New EB-5 Policy (Sustaining Investment, Redeployment, and Investors in a Terminated RC)–Updated
June 14, 2017 11 Comments
We’ve been waiting for years for USCIS to clarify its policy on sustaining investment, and when and how EB-5 capital may need to be redeployed if a project winds up before the investor reaches the I-829 stage. Today, we have this notification:
The USCIS Policy Manual has been updated to provide further guidance regarding the job creation and capital at risk requirements for Form I-526, Immigrant Petition by Alien Entrepreneur, and Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status. Volume 6 (Immigrants), Part G: Investors is effective on June 14, 2017. The Policy Alert is available here: Volume 6 (Immigrants), Part G: Investors (Final date for comments: June 28, 2017)
The Policy Alert from USCIS does not actually say what changed. I compared the the June 14, 2017 version of the Policy Manual with my hard copy of the previous November 2016 version, and highlighted the changes to the new file in red font. (Here is my folder with dated versions of 6 USCIS-PM G). The June 2017 changes — which are significant and touch on material change and termination issues as well as redeployment — are in Chapter 2(A)2, Chapter 4(C), Chapter 5(A)2, and Chapter 5(C).
UPDATES: I’ve copied the new Policy Manual language on redeployment into a separate document and added my attempt to analyze the language and understand the terms. Here is my work so far.
Here are reactions from others to the new policy:
- USCIS Finalizes EB-5 Sustainment and Redeployment of Capital Issues and Consequences of Regional Center Termination (June 15, 2017) by Robert C. Divine of Baker Donelson
- USCIS Policy Manual Changes on Sustainment, At Risk, Redeployment and Regional Center Terminations – Good, Bad and Ugly (June 16, 2017) by H. Ronald Klasko
- Standards and Guidelines for Redeployment of EB-5 Investment Funds (updated July 24, 2017) by Klasko Immigration Law Partners, Arnstein & Lehr, Jeffer Mangels Butler & Mitchell
The new policy is effective as of today, before anyone has had a chance to review or comment on it. Indeed, the policy is essentially retroactive since it defines new requirements for investment agreements that current investors may have signed years ago. But USCIS is offering an opportunity to comment, for what it’s worth at this point.
Please send all comments to publicengagementfeedback@uscis.dhs.gov and be sure to include the following to make your comments clear:
- State the title of the relevant volume and section in the subject line of your message;
- Refer to a specific portion of the document;
- Explain the reason for any recommended change; and
- Include data, information, or authority that supports the recommendation.
Opening & Closing Dates for Comments: June 14, 2017 – June 28, 2017
As background, here are some reactions to the draft policy memo from August 2015 on sustaining investment, and wish lists of features we wish had been included in the new policy.
- EB-5 Investment “At Risk” and Sustaining Investment: Redeployment is Not Required (June 13, 2017) By Carolyn S. Lee
- Standards and Guidelines for Redeployment of EB-5 Investment Funds – A White Paper (February 21, 2017) by Klasko Immigration Law Partners, LLP, Arnstein & Lehr LLP, Jeffer Mangels Butler & Mitchell LLP
- Redeployment: The New Frontier December 2016) By Osvaldo F. Torres, Torres Law, PA
- Visa Backlogs and Redeployment of EB-5 Investor Funds – Securities Law Considerations (May 24, 2016) By Mariza McKee and Robert Ahrenholz
EB-5 Updates 
Thank You Suzanne! This new policy, not surprisingly, leaves us with more questions than answers. So would investing in a stock of a company that is aligned with the project (let’s say a Construction company stock) be OK by the USCIS? or would it have to be re-deployed on a separate project with the same level of lack of liquidity as the original project? Since EB-5 investors were never engaged on trading of goods and services, but rather taking different roles as capital investors, this new policy is very confusing… at least to me.
Thank you — I AM glad I know you, as this is incredibly helpful.
One interesting and hopeful note, is that it allows for redeployment into “new issue municipal bonds,” which seems like a safe option that developers can choose to protect investors.
I am not sure if I understand correctly.
This seems to suggest: after investor satisfies job creation requirements, but before becomes a conditional permanent resident, repaid capital can not be further deployed to low-risk, liquid investments, unless such capital redeployment (e.g. bond investment) is described in the PPM. After an investor becomes a conditional permanent resident, however, the capital may be further deployed to buy bond, whether or not PPM talks about it.
This seems to be a really bad news to existing Chinese investors, as it gives an excuse to RCs who are attempted to redeploy capital in high-risk, high-return assets. To be more extreme, what if a RC redeploys repaid capital from a successful EB-5 project to save a troubled EB-5 project that is being sponsored by the same RC?
These are good points, and I’m waiting to see how other analyze the changes and what they mean.
UPDATE: I’ve revised the post with links to my analysis and articles from immigration lawyers.
Another significant change is new interpretation of job creation by regional center indirect jobs to be full time. “In the case of the Regional Center Program, full-time employment also means employment of a qualifying employee in a position that has been created indirectly that requires a minimum of 35 working hours per week.”
I don’t know how regional center will prove the 35 working hours per week for an indirect job.
That change started in the November 2016 Policy Manual, which left out this reasonable sentence from the May 2013 policy memo: “Due to the nature of accepted job creation modeling practices, which do not distinguish whether jobs are full- or part-time, USCIS relies upon the reasonable economic models to determine that it is more likely than not that the indirect jobs are created and will not request additional evidence to validate the job creation estimates in the economic models to prove by a greater level of certainty that the indirect jobs created, or to be created, are full-time or permanent.” I pointed out this problem in my comments on the November 2016 manual, and surprised that others didn’t seem more concerned. Maybe everyone is expecting to fall back on the simple fact that distinguishing FT and PT with economic models is in fact impossible, regardless of what policy says.
Do you feel that USCIS has changed its position from the past and now requires regional center project to report only full time positions created indirectly to meet job creation requirement? Only full time employees in JCE?
Regarding the clarification on the “sustainment period”, I am interested to know if the two year period begins after I-526 approval or after adjustment of status / consular processing, which generally adds six months to the process.
Suzanne, great work as usual. Re: Nimrod’s question above, I have the same doubt, motivated by this phrase on the Robert C. Divine’s analysis you referred to:
> The period of conditional residence is clarified to begin
> with the date of CPR admission
> (the “resident since” date on the green card)
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
My understanding is that the “date of CPR admission”, at least for counting the 2 years deadline of i-829 submission, begins *not* at the date of i-526 approval nor at the date of adjustment of status / consular processing, but rather at the date the investor effectively enters the US with said green card.
Can you please confirm?
Footnote 4 in Policy Manual Chapter 5 states that the sustainment period begins “from the date the investor obtained conditional permanent residence,” so definitely not at I-526 approval or six months after, to answer Nimrod’s question. (The theoretical 2 years + 6 months window is relevant for job creation, however, and thus might be significant for the defining the redeployment window in Chapter 2(A) of the new policy memo.)
To answer Lk Inz, the first sentence of Policy Manual Chapter 5 parenthetically defines “the 2-year anniversary of the date conditional permanent residence status was granted” as “for example, adjustment of status application was approved or investor admitted into the United States on an immigrant visa.” Item 9 in the Form I-829 Instructions likewise says:
“Date of Admission as a Conditional Permanent Resident. Provide the date you first entered the United States as a conditional permanent resident or the date you adjusted status. Refer to the date listed as “Resident Since” on your Form I-551, Permanent Resident Card.”
Thanks for the detailed answer, Suzanne. So my understanding was correct, and Mr. Divine’s analysis is mistaken at that point. It only goes to show how complex and error-prone the patchwork of legislation and policies and regulations for EB-5 has become