DOCUMENT NUMBER: FR 31-94

FEDERAL REGISTER CITE: 59 FR 26587 - 26593

DATE PUBLISHED: May 23, 1994

BILLING CODE: 4410-10

DEPARTMENT OF JUSTICE

Immigration and Naturalization Service

8 CFR Parts 103 , 211 , 216 , 235 , and 242

[INS No. 1429-92]

RIN 1115-AC53

Conditional Permanent Resident Regulations for Alien        

Entrepreneurs, Spouses, and Children

AGENCY : Immigration and Naturalization Service, Justice.

ACTION: Final rule.

SUMMARY: This rule implements provisions of section 121 of the Immigration Act of 1990, by providing for removal of conditional resident status for certain alien entrepreneurs, their spouses, and children. It sets forth the standards and procedures for the removal of the conditional basis of permanent resident status through the filing of a petition by the alien entrepreneur. This rule will allow alien entrepreneurs to continue their commercial enterprise while providing jobs in the United States.

EFFECTIVE DATE: May 23, 1994.

FOR FURTHER INFORMATION CONTACT: Michael W. Straus, Senior Immigration Examiner, Adjudications Division, Immigration and Naturalization Service, 425 I Street, NW., Room 7122, Washington, DC 20536, telephone (202) 514-5014.

SUPPLEMENTARY INFORMATION:

Background

As part of the Immigration Act of 1990, Public Law 101-649, November 29, 1990, Congress created the Employment Creation immigrant visa category under section 203(b)(5) of the Immigration and Nationality Act (Act). Section 203(b)(5) of the Act sets aside immigrant visas for aliens seeking to enter the United States for the purpose of engaging in a new commercial enterprise. To qualify under this immigrant visa category, the alien must invest $1,000,000 (or $500,000 in certain targeted areas) and create at least ten full-time jobs. On November 29, 1991, the Immigration and Naturalization Service (Service) issued a final regulation on implementing the provisions of section 203(b)(5) of the Act.

Under section 121 of the Immigration Act of 1990 (section 216A of the Act), Congress determined that aliens admitted to the United States under the Employment Creation category as alien entrepreneurs and their spouses and children should be admitted as conditional permanent residents as a means to deter immigration-related entrepreneurship fraud. Section 216A of the Act provides for a two-year conditional resident status for alien entrepreneurs and their spouses and unmarried children. It also provides for termination of status if the Service determines that the qualifying commercial enterprise was improper and sets forth the crite ria and procedures for the alien entrepreneur to remove conditional resident status.

Termination of Conditional Resident Status

Section 216A(b) of the Act calls for the termination of the alien's conditional permanent resident status during the two-year period if the Service determines that establishment of the commercial enterprise was intended solely as a means to evade United States immigration laws; that the alien did not establish the new commercial enterprise; that the alien did not invest or was not in the process of investing the prescribed capital; that the alien was not sustaining the new commercial enterprise or the inves tment of capital; or that the alien was not otherwise conforming to the requirements of his or her status. In addition, in light of Congress' intent to prevent further processing of an alien's visa if it becomes known that the alien obtained the money invested through other than legal means, this regulation adds an additional ground to terminate an alien entrepreneur's conditional permanent resident status. Section 216A(b) of the Act provides that if the Service decides to terminate the alien entrepreneur 's conditional permanent resident status, the alien shall be notified of such decision and may request a review of the Service's determination in a deportation proceeding. In a deportation proceeding, the Service has the burden of proof to establish by a preponderance of the evidence that one of the reasons for termination is true. Accordingly, 8 CFR 216.3 will be revised to allow for termination of conditional permanent resident status for alien entrepreneurs.

Petition for Removal of Conditions

Section 216A(c)(1) and 216A(d)(2)(A) of the Act require that the alien entrepreneur file a petition for removal of conditions during the 90-day period before the second anniversary of the alien's obtaining conditional permanent resident status. The final regulation provides that the alien entrepreneur file Form I-829, Petition by Entrepreneur to Remove Conditions, with the Service Center having jurisdiction over the location of the alien's commercial enterprise. The petition should include the alien entre preneur's spouse and children, even if the children marry or reach the age of twenty-one during the period of conditional residence. The final rule also permits the spouse and children of a deceased principal alien entrepreneur to file a petition and have conditions removed, if the spouse and/or children can show that, despite the entrepreneur's death, the requirements for removal of conditions have been met.

Under the final regulation, the Service Center will review the petition for removal of conditions. If the Service Center director determines in his or her discretion that a decision may be made on the basis of the petition and accompanying evidence without the necessity of an interview, the director will render a decision on the petition. If the director determines that an interview is needed, the Service Center director will schedule the alien entrepreneur for an interview at a local Service district off ice or sub-office having jurisdiction over the alien's commercial enterprise. The district director will then render a decision on the petition.

If the alien entrepreneur fails to file a timely petition for removal of conditions or, without good cause shown, fails to appear for a scheduled personal interview, the alien's status will be terminated and an order to show cause will be issued. The Service's decision may be reviewed in deportation proceedings, but, in all instances, the burden will rest with the alien to show compliance with the filing and interview requirements. The Service may accept and consider a late petition if the alien demonstr ates good cause and extenuating circumstances for failing to file a timely petition.

Decision on Petition

Section 216A(d)(1) of the Act provides that each petition shall contain facts and information demonstrating that a commercial enterprise was established by the alien, the alien invested or was actively in the process of investing the requisite capital, and the alien sustained the commercial enterprise and the investment of the required capital during the two years of conditional residence. Under 8 CFR 216.6(a)(4)(iii), the alien entrepreneur will be considered to have "sustained" the actions required for r emoval of conditions if he or she has, in good faith, substantially met the capital investment requirement of the statute and continuously maintained his or her capital investment over the two years of conditional residence. This liberal interpretation of the term "sustained" permits the Service maximum flexibility in determining whether the requirements for removal of conditional resident status have been met, as well as following Congress' intent to ensure that "all aliens receiving visas in this section * * * continue their new commercial enterprises so that the creation of U.S. jobs and the infusion of capital into the U.S. economy is sustained." See S. Rep. No. 101-55, 101st Cong., 1st Sess. 22 (1989). The Service recognizes that a bona-fide and good faith investment may not, by the end of the two-year period, meet all the expectations envisioned when the alien entrepreneur obtained conditional resident status. The determination of whether the alien entrepreneur has invested a substantial portion of the requisite capital in good faith will be made on a case-by-case basis. As discussed in the preamble to the proposed rule, in determining whether the alien entrepreneur has demonstrated that he or she invested the requisite capital in good faith, the Service will examine his or her intent based on both objective and subjective standards. See 59 FR 1317-18. The alien entrepreneur has the burden of proof that he or she has, in good faith, substantially met the capital investment requirement of the statut e and continuously maintained his or her capital investment during the two-year conditional resident period.

On January 10, 1994, at 59 FR 1317-1323, the Service published a proposed rule with request for comments in the Federal Register . Interested persons were invited to submit written comments on or before February 9, 1994. The Service received three comments relating to the proposed rule.

Comments

Two commenters criticized the proposed regulation for lacking any time limits for the Service to adjudicate a petition for removal of conditions. One commenter suggested that if the Service takes no action on a petition, the petition should be automatically granted after a set period of time.

Section 216A(c)(3) of the Act provides that the Attorney General make a determination on a petition to remove conditions within 90 days of the date the petition is filed or within 90 days of the interview, whichever is later. Accordingly, 8 CFR 216.6(b)(1) of the proposed regulation states that the Service Center director must either waive the interview requirement and adjudicate the petition or arrange for an interview within 90 days of the date the alien entrepreneur filed the petition. This regulation is, of course, subject to the provisions of 8 CFR 103.2(b)(10)(i). 8 CFR 216.6(c)(1) provides that a decision on a petition shall be made within 90 days of the date of filing or within 90 days of the date of interview, whichever is later. The above provisions in the proposed regulation adequately address the commenters' concerns as well as meet the adjudication time line set forth in section 216A(c)(3) of the Act.

There is no provision in section 216A requiring the Service to approve a petition if the Service fails to adjudicate a petition within 90 days after filing or after an interview. Section 216A(c)(3) of the Act states that the Service must make a determination whether the facts and information described in the contents of the petition are true. Requiring the Service to "automatically" approve a petition after the 90-day period has elapsed would be contrary to the language of section 216A(c)(3) of the Act.

Two of the commenters suggested that the Service list additional types of evidence in 8 CFR 216.6(a)(4)(ii) to show that the alien invested or was actively in the process of investing the requisite capital. This regulation states that such evidence may include, but is not limited to, an audited financial statement. The commenters contended that although an audited financial statement is only a suggested document, it might set too high a standard in the mind of a Service examiner. They suggested other typ es of evidence such as bank statements or certificates from certified public accountants or officers of the investment entity.

As clearly stated in the regulation, an audited financial statement is only a suggested type of evidence. There is no basis for the contention that mentioning an audited financial statement in the regulation would set too high a standard. The Service recognizes that it is not common practice for all companies to have audited financial statements. The regulation will be amended to include "other probative evidence" indicating establishment of a commercial enterprise. The Service notes that it is possible that the evidence necessary to meet the documentation requirements of 8 CFR 216.6(a)(4)(iii), such as bank statements, would be sufficient to meet the evidence required under 8 CFR 216.6(a)(4)(i) and (ii). Accordingly, 8 CFR 216.6(a)(4)(ii) will be amended to also include "other probative evidence" that a commercial enterprise has been established.

Two of the commenters were concerned that proposed 8 CFR 216.6(a)(4)(iii) requires that the alien entrepreneur make the full capital investment in cash within the two-year conditional residence period. They argued that the wording of the proposed regulation should specifically cover situations where only a portion of the capital in the form of cash has been invested, with the remainder of the capital to be invested by the commercial enterprise. The proposed regulation refers to substantially meeting and m aintaining the alien entrepreneur's capital investment. See 8 CFR 216.6(a)(4)(iii). As noted previously in this preamble, the regulation contemplates certain limited circumstances in which the entire amount of the requisite capital has not been invested by the end of the two-year period. Further, the word capital refers not only to a cash investment, but also to other types of investments which meet the definition of capital found in 8 CFR 204.6(e). The proposed regulation is sufficiently flexible to pe rmit situations in which the requisite capital invested is in a form other than cash. For these reasons, the proposed rule, therefore, will not be amended.

One commenter contended that the Service should state in the regulations that a good faith commitment on a debt agreement, which is secured by the alien entrepreneur's assets, should suffice to meet the requirement that the alien entrepreneur has, in good faith, substantially met the capital investment requirement of the statute and continuously maintained the investment. Under the statute, changing the wording of the regulation to include a good faith commitment is not warranted. Section 216A(d)(1) of th e Act requires that the alien entrepreneur invested or was actively in the process of investing the requisite capital and sustained those actions during the two-year conditional residence period. The language of section 216A(d)(1)(B) of the Act uses the past, rather than the present, tense in requesting information showing that the alien entrepreneur invested or was actively in the process of investing the requisite capital. While there is no statutory requirement with respect to when the requisite capita l must have been invested during the two-year period, it is clear that, by using the past tense, Congress expressed its intent that substantially all of the requisite capital be invested by the alien entrepreneur before the expiration of conditional resident status. Accordingly, the Service will not adopt the commenter's suggestion.

Two commenters recommended that the divorced spouse of the principal entrepreneur be entitled to have his or her conditional resident status removed. One of those commenters also suggested that children who reach the age of 21 or marry during the conditional residence period should be able to have their conditional resident status removed. Section 216.6(a)(1) of the proposed regulation clearly states that children who marry or reach the age of 21 during the conditional residence period can be included in the principal alien entrepreneur's petition to remove the conditions. The Service has carefully considered the commenters' suggestion that divorced spouses of alien entrepreneurs should also be allowed to remove their conditional residence status. The Service agrees with the commenters that divorced spouses of alien entrepreneurs should be able to remove their conditional resident status as long as the divorce occurred during the conditional residence period. Accordingly, section 216.6(a)(1) of the fina l regulation will allow divorced spouses of alien entrepreneurs to remove their conditional resident status. The children and the present or former spouse of the alien entrepreneur may be included in the entrepreneur's petition to remove the conditions or they may file a separate petition to remove conditions. They are eligible to have their conditional resident status removed only if the Service removes the alien entrepreneur's conditional resident status.

Two commenters urged the Service to state in the regulations that the legality of the source of the alien entrepreneur's funds should be determined by U.S., rather than foreign standards. The commenters are concerned that aliens would be precluded from applying lawfully acquired funds which were taken out of a country in violation of its export currency laws and placed in a new commercial enterprise in the United States as qualifying capital. The only provision in the proposed regulations concerning sourc e of capital is 8 CFR 216.3(a), which states that the Service shall terminate the alien entrepreneur's status if it becomes known to the government that the alien obtained his or her capital through other than (The word "than" was left out by the Federal Register) legal means (such as through the sale of illegal drugs). When the alien files Form I-526, Immigrant Petition by Alien Entrepreneur, he or she must show that the capital invested was obtained through lawful means. See 8 CFR 204.6(j)(3). The commenters' suggestion is more appropriately addressed to 8 CFR 204.6(j)(2)(ii), which addresses this issue in more detail. The Service notes, however, that without more specific information about the particular country's currency restriction laws, it is difficult to determine whether capital, in a given case, was obtained through other than lawful means. Each petition must be adjudicated on a case-by-case basis. Accordingly, the Service does not feel that it is appropriate to amend this regulation.

Regulatory Flexibility Act

The Commissioner of the Immigration and Naturalization Service, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and by approving it certifies that this rule will not have a significant economic impact on a substantial number of small entities. This rule is intended to allow alien entrepreneurs to continue their commercial enterprises thereby providing jobs in the United States. This rule merely sets forth the procedures for terminating the conditional resi dent status of alien entrepreneurs already present in the country and for removing the conditional basis of permanent resident status for such persons. This rule, therefore, will have, at most, an indirect and attenuated effect on such business entities.

Executive Order 12866

This rule is not considered by the Department of Justice, Immigration and Naturalization Service, to be a "significant regulatory action" under Executive Order 12866, Sec. 3(f), Regulatory Planning and Review, and the Office of Management and Budget has waived its review process under section 6(a)(3)(A).

Executive Order 12612

The regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 12612, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a federalism assessment.

Executive Order 12606

The Commissioner of the Immigration and Naturalization Service certifies that she has addressed this rule in light of the criteria in Executive Order 12606 and has determined that it will have no effect on family well-being.

This rule contains information collection requirements which have been approved by the Office of Management and Budget (OMB) under the provisions of the Paperwork Reduction Act. The OMB control numbers for these collections are contained in 8 CFR 299.5. The OMB control number for the Form I-829 is 1115-0190.