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AAO is changing its approach to Regional Center legal discussion

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AAO is changing its approach to Regional Center legal discussion

  1. 1. AAO is Changing its Approach to Regional Center Legal Discussion By Joseph P. Whalen (August 5, 2012)I am pleased to see a notable change in the way AAO is presenting the pertinentlaw on Regional Centers. Hardly over a year ago, in April 2011, AAO was stillmerely regurgitating large chunks of the statute and regulations without dissectingtheir language or even emphasizing the most critical portions or engaging in anyin-depth discussion. Please note the yellow highlighted “added text” in the firstexcerpt and compare it to what follows in the second excerpt. It is a major change!In the more recent July 2012, decision from which the second excerpt was taken,please note the vast differences in both quantity and quality of “discussion”versus “quoted legal text”. Note how the most pertinent portions of the statutehave been plucked out, interwoven into a narrative, discussed at length, and placedwithin a definite context. Additionally, deeper reference is made to the purpose andhistory behind the initial rulemaking. I see this not just as a change in style butalso as a long overdue improvement. An even greater improvement would bedeeper discussion of Congressional Intent behind the “Pilot Program” itself.USCIS and AAO are on the right path to reach such a discussion before too long.Perhaps we will see something in the next iteration of the overarching PolicyMemo (which itself should only be a precursor to a new rulemaking for EB-5.).We shall have to wait and see. April 26, 2011, “Home Purchase” Regional Center Proposal Denial Upheld on Certification1I. Relevant Statute and RegulationsSection 203(b)(5) of the Immigration and Nationality Act (the Act), 8 U.S.C. §1153(b)(5), as amended by Pub. L. No. 107-273, 116 Stat. 1758 (2002),provides classification to qualified immigrants seeking to enter the United Statesfor the purpose of engaging in a new commercial enterprise: (i) in which such alien has invested (after the date of the enactment of the Immigration Act of 1990) or, is actively in the process of investing, capital in an amount not less than the amount specified in subparagraph (C), and1 http://www.slideshare.net/BigJoe5/aao-home-purchase-rc-denial-with-comments-apr262011-01-k1610 Page 1 of 7
  2. 2. (ii) which will benefit the United States economy and create full-time employment for not fewer than 10 United States citizens or aliens lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United States (other than the immigrant and the immigrants spouse, sons, or daughters).Section 610 of the Departments of Commerce, Justice and State, the Judiciary,and Related Agencies Appropriations Act of 1993, as amended, provides: (a) Of the visas otherwise available under section 203(b)(5) of the Immigration and Nationality Act (8 U.S.C. 1153(b) (5)), the Secretary of State, together with the Attorney General, shall set aside visas for a pilot program to implement the provisions of such section. Such pilot program shall involve a regional center in the United States, designated by the Attorney General on the basis of a general proposal, for the promotion of economic growth, including increased export sales, improved regional productivity, job creation, or increased domestic capital investment. A regional center shall have jurisdiction over a limited geographic area, which shall be described in the proposal and consistent with the purpose of concentrating pooled investment in defined economic zones. The establishment of a regional center may be based on general predictions, contained in the proposal, concerning the kinds of commercial enterprises that will receive capital from aliens, the jobs that will be created directly or indirectly as a result of such capital investments, and the other positive economic effects such capital investments will have. *** (c) In determining compliance with section 203(b)(5)(A)(iii) of the Immigration and Nationality Act, and notwithstanding the requirements of 8 CFR 204.6, the Attorney General shall permit aliens admitted under the pilot program described in this section to establish reasonable methodologies for determining the number of jobs created by the pilot program, including such jobs which are estimated to have been created indirectly through revenues generated from increased exports, improved regional productivity, job creation, or increased domestic capital investment resulting from the pilot program.The regulation at 8 C.F.R. § 204.6(m) (3) provides:Requirements for regional centers. Each regional center wishing to participate inthe Immigrant Investor Pilot Program shall submit a proposal to the AssistantCommissioner for Adjudications, which: Page 2 of 7
  3. 3. (i) Clearly describes how the regional center focuses on a geographical region of the United States, and how it will promote economic growth through increased export sales, improved regional productivity, job creation, and increased domestic capital investment; (ii) Provides in verifiable detail how jobs will be created indirectly through increased exports; (iii) Provides a detailed statement regarding the amount and source of capital which has been committed to the regional center, as well as a description of the promotional efforts taken and planned by the sponsors of the regional center; (iv) Contains a detailed prediction regarding the manner in which the regional center will have a positive impact on the regional or national economy in general as reflected by such factors as increased household earnings, greater demand for business services, utilities, maintenance and repair, and construction both within and without the regional center; and ( v) Is supported by economically or statistically valid forecasting tools, including, but not limited to, feasibility studies, analyses of foreign and domestic markets for the goods or services to be exported, and/or multiplier tables.The regulation at 8 C.F.R. § 204.6(m) (3) (ii) requires the applicant to provide"verifiable" detail as to how the jobs will be created.The regulation at 8 C.F.R. § 204.6(m) provides, in pertinent part: (1) Scope. The Immigrant Investor Pilot Program is established solely pursuant to the provisions of section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriation Act, and subject to all conditions and restrictions stipulated in that section. Except as provided herein, aliens seeking to obtain immigration benefits under this paragraph continue to be subject to all conditions and restrictions set forth in section 203(b)(5) of the Act and this section.Thus, aliens investing in a regional center must still make a capital investmentinto a new commercial enterprise as described in 8 C.F.R. § 204.6. Page 3 of 7
  4. 4. The regulation at 8 C.F.R. § 204.6(e) provides in pertinent part: Commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to, a sole proprietorship, partnership (whether limited or general), holding company, joint venture, corporation, business trust, or other entity which may be publicly or privately owned. This definition includes a commercial enterprise consisting of a holding company and its wholly- owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business. This definition shall not include a noncommercial activity such as owning and operating a personal residence. *** Invest means to contribute capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the alien entrepreneur and the new commercial enterprise does not constitute a contribution of capital for the purposes of this part.(Bold emphasis added.)The regulation at 8 C.F.R. § 204.6(j) states, in pertinent part, that: (2) To show that the petitioner has invested or is actively in the process of investing the required amount of capital, the petition must be accompanied by evidence that the petitioner has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk. Evidence of mere intent to invest, or of prospective investment arrangements entailing no present commitment, will not suffice to show that the petitioner is actively in the process of investing. The alien must show actual commitment of the required amount of capital. Such evidence may include, but need not be limited to: (i) Bank statement(s) showing amount(s) deposited in United States business account( s) for the enterprise; (ii) Evidence of assets which have been purchased for use in the United States enterprise, including invoices, sales receipts, and purchase contracts containing sufficient information to identify such assets, their purchase costs, date of purchase, and purchasing entity; Page 4 of 7
  5. 5. (iii) Evidence of property transferred from abroad for use in the United States enterprise, including United States Customs Service commercial entry documents, bills of lading and transit insurance policies containing ownership information and sufficient information to identify the property and to indicate the fair market value of such property; (iv) Evidence of monies transferred or committed to be transferred to the new commercial enterprise in exchange for shares of stock (voting or nonvoting, common or preferred). Such stock may not include terms requiring the new commercial enterprise to redeem it at the holders request; or (v) Evidence of any loan or mortgage agreement, promissory note, security agreement, or other evidence of borrowing which is secured by assets of the petitioner, other than those of the new commercial enterprise, and for which the petitioner is personally and primarily liable.None of the above examples include purchasing developed property from a newcommercial enterprise that intends to use the revenue for future development.The regulation at 8 C.F.R. § 204.6(j)(5) states: To show that the petitioner is or will be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation, as opposed to maintaining a purely passive role in regard to the investment, the petition must be accompanied by: (i) A statement of the position title that the petitioner has or will have in the new enterprise and a complete description of the positions duties; (ii) Evidence that the petitioner is a corporate officer or a member of the corporate board of directors; or (iii) If the new enterprise is a partnership, either limited or general, evidence that the petitioner is engaged in either direct management or policy making activities. For purposes of this section, if the petitioner is a limited partner and the limited partnership agreement Page 5 of 7
  6. 6. provides the petitioner with certain rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act, the petitioner will be considered sufficiently engaged in the management of the new commercial enterprise. July 23, 2012, El Monte Regional Center Termination Upheld on Appeal2 I. THE LAWSection 203(b)(5) of the Immigration and Nationality Act (the Act), 8 U.S.C. §1153(b)(5), as amended by Pub. L. No. 107-273, 116 Stat. 1758 (2002),provides classification to qualified immigrants seeking to enter the United Statesfor the purpose of engaging in a new commercial enterprise in which the alienhas invested or is actively investing the requisite amount of capital and whichwill benefit the United States economy and created [sic] full-time employmentfor no fewer than 10 qualified workers.Section 610 of the Departments of Commerce, Justice and State, the Judiciary,and Related Agencies Appropriations Act of 1993 (Public Law), as amended,provides for a specific number of visas to implement a pilot program involvingregional centers in the United States. Subparagraph (a) of this section providesfor designation of regional centers based on "a general proposal for thepromotion of economic growth, including increased export sales, improvedregional productivity, job creation, or increased domestic capital investment." Aregional center applicant must explain how the regional center "shall havejurisdiction over a limited geographic area, which shall be described in theproposal and consistent with the purpose of concentrating pooled investment indefined economic zones." Subparagraph (c) provides that aliens admitted underthe pilot program may rely on "reasonable methodologies for determining thenumber of jobs created by the pilot program, including such jobs which areestimated to have been created indirectly through revenues generated fromincreased exports, improved regional productivity, job creation, or increaseddomestic capital investment resulting from the pilot program."The regulation at 8 C.F.R. § 204.6(m)(3) addresses requirements for regionalcenter proposals, including a clear description of how the regional center willpromote economic growth and verifiable detail on how jobs will be created2 http://www.slideshare.net/BigJoe5/aao-says-el-monte-termination-is-upheld-7-2312-with-my-comments-8412 Page 6 of 7
  7. 7. indirectly. Id. at (ii), (iv). The proposal must also provide a detailed statementregarding the amount and source of funds. Id. at (iii). Applicants must supportproposals with economically or statistically valid forecasting tools. Id. at (v).To ensure that regional centers continue to meet the requirements of the PublicLaw, legacy Immigration and Naturalization Service (INS) (now USCIS) issuedan implementing regulation providing legacy INS with the authority to terminatethe participation of a regional center "should it fail to satisfy theserequirements." 58 Fed. Reg. 44606, 44607 (Aug. 24, 1993). Specifically, theregulation at 8 C.F.R. § 204.6(m)(6) relates to the termination of regional centerstatus and provides, in pertinent part: USCIS will issue a notice of intent to terminate the participation of a regional center in the pilot program ... upon a determination that the regional center no longer serves the purpose of promoting economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment. The notice of intent to terminate shall be made upon notice to the regional center and shall set forth the reasons for termination. The regional center must be provided 30 days from receipt of the notice of intent to terminate to offer evidence in opposition to the ground or grounds alleged in the notice of intent to terminate. If USCIS determines that the regional centers participation in the Pilot Program should be terminated, USCIS shall notify the regional center of the decision and of the reasons for termination. As provided in 8 CFR 103.3, the regional center may appeal the decision to USCIS within 30 days after the service of notice.The potential reasons for the termination of a regional center extend beyondinactivity on the part of a regional center. 75 Fed. Reg. 58962, 58980 (Sep. 24,201 0).I could spend much time and effort in pointing out the various subtle as well asobvious differences. I could spend much time and effort explaining thesignificance of each change in approach and theorize on its deeper meanings, but Iwon’t. I will save that for clients from now on.SEE: http://www.slideshare.net/BigJoe5/joseph-p-whalen-professional-eb-5-services-rev-aug-5-2012 Page 7 of 7

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