By Dillon Colucci and Jennifer Hermansky
The USCIS May 30, 2013 EB-5 Policy Memorandum (the “Policy Memo”) was welcomed by the EB-5 community when it was first released. It remains the best guidance USCIS has provided regarding its EB-5 adjudications. However, it is not without controversy. For example, the Policy Memo explicitly states that USCIS “will not request additional evidence to validate the job creation estimates in the economic models to prove by a greater level of certainty that the indirect jobs created, or to be created, are full-time or permanent.” See Policy Memo at 17. This conforms to the regulations at 8 C.F.R. 204.6(m)(7) and the definition of indirect jobs, which are defined as those that are created as materials and other inputs to production are supplied to the project (e.g., the supplier of steel to the construction firm hires additional staff). Thus, we can take reasonable comfort that USCIS will not request hard evidence (i.e. payroll records, I-9s, W-2s, etc.) to establish that indirect jobs are full-time (i.e. more than 35 hours a week).
However, the next sentence in the Policy Memo states “USCIS may, however, request additional evidence to verify that the direct jobs will be or are full-time and permanent, which may include a review of W-2s or similar evidence at the Form I-829 stage.” Id. Such “additional evidence” would likely be payroll records, I-9s, W-2s and any other documentary evidence of the individuals employed in those direct jobs. This is contrary to the evidence required to demonstrate that model derived direct jobs, indirect jobs, and induced jobs have been created; which is simply demonstrating an input in an economic model was spent. For example, if an economic model calculates model derived direct jobs, indirect jobs, or induced jobs via the hard costs of construction of a project, the evidence required to demonstrate these jobs have been created would consist of documentary evidence that such hard costs of construction were spent as planned. This type of evidence would be provided in an I-829 Petition to demonstrate the calculations of an economic report contained within an I-526 Petition have actually occurred.
Because this sentence in the Policy Memo does not clarify whether it is referring to model derived direct jobs[1] or direct jobs (e.g. actual, full-time, W-2 employees of the new commercial enterprise), there may be some confusion about whether or not USCIS will request hard evidence of model derived direct jobs (i.e. payroll records, I-9s, W-2s, etc.). Model derived direct jobs are jobs that are created directly by the new change in final demand for a given project (e.g., the developer hires a construction management firm).
The likely answer is that USCIS is referring to “direct jobs” of the new commercial enterprise (i.e. actual, full-time, W-2 employees) in this sentence and will not request hard evidence of model derived direct jobs at the I-829 Petition stage to support model derived direct jobs. Additionally, it has been established by USCIS through its adjudication practices that such evidence is not necessary to verify model derived direct jobs. The regulations at 8 C.F.R. 204.6(m)(7) also support this interpretation. The regulation states that indirect job creation can be demonstrated by “multiplier tables, feasibility studies, analyses of foreign and domestic markets for the goods or services to be exported, and other economically or statistically valid forecasting devices which indicate the likelihood that the business will result in increased employment.” Because USCIS defines “indirect jobs” in the Policy Memo as “those that are held outside of the new commercial enterprise but are created as a result of the new commercial enterprise” and model derived direct jobs are not held by the new commercial enterprise, model derived direct jobs fit the definition of “indirect jobs” as defined in the Policy Memo.[2] Accordingly, USCIS views “model derived direct jobs” as “indirect jobs” for the purposes of demonstrating job creation via reasonable economic methodologies. It should be noted, however, that if “direct” jobs of the job creating entity are used as the input to the economic model in order to derive indirect and induced operations jobs, USCIS may request evidence that the “direct jobs” exist as part of the I-829 Petition. Therefore, this input is usually discouraged.
[1] An economic model will analyze the direct, indirect and induced impacts of economic activity. Thus, direct impacts or direct jobs (described here as “model derived direct jobs”) as defined by an economic model are not actual, full-time, W-2 employees of the new commercial enterprise.
[2] “[I]ndirect jobs” as defined by the Policy Memo also includes induced jobs and indirect jobs, for a total of 3 categories of jobs, model derived direct jobs, indirect jobs and induced jobs.
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