On Jul 15 2013 by H. Ronald Klasko

The “2 1/2 Year Rule” for Job Creation is Incorrect as a Matter of Law, Fact and Policy

The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.

USCIS presently applies an adjudicative standard, articulated in the Neufeld Memorandum of June 17, 2009, requiring proof that the requisite ten jobs will be created within 2½ years of the approval of the investor’s I-526 petition.  This does not appear in the statute, regulation or any precedent decision.  Rather, it is a creature of a non-binding memorandum.

The “rule” is premised on a six month period to complete adjustment of status or consular conditional immigrant visa processing.  The two year conditional residence is then added to arrive at the 2½ year requirement.

The “rule” is faulty for at least four reasons:

  • Neither the adjustment of status process nor the consular conditional immigrant visa process is usually completed within six months;
  • With the conditional immigrant visa process, the investor and his family have an additional six months after issuance of the conditional immigrant visa to actually immigrate to the U.S. and commence the two year period of conditional residence;
  • The regulations clearly state that the jobs do not all have to be created by the time of filing of the condition removal petition.  The jobs do not even have to be created by the time of the adjudication of the condition removal petition, which is traditionally many months after the two years.  Rather, the regulatory requirement is that the jobs must be created within a “reasonable time” after the adjudication of the I-829 condition removal petition; and
  • The two year job creation rule is arguably inapplicable to regional center investments.

Factual Basis is in Error

The faulty factual premise is that the approved EB-5 investor will obtain conditional permanent residence within six months.  Let’s look at reality.  Approximately, 80% of the world’s investors live in China.  The normal time from approval of the EB-5 petition until the issuance of the conditional immigrant visa at the U.S. Consulate in Guangzhou is approximately one year.  Upon issuance of the conditional immigrant visa, the investor has six months to enter the U.S.  Many investors wait several months after approval of the immigrant visa to enter the U.S. for a variety of reasons (children finishing school, selling real estate, liquidating businesses, arranging employment and other personal reasons).  Conditional permanent residence does not commence until the investor enters the U.S.

Therefore, conditional residence period for investors will likely commence anywhere from 12 months to approximately 18 months after approval of the I-526 petition.  As a result, the 2½ year rule requires the investor to fulfill the job creation requirement long before the end of the two year conditional residence period, which is inconsistent with 8 CFR § 216.6(a)(4)(iv).

Questionable Legal Basis for 2½ Year Rule

The job creation regulation, 8CFR§204.6(j) (4), is divided into three parts – “general”, which applies to direct EB-5; “troubled business”; and “immigrant investor pilot program”.  The “general” requirement (arguably not applicable to troubled businesses and regional center pilot program investors) is that the comprehensive business plan shows the need for at least ten qualifying employees within the next two years.  The troubled business regulation requires that the I-526 petition include evidence that the number of existing employees will be maintained at no less than the pre-investment level for at least two years.

However, for the large majority of investors who invest in regional centers, there is no two year job creation rule to be found anywhere in the regulations.  Rather, 8CFR§204.6(j) (4) (ii) only requires evidence that the direct or indirect employment will be created from the investment but with no time period specified whatsoever.  8CFR§204.6(m), which is the added regulatory section relating to regional centers, lists the requirement that the regional center describe how it will promote economic growth through job creation and how jobs will be created; but there is likewise no mention whatsoever of a time period.  In the absence of such a two year time period for regional center investors, the only time period that exists is the requirement in 8CFR§216.6(c)(1)(iv) that the jobs be created “within a reasonable time” following the approval of the condition removal.  See also 8 CFR § 216.6(a) (4) (iv).

Policy Issues

In addition to the questionable legal basis and the faulty factual premise, the 2½ year rule is inadvisable as a matter of policy.  There is a reason why the regulations draw a distinction between general EB-5 and pilot program EB-5.  General EB-5s are, by their very nature, individual investments that be expected to create jobs within a defined period of time.  The whole concept of regional center EB-5s is to encourage larger projects that will take far longer to develop and that by their very nature will not create jobs within the same defined period of time.  By creating the 2½ year rule and applying it to regional center projects, USCIS has in many cases eliminated any possibility of counting operations jobs, leaving only construction jobs.  It is not unusual for a large construction project to take two to three years to complete.  As such, operations jobs will not happen within the 2½ year timeframe.  It is hard to believe that this is an intended policy consequence.

Furthermore, it is impossible for the EB-5 petitioner to know when the jobs have to be created.  I-526 processing times continue to increase.  While some EB-5 petitions are approved in 6 months or less, more are approved in periods approaching or exceeding twelve months.  The 2½ year rule starts on the date of approval of the EB-5 petition, the date of which (or even the approximate date of which) the investor has no conceivable way of knowing.

The 2½ year rule is inconsistent with the requirement of 8 CFR §216.6(a)(4)(iv) that the jobs have to be created within a reasonable time, not of the filing of the I-829 petition, but of the approval of the I-829 petition.  I-829 processing times are presently listed as one year.  Therefore, in order to get an I-526 petition approved, the investor must prove job creation within a period that is often long before the end of the conditional residence period and even longer before the approval of the conditional residence petition and even far longer before the regulatory requirement of job creation within a reasonable time after the approval of the I 829 petition.

Finally, with quota retrogression, the foundation of the rule is completely undermined.  As a practical matter, when the quota retrogresses, there will be no reliable indicator of when any particular investor’s priority date will be reached.  Until the priority date is reached, no adjustment of status application can be filed and no conditional immigrant visa interview can be scheduled.  As arbitrary as the 2½ year rule is presently, it would be completely unjustifiable with quota retrogression, which could result in the investor having to prove the requisite job creation before he ever even becomes a conditional permanent resident.


As a matter of law, as a matter of fact and as a matter of policy, the 2½ year rule, at least with respect to regional center EB-5 petitions, should be eliminated.