AAO decisions on source and path of funds appeals

Petitioners who believe that their I-526 was denied in error have the option of appealing to the Administrative Appeals Office. AAO decisions on these appeals eventually get published to the USCIS website, where I read them and take notes to learn more about directions in EB-5 adjudications. I also download copies of the decisions, since the recent USCIS website redesign makes the decisions awkward to find, and since USCIS sometimes deletes files (as happened recently with all I-526 decisions from late June 2020 to September 2020, for example).

For community reference, I have made a folder that collects all AAO decisions since 2018 that specifically address source of funds, including a number of decisions since deleted from the USCIS website: https://www.dropbox.com/sh/igmg6anauua0mtz/AAA2uOuDIfTmKd1C72UJV74Ua?dl=0. A majority of the source of funds appeals since 2019 involve petitioners from China or Vietnam whose path of funds included third party exchangers. The decisions help trace the development of USCIS/AAO thinking on the issue of currency swaps, and include a few sustained appeals. While I do not work with EB-5 source of funds, I hope that this collection of AAO decisions will be helpful reference for people who are facing source-of-funds-related RFEs and NOIDs, or litigating on behalf of EB-5 investors. And I would love to see updated industry articles and advocacy on source/path of funds adjudications. The articles I know about (linked below) are from 2017/2018.

In a currency swap, the EB-5 investor sends local currency to the local account of an intermediary, and the intermediary then wires an equivalent amount in US dollars to the investor’s account in the U.S.  Starting in late 2016/early 2017, USCIS began to issue RFEs requesting source-of-funds documentation for the intermediary/third party exchanger’s funds, as well as evidence to overcome presumption that the exchange itself was unlawful. Older articles for reference:

Assessing EB-5 TEA Qualification (online tools)

How can we tell whether an area qualifies as a Targeted Employment Area for EB-5, now that states no longer issue TEA designation letters?

Letters are a handy form of evidence, better than printing out thousand-row spreadsheets, so most Form I-526 will still be accompanied by a letter that presents data and explains TEA qualification. The project company, regional center, or lawyer can hire a private expert to write the letter. But naturally, the analysis won’t look as automatically authoritative as a letter signed by a state labor department. So how can we still feel confident about TEA analysis? With TEA qualification making the difference between a $900,000 investment and a $1.8 million investment, we want to be sure on this point.

Thankfully, new online tools have helped to add convenience and transparency to the TEA process. The websites for the U.S. Census Bureau and Bureau of Labor Statistics are quite difficult for laymen to navigate, but three EB-5 industry sources have compiled relevant Census and BLS data in online TEA tools. I can recommend the following, having tested each (and if you know of any others, send me a link and I’ll try them out too): IIUSA TEA ToolImpact DataSource TEA ToolEB5 Affiliate Network TEA Tool.

The TEA tools are set up so that you enter an address, and the tool will tell you whether and how that address can qualify as a TEA. The tools use the same data options and methods consistent with USCIS guidance, while differing in which types of TEA geographies they particularly highlight or facilitate checking.

As a reminder, a given address may qualify as a TEA with respect to its location in the following geographies: single census tract, census tract group, MSA, county that is within an MSA or contains a city/town with population over 20,000, city/town with population over 20,00 which is outside an MSA, or rural area outside an MSA and not in the outer boundary of a city/town with population over 20,000. (Census tract group is the most common type of TEA.) In addition to geography options, TEA designation offers data options (with data available from the Bureau of Labor Statistics and/or U.S. Census Bureau explicitly sanctioned by USCIS as reasonable). If a given address qualifies as a TEA at multiple geographic levels and with multiple data options, so much the better.

I’d go to the IIUSA tool first if I wanted to scan a map looking for obvious TEA areas, or if I were interested in any geography option besides census tract group. I’d go to the IDS or EB5AN tools first if I expected a location to qualify as part of a census tract group. Both the IDS and EB5AN tools automatically identify which contiguous census tracts will optimize the TEA opportunity within USCIS policy restrictions. The IDS tool is unique in offering an additional trend feature that uses the latest monthly BLS data to help foresee future TEA changes – which will be significant in 2021, considering the crazy employment year in 2020. The EB5AN tool has the advantage of integrated map with census tract overlay, and the option of downloading a free template TEA letter.

I think it’s easy and good practice to just check all three tools when examining a particular location, though each should offer the same conclusions. That way if one company or organization eventually neglects to update data on time or makes some other slip, the difference from another tool will flag the issue and help prevent mistakes. And then, having used the online tools as a research reference, you can pay a qualified consultant to actually write up a TEA analysis letter, present the data, and remind you about the TEA qualification issues besides data and geography (TEA timing, and where jobs are located).

TEA Tool Comparison

Tool IIUSA TEA Tool
 
Impact DataSource TEA Tool EB5 Affiliate Network TEA Tool
Source Industry trade association Economist service provider Regional center operator
Advantages / Distinctive Features Best if you want to scan a map to visually identify rural areas and single census tract TEAs.
Only tool that reports county, MSA, and city-level data as well as census tract data.
Map portion of the tool functions most smoothly.
Good for identifying census tract group TEAs.
Best for predicting future TEA changes, as it separately reports and illustrates the latest monthly unemployment data trends.
Facilitates creating your own census tract groups.
Includes MSA TEAs.
Good for identifying census tract group TEAs.
Only option that offers to automatically generate a free TEA letter.
Census tract grouping tool is integrated with the map.
More detail than IDS (but less than IIUSA) for county and rural TEA.
Comparative Disadvantages Does not identify or automatically calculate census tract group TEAs (though it provides data that allow doing this oneself). The map integrated with the tool is not visually helpful – no overlay of census tract or other boundaries.
While correctly assessing TEA qualification at the county, MSA, and rural level, does not show the data used to make those determinations.
Intrusive advertising.
Map portion does not work as smoothly as IIUSA’s. Can have technical glitches if checking multiple addresses.
Rounding data to two decimal places maximizes opportunity for marginal TEAs (strength and weakness).
Does not flag MSA TEA.

As an illustration, a few screen shots of the various options for checking how my office location may qualify as a TEA.

Source of all invested capital

From: Suzanne Lazicki
Sent: October 8, 2020 7:04 PM
To: ‘public.engagement@uscis.dhs.gov’
Subject: EB-5 Question

Dear IPO,

This email asks a single important question in response to the EB-5 Call for Questions. My small business owner clients and I look forward to your response.

Why does the May 2019 USCIS Adjudicator Training instruct adjudicators to apply the lawful capital requirement in 8 CFR 204.6(g)(1) only to “non-EB-5 sources of capital invested in the NCE,” creating a requirement specific to standalone petitioners to identify and be liable for source of funds for other NCE owners?

8 CFR 204.6 (g)(1) does not say that pooled investment is allowed “provided that the source(s) of all non-EB-5 capital is identified and all non-EB-5 owner capital has been derived by lawful means.” Rather, the regulation says “all capital.”

” ….. The establishment of a new commercial enterprise may be used as the basis of a petition for classification as an alien entrepreneur even though there are several owners of the enterprise, including persons who are not seeking classification under section 2 0 3 (b) ( 5) of the Act and non-natural persons, both foreign and domestic, provided that the source(s) of all capital invested is identified and all invested capital has been derived by lawful means.8 CFR 204.6 (g)(1) (emphasis added).

8 CFR 204.6 (g)(1) refers to all capital and all owners. What’s required — and not required — of a given petitioner with respect to other NCE owners applies regardless of owner type per the regulations.

The Form I-526 and I-526 Instructions request evidence only for the petitioner’s own lawful source of funds. It is unreasonable to interpret 8 CFR 204.6 (g)(1) as requiring each petitioner to identify, validate, and bear responsibility for the source of all other funds in the same NCE, whether from non-EB-5 or EB-5 owners. But if USCIS does make this extreme interpretation, then it would have to apply per the regulation to “ALL INVESTED CAPITAL”. The regulation does not justify applying 8 CFR 204.6 (g)(1) to non-EB-5 capital only, and using it just to hassle stand-alone petitioners, as has been occurring in I-526 Requests for Evidence issued since May 2019.

USCIS does not deny or revoke the I-526 for EB-5 investor A if EB-5 investor B in the same NCE is found to have a problem. Apparently recognizing that B’s identity and funds are not pertinent to A’s eligibility, USCIS does not ask regional center Petitioner A to identify EB-5 investor B or to validate B’s lawful funds – either in the Form I-526 or in RFE. How then is it reasonable in the standalone context for USCIS to interrogate EB-5 Investor A in RFE about Investor B, predicating A’s eligibility on B?

The basic unreasonableness and lack of justification in the request helps to explain why the Form I-526,  I-526 Instructions, and published policy and filing tips say nothing about evidence to be provided by a petitioner to USCIS for other NCE investors and their source of funds. With no such evidence officially or publicly required, NCEs and petitioners have no way no know when filing I-526 what evidence may be requested, and adjudicators are left to individual caprice in issuing evidence requests. For example, from a sample of four RFEs issued to standalone investors in December 2019, one RFE asks for government ID or business registration document for each other NCE owner, one RFE asks for ID documents plus filed income taxes for each other NCE owner, one RFE asks for ID documents plus narrative description of business activities corroborated by “complete bank statements” for each other NCE owner, and one RFE does not ask about source of funds for non-EB-5 NCE owners. Is this not the definition of arbitrary and capricious processing? Even if such evidence were likely to be available to a petitioner post-hoc from independent parties not seeking immigration benefits. How do evidence requests that are unsupported in theory, unevenly applied, unprecedented in prior practice, impractical in fact, and undisclosed except in a few RFEs support program integrity? These RFEs clearly reflect an error that IPO should correct quickly in order to protect credibility and avoid litigation.

Suzanne Lazicki     Lucid Professional Writing
(626) 660-4030       Cell, WhatsApp, Telegram
suzanne@lucidtext.com
2314 Washington Blvd., Ogden, UT 84401
www.lucidtext.com/

Regional center program authorization and USCIS stabilization

Today begins Fiscal Year 2021. The good news is that the government remains funded and the regional center program remains authorized at least until December 11, 2020 thanks to the H.R.8337 –  Continuing Appropriations Act, 2021 and Other Extensions Act signed early this morning by President Trump. Assuredly no one in government spared a thought for EB-5 this year. The regional center program regularly gets extended as part of the appropriations process unless someone goes out of the way to change it. Such out-of-the-way effort is unlikely considering other issues competing for attention in Washington, and considering that USCIS already accomplished by regulation the major “reforms” that previously motivated EB-5 legislation. Regional center program authorization might be drama-free, these days, if only the appropriations process were drama-free. My chart of regional center authorizations since 2016 does not reflect disputes about regional center authorization, but rather repeated breakdowns in the overall effort to keep the government funded. Each of the PLs in the chart represents an appropriations act or a continuing resolution on appropriations.

Under normal circumstances, we’d be starting FY2021 with funding for FY2021. As it is, we have a continuing resolution that extends the deadline on FY2020 appropriations for another few months, at which time Congress may manage a funding bill through September 2021 – or more likely, another continuing resolution or two. Meanwhile, I don’t expect legislative changes specific to EB-5 any time soon. (FYI this July 2020 IIUSA webinar gave a very interesting look behind the scenes of EB-5 advocacy for long-term authorization and program improvements, and insight into the lack of results.)

In addition to extension of regional center program authorization (in Division A on p 2 – see my Washington updates page for specific language if you’re interested), H.R.8337 includes the Emergency Stopgap USCIS Stabilization Act (in Section 2 Division D Title I, starting on p. 30). This piece of legislation cleverly responds to USCIS’s request for a Congressional bailout by calling on USCIS to raise funds the way it’s supposed to: by collecting fees for services. I avoided talking about this before it was passed, because the legislation could’ve been controversial.  USCIS is apparently trying to get away from providing services to immigrants, and would prefer to be funded by the American taxpayer. The Emergency Stopgap USCIS Stabilization Act authorizes USCIS to sell immigrants a new product at an increased price; specifically, authorizing USCIS to expand and increase the fee for premium processing.  The previous law at 8 U.S.C. 1356(u) had generally authorized USCIS to collect a premium fee of $1,000 for “employment-based petitions and applications.” The Emergency Stopgap USCIS Stabilization Act gives a more specific list of authorized benefit types (including specifically name-checking EB-1, EB-2, and EB-3 through the reference to “aliens described in paragraph (1), (2), or (3) of section 203(b)”), and raises the authorized fee to $2,500. EB-5 is not specifically mentioned in the new law, but also not excluded from premium processing by the original law. USCIS would apparently not need additional authorization from Congress to offer premium processing for EB-5, which falls under the long-authorized category of “employment-based petitions and applications.” However, the long-standing and likely-to-continue barrier in EB-5’s case has been USCIS, which has repeatedly declined to offer premium processing for I-526, I-924, or I-829. (For a recent example, see p. 6 of Sarah Kendall’s remarks at the October 29, 2019 IIUSA industry forum.) USCIS must guess that 99.9% of EB-5 applicants would take the service if offered, making the service difficult to deliver.

I’ll be very interested to see how USCIS responds to this legislation. The new law authorizes but does not compel USCIS to expand and raise fees for a popular discretionary service. Will USCIS actually do this for the sake of budget-stabilizing new fee revenue? Or will the agency continue to sit back and not offer fee-generating services while still complaining to Congress about budgetary problems? Just this week, USCIS posted another statement on budget issues, this time responding to a preliminary injunction enjoining the new fee rule that would have taken effect and raised fees across form types starting October 2, 2020.

My favorite part of the Emergency Stopgap USCIS Stabilization Act is this paragraph at the end, with the welcome title “reporting requirements.”

SEC. 4103. REPORTING REQUIREMENTS.
(a) IN GENERAL.—Not later than 180 days after the date of the enactment of this Act, the Secretary of Homeland Security shall provide to the appropriate Committees a 5-year plan, including projected cost estimates, procurement strategies, and a project schedule with milestones, to accomplish each of the following:
(1) Establish electronic filing procedures for all applications and petitions for immigration benefits.
(2) Accept electronic payment of fees at all filing locations.
(3) Issue correspondence, including decisions, requests for evidence, and notices of intent to deny, to immigration benefit requestors electronically.
(4) Improve processing times for all immigration and naturalization benefit requests.

USCIS EB-5 Stakeholder Question Invitation

From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com>
Sent: September 25, 2020 11:32 AM
Subject: Ask USCIS A Question: EB-5 Immigrant Investor Program

Ask USCIS A Question

EB-5 Immigrant Investor Program

Do you have questions about the Immigrant Investor Program, also known as the EB-5 program?  USCIS would like to hear from you.

If you have questions about the EB-5 program, we invite you to submit questions by emailing public.engagement@uscis.dhs.gov by Oct. 9 at 4 p.m. Eastern. Put “EB-5 Question” in the subject line. We will not address case-specific questions.

USCIS will release an online presentation to provide program updates and respond to pre-submitted questions.

Note to media: Please contact the USCIS Press Office at media@uscis.dhs.gov for any media inquiries.

Please do not reply to this message. Contact us at Public.Engagement@uscis.dhs.gov with any questions.

To view a list of upcoming local and national engagements, please visit uscis.gov/outreach.

To update your RSVP, modify your email address, or to unsubscribe from our mailing list, please visit your Subscriber Preferences Page.

EB-5 Visa Availability in FY2021

October 2020 begins the government’s new fiscal year, which means a new set of annual visas available.

The October 2020 Visa Bulletin announces that that the annual limit for Employment-Based (EB) visas – normally 140,000 – will be approximately 261,500 for FY2021.

The quota for EB-5 (employment-based fifth preference) is 7.1% of total EB visas by law. So the EB-5 quota — which is approximately 140,000*0.071=9,940 in a normal year – will be approximately 261,500*0.071=18,567 for FY2021.

The country cap also shares visas on a percent basis – 7.0% to each country. So each country limited by the country cap can expect at least 18,567*0.07=1,300 EB-5 visas available in FY2021. China, the country with oldest EB-5 applicants, will theoretically get what’s left of 18,567 after deducting 2,600 visas for India plus Vietnam and however many rest-of-the world applicants can get I-526 approval and visa processing in time to claim visas (historically, under 4,000 visas).

What does this mean?

First, note that the extra employment-based visas available in FY2021 represent family-based visas that went unused in FY2020.  261,500 – 140,000 = 121,500, so we now know that 121,500 FB visas available in FY2020 were not issued, thanks to the combined effect of anti-immigration executive orders and consular closures. FB’s loss is EB’s gain. (I previously wrote a guest article explaining how the visa allocation process works, and anticipating the extra visas.)

[10/1/2020 UPDATE: Note that the updated version of the Heroes Act (coronavirus relief bill) passed in the House on 10/1 includes language in Division T Title I (PDF p. 2023-2024) that would change the allocation of unused visas for FY2021 and FY2022, returning family-based visas to the family-based category. This Democrat-centric bill currently has no chance to progress further. But if the language in the House bill did become law, then EB-5 would go back to expecting no more than 9,940 visas available in FY2021 and FY2022, instead of benefiting from unused family-based visas.]

What extra FY2021 visa availability means in practice for EB-5 will depend on whether and where available visas can be issued. Keep in mind these three constraints on the visa process:

  1. The number of visas available to EB-5. (This year will have almost twice as many as usual)
  2. How many visas the consulates can issue. (Still unknown when consulates will resume normal operations. A number of consulates – for example in nearly-virus-free Vietnam – have never had much pandemic excuse to close, and yet still at minimal operations, judging by monthly reports. The consular processing forecast going forward appears to depend on political as well as pandemic trends.)
  3. How many visas can be issued through adjustment of status. (This depends on how many EB-5 investors are in the U.S., how efficiently IPO can approve I-526 for those investors, and how efficiently USCIS can process I-485.)

The overall best case scenario is that consulates and USCIS will both go back to doing their jobs, and over 18,500 EB-5 visas will actually get issued in FY2021, equably to the oldest applicants both abroad in the U.S. That could shave almost one year off the expected visa wait times for Vietnamese and Indian investors, and deduct several years from the expected China wait time. (This benefit will be countered by however many expected FY2020 visas were lost due to consulate closures: we don’t know this number yet.)

Alternatively, if consular processing remains stuck while USCIS works efficiently in FY2021, then the few Vietnamese, Indian, and even Chinese EB-5 applicants able to use I-485 in the U.S. may skip their entire expected visa waits and get visas this year. Meanwhile, their compatriots abroad would face future wait times lengthened by the number of visas issued out-of-chronological order in the U.S. (and concurrently shortened by the number of visas issued above the average quota, if any).

Alternatively, if consular processing remains stuck and also USCIS continues operating at low volume, both for I-526 and I-485, then FY2021 may end with many of the technically-available EB-5 visas not having been issued to anyone. In that case, the unused EB-5 visas would be lost to EB-1 (as happened to any available EB-5 visas not issued in FY2020). In that case, EB-5 wait times (calculated based on the expectation of about 10,000 visas issued annually) would be lengthened across the board according to how far FY2020 and FY2021 fell below the expected average visas issued.

The Visa Bulletin is Department of State’s lever to channel visa demand. DOS knows more than we do about plans for consular operations, USCIS operations, and the number of people with pending I-526, pending I-485, and pending visa applications. So I try to read between the lines of the visa bulletin to understand what they know about constraints going forward.

Quoted from the October 2020 Visa Bulletin

E. MOVEMENT OF THE OCTOBER FINAL ACTION AND APPLICATION FILING DATES

Employment-based:  All of the Final Action and Application Filing Dates have been advanced at a very rapid pace, in anticipation of the FY 2021 annual limit being approximately 261,500, an all-time high.  The movement of these dates has been taken in consultation with USCIS Office of Policy and Strategy to accommodate processing plans for USCIS Offices during the coming fiscal year and to maximize number use within the FY 2021 annual limits.  Pending demand, in the form of applications for adjustment of status, and documentarily qualified immigrant visa applicants, is well below the estimated annual limit of 261,500.  Adjustment of status applications filed early in FY 2021 are most likely to be adjudicated during the upcoming fiscal year. [UPDATE: at about noon on 9/24, this last sentence was deleted from the visa bulletin.]

F. VISA AVAILABILITY IN THE COMING MONTHS

EMPLOYMENT-based categories (potential monthly movement)

Employment Fifth:  The category will remain “Current” for most countries

China:       No forward movement
Vietnam:   Limited forward movement

The above final action date projections for the Family and Employment categories indicate what is likely to happen on a monthly basis through January.   The determination of the actual monthly final action dates is subject to fluctuations in applicant demand and a number of other variables.

“All of the Final Action and Application Filing Dates have been advanced at a very rapid pace” in anticipation of a record-high visa limit, says the Visa Bulletin Section E. Only that statement is not true for the EB-5 category. The October 2020 Visa Bulletin has exactly the same Final Action and Application Filing dates for EB-5 as the September 2020 visa bulletin (except for the note about visa unavailability in case the regional center program is not reauthorized). The visa bulletin further predicts little to no forward movement for the China and Vietnam EB-5 dates at least through January.

With so many more visas available to EB-5, why isn’t the visa bulletin moving EB-5 dates? One factor is this statement in Visa Bulletin Section E: “The movement of these dates has been taken in consultation with USCIS Office of Policy and Strategy to accommodate processing plans for USCIS Offices during the coming fiscal year and to maximize number use within the FY 2021 annual limits.” Normally, visa bulletin date movement is just to maximize number use within numerical limits. It’s interesting that the visa bulletin admits a (presumably conflicting) second factor: “to accommodate processing plans for USCIS Offices.” DOS realizes that EB-5 visa issuance will be constrained by how efficient USCIS is planning to be this year. (Also, intriguing that the visa bulletin does not mention consultation with consulates about their also-relevant processing plans.)

Another factor in future visa bulletin movement: past visa bulletin movement. DOS already advanced the EB-5 Final Action and Application Filing dates very significantly in FY2020 to try to maximize visa usage under the consular processing constraint. The dates jumped in 2020 to August 2015 for China and August 2017 for Vietnam, which released a significant amount of visa demand. But then consulates all-but-stopped issuing visas, so that demand released by past visa movement is probably largely still waiting now for final action. Assuming consulates get back on track in FY2021, they may have enough EB-5 demand already to keep them busy for awhile due to constraints in 2020. Also, the fact that USCIS will now allow I-485 to be filed based on Chart B in October 2020 (while it had used Chart A since April 2020) opens up some additional visa demand for the new year. The EB-5 visa bulletin dates will only have to really jump forward for EB-5 if consular processing remains blocked indefinitely by the pandemic/politics, and the visa bulletin effectively just becomes a lever for adjustment of status demand.

This sentence from the visa bulletin Section E is also significant: “Adjustment of status applications filed early in FY 2021 are most likely to be adjudicated during the upcoming fiscal year.” [UPDATE: And even more significant: the visa bulletin was revised about seven hours after posting to delete this sentence.] The sentence suggests that DOS anticipates a good year of EB-5 visa availability for adjustment of status. Besides the increased visa quota, this could reflect predictions about limited visa demand from consular processing and/or limited volume of AOS applicants possible in light of I-526 circumstances. [The fact that the sentence was subsequently deleted suggests that USCIS called DOS to complain about representations regarding likely adjudication performance.]

For investors born in Mainland China (and people advising Chinese investors and planning redeployment), I do have a new visa timing analysis ready for China. It’s customized by quarter based on I-526 receipt data, and models scenarios around the I-526-to-visa ratio and potential range of future visa availability for China. But it’s complicated, with the number of variables involved. I’m thinking I’d better do something like a webinar or individual Zoom calls to talk through the data and scenarios, rather than just send a heavy Excel file with a book of comments. Please email me at suzanne@lucidtext.com if you are interested in my timing analysis service for China and have suggestions about the delivery and payment method that would work for you.

Investors born in Hong Kong, I still do not have news. But I notice that the October 2020 Visa Bulletin still just has the column title “CHINA-mainland born” in Chart A and Chart B, and mentions no limits for Hong Kong. So it seems to be business as usual, so far. The DOS U.S. Visa News page and the Hong Kong Consulate Immigrant Visa page have yet to interpret the Hong Kong executive order.

The employment-based visa backlog and wait times continue to be an issue of common concern, thanks to on-going lobbying around the Fairness for High-skilled Immigrants Act. I’ve written about this several times over the years, but will discuss the country caps again as time permits.

And a reminder of my PayPal link, which gives opportunity to support the effort behind this blog. As the EB-5 industry changes, your contribution will help preserve this space for in-depth, unbiased, ad-free, and freely-available EB-5 reporting.

Supporting Mandamus and APA actions

EB-5 investors facing excessive processing delay have the option to sue USCIS. They can bring claims under the Administrative Procedures Act, which permits federal courts to compel agency action “unlawfully withheld or unreasonably delayed.” 5 U.S.C. § 706(1), and/or under 28 U.S.C. § 1361, which provides for mandamus: an order to compel the agency to do its duty.

But what is constitutes unreasonable delay? What is USCIS’s duty with respect to processing petitions? Is there any hope in suing USCIS over delay for petitions that have been waiting less than the “normal processing” time defined on the USCIS Check Case Processing Times Page? When challenged in court, can USCIS actually support a claim that 3-6-year processing times are normal?

We’re seeing those questions tested now in district court, as USCIS has been fighting APA and Mandamus actions by investors whose I-526 have been pending less than the posted processing times. I wrote about two recent cases in a guest article Legal victories will put pressure on USCIS for normal EB-5 processing. The article discusses orders denying motions to dismiss in Raju et al v. Cuccinelli and Keller Wurtz v. USCIS. In these cases, USCIS tried to get EB-5 investor complaints dismissed, but the judges did not agree.

In fighting a mandamus action, USCIS may make a number of factual claims. They may argue that the USCIS Check Case Processing Times page defines normal processing times, that the investor petition is within the expected queue time, that the time USCIS takes to adjudicate petitions is governed by a rule of reason, that USCIS generally relies upon a “first-come” procedure when adjudicating I-526 petitions, and that USCIS has implemented a visa availability approach to allow more timely processing for qualified EB-5 petitioners with visas available. These claims can be countered with reference to public statements by USCIS, and data published by USCIS and obtained from USCIS via Freedom of Information Act (FOIA) requests.

As an EB-5 expert who has been collecting and analyzing USCIS statements and data since 2010, I have added a service to provide data and expert declarations to support APA and mandamus actions. As applicable, I can can review the touch time and queue time components of processing times, calculate reasonably-expected queue time for a given petition as a function of USCIS-published data for pending and processed petitions, document USCIS reports of IPO staff increases combined with declining productivity, review public statements about processing resources and procedures, review USCIS processing times page reports while pointing out inconsistencies over time and with external evidence, and array USCIS-published evidence that IPO has neither relied on a first-in-first-out process nor effectively implemented a visa availability approach. Please contact suzanne@lucidtext.com if you are interested in data to support mandamus and APA actions.

While I can offer to collect supporting facts, lawyers prepare and file mandamus actions. Here are a selection of articles from lawyers who have helped EB-5 investors litigate processing delay.

Also note that I’m once again actively updating the Washington Updates page, as we once again approach a deadline for regional center authorization. I add day-by-day legislation-related news to that page, rather than cluttering the blog feed. I expect the usual series of clean regional center program authorization extensions as part of Continuing Resolutions, until Congress finally has bandwidth to actually work out 2021 funding. It currently looks as if the first Continuing Resolution will take us into mid December, and possibly offer some emergency funding to USCIS as well.

And I’m waiting with bated breath to see the October 2020 visa bulletin and annual numerical limits for 2021.

Index to May 2019 EB-5 adjudicator training materials

In May 2019, the Investor Program Office held an I-526 “reset training” for adjudicators. I now know some of the content of that training, thanks to a Freedom of Information Act request (followed up by a lawsuit, because USCIS apparently didn’t want to release the materials). IIUSA has been promised 2,000 pages from its FOIA request, and has so far received about 500 pages.

IIUSA has chosen not to make the adjudicator training materials publicly available. The materials are available as a member benefit in the IIUSA Member Portal, accessible through this link.

For reference, I created a Table of Contents to the May 2019 training materials, copied below. This index can assist navigation for those able to access the file, and also highlights points of particular interest.

When I read adjudicator training materials, I look for guidance, interpretations, and examples that do not exist elsewhere. Much of the content is familiar – just the existing  published policy, regulations, and precedent decisions summarized in bullet point format on slides. But here and there, we find USCIS training adjudicators with guidelines and interpretations that they neglected to ever tell us, the public who’s trying to follow the rules. We who prepare documents for adjudicators to review particularly need to understand the standards and mindset that will be applied to those documents.

I also read between the lines of adjudicator training, attending to emphasis, angles, and omissions. I’ve studied every EB-5 adjudicator training since 2008, so I’m placed to notice how the training has shifted over time. (For those interested in the historical view, here are my articles on previous trainings: USCIS EB-5 Training Materials 2008 to 2011 published in the IIUSA 2013 Forum Handbook, 2014 USCIS EB-5 Adjudicator Training Materials published in the Regional Center Business Journal Vol. 2, Issue 4, December 2014, 2015 EB-5 Training Materials published on this blog in February 2017.)

What’s new in the May 2019 I-526 training materials provided so far? I particularly noted new content on economic impact analysis, TEA analysis, escrow arrangements, minor investors, path of funds, non-EB-5-investors, and capital at risk, and new perspectives on deference and material change. Future articles may address these points in detail.

Index to Immigrant Investor Program Office Training May 8, 2019

Page Section  Notes
1-5 Exercise prompts I-526 Exercise I has students practice when to not grant deference to prior I-526 and I-924 approvals

I-526 Exercise II has students practice denying for material change

I-526 Exercise III has students practice RFE/NOID over source and path of funds

I-924 Exercise focuses on what requirements apply to an Exemplar filing with no actual I-526 yet

6-40 Establishment of the New Commercial Enterprise Reviews the existing regulations and policy for an NCE

p. 28 clarifies that the investor could deposit directly into wholly-owned subsidiary’s account

p. 29 states that “It is the job creating business being undertaken by the NCE that must be examined in determining whether the NCE creation requirements found at 8 CFR 204.6(h) are met, not the NCE entity itself.” The training forgets Wei Gan v. USCIS, a 2016 decision that found based on Matter of Izummi that the founding date of the NCE, not the JCE, is the relevant date in the regional center context. (MAY182017_01B7203)

p. 31-35 have exercises with examples of what is(n’t) restructuring and reorganization, and wholly owned subsidiaries

41-67 Regional Centers and I-924 Adjudications Reviews the existing regulations, policy, and form instructions for regional center designation and amendments

 

67-109 Introduction to Job Creation in EB-5 Adjudications Reviews the existing regulations and policy with respect to job creation

p. 80 references 2009 Neufeld memos regarding economically direct construction jobs

p. 82-85 explain how the terms “direct jobs” and “indirect jobs” have different meanings in the legal and economic model contexts

p. 93 has a new section on Bridge Financing and what it means “to have a “nexus” between the investment and the employment creation,” as required. Students are taught to assess evidence that the bridge qualifies as short-term and temporary, and that there was contemplation of being replaced by more permanent long-term financing. Slide 97 gives a practical list of “factors typically present in bridge financing.”

110-134 Comprehensive Business Plan: Job Creation in EB-5 Adjudications Reviews Matter of Ho and the existing regulations and policy with respect to business plans

p. 123-125 provides a new list of “common supporting documents” for the business plan (market analysis, feasibility study, appraisal report, pro forma, biographical statements, staffing information, project status and milestones)

p. 125 lists out suggested “Open source information to verify the credibility of the business plan. i.e., property records, state business entity records, business license records, civil litigation records, google map, etc .”

p. 126-130 lists “questions for officers to ask” but all are redacted.

135-184 Regional Center and Indirect Job Creation p. 135-153 explain how the terms “direct jobs” and “indirect jobs” have different meanings in the legal and economic model contexts

p. 146 “Although USCIS may request additional evidence that the indirect jobs created, or to be created, are full time, in general, USCIS relies upon the reasonable economic models to determine that it is more likely than not that the indirect jobs are created and 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.”

 

p. 154-161 explain economic models and multipliers and how they work

p. 162 and 167 discuss how to select the appropriate geography for Type II multipliers

p.  163-180 discuss how to analyze an economic impact report to determine its reasonableness: is the geography appropriate, the inputs reasonable and eligible, the multipliers most recent, industry codes correct, math correct, model reasonable and used correctly (deflation adjustment), documents consistent

p. 166 To validate inputs to the economic model: “Relevant documentation may include receipts and other financial records for expenditures that have

occurred and a detailed projection of sales, costs, and income projections such as a pro-forma cash flow statement associated with the business plan for expenditures that will occur.”

p. 173 Cites a list of eligible inputs to 6/4/2015 stakeholder meeting, referred to as a “memorandum addressing accepted costs”

p. 180 compares common economic models

186-199 Troubled Business: Job Creation in EB-5 Adjudications Reviews the existing regulations and policy with respect to troubled businesses

 

200-218 Material Change in EB-5 Adjudications Reviews the existing regulations, policy, and precedent decisions with respect to troubled businesses

Emphasizes the difference between Stage I amendments (change) vs Stage II amendments (change to correct a deficiency) referencing Izummi

p. 211-212 asks without answering a series of questions about whether various types of location change are material

p. 213 “Material changes allowed for a I-526 exemplar are not allowable for a I-526.”

p. 214 “In correspondence, officers must tie the material change to one or more eligibility grounds”

219-238 Deference in EB-5 Adjudications Reviews the existing policy with respect to deference

p. 227-234 give specific examples of exceptions to deference

p. 227 “Absent a material change in facts, fraud, or willful misrepresentation, officers should not re-adjudicate prior agency determinations that are subjective, such as whether the business plan is comprehensive and credible or whether an economic methodology estimating job creation is reasonable.”

p. 230 states a principle “Deference is given to the previous favorable decision, not to documents”  “A document that supports a determination of eligibility for one application or petition at one point in time may not support a determination of eligibility for another application or petition at another point in time.” Reasons include documents becoming outdated.

239-255 Adjudication Worksheets and Instructional Guides Overview This presentation reveals that all previous adjudication worksheets have been discontinued and replaced by:

·        Form I-924 Amendment Worksheet

·        Form I-526 Worksheet

·        EB-5 Project Review Worksheet

·        Form I-526 Deference Worksheet

The worksheets are accompanied by instructional guides (the FOIA request response does not include the worksheets or guides)

The worksheets are to be used in combination: for example for a regional center I-526, the adjudicator first uses the deference worksheet to make a decision on deference, then the Form I-526 and EB-5 Project Review worksheets to make a decision whether to approve. (For pooled stand-alone adjudications, the deference step is omitted for some reason.)

256-326 Targeted Employment Area (TEA) Summarizes the pre-November 22, 2019 rules for TEAs

p. 273 Assessing TEAs at the I-924 stage

p. 282-287 discusses acceptable sources and methods for determining MSA, population, and unemployment rate

p. 292-302 and 320 gives instructions for verifying unemployment rate and geographic areas online

p. 306-307 evaluating rural areas

p. 314 poses multiple location scenarios with questionable TEA qualification, but does not specify which are acceptable and which not

327-443 Capital and Investment in EB-5 Adjudications Reviews the existing regulations, policy, and precedent decisions with respect to investment of capital

p. 339 redacts a comment on the Zhang Class Action

p. 354 lists items that an escrow agreement “normally includes”

p. 358-366 examples of problematic escrow agreement provisions, including extended discussion of hold-back clauses (p. 362 gives an example form CHAP of an acceptable holdback)

p. 391-393 gives some legally dubious guidance on impermissible debt arrangements, while p. 395-398 give questionable examples of impermissible redemptions

p. 403-405, 407 give examples of impermissible guaranteed returns

p. 409-415 is devoted to detailing the “chance of gain” requirement

p. 421, 423 discuss evaluating evidence of capital made available for job creation

p. 425-429 examples of multiple-JCE scenarios with capital not at risk

p. 435-439 examples of actual undertaking of business activity

P. 426 “If the NCE’s business is to pool capital to loan to a separate JCE, then sufficient business activity may be shown by an executed loan agreement obliging the NCE to loan Petitioner’s invested funds to the JCE.”

444-472 Minor Investors: Special Considerations for Adjudicating I-526 Petitions Filed by Minors Extensive discussion not published elsewhere on issues of minors as EB-5 investors. Most citations are to the USCIS-internal Consolidated Handbook of Adjudication Procedures (CHAP).
474-524 Lawful Source of Funds in EB-5 Adjudications Reviews the existing regulations, policy, and precedent decisions with respect to lawful source of funds

Emphasizes throughout the issue of path as well as source of funds

p. 483-484: References the Zhang class action and “Pre-Zhang” and “Post-Zhang” requirements

p. 502-506, 513 discusses requiring non EB-5 investors in an NCE to demonstrate lawful source of funds

p. 507-509 discusses in issues with E-2 investors filing for EB-5

p. 512 “If you see cryptocurrency ( e.g. Bitcoin, Ethereum, Ripple, etc.) anywhere in the source of funds claim, then please email IPO policy and your first line supervisor to seek guidance.”

I-526 Processing Time Report Update (country-specific)

The USCIS processing times report now offers three “estimated time range” sets for Form I-526: one for China mainland-born investors, one for other-area investors, and one for an unidentified third category. The report does not update the reporting methodology explanation. The outer end of the “estimated time range” for every category continues to be implausible, when compared against petition data. The report contains too many contradictions to accomplish its purpose of protecting USCIS from litigation, and I expect that it will receive another update shortly.

I’ve updated my processing time report log with two new tabs: one tab for logging the revised I-526 time report, and one tab with the most recent available I-526 inventory report (as of October 2018). The inventory tab offers a helpful fact check for the processing time report. For example, could it be true that USCIS is currently processing China I-526 filed 54 to 75 months ago (May 2014 to February 2016)? Look at the inventory tab, and count up (a) how many I-526 from before February 2016 were still pending back in October 2018, and (b) how many I-526 were processed since October 2018, until the visa availability approach started. That calculation gives the approximate number of February 2016 and earlier petitions that could be left to process today. The number is zero. Indeed, the processing numbers since October 2018 indicate that the worldwide backlog up to April 2017 should’ve been cleared by April 1, 2020, assuming that indeed “We generally process cases in the order we receive them.” Thus “we are currently processing China I-526 from February 2016 and earlier” appears to be a round-about way to report “we are currently processing almost zero China I-526.” Similarly “investors who filed I-526 before May 2, 2015 may submit case inquiries” is another way to say “almost zero investors may submit case inquiries.” Very clever, USCIS.

Redeployment policy comment: retroactivity

In addition to my technical comment on geographic area in further deployment, I submitted the following general comment. My goal: to pin down sources of confusion in redeployment policy, and show that redeployment guidance involves more than mere clarification.

——————————

From: Suzanne Lazicki <suzanne@lucidtext.com>
Sent: August 23, 2020 11:26 PM
To: ‘uscispolicymanual@uscis.dhs.gov’ <uscispolicymanual@uscis.dhs.gov>
Subject: 6 USCIS-PM G.2 “Clarifying Guidance for Deployment of Capital in Employment-Based Fifth Preference (EB-5) Category”

Comment Regarding: USCIS Policy Manual Volume 6: Immigrants, Part G, Investors, Chapter 2, Eligibility Requirements [6 USCIS-PM G.2], Part 2, as updated on July 24, 2020 by “Clarifying Guidance for Deployment of Capital in Employment-Based Fifth Preference (EB-5) Category”

Suggested Action: Do not make the “Clarifying Guidance” retroactive

Rationale: The July 24, 2020 Policy Manual Update is made retroactive based on the claim that “this is merely a clarification of continuing eligibility requirements. USCIS is not changing any substantive requirements.” However, it is not mere clarification if USCIS creates requirements. In the case of redeployment, USCIS takes requirements defined by existing regs/policy for Context A and applies them Context B. Lacking justification/reference to authority for why a particular Context A requirement also applies to Context B, that move looks like creating a new requirement for Context B. It can also look arbitrary/capricious when only an unexplained subset of A requirements are applied to B.

  Context A Context B
1 Investment by the EB-5 investor into the new commercial enterprise (NCE) Investment by the NCE into the separate job-creating entity (JCE)
2 Before the job creation requirement is met After the job creation requirement has been met
3 At/before the time of I-526 filing After the time of I-526 filing
4 The enterprise that receives equity from the EB-5 investor The JCE or other entity that ultimately deploys EB-5 investment
5 The initial deployment of capital The further deployment of capital

 

Examples of where EB-5 policy has confused contexts:

  1. Assuming that the “at risk” requirement defined by regs/policy for the investor/NCE relationship (Context A) also applies to the NCE/JCE relationship (Context B). The June 14, 2017 Policy Manual update on redeployment made this unjustified assumption; the July 24, 2020 Policy Manual update corrects it by removing the “at risk requirement” language from the further deployment sections.
  2. Assuming that the regional center geography requirement defined by the statute/regs and Matter of Izummi in terms of job creation still applies even after the job creation requirement has been met. The July 24, 2020 Policy Manual update introduces this illogical assumption, even as it grants that other job-creation-linked requirements (TEA geography, JCE deployment) naturally do not apply after the job creation requirement was met.
  3. Assuming that requirements for initial I-526 evidence for initial deployment also apply after I-526 filing for further deployment. The July 24, 2020 Policy Manual includes this assumption as a basis for asserting a regional center geography requirement. If the assumption necessarily held, then further deployment would have a TEA requirement, since TEA evidence is likewise required initial I-526 evidence for the initial deployment. The policy distinguishes between Context A and B when it comes to TEA geography. So why not for regional center geography?
  4. Assuming that the word “commercial” as defined by the regs/precedents for the “new commercial enterprise” automatically also applies to JCEs or other entities that ultimately deploy EB-5 investment. The July 24, 2020 Policy Manual update appears to do this, when describing guidelines for deployment and further deployment.  “The capital may be further deployed, as described above, into any commercial activity that is consistent with the purpose of the new commercial enterprise to engage in the “ongoing conduct of lawful business.” (footnoted to the regulations defining a new commercial enterprise). It doesn’t simply work, however, to apply all NCE requirements to JCEs and other deployments. For example, previous EB-5 decisions have found that the NCE must be for-profit but the deployment can be non-profit (p. 3-4), and that the NCE must qualify as “new” but the deployment need not qualify as new (MAY182017_01B7203). Apparently, not all “new commercial enterprise” requirements defined for the NCE automatically apply to the JCE or other deployment activity. So a “commercial” requirement for further deployment does not automatically follow from the existing policy framework, but needs to be spelled out and justified. The July 24, 2020 Policy Manual update lacks such clarity or attempt at justification.
  5. Neglecting to clarify which of the initial bases of eligibility in the initial deployment also apply to the further deployment, and why. The July 24, 2020 Policy Manual update gives five bullet points with requirements for the initial deployment, and then does not go on to specify which of these five USCIS thinks also apply to further deployment, and why. For example: “related to the actual undertaking of business activity.” The Policy Manual names this requirement for initial deployment and does not reference it again in the further deployment section. But we can’t tell – does that mean that USCIS understands that the “business activity” requirement is linked to the job creation requirement and thus no longer applicable, or did USCIS just neglect to mention it with respect to further deployment? As another example: the July 24, 2020 Policy Manual update adds language to state that secondary-market financial instruments do not satisfy three requirements for initial deployment. Two of the three requirements are specific to job creation. One requirement could apply independent of job creation. So can we conclude that the secondary-market financial instruments restriction is specific to initial deployment, and does not apply to further deployment after job creation? The industry is very confused about this. Many stakeholders are concluding that USCIS intended a blanket prohibition on purchase of secondary-market financial instruments, even after job creation and even after conditional permanent residence. If USCIS did not intend such a prohibition, it should clarify. If USCIS did intend a blanket restriction, that too should be justified so as not to appear arbitrary.

Redeployment is tough, because it’s a context that the people who drafted the statute and regulations did not anticipate. A framework of rules exists for initial deployment, not for further deployment. It’s understandable that USCIS should reference existing rules for one context in creating guidance for a new context. But this must be done with clarity about contextual differences, and admission that new policy is being created in the new context. New policy can be created for redeployment, just not made effective without notice and retroactively.

UPDATE: IIUSA and AILA ended up collaborating to submit a very good 30-page comment on USCIS’s Redeployment Policy Manual Update. I recommend their analysis, and hope that USCIS will read it carefully.

Policy Manual comment: Redeployment and regional center geography

We’re approaching the last chance to submit comments on the USCIS Policy Manual update on July 24 with “Clarifying Guidance for Deployment of Capital in Employment-Based Fifth Preference (EB-5) Category.” This page provides instructions for submitting comments, which are due “before” August 24. This post links to video of Carolyn Lee’s wonderful comment-writing workshop yesterday.

To prepare a rigorous policy comment for USCIS is tough hard work, especially for such a vexed issue as redeployment. See my draft comment copied below on the regional center geographic area issue. If you see any flaws, please reply to the post or email me so that I can revise.  I’ll try to find time this week to prepare a comment for at least one other aspect of the redeployment issue.

*** DRAFT COMMENT ****

To:                         USCISPolicyManual@uscis.dhs.gov

From:                    Suzanne Lazicki, Lucid Professional Writing, suzanne@lucidtext.com

Subject:                 USCIS Policy Manual, Vol. 6: Immigrants, Part G: Investors, Chapter 2

Comment Regarding : USCIS Policy Manual Volume 6: Immigrants, Part G, Investors, Chapter 2, Eligibility Requirements [6 USCIS-PM G.2], Part 2, as updated on July 24, 2020 by “Clarifying Guidance for Deployment of Capital in Employment-Based Fifth Preference (EB-5) Category”

Specific Portion of the Document: My comment relates to two paragraphs added to the Policy Manual [6 USCIS-PM G.2], Part 2 on July 24, 2020, quoted as follows (including footnotes).

Consistent with precedent case decisions and existing regulatory requirements, further deployment must continue to meet all applicable eligibility requirements within the framework of the initial bases of eligibility, [Fn. 38: See 8 CFR 103.2(b)(1). See Matter of Izummi (PDF), 22 I&N Dec. 169, 175-6, 189 (Assoc. Comm. 1998). See Chapter 4, Immigrant Petition by Alien Investor (Form I-526), Section C, Material Change [6 USCIS-PM G.4(C)] including the same new commercial enterprise  [Fn. 39 See INA 203(b)(5)(A), which refers to a single new commercial enterprise: “Visas shall be made available . . . to qualified immigrants seeking to enter the United States for the purpose of engaging in a new commercial enterprise.”] and regional center. [Fn. 40 See 8 CFR 204.6(j) which refers to a single regional center: “In the case of petitions submitted under the Immigrant Investor . . . Program, a petition must be accompanied by evidence that the alien has invested, or is actively in the process of investing, capital . . . within a regional center designated by the Service.” See 8 CFR 204.6(m)(7) which refers to a single regional center: “An alien seeking an immigrant visa as an alien entrepreneur under the Immigrant Investor . . . Program must demonstrate that his or her qualifying investment is within a regional center.”] In addition, because a regional center has “jurisdiction over a limited geographic area,” [Fn. 41 See Section 610(a) of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act of 1993, Pub. L. 102-395 (PDF), 106 Stat. 1828, 1874 (October 6, 1992), as amended] further deployment must occur within the regional center’s geographic area, including any amendments to its geographic area approved before the further deployment. The further deployment, however, does not need to remain with the same (or any) job creating entity or in a targeted employment area.

For example, if a new commercial enterprise associated with a regional center loaned pooled investment capital to a job-creating entity that created sufficient jobs through the construction of a residential building in a targeted employment area, the new commercial enterprise, upon repayment of the loan that resulted in the required job creation, may generally further deploy the repaid capital anywhere within the regional center’s geographic area (regardless of whether it would qualify as a targeted employment area) into any commercial activity that satisfies applicable requirements such as one or more similar loans to other entities.

Recommended Change, and Reason: The July 24, 2020 addition to 6 USCIS-PM G.2 Part 2 that addresses a regional center’s geographic area creates a substantive requirement. This language should therefore be rescinded. USCIS Policy Alert states that the July 24, 2020 addition intends to provide “clarifying guidance” only, and intended “not changing any substantive requirements.”

The added language about regional center geography in further deployment is not mere clarification, because it does not follow from existing regulatory requirements and precedent decisions. The authorities cited in Footnotes 38-41 in the Policy Manual update do not in fact justify a regional center requirement geography for further deployment, as demonstrated below.

The regulations and Matter of Izummi specify the reason for initial deployment within a regional center’s geographic area: indirect job creation. Since further deployment occurs after the job creation requirement has been met, these authorities do not justify assuming that a requirement that exists in the context of job creation should also be applicable to further deployment.

The Policy Manual grants that further deployment need not satisfy other initial deployment requirements linked to job creation: the requirements to deploy with a job-creating entity and within a Targeted Employment Area. The Policy Manual does not explain why regional center geography would be an exception to the previously unspecified but logical and predictable rule that deployment requirements linked to job creation do not apply after the job creation requirement has been met.

The community could hardly have predicted a redeployment requirement that is not theoretically grounded in the existing regulatory framework. If USCIS retains this contradictory new redeployment geography requirement with retroactive application, the industry will be punished for having previously acted in reliance on the regulations and precedent decisions.

If USCIS wishes to create a geographic requirement for further deployment, it should use an appropriate process for a substantive change. Otherwise, the Policy Manual could replace rescinded language with a clarification – consistent with the cited authorities – that further deployment need not be within the boundaries of the regional center.

Authorities:

Matter of Izummi states in pertinent part:

Under the Immigrant Investor Pilot Program, if a new commercial enterprise is engaged directly or indirectly in lending money to job-creating businesses, such job-creating businesses must all be located within the geographic limits of the regional center. The location of the new commercial enterprise is not controlling.

A petitioner may not make material changes to his petition in an effort to make a deficient petition conform to Service requirements.

… The definition of “regional center” in 8 C.F.R. § 204.6(e) requires that the economic unit be involved in “improved regional productivity.” 8 C.F.R. § 204.6(m)(3)(i) states that, in order to gain approval as a regional center, an entity must describe clearly how it will promote economic growth through “improved regional productivity.” If neither the credit company nor the export-related businesses are located in the regional center, it is difficult to see how the productivity within the regional center is being improved. As the subsidiary credit corporation’s actual and proposed loan activities benefit companies outside the geographical area covered by the regional-center designation granted in this case, the petitioner must establish direct employment creation; he cannot rely on indirect employment creation.

Comment: Footnote 38 in the updated 6 USCIS-PM G.2 cites Matter of Izummi in support of the point that “Consistent with precedent case decisions and existing regulatory requirements, further deployment must continue to meet all applicable eligibility requirements within the framework of the initial bases of eligibility, including … regional center.” But the citation does not support the point. Matter of Izummi does not indicate that a regional center’s geographic area is an applicable requirement outside the context of job creation.

In the passages quoted above, Matter of Izummi states that the requirement for location within the geographic limits of the regional center applies to job-creating businesses, and exists in connection with counting indirect job creation. So defined, this geography requirement does not logically apply to further deployment not in job-creating entities, and after the job creation basis of eligibility has already been met.

The NCE in the Matter of Izummi case deployed some investor capital outside the regional center’s geographic area. Matter of Izummi does not state that such initial was problematic in itself, but in connection with reliance on indirect job creation.  Matter of Izummi states that if investor capital is originally deployed outside of the regional center’s geographic area, the consequence is that the investor must then meet the employment requirement with direct employment creation. Since even initial deployment can be outside a regional center’s geographic boundaries provided that it does not rely on indirect job creation, according to Matter of Izummi, how can the Policy Manual now require further deployment that does not rely on any job creation to be within the geographical area covered by the regional-center designation? Such a policy creates a requirement that not only did not previously exist for redeployment, but did not even previously exist as an unqualified requirement for the initial deployment.

Perhaps the July 24, 2020 addition to 6 USCIS-PM G.2 Part 2 assumes a post-job-creation pre-CPR regional center geography requirement based on assuming that further deployment outside regional center geography would necessarily constitute a “material change.” However, such a material change assumption is not warranted. Further deployment outside a regional center’s geographic area does not meet the Matter of Izummi definition of “material change” as quoted above: change made in an effort to make a deficient petition conform to Service requirements. If capital invested in Minnesota Regional Center LLC is initially deployed according to plan in Minneapolis, creates jobs in Minneapolis as described in the I-526 petition, and subsequently further deployed in Dallas, the Dallas deployment obviously does not address a deficiency in the initial petition. Furthermore, the Dallas deployment does not result in changed circumstances predictably capable of affecting the decision about I-526 eligibility (Kungys v. United States). The regional center geography requirement pertains in context of the job creation requirement, and the job creation basis of eligibility is not implicated in further deployment.  Regional center geography could only be a material change issue for further deployment if it could be tied to an eligibility ground other than job creation. But the statute, regulations, and precedent decisions do not specify any regional center geography requirement divorced from job creation. Rather, they are united in linking deployment geography requirements to job creation eligibility requirements.

8 CFR 204.6(m)(7) states:

An alien seeking an immigrant visa as an alien entrepreneur under the Immigrant Investor Pilot Program must demonstrate that his or her qualifying investment is within a regional center approved pursuant to paragraph (m)(4) of this section and that such investment will create jobs indirectly through revenues generated from increased exports resulting from the new commercial enterprise. [Emphasis added to mark text omitted from the Policy Manual citation.]


Comment: Footnote 40 in the updated 6 USCIS-PM G.2 cites 8 CFR 204.6(m)(7) in support of a regional center geography requirement for further deployment. But the citation does not support the point. Footnote 40 places a period after the words “within a regional center” while omitting the second half of the cited sentence – the part that links the “within a regional center” requirement to the indirect job creation requirement. When viewed in full, 8 CFR 204.6(m)(7) does not clearly support a conclusion that a regional center geography requirement exists distinct from the job creation requirement. Matter of Izummi references 8 C.F.R. § 204.6(m)(3)(i) in the citation quoted above to support a conclusion about job creation requirement, with no suggestion of an abstract regional center geography requirement apart from job creation.

8 CFR 204.6(j) states:

(j) Initial evidence to accompany petition. A petition submitted for classification as an alien entrepreneur must be accompanied by evidence that the alien has invested or is actively in the process of investing lawfully obtained capital in a new commercial enterprise in the United States which will create full-time positions for not fewer than 10 qualifying employees. In the case of petitions submitted under the Immigrant Investor Pilot Program, a petition must be accompanied by evidence that the alien has invested, or is actively in the process of investing, capital obtained through lawful means within a regional center designated by the Service in accordance with paragraph (m)(4) of this section. The petitioner may be required to submit information or documentation that the Service deems appropriate in addition to that listed below. [Emphasis added to mark text omitted from the Policy Manual citation.]

Comment: Footnote 40 in the updated 6 USCIS-PM G.2 quotes a portion of 8 CFR 204.6(j) (the portion not underlined above) to support a regional center geography requirement for further deployment. But the citation does not support the point. Footnote 40 omits the context: 8 CFR 204.6(j) describes “Initial evidence to accompany petition.8 CFR 204.6(j) explicitly describes initial evidence to be submitted with the Form I-526 petition to demonstrate investment of lawful source of funds by an EB-5 investor in a NCE that will create jobs. 8 CFR 204.6(j) gives no reason to assume that these initial I-526 evidence requirements for the job-creating investment would also apply to a different context: a stage considerably after the I-526 filing that deals with reinvestment by the NCE of previously-deployed capital in an enterprise that need not create jobs.

Section 610(a) of Pub. L. 102-395, the statute that established the regional center program, states:

SEC. 610. PILOT IMMIGRATION PROGRAM.—(a) Of the visas otherwise available under section 203(bX5) of the Immigration and Nationality Act (8 U.S.C. 1153(bX5)), 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 for the promotion of economic growth, including increased export sales, improved productivity, job creation, and increased domestic capital investment.

This statute was subsequently amended by Pub. L. No 107-273, Sec. 11037(a)(3), 116, which states:

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.

Comment: Footnote 41 in the updated 6 USCIS-PM G.2 cites Pub. L. 102-395 to support the claim that “In addition, because a regional center has ‘jurisdiction over a limited geographic area,’ further deployment must occur within the regional center’s geographic area, including any amendments to its geographic area approved before the further deployment.” But the point does not unambiguously follow from the citation.

Pub. L. No 107-273 describes Congressional intent for a limited regional center geography: to concentrate pooled investment such that capital investments from aliens will create positive economic effects, including jobs created directly or indirectly, in defined economic zones.

This intent is addressed with the initial deployment of alien investment, which occurs within the regional center and results in the required economic effects, including job creation, that are calculated at the I-526 stage and verified at the I-829 stage.

The statute does not suggest that Congress anticipated some aliens needing to create more economic impact than others within the regional center, based on the accident of their place of birth and excess visa demand.  The statute does not suggest that Congress intended economic impacts dependent on serial deployment of an investment in multiple commercial enterprises within the regional center. By requiring further deployment to occur within the regional center’s geographic area, the updated Policy Manual creates a new eligibility requirement for compound economic zone impacts. The geography-specific requirements and impacts would be unique to investors from backlogged countries, and dependent on time delays that Congress did not intend.

Naturally, a defined economic zone would benefit from multiple deployments of capital investment where each repeat deployment is required once again impact that zone. Creating a geographic area requirement for further deployment would build on Congressional intent for the initial deployment, and could be economically beneficial (if practically problematic, as discussed in other comments).  However, such a requirement does not currently exist, as demonstrated above. The existing statute as amended and interpreted by the regulations and Matter of Izummi does not include a regional center economic impact requirement separate from and subsequent to the job creation requirement. The language in the July 24, 2020 update to 6 USCIS-PM G.2 containing this requirement should therefore be rescinded. If USCIS wishes to create a geographic requirement for further deployment, it may do so with the proper process for substantive change.

USCIS Funding, Furloughs, and Fee Rule

8/25/2020 Update: USCIS Averts Furlough of Nearly 70% of Workforce

I pause for a moment to thank all USCIS employees who are at work today. Though I may criticize your results, the very fact of working deserves credit. We appreciate you acting as civil servants, persevering to do your jobs even as furloughs have been threatened since May and could start August 31. That is, unless the public takes notice, your bosses start acting responsibly, and/or lawmakers decide they want to protect you more than they want someone else to get blamed for damage.

It’s heartening to see a steady stream of EB-5 decisions coming out of IPO, even under these trying circumstances. Thank you, adjudicators, for your service. Considering the huge investment in time and money that went into building and training staff for EB-5 adjudications, and the billions of dollars in foreign investment hanging in the balance, I sincerely hope that USCIS will get its house in order and keep all its people working, and EB-5 working in an economy that desperately needs it.

For the latest updates on the USCIS funding request and furlough situation, and ideas for how to advocate, see the AILA featured issues page on USCIS Budget Shortfalls and Furloughs. With so many issues competing for attention from Congress, representatives need to hear from people who care about averting disaster at USCIS.

To understand the history behind USCIS’s budget request and furlough threat, see the testimony at the House Judiciary Committee Hearing on Oversight of USCIS on July 29, 2020. (The recording is worth hearing, too.)

The testimony gives a well-documented indictment of USCIS management of petition processing. The testimony looks at petition data to demonstrate that USCIS has not actually suffered from falling fee revenue overall, as it claims (IIUSA), but rather from falling efficiency (AILA) and a faulty fee-setting method, obsolete funding process, and lack of fiscal oversight (even pro-immigration-barrier CIS identified this as a problem).

A witness representing AILA who worked until recently at USCIS noted that:

The Homeland Security Act established USCIS in 2003 to focus exclusively on the administration of immigration benefit applications and established Immigrations and Customs Enforcement (ICE) and Customs and Border Protection (CBP) to handle immigration enforcement and border security functions. Yet, the current leader of USCIS and DHS, Kenneth Cuccinelli claims that “we are not a benefit agency, we are a vetting agency.”30 So, as the agency collects money paid by its customers for the adjudication of applications, rather than doing its statutorily mandated work, I saw firsthand prioritization on adding layers of screening, such as social media vetting, hiring more fraud detection personnel, unnecessary interviews, as well as USCIS personnel being detailed to other agencies and spending more time on enforcement priorities. Yet, now USCIS leadership simply gets to put its hand out and ask for more than $1 billion of tax payer money, while at the same time passing off the costs of its own inefficiencies to its customers by proposing to significantly increase fees and adding a 10 percent surcharge on top of that to pay back its bailout and furloughing hard working Americans.

But even if USCIS arguably does not actually need and certainly does not merit the emergency supplemental funding that it’s demanded as a condition for averting staff furloughs, I agree with the union leader who made this plea to Congress:

Our Union fully acknowledges and supports the concerns raised by many Members of Congress: that there needs to be more transparency and fiscal accountability by USCIS; that the funding structure of the Agency needs to be reviewed and possibly overhauled – with a part of the operating costs to be met through user fees and part to be met through appropriated funds; that user fees should not be so unreasonably high that applicants cannot afford to pay them; that there need to be “guardrails” to ensure that all funds are utilized for the necessary operations of USCIS and not ever re-programmed or transferred to other federal agencies for any other purpose.

There are also legitimate concerns about many of the Administration’s policies that have hindered, deterred or blocked many forms of legal immigration…. But these concerns should not become hard and fast “conditions” for whether or when and how emergency funding should be made available. Instead, they should inform and frame the agenda for priority action by the next Congress and Administration, which will be elected by the American people to lead and unite our country in facing the great challenges of the troubled times in which we live.

Congress is currently putting together legislation to bail out USPS, another agency that’s facing crisis through every fault of its own. Many people realize that whatever the source of USPS’s current problems, our country simply cannot afford for it to fail. Can we ask Congress to consider USCIS at the same time? Some good legislative language already prepared:
H.R.7508 – To provide supplemental appropriations to U.S. Citizenship and Immigration Services, and for other purposes, and
H.R. 5971: The Case Backlog Transparency and Accountability Act of 2020.

[8/22 Update: Rep. Zoe Lofgren introduced a bill that proposes to help USCIS solve its budget problems for itself  in the sensible way — not by demanding a government handout but by increasing fees and demand for an existing service. H.R.8089 The Emergency Stopgap USCIS Stabilization Act passed the house on August 22.]

The emergency funding and furlough issue applies to USCIS as a whole, not specific to the Investor Program Office and EB-5 processing. We don’t know how many, if any, furlough notices were sent to IPO staff. However, IPO is certainly poised for budget issues. For the detail of the cracks in the planning for EB-5 adjudications specifically, see my comment to DHS in 2019 on the Proposed Rule to set new I-526 and I-829 form fees, and DHS’s response to my comment in the Final Fee Rule pages 226-227 (regarding I-526 processing) and 268-269 (regarding I-829 processing). The issues that I identify in my comment will remain an on-going challenge. Budget problems will naturally result when an agency relies on unrealistic volume forecasts, declines to make price increases sufficient cover anticipated cost increases, declines to budget for the cost of pending inventory whose associated fees were already spent, and operates on a Ponzi system that depends on continually incoming receipts to cover costs.

USCIS website Q&A on redeployment

USCIS has updated its website with a new page for Questions and Answers: EB-5 Further Deployment.

USCIS did not the announce that the page exists. I just happened to find it because I’m vigilant. The page contains new guidance and rules that USCIS apparently wanted to exist but to remain unknown to us. Like the policy manual update, the Q&A page provides answers that are either vague or blithely arbitrary, with no attempt at justification with reference to the existing statutory and regulatory framework, or even the policy manual. I will not repeat what the page says, but trust that lawyers will read it and give of their time to fight for justice and clarity.

A policy manual update and Q&A on redeployment urgently needed to exist. I give USCIS credit for attempting to provide them. If only the work had been done with thought and care, with an effort at justification and consistency.

Policy Manual Update — Redeployment

Today, the USCIS Policy Manual was updated with new policy regarding deployment and redeployment of EB-5 investor capital.

The Policy Alert makes this claim: These clarifications apply to all Form I-526 and I-829 petitions pending on or after [date of publication]. USCIS considered potential impacts to petitioners and determined that such impacts, if any, would be minimal because this is merely a clarification of continuing eligibility requirements. USCIS is not changing any substantive requirements.

If you look at the redline, you’ll see few clarifications but a couple significant changes. For example:

  • Previously, the PM said that the enterprise “may also further deploy repaid capital into certain new issue municipal bonds, such as for infrastructure spending.” The PM revision simply deletes this provision. When something used to be explicitly permitted, and then stops being explicitly permitted, is that a clarification or a change?
  • Previously, the PM had no guidance about the location of the activities using redeployed capital. Existing case decisions and regulations define requirements for an initial deployment (within an NCE, made available for job creation, for the purpose of generating a return, risk of loss and chance for gain, involves undertaking of business activity, JCE location in a TEA, JCE location in a regional center), but say nothing about requirements for redeployment. Significantly, initial deployment requirements are based on the initial deployment purpose: to create jobs. So which of those requirements logically apply in the redeployment context, following job creation? Without explaining its logic, the revised PMcherry-picks a selection of the initial deployment requirements to apply to redeployment. Even though there’s no longer a “JCE” concept since the job-creation requirement was already met, the PM revision arbitrarily decides that of the initial deployment requirements, location within a regional center should still apply to redeployment. (Meanwhile, the PM explicitly excludes the initial deployment requirements of TEA location and investment in a JCE, and leaves ambiguous whether redeployment is subject to the initial deployment requirements of business activity and a risk of loss/chance for gain.) When a redeployment location requirement did not used to exist, and USCIS creates one, is that a clarification or a change? When USCIS says that redeployment must satisfy “applicable requirements” without specifying what those requirements are and why they are applicable, is that even a clarification? What’s the basis for deciding which of the existing defined initial deployment requirements apply to the previously-undefined frontier of redeployment after job creation?

When interpreting the policy, keep in mind that three stages of deployment are subject to different requirements:

1. The initial deployment that creates jobs

2. Redeployment after the job creation is met, but before conditional permanent residence

3. Redeployment after conditional permanent residence.

The PM update makes changes to #1 and #2, but not #3

For #1, the initial deployment, the PM now specifies that “the purchase of financial instruments traded on secondary markets generally does not satisfy these requirements.” Notice that in context, this restriction refers to the initial deployment in a job-creating business, and does NOT refer to redeployment.

For #2, redeployment before CPR, the PM just moves the constraints on redeployment, adding some new guidelines while deleting others, and blurring some lines while clarifying others. For some reason, it deletes redeployment as an exception to the pre-CPR material change policy. I hope the lawyers get busy to actually clarify and solidify matters, considering billions of dollars on the line and developers and investors tearing their hair over how to get this right.

For other perspectives and a call for input, see https://iiusa.org/blog/send-iiusa-your-questions-regarding-uscis-new-redeployment-policy-updates/

Processing Time Report Update

I’ve been a bit overwhelmed by all the nonsense and potential disaster available to write about. USCIS may or may not be about to start staff furloughs next month as the agency, administration, House, and Senate busily blame each other over funding, no two lawyers seem to agree on if/when/how an incoherent executive order may or may not devastate Hong Kong immigration, consulates keep stalling on interviews even when pandemic control justifies opening (Vietnam being a striking example), Administrative Appeals Office decisions make me weep, and USCIS just redesigned its website to break my links and make everything harder to find. But as the industry’s official Ms. Processing Times, I’ll at least attempt to shed light and sense on one issue: the latest processing times report.

Despite the report, USCIS is certainly not currently occupied in processing I-526 filed 46 to 74.5 months ago.

I’ve tried to give the USCIS processing times page credit for reporting consistent with a methodology, even if that methodology is confusing and unhelpful. But with the latest report update, I can only conclude that the report has lost its moorings.  Here’s the latest update for I-526 processing times.

USCIS will be happy if people look at this report and think “Oh I guess a petition filed two years ago is not unreasonably delayed after all. I guess it’s too early to make inquiries to IPO customer service or Congressional representatives or to sue USCIS with a mandamus action, now that the report defines 46 to 74.5 months as normal processing for I-526.” This conclusion is very convenient for USCIS. They’re being flooded with inquiries and litigation over delayed processing, and need people to believe that they’re bogged down in cases from four to six years ago, and thus innocently unable to process two-year-old cases. Unluckily for USCIS, we in the community have records that show that the report cannot be true.

First, consider the “case inquiry date” in May 2014. If you believe the current report, an I-526 is not “outside normal” processing unless it was filed more than six years ago. We have two ways to put that claim in context and find it senseless.

  • According to USCIS form processing data, there were approximately 10,000 I-526 pending in May 2014, and over 48,000 I-526 have been adjudicated since May 2014. By the numbers, I-526 processing has passed 2014 and earlier petitions by tens of thousands. So how could any I-526 from 2014 be left on file? If by chance there were any recent adjudications on petitions somehow left tens of thousands of places behind, that’s clearly nothing to do with “normal processing.”
  • According to past USCIS processing times reports (which I have logged at least monthly since 2014), the most recent time USCIS reported it was working on May 2014 I-526 petitions was five years ago, in June 2015. (Note the reports before 2018 are in a separate tab in the Excel log referenced.)  Even when the case inquiry date started to look inflated in 2018, it never went back to 2014. And now, in July 2020, USCIS wants us to believe that it has suddenly returned to processing the inventory of petitions that it previously reported processing five years ago? And even if our memories didn’t go back to 2015, but only extended to last month – doesn’t USCIS think we’ll be suspicious when the boundary for “normal processing” was placed at 44.5 months in June 2020, and suddenly moved back to 74.5 months in July 2020? The reports are simply not plausible, when considered as a pattern.

The same reference sources can be applied as context to the lower end of the reported “estimated time range,” which supposedly represents the median of processing times in recent adjudications.

  • According to USCIS form processing data, there were 20,804 I-526 pending 46 months ago, in September 2016. USCIS data further shows that over 33,000 I-526 have been adjudicated since September 2016. 21,000 – 33,000 = <0.  So zero is approximately how many I-526 petitions could possibly be still left from 46 months ago and earlier, if there’s been any kind of order to I-526 processing.
  • Processing is rather disordered, and as of October 2018 USCIS reported 2,021 outlier I-526 left from before September 2016. Of those, 917 were Chinese that would now be excluded from adjudication by the visa availability approach. None of those oldest 2,000 oldest petitions should be left today considering that USCIS reported processing over 6,000 I-526 since October 2018. Certainly, there can’t be enough left to occupy 50% of IPO’s I-526 processing capacity, as the USCIS processing times report is now trying to suggest.
  • The pattern of USCIS processing times reports also undermines any appearance of sense for the lower end of the “estimated time range.” June 2018 was the most recent time that USCIS reported September 2016 as marking the median of recent I-526 adjudications. Since mid 2018, the processing times report has indicated that USCIS has slowly been working through I-526 filings from 2017 into 2018. Until yesterday, the lower end of the estimated time range put the I-526 median in early 2018. I believed that, because anecdotally I’m seeing a lot of I-526 approvals on early 2018 cases. I cannot believe today’s processing times report when it suddenly pushes the lower end of the estimated time range back to where it was reported to be two years ago.

Clearly, the USCIS processing times report can’t be reporting based on the methodology that it claims to use: giving the median and 93rd percentile for processing times of actual I-526 recently adjudicated. Realizing that, people have been trying to guess at an unstated methodology. Although the report states that it’s backward-looking, reporting historical data and not predicting future processing times, some people guess that the report has secretly been changed to be a predictor of future wait times in expectation of possible mass USCIS staff furloughs. Although the report states that it has not been updated to reflect the visa availability approach (with an alert promising that “in the future, we will update”), some people guess that the mysterious current report can be explained as an unannounced reflection on country-specific treatment under the visa availability approach. Although the report states that it’s objectively indexed to what was actually happening with processing about two months ago, I guess that USCIS has started just making up numbers to protect themselves against lawsuits. All we know for sure, considering the references cited above, is that the report is inconsistent with its nominal methodology. Any guesses about an unstated methodology are potentially correct, but unsure in absence of statement. Either way, it’s impossible to draw conclusions about reality from the current processing times report. For I-526, I rather credit inventory data, anecdotal evidence, and previous processing times reports that suggest USCIS has progressed to processing I-526 filed in early 2018. (And some more recent, as people such as medical professionals battling COVID-19 and residents of countries wracked by civil unrest successfully request expedited treatment, while others succeed in Mandamus even for recent dates by pointing out that all of 2019 was an administrative delay.)

My hypothesis that the USCIS processing times report has become a lever to influence community beliefs and behavior, not a report of facts, is bolstered by the I-924 time report. Year to date, USCIS has reported the I-924 processing time range at 4 to 8 years. Suddenly this week, USCIS changed that to 1 to 3 years. That makes sense as a decision to stop discouraging demand for IPO’s highest-revenue form. The report pattern is tough to explain otherwise.

If you benefit from my long-term commitment and hard work to record, share, and interpret USCIS data, please consider making a contribution toward what’s otherwise uncompensated effort. I appreciate any support.

Perspectives on the EB-5 visa queue (new I-526 approval report)

The wait time for an EB-5 visa depends on the number of people in line, and the rate at which the line moves. Both factors are complicated and can be tough to pin down. We’ve recently received significant new information related to each factor. This post attempts to put the new information in context. (Note: this post only concerns people interested in EB-5 timing for China, Vietnam, and India.)

The EB-5 queue normally moves at a rate of about 10,000 applicants per year, with about 700 per country, but this can vary. I recently wrote a guest post explaining How EB-5 Visa Numbers Will Increase in FY 2021. I have another post in progress to discuss visa availability and the movement of the EB-5 visa queue for China specifically, in light of recent developments.

The queue size question is complicated by spotty data and multiple stages. The following image illustrates three ways subdivide the EB-5 queue, when trying to calculate it. If you don’t have time to read the whole post, at least spend time gazing at this image, and see how it puts available queue data in context.

Perspective A looks at the queue in terms of stages between USCIS and Department of State.  Visa Control Office Chief Charles Oppenheim uses this perspective when making EB-5 wait time estimates. But Mr. Oppenheim calculates from two of the four variables in this picture. His wait time estimates count pending I-526 and pending applicants at the National Visa Center, and disregard the population segments for which he lacks data: people with approved I-526 but no visa application yet, and people with pending I-485. If those segments are small, then omitting them doesn’t matter much to wait time estimates. Historically, I-485 numbers have been indeed been very small (though Indians might change that going forward). The population of people between I-526 and visa application might be significant, particularly for China.

Perspective B reflects an alternate way to subdivide the EB-5 queue along the lines of before/after I-526 approval, and before/after visa availability. This perspective has come into focus because USCIS just started to publish data for a key variable: number of approved I-526 waiting for visa availability. I still can’t complete the calculation, because there’s only data for two of three segments for Perspective B. But the new data is tantalizing, because it overlaps with the major unknown from Perspective A.  The population of people with I-526 approval and no visa application on file yet (unknown) is a subset of the population of people with I-526 approval and waiting for visa availability (now reported).

So let’s look at these new data reports from USCIS, and think about what the numbers mean in context.  The following screen shots show reports as of October 2019 and April 2020.

Notes:

  • China report: In October 2019, there were 27,251 Chinese investors with I-526 approval and priority dates more recent than November 1, 2014 (the final action date in the November 2019 visa bulletin). In April 2020, there were 23,511 Chinese investors with I-526 approval and priority dates more recent than May 15, 2015 (the final action date in the April 2020 visa bulletin). Some inferences from these reports:
    • By moving the China final action date from November 2014 to May 2015 this year, Department of State apparently made a minimum of more 3,740 Chinese principal applicants eligible to claim visas. A decrease to the number of Chinese waiting for visa availability means an increase to the number of Chinese with visas available. (This doesn’t consider the number of visas actually issued, or the number of incoming I-526 approvals.)
    • USCIS reports 23,511 Chinese investors were awaiting visa availability as of April 2020. That number is principals only, not family members. Assuming a historical ratio of 2.7 visas per principal for China, that means about 23,511*2.7=63,889 future Chinese visa applicants at the stage of having I-526 approval, but not yet able to proceed to final action in the visa process. Charles Oppenheim reported that in June 2020, there were 42,575 EB-5 visa applications on file for China. The visa applications would include some people with visas available according to the visa bulletin Chart A, and some who are still awaiting final action. So the population represented by 42,575 overlaps with the population represented by 63,889. But the difference between 42,575 and 63,889 gives a hint about the number of Chinese with I-526 approval who may not have visa applications on file. In other words, a hint about the size of the population omitted from Department of State EB-5 queue estimates for China.
  • India report: In October 2019, there were 189 Indian investors with I-526 approval and priority dates more recent than December 8, 2017 (the final action date in the November 2019 visa bulletin). In April 2020, there were 51 Indian investors with I-526 approval and priority dates more recent than January 1, 2019 (the final action date in the April 2020 visa bulletin). Some inferences from these reports:
    • USCIS is slow. By April 2020, there apparently had been only 51 approvals for Indian I-526 filed in 2019 and later.
    • Department of State has apparently made India current for final action because it sees only a few Indians with approved I-526 waiting for visa availability. 51 principals would be about 124 visa applications, considering the typical applicant/principal ratio for India. Department of State still has over 200 visas available for Indians this year.
    • The number of Indian investors waiting for visa availability dropped between November 2019 and April 2020. That drop means an increase in the number of Indian investors who have visas immediately available to them (and suggests that there have been few incoming I-526 approvals on Indian petitions filed since December 2017).
  • Vietnam report: In October 2019, there were 491 Vietnamese investors with I-526 approval and priority dates more recent than November 15, 2016 (the final action date in the November 2019 visa bulletin). In April 2020, there were 443 Vietnamese investors with I-526 approval and priority dates more recent than February 8, 2017 (the final action date in the April 2020 visa bulletin). Some inferences from these reports:
    • The number of people waiting for visa availability is increased by new I-526 approvals, and decreased by visa bulletin movement that makes visas available to more people. For Vietnam, these two factors approximately balanced each other between November 2019 and April 2020, since the size of the waiting pool hardly changed. Either there were many I-526 approvals and many people became eligible for final action during that period, or few incoming I-526 approvals and few exits to the final action stage.
    • The numbers help explain why the Visa Bulletin has moved more slowly for Vietnam than for India. In April 2020, Department of State could see only 51 Indian investors ready with I-526 approval but as yet unable to claim visas, but 443 similarly-placed investors from Vietnam. 51 Indian investors plus family could all fit into this year’s visa limit, so the visa bulletin may as well become current to let them all through. By contrast, 443 Vietnamese investors would require more than one year’s visa quota, so the visa bulletin must continue to use final action dates to gradually channel that pool into the final action stage.

When confronted with a data point about the EB-5 visa queue, it’s necessary to put that data point in context, considering which segment of the queue it represents. The new USCIS report gives data for the segment of people with approved I-526 plus still waiting for visa availability. The total queue for EB-5 conditional residence includes two other segments: people with pending I-526, and people with approved I-526 plus visa availability. So according to USCIS data, the EB-5 queue of investors as of April 2020 equals about 17,500 I-526 pending plus 24,005 approved I-526 still waiting for visa availability plus an unknown number of approved I-526 now eligible for final action. As adjusted by the addition of family members, of course.

Perspective A and B are both limited by lack of data for a major population segement. I tend to favor Perspective C, which makes queue calculations simply from I-526 filing data, to avoid unknowns about where people currently fall in the process.

FY2020 Q2 EB-5 Form Processing Data

USCIS has published the All Forms report for FY2020 Q2 (January to March 2020), including entries for EB-5 forms I-526, I-829, and I-924. I look forward to these quarterly reports on the USCIS Immigration and Citizenship Data page because they provide information about EB-5 demand trends (receipts), processing trends (number of approvals and denials), and backlog trends (number of pending petitions).

FY2020 Q2 Data        
Form Receipts Approvals Denials Pending
I-526 21 714 190 16,633
I-829 604 730 57 10,309
I-924 48 10 50 137

IPO Chief Sarah Kendall had indicated at the March 2020 EB-5 stakeholder engagement that “With a lot of the infrastructure development now behind us, IPO is better situated to improve productivity. In fact, preliminary data for February shows a step in the right direction.” Now we can see that indeed, completion rates improved significantly. IPO processed almost twice as many I-526 and I-829 in FY2020 Q2 as in FY2020 Q1. That’s a most welcome update. The productivity in FY2020 Q2 is still three times lower than it was in 2018 with the same staff, so still not a recovery. But “a step in the right direction,” certainly. If IPO can manage more such steps in Q3 and Q4, I will start praising IPO Chief Sarah Kendall instead of pointing out inexcusable mismanagement of resources.

There were just over a handful of I-526 and I-924 receipts in January to March 2020 (21 I-526, and about 48 I-924). That’s no surprise. I would not expect many I-526 filings immediately after a deadline that nearly doubled the minimum investment amount. And I would not expect many I-924 filings considering that USCIS has essentially stopped processing I-924, as indicated by both the volume report (only 10 approvals in three months) and the processing times report (which gives an “estimated time range” for I-924 processing of 53 to 99 months).

Low receipt numbers are part of a trend throughout USCIS, and  help explain why the agency is now complaining to Congress about budget trouble. It turns out, measures to discourage immigration can result in falling revenue from immigrant fees. USCIS faces a reckoning from having operated on the Ponzi principle: depending on incoming fee revenue from new petitioners to pay for adjudicating a large backlog of forms whose fees were already spent without performance. I am heartened to see that at least in 2020, IPO did not use plummeting fees as an excuse to reduce productivity. In 2019, the coincidence of EB-5 receipt and adjudication numbers had me wondering whether IPO had decided to process only as many forms as justified by incoming fee revenue. I’m happy to see FY2020 Q2 firmly contradict that suspicion.

Denial rates remain comparatively high for Form I-526, but lower than in 2019. And it’s unclear whether IPO is actually denying more I-526 than usual, or just approving fewer than usual. Form I-924 denial rates remain astronomical – but no surprise, considering that most Form I-924 just request pre-approval for proposed investment projects. When I-924 processing times extend to four to eight years, the typical proposed project will no longer even exist by the time USCIS gets around to reviewing the application. Significant room for improvement in this area.

The charts below put FY2020 Q2 data in context of previous reports. I also included charts of recent processing times reports for reference and comparison. My timing consultation service remains available to people who want the numbers explained and interpreted as applied to their specific circumstances. So far I can only offer this service for I-526, because I have quite a bit of I-526 data available. I hope that I-829 processing will become more transparent in the future.

6/16 Oppenheim webinar updates (visa number usage and estimate, processing, retrogression)

I appreciated IIUSA’s June 16 webinar A Discussion With Charlie Oppenheim: Chief, Visa Control and Reporting Division, U.S. Department of State. IIUSA has a recording available for purchase, and it’s worth the price. Mr. Oppenheim spoke for 45 minutes and answered many questions in detail. Well-informed IIUSA panelists followed up with another 45 minutes of interesting and helpful discussion about how they are adjusting to current conditions.

Here are a few highlights from Mr. Oppenheim’s remarks. (6/22 UPDATE: See also the analysis published on the IIUSA blog by panelist Cletus Weber: “Highlights and Analysis of June 16, 2020 IIUSA Presentation on Visa Numbers, COVID-19, etc.”)

Consular processing and COVID-19

Department of State has been discussing when and how consulates can get back to full operations, but there are no decisions or forecasts at this point. It remains a “wait and see game.” Mr. Oppenheim expects that there will not be a “one size fits all” approach, but that different overseas posts will be coming back online at different times and with different capacities. The DOS website remains the best source for updates going forward (https://travel.state.gov/content/travel/en/News/visas-news.html and https://www.usembassy.gov/). Meanwhile, however, the National Visa Center remains operational. Applicants are encouraged to proceed as far as they can at NVC, so that they’ll be ready to go as soon as consulates can give interviews.

FY2020 Visa Usage

Mr. Oppenheim did not have exact numbers available, but estimated that over 4,500 EB-5 visas have been issued in FY2020 to date. (With 11,111 EB-5 visas authorized for this year, that could mean over 6,000 EB-5 visas would have to be issued in the next four months to maximize the FY2020 visa limit.) Mr. Oppenheim said that there is still potential for FY2020 numbers to be utilized if oversees posts open soon. USCIS does not allow Mr. Oppenheim to say how many I-485 are pending for EB-5, but he disclosed that they “don’t have a lot,” and that he’s “not sure there are enough I-485 out there to maximize visa usage this year.”

Based on the information Mr. Oppenheim provided, it appears likely that China will lose EB-5 visa numbers this year. China was expected to have over 5,000 EB-5 visas in FY2020, but in fact just over 1,000 visas were issued in Guangzhou before interviews stopped in February. Mr. Oppenheim said in the webinar that the July 2020 visa bulletin makes about 400 Chinese eligible for final action through adjustment of status, and about 3,000 Chinese eligible through consular processing. But he does not think Guangzhou could handle that many visa interviews this year even if it reopened tomorrow. (For reference, in the three years that I’ve logged monthly EB-5 visas from Guangzhou, the high was 781 visas issued in December 2017.)

Meanwhile, India has already used “well over 500 numbers, possibly 550 or more” for FY2020 (out of 778 visas expected under the quota), partly thanks to rapid movement of the visa bulletin. Mr. Oppenheim made India current for final action in the July 2020 visa bulletin, and expects India to remain current through the end of the fiscal year. (That must mean that he does not see many India I-485 pending or forthcoming, and/or is not optimistic about the number of visa interviews that can be scheduled in India this year.  If Mr. Oppenheim did foresee well over 250 Indians ready to claim a visa by September, then India would not be current for final action in the visa bulletin.)

Mr. Oppenheim did not mention how many visas have been issued to Vietnam so far in FY2020. He said that the visa bulletin dates for Vietnam would likely move “consistent with those moves through the end of the fiscal year” (referencing recent visa bulletin movement for Vietnam) but did not further explain that statement.

Mr. Oppenheim encouraged people to become documentarily qualified as soon as they can, so that they’ll be ready to go immediately when consulates can resume interviews. That means responding promptly when notified by NVC to assemble and submit documents. He said that overall, over half of people eligible to become documentarily qualified and pay fees have not done so. The more people are ready to claim a visa, the better chance of maximizing visa number usage this year.

FY2021 Visa Availability

On the bright side, EB-5 visa number loss in FY2020 is likely to be at least offset and possibly far exceeded by gain in numbers in FY2021. Mr. Oppenheim estimates that the EB visa limit, normally around 140,000, will be “at bare minimum” over 200,000 in in FY2021, and probably “well in excess” of 200,000. EB-5 gets 7.1% of total EB visas, so that means the EB-5 visa limit in FY2021 will at least be over 14,200 – and probably significantly over. This will happen because unused family-based visas from one year roll over into employment-based categories the next year. And consulate closures mean that many family-based visa numbers are going unused this year. I have a separate post coming on this topic, to explain the minimum and maximum benefit to EB-5 from unused FB visas in FY2020, and the potential impact on EB-5 wait times.

Mr. Oppenheim confirmed that the offset from the Chinese Student Protection Act will be completely satisfied in FY2020. So in FY2021, China will have the same EB-5 visa rights as other countries – i.e. 7% of the total limit, plus access to leftover visas according to priority date order. Since the number of leftover visas in FY2021 is likely to be very large, and Chinese have the oldest priority dates, FY2021 should be a good year for China EB-5.

Visa Bulletin Movement and Retrogression

Mr. Oppenheim spoke extensively about the thinking behind visa bulletin movement, and surprised me by indicating that he does not expect EB-5 retrogression. I haven’t figured out how this is possible for India in particular, considering the backlog and how visa bulletin dates have jumped in 2020, but Mr. Oppenheim made the statements strongly and repeatedly.  He described the visa bulletin date movements this year as “measured,” “not just moved for the sake of movement,” and “trying to avoid retrogression.” He aims to avoid a situation where people get qualified only to see time-sensitive documents expire. When specifically pressed on India, he said that “I don’t think that India is facing a retrogression in the foreseeable future” and “I think the previous wait time [estimate from October 2019] has dropped significantly for somebody that would be filing today.” This considers the possibility that a number of Indian applicants on file at NVC might be able to receive visas this year, and the increased visa quota next year.

I’m still trying to think this through, considering what we’ve been previously told about backlogs. But I credit Mr. Oppenheim’s predictions, because he has much more data than we do. He clarified that USCIS and IPO report to him monthly on processing status, including how many petitions they have at various stages of processing, and how many they are working on. (Why, IPO, do you persistently refuse to provide such reports to the public, even as you claim to stand for integrity?) Meanwhile, the National Visa Center gives monthly updates on the number of applicants who have become qualified and could potentially be scheduled for interviews.

Mr. Oppenheim acknowledged the remote possibility that all countries could become current for EB-5 final action in the visa bulletin in FY2021, for a period of time. This could happen in the first half of FY2021, if consulates remain closed into the new fiscal year, if there were a sufficient number of status adjustment cases to justify the movement, and if the system had the capacity to accommodate the resulting demand.

Other

Mr. Oppenheim clarified that absent change to U.S. immigration law, Hong Kong will continue to be treated as a separate country for the purpose of U.S. visa issuance.

Mr. Oppenheim conveyed mixed messages about IPO productivity. IPO itself has not yet published any processing data for 2020, so we’re left to guess whether their current I-526 completion rates are more like 2019 (horrible) or 2018 (great). Mr. Oppenheim, who does have recent information on volume of I-526 approvals, said that IPO has been “deciding petitions at a rapid pace” and “forwarding petitions at high volume.” He particularly noted a large number of I-526 approvals for Chinese – which must mean that many China I-526 were assigned for adjudication before the new visa availability approach took effect as of April 1, 2020. That all sounds promising. On the other hand, Mr. Oppenheim provided updated information about the NVC backlog that does not clearly reflect many people advancing from I-526 to the visa stage. The following chart compares the number of cases at the National Visa Center between October 1, 2019 and June 1, 2020.

Country Number of EB-5 applicants at NVC as of 10/1/2019 Number of EB-5 applicants at NVC as of 6/1/2020 Difference
Brazil 212 204 (8)
China Mainland 35,264 42,575 7,311
India 607 677 70
South Korea 221 193 (28)
China Taiwan 101 112 11
Vietnam 1,771 1,550 (221)
Rest of World 1,011 1,070 59
Grand Total 39,187 46,381 7,194
Total for countries other than China 3,923 3,806 (117)

The numbers show that only China has seen a significant net increase this fiscal year in EB-5 visa applicants at NVC. Mr. Oppenheim credited this increase to IPO productivity. However, the increase could also be explained by the fact that the visa bulletin has moved to allow many more Chinese to file documents, even as the consulate has not been issuing visas. For the rest of the world, incoming visa applicants have not been sufficient even to counterbalance the few EB-5 visas issued this year. If IPO were doing its job to adjudicate petitions, we should see more visa applicants. There is a lag between I-526 approval and becoming qualified at NVC, and some approved I-526 go on to status adjustment rather than to NVC. So there’s room for hope that IPO has indeed performed well recently, and I-526 approval numbers just aren’t reflected yet in visa applicant numbers. But Mr. Oppenheim hedged about the amount of visa demand he expected to make it out of USCIS. “I’ve had to temper my expectations with the immigration service because they are under certain processing constraints.”

Interpreting Processing Times Reports

And now, to demystify the USCIS Check Case Processing Times page, which as of today gives these processing times reports for EB-5 forms.

I’ve written a guest article for LCR Capital on Interpreting the USCIS processing times report. The article examines the disconnect between the content and application of the report, and goes in-depth on the following questions:

  • Does the USCIS Check Case Processing Times Page reflect the way that USCIS currently processes petitions?
  • Does the “estimated time range” on the Check Case Processing Times Page refer to the age of petitions that USCIS is processing now?
  • Does the “receipt date for case inquiry” define the limit between normal processing and unreasonable delay?
  • Why does the “receipt date for case inquiry” move so erratically, and sometimes retrogress?
  • Why are the “historical average” processing times reported by USCIS so different from the reported “estimated time range” for processing?
  • How can I estimate the processing time for my petition?

I wrote the article to give clarity and well-researched ammunition to people who may be discouraged and blocked by the USCIS processing times report, but should not be. My article addresses this core conflict:

  • USCIS uses the processing times report to create expectations about “normal processing,” and to shut down inquiries.
  • If you look at what the reported times represent, they in fact define abnormal and delayed processing.

For example, 29.5 months for I-526 indicates, specifically, that 50% of I-526 recently processed had been pending less than 29.5 months. So if my I-526 has been pending for 30 months, the report tells me that I’m being left behind – that over half of recent decisions were on cases younger than mine. And yet some people – including IPO, if I inquire – will blindly treat 29.5 months as the starting point for normal processing, not as the marker it is for delayed processing. Meanwhile, 44.5 months reportedly represents the 93rd percentile of delay in recently-adjudicated cases – by definition, an extreme outlier. Why should we accept the USCIS position that a petitioner doesn’t have a right to inquire unless and until he or she is an extreme outlier?

Or take the appalling 58.5-119 month “estimated time range” reported for Form I-924. How many regional centers have been discouraged by that report from even trying to file Form I-924, despite the importance of that form for project review and program integrity? And yet the report does not actually indicate that I-924 filed now will wait a long time. The processing times report does not claim to report future wait times, average recent wait times, or the age of the inventory. The report merely reflects the fact that half of petitions recently processed happen to have been waiting a long time. At last report, there were only 149 Form I-924 still pending at USCIS. In 2018, USCIS processed that many I-924 every quarter. Who then accepts the current estimated time range of 5-10 years as any reflection on normal processing?

For full discussion, see my article Interpreting the USCIS processing times report.

Bonus Features

Comparing Report and Reality: The following chart illustrates the processing reality for one quarter for which we have happen to have comprehensive data: October to December 2018. The USCIS processing times report during that quarter gave an estimated time range of 20.6 to 26.5 months for I-526 processing. Meanwhile, we now know that most I-526 processed in that period had been pending 10 to 15 months. And the chart shows the reality behind the USCIS claim: “We generally process cases in the order we receive them.”

Country-Specific Processing: When USCIS implemented the new visa availability approach to I-526 processing, they promised that the processing times report would be updated to reflect the new reality. The new approach took effect April 1, 2020, and the report has still not been revised as of June 2020. It still states “We generally process cases in the order we receive them,” and the time estimates have not been updated appreciably since March. While the report has never been a guide to future processing times, it’s particularly unhelpful now that it’s unmoored from the new reality of country-specific I-526 processing times. My I-526 processing time consultation service attempts to provide the service that USCIS should give, but does not. I approach the visa availability impact by piecing together data from different sources to estimate the current composition of the I-526 backlog by country and priority date. Having this picture in view, I then pick out the portions of the inventory that may be sidelined or fast-tracked by the visa availability approach, considering visa availability predictions, and consider the timing outlook in terms of light of volume trends.

 

 

Cooperating to share experience and support the program

Thank you to EB5 Investors Magazine for launching an initiative to showcase positive EB-5 stories. Regional Centers and project companies, please make this effort succeed by taking time to reach out and contribute information about your completed EB-5 projects. The airwaves desperately need stories of real-life experience with EB-5 success. Otherwise, the conversation and our reputation will continue to be defined by the few projects that make the news for bad reasons.

Showcase the positive impact the EB-5 program has had in America
EB5 Investors Magazine is launching a special feature to showcase how the EB-5 visa program has provided a positive impact across the nation by creating American jobs while stimulating our economy.

Please share how your completed EB-5 projects have had a beneficial effect on America. Details of your completed EB-5 projects will be used in material to promote the success and economic impact of the EB-5 program!
Let’s show our policy makers, industry influencers, interested EB-5 program participants and everyday Americans how much investment and jobs the EB-5 program creates!

Click here to share your EB-5 project details!

IIUSA has also emerged with calls to action to support the industry.

  • The IIUSA Public Policy Committee, of which I am a part, is preparing to engage with USCIS on the topic of unreasonable adjudication practices. To this end, we are collecting examples of recent Requests for Evidence and Notices of Intent to Deny that reflect new adjudication trends and make unreasonable requests. Do you have examples? If so, please redact personal information out of the RFE or NOID, and email to education@iiusa.org. The committee will use these examples to inform a robust response. (https://twitter.com/EB5IIUSA/status/1262832809162530819)
  • IIUSA is calling on all EB-5 stakeholders, economic development professionals, and businesses around the country to sign a public letter of support. The letter, addressed to members of Congress, highlights the economic benefits of EB-5 investment, including job creation and retention for U.S. workers and local economic development.
  • IIUSA offers a template to assist stakeholders in submitting op-eds to their local publications.