No announcement yet.

Article: Some Ideas for Resolving the Controversial Issues in the EB-5 Legislation. By H. Ronald Klasko


  • Article: Some Ideas for Resolving the Controversial Issues in the EB-5 Legislation. By H. Ronald Klasko

    Some Ideas for Resolving the Controversial Issues in the EB-5 Legislation


    Here we are in the middle of September, and the following facts appear to be indisputable:

    • Unless Congress passes an extension, the regional center EB-5 program will lapse (at least temporarily) on October 1;
    • Nobody involved in a decision-making or leadership position in Congress or the Administration wants the program to lapse;
    • Virtually everybody in a decision-making position wants some changes to the program before there is an extension;
    • There is agreement on almost all of the suggested changes among key players in the Senate and House;
    • Senate Bill 1501 (the Grassley-Leahy Bill) is not moving forward;
    • No new bill has yet been introduced in the House or Senate, and time is clearly running out (see first bullet point).

    There appears to be consensus that a program extension will be premised upon an increase in the investment amount and inclusion of many of the “integrity” or “transparency” provisions contained in the Grassley-Leahy Bill. That’s not the problem.

    There is also mostly consensus on the need for a change in how TEAs are defined. The problem is that there is no consensus – and in fact serious philosophical or ideological differences – surrounding what the changes should look like. The rural-urban divisions that were so apparent in the Grassley-Leahy Bill, and that played a major role in that Bill not moving forward, remain in dispute. For better or worse, the key players want to limit the ability of states or developers to “gerrymander” TEAs. Some of the key players want to provide incentives for investors to invest in projects in rural areas and, secondarily, infrastructure projects. However, other key players believe that projects in urban areas create more jobs from workers coming from high unemployment areas to work in the project, even if the project is physically located in a more affluent or lower unemployment area.

    Some different way of looking at the issue may be necessary to dislodge the logjam, and it better happen quickly. Here’s an idea for dealing with high unemployment TEAs. Both the present system and the suggested legislative changes focus on the census tract where the project is located. There is one problem with that – it makes no sense. If the EB-5 program is about job creation, and if the goal is to provide an incentive for investors to invest in projects that will create employment in high unemployment areas, shouldn’t the issue be where the workers are coming from rather than where the project is located? To my way of thinking, the answer is clear. Workers in a project rarely live in the census tract where the project happens to be located. Rather, they commute from nearby distances. (By the way, this is the point that The Wall Street Journal missed in its recent front page article.) So it would seem that the goal would be to determine what the normal commuting patterns are and come up with a system that is more objective and not subject to what opponents of the present system term “gerrymandering.”

    Well, there’s good news. The job has already been done for us, and we don’t have to invent the wheel. There is a concept called “area of intended employment” that exists in the U.S. Department of Labor regulations and that has been used in adjudicating labor certification applications for immigrants in the EB-2 and EB-3 categories for decades. Why not just adapt the EB-2 and EB-3 regulatory language to EB-5?

    I asked that question to eight of the most experienced EB-5 economists. They reviewed the definition of “area of intended employment” in the Department of Labor regulations and uniformly agreed that it would be a reasonable – or even ideal – definition for TEAs in the EB-5 context.

    So it’s worth examining what that definition is and what the economists had to say.

    “Area of intended employment” is defined in the Department of Labor regulations as follows:

    “Area of intended employment means the geographic area within normal commuting distance of the place (worksite address) of the job opportunity for which the certification is sought. There is no rigid measure of distance that constitutes a normal commuting distance or normal commuting area, because there may be widely varying factual circumstances among different areas (e.g., average commuting times, barriers to reaching the worksite, or quality of the regional transportation network). If the place of intended employment is within a Metropolitan Statistical Area (MSA), including a multiple MSA, any place within the MSA is deemed to be within normal commuting distance of the place of intended employment. The borders of MSAs are not controlling in the identification of the normal commuting area; a location outside of an MSA may be within normal commuting distance of a location that is inside (e.g., near the border of) the MSA.”

    All of the EB-5 economists who commented believe that this definition is feasible, logical and workable since it takes into account where the workers actually come from and the unemployment rates in those areas. Consistent with the definition, there would be no limit (maximum or minimum) on the number of census tracts or other political subdivisions as long as all are within the MSA (metropolitan statistical area). (If the project is near the border of an MSA, there could be a limit.)

    The economists noted that this definition fits within the definition of a “labor market area” as defined by the DOL Bureau of Labor Statistics. By utilizing MSA definitions (which are set based on commuting patterns), there is a recognition that commuting distances are not uniform across the United States, but vary by area/region. This definition would allow for census tract combinations only if all tracts used in the combination are within the MSA of the project. This would also be consistent with the system used by the U.S. Office of Management and Budget in determining MSAs and CSAs (combined statistical areas).

    I have not heard any argument as to why “area of intended employment,” combined with rural areas, would not be a solution to the TEA conundrum. It would place some limit on urban gerrymandering, it would allow for most urban projects to move forward upon proof that the workers commute from high unemployment areas and it is a system that has been used successfully for many years in immigration adjudications. The keys are that it would have to be an objective standard, not subject to discretion, and that combinations of census tracts could be used as long as they are within the area of intended employment.

    That appears to be the sole philosophical or ideological issue that is preventing the introduction of a consensus Bill that could be approved under the suspension rules in the House and the unanimous consent rules in the Senate before September 30.

    However, there is also the practical and legal issue of effective dates and grandfathering. This is actually a very thorny issue. Senate Bill 1501 proposed to grandfather all projects that filed for advance approval (presumably an exemplar petition) before the effective date of the new law. This grandfathering would apply at least to investment amount and TEA determination. However, the Senate Bill did not grandfather investors with pending I-526 petitions. Both of these decisions proved to be controversial and both are still the subject of debate among the leaders in the House and Senate who are trying to craft a bill.

    The issue of grandfathering investors is a particularly difficult one. There are good arguments on all sides. To me, the clearest issue is that it would be manifestly unfair to investors, and very probably subject to endless litigation, if investors are not grandfathered. In many cases, the investors’ money has already been used in the project, the project may have been built and the jobs have been created. It would be hard to fathom how the EB-5 program could continue to exist if investors were now told that their pending petitions – many pending more than a year – no longer qualify because of a combination of a delay in USCIS adjudication of their petitions and a change in the law. This would be a travesty.

    However, there is a flip side that is preventing – or at least delaying – inclusion of the language grandfathering the investors. The issue is that there are reportedly approximately 15,000 pending I-526 petitions. Since the EB-5 quota only allows for 3,000 to 3,500 investors annually (the rest are family members), that would mean that any of the changes that Congress now implements (including changes in the minimum investment amount) might not apply for five years or more. Some of the key players in the debate are not copacetic with that result.

    So how to deal with this conundrum? There really is no easy answer. However, here’s my attempt at trying to come up with a creative solution.

    The issue of recapture of unused visa numbers has been discussed for years. Until now, Congress has not been prepared to enact legislation to accomplish this result. However, there is no visa category quite like EB-5 where Congress allocated far more numbers than were ever used until the last year or two, and now the numbers are nowhere near sufficient to accommodate the demand. How about if the legislation provided for a one-time recapture of unused EB-5 visa numbers sufficient only to accommodate the investors who would be grandfathered under the new legislation? This would allow Congress to have the new investment amount apply to all investors who file I-526 petitions after the effective date of the new law without negatively impacting investors who invested in good faith prior to the effective date.

    I will certainly be interested in any comments to these ideas; and, of course, any reader of this blog is encouraged to use any of these ideas in their ongoing advocacy efforts.

    This post originally appeared on EB-5 Resource Center. Reprinted with permission.

    About The Author

    H. Ronald Klasko is recognized by businesses, universities, hospitals, scholars, investors and other lawyers as one of the country’s leading immigration lawyers. A founding member of Klasko, Rulon, Stock & Seltzer, LLP and its Managing Partner, he has practiced immigration law exclusively over three decades. Under his leadership, the firm was chosen with five other firms by Chambers Global in 2006, 2007, 2008 and 2009 as the top U.S. business, hospital and university immigration law firm. Ron, himself, was named as the world’s most respected corporate immigration lawyer (The International Who’s Who of Business Lawyers 2007 and 2008) and one of the country’s top immigration lawyers by clients and other immigration lawyers who said he is “revered for coming up with unique arguments that can save a client” (Chambers Global). A former National President of the American Immigration Lawyers Association (AILA), Ron served as General Counsel of that organization for three Presidents and has been a member of its Board of Governors since 1980. He has served as National Chair of AILA’s U.S. Department of Labor Liaison Committee and Business Immigration Committee, and he served as National Chair of that organization’s INS General Counsel Liaison Committee, Department of Labor Liaison Committee, and the National Task Forces on Labor Certifications, H-1 visas, L-1 visas and Employer Sanctions. He has previously served as Chair of the EB-5 Committee.

    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

      Posting comments is disabled.





    There are no tags yet.

    Latest Articles


    • Article: The EB-5 Immigration Program and the Investors Process By H. Ronald Klasko

      If you are having difficulty viewing this document please click here.

      08-20-2018, 08:15 AM
    • Article: Immigration Judges’ Union Fights for Judicial Independence By Karolina Walters
      Immigration Judges’ Union Fights for Judicial Independence by Karolina Walters The National Association of Immigration Judges (NAIJ), the union that represents the nation’s immigration judges, is challenging the government’s decision to remove an immigration judge from a well-known case and replace him with a judge who immediately ordered the immigrant in the case deported. NAIJ’s grievance addresses the treatment of one immigration judge, but its resolution will have implications for judicial independence throughout the entire immigration court system. The grievance was filed on behalf of Philadelphia-based immigration judge Steven A. Morley, who was presiding over the case of Mr. Reynaldo Castro-Tum. Castro-Tum’s case rose to national importance earlier this year when Attorney General Jeff Sessions chose to refer the case to himself to reconsider the Board of Immigration Appeals’ previous decision in the case. In reconsidering the decision, Sessions effectively eliminated judges’ use of administrative closure, a docket management tool. Sessions sent Castro-Tum’s case back to Judge Morley, noting that the immigration court order Castro-Tum removed if he did not appear at his next hearing. Castro-Tum did not appear at the next hearing. However, Judge Morley continued the case to resolve whether Castro-Tum received adequate notice of the hearing. Due process requires, at a minimum, that an individual be given notice of proceedings and an opportunity to be heard by a judge. But before the next hearing could take place, the Executive Office for Immigration Review (EOIR) replaced Judge Morley with an Assistant Chief Immigration Judge who ordered Castro-Tum removed when he did not appear at court again. In their grievance, NAIJ asserts that the decision to remove Judge Morley from Castro-Tum’s case and reassign many other cases from his docket resulted in unacceptable interference with judicial independence. The grievance specifically claims that EOIR’s actions violate immigration judges’ authority under the regulations to exerci...
      08-17-2018, 11:12 AM
    • Article: Indirect Refoulement: Why the US Cannot Create a Safe Third Country Agreement with Mexico By Sophia Genovese
      Indirect Refoulement: Why the US Cannot Create a Safe Third Country Agreement with Mexico by Sophia Genovese The Trump Administration is seeking to create and implement a safe third country agreement with Mexico . Under this agreement, asylum seekers arriving at the US border who have travelled through Mexico would be denied the ability to file their asylum claims in the US. Such an agreement would trample on the rights of asylum-seekers, violating both international and US asylum law. In particular, the US would be violating the international principle of non-refoulement , which provides that no State “shall expel or return (“refouler”) a refugee in any manner whatsoever to the frontiers of territories where his [or her] life or freedom would be threatened,” where Mexico has a proven track record of being anything but safe for asylum seekers . The US has also codified Article 33(1) of the Refugee Convention into Section 208(a)(2)(A) of the Immigration and Nationality Act (INA) which provides that it will not return an asylum seeker to his or her country of origin, but may, at the determination of the Attorney General, remove the asylum seeker to a “safe third country… where the [asylum seeker] would have access to a full and fair procedure for determining a claim to asylum or equivalent temporary protection.” Although Mexican officials have not yet indicated whether they would sign a safe third country agreement with the US, asylum advocates should proactively seek to prevent such a devastating policy with a country that lacks adequate asylum protections. As reported by Human Rights First and Amnesty International , 75 percent of asylum seekers apprehended and detained by the National Institute of Migration (INM), the Mexican immigration enforcement agency, were not informed of their right to seek asylum. Even if asylum seekers are able to make their claims, only 30% of the asylum proceedings are ever concluded , and even fewer are granted, leaving many bona fide asylum seekers stranded without a resolution. The treatment of unaccompanied minors’ asylum claims in Mexico are even more dismal. Of the 35,000 minors apprehended by the INM in the first half of 2016, only 138 were able to apply for asylum , of which only 77 were granted protection. Beyond the failing asylum system in Mexico, asylum seekers are also in extreme danger of kidnapping, murder, rape, trafficking, and other crimes by INM officers and civilians. A safe third country agreement with Mexico would violate the United States’ international obligations under the 1967 Optional Protocol to the Refugee Convention, to which we are a signatory, which adopts by incorporation the obligations outlined in the 1951 Refugee Convention, to which the US is not a signatory. Take the example of an asylum-seeker, Mrs. H, who is fleeing politically-motivated violence in Honduras. Her husband, Mr. H, was a vocal political activist who opposed the National Party and members of the Honduran government. Mr. H began to receive death threats due to his political beliefs and reported such threats to the authorities. The authorities, however, di...
      08-16-2018, 02:32 PM
    • Article: Flawed Statistics Undermine USCIS/ICE/SEVP’s Restriction of D/S for Unlawful Presence By Eugene Goldstein, Esq.

      Flawed Statistics Undermine USCIS/ICE/SEVP’s Restriction of D/S for Unlawful Presence


      On August 9, 2018 USCIS published a “Policy Memorandum” restricting the 20-year-old calculation of Duration of Status (D/S) for F-1, J-1 and M-1 entrants (and their derivative families).

      USCIS also published an announcement (hereinafter “announcement”) “USCIS Issues Revised Guidance on Unlawful Presence for Students and Exchange Visitors , and a general discussion “Unlawful Presence and Bars to Admissibility” ...

      08-15-2018, 12:57 PM
    • Article: Update On Express Entry Immigration To Canada By Edward C. Corrigan and Selvin Mejia
      Update On Express Entry Immigration To Canada by Edward C. Corrigan and Selvin Mejia On January 1, 2015 the Federal Conservatives introduced significant changes to Canada’s economic immigration program. Formerly called the Skilled Worker program the new program was re-branded as Express Entry which included Skilled Workers, the Federal Skilled Trades program, and the In-Canada Experience Program. Canada modelled its revamped economic immigration program on New Zealand’s. There is also an Atlantic Immigration program. In addition there is a separate Live-In Caregiver program where individuals can apply for Permanent Residence after two years employment in this category. EXPRESS ENTRY The initial object of the changes was to create a list of Applicants where the Federal Government could select the best and the brightest from the list of Applicants. The Express Entry was supposed have applicants who had an approved Labour Market Impact Assessment (LMIA) and a valid job offer from an approved Canadian Employer. Under the Comprehensive Ranking System (CRS) candidates were award 600 points for having an approved job offer. Applicants would have achieved a point score of around 1,000 with the 600 points for having a valid offer of employment under the CRS. The provinces in Canada were also allowed to select Applicants according to their economic needs and these applicants that were selected through the respective provincial nominee programs by a province were awarded 600 points to be added to their score. Ontario also has a program where graduates from an Ontario University with a Master’s or who were in a PhD. program would be approved and awarded 600 points which virtually assured that they would be approved and provided with an invitation to apply. There is a quota that governs this graduate program. LABOUR MARKET IMPACT ASSESSMENTS Things did not go according to plan with Federal Express Entry. Very few Applicants were able to attai...
      08-14-2018, 12:50 PM
    • Article: USCIS Finalizes Unlawful Presence Policy Putting F, J and M Nonimmigrants In Great Jeopardy By Cyrus D. Mehta
      USCIS Finalizes Unlawful Presence Policy Putting F, J and M Nonimmigrants In Great Jeopardy by Cyrus D. Mehta The USCIS finalized its unlawful presence policy for F, J and M nonimmigrants on August 9, 2018. The final policy makes no significant changes from the draft policy of May 10, 2018. My earlier blog noted the flaws in the draft policy, which persist in the final policy. The final policy incorrectly breaks down the distinction between violating status and being unlawfully present in the US. As of August 9, 2018, F, J and M nonimmigrants who have failed to maintain nonimmigrant status will start accruing unlawful presence. Individuals who have accrued more than 180 days of unlawful presence during a single stay, and then depart, may be subject to 3-year or 10-year bars to admission, depending on how much unlawful presence they accrued before they departed the United States. See INA § 212(a)(9)(B)(i)(I) & (II) . Individuals who have accrued a total period of more than one year of unlawful presence, whether in a single stay or during multiple stays in the United States, and who then reenter or attempt to reenter the United States without being admitted or paroled, are permanently inadmissible. See INA § 212(a)(9)(C)(i)(1). Prior to August 9, 2018, foreign students (F nonimmigrants) and exchange visitors (J nonimmigrants) who were admitted for, or present in the United States in, Duration of Status started accruing unlawful presence on the day after USCIS formally found a nonimmigrant status violation while adjudicating a request for another immigrant benefit or on the day after an immigration judge ordered the applicant excluded, deported, or removed (whether or not the decision was appealed), whichever came first. F and J nonimmigrants, and foreign vocational students (M nonimmigrants), who were admitted until a specific date certain accrued unlawful presence on the day after their Form I-94 expired, on the day after USCIS formally found a nonimmigrant status violation while adjudicating a request for another immigration benefit, or on the day after an immigration judge ordered the applicant excluded, deported, or removed (whether or not the decision was appealed), whichever came first. This will no longer be the case. Under the new policy effective August 9, 2018, any status violation will start the accrual of unlawful presence. The nonimmigrant will not be provided with any formal notice of a status violation, and any violation from the past that has been discovered would have already started the accrual of unlawful presence. According to the pol...
      08-14-2018, 10:51 AM