2012/04/27 -- Conversation with Director Mayorkas on Tenant Occupancy Methodology

We listend on this teleconference, and here's our take.

Director Mayorkas reiterated the "deference" policy of USCIS which should govern EB-5 adjudications. Many stakeholders present physically voiced their opinion that CSC examiners do not actually follow this "deference" policy, which is the problem. The deference policy basically says that USCIS will give a deference to how USCIS has adjudicated previously, unless there has been material change in facts or there is a fraud. There appears to be some confusion as to whether USCIS should give deference where there is a new project but the same repetitive investment structure has been followed.

Now, Director Mayorkas actually at one point voiced the real issue, which is: What if what USCIS has adjudicated in the past is in conflict with the EB-5 law? In other words, he views the issue as what if what USCIS has approved does not comply with the EB-5 law? Will USCIS still give a due deference to it? Director Mayorkas said "I am not sure what we will do in this case."

There were also hints that the "exemplar" pre-approval procedure might get discontinued because USCIS noticed instances where actual I-526 petitions submitted differ in material aspects from the information contained in the "exemplar" pre-approval requests. We believe this development was due to several large EB-5 projects which did not disclose all details.

What does Director Mayorkas mean by the "deference" that should be accorded to previous adjudications by USCIS? Let's examine what he said exactly:

Consistent with our deference policy, we are communicating to our adjudicators that they are to accord deference to prior adjudications. Our adjudicators should rely on a previous determination that the economic methodology is reasonable when the economic methodology is presented to us in later a proceeding based on materially similar facts.

For example, if we approved a Form I-924 Regional Center Application based on a specifically-identified project, including the specific locations and industries involved, we will not revisit the determination that the economic model and underlying business plan were reasonable when adjudicating related Form I-526 petitions, Form I-485 applications, or Form I-829 petitions. If we approved an I-526 petition for an immigrant investor based on a specifically-identified project, not associated with a Regional Center, we will not revisit the determination that the business plan was reasonable when adjudicating the investor’s related I-485 or I-829 petition. If, however, the facts underlying the application of the economic methodology have materially changed, then we will conduct a fresh review of the new facts to determine whether the petitioner or applicant has complied with the requirements of the EB-5 program, including the job creation requirement.

Let me explain as simply as possible what aspects of the tenant-occupancy RFE I agree and disagree with.

I agree with USCIS' requiring that the tenants' employees not simply be relocated employees, and our understanding is that USCIS always required this anyway, so this is not really a change in the policy. Where I disagree with USCIS is in regards to the "excess demand" or "jobs displacement" requirement, which are two sides of the same coin. It is extremely unreasonable to require a petitioner to show that there is an excess demand or the subject project is not displacing jobs from competitors in the subject region, precisely because USCIS is requiring the petitioner to evidence the broad economic market conditions in the region which often is impossible to gather data and ascertain AND moreover, which economic condition changes quickly. Simply put, the market forces do not operate this way. A business person in a real business world pursues a job-creating project because they think they can make profit, not because there is an "excess demand". USCIS is basically telling them to abandon their projects when there is no "excess demand". Also, often it's too difficult to demonstrate "excess demand" because there is not enough data and because economic condition changes too quickly.

For example, I can make a very strong argument that Apple iPhone takes jobs away from other competitors, i.e., causes jobs displacement, because without iPhones, consumers would buy other smartphones. This "excess demand" requirement is actually counter-productive to job-creation because it prevents new projects. This "excess demand" requirement is demanding that a business person pursue a project just to comply with this "excess demand" requirement, when frankly, the business people don't give a damn about "excess demand" when they decide to pursue projects. Very simply put, this is so out of touch with the way the real business world works that I am truly surprised at this too academic interpretation -- which by the way may discourage job-creation -- suddenly taken up by USCIS.