Policy Manual Update — Redeployment

Today, the USCIS Policy Manual was updated with new policy regarding deployment and redeployment of EB-5 investor capital.

• Here is a link to the Policy Alert on Clarifying Guidance for Deployment of Capital in Employment-Based Fifth Preference (EB-5) Category.
• More to the point, here is a redline that I made to show what changed exactly between the previous version of the Policy Manual (dated November 6, 2019) and today’s version dated July 24, 2020. (Every time the EB-5 section of the Policy Manual changes, I save a version in Word in this folder, for community reference.)
• Here is a link to provide feedback to USCIS on the update (feedback due “before” August 24, 2020)

The Policy Alert makes this claim: These clarifications apply to all Form I-526 and I-829 petitions pending on or after [date of publication]. 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.

If you look at the redline, you’ll see few clarifications but a couple significant changes. For example:

• Previously, the PM said that the enterprise “may also further deploy repaid capital into certain new issue municipal bonds, such as for infrastructure spending.” The PM revision simply deletes this provision. When something used to be explicitly permitted, and then stops being explicitly permitted, is that a clarification or a change?
• Previously, the PM had no guidance about the location of the activities using redeployed capital. Existing case decisions and regulations define requirements for an initial deployment (within an NCE, made available for job creation, for the purpose of generating a return, risk of loss and chance for gain, involves undertaking of business activity, JCE location in a TEA, JCE location in a regional center), but say nothing about requirements for redeployment. Significantly, initial deployment requirements are based on the initial deployment purpose: to create jobs. So which of those requirements logically apply in the redeployment context, following job creation? Without explaining its logic, the revised PMcherry-picks a selection of the initial deployment requirements to apply to redeployment. Even though there’s no longer a “JCE” concept since the job-creation requirement was already met, the PM revision arbitrarily decides that of the initial deployment requirements, location within a regional center should still apply to redeployment. (Meanwhile, the PM explicitly excludes the initial deployment requirements of TEA location and investment in a JCE, and leaves ambiguous whether redeployment is subject to the initial deployment requirements of business activity and a risk of loss/chance for gain.) When a redeployment location requirement did not used to exist, and USCIS creates one, is that a clarification or a change? When USCIS says that redeployment must satisfy “applicable requirements” without specifying what those requirements are and why they are applicable, is that even a clarification? What’s the basis for deciding which of the existing defined initial deployment requirements apply to the previously-undefined frontier of redeployment after job creation?

When interpreting the policy, keep in mind that three stages of deployment are subject to different requirements:

1. The initial deployment that creates jobs

2. Redeployment after the job creation is met, but before conditional permanent residence

3. Redeployment after conditional permanent residence.

The PM update makes changes to #1 and #2, but not #3

For #1, the initial deployment, the PM now specifies that “the purchase of financial instruments traded on secondary markets generally does not satisfy these requirements.” Notice that in context, this restriction refers to the initial deployment in a job-creating business, and does NOT refer to redeployment.

For #2, redeployment before CPR, the PM just moves the constraints on redeployment, adding some new guidelines while deleting others, and blurring some lines while clarifying others. For some reason, it deletes redeployment as an exception to the pre-CPR material change policy. I hope the lawyers get busy to actually clarify and solidify matters, considering billions of dollars on the line and developers and investors tearing their hair over how to get this right.

For other perspectives and a call for input, see https://iiusa.org/blog/send-iiusa-your-questions-regarding-uscis-new-redeployment-policy-updates/