On July 24, 2020, U.S. Citizenship and Immigration Services (“USCIS”) missed a huge opportunity to clarify its poorly written guidance from three years earlier regarding “redeployment” of EB-5 investment capital to meet the “at risk” requirement.
Strike 1: USCIS blatantly reversed it policy regarding the ability of a new commercial enterprise to “deploy the repaid capital into certain new issue municipal bonds,” despite three years of stakeholder reliance and possibly one of the safest investment options that could be provided to EB-5 investors once the job creation requirements have been satisfied. Now, the purchase of financial instruments traded on secondary markets is no longer allowed since such purchases do not relate to the actual undertaking of business activity and is not commercial in nature.
USCIS now requires the redeployment to “occur within the regional center’s geographic area, including any amendments to its geographic area approved before the further deployment” “to meet all applicable eligibility requirements within the framework of the initial bases of eligibility.” Yet, the redeployment does not need to be within a targeted employment area, another initial basis of eligibility.
Until now, the redeployment was to take place “within a commercially reasonable amount of time,” a vague term providing wide leeway for USCIS adjudicators to deny cases. USCIS notes now that “12 months to be a reasonable amount of time to further deploy capital for most types of commercial enterprises but will consider evidence showing that a longer period was reasonable for a specific type of commercial enterprise or into a specific commercial activity under the totality of the circumstances.” USCIS deserves a foul tip of the hat for this footnote.
No new regulation should have retroactive application since it contravenes fundamental fairness and due process concerns. Yet, USCIS states that “[t]hese clarifications apply to all Form I-526 and I-829 petitions pending on or after [date of publication].” Another swing and a miss: USCIS boldly (though incorrectly) claims: “USCIS considered potential impacts to petitioners and determined that such impacts, if any, would be minimal because this is merely a clarification of continuing eligibility requirements. USCIS is not changing any substantive requirements.” How can that possibly be the case? USCIS doesn’t think there would be any impacts? If pending Form I-526 petitions get denied based on this new guidance, it’s a substantive requirement. Will USCIS consider updating offering documents or modified company agreements to comply with this new guidance a “material change”?
You’re Outta Here:
On top of the substance of the policy (or its wanting basis in law – there is no “at risk” requirement at the I-829 stage, yet USCIS still indicates the clarifications apply to all pending Form I-829 petitions), what seems most disappointing from this new release is USCIS’ lack of process and input with EB-5 stakeholders before announcing new rules “meant to address potential confusion among stakeholders regarding prior language.”
The issue of redeployment has become an irritant to many investors stuck in long visa backlogs whose EB-5 capital was properly used for job creation purposes but cannot be returned until two years of conditional permanent residency has passed. This new guidance just dusts up the plate more.
It’s unclear how much deference this agency interpretation of its own regulation will be given when EB-5 cases get denied based on this guidance and challenged in federal court as arbitrary and capricious and not in accordance with law; in excess of statutory authority; and without observance of procedure required by law in violation of the Administrative Procedures Act.
This new roll-out of policy exemplifies what’s wrong with USCIS’ administration of the EB-5 Program: Unclear policy guidance that contravenes plain language of the statute; policy goals that are disconnected from EB-5 investment realities; feigned concern about stakeholder confusion while asserting unchecked authority to promulgate as desired; failure to communicate with industry stakeholders prior to creating or implementing new requirements; and spending more time and resources towards poor policy instead of focusing on the adjudication backlog that plagues the government agency as a whole.
While this guidance appears to be effectively immediately, it is possible to submit comments until August 6, 2020 and we recommend you submit your comments here. I can be reached with any questions at email@example.com.