The agency and its popular Director, Alejandro Mayorkas, must be commended for removing much of the entangling underbrush that has grown around the "Employment Creation" fifth preference immigrant visa category (EB-5) for an investor who places at risk either $500,000 or $1 million (depending on location) in a commercial venture projected to create at least 10 jobs for U.S. workers.
With the enthusiasm of a vigilant homeowner wielding a high-powered weed-whacker, USCIS's PM has obliterated many ambiguities and unanswered questions that had prevented the widely popular EB-5 investor program to reach its full potential.
In one document, USCIS offered a comprehensive set of interpretations that promises to allow the EB-5 category to flourish. Gone are most of the lingering doubts about the viability of bridge financing, and the stultifying restrictions imposed by an overly granular application of multi-digit "NAICS" codes -- a numbering system known as the North American Industry Classification System that the U.S. Census Bureau uses to identify and monitor various types of business establishments.
Also welcome are clarifications concerning (a) the relative power of the states and USCIS to define Targeted Employment Areas or TEAs -- rural areas and areas with unemployment at or above 150% of the national unemployment rate; (b) the specific circumstances when USCIS-designated Regional Centers (public or private entities authorized to accept EB-5 funds and allow its foreign investors to count direct and indirect job creation in reaching the 10-jobs-per-investor minimum) may or must submit amended petitions in order to change business activities or location, or when prior favorable EB-5 determinations will be given "deference," i.e., binding effect; and (c) the very limited situations when a business plan that has been derailed by unforeseen changes might adversely affect the later USCIS decision whether to remove conditions on permanent residence.
Still, without striving for perfection, USCIS could have made the PM much better. Here are my suggestions for EB-5 PM 2.0:
- Kill or reincorporate the past. The latest PM takes a wishy-washy approach in dealing with several prior policy utterances, listed below:
- Republish the policy as a proposed or interim final rule in the Federal Register and allow notice and public comment. The new PM says:
SCOPE: This PM is applicable to, and is binding on, all USCIS employees. * * *
This PM is intended solely for the training and guidance of USCIS personnel in performing their duties relative to the adjudication of applications and petitions. It is not intended to, does not, and may not be relied upon to create any right or benefit, substantive or procedural, enforceable at law or by any individual or other party in removal proceedings, in litigation with the United States, or in any other form or manner.
- Make sure economists are not EB-5 adjudicators. Last week at a public forum, Director Mayorkas waxed lyrical over a supposed innovation he heralded. Henceforth, EB-5 adjudications would be made not by Immigration Officers but by newly hired economists who, he surmises, are better equipped by education to tackle the complex business and economic issues that arise in EB-5 petitions. From now on, USCIS would no longer adopt the "hire to train" approach, whereby an indivdual is brought into the agency without experience and then trained in adjudicating a variety of immigration-benefits petitions and applications. Rather, here on out in the EB-5 context, according to Director Mayorkas, the agency will pursue a "hire to the skill" strategy, one that means that the successful job applicant at USCIS will only be hired if s/he already possesses the requisite skill -- an approach much like that of private industry. While the "hire to the skill" concept has much to commend it, the particular skill USCIS requires is not that of an economist. No, the skill in question is possessed by those with a legal education. At bottom, the EB-5 -- although containing elements of economic theory -- is ultimately a legal determination made by the application of facts to law. USCIS should instead offer positions at a level of GS-13 and above to persons with at least a juris doctorate, preferably with bar admission and the ethical testing that entails. This is not forging a new path; rather, it is merely replicating the reorganization of an adjudication function as occurred when the USCIS Asylum Office was reconstituted with lawyers in place of multi-function general adjudicators. Economists can be advisors but should never be USCIS adjudicators.
- Follow existing USCIS regulations in determining when a restructuring or reorganization creates a new EB-5 commercial enterprise. The EB-5 requires investment in a "new commercial enterprise" created, restructured or reorganized after the effective date of the law, November 29, 1990. On this point, the new PM states:
The immigrant investor can invest in an existing business, regardless of when that business was first created, provided that the existing business is simultaneously or subsequently restructured or reorganized such that a new commercial enterprise results. 8 C.F.R. § 204.6(h)(2). The facts of Matter of Soffici — where an investor purchased a Howard Johnson hotel and continued to run it as a Howard Johnson hotel— were not sufficient to establish a qualifying restructuring or reorganization. 22 I&N Dec. 158, 166 (Assoc. Comm’r 1998) (“A few cosmetic changes to the decor and a new marketing strategy for success do not constitute the kind of restructuring contemplated by the regulations, nor does a simple change in ownership.”). On the other hand, examples that could qualify as restructurings or reorganizations include a plan that converts a restaurant into a nightclub, or a plan that adds substantial crop production to an existing livestock farm.
- No EB-5 adjudication without representation. USCIS must allow every party in the EB-5 ecosystem with a valid legal interest to protect the right to counsel at no expense to the government in proceedings before the agency. USCIS must not persist in perpetuating conflicts of interest (real or really possible) by barring the attorney for the regional center or the pooled-investment enterprise to advocate for the validity of his or her client's position when a foreign citizen submits a petition for EB-5 classification on Form I-526 or a petition for removal of conditions on Form I-829. Regional centers and pooled investment entities have their businesses and brands at stake with every I-526 and I-829 submitted, yet USCIS muzzles them and expects the investor-chosen lawyer to carry their water. The SEC would never require businesses to risk their assets or reputations by relying on the investors' counsel to argue their interests. Neither should USCIS.
- No unsigned EB-5 adjudications. The new PM goes a long way toward greater transparency, but not quite far enough. The history of the EB-5 program has been pock-marked by policy reversals and arbitrary rulings. One measure of transparency is accountability. A decisionmaker becomes accountable when adjudicator puts on one's product his or her name (or nom de plum, in recognition of the need for personal and/or homeland security). There must be a way for the government (outside of USCIS), the public and the EB-5 stakeholder community to hold accountable any adjudicator who repeatedly flouts USCIS's EB-5 policy. If it worked for Voltaire (née François-Marie Arouet), it should also work for USCIS adjudicators.
- It's time for Expedited Adjudication. Quite a while back, USCIS indicated that it would adopt Premium Processing expedited service for at least some EB-5 adjudications. With the hiring rate still barely keeping up with population growth, the time for quick decisions across all categories of EB-5 petitions is NOW.
- It's time for coupling. There is no reason why the new PM did not announce a benefit that is presaged in S. 744, the comprehensive immigration reform bill awaiting floor debate in the Senate. That bill, as amended by a change Senator Leahy proposed, would allow foreign citizens who submit EB-5 petitions to file, concurrently, corresponding applications for adjustment of status to conditional permanent resident. Concurrent petition and adjustment filing has long been allowed by USCIS -- without the need for enabling legislation -- in the first three employment-based green card categories. USCIS should extend the same privilege to EB-5 petitioners and their immediate family members.