TEA drama on the 6/30 call
July 14, 2011 9 Comments
We know about recent cases in which USCIS has questioned state-designated TEAs, specifically designation of individual census tracts and groups of census tracts. And we were curious to see how they’d explain that in the 6/30 EB-5 Stakeholder’s Meeting. Here’s what went down. (With time references to my MP3 recording of the second half the meeting, as posted below.)
[minute 29] Kevin Cummings of the Office of Policy and Strategy acknowledged current frustrations regarding inconsistency and unpredictability in TEA designations. “We’re examining a couple of different options in this regard, things we can do to make the TEA designation more predictable. But it’s something we’ll probably have to discuss at a senior level. And I expect that we’ll probably be able to discuss that with our senior leadership during the month of July.”
[minute 45] Q:Can my state give me a designation of a TEA area per their calculations?
Kim Atteberry: I would suggest that it should be a reasonable, transparent, and reproduceable methodology.[minute 48] Q: The 2009 memo talks about USCIS not having the authority to question the governor’s designation of TEA status, but then within just a couple of lines it implies that USCIS does have that authority. So I’d like to get an answer if possible about whether USCIS has and can question a governor’s designation of a TEA.
Kevin Cummings: Like I said earlier, we are examining the TEA issues and that is one of the aspects that we’re taking a real close look at right now. So I’m not prepared to further comment on that right now at this time. But hopefully we will, um, resolve some of these issues within the next several weeks.
Q: Okay, has USCIS questioned, has USCIS overturned something in the past when there was a designation by the governor’s office?
[silence…whisper whisper whisper… silence]
Mary Herman: Sorry Sir, we’re just consulting.
Kevin Cummings: No, I mean you just have to look at the existing regulations at this time, and the TEA designations do have to be supported by valid methodologies. Um… so… I mean that’s all I can tell you on that at this point.
Q: Uh, okay, thank you.[minute 50] Q: Regarding TEAs, are you seeing any trends toward using census block groups as qualifying political subdivisions?
[silence]
Sasha Haskell: A census tract or a grouping of census tracts is not a political subdivision. The only means by which a grouping of census tracts could qualify would be as a geographic area.
[silence]
Q: Okay, but my question was about block groups.
Kim Atteberry: Block groups are also just geographic designations, not political.
Q: So there’s neither bias for nor against using block groups?
[silence]
Kim Atteberry: Uh, I don’t think so. I think so long as you know, sound data is supported by you know transparent reasonable methodologies, then, no, that they’re just simply a grouping of census tracts.
Q: Well thank you very much.[minute 55] Q: A quick follow-up to the discussion that was just had about census tracts. And I just want to be clear about this. So if the governor of a state designates a single census tract as a high unemployment area and that represents the most current data available — let’s say by BEA — that is or is not recognized by USCIS.
Kim Atteberry: I assume that it would be based on the appropriate BLS methodologies, etc. etc.
Q: Yup. It’s 2010 annual data. So it’s the most currently available.
Kim Atteberry: Yeah, I mean, I can’t see why… I mean… as long as methodology is there and you can see what’s going on, I don’t see why that would be a problem.
Q: I only ask because I thought that I heard that someone said that a census tract is neither a legal nor a political boundary.
Sasha Haskell: It is not. A political boundary. A census tract may qualify as being a geographic area but it is not, it doesn’t meet the definition of a political subdivision.
Q: So then we’re qualifying a single census tract under which of these two prongs? It’s either a legal boundary or a geopolitical subdivision?
Sasha Haskell: Well I would look at the regulations…
Q: Hahaha… It says “a single…legal or geo-“– I don’t have it in front of me — all I’m asking is does a census tract qualify for one of those two, if the state says “we designate a high unemployment area.”
[long pause]
Sasha Haskell: Yes, it probably would.
Q: Hahaha…
Sasha Haskell: You know, without seeing specifically what you’re talking about…
Q: This is a single census tract! That’s a period. It’s not like there’s a lot of ambiguity to it–
Mary Herman: Next question–
Q: We’re worried about aggregating or gerrymandering, but we’ve drilled it down to a single census tract–
Sasha Haskell: We’re not talking about gerrymandering. We’re talking about has the state followed the guidelines that are laid down in 204.6(5) by providing the methodology, and if the methodology is in keeping with what our memo says, then most likely if that is followed it would be qualifying. I really don’t know what to say beyond that.
Mary Herman: Thank you Sasha and thank you for your question David. Can we move on to the next question please…
6/2012 Update:See also this Q&A from USCIS’s Executive Summary of the 5/1/2012 EB-5 Quarterly Stakeholder Engagement
Q: Will a single or multiple contiguous census tracts be considered as a geographic subarea?
A: USCIS encourages that standard Bureau of Labor Statistics (BLS) estimation methodology be used. In the event that subareas for which Local Area Unemployment Statistic estimates are not regularly produced, such as census tracts, the TEA applicant should be aware of the following: (1) the census-share technique be used ONLY where inputs for the preferred BLS methodology are not available and (2) only household-only inputs be used, in order to eliminate the impact of the Census 2000 Group Quarters processing error. More information regarding this answer can be found at the Bureau of Labor Statistics webpage at: http://www.bls.gov/bls/empsitquickguide.htm
Q: Can a qualifying census tract with unemployment 150% of the national rate be certified as a TEA?
A: Yes, but designation will depend on the quality and timeliness of the data used to support the 150% of the national average rate of unemployment claim. Acceptable data sources for purposes of calculating unemployment include Local Area Unemployment Statistics produced by a government agency, U.S. Census Bureau data, and data from the American Community Survey.
Q: Has there been any progress on further defining an acceptable vs. gerrymandered TEA? Will USCIS be providing additional guidance?
A: This issue is being examined in the context of the draft memorandum, which will be posted for comment in the near future.
5/30/2013 Update: The information in the 2011 post below is now outdated. Please see pages 7-8 of the 5/30/2013 EB-5 Adjudications Policy Memorandum for USCIS’s current policy on Targeted Employment Area designation.
EB-5 Updates 
This again shows you that the EB-5 Program has too many issues yet undecided. USCIS has gone back and forth on this issue several times, and seems like USCIS officials even disagree internally on this issue.
Very good job on the transcribing of what went on. As you can see, USCIS hates to give any clear answers; they love to confuse people. USCIS officials should really put their heads together and come out with a very clear answer on this issue, because CSC examiners are probably just as confused as everyone on this issue. The EB-5 Program has been in existence for close to 20 years, and USCIS still don’t have practical answers to these kinds of issues.
I agree that it’s unacceptable that USCIS can’t seem to formulate a clear policy and practical guidelines for TEAs. However, just to be fair, the TEA problems did arise due to egregious attempts by the EB-5 community to cheat Congressional intent. So many Regional Centers have conspired with census tracts to get away with doing $500,000-qualified projects in areas that really don’t suffer from high unemployment, and state agencies have played along. I support USCIS cracking down on gerrymandering and questioning geographic slivers of high unemployment in generally wealthy areas, but this must be based on articulated policy, not on unevenly applied whim.
The drama in the discussion wasn’t from a policy decision made on the fly, but simply a conversation about the technical side of the question (from the economist’s perspective) versus the regulatory side of the question (from the adjudicator’s perspective). You CAN use census tracts & blocks, but since the data isn’t collected regularly like county data–the analysis is not as solid.
Does an examiner ask for your opinion or review for every job methodology study submitted to CSC?
I thought census tracts unemployment rates are updated annually, no? In which case, why would census tracts & blocks data not be as solid? The fact that the adjudicator’s perspective does not reflect the economist’s perspective is the problem.
Data at the tract and block level is collected only during the Census every 10 years. It is used to approximate statistics at the micro level.
Check out the BLS handbook: http://www.bls.gov/opub/hom/homch4_d.htm
The adjudicators have a tough job because the regs and statute leave many technical questions unanswered. When I was the Chief Economist for USCIS I unfortunately did not have time to review every application.
They are using Constant Share analysis to estimate the current level of unemployment in census tracts with a 10 year forward projection. Yes, it’s pragmatic, but it has been well settled that costant share analysis is virtually useless at making accurate projections over long periods of time and after 5 years most economists will agree that Constant share analysis has little if any validity or accuracy. Nonetheless as long as the program is not filled to capacity there is no reason to make rules that will prevent investment even if they are basically making TEAs in areas never intended to be such
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