Perspectives on New EB-5 Policy Memo: Promise and Possibility

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The USCIS just issued the much awaited final EB-5 Adjudications Policy memorandum on uscis.gov.  While the Sheppard Mullin EB-5 team is busy analyzing the twenty-seven page memo, I wanted to share the following highlights with our readers immediately.   For me the essence of memo offers compromise and renewed confidence in the EB-5 program.  The memo emphasizes the importance of flexibility.  The Service expressed its commitment to change, stability, predictability and program integrity.

Initial highlights include a reiteration of the purpose of the EB -5 Program, “… which is to promote the immigration of people who can help create jobs for U.S. workers through their investment of capital into the U.S. economy.” To that end the USCIS states its intention to ensure “that the potential of the EB-5 Program, including the Immigrant Investor Program, is fully realized, and that the integrity of the EB-5 Program is protected.”

More granular details include the USCIS acknowledging that the adjudication of EB-5 petitions and applications is based on a preponderance of evidence standard (in plain English this means the applicant must show that what he or she claims is more likely so than not so) rather than the higher standard of proof of “clear and convincing,” and the even higher standard of “beyond a reasonable doubt” that typically applies to criminal cases.  The memo offers that the “petitioner or applicant does not need to remove all doubt from our adjudication.”  The memo also softens the USCIS policy on requiring new I-526 filings for certain changes in the original business plans.   Based on the updated guidance, once an investor is granted conditional permanent residence, there does not need to be a direct connection between the original business plan and what is provided at the time the request for removal of conditions (I-829) is filed.  The memo notes that the “USCIS recognizes the fluidity of the business world and therefore allows for material changes to a petitioner’s business plan made after the petitioner has obtained conditional lawful permanent resident status.”

The final policy discusses deference to previous agency determinations.  According to the memo, “where USCIS has previously concluded that an economic methodology satisfies the requirement of being a ‘reasonable methodology’ to project future job creation . . ., USCIS will continue to afford deference to this determination for all related adjudications, so long as the related adjudication is directly linked to the specific project for which the economic methodology was previously approved.”  In other words, the Service will allow for deference only in the same exact project, and not a similar one offered by the same regional center down the road.  Regional Centers that stagger raises and phases in the same project will have to  take this into consideration during the initial planning stages.

The USCIS states in the memo that an amendment is not required when a “regional center changes its industries of focus, its geographic boundaries, its business plans, or its economic methodologies.”  However, the I-924 instructions remind Regional Centers that “changes to organizational structure or administration, capital investment projects (including changes in the economic analysis and underlying business plan used to estimate job creation for previously-approved investment opportunities), and an affiliated commercial enterprise’s organizational structure, capital investment instruments or offering memoranda” DO require an amendment.  Would be purchasers and those involved in the management of regional centers ought to remember those instructions carefully.  I have been advising clients for some time that such changes could derail a Regional Center designation and accordingly I am interested to see how the Service will monitor and punish violators down the road.

As expected the memo liberalizes the previous stringent Matter of Ho (an AAO precedent decision) business plan requirements.  This signals a welcome change to what adjudicators will require to be in a business plan.  The memo offers (and also reminds USCIS Adjudicators/Economists) that a “business plan is not required to contain all of the detailed elements described above, but the more details the business plan contains, as described in Matter of Ho, the more likely it is that the plan will be considered comprehensive and credible.”

The USCIS is moving towards keeping pace with the realities and demands of business faced by investors, developers, regional centers and entrepreneurs. It promises to recognize the “fluidity of the business world” and will certainly remain diligent in ensuring the integrity of the program.  Watch for updated posts as the Sheppard Mullin EB-5 Team digests the full impact on the EB-5 policy memorandum.