(1) Set backlog reduction milestones by application for every office, 
(2) assign staffing resources to offices based on a comprehensive workload analysis, 
(3) monitor office accomplishments of the backlog reduction milestones, and
(4) establish performance incentives for individual offices to meet and exceed the backlog reduction milestones.

The Service is applying a $5 surcharge to each application and petition to recover information technology and quality assurance costs associated with application processing. These costs were not included 
previously. The Service believes that this approach will ensure the resources necessary to support streamlined business processes, including on-line filing and case status inquiry via telephone or on-line; and expand quality assurance efforts to ensure the accurate and consistent adjudication of benefits.
It is also important to note that restructuring of the Service will result in improved services by clearly separating its conflicting missions of service and enforcement, clarifying its priorities, and ensuring adequate resources to carry out its mission.

C. Why INS Believes the Fee Increases Are Reasonable

One hundred and forty-nine comments stated that the fee increase was either too high or too burdensome on those applying for immigration and naturalization benefits. Many commenters noted that the Service 
only recently increased the majority of fees.

The Service is increasing fees by an average of $20 per application/petition, or 17 percent. The current fees, which were most recently increased in 1998, were based on a fee review that began in 1996 and was completed in 1997. Those fee levels reflected costs in 1997.
Other than the $5 per application surcharge for quality assurance and information technology, the fee

[[Page 65813]]

schedule is based solely on the recovery of costs for general cost-of-living increases since 1997, not from the period in which the fees were implemented. Bearing this in mind, the increase in fees on an annual 
basis equates to a less than 4 percent average increase. In this context, the Service believes the fee increases are reasonable. With regard to the fingerprint fee, this is the first time the fee was ever reviewed for the purpose of full cost recovery. As stated in the proposed rule, Congress directed the Service to implement changes to its fingerprint process in a short timeframe. To the extent that the revised fee may be viewed by some as a significant increase over the current fee, such an increase is both necessary and justified in an effort to recover the full cost of providing the service in accordance with applicable fee setting laws, regulations, and guidance. The Service does have the ability to waive fees on a case-by-case basis. Any applicant or petitioner who has an inability to pay the fees may request a fee waiver from either a District or Service Center Director depending on where the petition/application is to be filed. 
Service regulations at 8 CFR 103.7(c) concerning the granting of fee waivers is posted on the Service Web site at www.ins.usdoj.gov.

D. Why INS Is Raising the Fees Instead of Seeking Additional Sources of Funding

Thirty-eight of the commenters encouraged the Service to seek additional sources of funding from Congress instead of relying solely on fees. From FY 1989 to FY 1998, the fees collected and deposited into 
the IEFA have been the sole source of funding for immigration and naturalization benefits. In creating the IEFA, Congress intended that the activities supported by this account be self-sustaining, and not be 
funded by tax dollars (P.L. 100-459). The Service has been managing this account consistent with federal law and congressional direction. 

In the past, however, fees did not recover the full costs of processing applications and petitions. In an effort to eliminate the backlog this created, Congress provided additional appropriated resources. With this 
support, the Service dramatically improved productivity for naturalization and adjustment of status benefit applications.

The President included $100 million in the FY 2002 budget request as the first installment of a multi-year effort to support elimination of backlogs and overall improvements in service. The funding sources 
for the $100 million installment are $20 million from the Premium Processing fee and $80 million in appropriations. In contrast to the new fees that will recover the full costs of processing newly filed 
immigration benefit applications, the $100 million budget request will provide funding for reduction and elimination of the current backlog of immigration benefit applications. The Service will use this 
supplemental funding for the backlog elimination plan primarily to finance the costs of term staffing increases. Without this additional staff, the Service cannot process enough immigration benefit applications to meet the processing time goals and backlog reduction milestones. The Service will also use this supplemental funding to recover the costs to develop a performance incentives program for all Service offices.

E. How Will INS Provide Consistent Service?

Five of the commenters opposed increasing fees when service varies so greatly from office to office. The Service recognizes the need for a consistent level of service among offices. As previously stated, the 
Service's backlog elimination plan includes a two-step effort to achieve processing time goals for all immigration benefit applications. In the first step, the Service will reduce national average processing 
times to 6 months or less by the end of FY 2003. In the second step, the Service will achieve the processing time goals of 6 months or less in every Service office by the end of FY 2004. This fee schedule will 
begin to bring consistency of processing at all field offices, as well as ensure that backlogs do not recur in the future.

F. Why INS Believes the Fee Methodology Captures Full Costs

Two of the commenters objected to the methodology used to calculate the proposed fees. Some of the commenters felt that the activity-based costing methodology calculated fees based upon inefficient practices.
The fee review adhered to the guidance contained in the Office of Management and Budget (OMB) Circular A-25, User Charges, which requires that user charges imposed recover the full cost to the Government for providing a special benefit. In addition, the Federal Accounting Standards Advisory Board (FASAB) provides additional guidance on the meaning of full-cost recovery. In FASAB Statement No. 4, full cost is defined as:

The total amount of resources used to produce the output. This includes direct and indirect costs that contribute to the output regardless of funding sources. It also includes costs of supporting services provided by other responsibility segments or entities.

The fees reflect the full cost of processing immigration and naturalization benefits. The review was conducted consistent with the requirements of subsection 205(a)(8) of the Chief Financial Officers 
Act of 1990, Pub. L. 101-576, 104 Stat. 2838 (1990) (31 U.S.C. 902(a)(8)), which requires a biennial review of user fees to ensure that full costs are being recovered.

G. Why Do the Fees Pay for Unrelated Expenses?

Two of the commenters opposed the use of the applicant fees to pay for expenses that they perceived to be for unrelated services, such as the running of the asylum, refugee, parole, and the Cuban-Haitian 
Entrant programs. In the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1991, Pub. L. 101-515, 104 Stat. 2101 (1990), Congress authorized the Service to provide certain immigration and naturalization services at no cost to the applicants. Subsection 210(d)(2) of Public Law 101-515 states that ``fees for providing adjudication and naturalization services may be set at a level that will ensure recovery of the full costs of providing all such services, including the costs of similar services provided without charge to asylum applicants or other immigrants. Such fees may 
also be set at a level that will recover any additional costs associated with the administration of the fees collected.'' (8 U.S.C. 1356(m)). As a result of this legislation, Congress no longer provided the Service with an appropriation to cover the costs of asylum and refugee services, and directed the Service to fund these costs with revenue from the IEFA.

In FY 1996, Congress also authorized the Service to pay for the cost of the Cuban-Haitian Entrant Resettlement Program from the IEFA. See H.R. Conf. Rep. No. 104-378, at 83 (1995). In FY 1997, Congress transferred the cost of other asylum and refugee services that had been paid from the Violent Crime Trust Fund to the IEFA. See Pub. L. 104-208, 110 Stat. 3009 (1996). Through explicit legislative language and subsequent appropriation action, Congress has signaled its desire that certain asylum and refugee services should be provided at no charge to the recipient. The revenue to pay for these costs must be recovered from the fees charged to other applicants for immigration and naturalization benefits. All expenses being included for cost

[[Page 65814]]

recovery are consistent with federal law and federal accounting standards.
Many of these commenters also opposed the Service paying for costs that are unusual or atypical when compared to the usual costs in a normal processing year. They claimed that the type of organizational 
activities that the Service is currently engaged in, such as infrastructure building, should not be funded by current applications and must not be included in the fee calculation. Proper accounting treatment requires inclusion of unusual or atypical costs, such as improvement of automation activities or upgrading of records 
management. These types of costs were assigned a useful life, and the cost of these projects amortized or depreciated over the assigned useful life. Therefore, a portion of the unusual or atypical cost has 
been included in the fee calculation framework for the current year and treated like any other cost based on the useful life assigned to that asset.

H. Fee Increases Are Necessary

Seventeen comments were received in favor of the fee increases. 
Commenters noted several reasons for this:

(1) Current fees are too low given the benefit received;
(2) taxpayers should not pay for the increasing costs of providing immigration and naturalization benefits; 
(3) fee increases are justified given the increasing demand for immigration and naturalization benefits over the last several years; and 
(4) fee increases are necessary in order to increase the current level of services.

I. Separate Versus Blended Fee Schedule

In the proposed rule, the Service requested comments on whether it should set separate fee schedules for FY 2002 and FY 2003 versus the proposed single, blended schedule effective for both years. The Service 
also noted that commenters might want to consider whether changing fee schedules would unduly confuse applicants and petitioners.The Service received one comment on this subject. The commenter was 
in favor of a separate year fee schedule. The commenter noted that a separate, single year fee schedule will allow applicants to follow fee increases in relation to yearly inflation figures, making it easier to understand why fees increased more in one year versus another. The Service respectfully disagrees. Upon consideration of the issue, the Service has decided that changing fees every year will create unnecessary confusion with applicants and practitioners. Therefore, the Service will proceed with the single, blended fee schedule.

J. Review of the Fee for LIFE Act Adjustment of Status Applications (I-485)

In the proposed rule, the Service questioned whether it should change the established $330 fee for filing legalization applications under section 1104 of the Legal Immigration Family Equity Act, Pub. L. 
106-553, 114 Stat. 2762 (2000) (LIFE Act). In establishing the fee, on an interim final basis on June 1, 2001, the Service first identified the adjustment of status application (Form I-485) process as most 
similar to the new legalization application process. 66 FR 29661, 29667 (June 1, 2001). The Service then referred to the 1999 fee review, which identified an estimated full cost of the Form I-485 to be $330. Id. at 
29,668.

The Service questioned the methodology and limited nature of the 1999 fee review and proposed that the Form I-485 fee be $255. Id. The Service then said it would review the $330 fee established for filing 
legalization applications. Id.

Although no comments were received on this subject, the Service has reviewed the Form I-485 fee for legalization applications and has deemed it fair and reasonable to reduce the fee from $330 to $255, and 
refund the difference to those who have already paid the $330 fee. The Service will undertake a separate rulemaking to notify the public of the timing for this action.

III. Fee Adjustments

The fee adjustments, as adopted in this rule, are shown as follows:

                  Immigration Examinations Fee Account/Fee Schedule

[[Page 65815]]

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Regulatory Flexibility Act

The Attorney General, in accordance with 5 U.S.C. 605(b), has reviewed this regulation and by approving it has determined that this rule will not have a significant economic impact on a substantial 
number of small entities.
The majority of applications and petitions are submitted by individuals and not small entities as that term is defined in 5 U.S.C. 601(6). The Service acknowledges, however, that a number of small entities, particularly those filing business-related applications and petitions, such as Forms I-140, Immigrant Petition for Alien Worker; I-526, Immigrant Petition by Alien Entrepreneur; and I-829, Petition by Entrepreneur to Remove Conditions may be affected by this rule. For FY 2001, the Service projects approximately 130,000 Forms I-140, 400 Forms I-526, and 400 Forms I-829 will be filed. However, this volume 
represents petitions filed by a variety of businesses, ranging from large multi-national corporations to small domestic businesses. The Service does not collect data on the size of the businesses filing petitions, and therefore does not know the number of small businesses that may be affected by this rule. Even if all of the employers applying for benefits met the definition of small businesses, the resulting degree of economic impact would not require a Regulatory Flexibility Analysis to be performed.

Unfunded Mandates Reform Act of 1995

This rule will not impose a mandate of enforceable duty on State, local, and tribal governments in the aggregate, or on the private sector, and it will not significantly or uniquely affect small governments. Accordingly, no further actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

Small Business Regulatory Enforcement Fairness Act of 1996

This rule is a major rule as defined by the Small Business Regulatory Enforcement Act of 1996, Public Law 104-121, 110 Stat. 847 (1996). Based on the data included in the proposed rule, this rule will result in an annual effect on the economy of $169 million, in order to generate the revenue necessary to fund the increased expenses of processing the Service's immigration and naturalization applications and petitions. The increased fees will be paid by persons who file applications or petitions to obtain immigration benefits.

Executive Order 12866

This rule is considered by the Department of Justice to be an economically ``significant regulatory action'' under section 3(f) of Executive Order 12866, Regulatory Planning and Review, because it will have an annual effect on the economy of over $100 million. Without the fee adjustments, the Service estimates that it will collect approximately $815 million in fees for immigration and naturalization benefits in FY 2002. If the fee adjustments become effective on January 1, 2002, the Service anticipates collecting approximately $942 million in FY 2002--$127 million in additional revenue.

The projected increase in revenues may overstate the actual receipt of applications and petitions since fewer applications and petitions may be filed due to the implementation of the higher fees. The decrease in volume due to the higher fees has a real economic effect in that there may be fewer people applying for and receiving benefits paid for by the Service's user fees.

This increase in revenue will be used to fund the processing of immigration and naturalization applications and petitions. The revenue increase is based on the Service's costs and workload volumes. The volume of applications and petitions filed is projected based on a regression analysis of a 5-year history of actual applications and petitions received by the Service. The regression analysis is adjusted for any anticipated or actual changes in laws, policies, or procedures that may affect future filing patterns. The proposed fees will be paid by an estimated 6.6 million individuals and businesses filing immigration and naturalization applications and petitions. Accordingly, this regulation has been reviewed by the Office of Management and Budget (OMB).

Executive Order 13132

This rule 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 section 6 of Executive Order 13132, the Department has determined that this rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

Executive Order 12988

This rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995, Public Law 104-13, 109 Stat. 163 (1995), all Departments are required to submit to OMB, for review and approval, any reporting or record keeping requirements 
inherent in a final rule. This rule does not impose any new reporting or record keeping requirements under the Paperwork Reduction Act.

However, it should be noted that the Service solicited public comments on the change of fees in the proposed rule which was published in the Federal Register on August 8, 2001. It should also be noted that 
the changes to the fees will require changes to the application/petition forms to reflect the new fees. As a result of the changes to the forms, the Service will be submitting the forms to OMB for its approval.

List of Subjects in 8 CFR Part 103

Administrative practice and procedure, Authority delegations (Government agencies), Freedom of Information, Privacy, Reporting and record keeping requirements, Surety bonds.

Accordingly, part 103 of chapter I of title 8 of the Code of Federal Regulations is amended as follows:

[[Page 65816]]

PART 103--POWERS AND DUTIES OF SERVICE OFFICERS; AVAILABILITY OF SERVICE RECORDS

1. The authority citation for part 103 continues to read as 
follows:

Authority: 5 U.S.C. 552, 552(a); 8 U.S.C. 1101, 1103, 1304, 1356; 31 U.S.C. 9701; E.O. 12356, 47 FR 14874, 15557; 3 CFR, 1982 Comp., p. 166; 8 CFR part 2.

2. In Sec. 103.7, paragraph (b)(1) is amended by revising the entry ``For fingerprinting by the Service'' and by revising the entries for the following forms. The revisions read as follows:

Sec. 103.7 Fees.

* * * * *
(b) * * *
(1) * * *
* * * * *

For fingerprinting by the Service. A service fee of $50 will be charged by the Service for any individual who is required to be fingerprinted in connection with an application or petition for certain immigration and naturalization benefits (other than asylum), and whose residence is in the United States as defined in section 
101(a)(38) of the Act.
* * * * *
Form I-17. For filing an application for school approval, except in the case of a school or school system owned or operated as a public educational institution or system by the United States or a state or political subdivision thereof--$230.00.
* * * * *
Form I-90. For filing an application for a Permanent Resident Card (Form I-551) in lieu of an obsolete card or in lieu of one lost, mutilated, or destroyed, or for a change in name--$130.00.
* * * * *
Form I-102. For filing a petition for an application (Form I-102) for Arrival/Departure Record (Form I-94) or Crewman's Landing (Form I-95), in lieu of one lost, mutilated, or destroyed--$100.00.

Form I-129. For filing a petition for a nonimmigrant worker, a base fee of $130. For filing an H-1B petition, a base fee of $130 plus an additional $1,000 fee in a single remittance of $1,130. The 
remittance may be in the form of one or two checks (one in the amount of $1,000 and the other in the amount of $130). Payment of this additional $1,000 fee is not waivable under Sec. 103.7(c)(1). 
Payment of this additional $1,000 fee is not required if an organization is exempt under Sec. 214.2(h)(19)(iii) of this chapter, and this additional $1,000 fee also does not apply to certain 
filings by any employer as provided in Sec. 214.2(h)(19)(v) of this chapter.

Form I-129F. For filing a petition to classify nonimmigrant as fiancée or fiancé under section 214(d) of the Act--$110.00.Form I-130. For filing a petition to classify status of alien relative for issuance of immigrant visa under section 204(a) of the Act--$130.00.

Form I-131. For filing an application for travel documents--$110.00.

Form I-140. For filing a petition to classify preference status of an alien on the basis of profession or occupation under section 204(a) of the Act--$135.00.
* * * * *
Form I-191. For filing applications for discretionary relief under section 212(c) of the Act--$195.00.

Form I-192. For filing an application for discretionary relief under section 212(d)(3) of the Act, except in an emergency case, or where the approval of the application is in the interest of the United States Government--$195.00.

Form I-193. For filing an application for waiver of passport and/or visa--$195.00.

Form I-212. For filing an application for permission to reapply for an excluded, deported or removed alien, an alien who has fallen into distress, an alien who has been removed as an alien enemy, or an alien who has been removed at Government expense in lieu of deportation--$195.00.
* * * * *
Form I-360. For filing a petition for an Amerasian, Widow(er), or Special Immigrant--$130.00, except there is no fee for a petition seeking classification as an Amerasian.

Form I-485. For filing an application for permanent resident status or creation of a record of lawful permanent residence--$255.00 for an applicant 14 years of age or older; $160.00 for an applicant under the age of 14 years; no fee for an applicant filing as a refugee under section 209(a) of the Act.
* * * * *
Form I-506. For filing an application for change of nonimmigrant classification under section 248 of the Act--$85.00.

Form I-526. For filing a petition for an alien entrepreneur--$400.00.
* * * * *
Form I-539. For filing an application to extend or change nonimmigrant status--$140.00.
* * * * *
Form I-600. For filing a petition to classify orphan as an immediate relative for issuance of immigrant visa under section 204(a) of the Act. (When more than one petition is submitted by the same petitioner on behalf of orphans who are brothers or sisters, only one fee will be required.)--$460.00.

Form I-600A. For filing an application for advance processing of orphan petition. (When more than one petition is submitted by the same petitioner on behalf of orphans who are brothers or sisters, 
only one fee will be required.)--$460.00.

Form I-601. For filing an application for waiver of ground of inadmissibility under section 212(h) or (i) of the Act. (Only a single application and fee shall be required when the alien is applying simultaneously for a waiver under both those subsections.)--$195.00.

Form I-612. For filing an application for waiver of the foreign-residence requirement under section 212(e) of the Act--$195.00.
* * * * *
Form I-751. For filing a petition to remove the conditions on residence, based on marriage--$145.00.
Form I-765. For filing an application for employment authorization pursuant to 8 CFR 274a.13--$120.00.
* * * * *
Form I-817. For filing an application for voluntary departure under the Family Unity Program--$140.00.
* * * * *
Form I-824. For filing for action on an approved application or petition--$140.00.

Form I-829. For filing a petition by entrepreneur to remove conditions--$395.00.
* * * * *
Form N-300. For filing an application for declaration of intention--$60.00.

Form N-336. For filing a request for hearing on a decision in naturalization proceedings under section 366 of the Act--$195.00.

Form N-400. For filing an application for naturalization--$260.00.
* * * * *
Form N-470. For filing an application for section 316(b) or 317 of the Act benefits--$95.00.

Form N-565. For filing an application for a certificate of naturalization or declaration of intention in lieu of a certificate or declaration alleged to have been lost, mutilated, or destroyed; for a certificate of citizenship in a changed name under section 343(c) of the Act; or for a special certificate of naturalization to obtain recognition as a citizen of the United States by a foreign state under section 343(b) of the Act--$155.00.

Form N-600. For filing an application for a certificate of citizenship under section 309(c) or section 341 of the Act--$185.00.

Form N-643. For filing an application for a certificate of citizenship on behalf of an adopted child--$145.00.
* * * * *

Dated: December 17, 2001.
John Ashcroft,
Attorney General.
[FR Doc. 01-31452 Filed 12-18-01; 12:09 pm]
BILLING CODE 4410-10-P