[HOT] The rationale behind the broad and narrow interpretations of EB-5 law


We often touched upon the "broad" or "narrow" interpretations, and the cause for this difference lies in two different attitudes: One attitude is willing to allow what the EB-5 statutes and regulations do not specifically prohibit, and the other attitude wants to prohibit everything unless the EB-5 statutes and regulations specifically allow it.

Let me illustrate by using an actual example, and how complex it can get.

In December 3, 2010 letter from Director Mayorkas to Senator Leahy, Director Mayorkas writes:

You expressed your view that, contrary to USCIS' existing interpretation, a proposed regional center business plan may encompass job creation outside the center's geographic boundaries. Upon review of the applicable EB-5 law and regulations, we agree that a regional center may rely on jobs indirectly created outside its geographic boundaries . . .

Based on those sources, USCIS interprets the law to require that a regional center focus its EB-5 capital investment activities on a single, contiguous area within the defined geographic jurisdiction requested by the regional center. Nevertheless, we agree that the law does not further mandate that all indirect job creation attributable to a regional center take place within that jurisdiction. I will therefore, ensure that USCIS policy reflects this understanding of the law.

In this instance Director Mayorkas is taking a position that nothing in the EB-5 law specifically mandates that all indirect job creation attributable to a regional center take place within that jurisdiction. He is correct in so far as his statement that nothing in the EB-5 statutes and regulations specifically mandates that all indirect jobs attributable to a regional center take place within that jurisdiction, even though I grant you that there is a strong presumption that the job-creation benefit should be limited to the regional center area.

Director Mayorkas is apparently willing to take the broad interpretation, whereas we heard over and over again USCIS representatives say during EB-5 Stakeholders Meetings that "we cannot allow so and so arrangement because nothing in the EB-5 statutes or regulations allow that."

Now, the weird thing is I don't think Director Mayorkas has really ensured that the USCIS policy reflects the content of his letter, because CSC would probably never allow all indirect/induced jobs created outside the regional center area to be counted 100%.

Our personal viewpoint is that you have to follow what the intent, purpose or presumption of the EB-5 or Pilot Program is trying to achieve, rather than go with the "broad" or "narrow" interpretation. In this vein, we actually "disagree" with Director Mayorkas' position taken in the letter. We believe the Pilot Program actually does not make sense once you start to allow all kinds of indirect/induced jobs created way outside the regional center area to be counted. We believe the intent of the Pilot Program was to spur job-creation benefits within the regional center geographic area, and I can think of many scenarios where a majority of job-creation benefits would result outside the regional center area.

However, returning to the main point of this article, the political attitude plays a big role in how the EB-5 policies are shaped. We tend to side with the position that EB-5 regulations should not be used to support the "narrow" interpretation that one cannot do something unless the EB-5 regulations specifically allow it. Now, if EB-5 statutes does not allow something specifically, I would agree that we cannot do it; but we should be allowed to do whatever EB-5 statutes allow and also whatever EB-5 regulations do not specifically prohibit. In our opinion, that's the only reasonable way to interpret the EB-5 statutes and regulations. Heck, since EB-5 regulations are promulgated by USCIS, if USCIS specifically wanted to prohibit something, they could and should have done so. Therefore, if the EB-5 regulations do not specifically prohibit something, regional centers and EB-5 petitioners should be allowed to do things that are allowed by EB-5 statutes.