[HOT] Some of the impediments to the EB-5 Program reaching its potential

Some of the obstacles to the EB-5 Regional Center Program reaching its potential are:

1) The biggest problem is that USCIS is not being practical by penalizing some RCs for having gone certain direction when at the time there was no guidance or law at the time. Where RCs acted in good faith and substantially complied with the EB-5 requirements, CSC should at least not penalize those EB-5 projects which occurred before USCIS issued guidance memos (which are merely "interpretations" and therefore not controlling in litigation anyway) on these issues. From fairness and good business perspectives, CSC should approve those past EB-5 projects and then instruct them to follow or comply with USCIS issued guidances in future.

2) Unwillingness or inability of USCIS EB-5 HQ to quickly ascertain and proactively tackle major issues in EB-5 law, rather than relying on AAO or federal lawsuits to decide these issues through adjudications of individual EB-5 cases and letting the problems fester. CSC is an adjudicating body for EB-5 cases (and I am sure CSC examiners are hard working but understaffed to handle EB-5 cases being filed at this time), but USCIS HQ must get its hands dirty in setting major guide posts on policy related issues. In the past, USCIS HQ used to be willing to get its hands dirty . . . Most guidance memos issued by USCIS appear to raise more questions than answer them; an example is the December 11, 2009 Neufeld guidance memo which appears to change existing laws and raises an issue on why changes occurring after I-526 require filing of a "new" I-526 petition and go through another 2 years of CPR period, to get I-829 approved, even where jobs have been created within the first 2 years? In short, USCIS needs to consider releasing guidances memos to the public and obtain comments before they are issued, so the comments and potential problems can be seriously considered: without such procedures, this is tantamount to passing new regulations without going through the required procedures.

3) Inadequate EB-5 statutes and regulations which allow USCIS to argue that there is nothing in the EB-5 statutes or regulations to allow this and that kind of arrangement, when one can also make an equally strong argument that there is nothing in the EB-5 statutes or regulations that prohibits such arrangement. When something is unclear, USCIS has to issue reasonable, fair and practical guidances in compliance with existing statutes, without penalizing good faith actions that already occurred without violating the EB-5 law which existed then. That regulations are unclear can be evidenced by the fact that USCIS is forced to issue guidance memos which are merely "interpretations" and not binding in litigation.

4) Unwillingness to offer quick pre-investment review of EB-5 projects so that regional centers and investors will be assured that CSC has found the investment structure of the EB-5 projects in compliance with EB-5 law as long as certain conditions are met; and

5) Various other reasons -- lack of more staff, money, etc. -- why USCIS is not able to act quickly enough to clarify the inadequate regulations. To be fair to USCIS, its hands are tied when it comes to receiving more money to hire more staff, etc. because there is no separate operating account for EB-5 division. In other words, very high filing fees paid for EB-5 petitions get used for the entire USCIS operation and do not specifically go towards running an EB-5 adjudication operation. Basically, having 7 or 8 full-time CSC staff is not sufficient for the work required when there are over 1,000 I-526s and more than 500 I-829s, on top of many regional center designation request applications, unless pre-approval system is used for regional center cases.

In conclusion, since EB-5 statutes and regulations are obviously inadequate to offer clear guidances to many issues arising under EB-5 law, either USCIS has to provide more well-reasoned guidances (quickly rather than offering one or two guidances per one year) or EB-5 regulations have to be amended. Otherwise, courts will decide these issues and EB-5 Program will again be bogged down. Does this seem a deja vu?

What should CSC do in the meantime? They have to make decisions on certain issues to reflect the practical policy needs and the real-world commercial practices. After all, EB-5 law has as much to do with the commercial business law than with the U.S. immigration law. Let the EB-5 Program prosper and create jobs, even though we admit that it's hard to demonstrate exactly how many jobs are really created; but that's not the fault of EB-5 Regional Center Program but because calculating the job creation via spending or other methodologies is not an exact science.

Solution? Half joking, half serious

We believe we hit upon a perfect solution. CSC should partner with one of the regional centers covering their geographic area in Laguna Niguel and do an EB-5 project to expand and increase staff to handle EB-5 case. It would be a perfect solution and perhaps a perfect EB-5 regional center project. Such an EB-5 project would lead to a very high direct and indirect job creation, as well as attract incredibly motivated number of EB-5 investors because potential EB-5 investors will know that CSC will be very motivated not to deny I-526 and I-829 cases submitted by the very same EB-5 investors who are participating in an EB-5 project that will directly benefit CSC. The only problem is that CSC may feel that there is a conflict of interest in participating in this kind of EB-5 project, both as a job-creating agency and as an adjudicator.

Another solution is in some way make the federal government a partner or a beneficiary of all EB-5 projects, so that USCIS is more likely to take a broader position in adjudications. After all, when the federal government benefits in the event of an approval rather than a denial, USCIS will be more likely to take a practical approach. Comparing the Canadian EB-5 Program to the American EB-5 Program, said author definitely likes the Canadian EB-5 Program more.