On Aug. 24, 2018, U.S. Citizenship and Immigration Services (USCIS) made a significant update to its Policy Manual, Part G: Immigrant Investors. In its Policy Alert, USCIS outlined the changes to the Policy Manual. Notable among the updates was the following:
Policy Highlight 5
Explains that USCIS considers a change in regional center affiliation a material change in cases where the change takes place after Form I-526 has been filed.
This is the first time USCIS has stated in writing that such a change in regional center sponsorship is considered a “material change.” The impact on investors and projects could be significant: a material change post I-526 Petition filing but before the investor is granted conditional permanent residence requires the filing of a new I-526 Petition. For the following reasons, investors must carefully consider the potential consequences of this change:
- If an investor is subject to a visa backlog, the priority date (the date the I-526 Petition is received at USCIS) is critical to determining the length of time an investor will wait to achieve permanent residence. For investors born in Mainland China and Vietnam, which are currently subject to visa backlogs, it can significantly increase the wait time if a new I-526 Petition is required.
- If an investor must refile his or her I-526 Petition, and he or she has a child that has reached the age of 21, that child can no longer immigrate with the family.
- Even if the investor is not subject to a visa backlog, it could significantly increase the wait time to come to the U.S. as a conditional permanent resident.
- If the regional center sponsoring the project has its designation terminated by USCIS, the investors may be innocent bystanders who may nonetheless be penalized by USCIS for failures on the part of the regional center.
The regulations at 8 CFR 204.5(j) require an immigrant investor to establish the following facts for I-526 petition approval:
- A new commercial enterprise has been established by the petitioner in the United States;
- Petitioner has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk;
- Petitioner has invested, or is actively in the process of investing, capital obtained through lawful means;
- The new commercial enterprise will create not fewer than ten (10) full-time positions for qualifying employees. To show that the new commercial enterprise located within a regional center approved for participation in the Immigrant Investor Pilot Program meets the statutory employment creation requirement, the petition must be accompanied by evidence that the investment will create full-time positions for not fewer than 10 persons either directly or indirectly through revenues generated from increased exports resulting from the Pilot Program. Such evidence may be demonstrated by reasonable methodologies including those set forth in paragraph (m)(3) of [Section 204.6]; and
- The petitioner will be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation.
Sponsorship of one regional center or another does not affect the approvability of a petition under 8 CFR 204.5(j)(1), (3), and (5). Generally, the location of the new commercial enterprise (NCE) is not material to the adjudication of the I-526 petition in the case of regional center sponsorship, as the job creating entity (the JCE) and EB-5 project itself must be located within the boundaries of a regional center. The only exception to this is if the NCE and the JCE are the same entity, in which case the NCE must be located within the boundaries of an approved regional center. Assuming that the same NCE is legally in existence in the United States, the petitioner has invested capital obtained through lawful means, and the petitioner is engaged in the management of the NCE, then he or she meets the requirements of the regulations at 8 CFR 204.5(j)(1), (3), and (5), irrespective of which regional center is sponsoring the NCE.
The investor also must show that he or she has placed the required amount of capital at risk for the purpose of generating a return. Matter of Izummi requires that if the NCE is a holding company, the full requisite amount of capital must be made available to the business(es) (i.e., JCE) most closely responsible for creating the employment on which the petition is based to meet the “at risk” capital investment requirement. If the JCE is located within the boundary of a regional center approved by USCIS, then the immigrant investor meets the requirement of 8 CFR 204.5(j)(2) pursuant to Matter of Izummi. If a new regional center, previously designated by USCIS and in good standing, becomes the new sponsor of an NCE, and the project is located within its approved geographic area, such a change cannot be considered to naturally affect the decision, and thus, cannot be found material to the adjudication.
Finally, under 8 CFR 204.5(j)(4), the investor also must show that the investment will create full-time positions for not fewer than 10 persons either directly or indirectly through revenues generated from increased exports resulting from the Pilot Program. If a new regional center sponsors an NCE and that new regional center was designated previously by USCIS to cover the geographic area of the JCE and the project, then petitioner meets the standard outlined in Matter of Izummi, which requires the JCE to be located within the boundaries of a regional center.
Importantly, nothing in the regulations or the Policy Manual require all job creation to exist within the boundaries of the regional center, and this is established USCIS policy. The statute states that visas shall be made available to qualified immigrants seeking to enter the U.S. for the purpose of engaging in a new commercial enterprise “which will benefit the United States economy and create full-time employment for not fewer than 10 U.S. citizens or aliens lawfully admitted permanent residents…” 8 USC §1153(b)(5)(A)(ii). Moreover, 8 CFR §204.6(j)(4)(iii) states that an NCE located within a regional center can show that it meets the statutory employment creation requirement by including evidence that the “investment will create full-time positions for not fewer than 10 persons either directly or indirectly through revenues generated from increased exports resulting from the pilot program.” Nothing in this regulation limits the job creation to the bounds of the regional center, so the boundaries of the regional center are not necessarily material to the adjudication of the petition under the instant regulation. This is repeated in the Policy Manual, which states that “[i]ndirect jobs can qualify and be counted as jobs attributable to a new commercial enterprise associated with a regional center, based on reasonable methodologies, even if the jobs are located outside of the geographic boundaries of a regional center.”
Moreover, nothing in the regulations or the Policy Manual require that the modeled geographic area be exactly the same as the designated area of the sponsoring regional center; instead, USCIS reviews the economic methodology on a standard outlined in the Policy Manual. Assuming the location of the project has not changed, and the project is located within the previously-approved boundaries of the new regional center, then USCIS must simply determine whether the economic model uses an area with a reasonable demographic structure, the area’s contribution to supply chains of the project, and the connectivity with respect to socioeconomic variables in the area. Slight changes in regional center boundaries do not necessarily affect the adjudication of the petition. To the contrary, USCIS must review the geographic area of the impact study separately from the geographic boundaries of the regional center pursuant to its own guidance using demographics, supply chains, and socioeconomic variables. Therefore, a change in regional center where the new regional center’s geographic area covers the area of the JCE and project cannot be considered to naturally affect the decision, and thus, cannot be found material to the adjudication.
Should a new regional center sponsor an NCE, and the JCE and the project are located within the boundaries of the new regional center, then the eligibility criteria are not impacted for I-526 Petition approval.
A case-by-case analysis of the facts to determine whether a material change has occurred is more pragmatic and fair to EB-5 petitioners, NCEs, JCEs, and regional centers alike.
USCIS updated the Policy Manual previously to state that termination of a regional center following the issuance of conditional permanent residence is not fatal to an I-829 Petition, and that investors can continue to rely on indirect job creation. Therefore, investors who have entered the United States on the two-year green card, and thereafter the regional center is terminated by USCIS, may still be able to rely on indirect job creation for I-829 Petition approval.