Try as United States Citizenship and Immigration Services (USCIS) might to infuse the EB-5 Immigrant Investor Program with obstacles and hardships, the residency-by-investment program remains one of the fastest and simplest pathways to permanent U.S. immigration. Since 1990, the program has been issuing U.S. green cards to foreign nationals who make a qualifying EB-5 investment in a U.S. new commercial enterprise (NCE) and create at least 10 new jobs for citizens or permanent residents of the United States. Thanks to the EB-5 program, hundreds of thousands of U.S. workers have found new, gainful employment, and countless foreign investors have escaped political and economic turmoil in their home countries, forging a new, peaceful, stable life in the United States.

Of course, just because the EB-5 program is relatively quick and easy doesn’t mean it is quick or easy. The program ran smoothly until about 2014, when explosive demand, particularly from China, resulted in massive backlogs for Chinese EB-5 investors. Six years later, the backlogs remain, having seemingly become a permanent aspect of the EB-5 program. Long backlogs mean long processing times, with investors and their EB5 investments left in limbo for years. These delays don’t just postpone the invaluable opportunities that investors and their family members can benefit from in the United States—in some cases, they also conflict with EB-5 program requirements, such as the need to maintain EB-5 investment capital at risk until the end of the investor’s two-year conditional permanent residency period.

EB-5 Investment Capital Redeployment

Increasingly lengthy processing times in the EB-5 program led to the necessity to redeploy EB-5 investment capital to satisfy the EB-5 “at risk” requirement. If an investor who had not yet met all the EB-5 requirements withdrew their capital following a successful EB5 investment that created the required 10 jobs, they would disqualify themselves for a U.S. green card by failing to meet the requirement to keep their capital until their two-year conditional residency period is up. Thus, investors were forced to reinvest their capital with little guidance from USCIS, as such a situation had not been foreseen upon the creation of the program.

USCIS eventually published guidance on the redeployment of EB5 investment capital in June 2017, which EB-5 stakeholders welcomed with open arms. Much to the relief of investors, USCIS confirmed in its revision that the “at risk” requirement applies only until an investor files their I-829 petition, not until their I-829 petition is adjudicated. But the agency also provided an unclear provision that served as the source of confusion for countless EB-5 investors: the capital must be reinvested in commercial activity “consistent with the scope of the new commercial enterprise’s ongoing business.” It was unclear whether the redeployment needed to be through the same EB-5 regional center or in a targeted employment area (TEA) and whether the commercial activity needed to be similar to the activity of the initial JCE.

USCIS’s Clarification Constitutes Retroactive Policy Changes

In July 2020, three years after the publication of its unclear guidelines, USCIS finally released a clarification of EB-5 redeployment regulations—and to the dismay of the entire EB-5 world, it introduced policy changes that USCIS has stated will be applied retroactively. According to USCIS, retroactive application is justified because the clarification does not introduce any substantive changes and potential impacts on EB-5 investors will be minimal. If precedent is any indication, however, courts are likely to side with petitioners who made viable EB-5 investment redeployments based on the published guidelines at the time if they file suit against USCIS for wrongful denial of their EB-5 petition.

The July 2020 EB-5 redeployment policy clarification comprised six key updates, some of which could serve as substantial obstacles to applicants who have already redeployed their EB5 investment funds. The six key updates are as follows:

• Capital must be redeployed through the same NCE.
• If enough jobs have already been created, the redeployment does not need to be in a TEA.
• Capital must be redeployed within 12 months (if more than 12 months is needed, USCIS will consider evidence justifying the necessity of the delay).
• Capital can be deployed in any commercial activity consistent with the NCE’s goal to engage in the “ongoing conduct of lawful business.”
• The redeployment activity must not involve the purchase of financial instruments on the secondary market, as USCIS considers this a “financial” activity rather than a “commercial” activity.
• Capital must be redeployed in the approved jurisdiction of the regional center as of the date of redeployment.

It is clear that these policy updates will land some EB-5 petitions in the rejection pile through no fault of the investor or their immigration counsel. Undeserved denials are most likely with the requirement that redeployment not be in what USCIS considers “financial” activity, especially since the 2017 guidelines seemingly approved redeployment in “new issue municipal bonds” as long as they fell under the scope of the NCE’s ongoing business activities.

Another clear problem in the updated policies is the requirement for the EB5 investment capital to be redeployed in the EB-5 regional center’s approved jurisdiction. This seemingly random restriction could see honest EB-5 investors’ petitions needlessly rejected and NCEs’ business freedom unnecessarily stifled, and USCIS can cite no basis in law or regulation for such a requirement.

The clarification didn’t just pack sweeping policy updates—it also begs even more questions. The requirement to redeploy EB-5 capital through the same NCE, for example, automatically disqualifies EB-5 investors unfortunate enough to work with NCEs that have closed, whether due to fraud or bankruptcy, bringing their dream of a life in the United States to a screeching halt.

USCIS’s disingenuous policy updates may be challenged in court, however. Already in 2018, a court ruled USCIS’s policy updates disguised as a clarification were unlawful and could not be applied to EB-5 petitions retroactively. Thus, EB-5 investors unfairly rejected on the grounds of the redeployment policy updates may similarly follow suit and overturn the unreasonable aspects of the update.