Recap of USCIS’ Listening Session on EB-5 Immigrant Investor Program

By:  Joseph Barnett and Bernard Wolfsdorf

Introduction

On July 13, 2017, the U.S. Citizenship and Immigration Services (“USCIS”) held a listening session with stakeholders to hear feedback concerning the EB-5 Immigrant Investor Regional Center Program.  USCIS requested comment specifically on the EB-5 Regional Center lifecycle, the EB-5 project exemplar process, the recent implementation of EB-5 site visits, and the use of indirect job creation methodologies.  The listening session was limited to these subjects and other proposed changes “to increase predictability and transparency in the adjudication process for stakeholders, to improve operational efficiency for the agency, and to enhance program integrity,” as indicated in the Advanced Notice of Proposed Rulemaking on the EB-5 Immigrant Investor Regional Center Program posted in the Federal Register on January 11, 2017.

Listening in to stakeholders’ comments and suggestions on EB-5 regulatory and operations revisions and policy issues were Chief Julia Harrison, USCIS’ Immigrant Investor Program Office (“IPO”) Deputy Chief; Laurie McKenzie, IPO’s Division Chief of Policy & Performance Division; and Kathy Nuebel Kovarik, USCIS’ Office of Policy Strategy Chief.  No answers or substantive responses were provided to any questions, comments, or suggestions.

Stakeholders may submit additional written comments to IPO by sending an email to IPOStakeholderEngagement@uscis.dhs.gov with the subject heading “Listening Session Feedback”.

Below is a recap of the public comments received during the listening session on each subject:

EB-5 Regional Center Lifecycle

Numerous comments discussed the need for greater clarity on USCIS’ requirements for initial designation, maintenance, and termination of an EB-5 Regional Center designation that could increase predictability and strengthen the quality of applications to reduce adjudication processing times.  Suggestions included:

  • Written guidance for a Regional Center’s responsibility to “engage in proper monitoring and oversight of the capital investment activities and jobs created or maintained,” as indicated in certain Regional Center Notices of Intent to Terminate (“NOIT”), with consideration that Regional Centers may not have any operational or financial control over a job-creating entity.
  • More stringent requirements to obtain Regional Center designation, including a better demonstration by applicants of capability and experience to operate a Regional Center in accordance with USCIS regulations.
  • Written guidance on how a Regional Center wishing to “wind down” and stop sponsoring new EB-5 investment projects may maintain its designation without new Form I-526 filings, to protect EB-5 investors against any undue hardship. Requiring a Regional Center to provide written notice to IPO on its intent to “wind down” was also suggested.
  • Better and more-often communications and interaction with IPO on non-case-specific policy issues, so that I-924 applications are better.
  • Re-thinking of a Regional Center designation as a “license” for which applicants must meet certain requirements for initial and continuous designation.
  • Issuing an initial 5-year Regional Center lifecycle to provide more predictability to businesses wishing to use designation, with on-going renewal requirements every 3 years to maintain Regional Center designation.
  • Whether IPO using finite resources to issue NOITs to Regional Centers without I-526 applications on file is the best use of resources. One commentator noted that IPO should focus more resources on actual EB-5 project offerings and issues of fraud, misuse of funds, or project failure/change, as opposed to non-use.
  • More consistent issuance of NOITs to Regional Centers. An attorney mentioned that one of her Regional Center clients received a reaffirmation after responding to an initial NOIT, only to be issued another NOIT a couple of months later.  She also mentioned that in a separate case IPO issued a second NOIT without providing any feedback on the Regional Center’s response to an initial NOIT.
  • Need for the re-opening of denied I-526 applications if a Regional Center’s who motion to reopen/reconsider or appeal of a NOIT is successful.

Stakeholders generally agreed that reforms to the EB-5 Regional Center lifecycle need to occur to ensure integrity and continued commercial viability of the EB-5 Program.  They also noted the significance of the manner in which USCIS creates and implements those reforms, such as prior notice and a public comment period.  One commenter indicated that any information influencing USCIS’ reforms should be issued for prior review and comment on its website.  Another commentator smartly noted the importance of a “transition period” for the EB-5 industry and foreign nationals to respond and reasonably transition to meet new guidelines or regulations.  Numerous stakeholders referenced the need for USCIS to consider of how its’ unruly concept of “material change” could adversely affect U.S. companies and investors from meeting their business and immigration goals prior to implementation of any policy or adjudication changes.  USCIS has the ability to increase the integrity EB-5 Program not just substantively, but also administratively.

Exemplar Process

A majority of the commenters indicated that a mandatory exemplar approval process would benefit the EB-5 Program’s integrity and help ensure that only approvable EB-5 offerings are placed in the market, but also that IPOs current adjudication processing delays (currently at 21 months for I-924s) make this option commercially unviable.  Comments regarding the exemplar process included:

  • Mandatory 90- or 180-day adjudication timeline for I-924 adjudications. One commenter mentioned that EB-5 capital financing would become significantly more attractive to U.S. companies based on these processing timelines.
  • Separate adjudication tracks or queues for different types of I-924 filings: (1) initial Regional Center designations based on hypothetical projects; (2) initial Regional Center designations based on actual “Exemplar” projects; (3) amendments to Regional Center designations based on hypothetical projects; (4) amendments to Regional Center designations based on actual “Exemplar” projects; and (5) amendments to Regional Center designations for small changes (which should not require another $17,795 filing fee).
  • Consideration of USCIS’ current “nexus” requirement for temporary bridge financing for shovel ready projections and use of the EB-5 capital, as well as issues of “material change” between the time of I-924 exemplar filing and I-526 filing.
  • Ability for EB-5 projects to amend project documentation to meet USCIS’ new policy on the “sustainment period” and to repay EB-5 capital without it rising to the level of “material change” which would require EB-5 investors who haven’t obtained conditional permanent residency to refile I-526.
  • Reallocation of IPO resources to approved I-924 applications quicker, with the goal that EB-5 project approvals would speed up I-526 adjudications as well.
  • Elimination of Regional Center geographic restrictions announced December 2016 which has increases the number of I-924s.
  • Elimination of “hypothetical” Regional Center applications. In response, another commenter noted the flexibility that “hypothetical” projects provide U.S. companies for more complex development projects, especially considering USCIS’ processing timelines and “material change” policy.
  • Use of a Premium Processing option for I-924 applications

USCIS has the ability to increase the integrity and viability of the EB-5 Program not just substantively, but also through modified adjudication practices which consider the business realities surrounding the raise of EB-5 capital, the requirements for bridge-financing, and USCIS’ concept of “material change”.     ,

EB-5 Site Visits

USCIS was “not in a position to provide specifics” on the number of EB-5 site visits that have taken place to date, though commentators mentioned they were occurring.  Suggestions on EB-5 site visits included:

  • Publication of specific inspection module items for site visits, as starting point, for EB-5 projects and Regional Centers to be prepared and make site visit as smooth as possible.
  • Ensure site inspectors understand role and obligations of various EB-5 components, such as Regional Center, New Commercial Enterprise, Job Creating Entity, EB-5 investor.
  • One commentator indicated that USCIS could contact EB-5 investors as part of a site visit to ensure information being provided by EB-5 project is accurate.
  • Publication of results of EB-5 site visit for benefit of Regional Center and EB-5 investors

Indirect Job Creation

 

By far, the subject with fewest comments was indirect job creation.  Statements included:

  • Publication of all accepted economic models for indirect and induced job creation.
  • Rethinking the need for additional evidence that indirect jobs created, or to be created, are full time, due to the nature of accepted job creation modeling practice

Conclusion

In conclusion, we are happy to see that USCIS is attempting to engage EB-5 stakeholders to resolve or clarify critical issues for increased integrity and viability of the EB-5 Program.   We hope are hopeful that USCIS’ reforms are implemented in a manner which provide clarity and predictability for U.S. companies and EB-5 investors.

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