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[HOT] [Q] Do the new commercial enterprise and the capital investment project both have to be in TEA area?


For a Regional Center case involving a TEA investment, the question asks where the new commercial enterprise entity and the job-creating entity (which USCIS confusingly is referring to as the "capital investment project") must be located.

* key words: location of new commercial enterprise within TEA or principal place of business in TEA?

Legally, we would say the location of the new commercial enterprise does not matter (per Matter of Izumii), but USCIS appears to be requiring that the new commercial enterprise does its business principally in the TEA area. Here is the background on how this new issue arose.

During June 16th 2010 stakeholders meeting, USCIS stated that while the capital investment project (better to call this entity the job-creating entity because no EB-5 case or law ever referenced anything called "capital investment project", whereas the term "job-creating entity" has been referenced in the precedent Matter of Izumii case) which actually creates the required jobs have to be in the TEA area, the new commercial enterprise entity receiving aliens' capital contributions must be doing business principally in the TEA area. USCIS has declined to define what kinds of evidence must be submitted to show that the new commercial enterprise is principally in the TEA area. Note this does not mean that the new commercial enterprise entity has to be physically located in the TEA area; there is a difference between the actual physical location vs. the location where it is doing business principally.

This position will create another troublesome issue as to what constitutes sufficient evidence of "doing business principally" in TEA area. Also, we are not sure Matter of Izummi holds this. Our understanding is that Izummi does not require a new commercial enterprise entity to be located in the TEA area. Let's take a look at what Izumii case actually says because I find that often times what USCIS says the case holds is misleading:

(1) Regardless of its location, a new commercial enterprise that is engaged directly or indirectly in lending money to job-creating businesses may only lend money to businesses located within targeted areas in order for a petitioner to be eligible for the reduced minimum capital requirement.

(2) Under the Immigrant Investor Pilot Program, if a new commercial enterprise is engaged directly or indirectly in lending money to job-creating businesses, such job-creating businesses must all be located within the geographic limits of the regional center. The location of the new commercial enterprise is not controlling.

Now, does the above content seem like Izumii case cares about where the new commercial enterprise is located? We don't think so, but that's not what USCIS says. USCIS is probably relying upon 8 CFR 204.6(j)(6) which says:

(6) If applicable, to show that the new commercial enterprise has created or will create employment in a targeted employment area, the petition must be accompanied by:

(i) In the case of a rural area, evidence that the new commercial enterprise is principally doing business within a civil jurisdiction not located within any standard metropolitan statistical area as designated by the Office of Management and Budget, or within any city or town having a population of 20,000 or more as based on the most recent decennial census of the United States; or

(ii) In the case of a high unemployment area:

(A) Evidence that the metropolitan statistical area, the specific county within a metropolitan statistical area, or the county in which a city or town with a population of 20,000 or more is located, in which the new commercial enterprise is principally doing business has experienced an average unemployment rate of 150 percent of the national average rate; or

From the above, USCIS could logically argue that although it does not matter where the new commercial enterprise is located (Izummi), the new commercial enterprise entity must be principally doing business in the TEA area.

* Note that USCIS has stated nothing it says during any meeting or in guidance memos creates any legal right in dispute or litigation with USCIS. However, you can bet CSC examiners will rely upon such "opinions" expressed by USCIS. Basically, USCIS' opinions, even if unreasonable and not supported by the EB-5 law, will carry the force of law in so far as how CSC examiners must adjudicate EB-5 cases. :)