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EB-5 Redeployment Policy Change Analysis

Sam (00:14):
Hi everyone. This is Sam Silverman, managing partner EB5AN, joined by my partner, Mike Schoenfeld and Ron Klasko and Dan Lundy of Klasko Law. Thank you for taking some time to join us today. We’re going to cover the recent EB-5 redeployment policy change announcement that was made by USCIS in the last week. And we’re going to address some of the key questions that are now coming up for both project sponsors and EB-5 regional centers as we go through the presentation. Please write any questions that you have, use the chat box that’s on your screen. And at the end of the presentation, we’ll leave some time to go through those and try and address as many of them as we can.

Sam (01:10):
So, first is a quick overview of table of contents and what we’re going to cover today. First, a little bit about Klasko and EB5AN. A high-level summary of the redeployment process—what the changes that were announced by USCIS, are some of the key questions and impacts facing regional centers and project sponsors. Then, how to select a regional center to rent or expand a regional center that’s already existing going forward, taking into account the rule changes that were announced. And then, we’ll wrap up with a short question-and-answer session at the end.

Sam (01:47):
So, first, as I mentioned earlier, I’m Sam Silverman, managing partner at EB5AN, joined by my partner, Mike Schoenfeld. We’re a national EB-5 consulting firm. We work with a lot of regional centers and project sponsors to help provide access to regional centers across our network. I’ll let my partner, Mike Schoenfeld, jump in and introduce himself.

Hi everyone. Hope you’re all doing well. As Sam mentioned, we’re excited to be on the webinar now, speaking about the redeployment changes from USCIS. We’re one of the largest regional center operators in the country, with 14 approved regional centers covering over 20 states. We’ve sponsored over a hundred projects and are known as one of the best-in-class operators in the space. And with these surprising changes from USCIS, we wanted to invite Dan and Ron on the phone to help explain what this means for projects and investors. And we look forward to any questions you have—please put them in the chat box, and we’ll address them at the end.

Great. Thank you, Mike. We’ll turn it over to Ron and Dan and go from there.

Dan (03:03):
Sure. Are we talking about background, or are we just going into the stuff?

Just background for now.

Okay. Right. Ron Klasko probably needs no introduction. He is the managing partner of our firm, Klasko Immigration Law Partners. He’s been around in EB-5 and immigration for a long time and is generally regarded as an expert in the field. Myself, I joined the firm about eight years ago, and I’ve been practicing primarily EB-5 for that time. I’ve represented quite a large number of regional centers and projects and investors and, particularly, troubled projects. So, our firm is pretty much at the cutting edge of EB-5 and immigration in general. Next slide.

Dan (03:52):
Okay. So, redeployment came around because USCIS has this requirement that the investment must be maintained at risk throughout the conditional residence period. Around 2012, we realized that, with USCIS processing delays and visa quotas and backlogs, the traditional five-year period that, you know, of the EB-5 investment, either a five-year loan or five-year investment, that everybody had contemplated, was probably going to be too short, and we were going to need to do something with the money to keep the money invested at risk. So, as a result, redeployment came around. The idea was, you know, if you have put the money into the original project, followed the business plan, all the jobs have been created and the money comes back to the new commercial enterprise, then you could redeploy the money into a new investment in order to keep it at risk. Unfortunately, until just a few days ago, USCIS had given us very little guidance on what qualified as a redeployment. They didn’t tell us whether or not it has to be in the same regional center, a TEA… they didn’t give us almost any guidance at all as to what kind of enterprises or activities would qualify as a redeployment. Next slide. Okay.

Dan (05:19):
So, as I was saying, the original timing, we figured, you know, you file an I-526 petition, and, you know, depending on how lucky you are, USCIS is taking somewhere around two to three years to process. After USCIS processes an I-526, you have to file either a DS-260 application for immigrant visa or adjustment of status, which takes, you know, on average, another year. Of course, you can’t apply for that until your priority date is current. So, after you’ve now waited another year or so to get your adjustment of status or your visa application approved, and you’ve entered the country with a conditional green card, or you become a conditional resident, that starts the two-year conditional residence period. Now, between 21 and 24 months after that, you have to file your I-829, but after 24 months, at the end of the two-year conditional residence period, you’re actually allowed to get your money back, even if your I-829 is not approved.

You however must maintain your investment at risk throughout the entire two-year period. So, that means that we have to redeploy, but one of the problems that we had, and USCIS hadn’t answered, is, well, you know, it takes time to redeploy. If you’re a regional center or a manager of new commercial enterprise, you have to find a new investment. You have to do due diligence. You have a duty to the investors not to just throw it into anything, right? You have to find a project that’s not going to lose, hopefully, not going to lose the money that’s invested. So, we didn’t know, you know… USCIS had said that you had to redeploy within a reasonable time, but they didn’t define what a reasonable timeline. So, the new policy clarified a couple of things.

Dan (07:11):
It said, one, a reasonable time’s generally 12 months. You know, if it’s longer, you know, through extraordinary circumstances, that they may consider it, but, you know, 12 months is a de facto reasonable period. Number two, they’ve clarified what you can redeploy into. First, they said that you have to redeploy into the regional center, which is, you know, into the geographic territory of the regional center, which is totally new to us. They previously had not said that and, in fact, had indicated that and then backtracked on it during some stakeholder calls. So, this is a totally new requirement that caught us by surprise. They did say… one of the nice things that they said—there are a few good parts of this policy. One of them is that the investment, if it was originally in a TEA, it doesn’t have to be redeployed into a TEA because, presumably, your investment in TEA created the jobs and improved unemployment in the TEA—now you don’t have to invest in the TEA.

Dan (08:14):
What they did say, though, in terms of what you can invest the money into—basically, any activity that is in commerce, which they define as the exchange of goods and services. They specifically exclude purely financial activities, such as the purchase of securities on the secondary market. You can’t put the money in investment accounts, put it in a brokerage firm and trade stock with it, even though, by all means, that’s at risk, right? And there’s no question that that’s at risk, but they’re saying that that is not sufficiently in commerce. This is not to say that you cannot redeploy into a bond offering where you are purchasing the initial offering of the bonds and the bonds are used for construction. So, they had previously allowed for municipal bonds that were intended to finance construction.

Dan (09:11):
It seems to us that that is still allowable, provided that you are actually buying the bonds on the principle offering and not trading them on the secondary market. Another thing that they said, which, you know, we had pretty much assumed, but they clarified, is that you have to deploy to the same new commercial enterprise. You can’t redeploy the money into a different new commercial enterprise. This has some implications that we’ll talk about later, you know, for troubled investors, but in general, you know, for most projects, that’s not really an issue. Ron, do you have any other perils of wisdom you want to throw at us?

Ron (09:50):
What I would say is that, by and large, this policy is very consistent with what we expected would come down. The industry has been pushing real hard for guidance because there’ve been many open questions, I think, in discussions with our regional center clients. There really are two major issues of concern coming out of this. Number one is the requirement that the regional center, that the redeployment, be in the geographical boundaries of the regional center. And there are many regional centers who have already redeployed capital and redeployed outside of the boundaries of the regional center because that was completely consistent with any previous guidance that was given. Well, that’s bad, but what makes it even worse is that USCIS has stated unequivocally that they plan on requiring a redeployment in the regional center boundaries retroactively, which means that redeployment that’s already occurred outside of the regional center could result in either I-526 denials or I-829 denials, which will almost certainly be challenged in court.

Ron (11:21):
Now, again, from our discussions with our regional center clients, we’re quite confident this is likely to happen. And especially because of the retroactivity issue, I think the chances are good of one of two things happening. Either the immigration service will back down from the requirement, from applying it retroactively, or if not, that the federal courts will shoot it down, at least with respect to the retroactivity provision. There’s a very good argument that once the jobs have been created and the business plan has been implemented, the regional center geography could no longer be relevant. In addition, the regulation only talks about sustainment at risk. So, everything else is outside of the requirements of the regulation. And the only thing that is considered the law as opposed to whatever the latest policy of the immigration services is the regulatory requirement that it be sustained at risk, and, certainly, redeployment in an active enterprise outside of the regional center meets the regulatory requirement of sustainment at risk.

Ron (12:48):
The last thing I’ll mention is, certainly, going forward, to the extent of future redeployment and to the extent that you want to do everything you can to comply with the latest USCIS policy, certainly, we would advocate that our clients redeploy within the regional center boundaries. And what that means—and I think Sam and Mike are going to be talking about this—is that a regional center with wide boundaries becomes, maybe, more important than it’s ever been because it now provides more geographical space to perform the redeployment. And again, as I think that Mike and Sam will talk about, there is a procedure for regional centers to expand their geographical boundaries, and there may be more of that going on in light of this new policy on redeployment.

Mike (13:52):
So, Ron, one question that I had is this seems like it caught everybody a little bit off guard, where there were some things in the redeployment guidance that make sense, and there’s other things that don’t make sense in terms of being retroactive and, some would argue, being within the same geography of their regional center. What is your thinking on if clients are going to challenge this now or wait until there’s I-526 and I-829 denials before anybody tries to talk to USCIS and get these policies changed?

Ron (12:24):
Yeah, so, as you know, our firm does a lot of EB-5 litigation, and generally, our advice would be not to litigate based on simply the issuance of this policy. We’ve already seen that they’ve changed policy once—they may change policy again. I think you have to wait until somebody is actually harmed by this. It is conceivable that a regional center could, say… it could try to go into court now and say, you know, “We’ve already redeployed outside of the regional center—our investors are already concerned, and we want, you know, the court to clarify this.” I think, most likely, this is going to come up either if a I-526 is denied on this basis, or if an I-829 is denied on this basis. With a I-526, at the time of filing, the I-526 redeployment is not an issue.

Ron (15:22):
So, it would have to, in the I-526 context, that would have to be an RFE that is issued years after the I-526 is filed, saying, you know, please advise us if the money is still in the NCE or if it’s been redeployed, and then we’d respond to the RFE, and if that resulted in a denial, we would be in a position to litigate that denial. On the I-829, in each case it’s going to be a little bit different, but it may well be that the documentation that’s required to be submitted with the I-829 is going to reveal that some of some or all of the redeployment was outside of the regional center geography. And we will have to see if the immigration services prepared to actually deny investors and put them into removal proceedings for actions taken by the regional center that were perfectly legal and in conformity with the USCIS policy at the time those actions were taken. I’m not so sure that the immigration service is going to do that. So, although I could see a possibility of litigating right now based on the policy, I think it’s more likely that the litigation will await an actual denial by immigration of an I-526 or an I-829. Dan, do you agree with that?

Dan (16:53):
I agree that litigation now would be more difficult because there’s a complicated standing issue. But on the other hand, I think, well, one, there’s a comment period through August 24 [2020]. I think everybody in the industry has to comment on how that retroactive application of this would be unfair and terrible. But failing that, if they don’t backtrack after that, I think I would be willing to go for it. You know, yes, you have a much stronger case when somebody is actually denied, and you might get thrown out on the basis that nobody has, you know, kind of, been imminently harmed. But there needs to be some certainty in EB-5. And I think it certainly would be justifiable to file a lawsuit now. So, again, so it’s not actually in the policy manual, USCIS issued a Q and A that’s actually pretty hard to find, but it’s on their website, and it says that if there is a redeployment of the money and the I-526 is pending, the investor has an affirmative duty to make an inter-filing to let USCIS know, which would then trigger your RFE.

Sam (18:15):
Got it. Thanks. Thank you, Dan. One other question that kind of comes up in the same vein associated with the redeployment question is, you know, a lot of projects, when the initial construction is completed, the money oftentimes isn’t necessarily repaid to the NCE and then reinvested into a new project, oftentimes, you know, as you’ve seen, likely, largely in condominium projects, for example. The funds are sold, the project is completed, but then the collateral of that investment changes. So, the money is not repaid and then reinvested, but the collateral for the original loan just becomes something other than the original building, because that building has now been sold. So, in your opinion, how does that… is that still redeployment? And does that still fall under the same rules of having to be reinvested within 12 months and in the same area, or is that, you know, is that really not redeployment in that the money is still outstanding, other than the original loan, but just the collateral has changed? every, every case is going to be different on the facts, but from what you described.

Every case is going to be different on the facts, but from what you described… so, if the borrower still has the money, then the money is still at risk, right? It’s only when the money comes back to the NCE that you’re going to have to redeploy it, or if there’s some arrangement like… you couldn’t have an arrangement where the borrower or the JCE says, “Okay, we’re going to put the money in escrow and just let it sit there until you can get repaid.” Um, but if the borrower has possession and control over the money, the money is at risk, and it doesn’t need to be redeployed.

Sam (20:05):
Got it. Got it. Yeah, that makes sense. Okay. Well, we’ll move on to the next slide here. So, walking through some of the questions that impacted the policy changes that Ron mentioned earlier… so, you know, what are some of these key questions? Dan covered this one, largely. So, you know, what happens if a project already redeployed funds? We talked a little bit about that. Second, how can the geographic coverage area of a regional center be expanded? The process for that is through a form I-924 amendment. Initially, when a regional center is set up, it’s the same form, I-924, for initial designation, as it is for the amendment for expansion. So, you would file the same form explaining that the regional center has already been established and provide additional documents either for hypothetical projects, which would be most likely, or a specific exemplar project that you’re looking to get approved.

Sam (21:10):
And through that amendment, you would be asking USCIS for an expansion of coverage area. So, if your regional center initially was designated for 10 counties, 10 contiguous counties, but you wanted to expand to cover the remaining 20 counties in that state, let’s say, for example, then you would need to provide either hypothetical projects, or hypothetical and exemplar, or just an exemplar project to justify an economic impact of those new projects across the additional 20 counties that you’d be seeking coverage for. So, it’s very similar process to the initial designation, but now you’re going to be focused much more on providing details on the impact of the new projects in the new area. And you’re not going to be providing a lot of the information about the governance and about the marketing strategy and the operational plan. All of those items will have been already addressed initially in the first I-924 filing, and they won’t need to be resubmitted in the amendment filing.

Sam (22:19):
So, second… so, this is an important question. So, can a project change regional centers to expand the area in which EB-5 funds can be redeployed? So, of course, you know, if someone has a project that only covers three counties and then now they want to redeploy in the whole state, in a much larger area, can they change regional centers? Now, there’ve been some situations where USCIS has approved change of regional center, but normally that occurs when there’s an issue of fraud or the previous regional center has been terminated. But I’ll let Dan and Ron, kind of, jump in to address this more immigration-style question.

Ron (23:06):
So, the position of the immigration service—which we do not agree with—but the position of the immigration service is that any change in regional center, whether it’s voluntary or because of the termination of the original regional center, constitutes a material change. And if that occurs before the investors have conditional resident status, it would result in the denial of the investors, and they’d have to start all over again. That position of the immigration service is being challenged, I know, by our firm, and we are actually preparing to initiate an action in federal court on that issue. So, for now, we just have to say the position of the immigration service is that a project cannot change regional centers to expand the redeployment area, at least before all of the investors have conditional resident status.

Sam (24:17):
And so, Ron, to follow up on that, how does that interpretation or application possibly change if the investors have already gotten their conditional resident status and you’re within that two-year conditional residence period during which, you know, the redeployment would be most likely to occur anyway? So, if you had a project with 10 investors, they all get their I-526 approved, but they’re in a regional center that only has a few counties and now they have a new project they want to put the money in, but they need to change regional centers, or they want to change regional centers to get the bigger coverage area, is that automatically going to trip the material change and create a for-sure problem for those investors? Or is it more likely that that type of a change in regional center following the I-526 approval and conditional residence period start, could that be, you know… would you be comfortable taking that position, or how do you think the USCIS would approach that?

Ron (25:22):
Yeah, so, this gets a little confusing, and let’s just make sure we do it step by step. So, the issue of when you become a conditional resident is the trigger point for material changes. So, a change of regional centers is a material change, but that’s cut off once you get conditional residence, because the material change does not affect an investor after he gets conditional residence. Now, the next issue with that is, well, what is the period during which the investment must be sustained at risk? And the immigration service says that that period is two years after conditional residence. So, to the extent that the redeployment policy relates to this sustainment at-risk period, then I certainly think the most conservative way of dealing with things would be to say, well, during that two-year period, you’re subject to the immigration services rule, or policy, that any redeployment must be within the boundaries of the regional center.

Ron (26:31):
And it appears that they’re defining that as the regional center at the time you filed. What I think we don’t know a hundred percent—and remember, we’re not talking about the law here, we’re talking about their policy, which is changing—I don’t think we know exactly what their policy is on… you know, we meet all of the redeployment requirements, except for the fact that we have now changed regional centers after the investors got their conditional residence. And we’re going to continue to meet the redeployment requirements by changing regional centers to make sure that the NCE is now within a regional center where the redeployment will be included in the regional center geography. I fear that the immigration service position would be that you can’t do that, but I do not know that that’s 100% certain as to what their policy is right now.

Sam (27:42):
Got it. Got it. Okay. Great. One final question we had on this slide is the effective date. So, we talked a little bit about retroactivity. At least in the official policy alert memo that I saw, there were placeholders for, for the dates. How do we know for sure that that’s going to be retroactive or that, you know, that’s still being discussed? And, you know, it was part of the reason why they’re holding this Q&A and, you know, they may, in fact, just take the position of, you know, putting that date sometime in the future with a little bit of advance notice, why do we think it’s definitely going to be retroactive?

Ron (28:24):
Well, the easiest answer to that is because USCIS issued a questions and answers. And they stated, very specifically, that because they view that this guidance simply updates or clarifies their existing policy, that they will apply the July 24, 2020, policy memo to all I-526s and all I-829s that are pending at the top as of July 24. So, they have specifically said that they will apply this retroactively.

Mike (29:03):
Got it, got it. Okay. And I think that leads us well into the next slide, which, really, this is a question that I think everybody on the webinar probably has. So, now that this has been released, what can we do for current projects? And then, in the future, making sure that we follow the rules, right? What is your current thinking on what to do to make sure that you’re covered and won’t run into any problems?

Is that for us, guys? Or are you taking it?

The most conservative thing to do is to redeploy within the regional center territory.

Ron (29:56):
And if you’re planning on redeploying outside of the regional center territory, then to try to, depending on where the redeployment is, try to get the regional center to expand, through an I-924 filing, expand its geographical territory before the redeployment takes place.

Mike (30:22):
Okay, got it. Got it. And I would also say that if anybody is in a situation now where you have already redeployed and think that you don’t qualify under this, it might be a good time to reach out to Dan and Ron to start talking through what your options are, about what the best path forward is.

Ron (30:40):
Yeah, exactly. And, again, we would, you know… whether it’s a regional center contacting us or an investor contacting us, we would have the discussion in some more detail about whether it makes sense to wait to see what immigration does and if they, in fact, deny your application, or whether it’s worth, as Dan mentioned, the higher-risk litigation, or more difficult litigation, of trying to get this policy enjoined or stopped before anybody’s actually even denied.

Mike (31:16):
Exactly. And then— go ahead, Sam.

I guess, to summarize, for future EB-5 projects, for projects that have yet to be sponsored and start taking in EB-5 investment, now, given these policy changes, selecting a regional center is now more important than ever. And as Ron mentioned earlier, it’s now much more important to consider the entire approved geographic scope of a regional center, because that’s really the area where, you know, you’re going to want to redeploy the funds, if your project is going to face a redeployment issue down the road. So, in addition to the, you know, the most common diligence items that you want to look for—a track record, number of investors, et cetera—you also now really want to look at regional center approved geographic coverage area. And for current projects that, you know, are now sponsored, that, you know, are projects where the developer or the sponsor knows that that project is going to be sold or there’s going to be a capital event at some point, likely, during or before the investor’s eligible for repayment—those are the projects where, you know, looking a few years out, where you probably want to say, “Hey, we probably don’t have a project, or we don’t want to try to find a project, within the currently approved geographic area. And we’re going to want to file an expansion now so that, by the time redeployment does come up, you know, years down the road, we’ll have much more flexibility with a greater geographic coverage area in which we can redeploy the funds.”

Sam (33:06):
All right. So, now we’ll spend just a few minutes on selecting a regional center or expanding. So, as quick background, as Mike mentioned earlier, EB5AN—we own 14 regional centers that currently cover more than 20 states, including Washington, DC. Some of the approval letters are there on the right side. We’re one of the few regional center operators that has figured out how to get large geographic coverage areas approved. So, all of our licenses cover entire states or multiple states. And as an example of regional center expansion, we’ve done a number of expansions all around the country under the current policy. If the center was approved just for a few counties, let’s say in South Florida, but then additional counties were targeted for redeployment—so, let’s say, your first project was condos or a hotel in Miami, and it went well, but then you sold out all the condos or you decided to sell the hotel once it was stabilized.

Sam (34:10):
And then you wanted to redeploy the funds, but you wanted to redeploy them in a deal in Orlando. Then you would need to have an expanded coverage area that covers all the way up through Orlando in order to be able to do that. So, that’s just kind of a visual example of what the implications of an expansion look like and how that could actually happen in a project. And, again, you would only be looking to do this if you knew that your project was likely going to have a redeployment at some point in the future, and it was going to likely be in an area that you weren’t currently approved for under your sponsored regional center that you started with. And these are a couple of regional centers that we had—one that covered the Southeast, one that covered the West Coast. Both of those have already been sold. We do still have one available that covers several states contiguously in the Northeast as well. All right. Now, we’ll open it up for questions. I know we did get a few questions during the webinar. So, bear with me here and let me pull those up, and then we’ll try and cover a few of them here at the end.

Sam (35:29):
Okay. Let’s see. Okay. One of the questions that we received is, “Is a new change applicable to new applicants only, or does it impact old applicants as well?” I think Ron addressed that earlier when he said that the currently published version is retroactive. Is inter-filing required for all redeployment, or only if the redeployment would be considered a material change? I’ll let Ron or Dan jump in on that one.

According to the Q&A, it seems like all redeployment.

Sam (36:45):
What if the developer is no longer interested in continuing with the project and decides to stop construction? What happens to clients who are in between I-526 and I-829 processing period.

Dan (37:03):
So, this is going to be very complicated and fact-specific, but the key factor is whether or not you’ve gotten your conditional residence. If you’re a conditional resident, then the material change issue doesn’t necessarily apply to you. If you’re not a conditional resident, material change still applies, and if you, basically, if you want to redeploy your money into a different project than originally contemplated, USCIS is going to call that a material change, and your I-526 will be subject to denial or revocation. Afterwards, if you can keep the NCE and the NCE can redeploy or deploy into a different project, you may still be able to keep your green card, but only if you’ve already gotten that conditional residence.

Got it. Do these policies impact redeployment that’s occurring during the pending I-829 petition stage, or is this really only applicable during the time leading up to I-829 submission?

Well, technically, after the end of the two-year conditional residence period, you can get your money back. So, you know, some of the agreements still require you to keep your money invested, some don’t, but if you do, and they’re redeployed after the conditional residence period, then USCIS shouldn’t have anything to say about it because technically you could have gotten your money back. It’s no longer an issue.

Ron (38:37):
I agree, Dan, completely. As I see it, what they’re doing with this policy is defining what is considered to be sustainment at risk, and that’s what all this is about. And since the sustainment at-risk requirement only applies to the two years following conditional residence, I would certainly argue, and I think the immigration service would agree, that all of this is irrelevant to redeployment that occurs after the two-year sustainment at-risk period.

Sam (39:15):
Got it. One other question that we did get is, “What do you make of the fact that the policy manual, the updated version, deleted the sentence, ‘Similarly, the new commercial enterprise may also further deploy repaid capital into municipal bonds, such as infrastructure spending, et cetera.’”?

Well, again, they have eliminated trading securities or financial instruments on the secondary market. However, you may be able to still buy bonds on an initial offering, you know, that funds construction—that may still qualify, but it’s going to be a case-by-case analysis.

Ron (40:01):
I can’t imagine that they’re going to somehow say that those redeployments were somehow not in conformity with their policy. Now, it’s one thing when we’re talking about the original policy—didn’t specifically say that the redeployment has to be in the regional center boundaries, and now they’re saying there is that requirement. And I think that’s outrageous that they’re trying to do that retroactively. It would be at a whole other level of outrageousness if they said specifically that redeployment into those municipal bonds was perfectly acceptable, in their original policy, and now they take the position it isn’t and take that position retroactively. I can’t believe they’re planning on doing that.

Sam (40:49):
“If investors in a project had already redeployed out of the initially approved RC geography, could they go back now to the RC and continue to redeploy those funds under the RC’s approved geography, in an attempt to try to address the current policy?”

Ron (41:09):
I think that is certainly a strategy that will be looked at by all regional centers that have deployed outside of the regional center geography, whether it’s feasible at this point, and there are, you know, issues that go beyond immigration laws as to whether it is feasible, but whether it’s feasible at this point to change the redeployment to something in the geographical area and whether that would solve the problem—I think that’s something that’s going to have to be looked at at each regional center who has redeployed outside of the regional center geography.

Sam (41:47):
And again, another follow-up on the bond question—assuming that, you know, it was case by case and it did meet the requirement of purchasing bonds in a primary offering, how does the location of the project associated with that primary bond offering have to do with the redeployment requirement? In other words, if you’re buying bonds in a project that’s out of the RC’s approved area or within, does that matter or not?

I have to believe that, under their policy, in which explicitly states, “The redeployment has to be within the regional center,” that it has to be within the regional center.

Sam (42:26):
Got it. Okay. So, in other words, bonds may be allowed in a primary offering, but better make sure the project where the bonds are being sold for to fund is in the RC’s approved area. Yep. Got it. Okay. All right. We’ll do one—we’ve got a ton of questions here. We’ll address one more. I’m just trying to get different ones. One question we can quickly address is, “Will these slides be shared?” A recording of this webinar will be posted, and if people are interested in getting the specific slides themselves, on the next slide here, on the right, if you email in the top, right, then we can share a copy of the slides, but a recording of this log. So, it’ll be available to everyone who registered—they’ll get a follow-up email with a link as well. Okay then. So, the last question will be… “Is USCIS’s action legal, given that they provided no notice of this rule, and what coordinated actions can be taken from industry stakeholders, not necessarily investors, to try and push back on this? You know, other than, or including, the question-and-answer period—can a formal letter be sent, you know… what other actions can be taken before a rule that is unappealing becomes permanent?”

Dan (44:08):
Whether it’s legal or not, you know, we would say that this is, in fact, a legislative rule, not just a procedure rule—this is a substantive rule change that should have been made with noticing comments. USCIS, no doubt, would argue otherwise, and that’s why they, in fact, state in their Q&A that it’s a clarification and not a change. You know, we can disagree on that, but one way or another, yes, it’s absolutely essential that as many people as possible comment on this rule by August 24 [2020] and tell them that, you know, “Hey guys, you cannot do this retroactively. It’s going to cause all kinds of problems.” Barring that, you know, there is always the possibility of litigation, but I really, Ron, I don’t see any other options, you know.

Ron (44:51):
So, you know, I agree with you, Dan. Every stakeholder should be commenting and making a special reference to the retroactivity issue and possibly how it would impact the regional center or the project or the investors. Industry groups, IIUSA, others, may be submitting a comments as an industry, but the recent history is that the immigration service is not particularly interested in hearing those comments. And that leaves planning in each individual case. And it leaves litigation. I really do agree that, at a lot of levels, if this is ever litigated, the chance of the litigation would be successful. When you’re in federal court, the federal courts are governed by regulations. They’re not governed by whatever the policy is at any given moment of the government agency.

Ron (45:57):
In this case, the policy is shifted. If the regulation simply says sustainment at risk, and if you have a redeployment that is clearly at risk and where the investors and investment has clearly been sustained, the federal court is very likely to not go beyond that. And the fact that the immigration service on a Tuesday says it has to be within a regional center on a Wednesday says it doesn’t is not likely to be very relevant to a federal court. So, both because of what Dan said—that this would normally require what’s called notice-and-comment rulemaking, and they skipped that—and because the federal court would likely look at the language of the regulation, I think if it ever has to be litigated, the chances of success would be good. So, when we advise on this, we never look for litigation. We always advise at the first level on how to comply with whatever the latest immigration service policy is, and that would apply here also. How can we comply? In the end, if it looks like we can’t comply, or the immigration service is going to take action against our clients, then we would be prepared to litigate it.

Dan (47:19):
I would like to add that, so, IIUSA will no doubt comment, but I think comments from industry groups and interest groups are not taken as seriously as if a bunch of other individuals and businesses affected by the rule comment individually. So, just because somebody, you know… just because they’ve learned IIUSA are doing it doesn’t mean that everybody listening shouldn’t also do it.

Got it. Thanks. Thank you. With that, I think we can wrap things up, but really appreciate the time of everybody tuning in. And thank you, Ron and Dan, for joining on this and helping provide a lot of guidance with these surprise rule changes that came out. And if anyone has any more questions, you can find the contact information of EB5AN and of Klasko the screen, and please feel free to reach out.

Thank you. Thank you, everyone. And, again, if you registered in tuned in, you should get a follow-up email with a link to watch the recording. And if you did want just the slides themselves, you can send us an email, and we can get you that file separately. So, thank you again. And thank you, Dan and Ron, for your time today.