For the more seasoned EB-5 practitioner, memories of when
construction jobs could not be counted towards the job creation requirement remain
vivid. While it is true that the some
construction jobs may now be counted, with the plethora of real estate projects
being introduced and managed by Regional Centers (RCs) nationwide, can we really
count these jobs with certainty?
It is well known that transparency is necessary for
maintaining and stimulating strong and robust economies. The World Bank has ranked
the United States fourth (4th) out of 183 countries with respect to
the ease of conducting business and fifth (5th) for protecting investors.
With billions of dollars being poured into the EB-5 program, are USCIS policies
consistent with investor expectations?
The present article focuses on the development and
practical application of EB-5 rules pertaining to the job creation requirement
for construction jobs. In doing so, the authors have thoroughly examined existing
USCIS guidelines, salient issues raised in the Service's RFEs, AAO decisions,
and relevant case law.
of EB-5 Law: Construction Jobs
Under current EB-5 law, both direct and indirect
construction jobs created as a result of a foreign entrepreneur's investment,
which last for at least two (2) years, may now count as permanent jobs. If a construction project is not reasonably
expected to last for at least two (2) years, then only the indirect and induced
jobs can be counted.
It should be noted that the issue of construction jobs is
not directly addressed in the current regulations. Under 8 CFR § 204.6 (g)(1),
a foreign investor may invest in a new commercial enterprise "provided each
individual investment results in the creation of at least ten full-time
positions for qualifying employees." Historically, given the intermittent and
seasonal nature of construction jobs, such jobs could not be counted towards fulfilling
the job creation requirement. How then, has USCIS reached the conclusion that
some construction jobs may now constitute full-time employment?
Evolution of the EB-5 program: Historical & Financial Considerations
It is important to underscore the fact that the EB-5
investor program also serves as an alternative method of raising investment
capital. Given this fact, it is important to consider certain historical and
financial conditions that may be used to explain this shift in USCIS policy.
In 2003, the 9th Circuit decision of Spencer Enterprises, Inc. v. United States
made it extremely difficult to argue that construction jobs should qualify as
full-time employment. There, the court held that full-time employment means
continuous, permanent employment. As a
result, during this period, EB-5 construction jobs (direct and indirect) could
not be included in final job creation numbers.
In the case of Spencer, an EB-5 investor, Li-*** Chang,
filed her I-526 petition with the Service on May 4, 1998. (NB: This occurred before the four (4) major
EB-5 "precedent decisions"
were published). The Service denied Chang's petition on January 27, 1999, which
she appealed to the Administrative Appeals Office (AAO). After the AAO upheld the Service's denial, the
petitioner then filed an appeal before the Eastern District in California in
2001. The case eventually made its way
for review and re-consideration before the 9th Circuit in 2003.
However by 2008, the financial crisis, ignited by the U.S.
sub-prime housing market, plunged the world into a great recession. Banks were unwilling
to lend and many construction projects were halted mid-way. Since the EB-5 program was established to
create jobs though alternative sources of investment capital, as a practical
matter, it made very little sense to stifle the growth of the construction
industry, which is a large creator of jobs and provider of much needed tax
Senator John Cornyn (R- TX) voiced this reasonable
concern in his December 10, 2008 letter to USCIS. In his letter, the Senator requested USCIS to
publish its "views on the job creation requirement as it applies to Regional
Centers generally and the construction industry specifically".
It is widely believed that this letter
facilitated a positive and favorable change in the Service's views and
interpretation of EB-5 job creation rules.
Loosens Rules Regarding Construction Jobs
On January 16, 2009, under pressure from stakeholders
such as regional centers and EB5
Practitioners USCIS released a policy memo directed at construction jobs in response
to Senator John Cornyn's question directed to USCIS's opinion about
construction job creation where large multi-year EB-5 investment projects were
involved. USCIS's present policy that although construction jobs did not count
toward the 10 direct (or indirect, in the case of the regional center) jobs
that must be created by each investor, indirect job creation (again in the case
of a regional center) did not count. This policy or guidance did not make
sense. In relevant part, Senator
Cornyn's letter stated that: "Indirect
and induced jobs created as a result of construction jobs whether counted or
not may be included in the job count. Even when the construction jobs may not
be counted towards the job creation requirement, they do have indirect and
induced impacts that are eligible to be included in the final job count because
they are 'continuous, permanent employment'." 
USCIS' response marked a significant development in job
creation for the EB-5 program. Subsequently,
on June 17, 2009, the agency issued a Memorandum from Donald Neufeld (i.e. the
"Neufeld Memo"), which further addressed the issue of construction jobs.
The Neufeld memo stated that construction jobs must be continuous full-time
employment, rather than intermittent, temporary, seasonal, or transient. He underscored the point that it is the
"position" created, which must be full-time rather than the employee. In
addition, Neufeld stated that the employees hired must be qualifying employees
In the context of direct stand-alone programs, an independent contractor does
not meet the requirement for job creation. In addition, multiple part-time
positions cannot be combined to qualify as full time employment.
The June 17, 2009 Neufeld Memo further states that:
employment in some industries such as construction or tourism can be
intermittent, temporary, seasonal or transient, officers should not exclude
jobs simply because they fall into such industries. Rather, the focus of the
adjudication should be on whether the position, as described in the petition,
is continuous full-time employment rather than intermittent, temporary,
seasonal or transient. For example, if a
petition reasonably describes the need for general
laborers [Emphasis added] in a construction project that is expected to
last several years and would require a minimum of 35 hours per week over
the course of that project, the positions would meet the full-time employment
requirement. However, if, for example,
the same project called for electrical workers to provide services during three
to four five week periods over the course of the project, such positions would
be properly deemed to be intermittent and not meet the definition of full-time
USCIS' new position has considerably relaxed the rules
relating to job creation for construction projects under the regional center
program. By allowing indirect and induced construction jobs as well as direct (at
least two (2) years in duration) construction jobs to be counted, RC's have a
real potential to attract more investors and hence more investment funds. However,
while USCIS is to be commended for the issuance of guidance related to
construction jobs, the Service has not clearly delineated the rules for
stand-alone versus RC projects.
Confusion remains as a result of the mixed use of adjudication standards
for regional center programs and for non-regional center programs.
Position on Construction Jobs: Recent RFEs & AAO Decisions
Based on recently-issued Requests for Evidence, USCIS has
acknowledged that the indirect and induced jobs created by construction projects
may be counted towards the total job count, even if the direct construction
jobs are intermittent, temporary, seasonal and transient, provided that the EB-5
project is "massive, expansive, and major".
To substantiate an assertion that a project will be "massive,
expansive and major", EB-5 investors must submit substantial evidence showing
that the scale, location, and level of sophistication required for the project
is such that it requires more than 2 years for completion. Examples of such a
project include a forty (40) story hotel building in Manhattan and a nuclear
How does one show that a construction project will take
two (2) or more years to be completed? In this regard, USCIS has issued many
RFE's requesting detailed explanations and timelines of the various
construction phases in RC projects as well as verification of the estimated
costs for construction projects. In an
effort to ensure compliance with Matter
in addition to the explanations mentioned, USCIS has also been requesting
independent supporting documentation to corroborate each assertion. These detailed requests clearly state that
supporting documents should include the analysis methods used to derive a
project's estimated timeline and cost.
USCIS has approved petitions, which include supporting
documents in the way of comparable study reports, affidavits of construction
professionals (architects etc.) - who can reasonably be considered to be
"experts" in their field given their educational and extensive background in
various aspects of construction projects - and feasibility studies of similar construction
projects in terms of scale, location, and the like, which have taken two (2) or
more years to completion. These studies
reasonably provide benchmarks against which similar construction projects
before the Service may be evaluated. It
is also a good idea to submit the staffing requirements for construction projects
- i.e. the types of construction workers that will be required and the length
of time for which they will be needed.
An AAO decision
(dated January 6, 2010, with File No. SRC 08 064 52066) further confirms USCIS'
position that construction jobs that are not counted as direct jobs may
nevertheless be counted as indirect or induced jobs in the regional center
term construction jobs less than three years in duration have been determined
to be of such a short term in nature as to not be sustained and to decrease and
disappear as the initial construction activities wind down to completion. Such
shorter term construction jobs in many locations are seasonal at best.
Nevertheless, for all capital investment expenditures for the construction
phase, all capital-induced "down-stream" support activities and "indirect" jobs
impacted and associated with the construction activities such as suppliers, transportation, engineering, and
architectural services, maintenance and repair services, interior design
services, manufacturing of components and materials, etc., may be factored
into the calculations for creation of indirect jobs."
The authors believe that USCIS is unlikely to make any
further drastic policy changes with respect to its position on construction
jobs. Such changes, as occurred in 1998, will undoubtedly open the floodgates
of litigation against the Service. Moreover, under the Administrative Procedure
Act (APA), an agency decision or finding of fact may be reversed if it is
considered "arbitrary, capricious, an abuse of discretion, or unsupported by
The major cases, memos, and AAO decisions primarily addresses
non-regional-center projects. However,
today, the vast majority of I-526 petitions are submitted under the regional
center program. Moreover, it is widely recognized that some USCIS adjudicators apply
non-regional-center construction job rules to regional centers. The sheer magnitude of the EB-5 program calls
for more transparent regulations and policies in the EB-5 arena. 
The EB-5 program has the potential to create
even more jobs and alternative sources of investment capital - a "win-win" for
all concerned. As a result, comprehensive,
consistent, and predictable EB-5 adjudication guidelines are needed more than
Shah & Associates reserves and holds for its own use, all rights provided
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All rights reserved by Mona Shah &
*Mona Shah, Esq. is the principal of Mona Shah
& Associates. The firm has assisted many Regional Centers and Investors in
navigating this complex, nuanced and constantly changing area of immigration
law. Mona has more than 15 years of legal experience in immigration law and extensive
knowledge in EB-5law as well as litigation in federal district court and
Yi Song, Esq. is an associate attorney at Mona
Shah & Associates focusing on EB-5 and securities law. She is also admitted
to practice law in People's Republic of China. She practiced two years in China
as a tax attorney. She has experience in class action securities litigation
cases. Yi is a graduate from Georgetown University Law Center in Washington,
 World Bank and International Finance
Corporation in Economy Ranking: http://www.doingbusiness.org/rankings
The Ease of Doing Business Index
Enterprises, Inc. v. United States, 229 F. Supp. 2d 1025, 1039 (E.D. Calif.
2001) aff'd 345 F. 3d 683 (9th. Cir. 2003).
 Matter of Soffici, (A76 472 614 June
30, 1998); Matter of Izumii, (A76 426 873 July 13, 1998); Matter of
Ho, (WAC-98-072-50493 July 31, 1998); and Matter of Hsiung, (A76 854
232 July 31, 1998)
 Letter to Senator John Cornyn from USCIS offices
File No. CO703.2342, Re: Job Creation Requirement for Immigrant Investor (January
16, 2009), P.1, Para. 1.
 Id. P. 1, Para. 4
from Donald Neufeld, Acting USCIS Associate Director, Domestic Operations,
to all USCIS offices, File No. HQDOMO 70/6.1.8
AD09-04, EB-5 Alien Entrepreneurs - Job
Creation and Full-Time Positions (AFM Update AD
09-04) (June 17, 2009).
 US citizens, LPR's, Asylees and certain EAD
 Matter of Ho, (WAC-98-072-50493 July
 Office of Administrative Appeals, Filed by Texas
Service Center, File No. SRC 08 064 52066 (dated January 6, 2010)
 AAO decision dated
January 6, 2010, File No. SRC 08 064 52066)
 5 U.S.C. § 706; McDade v. West, 223 F. 3d. 1135, 1139 (9th Cir. 2000)
than $1.25 billion direct foreign investment from EB-5 program was invested
into the US economy in the year 2011. (Source from: IIUSA, the national trade
association of EB-5 Regional Centers).