EB-5 roller coaster continues (RC status after December 29, processing, FY2023 visas, EAGLE Act and country caps)

While my plate is full of everyday work plus hard articles that could be written, I’d like to briefly flag a few matters of critical importance for the EB-5 community. There are questions about the status of previously-approved regional centers and their investors, ongoing processing issues, and the prospect of new legislation to change everyone’s visa wait times. Before launching into details, a reminder that industry associations like IIUSA (for regional centers) and AIIA (for investors) are working on these issues, and you can join an association to help magnify your voice and interests in these volatile times.

Regional Center Status after December 29

USCIS finally published minutes from the October 14, 2022 meeting between USCIS and the plaintiffs in the Behring litigation. These minutes reveal that at least as of October, USCIS had yet to make up its mind about a few very consequential questions, and invited stakeholder feedback.

• USCIS has not yet decided whether it will take the position that RIA requirements, such as fund administrators and audits, apply to pre-RIA projects. USCIS will consider stakeholders’ written position paper on this issue in accordance with existing channels of communication and in compliance with Section 107 of the RIA.
• USCIS will accept input on the issue of whether the I-956G filing requirement should be deferred to December 2023 based on input from Stakeholders that much of the information is duplicative with the I-956 being filed in December 2022. Input will be provided in accordance with existing channels of communication and in compliance with Section 107 of the RIA.
• USCIS has not determined what will happen to regional centers that choose not to file Form I-956. Specifically, it has not decided whether such regional centers will be terminated, whether they will have to file I-956H, whether they will have to file annual statements, or whether any of the RIA requirements apply to them. They will accept our written position paper on these issues in accordance with existing channels of communication and in compliance with Section 107 of the RIA.

That last bullet point is especially urgent and significant. The Form I-956 content is focused on compliance for capital raising activities, and as such not technically relevant for previously-approved regional centers that do not plan to raise new EB-5 capital going forward. But what if USCIS decides to terminate all regional centers who do not choose to raise new EB-5 funds? If USCIS starts terminating regional centers for not filing I-956 by December 29, 2022, instead of offering another status for RCs still responsibly shepherding previous EB-5 investment, then past investors in those RCs will find their immigration status in jeopardy. Under the new law, regional center termination means that good faith investors in the terminated regional center lose eligibility in 180 days unless (1) the investor’s NCE manages to switch sponsors and secure affiliation from a different still-authorized regional center (practically a fraught and expensive undertaking) or (2) the investor makes a new investment (yikes). Under the new law, regional center termination has consequences for investors at all stages in the process, including during conditional permanent residence.  The grandfathering language in the new law protects past applicants from denials based on the expiration of regional center program authorization, but not explicitly from denials based on changes resulting from new legislation. So USCIS faces judgement calls when it comes to how to treat previously-approved regional centers and their investors, and should hear our input for those judgement calls. (To review the new law provisions, see INA 203(b)(5) sections (M) and (S). And here’s the Settlement Agreement.)

The plaintiffs in the Behring litigation are coordinating response to USCIS. Their feedback will naturally reflect their interests and perspective as regional centers who do choose to file I-956 to raise new capital going forward. If you’re with an RC that does not plan to raise new capital after RIA, and concerned about protecting past investors, you should also let USCIS hear your voice and reasoning, as soon as possible. The stakes are very high. See the base of this page for links to accepted channels of communication for submitting feedback. (UPDATE: Klasko Law, counsel for several of the Behring litigation plaintiffs, has just published a detailed article on this topic.)

RIA Compliance Resources

Note that the October 2022 Regional Center Business Journal is packed with substantive and helpful articles for regional centers working with compliance under the new law, including:

• “Checklist of Contents for Regional Center Compliance Policies and Procedures Manual Under the EB-5 Reform & Integrity Act” by the EB-5 Securities Roundtable
• “New Job Creation and TEA Rules in the EB-5 Reform and Integrity Act of 2022 Revised and Explained” by Scott Barnhart and Adam Greene
• “Understanding Audits & Fund Administration Under the Reform & Integrity Act” by Coleen Danaher, Bidhya Dhungel, and Mike Xenick (also a blog post)
• “Regional Center Transactions Post-RIA: Considerations for Purchase, Sale, and/or Rentals” by Rohit Kapuria and Ronald Fieldstone
• “EB-5 Concurrent Filing” by Simone Williams and Charles Kaufman
• ”Who are ‘Promoters’ and What Requirements Apply to Them Under the EB-5 Reform and Integrity Act” by Catherine DeBono Holmes (also a blog post)
• “Reserved Visa Rules, Possible Future Visa Allocation, and Recommendations” by Barnett, Oppenheim, and Lee (also a blog post)

I’m thankful for the hard work by industry. I’ve noted no significant new content on the USCIS website EB-5 pages. The EB-5 Policy Manual EB-5 Chapters 3, 4, 5, and 6 have not been updated yet based on the new law.

Processing and Timing Questions

I continue to update my Processing Data page with intel as I receive it on I-526 and I-829 processing. Pay attention to volume trends, and to the distribution of filing dates being adjudicated.  Since May 2022, the Investor Program Office has stabilized into a new stride of 100-140 decisions per month each for I-526 and I-829, with decisions spanning a wide range of filing dates. At that volume, it will take IPO about eight years to process the already-pending inventory of over 12,000 I-526 and over 11,000 I-829. My best guess for your personal adjudication wait is “probably less than eight additional years,” with the “how much less” depending on your filing date, whether you happen to benefit or suffer from USCIS’s major deviations from FIFO processing, how soon the new adjudicators hired this year/next year can get up to speed, and whether/when IPO gets approval to significantly increase its authorized staffing level.  No one thinks that eight years is an acceptable processing target. But regardless of goals, actual performance is constrained by staffing (which doesn’t change quickly) and by decisions about processing order (which can only improve appearances by manipulating the median, and provide faster times for some at the cost of slower times for others). IPO’s demonstrated incapacity to handle the EB-5 inventory is my top EB-5 concern.

The process for I-526 approvals getting transferred to NVC continues to be problematic. See question 16 (p. 7) of this June 2022 AILA/DOS Q&A for a process to follow if NVC has not received your approval notice and sent you a welcome letter after 60 days.

Visa operations generally are improving, though not back to normal. See the DOS October 21 Update on Worldwide Visa Operations.

FY2023 Visa Availability

Department of State has published Annual Numerical Limits for Fiscal Year 2023. Despite what the EB-5 Reform and Integrity Act said, the published FY2023 annual limit for EB-5 visas is exactly and only 7.1% of the EB limit. The report mentions no carryover of the 6,396 reserve EB-5 visas that went unused in FY2022.  I had wondered what DOS would do with a new EB-5 carryover law that contradicted another part of the INA. It appears that the conflict has not been resolved in EB-5’s favor. It’s a pity, because EB-5 will lose over 10,000 visas by FY2024 if the newly-reserved EB-5 visas both can’t be issued (because strictly restricted to post-RIA applicants who can’t reach the visa stage yet) and also can’t be carried over to the next year (as RIA had contemplated). I’ve encouraged advocates to look into this.

EAGLE Act and Country Caps

Under current law, there’s a country cap of 7% applied to each category of Employment-Based visas. The cap limits any one country to 7% of visas within that category until other countries’ demand under the 7% limit has been satisfied. (I used to assume that the 7% applied to categories as a whole, not subcategories, but Charles Oppenheim recently set me straight. In EB-5, the 7% cap applies independently within each reserve and unreserve visa class, not just to the EB-5 limit as a whole.)

Without country caps, visas within each EB category would simply get issued by priority date, oldest to youngest.

Who benefits from the country cap law, and who would benefit from changing the law to eliminate country caps and let EB visa applicants flow in FIFO order? Country caps protect visa availability for applicants from low-demand countries, while constraining applicants from high-demand countries into enormous backlogs. Big tech companies reliant on EB-2 and EB-3 don’t like country caps, which is why legislation to eliminate country caps has been proposed in Congress continuously since at least 2011. In EB-5, Chinese investors who filed I-526 before 2018 and Indian investors who filed I-526 in 2019-2021 suffer from country caps, while others largely benefit. I’ve written about country cap bills several times over the years and they never passed, but the current version (the EAGLE Act H.R.3648/S.4567) is reportedly actively in play, with a chance to get attached to FY2023 appropriations. And so I’m back with a few comments on the EB-5 effects, in case the legislation does pass.

To understand what a merely-FIFO queue for EB-5 visas would look like, it’s necessary to think about the distribution of the 80,000+ people currently queued up for an EB-5 visa (either already at the visa stage, or on the way at USCIS). The government doesn’t report this valuable intel directly, but I can guess by looking at data for I-526 filings by country and by year, and thinking about where those petitioners must be today based on what I know about petition processing, visa issuance, and the visa bulletin to date. Having estimated the distribution of applicants in today’s queue, I can further project the FY2025 distribution based on what I expect of I-526 processing and visa issuance in 2023 and 2024. I don’t have time to spell out all my thinking on this, but here’s my Excel file of data and calculations.  You’re welcome to download and play with this and apply your own assumptions. (One significant variable is attrition from denials/withdrawals/age-outs, which could reasonably turn out much higher than the value entered in my model.) My best guess is that if Congress acts soon to eliminate country caps, and if the country cap elimination takes effect in FY2025 as proposed, then it will have the following EB-5 effects.

1. Without country caps, the wait times for China-born EB-5 applicants with pre-2022 priority dates will at least have a predictable ceiling, instead of being potentially nearly infinite as is the sad case under country caps plus reserve visas. I estimate that a majority of the Chinese backlog (at least 2016/2017 priority dates) would get visas at least by 2032.
2. Without country caps, applicants from all countries except China with pre-2022 priority dates who don’t already have a visa by FY2025 could wait until 2032 before they can start getting visas. That estimate considers the number of Chinese applicants with pre-2018 priority dates whom I calculate will still be pre-green-card by 2025 (further considering newly-restricted unreserved visa availability and pending rest-of-world demand).  Based on processing trends and factors observable so far, I expect that a significant number of non-Chinese who filed I-526 in 2019-2022 will not have received a visa yet by October 2024 due to slow processing, and thus impacted by country cap removal.
3. Without country cap limits/projections, people filing I-526 or I-526E after 2022 would be advised to invest exclusively in one of the new reserve visa categories (since the unreserved category will be entirely absorbed by the oldest Chinese applicants if unconstrained by country caps). With country caps, on the other hand, new petitioners from some countries other than China and India might be advised to invest outside a TEA to qualify for an unreserved visa, since 7% of 68% is a lot more visas available than 7% of 20%, 7% of 10%, or 7% of 2%.
4. Without country caps to hold back and distribute demand, EB-5 categories will quickly become not-current across the board in the visa bulletin.

People are often surprised that applicants who started the EB-5 process years ago remain vulnerable to changing rules and conditions for visa availability. This is true because of when visas get allocated. Filing I-526 does not lock in access to a visa. Petition approval does not lock in access to a visa. The law and conditions that determine the EB-5 visa allocated are those that pertain at the time the visa is allocated — a time years after investment under current processing conditions. For EB-5 to become a stable program, that needs to change. We need more predictability at the time of investment/I-526 filing about the availability and even existence of the visa that incentivized the investment. The U.S. government should want to avoid bait-and-switch.

Country cap removal keeps being pushed in Congress because Employment-Based visas have a live issue — painful backlogs. So long as country cap victims are suffering in decade and multi-decade long queues, country cap beneficiaries cannot expect to rest easy in an unchallenged status quo. Until backlog problems resolve, we can expect to see civil wars over the insufficient few visas available. I would love to see the U.S. government supply EB-5 visa numbers sufficient to reward the investment-fueled U.S. job creation that already occurred based on the promise of such visas. That would be only fair. As things stand, the United States has raised and benefited from about 15 billion dollars in EB-5 investment over and above what it can justify based on current EB-5 visa number limits.