Reauthorization, Country Caps, S.2540, Visa Bulletin

Since last writing, Congress gave the regional center program another short authorization, the Fairness for High-skilled Immigrants Act almost passed the Senate, Senators Grassley and Leahy introduced a new piece of EB-5 legislation, and the Visa Bulletin offered a surprise window for Indians and Vietnamese to file I-485 regardless of priority date. I’ve had to hop, trying to keep my Washington Updates page up-to-date.

On Friday President Trump signed H.R. 4378, a continuing resolution that keeps the government funded and the regional center program authorized through 11/21/2019 —  or until the next funding bill or (more likely) the next short-term continuing resolution. The history of regional center program authorization now looks like this.

The regional center program needs the stability of a long-term authorization — something it hasn’t gotten since 2012. So far as I know, IIUSA and EB5 Coalition are still marching in lockstep and arm-in-arm over a consensus wish list for legislation that combines long-term authorization with an investment threshold lower than what was set in 1990, a neutered TEA incentive, and a TEA set-aside provision to set aside visas for incoming investors at the inevitable cost of reducing visas available to past investors. Meanwhile, last week Senators Grassley and Leahy announced proposed EB-5 legislation that does not appear to have benefited from any EB-5 industry input. S.2540 – A bill to reauthorize the EB-5 Regional Center Program in order to prevent fraud and promote and reform foreign capital investment and job creation in American communities is an updated version of the EB-5 Reform Acts associated with Senator Grassley’s office since 2015. Unlike previous versions, the new bill does not treat investment amounts or TEA designations. It does attempt to define measures that would improve the integrity and security of the EB-5 program. I admire the intention, but wish that Senator Grassley’s office had consulted with anyone who knows EB-5 in practice. If S.2540 passed, it would sweep almost everyone out of EB-5 except a few big-city regional centers (the only ones who could afford the swathes of new red tape and fees proposed) and direct EB-5 (whose existence the bill apparently forgot). That’s not Senator Grassley’s objective. If I had more time, I would write an analysis for Grassley’s office to explain where and how the S.2540 proposals depart from their intent, and suggest fixes that would better support the laudable accountability and transparency goals. Even better if this task could be done cooperatively by the EB-5 industry. But it seems that industry has decided to put all its marbles in the hope of no-compromise backroom deals.

Speaking of a few billionaires trying to cut deals, the Fairness for High-skilled Immigrants Act keeps coming back in the Senate. As of today the bill is blocked by Senator Durban, Senators Grassley, Paul, and Purdue having been talked out of their opposition. The funding bill process offers another possible opportunity to get the legislation passed on the down-low, tucked into a thousand-page omnibus. Unfortunately I can’t find anyone but Breitbart to keep me informed about developments. (I record what I hear of the various versions and actions in this post.) If the Fairness for High-skilled Immigrants Act can pass the Senate and get signed by the President, then there would be no more country cap on EB visas. That means the people already in line for an EB-5 visa – somewhere around 70,000 – would simply receive visas in order by priority date, regardless of nationality. With 10,000 EB-5 visas available per year, that means about 7 years to issue visas to everyone already in line, and 7+ years for any new investors to get a visa. That would be more than fair to the Chinese in line, who invested under a country cap that promised 10+ year visa waits. It would be less than fair to people born elsewhere, who invested under a country cap that promised little to no visa wait.  The bill offers to protect people already in the visa queue by saying that no one with an approved immigrant petition shall receive a visa later than that person would otherwise have received a visa under previous rules. However, that doesn’t help EB-5 because most of the non-China backlog is still stuck in slow I-526 processing, and thus does not yet have petition approvals that would protect them. The EB-5 industry has been nearly silent on this legislation, thanks to interests divided between China and the rest of the world. The industry will collapse if the bill passes, with new EB-5 demand quelled by the threat of a worldwide 7+year wait to conditional permanent residence.

I made a couple charts to assist in visualizing the impact of the Fairness for High-skilled Immigrants Act. To estimate how many years a given priority date would need to wait for a visa under the act, just add up the number of applicants with earlier priority dates, and divide by 10,000. (The latest version of the legislation has no transition period for EB-5.) To estimate how many people would be retroactively affected if the Fairness for High-skilled Immigrants Act becomes law, look at the number of applicants represented on petitions still pending at USCIS. (These charts are rough estimates starting from data by country and priority date published by USCIS and DOS as of October 2018, and that I updated with estimates based on worldwide I-526 and visa data since then. I guess the charts may be undercounting by about 10,000. As a reminder, my EB-5 Timing Page collects all the data to which I have access.)

At least there’s one bit of happy news for past investors. USCIS announced that in October 2019, applicants from Vietnam and India who are living in the U.S. and have I-526 approval can file I-485, regardless of priority date. The Visa Bulletin has two charts for EB visas: Chart A Final Action Dates and Chart B Dates for Filing. USCIS has agreed to use the Dates for Filing cart in the October 2019 Visa Bulletin, and all countries except China are Current in that chart.  This doesn’t necessarily affect the total time to actually get a visa, but having the I-485 filed brings significant benefits.

The USCIS AOS page explains that it opens Chart B “If USCIS determines there are more immigrant visas available for a fiscal year than there are known applicants for such visas.” The fiscal year starts in October with 700 visas available each to Vietnam and India, and apparently there aren’t yet 700 people ready yet to take those visas. No wonder, when USCIS is only advancing about 200 worldwide I-526 petitions a month. As illustrated in the above chart, much of the effective line for EB-5 visas is still stuck in USCIS processing.

FY2019 Q3 EB-5 Forms Processing Data

In her talking points for the EB-5 Modernization Stakeholder Call (September 9, 2019), Investor Program Office Chief Sarah Kendall made the following statement regarding processing times.

  1. IPO UPDATES AND PROCESSING TIMES

USCIS continues to process applications from regional centers and petitions from immigrant investors in a manner that strives to ensure timely adjudication while maintaining program integrity.

Over the past few years, IPO has been working diligently to reduce processing times by onboarding additional personnel, resulting in adjudicating more than 14,900 Immigrant Petitions by Alien Entrepreneur (Form I-526) in fiscal year 2018, which was an approximate 69% increase over the average completions for the previous five fiscal years.

During fiscal year 2019, the sunset of the Regional Center program during the last part of December and through most of January, cost IPO adjudicative time even after the program was reauthorized. IPO was forced to pivot to stand alone petitions and I-829 work and halted production on I-924s and I-526s associated with a Regional Center.

Additionally, IPO has taken significant steps in building more robust quality assurance and control programs to better ensure consistent adjudication practices, including conducting an extensive training session for all I-526 adjudicators and economists.

These reasons, along with temporary assignment of some staff to other agency priorities, have resulted in longer processing times, which you may have noticed with the May update to our online processing times.

These talking points do not suggest a crisis. The statement leads by emphasizing strong performance in 2018, and attributes the “longer processing times” that we “may have noticed” in 2019 to temporary factors: the few-week lapse in regional center authorization in December/January, a training session, and temporary reassignment of staff. There’s no suggestion of a major and persistent problem.

USCIS has now published FY2019 Q3 processing data for EB-5 forms on the Immigration and Citizenship Data page, and the numbers are concerning.

  • IPO is approving dramatically fewer I-526 than ever before:
    • Completion rates for I-526 have fallen 63%, comparing FY2019 with FY2018 year-to-date.
    • In FY2019 Q3, IPO processed fewer I-526 than ever before in its history – only 579 completions for the whole quarter, as compared with 3,000-4,400 completions per quarter last year.
    • In FY2019 Q3, a record number of I-526 decisions were denials — 42%. The average I-526 denial rate is 20% in FY2019 YTD, as compared with 9% in FY2018 YTD.
  • IPO is processing dramatically fewer forms in total than ever before:
    • Completion rates across EB-5 forms (I-526, I-829, I-924) have collectively fallen 59%, comparing FY2019 with FY2018 year-to-date. This demonstrates that IPO is not merely reallocating resources internally, but has become less productive across the board.
    • In FY2019 Q3, IPO processed more I-829 than in the previous quarter, but still a low volume – lower than average 2017/2018 performance for I-829.
    • Both IPO and the industry seem to have given up on I-924, with just a few handfuls of I-924 receipts and completions in the last two quarters. (And no wonder, when the current Processing Times report indicates that an I-924 is only considered “outside normal” processing after 90 months.)
  • Reduced performance combined with backlogs threaten long processing times.
    • FY2019 Q3 processed 579 Form I-526, and ended the quarter with 13,070 pending I-526. If IPO were to continue at the same processing volume, then the pending I-526 would take 13,070/579=23 quarters=5.6 years to process. If IPO had kept up (or can soon return to) last year’s volume of 3,000+ completions per quarter, then the same backlog would take just one year to process.
    • FY2019 Q3 processed 613 Form I-829, and ended the quarter with 9,295 pending I-829. If IPO were to continue at the same processing volume, then the pending I-829 would take 9,295/613=15 quarters=4.8 years to process.
  • The processing crisis at IPO is reflected in every quarter so far of FY2019, with each quarter worse than the last, and all together much worse than IPO’s performance from 2015 through 2018. I very much hope that the contributing factors are temporary, as Sarah Kendall suggested. I wish that she’d mentioned any expectation or intent to improve any time soon — at least to previous performance levels. Otherwise, one’s left to suspect an unspoken reason: that IPO has a new policy to maximize time spent per petition. But that would be a terrible move for program integrity. Long processing times benefit fraudsters, who can flourish in the expectation of years before USCIS gets around to reviewing investor petitions and catching the fraud. The worst harm and deterrent from long processing times falls on the best users — projects that genuinely need EB-5 investment and care about their investors. I hope that USCIS recognizes this important integrity issue, and soon improves — at least returning to the performance levels achieved in recent years.
  • Meanwhile I-526 receipts remain low, with the pre-regulations surge not in evidence yet as of June 2019.

For links to previous articles on processing data, see my EB-5 Timing Page.

Reauthorization by CR

The Regional Center program is currently authorized through September 30, 2019 as part of 2019 appropriations. We depend on Congress to pass a 2020 appropriations bill that continues to carry regional center authorization. As usual, Congress has not yet figured out government funding for the new year, so there will be another one or more Continuing Resolutions to extended 2019 appropriations and defer the deadline. Today, the House passed H.R. 4378, which defers the expiration of government funding (and incidentally the regional center program sunset) to November 21, 2019 (or until there’s a new appropriations bill, whichever comes fist.) The measure now goes to the Senate, which will vote on it next week. Since the Senate has not come up with any alternative, I assume that the bill will pass, the government will not shut down, and the regional center program will remain authorized for now. When the reauthorization is passed, then final action dates for regional center EB-5 categories will no longer be “unavailable” in the October Visa Bulletin. (See Visa Bulletin Section D for an explanation.)

November 21, 2019 also happens to be the date for new EB-5 regulations to take effect, but I assume that Congressional appropriators were thinking about Thanksgiving vacation, not minor regulations, in choosing the date. And if history is any guide, there may be another CR with a new short-term deadline passed before November 21. And possibly a series of CRs.

Here, FYI, is the daisy chain of language related to regional center program authorization.

  • H.R. 4378 (p. 3-4, 7) “The following sums are hereby appropriated… namely: Such amounts as may be necessary…for continuing projects or activities… that are not otherwise specifically provided for in this Act, that were conducted in fiscal year 2019, and for which appropriations, funds, or other authority were made available in the following appropriations Acts: … (6) … title I of division H of Public Law 116–6…Unless otherwise provided for…  authority granted pursuant to this Act shall be available until whichever of the following first occurs:  (1) The enactment into law of an appropriation for any project or activity provided for in this Act. (2) The enactment into law of the applicable appropriations Act for fiscal year 2020 without any provision for such project or activity. (3) November 21, 2019
  • This language refers back to Public Law 116-6 Division H, Title 1 (PDF page 463) which has current regional center program authorization in this sentence: “Section 610(b) of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note) shall be applied by substituting ‘September 30, 2019’ for ‘September 30, 2015.’”
  • This language refers back to Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (Public Law 102-395) Section 610(b) (PDF page 47), which originally established the regional center program.

9/9 EB-5 Stakeholder Non-Engagement

In today’s EB-5 Immigrant Investor Program Listening Session:

  • IPO Chief Sarah Kendall made a statement that sounded promising in outline (IPO Overview, IPO updates, and comments on implementation of the proposed rule) but that proved insubstantial and unhelpful in fact. The statement was in very general terms, with no specific answers to the specific questions that I at least submitted in advance. Even the single data point — that IPO has 212 dedicated staff as of July 2019 — was unhelpful as Kendall never specified whether these staff are actually working on EB-5, or among those on “temporary assignment to other agency priorities.” The statement then wasted time by regurgitating what’s written in the regulation without telling us anything specific about how IPO interprets or plans to implement the regulation. This ungenerous statement will eventually get posted online. (UPDATE: here it is.)
  • Stakeholders, having been invited before the call to submit written questions that USCIS chose not to answer, were then further invited to press *1 and ask questions live for USCIS to not answer. I do not understand what this was supposed to accomplish. Why have a call at all, if it’s to be like this? The only reason to have a live engagement, instead of just soliciting email input, is if there’s going to be any engagement. There was zero engagement in this call.

USCIS said so little that I must resort to analyzing what was not said. If USCIS had any hope of turning around the catastrophically long and continually worsening processing times, which must have occupied at least half the advance questions, wouldn’t they have expressed such hope or at least intent? If USCIS knew how they would implement the priority date retention and TEA designation process in the new regs (likely the other half of advance questions) wouldn’t they have said something helpful on these topics? But the call offered no such support or encouragement.

Here is my recording of the call. I do not recommend it.