INS General Counsel on EB-5 Petitions

September 10, 1998

Linda W. Lau, Esq.
1055 Wilshire Blvd.
Suite 950
Los Angeles, CA 90017

Dear Ms. Lau:

Thank you for your letters dated July 5 and July 28 to Jackie Bednarz in which you presented the concerns and suggestions of the Immigrant Investors Committee of the American Immigration Lawyers Association (AILA). Comments and suggestions from constituents such as AILA play an important role in the Service's fulfillment of its responsibilities. Ms. Bednarz has forwarded your questions to this office for response. As you are aware, the Immigration and Naturalization Service (Service) has recently taken steps to ensure the just and proper adjudication of EB-5 petitions. In this letter, we will address as much as possible the suggestions and comments presented in your letters. For ease of presentation, we will repeat, verbatim, the questions you have presented in your letter of July 28, together with any observations you have added to the text of your questions, followed by our answers to the questions.

Your Question 1:

Many "out of status" aliens filed I-526 petitions prior to January 14, 1998 in order to be "grandfathered" for 245(i) purposes. If the aliens withdraw and refile, will their new I-526 begrandfathered under 245(i) of the Immigration and Nationality Act ("INA") to adjust their status in the U. S.? Please note that the INS General Counsel office has previously indicated that for the purpose of section 245(i), an alien who is the beneficiary of a petition under section 204 or an application for labor certification filed on or before January 14, 1998 is grandfathered irrespective of whether the ultimately adjusts to permanent residence based on a pre-January 14, 1998 petition or labor certification application or on a petition or application filed after January I4, 1998. Thus, the alien remains grandfathered in the event that an amended petition or application is filed after January 14, 1998 or in the event that the alien ultimately desires to adjust status based on an entirely different application or petition. The interpretation should also apply to petitioners who have filed an I-526.

Service Answer to Your Question 1:

On November 26, 1997, the President signed Public Law 105-119 (the Departments of Commerce, Justice, and State, the Judiciary and Related Agencies Appropriations Act of 1997) which established the "sunset" of the 245(i) program and the related "grandfather" clause. The Service is developing implementing regulations and necessary policy guidance. Final policy instructions and regulations will apply to all aliens, including those who, prior to January 14, 1998, filed petitions (Form I-526) seeking classification under section 203(b)(5) of the INA. We will take into consideration the views and concerns expressed in your letter as we complete this policy and regulatory work.



Your Question 2:

If an alien who has an already approved 1-526 with a pending I-485, withdraws and refile an 1-526 and is approved, can the alien maintain the pending I-485 application or does she have to file another I- 485 application with fees?

Service Answer to Your Question 2:

Where an immigrant visa petition which forms the basis for the adjustment application has been revoked and there is no approved visa petition upon which to base the adjustment application, the application will be denied, and a new Form I-485 will be -required for any subsequent petitions. If a petitioner withdraws an approved petition filed under section 203(b) of the TNA by written notice prior to the final approval of the application for adjustment of status, the petition is revoked automatically as of the date of approval. 8 C.F.R. § 205. 1 (a)(3)(iii)(C). Accordingly, if an approved I-526 with a pending I-485 is withdrawn, a new I-485 application is required for any subsequently filed and approved I-526.

Your Question 3:

Will the INS adjudicate I-485 applications from aliens who have been out of status in the U.S., and who previously had any priority date before January 14, 1998, but have filed a new I-526 petition after January 14, 1998 (assuming the 1-526 is eventually approved)?



Service Answer to Your Question 3:

Please see the Service response to your Question 1.



Your Question 4:

What procedure will be set in place to deal with "aging out" dependents of aliens who must withdraw and refile I-526 petitions?

Service Answer to Your Question 4:

The Service will not establish special procedures to deal with dependents of alien entrepreneurs who are approaching their 21st birthdays. Existing procedures for "age out" adjustment cases will apply. Requests for expeditious handling of cases should be made to the center or district director in whose jurisdiction the adjustment of status application is filed.

Your Question 5:

The June 26 memorandum outlines procedures for any alien who has withdrawn an I-829, refiled an I-526 and is applying at a consular post abroad for an immigrant visa. The memorandum requires that the alien meet four factors. Specifically, the third factor requires the alien to show that the I-829 was denied because the original petition did not comply with the law and the regulations. Please explain the apparent inconsistency in allowing the alien to withdraw the I-829 before denial and then requiring the alien to show that the I-829 was denied because the original petition did not comply with the law and the regulations?

Service Answer to Your Question 5:

In this letter we would like to clarify the Service's policy on adjudicating Form I-829 petitions to remove conditions for aliens whose petitions are subject to the terms of the hold. We will first address the question specifically raised in your letter. An I-829 need not be denied in order for an alien to take advantage of the special, one-time procedure outlined in the June 26 memorandum and clarified here. Rather, the petition must be subject to denial solely because it contains one or more of the seven features that made a petition subject to the hold, though the petition need not have actually been pending at the time of the hold.

Let us now restate and clarify the Service's policy with regard to the adjudication of I-829 petitions for aliens whose initial petitions on Form I-526 were approved despite the fact that they did not comply with existing law as discussed in the recently issued precedent decisions. First, the Service lacks statutory authority to grant an I-829 if the petition does not meet the statutory and regulatory requirements. This is true even if the Service granted the I-526 petition and the petitioner has complied with the investment plan outlined in the I-526.

Second, the Service, in its discretion and in order to avoid hardship to legitimate, ongoing, job creating U.S. businesses, is offering a procedure to aliens whose I-829 petitions are subject to denial solely because they contain one or more of the features that subjected petitions to the hold. This procedure, set forth in the June 26 memorandum and clarified below, is available to aliens who have filed an I-829 and who file new I-526 petitions to classify themselves as alien entrepreneurs.

All conditional residents must submit an I-829 within the time limits prescribed in the statute and regulations. If an alien does not timely file an I-829, the Service will be obligated by statute to terminate the alien's status. When the Service receives an I-829, it will adjudicate the petition under normal procedures to determine if it is subject to denial. If the Service determines that a petition should be denied, and the only reason for the denial is that it contains one or more of the seven features that subjected a petition to the hold, and those features were present in the I-526, then the Service will issue a notice of intent to deny informing the alien of the opportunity to take advantage of the procedure outlined here, If the petition is deniable for any other reason, for example because the petitioner did not meet the job creation or preservation requirement or the new commercial enterprise has failed or is no longer viable, then the Service will follow normal procedures for denying a petition. In order for an alien to take advantage of this procedure, the new I-526 must be based on an investment in the same job-creating or job-preserving U.S. business as the original I-526, and the petitioner must have fully complied with the business plan in the original I-526 throughout the 2-year conditional period.

The notice of intent to deny for aliens eligible for this procedure will state that if an alien submits a new I-526 within 90 days of the date of the notice, the Service will delay the issuance of the denial of the I-829 until it has adjudicated the new I-526, If the new I-526 is denied, then the Service will proceed to deny the I-829. If the new I-526 is approved, the alien must obtain an immigrant visa and return as conditional resident for the normal 2-year conditional period. When the alien departs the country to process his or her immigrant visa, he or she must then withdraw his or her I-829 petition. If an alien fails to pursue the immigrant visa application or fails to withdraw the I-829, the Service will proceed to deny the I-829.



Your Question 6:

The fourth factor requires the alien to demonstrate that he or she "is basing the new petition on the same job-creating orjob-preserving United States business as the original petition." If the alien is required to initiate a new two-year period of conditional resident status, does the alien have to show that the commercial enterprise sustained the required employment levels for the additional two-year period. In other words, has the employment requirement now been increased to a total of four years? If the alien is required to initiate a new two-year period of conditional resident status, can he file the new I-526 petition based on a different commercial enterprise? Why does the alien have to file his or her 1-526 petition based on the same U.S business?



Service Answer to Your Question 6:

The primary reason the Service has provided for the special, one-time procedure outlined in the June 26 memorandum to otherwise qualified alien investors is out of concern that denial of such aliens' I-829 petitions might adversely affect the ten or more U.S. employees already employed by the alien's new commercial enterprise. For this reason, as indicated above, the only aliens who will be eligible to avail themselves of the special procedure will be those whose I-829 petitions would have been denied solely because they contain features that would have subjected them to the hold and were subsequently determined to be deficient under the AAO precedent decisions. In other words, in order to take advantage of this, an alien must base his or her second I-526 petition on the same new commercial enterprise as the original I-526 petition, and must demonstrate that this enterprise has met the job creation requirement -- either by creating or preserving the requisite number of jobs for U.S. workers -- by the time of the filing of the original I-829 petition. If the I-829 petition is deniable for other reasons, such as because the alien has failed to create or preserve the requisite number of full-time positions, the I-829 petition will be denied under normal procedures.

If the second I-526 petition is approved, the alien may seek a new EB-5 visa at a consulate abroad, and ultimately, admission for a new 2-year conditional period. As a conditional resident, an alien who takes advantage of this one-time option will be required to comply with all the requirements of the law, including the employment creation requirements. Accordingly, the alien will be required to sustain the jobs previously created or preserved by the new commercial enterprise throughout the second 2-year conditional period. In short, this special procedure does not increase the job creation requirement to 4 years, but merely provides certain aliens who have created the requisite jobs, but have failed in the first instance to meet other requirements of the law, a means of avoiding denial of an I-829 petition based on their failure to meet existing EB-5 requirements. Such aliens, like all other immigrant investors, must comply with the law when they again enter as conditional residents under an entirely new visa petition.

Your Question 7:

Can conditional permanent residents with previously approved I-526s supplement their petitions by providing new information with references to existing I-526s to cure any defects in the original petitions for purposes of the I-829?

Comments and Suggestions to Question 7:

The June 26, 1998 INS Memorandum regarding withdrawals and refilings of I-526 petitions deviates from standard INS practice. The June26 memorandum denies petitioners the right to file an amended petition and/or a petition in parallel. Amended petitions have always been permitted by INS, even as late as during oral arguments before the AAO. Amended petitions are essential in assisting businesses in avoiding time delays and disruption of commercial operations. The December 19, 1997 General

Counsel's memorandum also authorizes amended petitions. Therefore, petitioners should be permitted to amend their I-526 petition.

Service Answer to Your Question 7:

We have included the text of your comments and suggestions to this question because they make clear that your question concerns whether it is possible to amend an I-526 petition or file a parallel 1-526 petition while another is pending before the Service. The issue of amending a preference petition has been well settled in Board of Immigration Appeals (BIA) and other Service precedents for many years. The BIA has stated the rule as follows: In order to be eligible for preference status under section 203(a) of the Act, the beneficiary must be fully qualified for such classification at the time the visa petition is filed. . . " Matter of Atembe, 19 I&N Dec. 427, 428 (BIA 1986). The BIA precedents are based on earlier Regional Commissioner precedents in employment-based cases, that continue to bind the Service. See e.g., Matter of Bardouille, 19 I&N Dec. 114 (BIA 1981) ("qualifying facts which come into being only subsequent to the filing of a preference petition may not be considered in support thereof. . ."), citing, inter alia, Matter of Katigbak, 14 I&N Dec. 45 (Reg. Com. 1971). The regulations at 8 CFR §§ 103.2(a)(8) and (12) incorporate this rule. The standard for amending a petition is, therefore, whether the petition was approvable on the date it was filed. Any amendment based on facts (such as changes to a business plan or new investment agreements) that come into existence after the filing date, must be made in a new petition with a new filing and priority date. Amendments that are based on facts that did exist on the date of filing may be accepted only if they do not result in a material change to the petition. Whether a particular amendment is permissible will be determined on a case by case basis.

You indicate that the December 19, 1997, General Counsel's legal opinion "authorizes amended petitions." That opinion merely refers to the possibility of the filing of an amended petition. The reference, of course, was based on the assumption that amendments would be made, and cases would bc adjudicated, within the requirements of existing law as expressed in BIA and Service precedent decisions. That law, as stated above, has existed for years, and the General Counsel has no power, and never intended, to authorize amendments that would be inconsistent with that law. We are aware of no legal authority (and no attorney representing EB-5 petitioners has cited any authority) that would permit the Service to adjudicate a petition based on facts that did not exist at the time the petition was filed.

The AAO precedent decision in Matter of Izummi, Int. Dec. 3360 (1998), restates the longstanding rule on amending preference petitions discussed above. In Izummi, the AAO determined that the petitioner, on the facts presented and in existence on the date of filing, was not eligible, and that subsequent changes to the facts on which the petition was based in the form of amendments to the investment arrangements could not be properly considered by Service adjudicators. In your letter you state that "amended petitions have always been permitted by INS, even as late as during oral arguments before the AAO." Given the precedents cited above, it is clear that the Service has not "always" permitted amendments. As the AAO stated in Izummi, to the extent that the Service has permitted amendments based on facts that came into existence after the petition to be considered, that was improper.

Finally, we do not agree that the June 26, 1998, memorandum denies petitioners the possibility of filing parallel petitions. While resource and fairness considerations limitthe tiger team to adjudicating one petition per alien, the normal rules for filing parallel petitions apply to I-526 petitions, including those petitions subject to the hold. As stated in the June 26 memorandum, if a petitioner does not withdraw his or her petition that was subject to the hold, any new petition filed by that petitioner, including parallel petitions, must be filedunder standard procedures and not with the tiger team.

Your Question 8:

Regarding adjudication of I-829s, if an alien has timely filed an I-829, but withdrawn the I-829 and refiles an I-526 without any of the offending provisions according to INS instructions, will the alien be considered to be in lawful presence after the I-829 is withdrawn and while the I-526 is pending?

Service Answer to Question 8:

While 8 C.F.R. 103.2(b)(6) generally allows petitioners to withdraw petitions pending before the Service, the statute specifically requires conditional residents to file a petition to remove conditions during the 90day period before the second anniversary of the alien's admission as a permanent resident. The statute states that if an alien fails to timely file a petition to remove conditions, the Attorney General must terminate the alien's status. INA § 216A(c)(2). If an alien withdraws an I-829 and does not file a new petition to remove the condition within the 90-day period provided by the statute, the alien's conditional status will terminate as required by the statute, and the alien will be out of status. "An alien granted status as a conditional permanent resident under section 216 or 216A of the Act who does not timely file a petition ( ... Form I-829 ... ) to remove conditions placed an that status is unlawfully present in the United States." Memorandum from the Office of Programs to Service field offices, September 19, 1997, reproduced in 74 Interpreter Releases 1498 (September 29, 1997). The mere filing or approval of an I-526 petition, as with the filing or approval of any type of immigrant visa petition, does not convey to the beneficiary of the petition any type of status. For this reason, the prior or subsequent filing of a new I-526 petition would have no effect on the termination of the immigrant investor's lawful status.

Your Question 9:

In the above-mentioned situation (in question 8), will the alien be provided a tolling period during the pendency of the refiled I-526? Will the alien be protected from the three or ten-year bar irrespective of the decision on the refiled I-526 since the previous I-526 of INA §212(a)(9)(B)?

Service Answer to Your Question 9:

See Service Answers to Your Questions 5 and 8.

Your Question 10:

It is imperative that AILA-member attorneys and the public in general have an opportunity to review the AAO Precedent Decisions as soon as possible after they have been rendered. As of July 3, we have only received one precedent decision (Matter of SOFFICI). Moreover, that precedent decision simply restates the existing law and INS interpretation on loans and debt made to the commercial enterprise. None of the major changes that we understand the INS is proposing have been issued via a precedent decision yet. Will the AAO issue more precedent EB-5 decision? If so, considering the short time frame imposed by the June 26, 1998 Memorandum, how does INS propose to disseminate these decisions to AILA immediately so refiled petitions can be prepared accordingly?

Service Answer to Your Question 10:

As you are aware, the deadline for withdrawing held petitions and refiling with the tiger team has been extended to September 14, 1998. The Service issued its most recent precedent decisions on July 31, 1998. The Service does not intend to issue any more precedents based on cases currently pending before the AAO. Accordingly, the public and your members will have a total of 45 days between the date of the last precedent decision and the deadline for filing with the tiger team to adjust your filings accordingly. The Service, of course, may issue additional precedents based on new issues that arise in petitions appealed or certified to the AAO in the future, Such precedents will not affect the filing deadline for the tiger team and will be treated like all other precedent decisions.

Your Question 11:

If the "tiger team," starting on July 15, is to begin the adjudication of petitions that are currently on hold and the new refiling is not due until July 3, can the petitioner still withdraw and refile his or her I-526 petition before July 30 even if a denial is rendered by the "tiger team" between July 15 to July 30, 1998? There is an inconsistency in the memorandum.

Service Answer to Your Question 11:

As you are now aware, the date for the withdrawal and resubmission of a petition with the tiger team has been moved to September 14, 1998. The tiger team will not issue any decisions in hold cases until that date in order to permit the withdrawal and re-filing of petitions without any intervening denials. However, once the tiger team has rendered a decision on any petition filed by an alien, the tiger team will not adjudicate a second petition by that alien. Any subsequently filed petition will be adjudicated by the Service Center with normal jurisdiction in the case under normal procedures. The purpose of the tiger team is to adjudicate the backlog of cases created by the hold. The Service is permitting aliens who wish to withdraw a case subject to the hold to substitute a new petition for the hold case to get a tiger team adjudication. Because of resource constraints and out of fairness to aliens who never had a petition in the hold, the tiger team will only adjudicate one petition per alien. An alien whose petition is denied by the tiger team will have the same appeal rights (and ability to withdraw an appealed petition) as any other alien.

Your Question 12:

Should petitioners who merely file new I-526 petitiony, without withdrawing held petitions, file with the tiger team or with the Service Center having jurisdiction over the new commercial enterprise?

Service Answer to Your Question 12:

Petitioners who merely file new petitions, without withdrawing held petitions forwarded to the "tiger team", must file the petition with the Service Center having jurisdiction under normal procedures. New 1-526 petitions should not be filed with the "tiger team", which was established only to adjudicate cases within the hold. It should be noted, however, that if an alien files two inconsistent petitions, he or she may render both petitions deniable.

Your Question 13:

If the tiger team approves a new I-526 petition on behalf of an alien with a previously approved I-526 petition, can the petition be forwarded directly to the foreign consular post without passing through the National Visa Center since most consular post alreadv have opened their immigrant visa files?

Service Answer to Your Question 13:

Your question should be addressed to the State Department, the agency which must make any decision on the processing of approved EB-5 petitions for visa issuance. The Service is willing to cooperate in the implementation of any procedure established by the State Department.

Your Question 14:

What should a petitioner do if he filed an I-526 that does not contain any of the seven factors listed in previous INS memoranda, but the petition has nevertheless been placed on hold? Should the petitioner refiled the exact same petition so it will not be put on hold anymore?

Service Answer to Your Question 14:

If a case was placed within the hold, it will be adjudicated by the "tiger team". A petitioner is free to file the exact same petition with a Service Center, or withdraw the pending petition and refile the same petition with a Service Center. However, because the tiger team will begin adjudicating cases on September 15, and it will adjudicate cases placed in the hold, it is not clear what purpose would be served by refiling a petition that the petitioner believes was not properly placed in the hold. The hold is for all purposes over at this time.

Your Question 15:

If an alien has an approved I-526petition and has an adjustment application pending, will he be notified to refiled his I-526? Should we refile them now for adjudication by the "tiger team "? Please note that the June 26, 1998 INS memorandum covers "related approved Form 1-526 petitions with pending Form I-485 adjustment of status applications" but is silent as to the notice requirement and refiling procedure on the I-526 or I-485.

Service Answer to Your Question 15:

The Service will not send notices regarding the withdrawal and refiling of an application with the tiger team to aliens having an approved I-526 and a pending application for adjustment of status. These petitions were not in the hold established by the March 11, 1998, memorandum, and the Service did not intend for these applications to be adjudicated by the tiger team. Nevertheless, the Service will permit aliens to file a new I-526 with the tiger team if they have an approved I-526 that comes within the terms of the hold and they withdraw the approved I-526. Like other aliens, these aliens must withdraw and refile their petitions by the September 14, 1998, deadline in order for the tiger learn to adjudicate the new I-526. Because the Service did not contemplate this group of aliens when we did our workload analysis for the tiger team, the filing of these cases may delay adjudication of cases by the tiger team. Also, it should be noted that the withdrawal of an approved visa petition with a pending adjustment of status application may have consequences with respect to section 212(a)(9)(B) and (C) of the INA.

Your Question 16:

If the I-526 and l-829 petitions do not contain any of the factors listed in the December 19, 1997 General Counsel's Memorandum, will the petitions continue to be adjudicated "under normal procedures" at the "Service Center with jurisdiction over the new commercial enterprise"?

Service Answer to Your Question 16:

Yes.

Your Question 17:

Does the INS plan to follow the INS General Counsel's recommendation, contained on Page 35 of the December 19, 1997 Memorandum, to

"..as a courtesy to the general public, publish in the Federal Register any instructions to the field it may issue as a result of this memorandum. We recommend further that the Service hold these cases in abeyance until such time as HQBEN publishes these instructions in the Federal Register. We also recommend that such Federal Register Notice begin with language to the following effect."

Service Answer to Your Question 17:

The Service has determined that it will not follow this recommendation of the Office of the General Counsel. The four AAO precedent decisions, rather than the December 19, 1997, memorandum of the General Counsel, form the basis for adjudicators' decisions in EB-5 cases. Please note that the Service has made available to the Congress, your membership, and other interested parties the December 19, 1997, legal memorandum of the General Counsel and the AAO's four precedent decisions issued from June 30 to July 31, 1998.

Your Question 18:

On Page 27 of the December 19, 1997 Memorandum, as recommended procedures with respect to: (a) pending and future petitions at Service Centers, and (b) revocation of petitions prior to the granting of an immigrant visa, and recommendations to the Department of State with respect to procedures to follow for pending visa applications, it states.:

"... To this end, we recommend that the Office of programs prepare a policy memorandum summarizing the criteria discussed in this memorandum for determining whether an arrangement meets current regulatory requirements.

Is such a policy memorandum forthcoming?

Service Answer to Your Question 18;

Again, the Service has determined not to follow this specific recommendation. Nonetheless, beginning March 11, 1998, the Office of Programs disseminated a series of instructions and guidance memoranda concerning the EB-5 investor visa program. The Service has provided copies of all such memoranda to your membership and other interested parties.

As explained previously to your membership, during the week of July 6, the Service conducted intensive, supplemental training for select adjudicators from each of our four service centers. This team of immigration officers, dedicated to the adjudication of EB-5 petitions (Forms I-526 and I-829), will resume its work at the California Service Center from September 8 through October 10, 1998. The Service will conduct additional training in the future.

Supplemental Issues:

You have also asked us to address a number of "supplemental issues" involving, among other things, the impact of the Izumii decision on existing Service policy. You first ask whether relief is available to conditional residents who invested in certain troubled businesses which have failed. The existing statute and regulations do not differentiate between troubled businesses and other types of investments. Under all circumstances, an alien must sustain his or her investment, regardless of whether it is in a troubled business, for the entire two-year conditional residence period. The conditional resident status of an alien whose troubled business is dissolved or is declared bankrupt therefore is subject to termination under section 216A of the Act. Such an alien may of course file a new I-526 petition, and if found eligible, and is otherwise qualified, may once again seek immigrant investor status. You also ask for guidance with respect to the impact of Izumii and other recently issued precedent decisions on previous adjudications, opinions, memoranda, directives of the Service. These precedent decisions are fully consistent with current statutory and regulatory law, and like all other precedent decisions, are binding on all adjudicating officers. Further, like all other precedent decisions, the recently issued AAO opinions supersede any previous statements, policies, and opinions of the Service, including the Office of the General Counsel. Finally, you ask the Service to address issues regarding Regional Centers and installment payments. We assure you that the Service is examining these issues and will issue guidance in the future.

I believe the above information will provide helpful guidance and address AILA's concerns. Thank you for your suggestions, and if I can be of further assistance on this or any other matter, please do not hesitate to contact my office.

Sincerely,

David Dixon

Deputy General Counsel

Cite as AILA Doc. No. 98091091.