[HOT] An overview of outstanding issues in EB-5 area

If you think EB-5 law is a well-settled area of law, think again. In this article, we will list some of the most pressing issues that will ultimately be decided by one of the following avenues: statutory amendments, regulatory amendments, court decisions, AAO or USCIS guidance memos. The EB-5 statutory and regulatory languages are very inconsistent and unclear on many material issues; and therefore, EB-5 law really depends on, and is shaped by, USCIS-issued guidances or sometimes unpublished "policies".

1. Lack of resources leading to slow adjudications. In our opinion, it is very, very difficult for bona-fide EB-5 projects to take place and progress in a a real-world where I-526 petitions take around 6 months to be adjudicated. What we are saying is this: In a real-world environment in which real projects must function, taking six (6) months to adjudicate I-526 petitions is a deal-breaker. Although filing fees for I-526 and I-829s are extremely high compared to other USCIS applications, these filing fees do not go towards helping USCIS hire and train more staff to adjudicate EB-5 cases. This means USCIS adjudications of the EB-5 cases will always lag behind what the commercial world demands of bona-fide EB-5 projects. When you have bona-fide projects waiting for 6 months to use funds of foreign, EB-5 clients held at escrow accounts, that definitely creates problems for the EB-5 projects. It is important to note that this is not USCIS' fault because their hands are tied by the laws passed by the Congress.

2. I-829-related job-creation issues. There are many I-829 related issues concerning job-creations which have not yet been decided. I personally believe that there are job-creation related issues that have not even been dealt with floating around that can either kill the entire RC Program. This is a result of the unwillingness or very slow reaction by USCIS in recognizing the need to clarify and enforce these positions to the examiners who actually adjudicate the cases in a consistent manner. Because of these unsettled issues concerning job-creation involving bona-fide EB-5 projects, it may often be difficult to prove job-creation, because tax records do not really show accurate information. In many instances, one cannot get the job number for BEFORE Investment and then subtract this number from the After Investment figure to arrive at the number of jobs created. This is just too simplistic approach which does not work in real-world situations.

Let us give you a hypo. Let's say one EB-5 project involves using EB-5 investors' funds to establish a new division called "EB-5 Division" within USCIS operation and build a facility, hire and train 50 full-time examiners (I can hear all Regional Centers saying "Amen" to this) during next two years, to work on EB-5 related applications. However, due to stagnant economy and fiscal problems, USCIS lays off 60 full-time employees from its I-130 Division (totally unrelated to EB-5 Division). By subtracting the Before Investment job numbers of USCIS from the After Investment job numbers of USCIS would yield Negative 10 job numbers, but this number is grossly inaccurate.

How about the reverse situation where only 4 jobs are created in the EB-5 Division (the EB-5 Project) but 100 additional employees are hired by USCIS for its I-130 Division (falling outside the scope of the EB-5 Project). If the above simplistic formula was applied, it would look like 104 jobs were created due to EB-5 investors' investments, even though only 4 jobs were actually created in the EB-5 Division. Applying the simple formula (subtracting Before Investment Job Numbers from After Investment Job Numbers) espoused by and contained in the I-829 form would often lead to misleading and wrongful decisions. For a large RC EB-5 project, the USCIS examiner should come and do a site inspection and then quickly approve all the I-829 cases for that specific project. But the problem is USCIS probably does not have resources to undertake any on-site inspection.

3. Conflicting laws. Regulations state the applicant may submit to USCIS either I-9, tax documents or other documents, meaning the applicant may submit one of these documents, but USCIS often asks for all three types of documents; but in many cases, the individual privacy laws prevent the companies from submitting these documents without obtaining consents. It could be a nightmare situation. USCIS should accept any reasonable documents and evidences that shows the true number of new jobs created due to EB-5 investors' investments.

4. Consistency problems. Even for one RC EB-5 project, one examiner may approve I-829 case, while another examiner may deny basically the same I-829 case, because the case really comes down to the exercise of discretion of the individual examiner in asking or not asking for additional documents. The best thing to do would be for USCIS examiner to conduct an on-site inspection/tour to see the jobs created, but USCIS probably does not have enough resources to do so. This is just another reason why all I-829 cases for one RC EB-5 Program should be reviewed and decided by one USCIS Examiner who can come to the site and do an on-site inspection and see for herself/himself and then quickly approve all pending I-829 cases for that specific RC EB-5 Project.