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[HOT] What is right and wrong with the December 11, 2009 Neufeld guidance memo?

On December 11, 2009, USCIS issued a Neufeld guidance memo (the "Memo") some 23 pages long. This article will discuss things that were right/good and wrong/bad about the memo. It is fair to ask from whose perspective? Therefore, we are going to list things that we think were right/good and wrong/bad from the perspective of EB-5 investors.

Things that were right/good about the Memo

1. The Memo says that eligibility issues, case-specific and general EB-5 related communications with external stakeholders can be emailed to the designated email address and that they will try to respond.

2. It was good to see Regional Center Proposal EB-5 Eligibility Requirements spelled out on page 9 ~ 12. Especially helpful would be USCIS' willingness to consider the regional center's filing of an amendment in order to provide an exemplar Form I-526 with the supporting documentation required by 8 CFR 204.6 in order for USCIS to determine if the documentation is EB-5 compliant, and thus facilitate adjudication of an actual but identical Form I-526 petition, if the evidence of record otherwise establishes EB-5 eligibility. See page 12.

3. It was good to see USCIS state on page 14 that "the number of indirect jobs quantified through the I/O model analysis will be considered to be full-time and qualifying for EB-5 purposes."

4. It was good to see USCIS' willingness to actually go against the holding in Spencer Enterprises v. U.S. federal case and state on page 14 that "[a]lthough employment in some industries such as construction or tourism can be intermittent, temporary, seasonal or transient, officers should not exclude jobs simply because they fall into such industries. Rather, the focus of the adjudication should be on whether the direct positions, as described in the petition, are continuous full-time employment rather than intermittent, temporary, seasonal or transient."

5. It was good that USCIS acknowledged that positions filled by independent contractors can be credited in regional center based (not direct cases though) EB-5 project. See page 15.

Things that were wrong/bad about the Memo

1. It was wrong for USCIS to issue the Memo without providing an opportunity to the public to submit comments and point out potential problems. And believe us, the Memo raises many other issues.

2. Read for an explanation of why the outlined procedure to reacquire CPR status by filing another I-485 has no legal support under the U.S. immigration law.

3. At the end of the Memo, it states:

This memorandum is intended solely for the instruction and guidance of USCIS personnel in performing their duties relative to adjudications. It is not intended to, does not, and may not be relied upon to create and right or benefit, substantive or procedural, enforceable at law or by any individual or other party in removal proceedings, in litigation with the United States, or in any other form or manner.

Now, we have a hard time understanding what this means. As far as we can see, this Memo tells USCIS personnel what to do when deciding EB-5 cases, but it is not the law and carries no weight in any dispute or lawsuit against USCIS, which seems to mean this Memo is merely how USCIS interprets the EB-5 law, and is not intended to be EB-5 law. One question then: Why was this memo issued? Instead, why not issue EB-5 regulations that comply with the current EB-5 statutes? If USCIS wants to make changes, let's do it right.

3. The Memo uses some terms which are not clearly defined. As an example, the Memo says on page 5:

The capital investment project identified in the business plan in the approved Form I-526 petition must serve as the basis for determining at the Form I-829 petition stage whether the requisite capital investment has been sustained throughout the alien's two year period of conditional residency and that at least ten jobs have been or will be created within a reasonable period of time as a result of the alien's capital investment.

And then goes on to cite 8 CFR 216.6(c).

The term "capital investment project" referenced above is nowhere defined in the 8 CFR 216.6(c). What does this mean? Unclear terms lead to confusion and ultimately, a wrong interpretation of the existing law, and therefore, a change in the existing law. As far as we know, there is a new commercial enterprise entity and then a job-creating entity per Izummi AAO case. What is exactly meant when USCIS uses "capital investment project"?

4. Also on page 5, the Memo states: "The business plan in the Form I-526 petition may not be materially changed after the petition has been filed" and cites Matter of Izummi as supporting precedent AAO case. However, Izummi dealt with a situation where I-526 was pending and then some material changes were made to I-526 before I-526 was adjudicated. Izummi does not at all say anything about whether changes -- and if so, what kinds of changes -- can be made after I-526 has been approved. Besides, where does it say that changes to the EB-5 project cannot occur after I-526 has been approved?

5. The Memo does not address the fact that under the current I-829 regulations that certain changes to I-526 petition, after I-526 petition approval, are permissible. Moreover, the Memo does not recognize the fact that "material" changes in context of where I-526 petition has already been approved are only those changes which are fatal to the approval of I-829 conditions removal petition. A business plan is just that: you try to follow it but in the real world, business plan changes all the time. Under the Memo, Petitioner in the below scenario would be denied I-829 even though jobs were timely created.

I-526 petition was submitted in a RC based agricultural EB-5 project where almond plants would be planted. I/O methodology was used. I-526 petition was approved and Petitioner obtained CPR status. Shortly thereafter, the world demand for almonds decreased due to bad economy, and as a result, it was decided that olive oil trees or plants would do better, so the product was switched from almond to olive oil. Olive oil trees were planted, and jobs were created; and I-829 was filed. CSC says there was a "change" in the I-526 business plan, so I-829 had to be denied. Is this good for the EB-5 Program or fair to Petitioner? You decide.

We can give you many examples. Basically, what we are saying is that if certain changes take place BEFORE I-526 is approved, then Petitioner must withdraw and file a new I-526 petition; but where changes occurred AFTER I-526 has been approved, I-829 requirements do allow for and anticipate occurrences of certain changes that are not fatal to meeting I-829 requirements. In short, many scenarios can arise where there has been a change in the I-526 business plan but all requirements of I-829 have been met.

6. Pages 19 through 21 of the Memo assumes that once a new I-526 petition is filed and CPR status is "given up" via submission of I-407 that the I-485 can be filed to re-acquire another two years of CPR status, but under INA Section 245(d) it states:

(d) The Attorney General may not adjust, under subsection (a), the status of an alien lawfully admitted to the United States for permanent residence on a conditional basis under section 216 . . .

USCIS used to interpret the above statute to mean that any alien who previously acquired CPR status, regardless of whether the alien gave up the CPR status or the alien's CPR status was terminated, could not adjust under 245, so what is the legal basis for this sudden change to allow AOS via INA 245?

7. What if Petitioner files new I-526 and obtains two more years of CPR status AND THEN there is another change? Does this mean Petitioner will obtain two more years and so on forever? That doesn't make sense either.