USCIS Rescinds Policy Allowing for Use of Tenant-Occupancy Methodology to Establish Job Creation in EB5 Cases

 

Introduction

On May 15, 2018, the United States Citizenship and Immigration Services (USCIS) released Policy Alert (PA)-2018-03, titled “Rescission of Guidance Regarding Tenant-Occupancy Methodology” [PDF version].

In the PM, the USCIS takes position that tenant occupancy is not a reasonable methodology to support economically or statistically valid forecasting tools in the context of establishing that an EB5 petitioner under the EB5 regional center program is complying with the job creation requirement under section 203(b)(5) of the Immigration and Nationality Act (INA). Accordingly, the USCIS announced that it is rescinding its previous policy that it set forth in a 2012 Guidance Memorandum (GM)-602-0001 on December 20, 2012 [PDF version]. The USCIS's new PA updates the USCIS Policy Manual (PM) at 6 USCIS-PM 6.2 [PDF version].

In this post, we will briefly examine the new guidance.

Tenant Occupancy No Longer Valid Methodology in EB5 Cases

A foreign national seeking an immigrant visa under the EB5 regional center program is required to comply with the employment creation requirement found in section 203(b)(5) of the INA. The PA explains that a petitioner may establish compliance by establishing “reasonable methodologies for determining the number of jobs created by the program, including such jobs which are estimated to have been created indirectly…”

On December 20, 2012, the USCIS released its GM, which set forth guidance for adjudicating cases where EB5 Regional Center applicants rely on the tenant-occupancy methodology.

In November of 2016, the USCIS published consolidated guidance on the issue in the PM. The new guidance in the PM, updated in 2018, explains that the prior guidance permitted investors to “(1) map a specific amount of direct, imputed, or subsidized investment to new jobs, or (2) use a facilitation-based approach to demonstrate the project would remove a significant market-based complaint.”

In its new guidance, the PM explains why the USCIS has decided to rescind the prior guidance on the tenant-occupancy methodology. Regarding the first point of the previous guidance, the USCIS explains that “the construction of standard office or retail space alone does not lead to a sufficient connection for this type of mapping such that tenant jobs can be credited to the new commercial enterprise.” In short, the USCIS concluded that there were too many factors at play to allow EB5 applicants under the regional center program to rely on this method to establish that individual jobs are related to a specific commercial office space. Regarding the second method, the USCIS stated that the former guidance was “ill-advised, because a direct financial connection between the EB5 capital investment and the job creation is necessary to determine a sufficient nexus between the two.” It added that the “showing of constraint on supply or excess of demand by itself does not establish a causal link between specific space and a net new labor demand such that it would overcome the lack of a sufficient nextus.”

In short, the USCIS rescinded its allowance of the tenant occupancy methodology because it determined that it was insufficient for establishing a nexus between the EB5 applicant's investment and the jobs created. The PM adds that “[t]here is no reasonable test to confirm that jobs claimed through either tenant-occupancy methodology are new rather than relocated jobs that should qualify as direct inputs in the first place.”

For the foregoing reasons, the USCIS determined that “[tenant occupancy methods] are no longer considered reasonable methodologies or valid forecasting tools under the regulations.” However, the USCIS explains in the PA that it will generally defer to determinations made regarding existing “Form I-526 and Form I-829 petitions directly related to previously approved projects…” The only exceptions to this rule will be if there exists “material change, fraud or misrepresentation, or legal deficiency of the prior determination.” However, for prospective petitions, the rescission of the prior guidance will control.

Conclusion

The new USCIS guidance takes away tenant occupancy as a tool for establishing compliance with the employment creation requirement for EB5 petitioners. EB5 petitions are highly evidence-intensive and those seeking EB5 visas should always work closely with an experienced immigration attorney in the area of investment immigration. EB5 applicants with questions about how the new guidance may affect their pending cases, if at all, should consult with an attorney for case-specific guidance.