Redeployment policy comment: retroactivity

In addition to my technical comment on geographic area in further deployment, I submitted the following general comment. My goal: to pin down sources of confusion in redeployment policy, and show that redeployment guidance involves more than mere clarification.

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From: Suzanne Lazicki <suzanne@lucidtext.com>
Sent: August 23, 2020 11:26 PM
To: ‘uscispolicymanual@uscis.dhs.gov’ <uscispolicymanual@uscis.dhs.gov>
Subject: 6 USCIS-PM G.2 “Clarifying Guidance for Deployment of Capital in Employment-Based Fifth Preference (EB-5) Category”

Comment Regarding: USCIS Policy Manual Volume 6: Immigrants, Part G, Investors, Chapter 2, Eligibility Requirements [6 USCIS-PM G.2], Part 2, as updated on July 24, 2020 by “Clarifying Guidance for Deployment of Capital in Employment-Based Fifth Preference (EB-5) Category”

Suggested Action: Do not make the “Clarifying Guidance” retroactive

Rationale: The July 24, 2020 Policy Manual Update is made retroactive based on the claim that “this is merely a clarification of continuing eligibility requirements. USCIS is not changing any substantive requirements.” However, it is not mere clarification if USCIS creates requirements. In the case of redeployment, USCIS takes requirements defined by existing regs/policy for Context A and applies them Context B. Lacking justification/reference to authority for why a particular Context A requirement also applies to Context B, that move looks like creating a new requirement for Context B. It can also look arbitrary/capricious when only an unexplained subset of A requirements are applied to B.

Examples of where EB-5 policy has confused contexts:

1. Assuming that the “at risk” requirement defined by regs/policy for the investor/NCE relationship (Context A) also applies to the NCE/JCE relationship (Context B). The June 14, 2017 Policy Manual update on redeployment made this unjustified assumption; the July 24, 2020 Policy Manual update corrects it by removing the “at risk requirement” language from the further deployment sections.
2. Assuming that the regional center geography requirement defined by the statute/regs and Matter of Izummi in terms of job creation still applies even after the job creation requirement has been met. The July 24, 2020 Policy Manual update introduces this illogical assumption, even as it grants that other job-creation-linked requirements (TEA geography, JCE deployment) naturally do not apply after the job creation requirement was met.
3. Assuming that requirements for initial I-526 evidence for initial deployment also apply after I-526 filing for further deployment. The July 24, 2020 Policy Manual includes this assumption as a basis for asserting a regional center geography requirement. If the assumption necessarily held, then further deployment would have a TEA requirement, since TEA evidence is likewise required initial I-526 evidence for the initial deployment. The policy distinguishes between Context A and B when it comes to TEA geography. So why not for regional center geography?
4. Assuming that the word “commercial” as defined by the regs/precedents for the “new commercial enterprise” automatically also applies to JCEs or other entities that ultimately deploy EB-5 investment. The July 24, 2020 Policy Manual update appears to do this, when describing guidelines for deployment and further deployment.  “The capital may be further deployed, as described above, into any commercial activity that is consistent with the purpose of the new commercial enterprise to engage in the “ongoing conduct of lawful business.” (footnoted to the regulations defining a new commercial enterprise). It doesn’t simply work, however, to apply all NCE requirements to JCEs and other deployments. For example, previous EB-5 decisions have found that the NCE must be for-profit but the deployment can be non-profit (p. 3-4), and that the NCE must qualify as “new” but the deployment need not qualify as new (MAY182017_01B7203). Apparently, not all “new commercial enterprise” requirements defined for the NCE automatically apply to the JCE or other deployment activity. So a “commercial” requirement for further deployment does not automatically follow from the existing policy framework, but needs to be spelled out and justified. The July 24, 2020 Policy Manual update lacks such clarity or attempt at justification.
5. Neglecting to clarify which of the initial bases of eligibility in the initial deployment also apply to the further deployment, and why. The July 24, 2020 Policy Manual update gives five bullet points with requirements for the initial deployment, and then does not go on to specify which of these five USCIS thinks also apply to further deployment, and why. For example: “related to the actual undertaking of business activity.” The Policy Manual names this requirement for initial deployment and does not reference it again in the further deployment section. But we can’t tell – does that mean that USCIS understands that the “business activity” requirement is linked to the job creation requirement and thus no longer applicable, or did USCIS just neglect to mention it with respect to further deployment? As another example: the July 24, 2020 Policy Manual update adds language to state that secondary-market financial instruments do not satisfy three requirements for initial deployment. Two of the three requirements are specific to job creation. One requirement could apply independent of job creation. So can we conclude that the secondary-market financial instruments restriction is specific to initial deployment, and does not apply to further deployment after job creation? The industry is very confused about this. Many stakeholders are concluding that USCIS intended a blanket prohibition on purchase of secondary-market financial instruments, even after job creation and even after conditional permanent residence. If USCIS did not intend such a prohibition, it should clarify. If USCIS did intend a blanket restriction, that too should be justified so as not to appear arbitrary.

Redeployment is tough, because it’s a context that the people who drafted the statute and regulations did not anticipate. A framework of rules exists for initial deployment, not for further deployment. It’s understandable that USCIS should reference existing rules for one context in creating guidance for a new context. But this must be done with clarity about contextual differences, and admission that new policy is being created in the new context. New policy can be created for redeployment, just not made effective without notice and retroactively.

UPDATE: IIUSA and AILA ended up collaborating to submit a very good 30-page comment on USCIS’s Redeployment Policy Manual Update. I recommend their analysis, and hope that USCIS will read it carefully.