On July 24, 2020, USCIS issued a Policy Alert titled “Clarifying Guidance for Deployment of Capital in Employment-Based Fifth Preference (EB-5) Category.” The Policy Alert outlines those changes that USCIS made, without prior notice to the public, regarding its policy on “redeployment” of EB-5 capital, including:

1. Clarifies requirements for deployment of capital generally, including providing new language regarding the deployment of capital through any financial instrument that meets applicable requirements as well as explaining how the purchase of financial instruments on the secondary market will generally not satisfy such requirements.

2. Clarifies that capital may be further deployed into any commercial activity that is consistent with the purpose of the new commercial enterprise to engage in the ongoing conduct of lawful business. This clarification is meant to address potential confusion among stakeholders regarding prior language about the “scope” of the new commercial enterprise while remaining consistent with applicable eligibility requirements.

3. Provides that further deployment must be through the same new commercial enterprise.

4. Provides that further deployment must be within the geographic area of the same regional center, including any amendments to the regional center’s geographic area approved before the further deployment.

5. Explains that, based on an internal review and analysis of typical EB-5 capital deployment structures, USCIS generally considers 12 months as a reasonable amount of time to further deploy capital, but will consider evidence showing that a longer period was reasonable.

The changes by USCIS, meant to clarify the agency’s position on redeployment, have caused concern among stakeholders. Among the changes above, USCIS never confirmed the redeployments need to occur within geographic scope of the regional center, nor did it assign a timeline for redeployment. Moreover, USCIS clarified that “any financial instrument” can qualify for a redeployment but that the purchase of financial instruments traded on secondary markets generally does not satisfy the EB-5 requirements because such secondary market purchases generally: (1) are not related to the actual undertaking of business activity; (2) do not make capital available to the job-creating business; and (3) represent an activity that is solely or primarily financial rather than commercial in nature.

The Policy Alert states that these clarifications apply to all Form I-526 and I-829 petitions pending on or after the date of publication, which occurred on July 24, 2020. This is problematic from a stakeholder perspective, as USCIS provided no notice to the public regarding these changes, yet it seems USCIS seeks to apply these rules to all EB-5 cases. Further, USCIS published draft redeployment guidance in 2015 and final guidance in 2017, neither of which included these above-listed restrictions. EB-5 stakeholders have been operating under the previous USCIS guidance for almost five years. There may be litigation over these changes that were published without any notice to the public before its effective date of July 24, 2020.