Understanding USCIS Processing Time Reports

EB-5 investors and consultants may want to participate in a teleconference hosted by USCIS this Wednesday to discuss how to interpret USCIS case processing time reports.

USCIS Invitation: Online Processing Times, 02/15/2017
Dear Stakeholder,
U.S. Citizenship and Immigration Services (USCIS) invites you to participate in a national teleconference on Wednesday, February 15, from 1 to 2 p.m. (Eastern) regarding case processing times posted to the USCIS website.
USCIS seeks to improve accuracy and transparency, and minimize the potential for confusion about processing times. During this engagement, subject matter experts will ask for feedback from participants and answer questions.
To register for this session: Visit our registration page to confirm your participation

UPDATE: USCIS emailed a list of feedback questions for the teleconference. The conference itself was not very interesting and so I’m not uploading my recording. But USCIS has emailed a follow-up engagement opportunity: “As mentioned during yesterday’s engagement, we will use the USCIS Idea Community as a method for you to submit additional feedback regarding online processing times. Participating in the USCIS Idea Community is easy. All you need is an active email address and you can create a profile and submit ideas. This campaign will be open until Friday, Feb. 24.”

This invitation follows a stakeholder email from USCIS in January that explained,

Starting on Jan. 4, 2017, we will post processing times using a specific date format rather than weeks or months. This is the first step in providing processing times that are timelier and easier to understand.
We post case processing times on our website as a guide for when to inquire (service request) about a pending case. For the last several years, we have posted case processing times using two different formats: For cases that were within our production goals, we listed processing times in weeks or months; For cases that were outside of our production goals, we listed processing times with a specific date.
Always refer to your I-797C, Notice of Action, and look for “receipt date” to determine when we accepted your case. If the receipt date on the USCIS Processing Times web page is after the date we have listed on your notice, you should expect to hear from us within 30 days. If after those 30 days, you have not heard from us, you may make an inquiry on your case.

Every month, the USCIS Processing Time Information page updates a chart titled “Average Processing Times for Immigrant Investor Program Office” that looks like this.

chart

The “Processing Cases as of Date” column is ambiguous, and we’ll have to ask about it on the call. Does it mean that as of November 30, 2016 IPO is just starting to process I-526 cases filed on August 7, 2015 (and if so, about how long can we expect the adjudication to take? 30 days?), or does it mean that IPO is taking final action on cases filed as of that date? How much of IPO’s active workload on November 30, 2016 should we assume is composed of cases filed on August 7, 2015, and how much of cases filed much earlier and much later? What’s the difference between reporting “cases as of August 7, 2015” and “cases as of 16 months ago?” How should we interpret the average processing dates given what we know of IPO’s exceptions to a First In First Out policy (e.g. that petitions for a single project get grouped, and that Exemplar approvals can speed processing?) How can we know USCIS’s “production goals” for a given petition type?

As context, I’m copying charts based on my log of dates/months reported in monthly updates to the IPO processing times table since 2014. (You can access my spreadsheet here if you like).


The orange trend lines could allow forecasting when a petition filed on a certain date (primary Y axis) will be adjudicated (X axis). But even assuming that I’ve understood the IPO dates correctly, a linear forecast from past trends is risky because the future will be affected by new factors including IPO’s staff improvements (we hope) and variation from filing surges. Also, even if the IPO-reported processing time is in fact “average” as of a given date, that doesn’t mean it’s typical. For I-924 processing, I can compare the IPO processing times report with reality, since I-924 designation letters give actual filing and approval dates. Doing this comparison for I-924s processed in 2015 indicates that the IPO-reported average times were close to the actual average but not at all typical, since a majority of applications (each represented by a dot on the scatter chart) were adjudicated either much more quickly or much more slowly than average.


I don’t have access to data on actual processing times for I-526 and I-829 petitions, but it would be interesting to know whether the deviations are similarly large.

In the past, EB-5 investor readers have used the comments section of this blog to trade experience with processing dates, and I got a request to open up a discussion forum instead to facilitate this exchange. So I have set up http://eb5.freeforums.net/ as a platform, and you’re welcome to sign up and use this tool to discuss your experience with EB-5 petition processing. I will do some light moderating (mainly accepting membership requests), but mainly offer it as a more convenient discussion venue for anyone who’s interested.

S.232 Update, RC list changes

S.232 Update
Senator Feinstein and Senator Grassley have finally published text for and issued a joint press release on the long-shot S.232 – A bill to terminate the EB-5 Visa Program. The statement from Senator Grassley clarifies what this piece of legislation is really about: “For years, I’ve worked with bipartisan colleagues in good faith to reform it. Unfortunately, despite its many flaws, EB-5 proponents are apparently content with the status quo, and that’s unacceptable. I was hoping that it would not come to this point, but absent serious efforts to bring about reforms, we need to take the necessary steps to wind down the program and completely mitigate fraud, abuse and threats to our security.” S.232 expresses frustration at the progress of EB-5 legislation and makes a hardball negotiating statement: “if you don’t respond to my concerns, here’s what could happen.” The proposal to eliminate EB-5 entirely must be too drastic to gain much support or pass into law, but we should still take the frustration seriously. I can understand why EB-5 industry advocates in Washington DC would settle on a “protect the status quo” platform, that being the path of least resistance to industry consensus, but we cannot afford a reputation for being unserious about reform. We should address each of the concerns that Feinstein and Grassley raise in their press release. We can clarify points that are factually wrong (EB-5 is not green card sale and does not avoid waiting lines, as Feinstein assumes), respond constructively to valid concerns (for example support effective protections in response to past instances of fraud, address questions raised by GAO and Commerce studies on job counts), and have the leadership to offer some considered concessions on the fundamentally divisive issues (such how the targeted employment area incentive should be used, what investment amounts should be). We must not leave oxygen for S.232, or give it excuse to become anything more than a negotiating threat.

Hiring Unfreeze
Joseph Whalen emailed that “USCIS has resumed advertising job opportunities after a brief pause. While USCIS had canceled some previously scheduled interviews, some have been rescheduled and allowed to move forward. New personnel actions are taking place.” USAjobs.gov now shows active listings for jobs with USCIS. This may mean good news for planned staff increases at the EB-5 Investor Program Office.

State Department Statistics
The Report of the Visa Office 2016 has been updated with per-country statistics on EB-5 visas issued abroad (Table VI). I will post my visas-by-country summary chart when Table V is published with combined numbers for all fifth preference visas.

SEC Issues for Attorneys
IIUSA has reposted 10 Observations from Reviewing Evidence in an SEC Civil Enforcement Action, an article with good advice for attorneys based on the author’s review of documentary evidence in a civil enforcement action brought by the SEC against an attorney for taking commissions as an unregistered broker-dealer.

RC List Changes
Additions to the USCIS Regional Center List, 12/06/2016 to 02/04/2017

  • Health and Welfare EB-5 Regional Center, LLC (New Jersey, Pennsylvania)

Additions to the list of Terminated Regional Centers:

  • Medical Investment in Texas Regional Center (Texas) Terminated 1/23/2017
  • Pacific Proton Therapy Regional Center, LLC (California) Terminated 1/26/2017

Washington updates

2/6/2017 UPDATE: The news in this post is now all outdated.
–Original Post–
This week Washington has been busy making good on campaign promises and also throwing babies out with the bathwater. Of most significance for EB-5, the President has frozen federal hiring (halting USCIS plans to deal with petition backlogs and improve processing by bringing on more staff) and created two hurdles for new regulations (a regulatory freeze and a make-one-delete two requirement), deferring hopes and fears for the long-awaited modernization of EB-5 regulations. A horrifying new order suddenly suspends whole countries of people from US visas and even entry based on nationality. Senator Dianne Feinstein decided the time was right put her long-running opposition to EB-5 in the form of a bill (S.232) that proposes eliminating EB-5 entirely, both direct investment and the regional center program. I’ll write more about this bill if anything comes of it, but I expect that that the significant legislation will be a forth-coming update to the Goodlatte EB-5 reform bill (last released 12/2/2016). I am going forward with my work as usual under the assumption that reason will prevail eventually and that immigrant investment and the country generally are not, after all, doomed.  But if anyone would like to offer me a chance to move from the immigration business to the walls-and-bunkers business, I’m listening.

Regulations freeze, SEC action (San Francisco), RC List Changes

Progress of Proposed Regulations
As EB-5 stakeholders process proposed new EB-5 regulations, they are thinking (1) how can I dissuade USCIS from the changes that would be most harmful for me personally; (2) how can I take best advantage of this golden opportunity to explain to USCIS how EB-5 works in the real world; and (3) how early could the proposed regulations become final, effective regulations? We know at least that regulations can’t proceed to the next step until after the public comment period closes on April 11, 2017, and now the new administration has put another hurdle in the road.

President Trump’s first Presidential Memorandum is addressed to the Heads of Executive Departments and Agencies with the subject Regulatory Freeze Pending Review (January 20, 2017). It does not put a moratorium on new federal regulations, but does require that any new or pending regulations be presented for review and approval of a Trump-appointed agency head before proceeding any further. This means that proposed new EB-5 regulations will need to go before General John Kelley, the newly-confirmed Secretary of Homeland Security. Would General Kelley allow new EB-5 regulations to move forward? The tireless Senator Grassley met with General Kelley on January 13, and reported that “In addition, we talked about new proposed regulations published by the Department today that would go a long way to restoring the EB-5 immigrant visa program to the way Congress intended it to be used: to help bring much-needed jobs and capital to rural and economically distressed areas. I [Grassley] expressed my strong desire that these rules be kept in place and allowed to go forward to ensure that this program fulfills its original intent.” I don’t know what input General Kelley may get from other directions, or whether the flood of lobbying dollars out of New York will have an impact. IIUSA indicates that its official comment submission to DHS will seek to demonstrate the negative effects that proposed changes would have on the industry.

New SEC Action
People drafting new EB-5 regulations and legislation are motivated, in part, to implement reforms that can help preempt the kind of situations that end in SEC action. When cases appear, we have a post-mortem opportunity to consider: what went wrong here, and how might problems have been prevented or at least detected earlier? Last week the SEC published a complaint against San Francisco Regional Center, Thomas Henderson, and related parties. This case has the usual allegations (commingling, misuse, and misappropriation of funds), but offers a relatively challenging “what-if” analysis. The regional center’s website and offering documents (as quoted in the suit) appear to make all the right representations about account transparency; it just happens that the RC apparently didn’t follow through on these representations, and a third-party co-owner with apparently every right and motivation to monitor proper use of funds had to resort to a lawsuit to claim his right to oversight and eventually apply the breaks. Retrospective armchair due diligence isn’t as easy for this case as for some others. I wonder – what different policy or different industry practices could have contributed to improved policing in this situation?

Regional Center List Changes
Additions to the USCIS Regional Center List, 11/29/2016 to 12/06/2016.

  • Advantage America Seattle Regional Center (Washington): www.aaeb5.com
  • CP Northern Regional Center (Michigan, Wisconsin)
  • California Agricultural Greenhouse Regional Center, LLC (California)
  • California Bond Finance Regional Center, LLC (California)
  • Greystone EB5 Northeast RC, LLC (Connecticut, Delaware, District of Columbia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia): www.greystoneeb5.com
  • QueensFort Capital Texas Regional Center, LLC (Texas): queensforteb5.com
  • Texas Crown Regional Center, LLC (Texas)

Renamed:

  • Civitas Pacific Northwest Regional Center, LLC (former name Civitas Northwest Regional Center) (Oregon, Washington)

New terminations:

  • American Development and Investment Regional Center (California) Terminated 1/5/2017
  • Bay Area Regional Center LLC (California) Terminated 12/22/2016
  • Path America Sonoco, LLC (Washington) Terminated 11/23/2016

Recap of Major Winter Developments (policy, regulations, legislation, statistics, fees, Commerce study, new AAO, SEC actions, litigation)

The past few months have been packed with important EB-5 news, and it’s hard to keep up with all that’s happening.  As a reminder, here is a summary list of the major developments to keep in focus. (The first five I’ve discussed in previous posts; the last five I haven’t had time to write about yet.)

  1. New Policy: Effective November 30, 2016, USCIS replaced all existing EB-5 policy with a new Policy Manual: USCIS Policy Manual, 6 USCIS-PM G (November 30, 2016). This major event puts the whole program on a new footing (though 6 USCIS-PM G is essentially similar to the policy it replaced, with a few adjustments, additions, omissions, and clarifications as I started to discuss here).
  2. Proposed New Regulations: As I announced this week, USCIS has published notices of proposed EB-5 rule-making in the Federal Register.  Advance Notice #0008 invites stakeholders to give input on possible changes to regional center designations and terminations and the I-924 and project approval process. Notice #0006 gives proposed new rules covering priority dates, investment amounts, and TEA designation, among other things. If the new rules are finalized as proposed, the EB-5 minimum investment amount will increase to $1.8 million (or $1.35 million within a TEA) as calculated from inflation, fewer projects will qualify for TEA status, investors with approved I-526 will have the option to invest in a different project without losing their original priority date, and regional centers may need to get project approval before offering investments. We can expect action toward finalizing regulations at some point after the public comment period closes on April 11, 2017 – maybe shortly or maybe long after, if the comments inspire redrafting and/or if the new administration chooses not to greenlight the regulations.
  3. Proposed New Legislation: Congress was (reportedly) actively working on EB-5 reform legislation before the continuing resolution that passed on December 10 provided the regional center program with a clean extension through April 28, 2017. We have a staff draft of an EB-5 bill dated December 2, 2016, and understand that staffers and lobbyists are still working with this document behind the scenes. If the staff draft were passed as-is, the EB-5 minimum investment amount would decrease to $700,000 (or $650,000 for a TEA investment), with incremental increases up to $1M/$800K, additional TEA categories and incentives (including rolling visa set-asides) would be introduced, and regional centers would  be given hefty new annual fees ($10,000 or $20,000) and relatively gentle new fund administration and reporting requirements. (My bill comparison chart gives a link to the bill text and summarizes the provisions.) We may see action toward passing reform legislation in the coming months before the next regional center sunset date on April 28 – or may not, with so many other matters demanding attention during Trump’s first 100 days in office, and the anti-change lobby.
  4. New Data and Statistics: We got updated numbers from USCIS and the Department of State on EB-5 petition and visa processing and backlogs as of the end of 2016. The numbers show a queue of current and prospective visa applicants about 75,000 people long, which implies an 8-year visa wait for new China-born investors. And unless USCIS improves processing volumes, it will take 2+ years just to process the currently-pending I-526 petitions and 3+ years to just process the currently-pending I-829 petitions. Proposed EB-5 reform legislation and regulations both plan to improve processing times/volumes, but do not offer to increase available visa numbers.
  5. Fee Increases: EB-5 petitions and applications have higher filing fees since December 23, 2016. The new I-924 fee (dramatically increased to $17,785) is likely to curb the burgeoning number of regional centers (perhaps especially new applications from serial operators, which have accounted for an increasing percentage of new RCs) and discourage voluntary filing of amendments.
  6. Department of Commerce EB-5 Impact Analysis: We finally have the long-promised Department of Commerce study commissioned by USCIS: Estimating the Investment and Job Creation Impact of the EB-5 Program (January 2017). The product is a slender report and based on old data from 2012-2013, so the numerical conclusions are of limited interest at this point, but the analysis is still significant and could have political impact. I can see EB-5-critic Senator Grassley seizing on this report and the barriers to good analysis that the authors describe. EB-5 economists should review the formerly common EIR problems identified on p. 9, and ensure that they’re not still repeating them.
  7. New AAO Decisions: In November and December, USCIS published 27 new decisions on I-526 cases and one new decision on a regional center termination appeal.  The termination decision (NOV022016_01K2610) and 15 nearly-identical I-526 decisions (for example DEC142016_07B7203) are related to Path America KingCo, LLC, which lost designation after an SEC action mainly targeting its principal. The regional center appealed its termination based on pursuing active, viable projects under reputable new management. Investors appealed with the argument that their petition denials were premature, coming while the regional center appeal and the SEC case were still unresolved. AAO found that the investor appeals were hopeless due to the issue of material change, and that the regional center appeal was not sufficiently compelling. (But the RC decision interestingly grants the possibility that mitigating, corrective, and restorative actions could potentially compensate for past problems with the regional center or related entities.) Among decisions not related to Path America, I hope to write more about three decisions with good discussion of material change issues (NOV012016_02B7203, NOV072016_01B7203, NOV292016_02B7203) and two that address the level of business activity necessary before filing I-526 (NOV092016_01B7203, NOV292016_01B7203). I’ll particularly highlight NOV292016_01B7203, which explicitly states what I’ve always said – that an investor must not file a TEA-based I-526 before securing a location for the business.
  8. New SEC Actions: On December 27, 2016, the SEC published a complaint brought against California-based attorney Emilio Francisco and associated companies who are charged with diverting and stealing EB-5 investor funds. On December 28, 2016, the SEC announced settlement on a case against AJN Investments LLC/Jason Adam Ogden, who was charged with diverting EB-5 investor funds and wrongly making midstream business model changes.  I’m interested to note that these SEC complaints do not implicate or even identify the regional centers that sponsored the EB-5 investments involved. The SEC holds the project companies and principals exclusively responsible for problems in the offerings, projects, and use of funds. I wonder whether USCIS will pursue the regional center sponsors, holding them responsible for oversight, or whether it will follow the SEC’s lead in considering the sponsors out of the picture. It appears that the regional centers in these cases did not control any NCE bank accounts and were not involved in offering documents or investor promotion. In other news, the SEC has just settled with Path America (a case that did implicate the regional center).
  9. Other litigation: On November 14, 2016, a long list of EB-5 investor plaintiffs brought a civil suit against a long list of defendants associated with the Palm House Hotel EB-5 project. The suit enumerates the lies that the investors believe they were told, calls out every party and service provider allegedly involved in making false representations, and traces alleged misuse of investor funds. The case appears complicated and ambiguous (not the kind of low-hanging fruit that the SEC seems to favor) but full of drama and makes for gripping reading. Another case that’s older now (filed August 2016), but also a colorful Florida story: USA v. Karamchand Doobay, who was charged with perpetrating fraud through his regional center and projects. I’m sure the investors in these cases would unite in one message for the future: do not neglect due diligence before investing! And the defendants would likely encourage care in partnerships and representations.
  10. Good news: Meanwhile, just to keep  perspective, 99% of the 865 regional centers are apparently doing well and good, or avoiding lawsuits and bad press at any rate. At least $10.4 billion dollars of EB-5 investment entered the U.S. economy in 2016, judging by the number of I-526 petitions filed during the year. I was privileged to write business plans last year for 32 new EB-5 deals that look promising for both local communities and foreign investors, and I continue to be encouraged by what I see on the ground on the bright side of EB-5.

(Also note, adding to the festival of updates and feedback opportunities, an in-person EB-5 stakeholder meeting just announced for March 3 in DC.)

3/3/2017 USCIS EB-5 Engagement

From: U.S. Citizenship and Immigration Services [mailto:uscis@public.govdelivery.com]
Sent: Friday, January 13, 2017 8:55 AM
Subject: USCIS Invitation: EB-5 Immigrant Investor Program, 03/03/2017

Dear Stakeholder,

U.S. Citizenship and Immigration Services (USCIS) invites you to participate in a stakeholder engagement on Friday, March 3, from 1 to 2:30 p.m. to discuss the Immigrant Investor Program, also known as the EB-5 program.  This engagement is part of our ongoing efforts to enhance dialogue with our stakeholders in the EB-5 program.

During the first part of this engagement, USCIS officials will provide EB-5 program updates. The second part will be a question-and-answer session. We invite you to ask non-case specific questions or provide feedback on the EB-5 program.

Participation Details:

You may attend this engagement either in person at USCIS Headquarters in Washington, D.C., or by teleconference.

To register, please follow these steps:
·        Visit our registration page
·        Enter your email address and select “Submit”
·        Select “Subscriber Preferences”
·        Select the “Event Registration” tab
·        Provide your full name and organization, if any
·        Complete the questions and select “Submit”

If you wish to attend in person, please indicate so in your subscriber preferences when selecting your method of attendance. Please note that seating is limited, so we encourage you to register early.

Once we process your registration, you will receive a confirmation email with additional details.

To submit non-case specific questions before the engagement:

·        Email us at USCIS-IGAOutreach@uscis.dhs.gov by Friday, February 3, at 5 p.m. Eastern.

If you have any questions regarding the registration process, or if you have not received a confirmation email within two business days, please email us at the same address.

Note to Media: This engagement is not for press purposes. Please contact the USCIS Press Office at (202) 272-1200 for any media inquiries.

We look forward to engaging with you!

Proposed New EB-5 Regs (priority dates, investment amounts, TEAs)

On January 13, the Federal Register is publishing a Notice of Proposed Rule-making titled EB-5 Investor Program Modernization (DHS Docket No. USCIS 2016-0006). The notice proposes and explains the rationale behind new EB-5 regulations on priority dates, investment amounts, and targeted employment areas, among other changes. The Notice gives a comment period ending on April 11, 2017, and the regulation amendments could go live at any time after that point – though I assume not very soon thereafter, since the notice solicits and will presumably receive extensive public comment, may require another draft before the final, and will need to be greenlighted by the new administration.

Summary of Proposed Regulation Amendments in DHS Docket No. USCIS-2016-0006

  1. Priority Dates: Allow an EB-5 petitioner to use the priority date of an approved EB-5 petition for any subsequently-filed petition. (In other words, an investor with an approved I-526 in one project could choose to file a new I-526 in a different project while keeping the original priority date. This would benefit investors whose project or regional center has trouble after petition approval, but before the investor receives a visa number. The regulations do not restrict investor reasons for choosing to file a new petition.)
  2. Investment Amounts: Increase the standard minimum investment amount to account for inflation, reduce the differential between standard and TEA investment amounts, and implement automatic increases every five years based on inflation (rounded to the nearest 100,000).  Based on CPI increases since investment amounts were set in 1990, this means that the standard minimum investment would become $1,800,000 in 2017. The TEA amount, set at 75% of the standard, would be $1,350,000 in 2017. The investor would be required to contribute the minimum investment amount that is designated at the time the petition is filed.
  3. Targeted Employment Areas: Eliminate state designation of TEAs, and have DHS determine TEA qualification by applying its own uniform standards to evidence presented by investors and regional centers. For high-unemployment TEAs, DHS would only designate an MSA, county, city, or project tracts. (A project tract TEA is the census tract where the project is located, or a group comprising any or all census tracts that touch the tract where the project is located — but not a group including any indirectly connected census tracts). The regulations do not specify which unemployment data DHS would use or accept.
  4. Other technical changes: define a process by which derivatives may file Form I-829 if not included on the principal’s position; provide greater flexibility in selecting the I-829 interview location; remove the requirement that investors report to a district office in order to receive a permanent resident card; miscellaneous other changes (including clarifying that an investor can be sufficiently engaged in an NCE merely by virtue of being an equity holder, without requiring a management or other active role).

The notice goes into extensive detail about USCIS’s thinking and research behind the proposed changes (which is interesting in itself, even apart from context), and invites stakeholders to respond with equally substantial data and analysis. I look forward to IIUSA or others stepping up to help organize a serious stakeholder response. We need to do better than hundreds of individual stakeholders mailing to basically just say “this would hurt” and “we don’t like change.” (Update: IIUSA is inviting feedback from members; deadline January 31, 2017)

The regulators at USCIS and legislators in Congress share similar goals — to modernize the EB-5 program and change certain aspects of the program in need of reform — but so far the draft legislation and proposed regulations suggest quite different changes. I wonder whether Congressional staffers will be influenced by these Notices of Proposed Rule-Making as they continue to refine legislation. I note that the draft regulations frequently reference Congressional intent as expressed around 1990, but not current discussions in Congress. (As a reminder, here are the investment amount and TEA changes proposed in the most recent draft EB-5 bill I’ve seen.)

EB-5 Regs (Regional Centers), I-924 Process and 2015 Stats, Processing Times

Status of Amended Regulations

USCIS has published an Advance Notice of Proposed Rulemaking (ANPRM) in the Federal Register. This notice “EB-5 Immigrant Investor Regional Center Program” (Docket No. USCIS-2016-0008) does not unveil any revised regulations, but instead generously solicits stakeholder input to help formulate new rules for regional center designation, the exemplar filing process, continued RC participation, and RC termination. (Docket #0008 references a separate notice “EB-5 Immigrant Investor Program Modernization” Docket No. USCIS-2016-0006 that may cover the other EB-5 topics that we expected to see addressed. 1/12 UPDATE: here is Docket No. USCIS-2016-0006, which proposes new regulations for EB-5 investment amount increases, TEA requirements, priority dates, and other EB-5 matters.)

The bad news about notice #0008 is that it suggests USCIS is in a preliminary stage of thinking about new regional center designation rules, hasn’t actually drafted any regulations on this topic, and doesn’t expect to start for at least another 90 days. (Though hustle might be useless anyway, if Trump makes good on his election commitment to issue a temporary moratorium on most new regulations.) The good news is that notice #0008 demonstrates genuine concern to understand and work with regional center reality, presents thoughtful analysis of the issues, and poses excellent questions. Answers prepared for USCIS in response to the ANPRM should be organized and shared with Congressional staffers as well, since draft EB-5 reform legislation covers the same issues that USCIS aims to resolve, and would benefit from the same input.

I-924 Approval Data

I try to improve the accuracy of my Regional Center List by requesting regional center designation letters from USCIS through the FOIA process. So far I have logged all initial designations and amendments through 2015. I’m sharing summaries of data points gleaned from the most recent letters in my collection (2015 approvals) to help shed light on processing issues.  As we prepare to respond to the ANPRM, let’s think about what’s wrong with the following pictures, and how to improve the situation.

Processing Times

Speaking of processing times, here is an email that I should have shared last week.

From: U.S. Citizenship and Immigration Services [mailto:uscis@public.govdelivery.com]
Sent: Thursday, January 05, 2017 11:32 AM
Subject: USCIS Now Uses Specific Dates to Show Case Processing Times

Dear Stakeholder,

Starting on Jan. 4, 2017, we will post processing times using a specific date format rather than weeks or months. This is the first step in providing processing times that are timelier and easier to understand.

We post case processing times on our website as a guide for when to inquire (service request) about a pending case. For the last several years, we have posted case processing times using two different formats:

  • For cases that were within our production goals, we listed processing times in weeks or months.
  • For cases that were outside of our production goals, we listed processing times with a specific date.

Always refer to your I-797C, Notice of Action, and look for “receipt date” to determine when we accepted your case. If the receipt date on the USCIS Processing Times web page is after the date we have listed on your notice, you should expect to hear from us within 30 days. If after those 30 days, you have not heard from us, you may make an inquiry on your case.

We recommend using our e-request tool for all case inquiries. In addition, we have many other services and tools at my.uscis.gov

If you move, remember to update your address for each pending case and receipt number at uscis.gov/addresschange.

Kind Regards,
USCIS Public Engagement Division

Note that this change is cosmetic: processing “as of month” and “as of date” are the same information, just in a different form. But the change is helpful to clarify that the report does not give average processing times, but rather a metric for judging when it’s okay to inquire about case status. FYI here is my spreadsheet of historical IPO processing times with columns translating month to date and vice versa. (But whether considering month or date, keep in mind individual deviations as illustrated above in my scatter plot charts of actual I-924 processing in 2015.)

FY2016 Q4 EB-5 Petition Statistics, Visa Backlog

I wish I had a merrier Christmas post for EB-5 world, but it’s my duty to report sobering statistics from USCIS for EB-5 petition processing as of Q4 FY2016 (ending September 30) and the National Visa Center for pending visa applications as of November 1, 2016.

NOTES

  • I-526 Processing Volume: USCIS sped up considerably in the 4th quarter, processing more I-526 petitions than in prior quarters. 4th quarter decisions were also relatively positive – 91% approvals. However, the 4th quarter was not enough to improve the annual numbers. USCIS still processed fewer and denied more I-526 petitions overall in FY2016 than FY2015.
  • I-526 Receipts and Backlog: The last quarter of 2016 saw another unnatural surge of I-526 filings (thanks for nothing, Congress), further swelling the already huge pool of pending petitions.  If USCIS continues to process about 9,500 I-526s a year (average for 2015/2016), then the 20,805 petitions currently pending will take over two years to process.
  • I-829 Processing Volume: I-829 processing in FY2016 started well and then fell every quarter, from over 800 petitions processed in the 1st quarter to barely 200 petitions by the 4th quarter. The year was still better than FY2015 overall, with 1.7x more completions. USCIS did not report denying any I-829 petitions in the 4th quarter, and the denial rate for the year is a low 5% (but higher than last year’s 1% overall).
  • I-829 Receipts and Backlog: I-829 receipts grew a few percentage points over the course of the year, even as processing slowed dramatically. USCIS ended the year with 6,309 pending I-829 petitions, which would take three to five years to process at the current rate of adjudication.
  • Pending EB-5 Petitions and Applications: There are currently about 20,804 I-526 petitions pending at USCIS (each petition representing one investor who may subsequently apply for about three EB-5 visas) plus about 24,629 EB-5 visa applications already pending at the National Visa Center. This means that the queue of current and committed EB-5 visa applicants now is about 75,000 people long and therefore stretches about eight years into the future. (Assuming that DOS can issue only about 10,000 EB-5 visas a year, and that we don’t – though we might — see major changes from investors dropping out or Congress changing its mind about the total numbers or allocation of visas. Here is a link to my spreadsheet with calculations, for anyone who would like to rethink the numbers.) New China-born investors filing today will go to the back of the line of pending petitions and applications, while new applicants from other countries can look forward to skipping ahead of China-born investors once they reach the visa stage. Considering the line, a China-born investor filing I-526 today might receive a green card in 2024 and think about removing conditions and exiting the investment after 2026, while today’s investor from Brazil may get a green card in 2018 and be ready for exit after 2020. These are unreliable estimates because many possible factors could affect actual timing, but food for thought. I look forward to linking to other commentary and opinions on these numbers.

NOTE: See the comments for additional input and insights

 

Proposed EB5 investment and TEA changes

The Regional Center program sunset date has been pushed back to April 28, 2017 by Public Law 114-254, but don’t count on the EB-5 status quo remaining unchanged through April. As I reported before, EB-5 filing fees are increasing from next week, there’s a new EB-5 Policy Manual, and Congress and USCIS might be about to unveil major EB-5 rule changes. USCIS signaled intention to post proposed new EB-5 regulations in the coming month, which could (at record speed) mean a final rule as early as March 2017. Congress reportedly came close to finalizing new EB-5 legislation behind the scenes last month and reportedly plans to introduce a new bill shortly. (USCIS has a history of dragging regulation revisions out over months or years or even decades, and Congress has a packed schedule for Trump’s first 100 days without mentioning EB-5. But still, there’s at least a chance of immanent EB-5 action.)

New regulations from USCIS promise to increase the minimum EB-5 investment amount, revise Targeted Employment Area requirements, clarify regional center designation requirements, and consider priority dates. We’ll have to wait for the proposed rule to learn more detail. (UPDATE: here is the detail.) New legislation promises to address those same issues while also adding new rules  for job creation, project pre-approval, investor source of funds, investor vetting and protections, fund administration, and many aspects of regional center operations.  My Bill Comparison Chart summarizes features from various iterations of proposed EB-5 legislation. I just added a column for a new “staff draft” bill dated 12/2/2016 that has been making unofficial rounds. This draft is a version of the H.R. 5992 released earlier this summer, with revisions that show the influence of good sense (clearer presentation, no more deadly retroactive effective dates, fewer practically impossible tasks for USCIS and regional centers) as well as good lobbying by large regional centers (lower fees and better incentives for the major players). This staff draft legislation is unofficial (I received the same document separately from three sources, but without much context, and it’s just a redline with many passages marked for further negotiation), but I’m analyzing it because I hear that a bill based on this document may be  introduced early next year.

To begin, I’ve outlined proposals in the recent staff draft legislation that would change the EB-5 minimum investment amounts and targeted employment area criteria. (Click on the link to access the document, which has tidy summary tables and some analysis of implications.) Future posts will address other big proposed changes that I consider particularly significant for my clients: proposed new rules for job creation, amendments, fund administration, ownership/management, and regional center operations. (I’ll also link to useful articles from others. For example Bernard Wolfsdorf’s informative webinar “EB-5: 12/23/16 Fee Increase & Preparing for 2017” discusses the staff draft legislation and other developments.)  We don’t know whether the proposals in the draft legislation will become reality, but it’s important to know what’s being discussed in Washington. Discussions in Congress may or may not affect the changes that USCIS proposes through regulation. Regulation rule changes from USCIS will be more limited than what Congress can enact, and might be more restrictive. (I hear that USCIS has been working closely with the hardliner Senator Grassley, which is not a good sign.) Let’s see who acts first.

1/12/2017 UPDATE: DHS has published its proposed changes to investment amounts and TEAs in a Notice of Proposed Rule-making: EB-5 Investor Program Modernization (DHS Docket No. USCIS 2016-0006).

Countdown to reauthorization (CR to 4/28/2017)

The next sunset date for the regional center program is coming up on Friday 12/9, and I’ll update this post with relevant news as I receive it. (See my 9/29 post if you’d like to review the history of RC program authorizations.)

UPDATES:

  • 12/10/2016: President Obama signed into law H.R. 2028, the “Further and Continuing and Security Assistance Appropriations Act, 2017.” It is now Public Law 114-254. This extends Regional Center program authorization together with government funding and other authorities through April 28, 2017.
  • 12/9/2016: The Senate is up late voting on the CR (HR 2028), and tomorrow should bring the good news of no government shutdown or RC program lapse.
  • 12/8/2016: The Hill reports that the CR passed the House today, and the Senate is expected to vote tomorrow. GOP leaders are confident that it will reach the President by the deadline, though it’s facing some opposition.
  • 12/7/2016: IIUSA has issued an advocacy alert welcoming the CR and the short-term reauthorization of the EB-5 Regional Center Program through April 28. “EB-5 stakeholders and congressional offices have engaged in meaningful discussions all year, particularly over the past few months, to reach consensus and compromise for the healthy future of the Program. With a tight deadline to fund the federal government and address other pressing legislative issues, there was simply not enough time for a reform package to be passed during this Congress. The short-term extension through April 28 will ensure that the industry and legislators will have the opportunity to agree upon a comprehensive reauthorization bill that provides necessary reforms to the Program while allowing the Program to continue to grow, thrive and endure in the long term.”
  • 12/6/2016: Quoted from a House Appropriations Committee Press Release: “House Appropriations Chairman Hal Rogers today introduced a short-term Continuing Resolution (CR) (H.R. 2028) to prevent a government shutdown and continue funding for federal programs and services until April 28, 2017. The legislation also contains funding for emergency disaster relief.  …The CR extends funding for operations for most federal agencies, programs and services until April 28, 2017. It maintains the current budget cap level of $1.07 trillion put into place under the Budget Control Act of 2011. The legislation continues policy and funding provisions included in currently enacted fiscal year 2016 Appropriations legislation. It does not include controversial riders, or major changes in existing federal policy.   ….For the full text of the legislation, please visit: http://docs.house.gov/floor/”  The Appropriations Committee has also posted a nice section-by-section summary.
  • 12/6/2016: Lawmakers haggle over funding bill as shutdown nears, says The Hill
  • 12/5/2016: I hear that Goodlatte and Conyers’ H.R. 5992 EB-5 Reform Act is still under active negotiation behind the scenes. A staff draft of the bill dated 12/2/2016, just forwarded to me by a kind reader, shows significant revisions from the original bill and suggests concessions to industry pressure on TEA definitions, visa set-asides, minimum investment amounts, foreign government involvement, and account transparency requirements. The matter of retroactive effective dates is marked as controversial and “unresolved” in this draft. Provisions on direct jobs, public bonds, and loan restrictions are highlighted as points for discussion. I will be astonished if a substantive EB-5 reform bill gets passed soon, but Congress might exceed expectations. This draft in progress does show a lot of recent work

Policy Manual EB-5 Section: What’s New

The EB-5 program just shifted onto a new and slightly different foundation. USCIS Policy Manual Volume 6, Part G, published today, is now the controlling source for EB-5 policy guidance. Usually we get a review and comment period before new policy goes live, but the effective date for this policy (which I’ll call PM 6G for short) is November 30, 2016.

PM 6G consolidates and replaces (and expands on) the May 2013 EB-5 Policy Memo, EB-5 sections in the Adjudicator’s Field Manual, and other related prior USCIS guidance. It’s intended as a compendium of existing policy, but it’s not identical to the previous guidance. Here are significant points that I notice (based on reading PM 6G side-by-side with the May 2013 Policy Memo, and consulting my memory).

PM 6G introduces a few new petition filing instructions:

  • Chapter 3(B)(3) states that a regional center I-526 petition for a project not previously reviewed by USCIS must identify the project “as an actual project being presented for the first time,” and  “should contain an affirmative statement signed by a regional center principal confirming that the regional center is aware of the specific project being presented for the first time as part of the immigrant investor petition.”
  • Chapter 4(A) states that a regional center I-526 petition for a project previously reviewed by USCIS must submit the previously-approved documentation together with the investor’s documents. This is required even though the regional center previously submitted the documentation with the Form I-924. The petition must also include a copy of the regional center’s most recently-issued approval letter.
  • Chapter 5(B) states that a I-829 petition must include relevant documents previously submitted with the Form I-526, including the comprehensive business plan and economic impact analysis, if the petitioner is relying on such documents to meet his or her burden of proof. “This information is necessary to indicate whether there are material changes that would impact deference.”

PM 6G includes a few items that might be arguable as new policy:

  • Chapter 2(A)1 has a section on “using loan proceeds as capital”
  • Chapter 2(D)4 says that “USCIS may request additional evidence that the indirect jobs created, or to be created, are full time.” (The May 2013 Policy Memo had stated the opposite:Due to the nature of accepted job creation modeling practices, which do not distinguish whether jobs are full- or part-time, USCIS relies upon the reasonable economic models to determine that it is more likely than not that the indirect jobs are created and will not request additional evidence to validate the job creation estimates in the economic models to prove by a greater level of certainty that the indirect jobs created, or to be created, are full-time or permanent.” We need to get PM 6G revised to reflect that reasonable approach.) Chapter 2(D)(4) also confusingly defines direct jobs in the context of regional center job creation and economic analysis as “those jobs that establish an employer-employee relationship between the new commercial enterprise and the persons it employs.” This should be revised or expanded to reflect the alternate meaning of a “direct” job that is in fact used by economic models.
  • Chapter 2(D)6 incorporates the content of the 12/20/2012 Operational Guidance on tenant occupancy
  • Chapter 3(D) says that amendments are optional for changing a regional center’s “industries of focus, business plans, or economic methodologies,” but does not say that amendments are optional for a change in geographic boundaries.  The May 2013 Policy Memo had included geographic boundaries on the list of changes for which an amendment was not required.
  • Chapter 5(B) defines a first-in policy for allocating jobs to EB-5 investors, absent other agreement  (departing from the recent practice of saying no investors get jobs if there aren’t enough for all and there isn’t a job allocation agreement)

PM 6G provides some new examples, clarifications, and re-emphasis:

  • Chapter 2(A)2 lists types of documents that can be used to help demonstrate source of funds
  • Chapter 2(A)2 lists “administrative fees, management fees, attorneys’ fees, finders’ fees, syndication fees” as examples of expenses that will be considered to erode capital made available to the job-creating entity, if paid out of the EB-5 qualifying investment amount
  • Chapter 2(A)5 repeats the old point that TEA qualification is determined for each petitioner based on the  project location’s TEA status at the time of that petitioner’s investment or I-526 filing, while re-emphasizing the implication that the project location is not necessarily a TEA for all time, and just because some early investors qualified for the reduced investment amount isn’t determinative for later investors in the same project
  • Chapter 2(D)3 lists examples of evidence to be provided for a job-sharing arrangement in order to show that it truly involves job share of a full-time position, and not combination of part-time positions
  • Chapter 2(D)5 re-emphasizes that a reasonable economic methodology must be based on reasonable inputs, and gives examples of economic model inputs and relevant documentation to help establish their reasonableness. This discussion is repeated in Chapter 5(B), with odd lack of distinction between evidence required at the I-526 and I-829 stage.
  • Chapter 3(A) describes new detail required of the operational plan filed with the I-924 Application for Regional Center
  • Chapter 3(B)1 suggests specific content for the “general proposals and predictions” in a regional center application relying on hypothetical projects
  • Chapter 3(E) describes the process and issues in regional center termination
  • Chapter 4(C) and 5(C) discuss material change in terms of the same principles but with different language and different examples from the May 2013 Policy Memo. Unlike the memo, the manual discusses and gives examples of changes that would NOT count as material.
  • Chapter 5(B) tries to discuss evidence for regional center job creation at the I-829 stage, but needs more work to clearly address issues specific to regional center as distinct from direct investments, and to differentiate what’s required at I-829 from what’s required at I-526
  • Chapter 5(B)1 gives examples of kinds of construction jobs that do and don’t count as intermittent

What is the significance of PM 6G?  For investors, I guess it doesn’t make much difference because it doesn’t include major policy changes (yet) and basically says what their consultants knew already. It will just be a handy place to find all EB-5 policy, being more comprehensive and better written than the May 2013 memo. Attorneys will want to get busy finding problems and commenting on details that need to be changed.  I’ll have to spend Christmas going through years of blog posts and other documents updating the content and citations to reference PM 6G instead of the various superseded guidance and policy sources (and maybe spend Easter the same way when PM 6G gets revised based on new regulations). I dislike the fluidity of the online Policy Manual, and for myself am copying the content into stable old-fashioned page-numbered documents with navigation.(Here is a link to my folder, which I expect will eventually include many dated versions. You’re welcome to share, keeping in mind that the online manual is the most reliable source for the most current content.)

I look forward to linking to other reactions on the manual here, and may modify my own comments in this post.

Policy Manual EB-5 announcement

From: U.S. Citizenship and Immigration Services [mailto:uscis@public.govdelivery.com]
Sent: Wednesday, November 30, 2016 9:29 AM
Subject: USCIS Message: Policy Manual Available for Comment Employment-Based Fifth Preference Immigrants: Investors

Dear Stakeholder,

USCIS seeks your input on the USCIS Policy Manual item listed below which contains either new or revised policy guidance. Please note that this item is effective as of the date shown below.

Type of Document for Comment: USCIS Policy Manual
Title of Document: Employment-Based Fifth Preference Immigrants: Investors
Related Documents: Policy Alert
Opening & Closing Dates for Comment: November 30, 2016 – December 14, 2016
Effective Date of Policy: November 30, 2016

Please send all comments to publicengagementfeedback@uscis.dhs.gov and be sure to include the following to make your comments clear:

State the title of the relevant volume and section in the subject line of your message;
Refer to a specific portion of the document;
Explain the reason for any recommended change; and
Include data, information, or authority that supports the recommendation.

If you are unable to access the document through the link provided above, please do the following:

  1. Go to www.uscis.gov/outreach
  2. Select “Feedback Opportunities” on the left side of the page
  3. Select “Policy Manual for Comment” on the left side of the page

Kind Regards,

USCIS Public Engagement Division

New EB-5 Regs in 2017?

01/11/2017 Update: USCIS published an Advance Notice of Proposed Rulemaking  “EB-5 Immigrant Investor Regional Center Program” (Docket No. USCIS-2016-0008)  and Notice of Proposed Rule-making EB-5 Investor Program Modernization (DHS Docket No. USCIS 2016-0006).

–ORIGINAL POST–

While we’ve been focused on how Congress might change EB-5, the immigration service is taking action. Since Spring 2015, DHS has published Rule 1615-AC07 (Improvement of the Employment Creation (EB-5) Immigrant Regulations) bi-annually as an agenda item in the Office of Management and Budget’s Rule list. Since the “stage of rule-making” just said “Long-Term Actions,” with no specified timeline, I didn’t actually hope to see action any time soon. But now, the Fall 2016 OMB Rule list has upgraded the status of 1615-AC07 to “Proposed Rule Stage” and has added a timetable date: Notice of Proposed Rulemaking on date 01/00/2017. That means that in just a couple months, we could be getting our chance to read and comment on new regulations that make significant EB-5 program changes (including increased investment amount), and those regulations could go live shortly after the comment period closes. (Or not — my post from June discusses the regulatory process and how it’s played out before.) The Fall 2016 version of the rule notice goes into more detail on what DHS intends to accomplish with the new regulations, and promises to address a point not mentioned in earlier notices: “providing the opportunity to mitigate the harsh consequences of unexpected changes to business conditions through priority date retention in limited circumstances.” While new legislation from Congress might primarily focus on the regional center program, new DHS regulations will affect all EB-5 investors, and this notice concerns everyone in EB-5.

DHS/USCIS RIN: 1615-AC07 Publication ID: Fall 2016
Title: Improvement of the Employment Creation Immigrant Regulations

Excerpted from http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201610&RIN=1615-AC07

Abstract:
DHS proposes to amend its regulations governing the employment-based, fifth preference (EB-5) immigrant entrepreneur category and EB-5 regional centers to modernize the EB-5 program based on current economic realities and to reflect statutory changes made to the program. DHS is proposing to update the regulations to include the following areas: priority date retention, increases to the required investment amounts, revision of the Targeted Employment Area requirements, clarification of the regional center designation and continued program participation requirements, and further definition of grounds for terminating regional centers.
Statement of Need:
The proposed regulatory changes are necessary to reflect statutory changes and codify existing policies, more accurately reflect existing and future economic realities, improve operational efficiencies to provide stakeholders with a higher level of predictability and transparency in the adjudication process, and enhance program integrity by clarifying key eligibility requirements for program participation and further detailing the processes required. Given the complexities involved in adjudicating benefit requests in the EB-5 program, along with continued program integrity concerns and increasing adjudication processing times, DHS has decided to revise the existing regulations to modernize key areas of the program.
Anticipated Costs and Benefits:
As a result of these amendments and resulting modernized program, DHS believes that regional centers, entrepreneurs, and the Federal each benefit. This rule would benefit regional centers by clarifying the requirements for designation and continued participation in the EB-5 program, making the application process more transparent for regional centers and streamlined to improve DHS operational efficiencies. The rule would benefit entrepreneurs seeking to participate in the program by providing the opportunity to mitigate the harsh consequences of unexpected changes to business conditions through priority date retention in limited circumstances. This rule would also provide a more transparent process for entrepreneurs seeking to participate in the regional center program by providing increased consistency and predictability of adjudications through the clarified regional center continued program participation requirements. These changes will also streamline the adjudication process and improve DHS operational efficiencies, resulting in improved adjudication times. Finally, the Federal Government will benefit from clarifications and enhancements to the EB-5 program to strengthen program integrity, reducing the risk of fraud and national security concerns in the program, as well as improving operational efficiencies to reduce overall program costs.

Election and EB-5 (updated), RC list changes

Political Changes and EB-5
In the new political climate, Regional Center EB-5 has an interesting position: it’s an immigration program whose strongest criticism has been that it unfairly benefits wealthy New York real estate developers. Perhaps we’re about to see EB-5 become an immigration program whose saving grace is its benefits to big developers (including President-elect Trump’s family). Or maybe EB-5 will be crushed between judiciary committee chairmen (still to be Senator Grassley and Rep. Goodlatte in the new Congress) who want reforms and a new administration that may aim to cut down on immigration generally? Maybe the Regional Center program will be simply ignored and punted down the road with more short-term extensions as the lame-duck Congress focuses on bigger spending bill issues and the Judiciary Committees get caught up in Supreme Court hearings? I don’t know. Preliminary comments on the election’s immigration and EB-5 impact: IIUSA letter to members, EB-5 Insights Post-Election Immigration Update, Klasko Law post on the Election Impact on EB-5. In the article Leahy to press ahead with EB-5 reforms in lame duck session (Nov. 16. 2016), VT Digger quotes sources saying that Senators Leahy and Grassley are continuing to push even now for any regional center reauthorization to be accompanied by reforms. However, the impression I get from reading political news is that Congress as a whole is determined to do and decide just as little as possible until Trump is President. House Republicans have already agreed it’s a good idea to extend government funding from December 9, 2016 into 2017 with another short-term spending bill, in order to defer big decisions until next year. It’s probable that the Regional Center program will piggy-back on that additional extension of existing appropriations and authorities, as it did before — if for no other reason than that Congress would have to make extra effort and go out of its way to specially exclude it. (Update: a CR has indeed extended the RC program with government funding through April 28, 2017.)

Regional Center List Changes
Additions to the USCIS Regional Center List, 10/03/2016 to 11/01/2016

  • EB-5 Fund CA, Inc. (California)
  • Home Paradise Texas Regional Center, LLC (Oklahoma, Texas): ushpic.com

Renamed:

  • CanAm Los Angeles County Regional Center, LLC (former name Los Angeles Film Regional Center) (California)
  • Central Southern Regional Center (previously USA South Regional Center) (Louisiana, Oklahoma, Texas)
  • Rural Economic Development Center LLC (former name 1900 Gulf Street Partners Regional Center LLC) (Kansas, Texas)

Removed, but not listed as terminated:

  • Los Angeles County Regional Center (California)
  • Mountain States Center for Foreign Investment (Utah)

New Terminations:

  • Montana Energy Regional Center LLC (former name USA Montana Energy Regional Center) (Montana) Terminated 11/1/2016
  • Dominion Mid-Atlantic Associates, Inc. (Virginia, Virginia) Terminated 10/20/2016
  • Mariana’s Investment Co, LLC (Commonwealth of Northern Marianas Islands) Terminated 10/27/2016
  • Northern Illinois Regional Center (Illinois) Terminated 10/13/2016

I-924A Resources

USCIS has kindly shared IPO Deputy Chief Julia Harrison’s Talking Points IIUSA and AILA Conferences October 2016. There isn’t any breaking news here, but I’ll repeat Ms. Harrison’s first point. “Regional Centers: Don’t forget to file your Form I-924A between October 1 and December 29.” All Regional Centers that were designated as of September 30 this year must file this annual report.

I-924A Resources for Regional Centers

Go to the USCIS website for the Form I-924A and Instructions: https://www.uscis.gov/i-924a. Note that there’s a significantly revised version this year, so don’t reuse last year’s form. USCIS gives additional guidance for completing the form in I-924A Filing Tips (2015) and I-924A Q&A (2011).

The deadline for I-924A filing this year is December 29, but plan to file by December 22 if you want to avoid the new $3,035 filing fee.

Remember that I-924A stakes are high. This form is at the center of an annual review in which USCIS reassesses whether each RC can keep its designation. In preparing to file, consider what we know about the review process. Form I-924A goes to the IPO Compliance Unit at USCIS, which takes the following steps.

  • IPO reviews the info provided in the I-924A for timeliness, accuracy, and completeness
  • IPO considers the Form I-924A responses (and any supplemental narrative and exhibits filed with the form) to determine whether the RC is fulfilling its basic mandate to promote economic growth. If the RC does not have investment or jobs to report in the Form I-924A, IPO will look to see whether the RC makes a compelling case for future activity and mitigating circumstances. (“For example, it is reasonable to provide greater flexibility to a regional center with a more recent USCIS designation whereas a regional center with a longer period of designation that has not shown any economic growth to the geographic area, may receive less flexibility. In addition; the regional center’s progress in developing actual projects should be taken into account, including the steps taken to identify and pursue developmental projects, how the projects have progressed in the pipeline, and the likelihood of those projects promoting economic growth in the immediate future. Moreover, USCIS may consider any reasonable, temporary delays, such as natural disasters or litigation, which may have prevented the regional center from promoting economic growth in a timely manner, and any alternative plans or actions taken as a result of unexpected delays. This flexibility, however, is not an open-ended allowance in which the regional center can indefinitely explore potential projects or remain stagnant on either a hypothetical or actual plan.” See RC Designation: Use it or lose it )
  • IPO checks the numbers and claims reported in the I-924A against other info that it has on file for the RC, and red flags any inconsistencies
  • IPO performs an Internet search and searches internal databases looking for derogatory information related to the RC and its projects and principals
  • IPO investigates the RC’s online presence (the RC’s website, online content from agents and promoters) and looks for any impropriety. IPO particularly looks for use of the DHS seal or USCIS signature; any claims about guaranteed returns, guaranteed approvals, or expedited treatment of petitions; and any language (including entity names) that implies a special relationship with USCIS, DHS, or the US government. Keep in mind Cautions on Names of Regional Centers and Enterprises, and Unauthorized Use of DHS Seal.
  • IPO will issue a Notice of Intent to Terminate if the RC fails to submit required information, or if IPO determines based on its I-924A review that the RC no longer serves the purpose of promoting economic growth, and no longer remains eligible for designation. 70 RC have been terminated so far (54 in 2015/2016 alone), so this is not an idle threat.

(My sources: EB-5 stakeholder meetings on 8/13/2015, 9/17/2015, 2/3/2016; AAO termination appeals in 2015 and 2016; and FOIA material)

A regional center that hasn’t been active and doesn’t see future prospects may consider taking this chance to proactively withdraw from the program, instead of waiting to be terminated.  The recent Fee Rule says that “A regional center may elect to withdraw from the program and request a termination of the regional center designation. The regional center must notify USCIS of such election in the form of a letter or as otherwise requested by USCIS. USCIS will notify the regional center of its decision regarding the withdrawal request in writing.”

Final Fee Rule, Processing Updates, RC Withdrawal

Today the Federal Register published U.S. Citizenship and Immigration Services Fee Schedule, a final rule adjusting the fees required for most immigration applications and petitions. USCIS invites stakeholders to participate in a Fee Rule Engagement teleconference on November 2, 2016 from 3:30 to 4:30 PM EST. (To register, click on the USCIS registration page.)

The final rule is similar to the proposed rule that we reviewed this summer, with the addition of DHS response to public comments. Here are the portions of the rule particularly significant to EB-5 (summarized from PDF pages 17-20, 30-31, and 41 of the final rule).

Fee Increases

EB-5 petitions and applications become more expensive to file as of December 23, 2016.
newfees
The fee increase for Form I-924 is especially drastic, and I’m surprised to discover that USCIS apparently did not hear public feedback on its two most obvious problems: that it was assessed based on inaccurate assumptions about regional center revenue, and that it will discourage regional centers from voluntarily using I-924 to file the amendment requests and Exemplar I-526 that USCIS wants to encourage. IIUSA and AILA – did you drop the ball on commenting, or did USCIS just not pay attention? But the rule is final now, so we live with it. And Regional Centers, you might want to hustle to file any exemplars and amendments before December 23.

Processing Issues

  • The rule does not promise that fee increases will bring improved service for EB-5 petitions. The rule states that higher fees will be used to recover costs needed to sustain current operating levels, pay a share of services that DHS provides on a fee-exempt basis to others, bolster IPO’s fraud detection and national security capabilities, and make limited investments in technological improvements to bolster information security. These uses have merit, but none are directly linked to improved EB-5 processing times. But the rule does claim that the new I-924 fee “was, in part, calculated to allow USCIS to hire additional staff to process Forms I–924 and provide better and more thorough service.”
  • The rule includes in passing this interesting tidbit on how IPO currently handles I-829 adjudications:

DHS appreciates the suggestions for improving EB–5 processing times. DHS clarifies that USCIS already has processes in place to streamline adjudication of the business-related portions of multiple Forms I-829 associated with a single, new investment project. Specifically, when USCIS receives a regional center-associated Form I–829 that involves a new commercial enterprise, USCIS reviews the first two petitions associated with that new commercial enterprise to determine if there are specific project-related issues that would apply to all petitioners associated with the new commercial enterprise. After completing that review, USCIS commences adjudication of all Forms I–829 associated with that new commercial enterprise filed within a given period. Similarly, when USCIS receives a regional center-associated Form I–829 that involves a previously reviewed commercial enterprise, USCIS immediately assigns that petition for adjudication. In other words, USCIS currently adjudicates Form I–829 petitions in ‘‘first in, first out’’ order by new commercial enterprises.

  • The rule gives the welcome news that “USCIS is transforming how it calculates and posts processing time information to improve the timeliness of such postings, but more importantly, to achieve greater transparency of USCIS case processing.” To that end, “USCIS is evaluating the feasibility of calculating processing times using data generated directly from case management systems, rather than with self-reported performance data provided by Service Centers and Field Offices” and “USCIS is also considering publishing processing times using a range rather than using one number or date. This approach would show that, for example, half of cases are decided in between X and Y number of months.” (Or, as Sir. Humphrey Appleby might say: of course we understand that you want a usable processing report, and have convened an interdepartmental committee to conduct a feasibility study that will make recommendations at the appropriate juncture, in due course, when the moment is ripe, in the fullness of time. Rome wasn’t built in a day.)
  • The rule says that “USCIS does not have immediate plans to allow electronic filing for EB–5 requests, but appreciates commenters’ desire to avoid voluminous paper filings. USCIS plans to allow electronic filing for EB–5 requests in the future.”

Regional Center Withdrawal Procedure

The rule recognizes the problem that “Currently, there is no procedure for regional centers seeking to withdraw their designation and discontinue their participation in the program,” and offers to provide a withdrawal procedure to “allow a regional center to proactively request withdrawal without the need for the more formal notices sent out by DHS.” To this end, the rule amends the EB-5 regulations, replacing 8 CFR 204.6(m)(6) with the text I quote below. The new language is similar to the previous 8 CFR 204.6(m)(6) except that it adds failure to pay fees as a reason for termination and adds a rather vague paragraph stating that a regional center may notify USCIS by letter or other means if it wishes to withdraw from the program. The paragraph does not clarify what the letter should include, where it should be sent, what kind of decision USCIS has to make about the letter, and to what extent such a regional center will be treated differently from another whose designation is terminated involuntarily.

PART 204—IMMIGRANT PETITIONS
■ 8. Section 204.6 is amended by revising paragraph (m)(6) to read as follows:

  • 204.6 Petitions for employment creation aliens.

* * * * * (m) * * *
(6) Continued participation requirements for regional centers.
 (i) Regional centers approved for participation in the program must:

(A) Continue to meet the requirements of section 610(a) of the Appropriations Act.

(B) Provide USCIS with updated information annually, and/or as otherwise requested by USCIS, to demonstrate that the regional center is continuing to promote economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment in the approved geographic area, using a form designated for this purpose; and

(C) Pay the fee provided by 8 CFR 103.7(b)(1)(i)(XX).

(ii) USCIS will issue a notice of intent to terminate the designation of a regional center in the program if:

(A) A regional center fails to submit the information required in paragraph (m)(6)(i)(B) of this section, or pay the associated fee; or

(B) USCIS determines that the regional center no longer serves the purpose of promoting economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment.

(iii) A notice of intent to terminate the designation of a regional center will be sent to the regional center and set forth the reasons for termination.
(iv) The regional center will be provided 30 days from receipt of the notice of intent to terminate to rebut the ground or grounds stated in the notice of intent to terminate.
(v) USCIS will notify the regional center of the final decision. If USCIS determines that the regional center’s participation in the program should be terminated, USCIS will state the reasons for termination. The regional center may appeal the final termination decision in accordance with 8 CFR 103.3.
(vi) A regional center may elect to withdraw from the program and request a termination of the regional center designation. The regional center must notify USCIS of such election in the form of a letter or as otherwise requested by USCIS. USCIS will notify the regional center of its decision regarding the withdrawal request in writing.

Visa Usage, GAO TEA Report, RC List Updates

Visa Usage
Here is a chart that visualizes how EB-5 fits into the big picture of U.S. immigration. The main chart is lifted from a New York Times article this week that discusses immigration levels. I added the box with detail on numerical limits within EB preference visas.
greencards
It’s worth gazing at this chart and considering how we feel about the allocations. The pie is unlikely to get larger: the message I hear from Washington is that no one has the political will to push for a greater total number of immigrants to the U.S. The pie  could be divided differently, if Mr. Trump or Ms. Clinton gets a chance to make comprehensive immigration reform happen. EB-5 is currently limited to barely 1% of the annual total (7.1% of the EB category), and EB-5 investors get still fewer numbers since they share the allocation with family members. This wasn’t a problem for years when the program didn’t really work, but now is a shame as EB-5 is working overtime and thousands of people eager to invest in US business and bring their resources to the US are stuck in years-long waiting lines. (For sobering figures on wait times, and thoughts about how to alleviate the problem, see the slides from Symposium on EB-5 Visa Usage at the IIUSA EB-5 Industry Forum October 2016.) The employment-based category as a whole is bursting at the seams as it tries to accommodate needs from health care to Silicon Valley with only 15% of total visas, so EB-5 stakeholders aren’t the only ones agitating strongly and loudly for a better piece of the pie. As the New York Times points out, the current legal immigration system prioritizes family reunification over employment-based preferences. Mr. Trump says he wants “to choose immigrants based on merit, skill and proficiency” (so far so good for EB-5, though his idea of reducing total immigration could pull the rug from under EB-5 visa numbers), while Ms. Clinton’s immigration platform keeps the focus on families. One or the other will probably get elected next month, and we’ll wait with bated breath to see what happens next with immigration. Maybe either will solve the problem by reducing the likelihood that a million sensible people a year will even want U.S. immigrant visas. (FYI: my chart and NYT’s chart aren’t exactly in parallel, since theirs shows percentages used in a given year while mine shows numerical limits — percentages that may not match actual usage in 2014.)

GAO Report
The Government Accountability Office has another EB-5 report, this one titled Immigrant Investor Program: Proposed Project Investments in Targeted Employment Areas (September 19, 2016). The report is addressed to Senators Grassley and Leahy and Representatives Goodlatte and Conyers, and responds to their request for information on EB-5 projects in recent I-526 petitions, specifically “(1) proportion of petitioners that did or did not elect to invest in a TEA; (2) proportion of petitioners basing a high unemployment TEA on various types of geographic areas; and (3) EB-5 investment as a proportion of the total investment in petitioners’ TEA projects.” GAO answers these questions with statistics from a random sample of 200 I-526 petitions filed in FY2015 Q4. The report will interesting for people who don’t already know where most EB-5 money goes, in terms of geography and industry, and how EB-5 normally fits into a project’s capital stack. The report is a gift to journalists itching to write a headline with “gerrymandering” in the title (though it also indicates that the majority of combined-census-area TEAs are actually quite small areas, comprising fewer than 11 tracts). I’ve gathered that Grassley et. al.’s ideal EB-5 project is a business with no non-immigrant funding in a thoroughly blighted Midwestern town, and the GAO report reflects the fact that indeed few EB-5 petitioners have chosen such projects. Of course TEA incentives are only one factor in this reality. Market factors also determine the kind of project that entrepreneurs are willing to undertake and investors are willing to fund. But the GAO report will inform the talks on EB-5 legislation that need to resume before December 9.

Regional Center List Updates
Additions to the USCIS Regional Center List, 9/16/2016 to 10/03/2016:

  • Eagle EB-5 Regional Center (California)
  • McCormick Regional Center LLC (Washington)
  • NY Entrepreneurs Fund, LLC (Connecticut, New Jersey, New York)

Restored to list of approved RCs (apparently removed by mistake last week):

  • Benefield California Regional Center, LLC (California)
  • HS Regional Center, LLC (California)
  • SAA Cedisus EB-5 Projects – SW Indiana Regional Center, LLC (Indiana)
  • Western Energy Regional Center (Oklahoma)

Renamed:

  • American Islands Regional Center (former name United States Virgin Islands Regional Center) (U.S. Virgin Islands (USVI))

New Terminations:

  • Northern Illinois Regional Center (Illinois) Terminated 10/16/2016
  • Arizona Alternative Energy Center, LLC (Arizona) Terminated 10/6/2016
  • Detroit Immigrant Investor Regional Center (Michigan) Terminated 9/30/2016
  • Yellowstone Montana Regional Center, LLC (Montana) Terminated 9/28/2016

H.R. 5992 Account Transparency Requirement

The Account Transparency Requirement proposed in Goodlatte and Conyers’ H.R. 5992 American Job Creation and Investment Promotion Reform Act of 2016 (see pages 64-72) is probably the most important new idea in the bill. Commentary on the bill has focused on suggestions that people don’t like (retrogression, set-asides), but we should also be discussing account transparency because it’s genuinely relevant to program integrity. I don’t see national security threats in EB-5, but misappropriation of funds shielded by lack of transparency is a live problem — the major factor in most SEC enforcement actions so far on EB-5 offerings.  H.R. 5992 may not become law, but any EB-5 bill that does get passed will certainly have the words “reform” or “integrity” in the title, and we should be working to refine relevant and effective integrity provisions.  Let’s consider H.R. 5992’s account transparency proposal, the impact it would have if enacted, and how it might be improved.

Summary of the Account Transparency Requirement Proposed by H.R. 5992

  1. A new commercial enterprise (NCE) must place each EB-5 investor’s funds in a “separate account” with the following characteristics:
      • The account contains only pooled investment funds of EB-5 investors for a single project
      • The account is at an insured US financial institution
      • At least one signatory on the account is an independent third party with a position such as a bank officer, broker-dealer, attorney, or CPA

    A job-creating enterprise that’s affiliated with the NCE must likewise hold investor funds in a separate account satisfying the above requirements. The proposal does not place requirements on accounts for an unaffiliated JCE.

  2. Funds may only be transferred out of the NCE account for one of the following purposes:
    • Refund an investor’s investment
    • Transfer to another account that also meets the above qualifications for a separate account
    • Transfer to a job-creating entity
    • Deploy funds in the project for which they were intended
  3. The following oversight and reporting is required:
    • Whenever the NCE accepts investor funds into its account, it must immediately send a notice to the investor, the regional center, and USCIS that contains this account information: contact info for the financial institution, the name of the independent signatory, and access to view the account balance online on an on-going basis.
    • Whenever the NCE transfers funds out of the NCE account, the transfer must have prior written approval from the independent signatory, and the NCE must immediately send a notice to the investor, the regional center, and USCIS that specifies the amount and destination of the transfer.
    • When an affiliated JCE deploys funds into a project, the independent signatory or another attorney, broker-dealer, or CPA has 30 days to “verify that the funds were deployed in the project for which they were intended,” and notify the investor, regional center, and USCIS accordingly.

Analysis and Links

I wrote up some thoughts on the AT proposal, but I’m demoting them to a comment on this post because I’m more interested in what other people think. What’s the perspective from lawyers who specialize in securities law issues? How would H.R. 5992’s Account Transparency Requirement work for large NCEs that already implement fund administration and independent fiduciaries? How would it work for small businesses using EB-5, and direct EB-5 cases? Do investors and their advisors see effective protections in this proposal? What’s the perspective from regulators and receivers working to sort out past misappropriation cases? How could the AT proposal be better directed toward the ultimate account transparency goals of deterrence, detection, and discovery and recovery? What are the best protections we can afford, for investors and for the healthy future of the program?

Articles on H.R. 5992 Account Transparency Requirement

  • Gary Friedland and Jeanne Calderon of NYU have started the conversation with a detailed analysis of the H.R. 5992 Account Transparency Requirement in “EB-5 2.0: Can Account Transparency Save the Program?”  (October 6, 2016 draft). They describe the background that underlies the need for an AT requirement, unpack the H.R. 5992 proposal point by point and discuss its goals and implications, and suggest areas for further discussion and improvement. A few of my takeaways from the article and subsequent emails with Dr. Friedland: For improved effectiveness, the AT proposal might further define the role and duties of the third party signatory and verifier, bolster account transparency by adding account balance reconciliation to the Regional Center’s Form I-924A annual report, consider expanding the scope of reports to be provided to investors in an NCE (e.g. quarterly account statements, notice of transfer of funds from other investors in the NCE, a copy of the Regional Center’s Form I-924A filing), and craft AT requirements for the special cases of small EB-5 projects and direct EB-5.
  • I hope to link to other topical articles here soon.

Other relevant content

  • Assuming that the people drafting the H.R. 5992 Account Transparency Requirement were primarily motivated to avoid another Jay Peak situation, I made a chart (as best I could, based on detail in the legal complaints and news reports) that illustrates how and where exactly money got misappropriated in a Jay Peake project. Here is my simplified chart of where the money went (or see Vermont DFR for the complete, complicated picture). In my chart, related party transactions, single signatories, and multiple layers in the flow of funds stand out as fault lines. The chart also shows why it’s necessary to do more than watch funds safely out the door of the NCE account.
  • Angelo Paparelli’s article All Checks but No Balances — The Systemic Failure to Protect EB-5 Investors (June 24, 2016) diagnoses a lack of meaningful oversight in EB-5 and defines a role for independent fiduciaries representing investors.
  • Ron Klasko’s article Attention Receivers and Litigators: EB-5 Investors Are Not Your Typical Clients (July 11, 2016) addresses the unique position and interests of EB-5 investors when problems arise in an investment project.
  • The EB5 Diligence webinar on Structural Weaknesses in Path America’s Offering (September 12, 2015) considers controls and procedures that might have averted the self-dealing and misappropriation that happened in the Path America case. The discussion is important because it could apply as well to other SEC EB-5 actions, most of which similarly involve related-party scenarios.

RC program extension to 12/9, reauthorization history, new RCs

Regional Center Program Authorization
The regional center program has been reauthorized through December 9, 2016 as part of the Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act signed today by the President. I held off on reporting this because I couldn’t find RC program reauthorization in the bill. But IIUSA assures me that they’ve gotten confirmation from multiple Congressional offices that RC program extension is in Division C (p. 125-127), so we’ll go with it. (UPDATE: If you’d like the detail, here are emails I received from a couple kind attorneys who explain how the language works. See also the article Congressional Research Service Analyzes Validity of EB-5 Program Extension.) The extension gives only a very short reprieve. Lawmakers are now leaving Washington and won’t be back until November 14, leaving just a few weeks to figure out what comes next — or (probably more likely) to redeploy short-term measures to defer substantial lawmaking to the next Congress.

For reference, I’ve compiled a timeline of regional center program legislation to date. Notice the varying authorization periods, the fact that new legislation has usually been finalized nearly on and sometimes after the sunset date, that RC program extension has usually been part of appropriations legislation, and that previous program extensions have been associated with few to no program changes.
rctimeline

  • 11/29/1990 – EB-5 is established as part of an immigration act (PL 101-649)
  • 10/6/1992 – RC program is established as a pilot within EB-5 and authorized for five years as part of an appropriations act (PL 102-395)
  • 11/26/1997 – RC program is authorized for an additional two years (with one small change) as part of an appropriations act (PL 105-119)
  • 10/30/2000 — RC program is authorized for an additional three years (with a couple small changes) as part of immigration-related legislation (PL 106-396)
  • 11/2/2002 – Significant changes are made to EB-5 as part of an appropriations act, but no change to the RC program sunset date (PL 107-273)
  • 12/3/2003 – RC program is authorized for an additional five years (with a few small changes) as part of standalone EB-5 legislation (PL 108-156)
  • 9/30/2008 – RC program is extended unchanged to 3/6/2009 as part of a continuing resolution (PL 110-329)
  • 3/11/2009 – RC program is extended unchanged to 9/30/2009 as part of an appropriations act (PL 111-8)
  • 10/28/2009 – RC program is extended unchanged to 9/30/2012 as part of an appropriations act (PL 111-83)
  • 9/28/2012 – RC program is extended (with one small change) to 9/30/2015 as part of immigration-related legislation (PL 112-176)
  • 9/30/2015 – RC program is extended unchanged to 12/11/2015 as part of a continuing resolution (PL 114-53)
  • 12/8/2015 – RC program is extended unchanged to 9/30/2016 as part of an appropriations act (PL 114-113)
  • 9/29/2016 – RC program is extended unchanged to 12/09/2016 as part of a continuing resolution (PL 114-223)

To be continued….(Note that Googling the PL number will readily bring up the legislation, and in most cases you can locate the RC program reference in the document by searching for 610(b).) We hope that the regional center EB-5 will eventually have the stability of a permanent program.

Regional Center List Changes

Additions to the USCIS Regional Center List, 09/12/2016 to 9/16/2016

  • American Southern Regional Center, LLC (Georgia)
  • California Bohong Premier Regional Center, LLC (California)
  • KCI Capital Limited (Colorado)
  • TLQ Partnership, LLC (California)
  • TriHaven Investment Group LLC (California)

Mysteriously re-added to the approved regional center list, though they’re also still listed on the page for terminated regional centers

  • Path America KingCo, LLC (Washington)
  • The Lawrence Economic Development Corporation (Ohio)

Removed from the regional center list (but not listed as terminated)

  • DC Partners Regional Center (Texas)
  • FP Advisors LLC (Colorado)

Regional center terminations:

  • American EB-5 Centers (Florida) Terminated 9/28/2016
  • Virginia Center for Foreign Investment and Job Creation (Virginia) Terminated 9/29/2016