Today marks the end of Fiscal Year 2022, and the first September since 2015 that I haven’t spent reporting on Congressional news and the appropriations process, waiting with bated breath for updates about regional center program authorization.
Thanks to the EB-5 Reform and Integrity Act of 2022, we now have until September 30, 2027 to panic about legislation to reauthorize the regional center program. EB-5 is stable today in the sense that it neither requires nor anticipates near-term legislative action.
My dream for the future is that EB-5 will also stabilize in the sense of offering a reliable opportunity to immigrate based on investment. In this dream, investor petitions will be processed. Policy will be written. Adjudications will be based on transparent standards, and will have a predictable timeline. Visa availability will be transparent and predictable. Investors who satisfy all the requirements will get a chance to immigrate before they age out, give up, or die. An investment will be an investment, not an unpredictable series of deployments. Escrow protection will be possible. Regional centers will know where their status and responsibilities begin and end. EB-5 issuers will be constrained to make offerings that can and do bear scrutiny as investments. Reasonable exit strategies will be expected and possible. The experience of existing investors will influence a regional center’s ability to attract new investment. Good actors will be empowered to plan well based on good information about the immigration process and success factors. Bad actors will not flourish in impunity underwritten by long processing queue times, policy uncertainty, misdirected adjudication, and lack of communication from USCIS. Both the government and stakeholders will put stock in what happens after investors make investments and file petitions. We’re partway there, and with so much scope for improvement going forward.
To the extent that words can help, I hope and plan to bring out articles on FY2023 visa availability and reserved visas implementation, the scope of exemplar approval, denial factors and issues for attention in IPO adjudications, questions about regional center and investor status after December 29, China timing factors, India timing factors, market size potential and constraints, issues and questions in new forms, and changing project success factors in the wake of the new law. In the meantime, I’ll suggest a reading list of articles from other sources, followed by a comment on the October 2022 visa bulletin.
Reading list:
Fiscal Year 2023 Employment-Based Adjustment of Status FAQs” (09/08/2022) at USCIS.gov. A detailed and informative Q&A from USCIS about the specific processes involved in employment-based visa allocation. Predicts the number of FY2023 EB visas available, settles a question about EB-5 visa carryover, and offers valuable practical tips for I-485.
Reserved Visa Rules, Possible Future Visa Allocation, and Recommendations” (09/09/2022) on the IIUSA blog. Written by Joseph Barnett and Lee Li in consultation with Charles Oppenheim, this article provides clear and updated analysis on reserved visas. The article revised my understanding, particularly with respect to how reserves interact with country caps. Once I get feedback from the authors on a couple points, I’ll publish a revision to my article from April.
IIUSA Questions and Comments for October 19, 2022, EB-5 Stakeholder Engagement (09/16/2022) IIUSA did nice work in articulating many pain points in IPO operations, pointing out why the problems are problems, and suggesting feasible solutions. Now that someone has done all the work to write out these good comments, let’s all read them and amplify them with repetition. (Also FYI, here are the comments I submitted to USCIS, focused on my top concerns of transparency, and the status of pre-RIA regional centers and investors.)
How long must you keep EB-5 capital at risk? (9/27/2022) in EB5 Investors Magazine. Robert Divine explains how the EB-5 Reform and Integrity Act changed the EB-5 sustainment period, and the consequences for new investors and redeployment. This is game-changing good news, if USCIS also sees what Robert sees in the law. Another point worth amplifying.
I considered writing an article about the October 2022 Visa Bulletin, discussing what it means for demand to “materialize,” as the visa bulletin notes like to say. Also, pointing out which applicants the visa office accounts for in setting monthly visa bulletin dates, which applicants (by contrast) we need to account for in estimating visa wait times, and what all that means for predicting future action dates. But instead, I made a picture. I hope that just looking at this image can help conceptually. After examining the picture, you may want to consult this presentation and my data summary for most recent available estimates of the number of applicants hidden in the EB-5 process clouds (not yet on the Visa Control radar, but important for us because determinative for future visa bulletins). And then if you still really wish you had an article about the Visa Office perspective behind visa traffic control, I recommend Note F in the November 2021 Visa Bulletin, this article, and the Chat with Charlie for the April 2021 visa bulletin.
I’m overjoyed to report a positive development. For the first time in years, USCIS is holding an EB-5 stakeholder engagement that promises to include engagement (not just updates and not just listening, but “a question-and-answer session to answer questions“(!!!) From 2010 to 2017, USCIS used to hold quarterly EB-5 engagements with updates and live Q&A. I complained at the time about the quality of these engagements, but at least they happened. Communication between USCIS and the EB-5 world started to break down with the end of quarterly meetings in 2018. Over the last five years, there have very few EB-5 updates from USCIS, and only three events that could be considered “engagements” in the sense of involving any dialogue between USCIS and EB-5 stakeholders. No wonder we’ve ended up in such a mess of frustration, hostility, and litigation. But now, USCIS is reaching out with a chance to talk. What a good sign!
USCIS Immigrant Investor Program Stakeholder EngagementWednesday, Oct. 19|2-3 p.m. Eastern
U.S. Citizenship and Immigration Services (USCIS) invites you to participate in a stakeholder engagement on Wednesday, Oct. 19, from 2 to 3 p.m. Eastern.
During the first part of the engagement, we will share updates on the EB-5 Immigrant Investor Program. We will then hold a question-and-answer session to answer questions, listen to your comments, and seek your individual feedback. We will not address case-specific questions, questions outside the scope of the engagement, or issues under active litigation or likely to be litigated.
We are committed to public engagement, and our stakeholder engagements provide valuable feedback as we work to improve our programs. Participation in this engagement will be virtual. If you would like to submit a question in advance, please send your question to the Public Engagement mailbox at public.engagement@uscis.dhs.gov with the subject line “Question: EB-5 Engagement October 19, 2022” by 4pm Friday, Sept. 16.
To Register: 1. Visit our registration page.2. You will be asked to provide your email address and select “Submit.”3. On the next screen, you will see a notification that you successfully subscribed to this event. Once we process your registration, you will receive a confirmation email with additional details. If you have any questions, or if you do not receive a confirmation email within three business days of submitting your registration, please email us at public.engagement@uscis.dhs.gov. To request a disability accommodation to participate in this engagement, email us at public.engagement@uscis.dhs.gov by 4 p.m. Eastern, Friday, Oct. 14. Note to media: This webinar is not for press purposes. Please contact the USCIS Press Office at media@uscis.dhs.gov for any media inquiries. We look forward to your participation!
While everyone buzzes about when I-526E can be filed with USCIS (a key point in the proposed Settlement Agreement for the Behring litigation), I consider another critical issue: when I-526/I-526E can be reviewed and approved by USCIS. The processing time topic should concern everyone who wants immigrant investment to possibly result in immigration.
I’ve noted that “about two years” has long been a favorite guess to answer the question “How long does I-526 take?” Actual estimates are tough, and the two-year guess looks relatively tolerable (still longer than I-526 should take, but about the outside limit of how long most EB-5 project developers and investors can imagine waiting in limbo). The guess was also justifiable as an estimate through about 2018, but now quite unmoored from observable processing factors.
Processing times naturally result from the size of the I-526 inventory, the quantity and productivity of resources assigned to I-526 adjudication, and the order of I-526 adjudication. I’ve carefully assembled below a table highlighting data to help ground thinking about these factors.
Consider: back in 2018, the median age of completed I-526 was 18 months. From 2018 to Summer 2022, the number of adjudicators assigned to I-526 fell by 61%. In the most recent officially-reported quarter (January to March 2022), IPO completed 24x fewer I-526 than in the same period in 2018. IPO has over 13,000 I-526 pending today, and has not processed more than 400 I-526 a month since 2018, and not more than 200 I-526 per month since July 2021. How far does that put us from expecting two-year I-526 processing times?
When one collects fees for a service, spends the fees, and then does not deliver the service or even allocate resources to provide the service, that’s generally called fraud. Today, $49 million of spilt I-526 filing fees call from the ground, asking why the United States government has assigned only 26 I-526 adjudicators to handle an inventory of over 13,000 pending investor petitions, offers excuses rather than improvement plans for falling IPO adjudicator productivity, and manages I-526 inventory by defining a large percentage of the inventory as ineligible for processing (via the “visa availability approach”).
People in government and industry who want to pave the way for future EB-5 investment and more I-526 (I-526E) filings must look at processing factors as of today. Witness how conditions have deteriorated since 2018, back when we thought two-year I-526 processing times were long. Consider how much needs to change going forward to allow for the “timely processing” of under a year that Congress wants to see for EB-5 forms according to the EB-5 Reform and Integrity Act of 2022. (Tables can look boring, but persevere. This table highlights significant detail worth thinking about. I have also created a new Processing Data page to house trend charts.)
Number of employees gained or lost by IPO during the previous 2-year period
45
(68)
E is calculated from D
Number of IPO employees assigned to I-526
67
56
26
F. USCIS reports in stakeholder meeting notes, Congressional testimony, and/or litigation declarations
Percent of IPO employees assigned to I-526 adjudication
34%
23%
15%
G=D/F
Percent change to IPO’s number of adjudicators assigned to I-526 2018-2022
-61%
H is calculated from F
Average I-526 completions per I-526 adjudicator in the quarter ended March 31
54
6
I=B/F
Percent change to IPO’s productivity per I-526 adjudicator 2018-2022
-89%
J is calculated from I
Estimated time (months) to process all I-526 pending as of March 31, assuming that the rate of completion from the most recent quarter continues going forward
17
55
264
K=A/B*3
Median processing time (months) of I-526 completions in this fiscal year
Considering the factors summarized above, an individual I-526 or I-526E filed today may avoid an unthinkably long processing time if (1) IPO dramatically increases the amount and productivity of I-526 adjudication resources and/or (2) IPO implements exceptions to the nominally First-Come-First-Served order that benefit that particular I-526, or (3) that particular I-526 or a massive number of other petitioners give up and drop out of the process. Addressing adjudication resources is the best and toughest solution. I have noted no IPO adjudicator job announcements yet this year at USAjobs.gov (only five openings for management staff) — UPDATE: but a reader informs me that there was an IPO adjudicator job announcement that closed recently. If and when USCIS hires more staff for EB-5, it takes an average 241 days to move a new USCIS adjudicator from hiring decision to completion of basic training, according to the CIS Ombudsman. IPO has not explained why it has assigned only 15% of its employees to adjudicate the Form that accounts for more than 50% of its fee-paid workload, or whether that allocation decision is open to change. To compensate for resource problems, IPO has fiddled with processing order, implementing multiple queues and a visa availability approach that effectively excludes thousands of I-526 from the processing workload. Petitioners have fought to become exceptions to the dreadful processing average by means of expedite requests and Mandamus litigation. And the new EB-5 law encourages special priority for new I-526 associated with rural projects.
The longer I-526 resource problems remain unresolved, the more IPO will face political and industry pressure to adjust processing order, pushing some subset of pending I-526 forward by pushing the other subset of pending I-526 backward. If the entire system cannot be improved with sufficient resources to provide reasonable processing for everyone, then pressure will build to improve processing times inequitably for at least a few constituents. I do not want to see I-526 processing replicating the cynical tragedy already in place at the visa stage, where “reserved visas” offer to fast-track new applicants by excluding and displacing backlogged applicants. USCIS must address I-526 resources to avoid resorting to processing inequalities and broad-based damage.
I particularly highlight I-526 processing and backlog issues, because I-526 processing is the engine for the entire EB-5 immigration process. But I-526 problems are not unique. USCIS as a whole is laboring under resource and backlog challenges. Current DHS and USCIS leadership recognize and deplore the agency-wide problems, which is encouraging. Their sympathetic attention illuminates the magnitude and the systemic nature of problems, which is useful but less encouraging. In recent statements, webinars, and reports on processing conditions across USCIS, I hear principled commitment to improve more than practical hope for broad-based change any time soon. This shapes my expectations for improvement EB-5 processing – a small part of the total immigration system.
My expectations for processing improvements must also consider mixed incentives even among EB-5 stakeholders. Who is willing to take the first step toward affecting change — identifying and discussing EB-5 processing problems — when the problems look discouraging? Who needs to care if a protracted EB-5 process increases the time to hold EB-5 funds under management and defers government oversight? Who needs to think about what happens after investors file I-526 or I-526E, when most incentives for service providers, projects, and regional centers come before petition filing? Among those motivated to care about immigration outcomes, how many will slog through articles like this instead of clinging to hopeful guesses? Here’s a gauntlet. Let’s see our industry warriors, fresh from successful I-956 battles, take up the fight to salvage processing conditions for investor petitions.
For further insight into the context of EB-5 processing, I recommend the CIS Ombudsman 2022 Annual Report to Congress. “This year’s Report examines the ‘snowball effects’ and pain points associated with backlogs and recommends actions USCIS can take to address not only the human consequences suffered by applicants, families, and employers but also the detrimental impacts on the agency … This article examines how the agency arrived at the crisis of backlogs which is now threatening to overwhelm it and highlights some of the steps it is taking to overcome this challenge.” A really excellent report: thoughtful, substantial, and sympathetic. EB-5 stakeholders should note the insightful analysis of resource constraints (not EB-5-specific, but applicable), and the detailed discussion of the EAD and Advance Parole processes and the expedite process. Regarding parallel issues with Department of State and consular processing, see the study Mounting Backlogs Undermine U.S. Immigration System and Impede Biden Policy Changes (February 23, 2022) by the Migration Policy Institute. See also U.S. Citizenship and Immigration Services: Actions Needed to Address Pending Caseload by the Government Accountability Office (August 18, 2021).
Today marks five months since the EB-5 Reform and Integrity Act (RIA) was enacted on March 15, 2022, and three months since the regional center program gained new authorization. Where are we now?
Amidst the flux on the USCIS website, litigation disputes, questionable new forms, and guidance that’s here today and may be gone tomorrow, this reliable foundation remains: RIA is law. Every regional center application and new investor petition filed today will certainly be approved or denied with reference to the law as updated by RIA. Every interpretation/application question that’s open today will eventually have to be resolved with reference to the law as updated by RIA.
The word “back” has become extremely popular, but the regional center program is not “back” in the sense of “back to the way it was before.” Regional centers are moving forward and finding their feet on a new footing: a law with new requirements and restrictions. Struggling to avoid RIA compliance can only lead to failure, for industry and investors. For better or worse, RIA is the law.
Can new regional center investors file petitions? The day is coming, but it’s been a long wait. The new law says that “a regional center shall file an application with the Secretary of Homeland Security for each particular investment offering through an associated new commercial enterprise before any alien files a petition for classification under this paragraph by reason of investment in that offering.” IPO Chief Alissa Emmel declared on July 15 that “We are currently accepting immigrant petitions based on previously approved exemplars from regional centers. We are also receiving Form I-956F applications from previously designated regional centers.” So far I have heard of just two I-956F receipt notices, though many I-956F applications have been filed over the past couple months and should be acknowledged shortly. For example, USCIS finally issued a receipt notice on August 11 for an I-956F that it received from CMB on July 1. Cautious prospective regional center investors are waiting on I-956F receipt notices so that they can file I-526E according to instructions. (Personally I would not file I-526 relying on an I-924 exemplar approval without I-956F, since I-924 had half the content required for an exemplar under the new law plus different approval standards, and any material change cancels exemplar deference according to the new law.) IPO should at least issue I-956F receipt notices expeditiously, and should also approve or deny I-956F as soon as possible. The exemplar process will only be effective if IPO can process NCE approval requests quickly enough to provide a reliable basis for approvable investor petitions. I wish that IPO will publish a list of approved and denied NCEs, to help regulate the market and stop denied NCEs from still soliciting EB-5 investment and sponsoring I-526E that can never be approved.
The litigation Behring Regional Center LLC v. Mayorkas et al. is still underway. The Preliminary Injunction on June 24 preliminary enjoined DHS from treating pre-RIA regional centers as deauthorized (finding ambiguity in RIA about RC designation). The parties are still discussing how DHS should handle pre-existing regional centers and their existing and new investors under the new rules. The plaintiff regional centers are trying to preserve as much of the pre-RIA status quo as possible, while DHS is fighting for time and leeway to ensure RIA compliance. (For a sense of the back and forth see the IIUSA Notice of Motion for Summary Judgment filed July 21 and the DHS Cross Motion for Summary Judgment filed August 18.) The most recent docket item filed August 12 by DHS discloses that “the parties are substantially engaged in settlement discussions, and an administrative resolution that may render further litigation of this case unnecessary.”
Prodded by litigation, USCIS has made limited adjustments to the EB-5 pages on the USCIS website.
EB-5 Home is updated as of 8/2/2022 to remove references to a repealed RC program and to add one “Alert” that USCIS will no longer accept combined fee payments for I-526/I-526E concurrently filed with status adjustment forms.
About the EB-5 Visa Classification was updated on 7/28/2022 with new sections reflecting the new law on Job Creation Requirements, Capital Investment Requirements, and Immigrant Visa Set-asides.
EB-5 Investors – This page is marked as last reviewed/updated on 8/2/2022, but the information provided on this page is outdated and inaccurate to the new law except for the “alert” in the header.
EB-5 Filing Tips – This page is marked as last reviewed/updated on 6/23/2022, but only one form title was changed. The page continues to give info that was accurate in December 2020 but now outdated/inaccurate.
EB-5 Resources – This page links to the EB-5 Questions and Answers (updated April 2022) document most recently revised as of 7/11/2022. The latest Q&A deletes the previously-provided answers about regional center authorization repeal and investor petition grandfathering. The Q&A is currently silent on how USCIS treats pre-RIA regional center and their investors.
EB-5 Support – This page has been updated as of 7/27/2022 to link to new EB-5 forms (and now interestingly links to no regional center annual statement form – not I-924A and not I-956G – though I-956G remains available on the USCIS website.)
USCIS Policy Manual Volume G Part G Investors has not been updated at all as of August 15 except with an Alert noting that RIA was enacted and “USCIS is reviewing the new legislation and will provide additional guidance, including an eventual revision of Policy Manual content.”
USCIS has published six new forms that will need to be revised eventually in response to litigation and to correct errors and omissions: Form I-956 Application for Regional Center Designation, Form I-956H Bona Fides of Persons Involved with Regional Center Program, Form I-956F Application for Approval of an Investment in a New Commercial Enterprise, Form I-956G Regional Center Annual Statement, Form I-526, Immigrant Petition by Standalone Investor, and Form I-526E Immigrant Petition by Regional Center Investor. These forms can be filed despite their faults; lawyers and advisors just have to go the extra mile to think through what the law requires and what USCIS can be expected to request or should accept beyond what’s in the forms. I particularly look forward to USCIS revising I-956G Annual Statement (which is predicated on the now discredited interpretation that RIA canceled pre-RIA regional center designations), and the new I-526E (which conflates ownership with decision rights over EB-5 investment in the definition of “persons involved”).
We’re used to living with inadequate instructions, as USCIS has a history of disconnect between form content and adjudication standards. For example among AAO I-526 denial decisions in 2021, a third cite lack of documentation for currency exchanger source of funds – a type of evidence that Form I-526 never has and still does not request. I-526 routinely get denied for not providing such evidence, because RFEs and decisions can point to justification in the law although USCIS doesn’t publicly request the evidence in their forms, instructions, filing tips, or policy manual. Or consider the issue of source of funds for enterprise owners not seeking immigration benefits. Form I-526 does not ask each petitioner to provide and depend on lawful source of funds documentation for every other investor in the NCE. But USCIS still denies I-526 for lack of such documentation. EB-5 practitioners have had to get used to looking past form instructions to figure out what EB-5 submissions need to succeed with USCIS. This challenge increases with room for interpretation in new EB-5 law. (And the new law sadly increases the stakes and risks of ambiguity, because RIA removed the possibility of judicial review for unreasonable USCIS interpretations.)
EB-5 processing volumes have yet to recover from the regional center program shutdown or the new law (not to mention the 2019 Reset Training at IPO), but I keep watching and hoping. I will shortly publish a separate post and new pages with the updates I’ve been collecting on I-526 and I-829 processing, adjustment of status, consular processing, the backlog and visa availability, and processing conditions generally. At least broader processing problems and the dire consequences have started to get better recognition from the government and media, which is a good step toward change.
On July 11, USCIS deleted five Q&A from the EB-5 Questions and Answers (updated April 2022) document linked to the EB-5 Resources page. This update successfully deletes all references to repealed regional centers. The update also removes all input on important questions of when investors can file I-526, how USCIS treats I-526 filed before the new law, and how regional centers maintain and amend designation.
On July 12, USCIS announced a new Form I-526 and Form I-526E. The announcement includes the important reminders that “a potential immigrant investor cannot file Form I-526E until the regional center has filed Form I-956F for the particular investment offering” and “Forms I-526 and I-526E must be submitted in compliance with new program requirements.” I will analyze the new forms as time permits. [UPDATE: USCIS has now sent a second announcement email with slightly different content and additional info about fees, copied below.]
From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com> Sent: July 12, 2022 2:12 PM Subject: USCIS Releases New Forms for Immigrant Investor Program
USCIS is revising Form I-526, Immigrant Petition by Alien Entrepreneur, to accommodate the EB-5 Reform and Integrity Act of 2022, which made significant changes to both the filing and eligibility requirements for investors under the EB-5 program. The form will be split into two versions: Form I-526, Immigrant Petition by Standalone Investor, and Form I-526E, Immigrant Petition by Regional Center Investor. —Form I-526 will be used by standalone immigrant investors who are not seeking to pool their investment with additional investors seeking EB-5 classification, and will closely resemble the prior edition of Form I-526. —Form I-526E will be used by immigrant investors who are seeking to pool their investment with one or more additional investors seeking EB-5 classification under the new regional center program.
We created Form I-526E to reflect elements of the new regional center program, including the ability to incorporate evidence by reference from a regional center’s Form I-956F.
By statute, a potential immigrant investor cannot file Form I-526E until the regional center has filed Form I-956F for the particular investment offering through an associated commercial enterprise that the potential immigrant investor is investing in. Once the regional center has received a receipt notice for the Form I-956F confirming its filing, investors may then file their associated Form I-526E based on that receipt notice.
Effective July 12, 2022, Forms I-526 and I-526E must be submitted in compliance with new program requirements. The filing fee is $3,675 for each form. Visit the forms pages for additional information about the filing fees and biometric fees.
From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com> Sent: July 12, 2022 5:52 PM Subject: Revision of Form I-526
Revision of Form I-526 We have released a revised version of Form I-526, Immigrant Petition by Alien Entrepreneur, splitting it into two versions to accommodate the EB-5 Reform and Integrity Act of 2022, which made significant changes to both the filing and eligibility requirements for investors under the EB-5 program.
Background Form I-526, Immigrant Petition by Standalone Investor Form I-526 is filed by “standalone” immigrant investors who are not seeking to pool their investment with one or more additional investors seeking EB-5 classification.
Form I-525E,Immigrant Petition by Regional Center Investor Form I-526E is filed by immigrant investors who are seeking to pool their investment with one or more additional investors seeking EB-5 classification and who must now do so under the Regional Center Program. Regional Center investors will also use Form I-526E to report any amendments necessary to establish ongoing eligibility if the regional center, new commercial enterprise, or job-creating entity in which the investor has invested is terminated or debarred from participation in the Regional Center Program.
Filing Fees The filing fee for Form I-526 is $3,675. The filing fee for Form I-526E is $3,675 (add the $85 biometrics fee for a total of $3,760, where applicable. See exceptions below). On and after October 1, 2022, an additional $1,000 fee will be required under the EB-5 Reform and Integrity Act of 2022. Note: The biometric services fee is not required for petitioners filing the I-526E to amend a previously filed petition.
Additional Information Forms I-526 and I-526E that are properly filed will receive two separate receipt notices. The first notice you should expect to receive will be from the USCIS Lockbox, acknowledging receipt of your I-526 or I-526E and the total fee amount received and processed. Next, we will issue a formal receipt notice that includes the assigned receipt number for the application when data entry has been completed. The priority date for the Forms I-526 and I-526E will be the date USCIS Lockbox receives your petition.
Who bears the burden of waiting for USCIS to ensure regional center compliance under the EB-5 Reform and Integrity Act of 2022 (RIA)? Who takes the risk that USCIS will find some pre-RIA regional centers and their projects not compliant under all the new rules?
At first, the answer was: regional centers bore the compliance wait and the risk of denial. On April 11 and April 29, the USCIS website posted announcements to the effect that regional centers needed to wait for USCIS to approve new designation applications before sponsoring EB-5 investment. (USCIS justified the announcement with the interpretation that RIA cancelled all pre-RIA regional center designations.) This approach offered some protection for incoming investors (who would benefit from advance compliance review by USCIS), confusion and alarm for past investors (who found their previous RC sponsor status and compliance responsibilities cancelled), and pain for regional centers authorized under the old law (who wanted to resume business, not be held back by lengthy USCIS processing times for compliance review under the new law).
Naturally, previously-designated regional centers sued USCIS over the April website announcements. On June 24, a judge took preliminary action on one of the lawsuits, Behring Regional Center LLC v. Mayorkas et al, issuing an “Order Granting Plaintiff’s Motion for a Preliminary Injunction.” The order does not change RIA, or regional centers’ responsibility to comply with RIA, or USCIS’s ability to control the process (and it doesn’t decide the lawsuit). But the order finds that USCIS was likely in error to take for granted that RIA cancelled all pre-RIA regional center designations. By pulling the legal justification out from under USCIS’s website announcements, the injunction potentially opens a window for formerly-designated regional centers to raise new capital during the transition period while USCIS implements and assesses compliance under the new law. (Hopefully, the injunction also makes USCIS reconsider regional center responsibility for capital raised under the old law.)
Today, prospective investors are invited to take the compliance wait and risk. I’ve already received several marketing emails from regional centers designated under the old law, urging potential immigrants to invest with them immediately and file I-526 right away. The approvability of such new I-526 will depend on the outcome of USCIS’s assessment of regional center and project eligibility under RIA (which assessment will happen in the context of I-526 review, if not earlier). But who needs to care about the immigration risk, if EB-5 investment can be banked today and deployed regardless of future USCIS decisions?
If I were a prospective EB-5 immigrant willing to gamble today, I would consider trying to mitigate the risk by asking for escrow, with release of funds on I-526 approval or I-956F approval, and an exit option after a defined period in case of no action by/response from USCIS. Regional centers fought to avoid the wait and risk of USCIS’s potentially lengthy and capricious process to figure out law interpretation and compliance. Investors may also want to protect themselves from that process and risk. Meanwhile, if I were a regional center, I would still go ahead with filing the new I-956 applications. These forms have material that RIA unambiguously requires USCIS to collect and review for all regional centers, including those designated prior to RIA, and RCs should benefit from getting that submission and review done as soon as possible.
I recommend that everyone read the text of the preliminary injunction, to see what it does and – more important — does not say. The order’s content has been misrepresented in the PR I’ve seen about it so far, so caution is needed. I’m also watching the USCIS website EB-5 page, to see if/when USCIS exercises their power to choose another basis for making regional center sponsors undergo some kind of review process before new regional center petitions can be accepted. And finally, a few key quotes from the injunction.
In short, the Integrity Act does not clearly answer the question whether Congress meant to strip existing regional centers of their authorization. But the agency provided no other explanation for its decision. It stated only that because Congress “repealed Section 610, . . . regional centers previously designated under section 610 are no longer authorized.” The agency’s conclusion therefore rests on a misreading of the law: USCIS thought itself compelled by the Integrity Act to treat the existing regional centers as deauthorized, even though the Act does not require that outcome. Had the agency considered the question, balanced the competing interests at stake, and arrived at a decision on the continued status of existing regional centers, perhaps the agency could successfully defend its action.
…Accordingly, USCIS is preliminarily enjoined from treating as deauthorized the previously designated regional centers based on its almost certainly erroneous interpretation of the Integrity Act. Of course, the agency may do whatever is reasonably necessary to ensure that the existing regional centers comply with the Integrity Act, but those centers must presently be permitted to operate within the regime created by the Act. This includes processing new I‑526 petitions from immigrants investing through previously authorized regional centers like Behring, just as the agency would do for a newly approved regional center.
The preliminary injunction will remain in place until the earlier of: (1) a ruling on summary judgment by this Court; or (2) a reasoned decision by the agency about how regional centers should be treated given the Integrity Act’s ambiguity. Perhaps, after engaging in a reasoned decision‑making process and considering the competing policy factors, the agency could conclude that Behring and the other previously authorized regional centers can no longer operate until they have successfully reapplied by submitting new I-956 petitions. Perhaps the agency could conclude that the centers must reapply but can operate consistent with the requirements of the Integrity Act pending their new applications. Or perhaps the agency could conclude that the centers can operate without reapplying so long as they otherwise comply with the Act’s requirements. But what’s clear is that the agency cannot deem the existing regional centers deauthorized without engaging in reasoned decision-making consistent with the APA.
Of the many battles to fight in EB-5, a critical one remains the situation at the Investor Program Office. The EB-5 program and visa issuance depend on IPO functioning to administer the program and process petitions.
With three months since Congress passed the new EB-5 law, is IPO back to work? Witness the number of I-526 approvals in recent months, in context of IPO’s performance since 2014.
As illustrated, processing volume remains not merely suboptimal, but almost vanishingly small. This is extremely concerning, in light of what IPO demonstrably could do and needs to do.
To at least advance sufficient applicants to claim the average 10,000 EB-5 visas available annually, IPO needs to at least approve about 3,600 I-526 per year (considering an average 36% of EB-5 visas have gone to principal applicants). In the first 8 months of FY2022, IPO has only approved 223 I-526. IPO management might proudly point out that they have improved since the new EB-5 law, approving almost 100 I-526 in May 2022, compared with only 9 in February 2022. This is “next to nothing” improving on “nothing.” A rate of 100 approvals a month is still three times too low to avoid wasting EB-5 visas in a normal year, five times too low to avoid wasting visas this year, and ten times too low to provide timely processing for over 13,000 pending I-526 petitions. The necessary recovery is not even close to complete. If IPO thinks that May 2022 was anywhere near “back to normal,” we’re in trouble.
I start with a focus on I-526 approvals, since that’s what drives the EB-5 process. Everyone from prospective investors to DHS leadership to Congressional representatives should care if the EB-5 process is grinding to a halt because USCIS is stalling Step 1.
A closer look at the data reveals other details of interest.
We can see what happened when the regional center expiration as of July 2021 left USCIS to focus on the direct EB-5 I-526 inventory. IPO ramped down activity overall, and what it did was mainly to RFE and deny petitions with priority dates from before 2015 through late 2019. And then with the return to regional center I-526 processing since March 2022, we see I-526 activity going back to concentrate on late 2018 priority dates, with a modest uptick in volume, more decisions than RFEs, and denial rates still high. USCIS had been mainly processing I-526 with October to December 2018 priority dates back in early 2021, before the regional center processing freeze, so I’m not surprised to see those dates back on the table now. Many 2019 decisions in May 2022 were likely on direct petitions that had received RFEs during the shutdown. But overall, processing is evidently not first-in-first out. On any given day, the handful of EB-5 actions completed can include I-526 with priority dates anywhere from 2013 to 2022. As a supervisor looking at these charts, I would question IPO management about its disordered process as well as about its low productivity.
Needless to say, USCIS did not intend to share such granular and timely data. USCIS has edited the processing times report to report only outliers and only 6-month averages, officially publishes limited performance data only after a half-year delay (last published report was October-December 2021), and does not answer my FOIA requests. Fortunately, USCIS also leaks. The above data is from a leak that I am delighted to report, as someone concerned about my clients’ future and EB-5 program integrity. The Investor Program Office is acting as if it could count on darkness and inattention. May the record of its irresponsible performance come to the attention of USCIS leadership who want reforms, and of Congressional representatives who care about the integrity, reputation, and functionality of EB-5.
At the EB-5 listening session on April 29, 2022, USCIS Director Jaddou recognized that “The EB-5 investor program allows individuals to become vital and contributing members of the United States. It also strengthens our communities across the country by encouraging foreign direct investment and creating jobs.” She also stated that “I firmly believe that every applicant who seeks a benefit from USCIS is entitled to a timely decision – be it a yes or no. This is about delivering tools to our workforce to efficiently and effectively adjudicate cases and reduce processing times.” Time to see that vision work its way down to IPO.
(I could also discuss I-829 processing data, with similar concerns, but consider the I-526 problem in most urgent need of publicity as an integrity, public policy, and market issue.)
Form I-956F is a new form that can only be filed by an approved regional center. Form I-956F is similar in some respects to an “exemplar” submission on Form I-924 under the previous program; however, Form I-956F is required by statute for regional centers to apply for approval of each particular investment offering through an associated new commercial enterprise.
Form I-956G takes the place of Form I-924A from the previous program but incorporates the increased statutory reporting requirements.
The next series of forms USCIS will be releasing are Form I-526, Immigrant Petition by Standalone Investor, and Form I-526E, Immigrant Petition by Regional Center Investor. USCIS will notify stakeholders once these forms are available on our website.
Effective June 2, Forms I-956F and I-956G must be submitted in compliance with new program requirements. The filing fee is $17,795 for Form I-956F and $3,035 for Form I-956G.
As of this week “EB-5 2.0” has officially launched, with a new regional center program authorized since May 14, 2022. Now that 60 days have passed since enactment, the EB-5 Reform and Integrity Act of 2022 (“RIA”) has taken full effect. New regional center I-526 still cannot be filed, and none of the USCIS EB-5 pages or policies or petitions have yet been updated with the rules now in effect. But one EB-5 2.0 process is moving: entities can begin to apply for new regional center designation.
Form I-956 asks open-ended questions, and provides minimal instructions. I-956 requests less evidence than the previous I-924 Application for Regional Center – whether intentionally or not, it’s hard to tell. I foresee that 100% of Form I-956 submissions will receive a Request for Evidence, given the minimal instructions. Until we start seeing RFEs from USCIS, we need to guess at how USCIS interprets new regional center designation requirements. I wonder if USCIS has drafted the Form I-956 worksheet for adjudicators, and what’s on that worksheet. If only USCIS would tell the public what’s on its adjudication checklists, then we might make submissions correct and complete the first time. The guess-question-clarification process is inefficient, and the regional center program does not have years to waste.
Top Takeaways from Form I-956 Application for Regional Center
What’s New: I-956 and I-956H are almost entirely language copied straight from the RIA text, without interpretation or comment. The I-956 instructions offer one item of additional guidance: “The description [of policies and procedures] may include, but is not limited to, the regional center’s policies and procedures regarding internal controls, risk management and assessment, governance, and fraud detection and/or deterrence. Documentation may include, but is not limited to, Policy Manuals and Standard Operating Procedures.” I-956 offers no comment on what USCIS considers to be the specific “applicable laws” and “program requirements” for which applicants should provide policies and procedures.
Evidence Required: Form I-956 specifies little required evidence. While the old Form I-924 Application for Regional Center had a seven-point list of “evidence you must submit,” Form I-956 has mostly open-ended questions, and says ”may provide” more often than “must submit.” An applicant following the letter of the I-956 instructions (and interpreting “should” as closer to “may” than “must”) could technically submit I-956 with the form blanks completed but no exhibits whatsoever beyond copies of the Form I-956H for persons involved. As an applicant I’d be tempted to go for a minimal initial filing, considering that I can hardly avoid an RFE in any case, given the vague and minimal instructions provided upfront.
RC History: Form I-956 implies that USCIS has no interest in and attaches no relevance to the applicant’s previous history of regional center designation. I-956 asks only forward-looking questions. I-956 gives no space to provide information about any prior regional center designation, good or bad history of promoting economic growth as a previously-designed regional center, previously-approved geographic scope, in-progress EB-5 projects, or EB-5 funds currently under management. There’s no indication in I-956 that USCIS has any plan to link designation and investors under the new law with designation and investors under the old law. The I-924 had required disclosing the applicant’s previous regional center termination and denial history, and prohibited use of names that duplicated pre-existing RC names, but the I-956 lacks even this.
Geographic Area: Form I-956 is less specific than I-924 about regional center geographic area and economic impact. I-956 says generally “You should provide evidence that the regional center’s pooled investment will have a substantive economic impact on the proposed geographic area,” and asks for “reasonable predictions” supported by economic impact analysis. But it does not define “substantive impact” or request project-specific basis for predictions. By contrast, Form I-924 required the applicant to base economic impact analysis on business plan inputs, and to show “that the boundaries of the regional center are reasonable based on evidence that the proposed area is contributing significantly to the supply chain and labor pool of the proposed new commercial enterprises.” Either USCIS was careless in writing I-956, or it now has a looser/more open-ended standard than before for geographic area requests. It may be that by separating regional center designation from NCE/project approvals, USCIS has blocked itself from demanding project-specific grounding for regional center impact claims. If that’s the case, surely all applicants will submit theoretic cases for sprawling multi-state geographies.
Organizational Evidence: The “who are you” questions in Form I-956 are limited to identifying the legal name of the regional center entity and the identities of persons involved with the regional center. Unlike I-924, Form I-956 does not specifically request the regional center’s formation documents, Operating Agreement, or management agreements. I-956H requests personal identity detail needed to check for law/rule violations, but not any of the business experience or professional track record detail that a banker or investor would want to know about persons involved. This may or may not be an oversight.
Business Plans: The “what will you do” questions in Form I-956 are limited to compliance policies and theoretic economic impact predictions. I-956 does not specifically ask the applicant for any kind of business plan, either for regional center operations or to support economic activity projections. (By contrast, I-924 required an Operational Plan and Plan of Promotion to describe how the regional center would operate and support its operations, and project business plans to provide reasonable real-world inputs to support impact analysis. The I-956 silence on business planning may or may not be an oversight. Surely such detail should still be relevant for designation.)
Further Guidance: The I-956 instructions promise that “The approval notice will provide information about the responsibilities and obligations of your USCIS designated regional center. It will also list the evidence to submit in support of regional center-associated individual EB-5 petitions, as well as details on the reporting and oversight requirements for regional centers.” Why not disclose the approval notice template upfront, USCIS, so that applicants can shape their plans around these requirements?
NCE Approval Form: The Form I-956H Instructions reveal that USCIS has chosen a name for the yet-to-be-published project approval form that needs to be filed before regional center investors can start filing I-526. The application for NCE approval will be called Form I-956F. (In the old days, applicants could file for regional center designation and exemplar project approval at the same time using the same I-924, but now the process has two separate and consecutive forms.)
Timing: I foresee significant processing times for Form I-956 (given the back-and-forth that will result from the open-ended questions and minimal instructions), and for I-956H (given the number of agencies that USCIS will need to coordinate with to perform security checks). I will be pleasantly surprised if the first new regional center gets designated before 2023, and astonished if all I-956 filed in the next few weeks get adjudicated before 2025. [Update: The May 18 Declaration of Alissa Emmel in the Behring lawsuit states that: “IPO … as of this date has received approximately 8 applications. …While every application will be reviewed on a case-by-case basis, IPO aims for its processing times on Form I-956 applications to meet or exceed the statutory goal of 180 days.”] I very much hope that the first applicants to receive RFEs will be public-spirited and share the RFEs with the rest of the community. The more guidance we can extract from USCIS, the more we’ll be able to improve application quality and speed up the adjudication process for everyone.
Caution: Historically, an EB-5 document requirement will spark a cottage industry of chancers who smell profit in producing documents with the right title on a nice cover and any old filler shoved under the cover. Thus the proliferation of shoddy economic impact reports, business plans, and offering documents in EB-5. I suggest, look closely at anyone who offers to relieve you of thousands of dollars in exchange for documents with covers that that say “Policy Manuals” and “Standard Operating Procedures.” If there isn’t an EB-5-experienced securities attorney involved in drafting and signing off on the content, consider only paying what the cover is worth. USCIS adjudicators may have little way to judge compliance policies but by the cover, and might possibly just rubber stamp whatever gets submitted. But even better for regional center applicants to invest in solid content, especially in the sensitive area of securities compliance.
I’m copying below an invitation from USCIS to participate in another EB-5 listening session. The invitation asks some excellent questions, but oddly — considering the engagement’s stated purpose — no questions specifically related to implementation of the EB-5 Reform and Integrity Act of 2022, or the rulemaking required by the Act. The invitation also offers no way to answer the questions, except to call in to the engagement. If USCIS is serious about getting solid feedback, it should provide a path for written answers.
From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com> Sent: May 17, 2022 8:09 AM Subject: Listening Session: EB-5 Reform and Integrity Act of 2022 Rulemaking
EB-5 Reform and Integrity Act of 2022 Rulemaking Listening Session
Wednesday, May 25 | 2 – 3 p.m. Eastern
U.S. Citizenship and Immigration Services (USCIS) invites you to participate in a listening session on Wednesday, May 25, 2022, from 2 to 3 p.m. Eastern. The listening session is for stakeholders to provide individual input on rulemaking related to the implementation of the EB-5 Reform and Integrity Act of 2022. USCIS is committed to public engagement and sessions such as these provide us with valuable feedback as we work to improve our programs.
Questions for consideration: Although we are interested in overall feedback about the EB-5 program, we would also appreciate your input on the following questions:
1. Evidence a. Are there evidentiary requirements for Form I-526 filings in the existing regulations that should be simplified or modernized? We invite specific estimates of these burdens and potential effects of these simplifications.
2. Definitions a. Are there undefined or other ambiguous terms in the existing regulations or statute that DHS should define or clarify through rulemaking? b. Should we keep the “troubled business” definition in the existing regulations (8 CFR 204.6(e), 204.6(h)(3), and 204.6(j)(4)(ii))? If we keep the definition, should we revise it and, if so, how? c. Should we keep the definition of “new” for a commercial enterprise in the existing regulations? Is there an alternative approach for what should be considered “new” (for example, a more recent cutoff date or a particular period for determining whether a commercial enterprise is “new”)?
3. General a. Are there other processes or requirements in the existing regulations or statute that DHS should clarify or further develop through rulemaking? For example: • The process we will use to designate and communicate high unemployment areas. • Factors we should consider in determining if a regional center’s geographic area is “limited.” • How construction jobs for less than two years will be calculated. • Are the expansion and restructuring requirements in the existing regulations still relevant?
2. You will be asked to sign up for updates or to access your subscriber preferences, please enter your email address and select “Submit”
3. Select “Subscriber Preferences”
4. Select the “Questions” tab
5. Complete the questions and select “Submit.”
Once we process your registration, you will receive a confirmation email with additional details.
If you have any questions, or if you have not received a confirmation email within three business days, please email us at public.engagement@uscis.dhs.gov.
To request a disability accommodation to participate in this engagement, email us at public.engagement@uscis.dhs.gov by 4 p.m. EST on May 20, 2022.
The https://egov.uscis.gov/processing-times/ page now reports a number that is apparently arbitrary. What is relevant about 80%? Why not report the median age of recent completions? (The USCIS historical processing times report gives the median, which is logically more indicative of “normal” and “average” processing.) Why not the first and third quartile? (That would at least be meaningful statistically.) Why not 93%? (Significant if the threshold for case inquiry.) What possible justification/explanation is there for choosing to report 80% on this page? Unless explained, it would appear the USCIS chose 80% to 1) cover up the major deviations from FIFO processing that had been exposed by the previous “estimated time range” method, 2) prevent petitioner inquiries by not reporting median or average processing, and 3) confuse and disguise the derivation of the Case Inquiry Date, which is not calculated from the 80% month. I suggest that this page would be more meaningful if it reported the median (or even better, the median and the average) age of recently-adjudicated cases. The number of months used to calculate the Case Inquiry Date should also be disclosed.
The https://egov.uscis.gov/processing-times/ page is not clear or transparent about the Case Inquiry Date – the single most important piece of information on the page. The “get inquiry date” tool on this page uses a month multiplier that is not disclosed, and is not equal to the 80% month reported on the page. The page vaguely says “we only allow inquiries for cases that are well outside the processing time listed above.” To be transparent, this page needs to state “93% of recent adjudications were completed within ___ months,” and then explain that this number of months is used to calculate the case inquiry date.
The case inquiry date and answer to the question “When can I ask about my case” are both unreasonable. To protect USCIS from Mandamus litigation (which must be much more expensive to the agency than individual inquiries), the processing times report needs to define a reasonable boundary for “normal” processing. Outside the 93rd percentile is too-obviously a boundary for extreme outliers, not a definition of what’s normal – especially given the well-documented spread of processing times. For example, for Form I-829, the historical times page gives a median of 41.5 months in 2022, and the I-829 Case Inquiry Date is calculated at 64.8 months. What judge will believe that a I-829 petitioner should have to wait 15 months longer than the median processing time to even inquire about case status? The 64.8-month case inquiry boundary in the processing times report is too-blatantly unreasonable, and appears to be arbitrarily set to prevent inquires.
Strictly speaking, the processing times report simply and only reports past performance. But the USCIS Report and More Info pages do not speak strictly, but as if the past performance numbers were true for all time and predictive for the future.
“We display case processing times for select forms and locations to let you know how long it generally takes to process benefit requests.” This sentence conflates “how long it has recently taken” with “how long it generally takes.” This conflation is false and misleading, implying a status quo where none exists. USCIS has a history of large processing time fluctuations, and actively plans on processing time changes going forward. The sentence had better be “We display case processing times for select forms and locations to let you know how long it has recently taken to process benefit requests.”
“80% of cases are completed within” This language is misleading, when in fact the number only represents “the amount of time it took us to complete 80% of adjudicated cases over the last six months.” At minimum, the verb “are” should be replaced with “were” or “have been.” Or could replace “80% of cases are completed within” with “80% of recent adjudications completed were within”
“The earliest you can submit questions is _____. Please do not contact us before this date.” This statement has two problems: it directly uses past performance to predict future results, and it implies that the date given in the sentence is a firm barrier not subject to constant change. The sentence copies the time it took to complete 93% of adjudications over the past six months and pastes it into the future, which is only meaningful if USCIS plans for no improvements over past performance. But USCIS does plan improvements, so the prediction is not meaningful. And it is not even a prediction, given that a petitioner consulting the page from month to month will see the “earliest you can submit questions” sentence populated with ever-changing dates that fluctuate forward and backward in time depending on recent adjudications. To make the sentence transparent and meaningful, better to say something like “You may not submit questions until your case has been pending longer than __% of recent adjudications. If your receipt date is before _______, you may submit questions.” It’s meaningless to give a sentence that predicts a future date, if the given date is not actually intended or usable as a prediction.
USCIS announced new cycle time goals on March 29, 2022 for multiple forms. If USCIS is serious about making progress toward these cycle time goals, and willing to be transparent and responsible to the public, USCIS should regularly publish current cycle times for those forms.
During the first five minutes of the listening session, USCIS Director Ur Jaddou provided opening remarks. My recording sadly does not include this intro, thanks to my apparent inability to read call-in instructions. From the portion I heard, it seems that Director Jaddou provided a “big picture” perspective of changes and improvements at USCIS, covering the points about agency-wide performance and goals that she made in her April 6 testimony to the House Committee on Appropriations (which is worth reading). She did not have significant EB-5-specific input (that I heard), but it was nice of her to be on the call. I applaud her goals and accomplishments so far at USCIS, and her seriousness about challenges.
My recording starts with the EB-5-specific portion of the call.
New Investor Program Office Chief Alissa Emmel introduced herself and talked about the new law (minute 0-5), and processing times (5-9).
A Policy Analyst with USCIS Office of Policy and Strategy discussed upcoming policy manual revisions and regulations. (minute 9-11)
An Adjudication Officer with USCIS Service Center Operations confirmed that I-485 processing for regional center petitions has resumed. He incidentally dropped the revelation that “over 4,000” regional center I-485 were already pending before July 1, 2021. (minute 11-13)
A Visa Policy Analyst with State Department Bureau of Consular Affairs Office of Visa Services Field Operations confirmed that RC-associated visa processing has resumed as of April 2022. (minute 13-16)
From minute 16 of my recording, the call consists of stakeholders making comments and asking questions, and USCIS responding with thanks for the input (but not any answers).
The headline news is that new regional center I-526 cannot be filed starting with the new regional center program authorization on May 14, 2022. Instead, investor filings will need to wait until after USCIS designates individual regional centers under the new program; i.e. wait for new RC application forms to be not only filed but also approved. USCIS did not estimate a time for this process. (For reference, the previous RC application form, I-924, had a median processing time from 19 to 22 months between 2017 and 2021. The most I-924 approvals that USCIS ever managed in one month was about 40, back in 2018. Since 2019, the average was more like 15 per month. Based on new law requirements, the new RC application will have less offering-specific and project-specific content than I-924, but more compliance content and more security checks. The processing workload will depend on how many of the previously-designated 632 regional centers decide to apply for new designation. I guess that at least most of the 344 RC that were committed enough to file I-924A even during the RC program expiration will apply.)
A second headline, which I doubt that USCIS thought through: USCIS now claims no jurisdiction over the entities that were formerly designated as regional centers, and that are still handling billions of dollars of EB-5 investment. The written Q&A states that USCIS will no longer require these entities to file annual reports about what they are doing with those billions of dollars, or to file amendments when they change plans or ownership. Unless and until they choose to apply for new designation, the entities holding pre-enactment EB-5 investment are now apparently exempt from the new EB-5 integrity measures, and also from such oversight as USCIS used to provide for regional centers. This follows from USCIS’s interpretation that “regional centers previously designated under section 610 are no longer authorized,” and thus no longer have any status for USCIS to regulate. But I doubt this was intended. I understand the rationale to make regional centers demonstrate compliance with the new law before raising new investment (and to buy more time for USCIS to figure out how to implement the new law). I doubt USCIS thought about the negative integrity side effects of cancelling the only status that allowed USCIS to monitor or dictate to pre-existing regional centers. “USCIS abrogates oversight of entities currently deploying $27 billion dollars in immigrant investment.” This is a true and shocking headline, unless USCIS scrambles to make some clarifications on the status of formerly-designated regional centers.
The written Q&A and the listening session provide welcome clarity about grandfathering of regional center investor petitions. Regional Center I-526, I-485, and visa applications are already being processed as of April 2022. Pre-enactment I-526 are judged “according to the applicable eligibility requirements at the time such petitions were filed,” and with opportunity to demonstrate eligibility “despite the previously approved regional center associated with your petition no longer being designated.”
In the listening session, we heard for the first time from new IPO Chief Alissa Emmel, a career civil servant who was appointed to her position in September 2021 after having previously worked at IPO as an economist starting in 2013, and managing the IPO Compliance Division since 2017. On the call she sounded upbeat, relaxed, and unworried about the challenges of performance improvement or law implementation. She stated one firm plan for EB-5 law implementation: to publish a form and instructions for a new Form I-956, Application for Regional Center Designation, by May 14, 2022. If she has other implementation plans yet, she did not articulate them. No mention of a timeline for publishing the new project approval form or revising Form I-526 or I-829, no mention of processing time targets for regional center application adjudications, and no mention of plans for training adjudicators in the new law. If IPO has started tackling the major challenge of assessment metrics for new regional center compliance plans – a task that will presumably require coordination with the SEC and other outside experts – Chief Emmel didn’t mention it. I came to the call prepared with sympathy for the enormous burden that law implementation puts on USCIS, and for how harassed and panicky the USCIS staff would sound as they grappled with that burden, and with the intense time pressure. But I did not get a chance to deploy my sympathy. I couldn’t tell that much grappling has yet been undertaken or foreseen, or that much pressure has yet been felt.
The call included a Policy Analyst with USCIS Office of Policy and Strategy, who spoke to the need for new policy and regulations. She divulged one plan: “to hold another engagement in late May to gather individual feedback from impacted stakeholders on those areas or topics from the legislation that require rule-making or other sub-regulatory policy considerations.” And she expressed one specific “hope”: to roll out substantive policy manual revisions “over the next few months.” She also noted that “USCIS fully intends to follow appropriate rule-making procedures for implementing regulatory changes, which is by no means a quick process.” As background, the current EB-5 policy originated with a three-year process (with a policy memo drafted in 2011 and finalized in 2013), redeployment policy took three years (promised in 2014, draft released in 2015, published as policy in 2017), and the EB-5 Modernization regulation emerged over three years (promised in 2016, Notice of Proposed Rulemaking in 2017, Final Rule in 2019). With that background, to rewrite all EB-5 policy based on the RIA in a matter of months will be a herculean task. I would love USCIS to manage this; we badly need speed so that investor I-526 can be filed based on known guidance as soon as possible! But the Policy Analyst on Friday’s call did not sound stressed, as I’d expect she would be if herculean efforts were underway. She announced without audible shame what her office has done in 1.5 months so far: added a one-sentence “alert” to the Policy Manual (without deleting or revising the two other contradictory alerts), and archived one of the five Policy Manual chapters already made obsolete by the new law.
Regarding processing, Chief Emmel stated that “I want you to know that we are taking critical steps to reduce processing times for I-526s and I-829s, knowing that this goal will take some time to achieve for the reasons I’m about to discuss.” The steps cited were to resume regional center I-526 processing (“one of our predominant adjudication goals for our I-526 staff is to work through the large volume of I-526 petitions that were in process pre-sunset”), and to increase staffing levels (Emmel did not offer specifics, but I see that USAJobs.gov has listed two open positions at IPO). Chief Emmel expects that improved processing will take “time to achieve” because “it is important to note that in addition to adjudicating cases, IPO requires the time and subject-matter expertise of our adjudication staff to address other necessary efforts including implementation of the new legislation, litigation responses, FOIA requests, public inquiries, and others.” IPO processed over a 1,000 I-525 per month under Julia Harrison’s leadership, around 300 per month under Sarah Kendall, and 20 per month under Alissa Emmel in her first quarter at the helm. In Chief Emmel’s words on Friday, I heard positive intent to achieve incremental improvement over recent performance. I did not hear a plan for the exponential improvement that would be required to regain past performance levels or achieve new processing time targets in the foreseeable future. I listened closely for a sense of whether Chief Emmel intends to change the culture of IPO, which since 2019 has taken a time-is-no-object extreme-vetting approach to EB-5 adjudications, with gratuitously lengthy and hostile RFEs, high denial rates, and low completion rates. Chief Emmel spoke about the EB-5 program and investors in very positive terms, and she repeated the new service-oriented USCIS mission statement promising “fairness, integrity, and respect for all we serve.” She then went on to say that “for our office, what that means is to accurately and efficiently adjudicate petitions and applications, as well as safeguard the integrity of our nation’s immigration system through our efforts to combat fraud, protect national security and pubic safety, and maximize our law enforcement, intelligence community, and other federal agency partnerships.” Other than the word “efficiently,” those are still Stephen Miller/Sarah Kendall-era enforcement-centric talking points. I am still waiting for a changing tide in EB-5 adjudications, and to see efficiency, fairness, and respect treated as integrity issues by the Investor Program Office.
Department of State has published the Report of the Visa Office 2021, including data for the number of EB-5 visas issued by country through consular processing and adjustment of status from October 2020 through September 2021. The following three tables summarize key data points for traditionally high-volume countries.
In normal years, visa statistics tell a story about EB-5 visa demand. In 2020 and 2021, they tell a story of processing constraints.
Fewer than 3,000 EB-5 visas were issued in FY2021, limited by neither supply nor demand. FY2021 started with 18,602 EB-5 visas available to be issued and 50,936 EB-5 applicants registered at NVC waiting for visas (including 45,749 from China). Available visas were not issued to available demand due to COVID-19, regional center program expiration, and long-standing processing problems.
Direct EB-5 visas accounted for a relatively high percent of the total visas issued in FY2021 – not due to a spike in direct EB-5 applicants, but because regional center program expiration halted regional center visa issuance for three months of FY2021.
A relatively high percentage of EB-5 visas in FY2021 were issued through Adjustment of Status — not because 31% of EB-5 demand is living in the U.S., but because COVID-19 shut down consular processing abroad more than I-485 processing in the U.S. (For the on-going pandemic impact on consular processing, see the NVC Immigrant Visa Backlog Report page.)
While a relatively high in terms of percentage, Adjustment of Status EB-5 visas were still a very low number in FY2021 – the lowest in five years. Generally, USCIS boasted of its efforts in FY2021 to ramp up I-485 processing volume to help compensate for consular closures and prevent visa loss. Data shows that employment-based I-485 completions increased across the board in FY2021 — except sadly not at the California Service Center, and not for EB-5 status adjustments. AOS visas between FY2020 and FY2021 increased 35% overall, but fell 21% for EB-5. See the base of the post for additional charts illustrating I-485 trends. The regional center program expiration must be partly to blame for abnormally low AOS EB-5 visa numbers last year. Trend charts also show I-485 processing issues that predate the regional center program expiration, and even the pandemic. If you have a pending or future I-485, consider these charts and what has to change.
Vietnamese received more than three times as many EB-5 visas as Indians in FY2021 – not because Vietnam had more applicants ready (it had fewer), but because the consulate in Ho Chi Minh City weathered the pandemic better than the consulate in Mumbai or the California Service Center. (See charts below for processing trends by post.)
Chinese received even fewer EB-5 visas in FY2021 than in FY2020. This cannot be blamed on China demand (which was higher than ever in FY2021) or supply (with over 15,000 visas left “unused”), or entirely on COVID-19 (the Guangzhou consulate processed more immigrant visas overall in FY2021 than in FY2020). Chinese applicants particularly suffered from the regional center program expiration putting a stop to regional center visa issuance from July 2021.
The May 2022 Visa Bulletin indicates that visas now “may” be allocated to regional center EB-5 applicants – thus eliminating one constraint from 2021. The next question is whether and when DOS and USCIS “can” issue visas, considering the many other factors delaying and limiting visa issuance besides RC program status. I made a number of additional charts of data that bear on this question, including I-485 processing trends, I-485 backlogs, consular processing trends, and appointment interview trends. The charts help to put EB-5 delays in a wider context, and highlight problems that need to be addressed.
I’ve thought about reopening my paid EB-5 timing service, to accommodate everyone who’s thinking “don’t make me look at charts, just tell me when I can expect a visa, given my specific situation.” The barrier is that the firm answers that people want aren’t possible. At best, I can offer personalized explanations of and reflections on contributing factors to wait times, such as described in this post. Email me at suzanne@lucidtext.com if you want a personalized (but still unfortunately complicated and qualified) guided tour. Note also my page of EB5 Timing resources.
I haven’t had time to write about this yet (and waiting on the answers to a couple questions), but note also that IIUSA has nicely published the slides from its April 2022 conference presentation with Charles Oppenheim on What the Latest EB-5 Data is Telling Us. See also Lee Li’s article on per-country I-526 data in the latest Regional Center Business Journal.
Welcome to the first EB-5 stakeholder engagement since March 2020! (Only a listening session, but still a good sign!) I look forward to the updates with bated breath.
From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com> Sent: April 19, 2022 10:10 AM Subject: USCIS EB5 Reform and Integrity Act of 2022 Listening Session
USCIS EB–5 Reform and Integrity Act of 2022 Listening SessionFriday, April 29, 2022 | 2-3:30 p.m. Eastern
U.S. Citizenship and Immigration Services (USCIS) invites you to participate in an engagement on the EB-5 Program, in line with the EB-5 Reform and Integrity Act of 2022 on Friday, April 29, 2022, from 2-3:30 p.m. Eastern. This will be a virtual meeting.
The EB-5 Reform and Integrity Act of 2022 requires all entities seeking regional center designation to provide a proposal in compliance with the new program requirements, which will take effect on May 14, 2022.
Director Jaddou will provide opening remarks, and USCIS will share updates on the implementation of the EB-5 Reform and Integrity Act of 2022 and guidance about the new designation filing process to entities desiring to be designated as regional centers under the new program. We will then hold a listening session to hear feedback from stakeholders regarding statutory changes made by the EB-5 Reform and Integrity Act of 2022.
USCIS is committed to public engagement, and sessions such as these provide us with valuable feedback as we work to improve our programs. We will not address case-specific questions, questions outside the scope of the engagement, or issues currently or likely to be in litigation.
To Register: 1. Visit our registration page2. You will be asked to sign up for updates or to access your subscriber preferences, please enter your email address and select “Submit”3. Select “Subscriber Preferences”4. Select the “Questions” tab5. Complete the questions and select “Submit.” Once we process your registration, you will receive a confirmation email with additional details. If you have not received a confirmation email within three business days, please email us at public.engagement@uscis.dhs.gov. If you wish to provide written feedback on this topic in advance of this session, please email us at public.engagement@uscis.dhs.gov. To request a disability accommodation to participate in this engagement, email us at public.engagement@uscis.dhs.gov by 4 p.m. Eastern on Friday, April 22, 2022. Note to media: This webinar is not for press purposes. Please contact the USCIS Press Office at media@uscis.dhs.gov for any media inquiries. We look forward to your participation!
On March 15, 2022, President Biden signed a law that made changes to the EB-5 program, authorized a new EB-5 Immigrant Investor Regional Center Program, and directed that certain “grandfathered” immigration benefits be processed. The Department has resumed processing visas associated with the Regional Center Program based on approved USCIS Forms I-526 (Immigrant Petition by Alien Entrepreneur), including those filed on or before the expiration of the previous regional center program on June 30, 2021. Further, pursuant to the new legislation, processing of visas associated with the new Regional Center Program may begin 60 days after enactment of the law.
Thank goodness for the push from well-drafted grandfathering language in the new law. Notice the two policies: one for Regional Center 1.0, and one for Regional Center 2.0. The Department “has resumed” processing visas based on approved I-526 based on previous regional center program authorization. For I-526 based on the “new Regional Center Program,” DOS “may begin” processing after 60 days.
Commenters, let me know if you can access your NVC accounts, or have any other evidence that the Department has actually resumed processing for pending applicants.
We have resumed processing regional center-based Form I-526, Immigrant Petition by Alien Entrepreneur, filed on or before the sunset of the previous regional center program on June 30, 2021. We will adjudicate all Form I-526 petitions filed before March 15, 2022, according to the applicable eligibility requirements at the time such petitions were filed (that is, the eligibility requirements in place before the enactment of the EB-5 Reform and Integrity Act of 2022, Div. BB of the Consolidated Appropriations Act, 2022 (Pub. L. No. 117-103) (Sec. 101 and 102). We will continue to process Form I-526 petitions under the visa availability approach, prioritizing those Form I-526 petitions for investors with an available visa or a visa that will be available soon. We will continue to reject all Form I-526 petition received on or after July 1, 2021, when it indicates that the petitioner’s investment is associated with a regional center.
I’m glad to see that USCIS does not intend to hold pending regional center petitions in abeyance pending regional center recertification. I have noted a recent uptick in I-526 processing, with around 10 actions and at least two or three completions most working days this month. That’s a great improvement over last month (but still far from the volumes needed to process over 13,000 pending I-526 petitions in a timely manner).
The USCIS EB-5 page was updated today April 11 with this message.
Congress repealed Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993, in the EB-5 Reform and Integrity Act of 2022, Div. BB of the Consolidated Appropriations Act, 2022 (Pub. L. No. 117-103) (Sec. 101 and 102). Therefore, regional centers previously designated under section 610 are no longer authorized. The EB-5 Reform and Integrity Act of 2022 requires all entities seeking regional center designation to provide a proposal in compliance with the new program requirements, which will be effective on May 14, 2022. We will provide further guidance to entities desiring to be designated as regional centers under the new program. We are not accepting Form I-924, Application For Regional Center Designation Under the Immigrant Investor Program, for this purpose.
Sigh. The EB-5 Reform and Integrity Act text does not does not, in fact, say that all previously-designated regional centers lose designation and need to reapply. But we’d been wondering about this since Senator Grassley expressed his impression that the law included such a provision. I guess I shouldn’t be surprised that USCIS has chosen the interpretation that will lead to maximum delays for future regional center investment and maximum confusion for in-process EB-5 projects and pending regional center applicants. There were 632 regional centers at last count as of October 25, 2021, and over 100,000 pending EB-5 applicants associated with the previously-designated regional centers. What happens next? Are billions of dollars in regional center investment suddenly stateless, pending the USCIS timeframe to review hundreds of new regional center applications? I would bet that as of today, USCIS intends no retroactive harm but simply hasn’t thought anything through and doesn’t know what further guidance it’s going to provide.
This post tackles a momentous question: what is the impact of the 32% reserved visas provision in the EB-5 Reform and Integrity Act of 2022?
In the zero-sum visa game, newly-reserving visas for some means newly-restricting visa availability for others. That’s self-evident. But who wins and loses, and how much?
I’ll start with my conclusions, then take a deep dive into the detail, calculations, and questions behind the conclusions.
Reserved visas will probably not harm pending EB-5 applicants from countries other than China, Vietnam, and India, because country caps still protect minority-country visa availability, and demand under per-country limits has always been well under 68% of the annual EB-5 quota.
Reserved visas also have no incentive value for incoming EB-5 applicants from low-demand countries, since these applicants already have visa availability protected by country caps, and no visa backlogs to avoid.
Reserved visas can have incentive value for incoming EB-5 applicants from high-demand countries with backlogs (China, Vietnam, India) provided that the reserve visas are exclusive to incoming applicants, and thus offer a way to avoid standing in line behind thousands of pending applicants with earlier priority dates.
Reserved visas have a devastating cost for pending China-born applicants, because reserved visas drain the pool of “otherwise unused” numbers normally generally available at the end of every year to applicants with the oldest priority dates. The magnitude of the negative impact depends on whether or not Department of State interprets and applies the new law as making all reserve visas practically exclusive to post-March 15, 2022 priority dates, and thus inaccessible to the 80,000+ pending EB-5 applicants already queued up for visas. [6/21/2022 Update: DOS has announced that it interprets reserve visas as only available to applicants who file I-526 after March 15, 2022, and unavailable to the backlog.] But even with optimal interpretation, the China backlog is poised to lose access to at least 2,000 visas a year.
This article has five parts:
Analogy: To set the stage, I suggest the analogy of an airport (like EB-5, a multi-stage process), and passengers waiting on standby (analogous to oversubscribed EB-5 applicants waiting on unused visas).
Law: I list out all the provisions in existing law that govern EB-5 visa availability, and the specific changes made in the EB-5 Reform and Integrity Act of 2022. This exercise highlights ambiguities and room for interpretation. I transcribe comments on the ambiguities from Charles Oppenheim, recently retired from Department of State, at a March 22 webinar with Wolfsdorf Law.
Data: I lay out data for historical EB-5 visa demand, supply, and allocation.
Application: I review how EB-5 visa wait time estimates worked under the old law, and consider the marginal impact of the new law on visa supply and wait times.
Conclusion: I consider possibilities for making the reserve visas law turn out less bad for our past clients than it could be
Three stages: buy a ticket, wait in the security queue to get to the gate area; wait in the gate area to get on a flight. Only passengers who reach the gate area are practically as well as theoretically eligible to use their tickets to get seats on a flight.
File I-526, wait for I-526 processing, then wait in the consular or adjustment process for a visa. An I-526 priority date is a kind of ticket to maybe claim a visa in the future, but only people who are documentarily qualified at the visa stage can use their priority dates to claim visas.
Standby tickets: Flying standby means that my ticket doesn’t lock in a specific designated seat, but I still have a chance to get a seat — assuming that a flight will have enough undesignated seats leftover for standbys to take.
Most EB-5 applicants from China are waiting on standby status for visas. Most Chinese do not have designated places in the annual EB-5 visa quota thanks to overbooking (under country caps, only 7% of annual visas can go to any one country by right). But having the oldest priority dates, Chinese are at the front of the standby line for any annual visas left unclaimed after by-right per-country allocations. Historically, at least over 40% of annual EB-5 visas have been “otherwise unused” and therefore leftover for the standby queue. Chinese have been able to depend on flying standby, because (1) they’ve been waiting longest and therefore at the head of the standby queue, and (2) a good number of “otherwise unused” visas have been reliably available to standby given the inherently low EB-5 demand from most other countries in the world. (Vietnam and India, while also overbooked, have not been able to expect any visas over the per-country limit, because they’re more recent and thus behind tens of thousands of Chinese in the standby queue.)
I believe that in real life, an airline will try to fill a flight with whoever at the gate can board, with people registered on the standby list getting otherwise unused seats in first come first served order.
Imagine if an agent at a crowded gate suddenly announced that 32% of seats on the flight are now exclusively reserved for passengers with codes that don’t yet exist in the boarding area or current standby list, but can be sold on tickets outside to prospective passengers who had been deterred by the long standby queue already at the gate. That’s the closest analogy I can think of to the 32% reserved visa provision in the new law (and particularly the 20% rural reserve, given very few past rural investments).
In the picture, I tried to illustrate who’s happy (the ticket seller), who’s sad (the displaced standby passengers at the gate), who’s confused (the pending standby passengers who technically match reserve conditions, but not sure yet how/if they can claim new codes only being stamped outside on new tickets), who doesn’t care (the passenger who has a designated seat anyway and not dependent on standby or reserves), who’s frustrated (the guy at the gate who looks around, sees no one positioned yet to use up the reserved seats, and realizes that planes will have to take off partly empty until new reserve-eligible passengers finally make it to the gate, meaning existing standbys get further delayed for nothing), who’s conflicted (the prospective passengers standing in a crowd outside the ticket counter, wondering how to interpret the pitch that they won’t find themselves stuck in a crowd once they get to the boarding gate), and who’s two-faced (the airline, with different messages at the ticket counter and the gate).
Part 2: Law
The EB-5 Reform and Integrity Act of 2022 introduces two changes to the law for EB-5 visa allocation:
it repeals/replaces the two pre-existing categories of EB-5 set-aside visas (3,000 regional center, 3,000 TEA), and adds three newly-defined reserved visa categories (20% rural, 10% high unemployment, 2% infrastructure);
it introduces an instruction to preserve unused reserved visas from year to year within the EB-5 category (without, however, repealing or amending the parts of the existing law that define/cap the annual EB-5 limit and allocate any used EB-5 visas to other visa categories).
Law prior to the EB-5 Reform and Integrity Act of 2022
INA 201(d): The Employment-Based category is allocated a base 140,000 visa annually. The EB limit for a given year is the base 140,000 plus any unused Family-Based visas from the previous year.
RIA specifies no change to INA 201(d)
INA 203(b)(5)(A) Each year, the EB-5 category is allocated a maximum of 7.1% of the EB limit for that year.
RIA specifies no change to INA 203(b)(5)(A)
INA 203(e)(1) Available EB visas are generally issued to eligible immigrants in the order in which the immigrant petition was filed.
RIA specifies no change to INA 203(e)(1)
INA 202(a)(2) states a per-country limit: that no more than 7 percent of visas available within an EB category in a fiscal year can be made available to natives of any one country. INA 202(a)(3) and (5)(A) provide an exception: that EB immigrants are not subject to the per country limit allocation in a period where available visas exceed the number of qualified applicants to take them.
RIA specifies no change INA 202(a)
INA 203(b)(1) If visas still remain unused within the EB-5 category near the end of a fiscal year, such unused visas are made available for use by priority workers (EB-1/EB-2)
RIA specifies no change to INA 203(b)(1)
INA 201(c): If the EB category as a whole does not use all its allocated visas in a fiscal year, such unused visas are made available within the Family-Based category in the next fiscal year.
RIA specifies no change to INA 201(c)
I’m not sure where this is in the INA, but DOS explains in its document on Operation of the Numerical Control Process that DOS allots visa numbers monthly to consular posts and CIS to be given to reported documentarily-qualified applicants within established cut-off dates. Significantly, visa numbers do not get allotted to applicants earlier in the process; including not when petitioners invest or file I-526.
RIA specifies no change to the timing of visa allotment.
Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note) sets aside 3,000 visas annually for regional center applicants.
RIA Section 103(a) repeals Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note), thus doing away with the regional center visa set aside in that section. RIA Section 103(b) says that “visas under this subparagraph shall be made available” to a new program for pooled investment, but does not specify a specific number of visas to be made available specific to regional center applicants.
INA Section 203(b)(5)(B) specifies that “Not less than 3,000 of [EB-5] visas made available in each fiscal year shall be reserved for qualified immigrants who invest in a new commercial enterprise … which will create employment in a targeted employment area.”
RIA Section 102(a) (2) “amends” (i.e. apparently deletes and replaces) the old INA Section 203(b)(5)(B) to read as follows: “(B) DESIGNATIONS AND RESERVED VISAS.— “(i) RESERVED VISAS.— “(I) IN GENERAL. —Of the visas made available under this paragraph in each fiscal year— “(aa) 20 percent shall be reserved for qualified immigrants who invest in a rural area; “(bb) 10 percent shall be reserved for qualified immigrants who invest in an area designated by the Secretary of Homeland Security under clause (ii) as a high unemployment area; and “(cc) 2 percent shall be reserved for qualified immigrants who invest in infrastructure projects. “(II) UNUSED VISAS.— “(aa) CARRYOVER.—At the end of each fiscal year, any unused visas reserved for qualified immigrants investing in each of the categories described in items (aa) through (cc) of subclause (I) shall remain available within the same category for the immediately succeeding fiscal year. “(bb) GENERAL AVAILABILITY.—Visas described in items (aa) through (cc) of subclause (I) that are not issued by the end of the succeeding fiscal year referred to in item (aa) shall be made available to qualified immigrants described under subparagraph (A). ERIA Section 102 has an effective date of March 15, 2022.
Notes on what did and didn’t change in the law, and what’s ambiguous
Minority Country Protection: The new law does not change the rule that protects low-volume countries with an annual 7% per country limit – a cap that high-volume countries may only exceed if and when there’s insufficient demand for available visas. Even if the new law does make 32% of 10,000 annual EB-5 visas practically unavailable to the backlog of pending applicants, that shouldn’t hurt minority countries in theory. An EB-5 applicant from Ireland doesn’t depend on a total 10,000 visas available anyway, but only on one of the 7% of EB-5 visas that must be made available to the few Irish applicants ready to claim them before other countries can start to exceed their 7% caps. Thus far, the highest that EB-5 demand under per-country limits has ever gone is 5,851 total in FY2019 (other visas that year were “otherwise unused” and thus issued to the oldest Chinese applicants). So even reducing generally-available EB-5 visas to about 6,800, if set asides have that effect, may not threaten applicants under per-country limits. At the same time, reserved visas don’t stand to benefit minority countries, since applicants from low-demand countries don’t have visa backlogs/visa wait times to avoid.
Eliminating RC and TEA Visa Set-asides: The new law explicitly repeals or replaces the EB-5 visa set asides in previous law: 3,000 for regional centers and 3,000 for TEA. Those set-asides were popularly forgotten because they hardly mattered in practice. There never were over 7,000 non-regional center or over 7,000 non-TEA investors ready to request visas in a year, and thus no one ever ran up against the old set-aside limits. With the backlog dominated by RC and TEA investors, the previous RC and TEA set-asides gave no short-cut around the backlog. So, who cares about eliminating those insignificant set-asides? At minimum, pending applicants are confused now, since their pending applications and the Visa Bulletin are marked for visa codes (C5, T5, I5, or R5) that correspond to the now-eliminated reserved visa categories. The reserve categories around which they invested have suddenly disappeared. For applicants not dependent on the Visa Bulletin anyway, this records confusion shouldn’t affect their actual visa availability. But it’s a reminder that the grandfathering fight is not done; we need to improve the law so that filing I-526 locks in something for future visa availability, not just regional center status. As it is, the law and situation that exists when you commit to the EB-5 process guarantees nothing for visa availability; people are dependent on the visas that exist and the rules for allocating them once they finally reach the visa stage. If the law changes midstream, too bad.
Creating New Reserved Visa Categories: The new law creates three new EB-5 set-aside categories: 20% rural, 10% DHS-designated high unemployment, and 2% infrastructure. These changes are effective as of the date of enactment — March 15, 2022 – which means that someone filing I-526 today should be assigned a new code that marks him or her as belonging or not to one or more of the three new categories. What’s not clear: are any of those these reserved visas theoretically or practically available to the 80,000+ people in the EB-5 visa backlog, who are coded C5, T5, I5, and R5 under the now-abolished RC and TEA set-aside categories? [6/21/2022 Update: DOS has announced that it interprets reserve visas as only available to applicants who file I-526 after March 15, 2022, and unavailable to the backlog.]
In fact, most of the backlog invested in TEAs based on high unemployment. Whether or not those applicants can touch the new 10% high-unemployment set-aside would depend on (1) whether or not DOS interprets the new set-asides as theoretically available to people who started the process pre-enactment and under slightly different high-unemployment area definitions, and (2) whether or not DOS can get USCIS to go back and re-code all the backlogged TEA applicants as being either high unemployment or rural investors, such that DOS is practically able to offer reserve visas to the backlog as well as to new investors.
Of course, the people who drafted the reserved visa law must have wanted the reserve visas available to incentivize new investment. Reserved visas can only have an incentive function if they can offer a priority/timing advantage to new investors, which is only possible if the visas are not absorbed by the many people already in the backlog waiting for visas. Thus the talking point that reserved visas should only apply “prospectively.” This has long been an industry lobbying focus (e.g. this 2019 industry letter to Congress requesting set-asides that apply only to new I-526 petitions and not pending applicants.)
Of course, pending applicants do not want reserved visas to be prospectively available only to incoming I-526. The China backlog must particularly fight to lose as few visa numbers as possible, which means keeping their access to reserve visas if possible. At least, the backlog has a potential chance to access the 10% of visas newly reserved for high unemployment investment. Many backlogged applicants in fact invested in high-unemployment areas, and just need to be re-coded and recognized as such – something for investor associations to fight for. The 20% rural set-aside is probably largely an inevitable loss to the backlog because, as a practical matter, few past investments were in rural projects. Most rural reserves are therefore effectively off the table for the backlog even if DOS decides that past rural applicants could theoretically qualify for rural reserves.
On March 22, Bernard Wolfsdorf and Joseph Barnett held a wonderful webinar with special guest Charles Oppenheim, recently retired chief of Visa Control at Department of State. A webinar recording is now available on Youtube, and I’ve transcribed below a few of Charlie’s comments on the reserved visas provision in the new law.
[Quoted from minute 32] Oppenheim: I do believe that the State Department will have to have new visa categories, and issuance codes or issuance symbols need to be established to identify the applicants who are going to be eligible for processing under the 10, 20, and 2 percent set aside limits. This may actually eventually result in there being five EB-5 visa listings in the visa bulletin. Right now there are only two for non-regional centers and regional centers. Again, with the establishment of new codes to cover the set-asides, I think that is likely to go to five listings.
[Quoted from minute 40] Oppenheim: It’s important to note that the use of the use of the new codes to distinguish the 20, 10, 2 set-asides is going to be necessary for Department of State to compare the amount of numbers which have already been used in those categories, the amount of documentarily complete demand ready for immediate processing, and to know the potential demand requiring use of a number in the future. That information is used not only for the set-asides, but for the determination of any of the preference category’s final action dates. And it’s necessary to apply that to control number use under the respective limits. Therefore it is going to be very important for the officers to know which of the visa codes to be used for final action on a case so that the number use can be accurately tracked and then reported to the visa office for numerical control purposes. Unfortunately my previous position did not require me to know the detailed information which is included on these petitions, so I can’t really say how easy it’s going to be for them to make that distinction between the rural and high unemployment applicants for these set asides.
[Quoted from 1:01:36] Question: Do the reserved visa categories create even longer delays for Mainland China, with the fact that 3,200 visas are being pulled from the general category? Oppenheim: I think there is the potential for that. Although, it’s unknown how many of the Chinese applicants that are in line may be able to benefit by this new set-aside. I think that is one of the unknowns at this point, and I don’t think it’s worth worrying about too much until we know in terms of the official determination of the implementation of the set-asides. [end Oppenheim quote]
Impact of Reserved Categories: If the reserved visas are genuinely reserved for post-enactment I-526, not available to the pending backlog, who wins? In the near term, reserved visas benefit incoming applicants from oversubscribed countries, who would otherwise be stuck in line behind many thousands of fellow-countrymen for generally available visas.
The new law creates visa reserves that work if they restrict 32% of visas such that those visas can’t be issued to the oldest priority dates, and must be issued to post-2022 priority dates or go unused. For example, in 2023 Department of State will have about 2,000+ visas restricted for rural investment. If Department of State has already issued 700 visas to the oldest applicants from every country in 2023 and sees 1,000 rural set-asides still lying unused on the table, it will have to start waving up whichever remaining rural applicants are eligible for those visas, even if they’re Indians or Vietnamese or Chinese already over the 700 limit and with priority dates far more recent than their backlogged fellow-countrymen. That’s the queue-cutting opportunity. Genuinely reserved visas serve to create a new category of standby that can attract new applicants from China, Vietnam, and India who would’ve otherwise been at the back of the old generally-available standby queue. I emphasize “near-term” advantage for in-coming applicants, though, because a new standby category only benefits the people who start the new queue. 2,000 rural visas per year can sustainably accommodate around 700 investors per year, and will cease to offer a fast track when demand exceeds that level and creates new backlogs.
For the rest of the world, reserved visas should not be significant. Department of State already waves up minority-country EB-5 applicants as soon as they’re ready by virtue of their nationality priority under the per-country limits, with no need for other priority. (I still expect to see quite a few minority-country rural investors, though, because the I-526 processing priority provision for rural in the new law does offer time advantage for everyone.)
Unused Reserved Visas: It’s hard to tell whether the “unused visas” provision in the new law is careless or crafty. Maybe it was written by people who just forgot all those conflicting parts of existing law that prevent EB-5 visas from rolling over to EB-5 from year to year. Maybe it was written by people who ignored the existing law conflicts on purpose, gambling that Department of State might choose to settle the conflict in favor of EB-5, start allowing a limited amount of EB-5 visa recapture for the first time in history, and start letting the EB-5 annual limit exceed its statutory maximum 7.1% of EB allocation for the first time. This could be a back door to recapturing at least FY2022’s large number of unused EB-5 visas, which would be very valuable. The darkest possible interpretation is that the “unused visa” provision was just put in the law to help ensure that no matter how interpreted – whether the unused set-aside visas are retained for new applicants or lost to other preference categories as usual — at least they’ll definitely not be generally available to the China backlog at each year-end, and thus conveniently serve to lengthen wait times for redeployable Chinese investment. I hope no one did think that way, because investors and their projects are not infinitely patient.
In the March 22 webinar, Oppenheim addressed questions about the unused visas provision in light of existing law.
[Quoted starting from minute 42] Oppenheim: In one way of looking at this, the INA guidelines clearly state how unused numbers within a preference category’s annual limit should be made available to other preferences. For example, Section 203(b)(1) indicates already that any unused employment fourth or fifth preference numbers should be added to the EB-1 annual limit. Also Section 201(c) says that any unused numbers from the previous year’s worldwide employment limit fall across and are to be used in the determination of the next year’s family sponsored annual limit. So, despite the fact there are these set aside provisions, I think it could be argued that the current year’s unused set-aside numbers could be made available to other EB-5 applicants, and then if they were still unused numbers under the overall EB-5 limit, such numbers could then fall up for potential use in EB-1 during the current fiscal year. And if you followed that logic, then the only numbers that ultimately remained unused after the fall-up provision would then fall across for the next year’s set-aside limit. That’s confusing, but I think that there’s room for interpretation, and it could be argued either way on this. …I think that there likely will be a need for technical corrections. … I do think that there potentially will be some changes, at least to the language to clearly identify what is meant. Because, for example on this set-aside provision where it’s saying, ok, if there are unused numbers under the 20 percent set-aside, that those numbers should be reserved and added to the next year’s limit. That is fine in regards to the EB-5 applicants, but if you’re an advocate for EB-1 or EB-2 or family fourth or any other preference category, you may be saying, well why can’t we have the same benefit where our unused EB-1 numbers are reserved for the next year, etc. That type of “reserved for the next year” previously has only occurred through legislative action to recapture unused numbers. So this is kind of a whole new world. And again, I think that’s why it’s going to be important to clearly interpret how you distinguish unused numbers.
[Quoted from minute 58] Joseph Barnett: Can I try to paraphrase what you mentioned before, Charlie, and let me know if I’m getting this right here. You think that the Department of State is going to have to create new visa categories to deal with the reserved visa classes. You don’t necessarily know how the existing investors are going to be included into those new visa categories without further action by investors or USCIS or some way to report that demand. And with regards to the unused visas provisions, there’s going to have to be some interpretation and discussion in DOS about how that’s going to play out and how it’s going to fall up or fall across – they’re just kind of unknowns at this point?
Oppenheim: Correct. [end Oppenheim quote]
Part 3: Data
After all this general talk, let’s look at numbers. I’ve copied below tidy tables of figures that represent the individual real people caught up in all this, and the history of how EB-5 visa demand and allocation has played out to date. (To interact with the data and see source citations, access the Excel file of Key Backlog data linked to my EB-5 Timing page.)
Points to note as you look at visa issuance numbers:
The variable number of EB-5 visas issued each year has followed from (1) the number of visas technically available to EB-5 and each country that year as calculated under the INA rules described above, and (2) the number of visas that applicants were practically able/willing to claim (by getting through I-526 processing to the visa stage) and that the government was practically able to issue (considering processing constraints).
Note the number of EB-5 visas actually issued to China-born applicants each year, from over 8,000 in FY2015 to just over 4,000 in FY2018 and FY2019. Those China visa numbers were a function of visa demand from the rest of the world. Each year, the oldest applicants received whatever was leftover of the EB-5 limit after DOS satisfied rest-of-world demand within per-country limits. (Except FY2020, when everyone got constrained by COVID-19.)
On the following I-526 table, note the number and timing of I-526 filings from countries other than China. See that China had its I-526 filing surge early, which is why it now leads the standby queue at the visa stage, while India had a later surge that’s thus further back in queue priority (and largely not at the visa stage yet, thanks to sluggish I-526 processing). Most significant of all, note the relatively flat line of I-526 filings from non-backlogged countries since 2015, even during years of peak EB-5 popularity and the $500,000 threshold. EB-5 just doesn’t have a big market in most of the world. That “all except China, India, Vietnam” column in the I-526 filing trend gave hope to the China backlog and concern to people selling EB-5. Backlogged Chinese applicants could rejoice to see on-going low rest-of-world I-526 filing numbers, which underwrote the hope that “otherwise unused” visas would continue to be leftover from the rest of the world in significant numbers for the oldest Chinese applicants. Marketers would lament the persistently and organically low ROW I-526 numbers, and strategize to get more visas to offer the historically fruitful China/India/Vietnam markets now constrained by backlogs of old priority dates.
Part 4: Application
For a reminder of how EB-5 visa distribution used to work, consider this slide from the “Visa Update with Charles Oppenheim and Roundtable Discussion” at the 2019 IIUSA EB-5 Industry Forum (October 29, 2019). The equation starts with the annual visa limit, then deducts all qualified demand from applicants at/under the per-country limit, and ends with a difference of “unused” numbers available for allocation to the oldest applicants regardless of per-country limit.
As it turned out, a global pandemic intervened and prevented Department of State from actually issuing the number of visas anticipated for FY2020. But in theory, the 11,000 visa available for FY2020 should’ve been distributed first to all prepared applicants up to their 7% country limits, with the balance then leftover for the oldest i.e. Chinese applicants. Oppenheim estimated in 2019 that over 5,000 visa could be allocated to Chinese in FY2020, as a function of the expected number of “otherwise unused” numbers.
Now here’s a version of the same slide, but marked up to show how the calculation would change with reserved visas — if reserved visas are indeed reserved in new categories and not accessible to pending pre-March 2022 priority dates.
As illustrated, the difference falls on the “unused numbers” calculation. Removing 32% percent of visas from the general pool does not affect visa allocation under per-country limits in this year, because more than 32% of visas were going to be leftover after per-country allocation anyway. The impact is on the number of available leftovers for the oldest applicants, and the applicants depending on leftovers for their visa allocation. In the year shown in the slide example, the number of leftover visas for the oldest (Chinese) priority dates falls from 5,200 to 1,670.
Let’s say I’m a China-born EB-5 applicant who can estimate 40,000 other Chinese applicants in process with earlier priority dates. How does my wait time calculation change depending on whether I can estimate the queue before me proceeding at an average rate of 5,000+ visas per year to China, or 1,700 per year? 40,000/5,000=8 years. 40,000/1,700=24 years. That’s a huge difference. Of course, real life is complicated. For example 40,000 isn’t just a number but represents humans who are liable to giving up and aging out and dying, in increasing numbers as time goes on. So in real life, changing the denominator of a wait time equation – as reserved visas does for China – will change the numerator as well. In practice, if supply relief doesn’t bring down wait times, demand failure inevitably will. Meanwhile, a variety of factors besides reserved visas sway the denominator of the China wait time equation. Probably new minority-country investors who would’ve invested in EB-5 anyway will choose the new TEA categories, thus eventually blunting the marginal-difference impact of set-asides. Probably overall demand at the $800,000+ level will be lower than before, such that lower incoming demand will leave more visas unused and available to the China backlog eventually even above set-aside limits. Maybe the backlog will get some supply relief in three years if DOS actually allows recapturing unused reserve visas. Real life gives many moving parts to account for. But, all other factors being equal, reserved visas in themselves (if genuinely reserved) certainly have a dreadful impact on the wait time equation for backlogged Chinese applicants. (For detailed analysis, see EB5 Sir’s recent posts.)
Part 5: Conclusion
Anyone who made it to the end of this exhausting article obviously cares about the impact of reserved visas. What can we do now? The EB-5 Reform and Integrity Act of 2022 is law since March 15, 2022. Is there any room to stand athwart history yelling Stop?
Here are some theoretical possibilities for making the reserve visas law turn out less bad for our past clients than it could be.
The China backlog will lose at least 1,000 fewer annual visas than it would lose otherwise if (A) Department of State interprets the new reserved visa categories as being available theory to pending applicants who happen to have invested in high unemployment area, rural area, or infrastructure projects, and also (B) DOS and USCIS communicate to mark pending applications that match the new set-aside categories.
The China backlog will lose fewer visas if Department of State interprets the “unused visas” provision in the law to mean that 32% of the visas that will go unused in FY2022 (6,362 numbers) can be added to the EB-5 limit in FY2024, and generally available.
The China backlog will lose fewer visas if Department of State disregards the “unused visas” provision in the new law as contradictory to the INA, and makes any unused EB-5 visas available to the oldest EB-5 priority dates at the end of each year, regardless of reserved status.
The China backlog may lose fewer visas if we decline to promote reserve visas to new Chinese, Indian and Vietnamese clients, realizing that every one EB-5 visa taken to accommodate a new backlog-country client who wouldn’t have invested otherwise is one visa removed from the pool that would have been available to the oldest backlogged priority dates if not for visa reserves. But this grand gesture would only help our past clients if unused reserved visas can indeed eventually be accessed by the backlog – an open question.
Investors and project companies can best manage impacts if they are realistic about what’s happening. Let’s refuse fallacies (“this is queue cutting with no queue cuts”) and cop-outs (“it’s complicated, so don’t bother thinking or worrying about it”)
Most important, we need to pour advocacy dollars and energy into getting any possible backlog relief for the oldest EB-5 applicants, who need it now more desperately than ever. Regional centers who don’t want to deal with a fight for the exits will want to help fight for visa conditions that keep immigration hopes alive. The best way to incentivize new EB-5 demand is to create an environment where past EB-5 users can also be seen to flourish.
H.R.2471 – Consolidated Appropriations Act, 2022 was enacted on March 15, 2022, and contains the EB-5 Reform and Integrity Act of 2022 in Division BB (PDF page 1022 of the enrolled bill). This means that the regional center program will have a new authorization and new requirements as of May 15, 2022, and other EB-5 program changes are effective as of March 15, 2022 as I discussed in my previous post.
Now we wait for USCIS and Department of State to react with their interpretation and applications of the new EB-5 law. So far, the USCIS EB-5 page has still not been updated since December 2021. I hereby predict that the USCIS page will be updated later this week with one sentence saying “We are evaluating the EB-5 Reform and Integrity Act enacted on March 15, 2022 and will provide additional guidance as soon as practical,” followed by silence. But surprise me, USCIS! (3/17 UPDATE: The USCIS page is now updated to say almost exactly what I predicted.) The April 2021 Visa Bulletin published today has RC category Unavailable in Part A and mostly Current in Chart B, makes no changes yet to reserved visa categories, and says “The Consolidated Appropriations Act, 2022, which reauthorizes and reforms the EB-5 Immigrant Investor Regional Center Program, was signed by the President of the United States on March 15, 2022. Certain Regional Center Program aspects of this legislation go into effect 60 days after the date of the enactment of this Act. More information will be published in coming editions of the Visa Bulletin.”
Pending official interpretation, I’m continuing to update the Reauthorization page on this blog with links to a selection of industry articles and upcoming webinars, as they come to my attention.
In case this helps anyone else’s sanity and clarity, I’m sharing a folder of Word documents that I made for myself. The folder includes:
The text of the EB-5 Reform and Integrity Act of 2022 with heading styles applied. The text is copied from the “enrolled bill” version of H.R.2471 at Congress.gov (which has a few minor tweaks from the EB-5 bill text first released on March 6). I formatted to flag six layers of headings so that I can always track where I am using Word’s Navigation Pane.
The text of Immigration and Nationality Act sections referenced in the EB-5 Reform and Integrity Act of 2022, with headings applied. I didn’t redline the new law changes onto the INA (I just copied INA excerpts as-is), but at least this facilitates looking back and forth to see changes in context. We must be able to follow section headings in order to translate innocuous-looking sentences like “An alien seeking to pool his or her investment with 1 or more additional aliens seeking classification under section 203(b)(5) shall file for such classification in accordance with section 203(b)(5)(E)” and realize the explosive meaning: “from now on, an EB-5 investor may only invest with other EB-5 investors through a regional center; pooled direct EB-5 is no longer an option for new I-526.”
A document comparison showing the EB-5 Reform and Integrity Act of 2022 red-lined on the base of S.831 – EB–5 Reform and Integrity Act of 2021. S.831 is the bill that Senators Leahy and Grassley introduced back in March 2021 and tied to pass last June before the RC program expired. No surprise considering Senator Leahy’s negotiating position, document comparison shows that the new EB-5 law largely reproduces S.831. There were no changes to the S.831 integrity measures, and no backlog relief additions. Negotiations just added higher investment amounts, new visa restrictions, new TEA definitions, redeployment policy, and grandfathering protection for the future.
I’m occupied with business plan deadlines at the moment, but will write more as soon as possible about reserved visas, the new EB-5 law change that most concerns me as resident EB-5 data collector and backlog Cassandra.
EB-5 Updates 