By: Bernard Wolfsdorf and Joseph Barnett
Yesterday USCIS released new guidance on the EB-5 Visa which updates the adjudication policy on issues related to Form I-526 and Form I-829 petitions. In particular, the new guidance attempted to clarify the “at risk” requirements for Form I-526 approval and the “sustainment” requirement for Form I-829 approval. We blogged on the specifics yesterday, and now we’ve had time to digest the changes.
Here are 3 things we like, and 3 things we don’t like, about USCIS’ new guidance:
Things We Like
- USCIS Policy Now Consistent with EB-5 Regulations. Applicable regulations indicate that a Form I-829 must be accompanied by evidence that the EB-5 investor “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.” USCIS has now clarified its policy to be consistent with the regulations: “The sustainment period is the investor’s 2 years of conditional permanent resident status. USCIS reviews the investor’s evidence to ensure sustainment of the investment for 2 years from the date the investor obtained conditional permanent residence. An investor does not need to maintain his or her investment beyond the sustainment period.”
- USCIS Shows Understanding of Reality of Chinese EB-5 Visa Backlog. The new guidance is particularly interesting for mainland-Chinese EB-5 investors who are stuck in the EB-5 visa backlog. It provides some assurance that EB-5 projects can structure their investments deals to obtain higher return on investment once the job creation requirement has been met, even if an EB-5 visa is not yet available, to meet the “at risk” requirement. Additionally, because an EB-5 investor’s “two years of conditional residence” is dependent on when an EB-5 visa is available, EB-5 projects may be able (depending on the terms of the investment contracts and NCE organizational agreements) to return EB-5 capital to investors at an earlier time under the new guidance.
- Relief to Conditional Green Card Holders with Terminated Regional Center. The new guidance states that an EB-5 investor’s conditional permanent resident status is not automatically terminated if he or she has invested in a new commercial enterprise associated with a regional center that USCIS terminates. The EB-5 investor may still demonstrate compliance with EB-5 requirements, including reliance on indirect job creation, by demonstrating that the NCE has associated with a new Regional Center. The new guidance does not provide similar relief to EB-5 investors whose Form I-526 is pending or who are waiting for an EB-5 visa; the termination of a Regional Center in this instance would constitute a material change to the petition that would require an EB-5 investor to re-file the Form I-526 with a new Regional Center. USCIS’ different treatment between EB-5 investors with and without conditional green card status shows the extreme importance in performing critical due diligence on a Regional Center prior to making an EB-5 investment.
Things We Don’t Like
- Too Many Undefined Terms. While we certainly appreciate USCIS’ attempt at making EB-5 adjudication policy more clear, there is still too much uncertainty involved for Regional Centers, EB-5 investors, and EB-5 projects to feel secure in their decisions. In particular, USCIS’ use of vague or ambiguous terms like “related to engagement in commerce,” “consistent with the scope of the new commercial enterprise’s ongoing business,” and “commercially reasonable time” could lead to subjective and arbitrary adjudications by USCIS. We hope USCIS will provide some updated guidance to clarify these terms.
- Effective Immediately. USCIS indicated that its new adjudication policy is effective immediately, as of June 14, 2017, despite the fact that the EB-5 community did not have the ability to review and comment on the big changes. This regrettably seems to be par for the course on EB-5 and Immigrant Investor Program Office, which previously changed policies on indebtedness, foreign currency exchangers, and eligible EB-5 expenditures, among many others, without going through standard APA notice-and-comment rulemaking. It’s likely that these interpretive rules or policy statements will not receive the same level of deference if/when they are challenged in federal court. Public comment on the guidance, due June 28, 2017, may unfortunately do little, if anything, to change USCIS’ new policies.
- Little Relief for NCEs with Pending I-526s Wishing to Redeploy. The new guidance is clear that an NCE’s redeployment of repaid capital must be “within the scope of the new commercial enterprise in existence at the time” the EB-5 investor filed the Form I-526. We take this to mean that clear redeployment language must be adequately described in the NCE’s securities offering and/or organizational agreements. However, by referring to 8 C.F.R. § 103.2(b)(1), it appears that USCIS may indicate that any such changes to the offering documents after a Form I-526 is submitted would constitute a “material change” that would require the EB-5 investor to re-file a Form I-526 with the updated redeployment language.