EB-5 process illustration (Visa Bulletin questions)

The Visa Bulletin exists to provide crowd control for the visa process. But it’s complicated – even for Department of State apparently, as they’re currently over a week late with the November 2020 visa bulletin. What’s happening behind the scenes, as DOS tries to decide what to put in the visa bulletin?

The visa process and timing for EB-5 are complicated by a multi-stage and multi-constraint process. The Visa Bulletin exercises a measure of control by publishing filing and final action dates that help to pace visa demand to match available supply. But knowing supply and demand is not enough to guess the visa bulletin, thanks to other factors at work.

In an attempt to add some clarity, I made a visual to illustrate the stages and constraints that determine what happens with the visa bulletin and EB-5 visa wait times. (This is part of my still forth-coming but belated webinar on China EB-5 visa timing – my apologies to those who have been waiting patiently.)  I hope that this image can help to orient readers and replace a thousand words of explanation.

Points I particularly want to make with this image:

  1. Getting a green card is roughly a two-stage process (first I-526 petition, then visa application), but includes five places where an in-process EB-5 applicant could be at any given time. To estimate visa wait times, which depend on total EB-5 demand, one should count applicants in all five places. For the visa bulletin, which depends on currently-eligible EB-5 visa demand, Department of State just looks at people in four places. DOS does not count pending I-526 for visa bulletin analysis, since this population can’t practically proceed to application filing or final action yet, lacking I-526 approval.
  2. The visa bulletin filing and final action dates serve as constraints to control the flow of people through the EB-5 process, but they’re not the only constraints at work. USCIS processing productivity also makes a significant difference in determining who gets to move to final action and when. And these days, COVID-19-justified shutdowns can block or expedite final action for individuals in practice.

Application to timing questions:

  • My priority date is available or current in the visa bulletin — why hasn’t my I-526 or I-485 been approved? Because the visa bulletin is not the only constraint. USCIS capacity and willingness to process petitions can also slow the process, even for petitions with visas available.
  • Why have India and Vietnam been getting different visa bulletin treatment despite having about the same predictions for total visa wait time? The wait time predictions for India and Vietnam in 2019 were about the same because they had about the same total number of people in process. But — at different stages. Many Vietnamese have approved I-526, and thus in the stage where the visa bulletin controls their forward movement. Meanwhile, many of the Indians still have pending I-526 – thus still out-of-range for the visa bulletin. Therefore, recent visa bulletins have been tight for Vietnam but loose for India.
  • Does the relaxed visa bulletin for India mean that total visa wait times for India have shortened? Not for everyone. The current visa bulletin needn’t account for the thousands of Indians with pending I-526, but those thousands still exist. Most will eventually get I-526 approval, one trusts, thus expanding the visa-stage queue and triggering future visa bulletin movement.
  • Can total EB-5 visa demand be estimated by adding applications pending at the National Visa Center to applicants associated with pending I-526? Yes, as an approximation. But keep in mind that this method counts two of the five stations where applicants can be at any given time. This reminder is particularly important for China timing estimates, which have risked undercounting demand.
  • Does the visa bulletin affect everyone at the visa stage equally? Not necessarily, because the visa stage is divided into groups with different circumstances. Applicants at the National Visa Center and on I-485 might react equally in a normal year, but not in 2020, when COVID-19 precautions have blocked final action for consular processing but not status adjustment. If DOS does advance visa bulletin final action dates now, it will practically only help I-485, while potentially disadvantaging visa applicants dependent on closed consulates.
  • Why is Department of State still sweating over the November 2020 visa bulletin? Because it’s tough to create order right now in the visa process. Should DOS relax the visa bulletin to let U.S.-based applicants go full steam ahead, with the benefit of maximizing visa usage in a heavy supply year but the disadvantage of leaving applicants abroad behind, and risking retrogression? Or should DOS tighten the visa bulletin constraint, and thus help keep an even playing field and avoid future retrogression — but at the cost of letting visas go unclaimed? How do they balance the effect of the visa bulletin constraints with the effect of constraints outside their control: the pandemic, USCIS productivity, and USCIS willingness to advance documents through the process? Political winds may also be a factor. In the July 29, 2020 Hearing on USCIS Oversight, Rep. Zoe Lofgren mentioned that she had received complaints of administration officials overruling career civil servants with respect to the visa bulletin. No doubt Stephen Miller is motivated to do whatever he can to ensure that FY2021 does not fulfill its potential as a record year for EB visas issued. Congress has also flirted recently with changing the most important process constraint — the number of annual visas available. There’s still the president’s Executive Order on Hong Kong, yet to be interpreted and also possibly a sticking point. But I believe that the career civil servants are currently still working hard to navigate very complicated terrain in the fairest possible way.

UPDATE: The November 2020 visa bulletin finally published on 10/29/2020 has no surprises — same wording as usual, and dates consistent with the October 2020 bulletin.  The China cut-off dates remain specifically for “China-Mainland born.” Good job standing up for law and order, civil servants.

AAO decisions on source and path of funds appeals

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

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

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

Source of all invested capital

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

Dear IPO,

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

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

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

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

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

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

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

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

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

Regional center program authorization and USCIS stabilization

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

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

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

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

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

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

Supporting Mandamus and APA actions

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

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

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

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

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

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

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

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

Redeployment policy comment: retroactivity

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

——————————

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

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

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

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

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

 

Examples of where EB-5 policy has confused contexts:

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

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

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

Policy Manual comment: Redeployment and regional center geography

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

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

*** DRAFT COMMENT ****

To:                         USCISPolicyManual@uscis.dhs.gov

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

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

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

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

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

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

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

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

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

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

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

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

Authorities:

Matter of Izummi states in pertinent part:

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

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

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

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

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

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

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

8 CFR 204.6(m)(7) states:

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


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

8 CFR 204.6(j) states:

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

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

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

SEC. 610. PILOT IMMIGRATION PROGRAM.—(a) Of the visas otherwise available under section 203(bX5) of the Immigration and Nationality Act (8 U.S.C. 1153(bX5)), the Secretary of State, together with the Attorney General, shall set aside visas for a pilot program to implement the provisions of such section. Such pilot program shall involve a regional center in the United States for the promotion of economic growth, including increased export sales, improved productivity, job creation, and increased domestic capital investment.

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

A regional center shall have jurisdiction over a limited geographic area, which shall be described in the proposal and consistent with the purpose of concentrating pooled investment in defined economic zones. The establishment of a regional center may be based on general predictions, contained in the proposal, concerning the kinds of commercial enterprises that will receive capital from aliens, the jobs that will be created directly or indirectly as a result of such capital investments, and the other positive economic effects such capital investments will have.

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

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

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

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

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

USCIS Funding, Furloughs, and Fee Rule

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

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

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

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

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

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

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

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

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

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

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

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

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

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

USCIS website Q&A on redeployment

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

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

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

Policy Manual Update — Redeployment

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

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

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

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

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

1. The initial deployment that creates jobs

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

3. Redeployment after conditional permanent residence.

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

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

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

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

EB-5 updates and resources under COVID-19

[Update: for newer information, see instead my 5/28 post EB-5 Impact of COVID-19 (processing, eligibility, visa numbers)]

As the war against COVID-19 heats up around the world, EB-5 work continues, but with some changes. A few notes on developments over the past two weeks:

USCIS continues to operate despite COVID-19, with modifications

USCIS offices have been closed to the public since March 18, but USCIS staff are continuing to perform duties that do not involve face-to-face contact with the public. (Except where otherwise noted, the information in this section is from uscis.gov/coronavirus, which gets updated regularly.)

That means IPO (which needless to say lacks public contact) is continuing to adjudicate I-526, I-829, and I-924, and to terminate regional centers. In fact, the latest processing times report (updated March 20) recorded a decrease to I-526 processing times. I’ve heard multiple personal reports of EB-5 decisions received. The USCIS list of regional centers got a significant update this week, recording three new approvals and 24 terminations. Service centers also continue to process I-485 status adjustments.

EB-5 investors at the visa stage will be affected by the fact that all biometrics appointments have been temporarily suspended since March 18 until at least April 7 May 3 June 4, with all appointments to be automatically rescheduled once USCIS again resumes normal operations.

On March 20, USCIS announced flexibility in submitting required signatures. “For forms that require an original “wet” signature, per form instructions, USCIS will accept electronically reproduced original signatures for the duration of the National Emergency.”

On March 27, USCIS announced flexibility for responses to Requests for Evidence and Notices of Intent to Deny. “For applicants and petitioners who  receive an RFE or NOID dated between March 1 and May 1, 2020, any responses submitted within 60 calendar days after the response date set forth in the RFE or NOID will be considered by USCIS before any action is taken.”

On March 30, USCIS expanded this flexibilty: “A response received within 60 calendar days after the response due date set forth in a Request for Evidence, Notice of Intent to Deny, Notice of Intent to Revoke, or Notice of Intent to Terminate will be considered before taking any action if such request or notice is issued and dated by USCIS between March 1 and May 1, 2020, inclusive.”(uscis.gov/coronavirus)

Other IPO Activities

The EB-5 Resources page on the USCIS website was updated on March 23 with Sarah Kendal’s prepared remarks from the 3/13 Public Engagement, as well as with Q&A on the Visa Availability Approach. The Q&A gives a detailed, clear, and helpful overview of the new visa availability approach to I-526 processing that will officially launch next week.

EB-5 visa applications and COVID-19

EB-5 visas are temporarily not being issued through consular processing. On March 20, 2020, DOS announced suspension of routine visa services. “In response to significant worldwide challenges related to the COVID-19 pandemic, the Department of State is temporarily suspending routine visa services at all U.S. Embassies and Consulates. Embassies and consulates will cancel all routine immigrant and nonimmigrant visa appointments as of March 20, 2020. As resources allow, embassies and consulates will continue to provide emergency and mission critical visa services. Our overseas missions will resume routine visa services as soon as possible but are unable to provide a specific date at this time.”

With applicants overseas temporarily unable to claim available visas, this may mean more visas available to applicants in the U.S., since I-485 status adjustments are still being processed (as of now). Depending on how long it takes overseas visa services to get back on track, Department of State faces a challenge to allocate all available visas for the fiscal year.  So long as consulate closures prevent people overseas from claiming visas, that could cause the Visa Bulletin final action dates to advance rapidly to accommodate those few who are placed to receive visas. At the beginning of the year, Department of State had anticipated issuing a total of 11,112 EB-5 visas, including 778 each to Vietnam and India, with an estimated 5,270 leftover for the oldest priority dates (i.e. China).  In the first five months of FY2020 (October to February), consulates had issued 237 EB-5 visas in India, 345 EB-5 visas in Vietnam, and just 1,088 EB-5 visas in China. (Data from adding up monthly tallies of EB-5 visas issued by consulate. Unfortunately USCIS does not publish data on EB-5-related I-485 approved and pending.)

Politico Rumor

Last week someone launched an EB-5 virus – an implausible story that Senator Lindsey Graham was pushing to increase EB-5 visas to 75,000 and decrease the minimum investment amount to $450,000 as part of the emergency stimulus bill. Politico published the story, Senator Graham himself responded publicly that the story was false (listen starting at minute 2:50 in this 3/19 Fox News interview), and yet the story continues to spread and mutate, inspiring a storm of media criticism of the EB-5 program and EB-5 investors. As IIUSA says “Although the EB-5 industry would like to see program reforms, it would never support these extreme and unfounded shifts. It did not do so last week, and it will not do so in the future.” I wonder which interest group planted the rumor, with what intent. Possibly it came from an anti-immigrant faction that’s now chuckling with glee at the backlash? Or a misguided industry insider hoping to stoke the market with false hopes? Certainly, this story has damaged EB-5 just when it’s in a position to be a helpful tool in our current economic state.

EB-5 risks and opportunities under COVID-19 conditions

Martin Lawler’s article COVID-19 Impact on EB-5 Hotel Projects (April 6, 2020) discusses issues related to maintaining EB-5 eligibility in an industry particularly threatened by COVID-19

Green Card by Investment continues to come out with EB-5 Talk podcasts on timely topics, most recently “Restructuring your NCE operating documents for redeployment” with Mark Katzoff (March 23), and “Investor options with troubled projects” with Robert Divine (March 17).

Matthew Galati has a helpful article on Filing I-829s During a Coronavirus Economic Downturn (March 26, 2020)

A reminder of my July 2019 article on Priority date retention and redeployment, which includes a flow chart to clearly illustrate the different project change and redeployment options at various points in the EB-5 process.

IIUSA has started to roll out a new Investor Market Webinar Series.

If no one else does, I will write in April about high-unemployment Targeted Employment Areas, and options for TEA analysis in response to our abruptly increasing unemployment.

EB-5 processing times and visa wait times remain a constantly moving target, but I’m still grappling with the timing estimate problem as well.

Meanwhile, my business plan service remains available to the brave few seeking to launch new ventures, and to the many who may need to describe how updated circumstances still support EB-5 investor eligibility.

Report from 3/13 USCIS Engagement on Visa Availability Approach

The March 13 EB-5 Immigrant Investor Program: Public Engagement provided a few program updates, and discussed the new visa availability approach to I-526 processing. IPO Chief Sarah Kendall mainly spoke, with additional input from DOS Visa Control Office Chief Charles Oppenheim.

As usual I am sharing my recording, so that anyone can review the meeting for themselves. (3/23 Update: Sarah Kendall’s prepared remarks and a Q&A on the Visa Availability Approach have now been posted in the EB-5 Resource Room on the USCIS website.)

Prior the meeting, my many questions boiled down to two: the priority question and the volume question.  How will IPO apply the visa availability approach to decide which I-526 to process when? How many I-526 does IPO have on hand and intend to process, going forward? I was indeed pleasantly surprised by detailed and helpful answers to the priority question. Thank you Sarah Kendall! Particularly, thank you for taking live audience questions, which proved very important. But no thanks for deflecting the volume question.

Key information from the engagement:

What is the visa availability approach? (VAA)

  • Consistent with the initial USCIS announcement, Kendall describes the VAA as an inventory management approach that will prioritize adjudications for I-526 petitions where visas are immediately available or soon to be available.

Who is affected by the visa availability approach?

  • Kendall said that the VAA will apply to all I-526 petitions not assigned as of March 31, 2020, including pending petitions currently in the pipeline, and including petitions to be filed after March 31, 2020. USCIS will continue to work on I-526 assigned for adjudication before March 31.
  • My comment: That is, the VAA will not limit decisions on cases that were already issued a Request for Evidence or Notice of Intent to Deny. The VAA does apply to all unassigned pending I-526, no matter when they were or will be filed.

Who will be held back by the visa availability approach?

  • Kendall said that in deciding which I-526 NOT to assign for adjudication, IPO will consult the monthly Visa Bulletin Chart B Dates for Filing. If a petition’s filing date is not within the dates that can file a visa application or I-485 according to that month’s Visa Bulletin Chart B, then the petition will not be assigned for I-526 adjudication that month.
  • My comments:
    • In practice, this means that for now, only pending I-526 from China will be limited by the VAA. (The April 2020 Visa Bulletin Chart B has a December 15, 2015 cut-off date for China, but current for all other countries.) It’s good news that IPO will at least look at Chart B, not Chart A, to determine visa availability for I-526 purposes.
    • The VAA will create a chicken-and-egg situation between Department of State and USCIS. The visa bulletin moves in response to demand for visas, demand for visas is created by I-526 approvals, and now I-526 adjudications will move in response to the visa bulletin.
    • Vietnam and India will benefit from the VAA in the near term, since they are current in Visa Bulletin Chart B. They will eventually be held back by VAA, since the number of pending I-526 from Vietnam and India exceed the annual visa limit. When they will be affected depends on the rate of I-526 approvals for Vietnam and India. If many Indian and Vietnamese I-526 shortly get assigned for adjudication and soon approved by USCIS, then many visa applications will soon result, creating excess demand that triggers DOS to put cut-off dates in the visa bulletin Chart B, triggering USCIS to stop assigning I-526 for adjudication.  Alternatively, if USCIS continues to approve just a few I-526 for Indians and Vietnamese, then the visa bulletin will stay open due to low visa demand, and the trickle of India and Vietnam I-526 adjudications can continue unchecked by the VAA.  (DOS apparently anticipates the second scenario, according to Oppenheim’s comments on the call.) Either way, whether the flow of I-526 adjudications is limited by the visa bulletin or by IPO’s natural slowness, the VAA would allow USCIS to, in theory, only adjudicate as many I-526 for India and Vietnam per year as needed to produce a years-worth of visa applicants. That would mean about 350 annual I-526 adjudications for India and 250 adjudications for Vietnam (considering Oppenheim’s most recent ratio of pending I-526 to visa applicants). If USCIS used the VAA as an excuse to keep to such minimum volume, within the visa caps, then long I-526 waits for India and Vietnam would result (considering that there were about 2,500 India I-526 pending and 770 Vietnamese I-526 pending as of 10/1/2019).
    • However, Sarah Kendall did not specifically say that I-526 adjudications would be limited to visa availability. The VAA just allows such limitation, as needed to prioritize as many petitions as have a visa available. And this competitive rest-of-the-world demand has historically been low, and likely to remain so considering the EB-5 price increase. China, Vietnam, and India will only have I-526 adjudications limited to visa availability to the extent that IPO can maximize its I-526 capacity with other-country adjudications.
    • The VAA guides which petitions will NOT be assigned for adjudication; it does not promise which petitions WILL be assigned for adjudication. As of 10/1/2019 (most recent available data), there were 7,472 pending I-526 from countries other than China. Those 7,472 petitions won’t all be immediately assigned for adjudication, even though they’re prioritized based on having visas available for them, unless IPO improves its volume from the FY2019 average of 390 I-526  adjudications per month.

Will IPO make any exceptions to the visa availability approach?

  • Kendall stated that:
    • Petitions with approved expedite requests will continue to be promptly assigned for adjudication, regardless of the petitioner’s country of origin.
    • If the Petitioner is from a country that would be held back by the VAA, but could have a visa available due to the spouse’s nationality, then the petitioner should email IPO to explain the situation, and IPO may assign the case based on the spouse’s nationality. Listen starting at minute 25:45 of the recording for detail.
    • Aside from the above two circumstances, IPO does not contemplate offering opportunity for petitioners to opt out, opt in, or request to be treated as an exception to the VAA policy.
    • USCIS currently plans to continue the VAA approach indefinitely.

Will the visa availability approach affect visa distribution, and number of visas available?

  • The VAA does not change the rules for visa availability. The EB-5 quota and per-country cap remain the same. The variable component in visa availability is the number of “leftover” visas available to the oldest priority dates (in the EB-5 case, to Chinese) after demand under the country caps has been satisfied. The VAA is explicitly designed to reduce the number of leftovers (being intended to help rest-of-world applicants to maximize their available visas), but Oppenheim opined that the number of leftover visas would remain unchanged for about the next 12 to 18 months.
  • My comment: When Oppenheim estimates that the number of visas available to any one country will not change for the next 12 to 18 months, he must be assuming that USCIS will not, near-term, approve more rest-of-the-world I-526 than it would have otherwise, without the VAA approach. Visas available to China are a function of rest-of-the-world visa demand, and rest-of-the-world visa demand is a function of number of I-526 approvals. Apparently, Oppenheim expects IPO to actually reduce I-526 completion rates under the VAA (since if completion rates stayed the same, fewer China I-526 completions would be counterbalanced by more rest-of-the-world completions, resulting in fewer visas available to China). I wonder if Oppenheim’s assumption is based on anything Sarah Kendall told him?

Will the visa availability approach improve I-526 completion rates and processing times?

  • Processing times are a function of backlog, processing priority, and processing volume. The VAA changes priority in a way that will benefit petitioners from low volume countries. The size of that benefit depends on what happens concurrently with processing volume (completion rates).
  • Sarah Kendall declined to answer questions about the size of the I-526 backlog, and the number of petitions that could benefit. “As a general matter, we refrain from discussing any kind of numbers with the public outside of our OPQ posting process.”
  • Kendall repeated the same reasons for low I-526 completion rates that she gave in 2019 (recorded in my previous post). Most are related to extreme vetting efforts to seek out signs of fraud and abuse. Kendall stated that “USCIS leadership views these initiatives as absolutely vital to the success of the EB-5 program. We acknowledge that case completion rates have decreased partly because of these activities, and we understand the concerns that raises for our stakeholders. With a lot of the infrastructure development now behind us, IPO is better situated to improve productivity. In fact, preliminary data for February shows a step in the right direction. The USCIS Office of Performance and Quality anticipates publishing new data in the coming month.”
    • I take this to be saying that IPO expects to adjudicate a few more I-526 in 2020 than in 2019, but not many more. IPO’s per-quarter productivity would have to be seven times higher than it was in FY2019 Q4 just to regain 2018 productivity levels. “A step in the right direction” from recent performance is good news, and Kendall mentioned later in the call that she expects such incremental improvement to continue – also good news. But this does not sound like a promise of exponential improvement to counterbalance last year’s exponential productivity loss. Kendall emphasized that the lengthy new review procedures requiring time-consuming multi-agency coordination are “absolutely vital” to program integrity, suggesting that she does not intend to change those factors in long processing times. There will be some improvement this year from the mere fact that the procedures are at least set up, while last year included time lost due to setup/training.
  • In response to my question about number of adjudicators assigned to I-526, Kendall reported that IPO had about 240 dedicated personnel as of the beginning of the fiscal year – a record high number. “This number includes support staff, adjudicators, economists, fraud detection and national security personnel, and other positions vital to the IPO mission. The number of personnel and adjudicators assigned to each EB-5 form type varies according to workload demand and agency priorities.”
    • My comment: I note that Kendall pointedly did not answer the question about I-526 resources. The VAA reduces workload demand for I-526 by reducing the number of petitions that require prompt adjudication, which may be a sign for I-526 resource allocation. I wonder how much of the fees petitioners pay for adjudication actually funds adjudicative staff, and how much goes to staff devoted to seeking fraud.
  • Kendall gave an ambiguous answer to a question about whether or not we can expect to see a reduction in rest-of-the-world I-526 processing times as a result of the VAA. (minute 54 in the recording)

Will IPO provide transparency about its processing under the visa availability approach?

  • Kendall said that the Office of Performance and Quality would revise the I-526 processing times report to reflect the VAA change, but she also said that there’s no plan for the report to show country-specific processing times – the only possible way to reflect the VAA change for EB-5. So it’s hard to visualize how helpful the report could be. As noted above, she also declined to provide any I-526 data (and the IPO Customer Service email continues to refuse or ignore my requests for per-country I-526 data).
  • Note to IPO: you could be commended for a change that moves the EB-5 constraint to the beginning of the process, rather than leaving people to pile-up midway at the visa stage. But only if you are transparent. When you keep I-526 processing a black box, you leave people to file I-526 in ignorance, unable to assess the nature of the backlog, and inventory pileups will still occur. To avoid this, you must give the public timely data about the country composition of the I-526 backlog, and  country-specific information in the processing times report. If you make I-526 processing transparent in this way, you will actually move the constraint to the start of the process, thus improving the whole process. With transparency, demand will self-regulate as people can make informed decisions about filing I-526.  Otherwise, you have made no improvement and the process will remain broken.
  • If petitioners whose cases are not ripe for adjudication under the VAA try to make a case inquiry, they will be sent a stock response that refers them to the visa bulletin.

Other Updates regarding India, China, and regional centers:

  • Regarding the Visa Bulletin Final Action Date for India, Charles Oppenheim said “at this time, I believe that India will become current some time in the summer, and once it becomes current it would stay for the foreseeable future, pending receipt of larger volumes of approved petitions at our National Visa Center.” (Minute 33 and 44 of the recording) (My comment: apparently, Oppenheim expects USCIS to continue low productivity, with the visa bulletin to open for India due to few Indians making it past the I-526 stage and to the visa stage. See my comments above on the connection between I-526 adjudication volume and visa bulletin movement.)
  • A caller asked Charles Oppenheim about the impact of the current shutdown of consular processing in China due to COVID-19, and whether that could result in EB-5 visas that would have been given to China going to Vietnam instead. Oppenheim said: “This is a very unique situation where there is not a lack of applicants which is preventing the numbers from being used, but the situation where at this time the consulate is closed. So this will continue to be monitored throughout the year, and we’ll just have to do the best we can. But again, if it does appear that all the numbers would not be used, then we would go to the next country in line, which would be Vietnam, which is oversubscribed.” (minute 43-44 of the recording) No one asked about other potential visa impacts of COVID-19 (i.e. closures of other consulates besides China, or possible interruptions to service center operations in the U.S.)
  • USCIS has sent out 100 Notices of Intent to Terminate so far in 2020 to regional centers that did not file I-924A in FY2019.
  • Sarah Kendall announced the regulations FAQ that I flagged last week: Questions and Answers: EB-5 Immigrant Investor Program Modernization Rule.

I worked hard on this post, trying to record and explain answers, as available, to many of the questions that I anticipate regarding the visa availability approach. Regarding personalized EB-5 timing estimates, it’s difficult. The timing complications are so many at this point, and limited data makes any estimate time-consuming and not definitive. The best I can offer now, as time permits, is personalized conversations about timing, with some data support. I will soon be announcing a schedule to allow reserving appointments, for those who would like to discuss individually.

And as always, my PayPal link is open. If my work is helpful and time-saving for you, consider making a contribution to support the work. Thank you!

I-526 processing context, 2017-2019

On Friday 3/13, USCIS will hold a meeting (now by teleconference only) that promises to “address program updates, including the agency’s change from a first-in, first-out case-processing approach to a visa availability approach for Form I-526.”

I look forward to being pleasantly astonished when USCIS provides substantive, detailed information at the meeting, and answers questions. (By the way, USCIS recently posted an unannounced new page with Questions and Answers: EB-5 Immigrant Investor Program Modernization Rule. Note that this page includes some guidance not previously provided regarding targeted employment area analysis.)

In the meantime, as we face the visa availability approach to take effect as of April 1, 2020, another post with context for the I-526 processing adjustment.

EB5 Diligence/EB5 Marketplace has posted a helpful podcast: Analysis of Visa Availability Processing and March 13 USCIS Stakeholder Meeting. The discussion features a wide range of industry perspectives on what the visa availability approach means, and its potential benefits and downsides in practice.

As additional background, I’ve created a compendium of things that USCIS has disclosed about EB-5 processing leading up to the change.

First, a picture of the data for EB-5 form processing in recent years.

And a log of recent statements made by USCIS/DHS to explain what’s happened to date with I-526 processing.

  • Factors related to long processing times and low volume of I-526 adjudications in 2019:
    • “Complying with court orders related to the EB-5 program” (5/13/2019, USCIS letter)
    • “Temporary assignment of IPO staff to other agency priorities” (9/9/2019, Kendall)
    • Adjudication time lost due to I-526 training in May 2019 (10/29/2019, Kendall)
    • Disruption to processes due to regional center program sunset (12/22/2018-1/25/2019) (10/29/2019, Kendall)
    • “IPO has made structural changes to ensure continued program integrity” (10/29/2019, Kendall)
    • “More robust quality assurance and control programs” (10/29/2019, Kendall)
    • “A growing number of cases where we have worked with our law enforcement and other partners, including the SEC, related to civil and criminal investigations” (10/29/2019, Kendall)
    • “We also work with USCIS and Department of State officials abroad to perform overseas verification checks on various questions that arise in our petition pool, such as for source of funds and other key elements of the program” (10/29/2019, Kendall)
    • “In the next year [2019] we anticipate putting additional resources to the I-829 so that we can address the needs of the particular line of adjudication.” (10/5/2018, Kendall)
    • The average touch time per I-526 had increased to 8.65 hours by 2019 (+33% since 2016) (2019 fee rule as compared with 2016 fee rule)
  • Factors in the higher volume of adjudications in 2018:
    • At the end of 2017, IPO launched multidisciplinary teams of cross-trained economists and adjudicators to focus on I-526 adjudications (11/7/2017, Harrison)
    • In 2018, IPO focused on standardizing and better managing assignment of EB-5 cases (5/11/2018 USCIS response)
    • “I believe that this [increase in our productivity in 2018] represents that it was a good decision for the leadership here to invest additional resources in the program. We are fully staffed now. And with the normal continuing rotation of having to hire to replace people that are moving on, right? But we are fully staffed and we anticipate that we will continue to be as productive and we’re aiming to be more productive. I say that within the limits of the parameters for integrity that the Director has laid out and that you all have embraced in your discussion with us. So the productivity on the 526s was very good this year. But we’re not sitting on our laurels. We recognize that this is a business community. There are business There are people, the individuals behind every application. And that the credibility of that application’s likelihood of being adjudicated in a timely way is important. So we hear you. And the agency has made long-term investments to make sure that we can reasonably manage the work load that comes in.” (10/5/2018, Kendall)

Other context factors:

  • The IPO staffing level has increased from 110 as of February 2016 to 185 as of July 2017 to 212 as of September 2019.
  • Government Executive reported in February 2020 that “The Trump administration has issued a hiring freeze for non-asylum officers at U.S. Citizenship and Immigration Services.”
  • The latest fee rule, which sets filing fees to fund resources for adjudications, did not propose significant increases to EB-5 form fees. (2019 fee rule)
  • IPO mentioned the idea of a visa availability approach in 2017, and asked for stakeholder input. (11/7/2017, Harrison) The data from Department of State and USCIS does not show that IPO started to implement a visa availability approach before this year, though obviously adjudications have not been simply FIFO.
  • The theory of FIFO processing for immigration forms goes back to the Operations Instructions of legacy-INS at OI 103.2(q), which provided: “(q) Chronological processing of applications and petitions. To deal fairly and equitably with applicants and petitioners, it is Service policy that cases be processed in chronological order by date of receipt.” The Check Case Processing Times page for I-526 still says “We generally process cases in the order we receive them.” And the Adjudicator’s Field Manual instructs careful receipting for petitions because “The receipt date is important to ensure fair, chronological processing.”
  • Since 2015, I have kept a log of public comments by USCIS about I-526 processing factors in this Word file and a log of monthly processing times reports for I-526, I-829, and I-924 in this Excel file.

Questions for USCIS about the Visa Availability Approach (revised)

On March 13, USCIS will hold a public engagement to discuss and field questions about its recent announcement that “USCIS Adjusts Process for Managing EB-5 Visa Petition Inventory.” Here are my questions, so far. I may revise in response to reader comment. The deadline for submitting questions is February 11.

— Revision —

I attempted to condense my questions, hoping that will maximize the likelihood that USCIS may answer any of them. Here’s the revised list that I’m actually sending to USCIS:

  1. Why is USCIS proposing an operational change to select just a few petitions to be processed “in a timely fashion” instead of using available resources to process all I-526 in a timely fashion?
  2. In 2018, IPO had about 50 adjudicators working on I-526 and processed over 15,000 I-526 petitions. After implementing the “visa availability approach,” how many adjudicators will IPO allocate to I-526, and how many I-526 does IPO aim to process per quarter?
  3. If IPO has reduced staff committed to I-526 adjudications, and downgraded its productivity goals, why?
  4. The “visa availability approach” could appear to be an excuse to reduce I-526 adjudication volume from 2018 levels – is it?
  5. How does IPO plan to identify the “individuals from countries where visas are currently available, or soon available”? (Does “available” look at the current visa bulletin Chart A or Chart B, visa bulletin projections, or long-range visa availability projections? Will “individuals” account for the fact that the family may claim visas based on the nationality of the petitioner’s spouse?)
  6. Does the visa availability approach aim to limit adjudications to individuals with visas immediately or soon-to-be available? (In other words, does IPO aim to match a petition’s I-526 wait time to the visa wait time, however long that may be?)
  7. Does the visa availability approach aim to adjudicate only enough I-526 annually to claim annual visas available under the country caps? If so, what processing time and visas-to-I-526 assumptions will IPO use to choose how many I-526 to adjudicate?
  8. How far in advance of visa availability will IPO assign an I-526 for adjudication, considering the processing times associated with I-526 and I-485 or consular processing?
  9. How will IPO change the processing times report for I-526, after March 31, 2020?
  10. After March 31, 2020, will the visa availability approach apply to pending petitions that were issued an RFE or NOID prior to March 31?
  11. What meaning will Exemplar I-526 approval have after March 31, 2020?
  12. What meaning will an approved Expedite request have after March 31, 2020?
  13. How does IPO intend to ensure fairness for petitioners who invested at the same time in the same project, but who will not get concurrent adjudication due to the visa availability approach?
  14. A FIFO approach aims to minimize the time between the EB-5 investment and USCIS review. This is important for program integrity, giving IPO opportunity to catch frauds as early as possible, trigger investigations while there’s still time to act, and investigate source and path of funds before trails have gone cold. The “visa availability approach” aims to defer USCIS review for some countries. How does IPO intend to help protect security in EB-5 investments and source of funds, under conditions of deferred review?
  15. As described in the USCIS Policy Manual, the I-526 stage is, by its nature “the preliminary filing stage,” with eligibility requirements defined by the preliminary stage. Will USCIS revise the Form I-526 if the form will, as a matter of policy, often not be adjudicated in time to assess the preliminary stage?
  16. In what sense does USCIS consider I-526 comparable to I-130?
  17. Under a visa availability approach, I-526 processing times depend on the country composition of the I-526 inventory. USCIS does not currently publish data on the country composition of the I-526 inventory. When will it start to publish this data?

— Original Post —

Original question list:

1. Inventory management is not only about priority. There’s also the question of resources and productivity.

  • In FY2018, IPO had about 50 adjudicators assigned to I-526, and completed over 15,000 I-526. That same resource commitment and volume could clear the entire current backlog of pending petitions in about a year. What staffing allocation and specific volume goals does IPO have for I-526 in FY2020? If I-526 resources, commitment, and volume are much lower in FY2020 than they were in FY2018, what is the explanation and justification?
  • The visa availability approach intends to “give priority to petitions where visas are immediately available, or soon available.” Does it also, conversely, intend to delay I-526 for petitions where visas are not soon available – not only incidentally as a side effect of taking current countries first, but as a strategy to match I-526 wait time to visa wait time, providing a justification to reduce the volume of petitions that call for timely attention from IPO? If IPO clears the backlog of pending petitions from current countries, will it move resources away from I-526 adjudications, leaving I-526 from non-current countries to wait, pending visa availability?

2. How will IPO will balance visa availability priority with other forms of priority? Consider the following hypothetical scenarios. The answers should not be case-specific, but should express the general guidelines that would clear up the ambiguities illustrated by practical example.

  • The I-526 petition has an approved expedite request, but it’s for a Chinese petitioner with 2019 priority date that won’t be current for over a decade. The backlog of pending petitions includes many petitions with no expedite requests, but current visa availability.
  • The petition is for a project that has Exemplar approval, but it’s for a Chinese petitioner with 2019 priority date.
  • Two Vietnamese have identical 2019 priority dates. One invested in a project with Exemplar approval; the other invested in a project without Exemplar approval.
  • The petitioner is Chinese with a 2017 priority date that won’t be current for at least a decade. He’s part of a pooled investment in project for which IPO has already reviewed all the project documents, and denied all I-526 for other investors in the project.
  • The petitioner is Chinese with a 2017 priority date. He’s part of a pooled investment in project for which IPO has already reviewed all the project documents, and approved all I-526 for other investors in the project.
  • The petitioner is Chinese with a 2017 priority date. The petition was issued a Request for Evidence prior to March 30, 2020, but a decision has not yet been made.
  • The petition is affected by a court order, but it’s for a Chinese petitioner with 2019 priority date.

3. The visa availability approach will result in petitioners in a pooled investment who file I-526 at the same time but come from different countries potentially reaching adjudication at very different times. How will this affect the policy that “The 2-year period is deemed to begin 6 months after adjudication of Form I-526. The business plan filed with the immigrant petition should reasonably demonstrate that the requisite number of jobs will be created by the end of this 2-year period. ”

4. Which metric will IPO use to select the “petitions where visas are immediately available, or soon available.” Will the decision be based on public predictions by Charles Oppenheim for visa availability in the coming 12 months? If so, will USCIS look at his “best case scenario” or “worst case scenario” prediction for visa availability? Or will USCIS wait to react to the monthly visa bulletin? If so, how will it respond to monthly fluctuations and retrogression? Or does IPO plan to rely on private and undisclosed information about future visa availability? Or does IPO simply plan to shelve all I-526 from countries that are not current, regardless of petitioner priority date, in favor of adjudicating current-country petitions when the volume of current-country petitions is large? What assumptions does IPO make about I-526 touch time and visa application and I-485 processing times, when IPO decides how far in advance of visa availability an I-526 should be assigned for adjudication? How will IPO recognize the issue of cross-chargeabiltiy, and the fact that a visa may be available to the petitioner based on the spouse’s nationality?

To assist in answering these questions, the following scenarios highlight areas of ambiguity. The answers need not discuss the specific hypothetical examples, but the answers should express practical guidelines that resolve the practical ambiguities illustrated by the specific examples. (The answers would only be case-specific if IPO plans to implement the visa availability approach on an arbitrary case-by-case basis, lacking generally-applicable principles.)

India

  • Circumstances:  India has been “current” in the Visa Bulletin Chart B Dates for Filing, which means that Department of State considers all Indian priority dates to be “within a timeframe justifying immediate action in the application process,” and USCIS has been accepting I-485 for all India priority dates. Meanwhile, the Visa Bulletin Chart A Final Action Date for India is September 1, 2018. Charles Oppenheim predicted that in the next few months, this date could either progress to being “current” (best case scenario) or retrogress to November 1, 2017 (worst case scenario). [1]
  • Implications: Considering this, starting in April 2020, will IPO:
    • Let all India I-526 stay in the queue together with current countries for FIFO adjudication, since the Visa Bulletin Chart B signals that that all Indian priority dates are  currently“within a timeframe justifying immediate action,” and Oppenheim predicted that India could be current in the Visa Bulletin Chart A in October 2020; or
    • For now, shelve India I-526 with priority dates more recent than November 1, 2017, since Department of State predicted that could be the worst case cut-off for India visa availability by October 2020; or
    • For now, shelve India I-526 with priority dates more recent than September 1, 2018, since these dates are not authorized for visa issuance per the current visa bulletin. Then react month-by-month to future visa bulletin date shifts; or
    • For now, prioritize India I-526 with priority dates older than September 1, 2018, since these dates are authorized for final action per the current visa bulletin (in the spirit of the stated goal to make each country “better able to use their annual per-country allocation of EB-5 visas”).

Vietnam

  • Circumstances:  Vietnam is included in the “all chargeability areas except those listed” in the Visa Bulletin Chart B Dates for Filing. This category has been “current,” and USCIS has accepted Chart B for Vietnam I-485 so far in 2020. This indicates that Department of State and USCIS consider all Vietnamese priority dates to be “within a timeframe justifying immediate action in the application process.” Meanwhile, Vietnam has a Final Action Date of December 15, 2016 in the February 2020 Visa Bulletin. Charles Oppenheim predicted that by October 2020, the Vietnam Final Action Date will progress to either June 1, 2017 (best case) or April 1, 2017 (worst case).
  • Implications: Considering this, starting in April, will IPO:
    • Let all Vietnamese I-526 stay in the queue together with current countries for FIFO adjudication, since the Visa Bulletin Chart B signals that that all Vietnamese priority dates are “within a timeframe justifying immediate action,” and USCIS has been accepting I-485 for all Vietnamese priority dates; or
    • For now, shelve all Vietnamese I-526 with priority dates before June 1, 2017, Oppenheim’s outside estimate for final action visa availability for October 2020? If so, how will USCIS decide when to advance the “adjudication date” cut-off for Vietnam?

China

  • Circumstances:  China has a Final Action Date of December 1, 2014 in the February 2020 Visa Bulletin. Charles Oppenheim predicted that by October 2020, this date will progress to February or March 2015.  Meanwhile, If Charles Oppenheim’s past predictions are correct, China priority dates since 2016 all face long waits to visa availability:
    • 2016 priority dates may have visas available around 2023[2]
    • 2017 priority dates available around 2027[3]
    • 2018 priority dates available around 2032[4]
    • 2019 priority dates available around 2035[5]
  • Implications: Considering this, starting in April, will IPO:
    • Even contemplate the option of leaving China I-526 unadjudicated for a decade or more, to free bandwidth for other work?
    • If so, what kind of “preliminary stage” adjudication and security checks does IPO think would be possible for the I-526 a decade or so after the investment was made and the project implemented? In other words, would the I-526 be possible to adjudicate as an I-526 after such extended delay?
    • Assuming it would be unthinkable to defer any currently-pending petitions to the 2030s, how will IPO decide when to adjudicate China I-526? Assuming there will be a continual inflow of new current-country I-526, how will IPO decide when to take not- current China I-526 off the shelf and give them attention? What is the principle of fairness applied to pending I-526 from China?
    • What if the primary applicant is China-born with a 2018 priority date, but the spouse was born in Europe, and thus visas would be currently available to the family based on her place of birth, were the China petition approved?

South Korea, Taiwan, and Brazil

  • Circumstances:  South Korea, Taiwan, and Brazil are all “current” in the February 2020 Visa Bulletin, and expected to still be current in the October 2020 visa bulletin. [6] However, Charles Oppenheim stated that as of October 1, 2019, each country had sufficient applicants on pending I-526 petitions to exceed the approx-700 annual visa quota: 1,900 for South Korea, 1,241 for Taiwan, and 765 for Brazil). [7]
  • Implications: Considering this, starting in April, will IPO:
    • Let all South Korea, Taiwan, and Brazil I-526 stay in the queue together with other current countries for FIFO adjudication, since they are current in the Visa Bulletin and expected to remain so at least through October 2020; or
    • Actively prioritize I-526 from South Korea, Taiwan, and Brazil this year, since they have potential to reach the visa quota per Oppenheim’s calculations, if only IPO can adjudicate enough of the pending petitions in time (in the spirit of the stated goal to make each country “better able to use their annual per-country allocation of EB-5 visas”); or
    • Demote petitions from South Korea, Taiwan, and Brazil behind petitions from countries that are not even on Oppenheim’s radar to exceed the annual visa limit?

Countries other than China, Vietnam, India, South Korea, Taiwan, and Brazil

  • Circumstances Any country becomes not current if annual visa demand reaches about 700. The USCIS press release for the “visa availability approach” indicates that a goal of the I-526 priority change is to make countries “better able to use their annual per-country allocation of EB-5 visas.”
  • Implications: Considering this, starting in April, will IPO:
    • Keep a certain I-526-to-visas multiplier in mind for each country, and adjudicate only a maximum number of I-526 per year per country to avoid exceeding the per-country visa allocation?
    • Publish timely data on I-526 receipts by county, so that the market is able to judge if countries are meeting or in danger of exceeding the annual per-country allocation, and moderate or encourage demand accordingly?
    • Consider any factor other than/in addition to priority date order, when adjudicating I-526 for countries with visas immediately available? For example, whether the project has Exemplar approval?

[1] IIUSA Conference presentation October 2019 https://wolfsdorf.com/blog/2019/11/01/important-updates-on-eb-5-from-u-s-department-of-state-indian-eb-5-estimates-reduced-prepare-to-file-last-chance-cases-before-november-21-2019/

[2]IIUSA Panel with Charles Oppenheim https://event.crowdcompass.com/la2016/page/rFpfQUiXJw

[3] 2017 CIS Ombudsman Report (EB-5 visa backlog calc on p. 32-33) based on data and calculations from Charles Oppenheim https://www.dhs.gov/publication/2017-annual-report-congress

[4] Charlie Oppenheim presentation at AILA/IIUSA conference https://iiusa.org/blog/wp-content/uploads/2018/11/EB-5-AILA.IIUSA-Visa-numbers-panel-for-EB-5-Conference-October-2018.pdf

[5] Charlie Oppenheim at IIUSA Conference https://iiusa.org/wp-content/uploads/2019/10/IIUSA_Visa-Update-w-Charlie-Oppenheim-and-Roundtable-Discussion.pdf

[6] IIUSA Conference presentation October 2019 https://wolfsdorf.com/blog/2019/11/01/important-updates-on-eb-5-from-u-s-department-of-state-indian-eb-5-estimates-reduced-prepare-to-file-last-chance-cases-before-november-21-2019/

[7] Charlie Oppenheim at IIUSA Conference https://iiusa.org/wp-content/uploads/2019/10/IIUSA_Visa-Update-w-Charlie-Oppenheim-and-Roundtable-Discussion.pdf

 

EB-5 form filing fees

We have opportunity to review and comment on the U.S. Citizenship and Immigration Services Fee Schedule. The proposed rule was published on 11/14/2019, and comments are due by 12/16/2019.

The proposed rule appeared at a busy time in EB-5 and I haven’t heard much talk about it. But this could be important. Future processing times could depend on today’s fee decisions. And EB-5 processing is a major factor in the future survival and integrity of the EB-5 program.

The fee review asks this important question: what resources does USCIS need to provide adequate service? Considering what has changed since the existing fees were set in 2016, how do filing fees need to change?

The fee review reports that the work associated with EB-5 forms has increased significantly since the last fee adjustment in 2016, but the 2019 rule proposes only minor increases to EB-5 filing fees.

Proposed Rule Table 6 — Completion Rates per Benefit Request*
Form  in May 4, 2016 Proposed Rule in November 14, 2019 Proposed Rule Change
I-526 6.5 hours 8.65 hours +33%
I-829 5.5 hours 8.15 hours +48%
I-924 40 hours 34.95 hours -13%
I-924A 5 hours 10 hours +100%
Proposed Rule Table 19 — Proposed Fees by Immigration Benefit
Form Current Fee (Proposed May 4, 2016) New Fee (proposed November 14, 2019) Change
I-526 $3,675 $4,015 +9%
I-829 $3,750 $3,900 +4%
I-924 $17,795 $17,795 0%
I-924A $3,035 $4,470 +47%

* Completion rates “reflect what is termed ‘touch time,’ or the time an employee with adjudicative responsibilities actually handles the case.”

How do we feel about this fee proposal? To me, that small fee increase over 2016 looks like bad news. A 9% fee increase for I-526 does not look equal to addressing the 33% increase to per-form touch time, not to mention the 100% increase to I-526 processing times and 50% decrease to processing volume that occurred between 2016 and 2019. If the labor to adjudicate Form I-829 has nearly doubled since 2016, how will a 4% fee increase give resources to handle that? Does the 0% increase to the I-924 fee indicate that USCIS considers the currently-posted 62 to 115-month I-924 processing time acceptable?

The fee rule aims “to determine the USCIS resources needed to process benefit requests within established adjudicative processing goals.” The rule does not disclose what processing goals it uses. But the goals can’t differ much from the status quo, if the rule expresses little need for additional resources for EB-5.  (To review the dire status quo: according to the current Check Case Processing Times page, a petition is only “outside normal processing” after 1,527 days for I-526, 1,339 days for I-829, and 3,452 days for I-924. But, side note for people filing Mandamus complaints, note that the Historical Processing Times page has a quite different statement of average processing times in 2019.)

I don’t only worry that proposed fee increases are not proportional to the reported increase in work per form. Total revenue is also a concern. Revenue equals price times quantity. If form fees stay about the same, and receipts plummet, then USCIS will have a smaller and smaller EB-5 budget to work with. The fee review estimates $83 million average annual revenue from proposed EB-5 fees, assuming about 19,000 EB-5 forms get filed in FY2019/2020. (This is summing I-526, I-829, I-924, and I-924A.) In reality, annual average EB-5 receipts were only about 10,000 for FY2018/2019 per USCIS data, and will be even lower going forward assuming that the law of demand holds following the doubling of the EB-5 investment amount. The picture won’t be pretty, if IPO ends up having less than half the new fee revenue that it expected, while still needing resources to adjudicate years-worth of pending forms on top of new receipts.  I wonder if the terrible performance we saw at IPO in 2019 wasn’t linked in part to low revenue due to dropping receipts, even as workload remained heavy due to pending petitions. (Sadly, there’s apparently no GAAP revenue recognition principle for USCIS accounting.) And the fee-setting methodology employed by USCIS apparently assumes that for any given year, receipt volume = workload volume. That’s not the reality for EB-5, given long processing times and fluctuating but generally falling demand.

In commenting on the proposed rule, I’m inclined to advocate for much higher EB-5 form filing fees. That considers the current unacceptable processing situation, and assumes that future resources depend on future fee revenue.  But I can see other arguments. EB-5 fees are linked to EB-5 adjudication costs in theory, for calculation purposes, but not necessarily in reality. If EB-5 fee revenue increased, that might buy more resources to improve EB-5 adjudications. Or the added revenue might help subsidize fee-exempt forms, get appropriated for ICE, or cover other USCIS shortfalls and overhead.  Even if the increased EB-5 fees stayed with EB-5, a new petitioner wouldn’t technically be paying the cost of her own adjudication, but helping to cover the cost of adjudicating the 20,000+ EB-5 petitions still pending from previous years. I see the unfairness in calculating fees for the incoming few at a rate needed to subsidize the cost of adjudicating the many still pending. (Though I also don’t see an alternative.)  Furthermore, one could argue that the longer completion times and ballooning processing times aren’t due to lack of adjudicative resources, but to bad policy and management that should be addressed before increasing fees. And finally, it’s possible that although the proposed rule invites public comment, it’s actually to late too influence decisions about resource allocation. I don’t know. But for those interested in this topic, I welcome your thoughts. Here is a draft of a comment that I wrote, and shared with IIUSA. This comment has not been submitted to USCIS, and I welcome input, objections, corrections, and improvements before the submission deadline. At least I’m sure that we shouldn’t miss the chance to speak to USCIS about the critical issue of processing. USCIS has long way to go to achieve its goal “to recover the full operating costs associated with administering the nation’s immigration benefits system, safeguarding its integrity, and efficiently and fairly adjudicating immigration benefit requests, while protecting Americans, securing the homeland, and honoring our country’s values.”

Targeted Employment Areas from November 21

The EB-5 Immigrant Investor Program Modernization Regulation Final Rule took effect on November 21, 2019, and  changed USCIS Policy for Targeted Employment Area (TEA) definitions and process.  Rather than reacting with questions and complaints, I carefully review the specific content of current TEA policy, place changes in context, and address the theoretical background and practical implications. This simple post took a great deal of work and thought.

POST AGENDA

A. Who is affected by the new TEA rules?

B. What areas can now qualify as a TEA?

C. What data can now be used to qualify a TEA?

D. Who determines TEAs, and how and when?

DISCUSSION

A. Who is affected by the new TEA rules?

New TEA rules apply specifically and only to all I-526 petitions filed on or after November 21, 2019. (The final rule for the EB-5 regulation gave a 120-day implementation/transition period: that period started upon publication of the final rule on July 24, and ended when the rule took effect on November 21.)

“Applies to Form I-526 filed on or after Nov 21” is a hard and fast rule. This is very clear in the final rule text, and confirmed by subsequent comments.  The new TEA rules apply to every I-526 filed from 11/21 – no matter if the project had previous investors or an Exemplar I-526 approval pre-11/21, and no matter if the investor is seeking to retain a pre-11/21 priority date when filing the new I-526. The new TEA rules do not apply to any I-526 filed before 11/21, even if the investor funds had not been fully invested in the NCE or deployed to the JCE before 11/21. IPO Chief Sarah Kendall reassured the IIUSA conference that her staff have been trained to adjudicate each pending I-526 based on the rules in place at the time that I-526 was filed. People who filed I-526 before 11/21/2019 are only indirectly affected by the new TEA rules, to the extent that open offerings must now be amended. But policy specifies that such conforming amendments will not count as material change for past investors.  As always, TEA qualification is not an issue at the visa application or I-829 stages.

While the new EB-5 regulation applies to all I-526 filed going forward, it does not apply entirely new rules. Rural areas, for example, have the same definition before and after November 21. The standards for a high-employment MSA TEA are no different now than they were under previous policy. Data recommendations remain unchanged. This post goes on to review what is and is not new.

B. What areas can qualify as a TEA?

The old rules gave the states authority and flexibility to designate geographic areas for TEAs. The new rules instead specify a limited list of possible TEA areas defined by DHS. From now on, a job-creating entity is in a TEA if it is in one of the following defined areas:

  1. A rural area, defined as an area that is not in a standard Metropolitan Statistical Area as defined by the Office of Management & Budget, and not within the outer boundary of any city or town having a population of over 20,000 or more based on the most recent decennial census; or
  2. A high unemployment area, defined as an area that has experienced unemployment of at least 150 percent of the national average rate. For high unemployment, “area” can only mean:
    1. A Metropolitan Statistical Area (MSA)
    2. A county within an MSA
    3. A county that contains a city or town with 20,000+ population
    4. A city or town with population of 20,000+ or more which is outside an MSA
    5. A single census tract, and/or
    6. A group of census tracts comprising the census tract where the job-creating entity principally does business, plus any or all directly adjacent census tracts (PDF p. 11-12 of the NPRM illustrate specifically what DHS has in mind.)

Option 2.4 and 2.6 were revised by the regulations; other options match previous policy. The new list of geographies that can qualify excludes several areas that states were willing to designate as TEAs: census blocks, census block groups, and sprawling groups of census tracts.

As before, the EB-5-funded job-creating entity must principally do business and create jobs within the TEA area.

If you have an EB-5 project in mind, how can you find out the potentially qualifying “areas” to which it belongs?  You can get a quick sense of geography just by looking up the city/town name on Wikipedia, which will tell you to what county and MSA (if any) the place belongs, and give ballpark population data. From there I’d go and enter the project address in the government’s FFIEC mapping system, which will identify the census tract for that address, show the directly adjacent census tract numbers, and confirm whether or not the address is in an MSA. Once having identified the possible geographic areas for a TEA determination, you’re ready to think about data.

C. What data can be used to qualify a TEA?

Since November 21, USCIS does not automatically approve any particular unemployment dataset for TEAs. Before November 21, USCIS also did not offer deference for unemployment data and methods. Regarding TEA data, the regulation simply repeats language that was introduced back in the May 30, 2013 EB-5 Policy Memo, and that has been included in (6)(G)(2)(A)(5) of each Policy Manual iteration since: “USCIS will review determinations of the unemployment rate” and “acceptable data sources for purposes of calculating unemployment include U.S. Census Bureau data (including data from the American Community Survey) and data from the Bureau of Labor Statistics (including data from the Local Area Unemployment Statistics).”  BLS data was specifically identified as acceptable in the December 2009 Neufeld Memo. By 2012, USCIS clarified that it would accept ACS data with census share methodology for subareas not covered by BLS. The point of this history lesson: we are not standing on new ground now, regarding data.  USCIS only changed its deference to state designations of TEA geographies — there never was deference for the data portion of TEA analysis, and suggested data sources remain unchanged. In fact, TEA requirements are, if anything, clearer now than they used to be.  To quote from discussion in the regulation final rule related to acceptable data:

  • The regulation “does not provide one specific set of data from which petitioners can draw to demonstrate their investment is being made in a TEA. Rather, the burden is on the petitioner to provide DHS with evidence documenting that the area in which the petitioner has invested is a high unemployment area, and such evidence should be reliable and verifiable.” [Consistent with previous policy.]
  • “The data necessary for the TEA designation determination is publicly available from the Bureau of Labor Statistics or U.S. Census Bureau. A TEA designation request alternatively can be supported with other data, public or private, provided that DHS can validate that data.” [Consistent with previous guidance.]
  • “Regardless of which reliable and verifiable data petitioners choose to present to DHS, the data should be internally consistent. If petitioners rely on ACS data to determine the unemployment rate for the requested TEA, they should also rely on ACS data to determine the national unemployment area to which the TEA is compared.” If considering state data, the rule cautions that “petitioners may not be able to compare the state census tract data to a national unemployment rate that utilizes the same methodology.”
  • To calculate the weighted average for a group of census tracts, the Final Rule opts to keep the cumbersome method described in Footnote 41 of the NPRM, except specifying that civilian labor force rather than total labor force should be used: (1) divide the labor force of a census tract by the labor force of the entire TEA area; (2) multiply this figure by the unemployment rate of that census tract to calculate a weighted unemployment rate for that tract; (3) repeat Steps 1-2 for each tract in the TEA area; (4) sum the weighted unemployment rates for all tracts in the group to calculate a total that can then be compared with the national unemployment rate.

The final rule optimistically states that the TEA process can be “easily navigated by any petitioner–whether associated with a regional center or not–for little or no cost,” because “unemployment data is readily available by which they can determine if an investment in a particular area satisfies applicable TEA designation requirements.”

The person who wrote the rule clearly never tried to pick an address, venture online, and find and interpret appropriate unemployment data for that location at the MSA, county, city, and census tract levels. It’s not easy.  In practice, most people will have to pay qualified consultants to help with the data portion of TEA determinations. But if you still want a sense of what’s available to the public, a few links:

  • Guidance for Labor Force Statistics Data Users, published by the U.S. Census Bureau, reviews the types and sources of unemployment data available for different types of geographic areas. The EB-5 regulation merely acknowledges that “no one dataset is perfect for every scenario”; Census Bureau guidance explains which dataset to use for which scenario.
  • The Bureau of Labor Statistics publishes monthly and annual unemployment data for the nation, MSAs, and counties. TEA designations have traditionally referenced the annual data –  one doesn’t want to update the TEA analysis every month, and annual data facilitates apples-to-apples comparisons across geographies. To find the annual average employment rate for an MSA or county, open the BLS Local Area Unemployment Statistics page to the section on Tables and Maps Created by BLS. Within that section, scroll down to the “Annual Average” subsection, and within that subsection to “Metropolitan Area Data” and “County Data.” (This link jumps directly to annual average county data.) Alternatively, perform a search using the Featured LAU Searchable Database. Either way, you will be directed to a table crammed with data that’s ugly and not convenient to print and share, but reliable and verifiable.  The nationwide annual average employment rate, for comparison, is on this page. Monthly data is less workable for TEA purposes, but has a benefit of coming in focused and print-friendly reports.  For county data, I like the BLS reports linked to the Geographic Information > Economic Summaries page. They’re in PDF format, and handily compare county unemployment with nationwide unemployment, as required for TEA designation. If my project were in a clear high-unemployment county covered by one of these reports, I’d consider this resource.  (Just keeping in mind that BLS refreshes these reports every month, and does not archive older versions, so they’re not directly verifiable over time. Archives of monthly MSA data can be found here, but monthly county data archives are tougher to locate.)
  • The U.S. Census Bureau’s American Community Survey comes in because BLS does not collect or report unemployment data at the census tract level, or for cities outside MSAs. One can search for ACS data for employment by geography, including at the census tract level, using the advanced search function in the old factfinder.census.gov or the new data.census.gov. The census bureau search functions are not friendly to casual human users, and their employment data is relatively outdated. State TEA designations would frequently update ACS employment data for census tracts with reference to the more recent BLS unemployment data at the county level using a method called census share (as described here by BLS and here in the EB-5 context, for example). But I don’t recommend trying this at home. You’ll want an experienced professional to crunch data for any TEA below the county level. But in the meantime, to get a preliminary sense of unemployment at the census tract level, try using one of the free mapping tools for EB-5, such as by IIUSA and Impact DataSource.
  • State workforce agencies also publish labor market information, as part of a nationally designed LMI infrastructure that connects BLS, the Census Bureau, and each state. Such state-reported data should also be acceptable, as it’s linked to the BLS and ACS data specifically name-checked by DHS as evidence that “should be reliable and verifiable.” The challenge is to determine which national unemployment rate is comparable to the state unemployment rate. (For example, should use the BLS national rate if the state is referencing BLS data or ACS data updated with census share methodology, the ACS 2017 5-year estimate unemployment rate if the state’s numbers are based on ACS 2017 5-year estimates, etc.)

D. Who determines TEAs, and how and when?

We’d gotten comfortable thinking about TEAs determined in advance by state agencies, via designation letters.  That TEA letter comfort was useful for marketing, but somewhat of an illusion.  In fact, TEA determinations were never fixed as of the date of a letter, because policy has required TEA status to be determined for each investor based on the date of investment or I-526 filing (whichever came first). As discussed above, state letters were not granted automatic deference; USCIS reserved the right to question the timeliness, data, and methods. We’ve long had to work with a degree of uncertainty and case-by-case discretion by USCIS when it comes to TEAs.  The new situation is not necessarily more ambiguous, just different.

Determining the geography component of TEAS

The regulations depart from previous practice primarily by eliminating state designation of TEA geography. The power to designate an “area” now lies with DHS, and DHS has made the geography determination once and for all in advance by specifying a limited and strictly defined list of possible areas in the final rule.  Petitioners just have to pick one of the defined area types (see the list in Section B above), and provide unemployment data for that area.

DHS intended for the new reg to eliminate ambiguity and individual discretion from the geography element of TEAs, and apparently succeeded.  There’s no need for anyone to “designate” the geography portion of a TEA; a list of acceptable geographic areas has already been defined.

Determining the unemployment data component of TEAs

As discussed above, the process for data remains unchanged in theory. Whoever provided the TEA data, USCIS has always reviewed and assessed that data in context of each investor petition, and determined as part of I-526 adjudication whether TEA requirements were met.

In the past, we’ve used letters from state agencies as a vehicle for presenting unemployment data to USCIS. Nothing in the regs would prevent us from continuing to do this. DHS has relieved state agencies of the extraneous responsibility of drawing boundaries for EB-5 incentive areas. DHS has not stripped state workforce agencies of their own mandate to supply workforce data.  State agencies may or may not be amenable to continued requests from EB-5 users for unemployment reports customized to DHS-defined areas. But state letters are a tidy and convenient vehicle for reliable unemployment data, and it doesn’t hurt to ask. State workforce agencies are subject to uniform, nationally-designed standards for Labor Market Information (LMI) reporting, so USCIS couldn’t suspect the agencies of being idiosyncratic or inventive with the data portion of a TEA determination.  At least, I would try the state workforce agency, before downloading hundred-column spreadsheets myself from the internet, and before requesting unemployment analysis from some former Uber driver Joe Smith now d/b/a TEA Designations, LLC.

In the past, we’ve used consultants, particularly EB-5 experienced economists, to help identify TEAs and approach states for letters. Now, we can ask those same consultants to prepare letters with unemployment analysis to present to investors and USCIS. We should demand that the consultant’s work product meet these standards: (1) define the geographic area with specific references to the latest EB-5 policy/regs, (2) identify the sources for population and employment data with sufficient specificity to allow the reader to go online and find the publicly-available data referenced, (3) show all the steps in any calculation, (4) explain, with references to the EB-5 regulation and BLS and/or Census Bureau guidance, why the analysis is reasonable. If you, as a reader, can verify the data and see that the analysis aligns with authoritative guidance, odds are the USCIS adjudicator will likewise find it reliable and verifiable. I’d demand more detail and footnotes from a consultant report than from a state letter. Compared with the Georgia Department of Labor, Joe Smith has a hurdle to prove his data and methods.

Whoever wrote the regulation seems to think that people can easily go online and get appropriate unemployment data to print out as evidence.  As briefly discussed above, BLS and ACS data is not that easy to navigate or interpret (or even print, for that matter), and info from third party mapping programs and other sources may or may not be up-to-date, reliable, and verifiable. It takes some expertise even to accomplish a simple task like choosing a national unemployment rate that’s internally consistent with a given local area unemployment rate. And it takes considerable expertise to bolster a TEA analysis with references and explanations that leave no crack for USCIS questions.  So I think we’re still in a world of securing TEAs using letters and reports – the only question is: who prepares them.

Some wondered whether DHS itself could start providing TEA designations in advance of investor petitions. The regulation states that “this rule does not establish a separate application or process for obtaining TEA designation from USCIS prior to filing the EB-5 immigrant petition and USCIS will not issue separate TEA designation letters for areas of high unemployment.” The regulation offers that a regional center may seek TEA determination by filing an exemplar petition, and “If the exemplar application is approved, the approval (including the TEA determination) will receive deference in individual investor petition filings associated with that exemplar in accordance with existing USCIS policy (for example, absent a material change in facts affecting the underlying favorable determination or its applicability to eligibility for the individual investor).” However, this offer is 100% useless and void, unless USCIS can start providing exemplar approvals in less than the time that it takes unemployment data to expire, and thus become inapplicable to individual investor eligibility.  The currently posted I-924 processing time is 62 to 115 months. No investor can claim TEA status at the time of investment or I-526 filing based on a TEA determination calculated five to ten years previously.

Regarding timing, the regulations do not imply a change from past practice.  A TEA determination has always needed to be valid at the time of an EB-5 investor’s investment or I-526 filing, whichever comes first. A TEA determination has always been valid so long as the underlying data is the most current available. Most state letters were effective for up to a year because they calculated unemployment rates from annual average data that is, naturally, updated just once a year. The regulations do not change what unemployment data is available, or when BLS and the Census Bureau publish updates. The regs do not suggest that DHS had a problem with the unemployment data and methods that states have used all these years, only a problem with how states were willing to gerrymander geographies. So I do not see any new policy or new ambiguity, when it comes to timing of TEA determinations.   When a consultant creates a TEA analysis, just be sure to specify the validity period for the underlying data, and point out that this defines the shelf life of the TEA determination.

11/21 Welcome to the New EB-5

The EB-5 Modernization Regulation takes effect today, November 21, 2019. As a reminder, the USCIS EB-5 Page summarizes what’s new, the full text of the final rule gives all the detail and background of the new regs, and the USCIS Policy Manual EB-5 section contains current policy as updated by the regs. It’s possible that rules will be changed again sooner or later by legislation, but that has not happened yet. (The regional center program’s most recent authorization also coincidentally expires today. It will be extended without affecting the regulation, assuming that the Senate and President sign off on the clean continuing resolution that the House passed on Tuesday. I track developments on my Washington Updates page.)

To recap what’s new beginning today, thanks to the effective regulations:

  1. I-526 filed from today through 2024 are subject to a minimum investment of $1.8 million, or $900,000 in a Targeted Employment Area (TEA). After that, investment amounts will be adjusted again based on inflation.
  2. I-526 filed from today have different TEA issues. The definitions are more restricted, and the process has changed. It’s no longer possible to simply order a TEA designation letter from the state, and expect USCIS to defer to that letter. Instead of pre-designation by the states or DHS, TEAs get confirmed on a case-by-case basis as part of I-526 adjudication, based on data provided by the petitioner. (This post discusses the detail.)
  3. From today, people can have the option of filing a new I-526 while retaining the priority date of a previously-approved I-526. (This post discusses the detail.)
  4. From today, people who are removing conditions can enjoy some process improvements related to I-829.

And that’s all. A few simple changes, but with significant consequences. EB-5 usage will be different now that the price tag is two to three times higher than it used to be, now that urban TEAs are more limited, and now that there’s no longer a deadline to hurry investment decisions.

EB-5 Legislation? (S.2778, S.2540)

Since 2015, when the last three-year regional center program authorization expired, there’s been much effort to get EB-5 legislation passed. At minimum, we need Congress to put the regional center program on a stable footing by giving it a long-term authorization. (Since 2015, the program has been extended 17 times, each time for just a few weeks or months.)  Other features that one faction or another hope to get into legislation: update the EB-5 minimum investment amounts, revise the Targeted Employment Area incentive, implement additional integrity measures, improve procedures, and provide visa relief.

However, the status quo has been profitable, and those who profited most have resisted change. Several times since 2015, negotiators were reportedly close to getting EB-5 legislation attached to a funding bill, but ultimately did not succeed. Reviewing the history gives perspective on where we are today.

  • December 2015: Senators Grassley, Leahy, Goodlatte, Conyers, Issa, and Lofgren drafted legislation that would have given the RC program a 4-year authorization, changed the EB-5 investment amount to $1.2 million ($800,000 in a TEA), restricted TEA definitions, and added integrity measures. According to Senator Grassley, “On that first day of December negotiations, there was a lot of discussion about how New York wouldn’t be able to compete with rural America if our reforms were enacted.  They thought the bill was unfair to urban areas.” Grassley claimed that he tried to compromise, but could not go far enough. ABC News reported that “the legislation was defeated by a group of lawmakers led by New York Democrat Chuck Schumer, who argued that security improvements were a good idea, but the way the reform was written would unfairly hurt investments in his home state.” ABC quoted a Schumer spokesman: “Sen. Schumer supports reforms that will bring transparency and accountability to the EB-5 program, but strongly believes that the EB-5 program should continue to act as a catalyst for thousands upon thousands of jobs throughout New York.”
  • December 2016: A version of the The American Job Creation and Investment Promotion Reform Act of 2016 originally introduced by Representatives Goodlatte and Conyers was seriously discussed for inclusion in the December 2016 funding bill. This legislation would have given the RC program a 6-year authorization, gradually increased the the TEA EB-5 investment amount to $800,000 while leaving the $1M standard unchanged, revised TEA definitions, and revised integrity measures. But this also proved unacceptable. Senator Grassley wrote a post listing the specific reasons for “why this package was not acceptable to some – notably the U.S. Chamber of Commerce that was the most rigid in not compromising” and complained again that “the industry love the status quo and the billions of dollars that pour in to affluent areas.” The Wall Street Journal reported that “Related Cos., a developer of massive mixed-use projects, has waged an aggressive campaign to head off proposed changes to the so-called EB-5 program in an apparent effort to keep low-cost money flowing to luxury urban projects such as its $20 billion Hudson Yards development in Manhattan.” A few million in lobbying dollars proved money well spent for Related, which eventually raised $1.2 billion in EB-5 investment for Hudson Yards. According to the WSJ article from January 2017, Related Companies “found support from a handful of key senators including Sen. John Cornyn (R., Texas) and Sen. Charles Schumer (D., N.Y.), who have been resistant to the changes opposed by the developers.” A spokesman told WSJ that Schumer believes good projects in EB-5 “should rise to the top based on how many jobs they’ll create,” and that the government shouldn’t be trying to direct development to specific parts of cities.
  • March 2018: The EB-5 Immigrant Investor Visa and RC Program Comprehensive Reform Act negotiated by Grassley, Goodlatte, Cornyn, Flake reportedly came close to inclusion in the March 2018 funding bill. This bill would have given the RC program a 5-year authorization, increased the EB-5 investment amount to $1.025 million ($925,000 in a TEA), revised TEA definitions, and revised integrity measures. I saw this bill as a generous compromise to urban interests. But the bill also failed, and Senator Grassley had an opinion as usual about what happened. “For the last year, my staff, along with Chairman Goodlatte, Senator Cornyn, and Senator Flake’s teams, has worked around the clock to produce an EB-5 reform package. Everyone made numerous concessions in order to reach a deal, and after more than twenty meetings and countless hours of drafting, we produced a reform package that was fair. These reforms weren’t acceptable to the big moneyed New York industry stakeholders who currently dominate the program. And because big money interests aren’t happy with these reforms, we’ve been told they won’t become law.”

This story gets repetitive. But now, circumstances have changed, due to the EB-5 Modernization Regulation to take effect on November 21, 2019. The regulations will create a new status quo of exclusive TEA definitions and investment amount increases that would tend to reduce the flow of EB-5 investment overall, and channel EB-5 investment away from many urban areas. That’s not the status quo that EB-5 protectionists want to protect, and now legislation offers the only path to change.

That brings us to S.2778 – Immigrant Investor Program Reform Act, introduced by Senators Mike Rounds (R-SD), Lindsey Graham (R-SC) and John Cornyn (R-TX). Charles Schumer (D-NY) has already signed on as an additional co-sponsor, pivoting from his traditional role as quasher of EB-5 bills. Robert Maples of Greenberg Traurig, who previously expressed Related’s objections to the EB-5 regulations, praises S.2778 for “proposing long overdue improvements to modernize the EB-5 program in alignment with industry and market principles.” IIUSA lauds “the EB-5 industry’s ability to work together and come to an agreement on many issues that until now left industry stakeholders divided.” Perhaps we finally have an EB-5 bill that can avoid being blocked.

S.2778 proposes Targeted Employment Area changes that would allow EB-5 capital to continue to flow to high-quality urban projects that naturally attract investment, instead of countering market principles by encouraging capital toward projects in less prosperous areas. The bill would shift TEA definitions to privilege the areas that major regional centers already favor (Opportunity Zones, closed military bases), and – more to the point – would minimize the incentive to choose a TEA investment over a standard investment.  In the regulations comment linked above, Related Companies argued that a $100,000 differential would be fair and reasonable (avoiding the problem — from Related’s perspective — of “financial incentive for foreign investors to invest in TEAs, regardless of the project”), and that’s what S.2778 proposes.  While past statute and the new EB-5 regulations offer a 50% TEA discount, S.2778 would offer a 9% TEA discount, with $1,100,000 standard investment and $1,000,000 TEA investment. This would essentially eliminate the monetary TEA incentive. As a concession, S.2778 offers two additional TEA incentives related to timing: expedited I-526 processing, and set-aside visas. These are safe concessions for New York City, because expedited processing is limited by USCIS’s ability to deliver such a benefit, and the visa set-aside incentive is limited to the number of visas offered (must stay under 3,000, or the incentive disappears) and to the few countries that need a visa incentive (China, Vietnam, India).  Current law already sets aside 3,000 visas annually for TEA investments (INA Sec. 203(b)(5)(B)), but people forget that because the existing TEA set-side has had zero incentive effect in practice. Set-asides only have any incentive value if limited to a few. The industry consensus proposal offered to give some potency to the new TEA set-asides by restricting them to TEA investors filing after the date of enactment. S.2778 does not specifically state such a restriction, however. I hope the restriction is not still implied, because reserving up 3,000 visas annually for incoming investors and their families would be at the direct cost of reducing visas available to the tens of thousands of past EB-5 applicants (mostly TEA investors) who are currently waiting for visas. To the extent that visa set-asides and expedited processing can work at all as incentives, they work by offering queue-cutting. That would not be fair to 70,000+ people in the queue before the rule was made. To the extent that the timing-related incentives would not work at all, they are unfair to parties in negotiation who accepted these concessions in faith that they would be effective TEA incentives to replace the monetary incentive.

Visa-limiting TEA incentives aside, S.2778 offers some  backlog relief. The bill would make no additional EB-5 visas available, but would soften the pain of waiting for visa availability. S.2778 offers the possibility of parole (entry to the United States) and work authorization for EB-5 applicants with I-526 approval who have been waiting over three years for a visa. This would extend to EB-5 investors abroad the benefit already available to applicants in the U.S. who file I-485 to adjust status. Otherwise, parole has been restricted to urgent humanitarian or significant public benefit reasons. (Links FYI that describe how parole currently works in the I-485 context and for applicants abroad.) I wonder about the politics of offering parole to EB-5 investors, since the administration cancelled parole for immigrant entrepreneurs and threatened to take it away from U.S. military families.  But if this benefit can be enacted (and DHS consents to implement it), parole could really help EB-5 investors stuck abroad waiting for visas – particularly direct EB-5 investors who struggle to manage their US businesses from afar. This is not a visa giveaway, does not change the EB-5 visa limit, and only offers the weak promise that DHS may “temporarily parole… on a case-by-case basis,” but at least it’s something. Besides parole, the bill offers to soften the pain of long wait times by permanently protecting children from age-out. I understand that IIUSA pushed very hard for the additional relief of applying the EB-5 visa limit to investors, as intended by EB-5 program architects, not investors plus family, but that provision did not make the final bill. Visa relief has never had much chance, considering that immigration politics does not favor increasing visa numbers, and that there’s little self-interest for the dominant regional centers in reducing the time they have to deploy and redeploy low-cost EB-5 capital.

Other positive features of S.2778 include 6-year authorization for the regional center program and recourse for investors and projects following termination of a regional center.

If I could choose three modest improvements on S.2778, I would suggest:

  • Authorize DHS to assess fees necessary to meet reasonable processing time goals for EB-5 investor petitions. This is one of the few good ideas in Grassley and Leahy’s S.2540 EB-5 Reform and Integrity Act, which defines targets (in days) for each form, and charges USCIS to set fees to allow meeting those targets. The latest proposed fee rule from DHS shows that DHS will not, on its own initiative, allocate resources to improve the current status quo of 2-4 year processing times for I-526 and I-829. Congress needs to step in to push DHS toward processing integrity, and to authorize the resources necessary. (S.2778 suggests premium processing with a fee, but only for regional center applications, amendments, and reports, not for investor petitions. S.2778 suggests collecting $51,000 in additional fees from investors, but specifies that these are to be used for enforcement activities, not processing improvements.)
  • Delete the $10,000 annual fee for regional centers that are not-for-profit or have fewer than 20 investors. If Congress wants to see at least a few face-saving EB-5 projects in distressed areas, it should keep the regional center option affordable to small entities, and open to areas that won’t have high-volume deal flow. A $20,000 annual fee – or $50,000 annual fee for that matter — is nothing to a regional center handling hundreds of millions of EB-5 capital. But a minimum a $10,000 fee (especially on top of all the other cumbersome red tape suggested by the bill) could eliminate small regional centers with modest and occasional EB-5 capital raises. The $10,000 minimum regional center fee is a handy as an anti-competitive measure, benefiting large, high-volume and established regional centers by helping to clear the deck of small players, but such a winnowing would not benefit EB-5’s potential or reputation.
  • Include at least one genuine integrity measure – i.e. at least one measure that involves something besides reporting to and making records available to DHS. At minimum, why not borrow another good idea in Grassley’s S.2540: require regional centers to make their annual statements available to their investors. Record-keeping, reporting, and certifications are fine activities in themselves, but not anti-fraud measures if just paper disappearing into the vaults at USCIS, along with all the other paper that doesn’t get read for years. But that’s as far as S.2778 goes. S.2778 excludes an integrity measure that’s been in other EB-5 reform bills, including S.2540: the requirement to have an independent fund administrator to monitor the deployment of funds into any affiliated job-creating entity, and keep alien investors informed about the deployment.  In the cover article to their 2018 database of SEC actions, Friedland & Calderon note that “virtually every SEC civil enforcement action involving EB-5 fraud the NCE did not have an independent fund administrator, escrow conditions were ignored, and periodic reports of the status of investor funds were not furnished to investors.” Effective integrity measures had better address such proven vulnerabilities. It’s hard to imagine that any of the specific SEC cases would’ve been forestalled just by enhanced reporting to and threat of sanctions from USCIS. If I were putting EB5 language into a funding bill, and serious about program integrity, I’d consider taking the fund administration language from S.2540.

I will not bother to say more about Grassley and Leahy’s S.2540 EB-5 Reform and Integrity Act — a bill that no one will support. S.2540 alienates prosperous urban interests by not replaceing the TEA rules in the EB-5 regulations, and excludes most everyone else with a blizzard of restrictions, requirements, and fees that would be too much for most stakeholders serving distressed urban and rural areas. S.2540 doesn’t propose to simply terminate the regional center program, but the effect would be pretty close. So S.2778 is what we have, a bill with enough benefits for enough people to win support. The industry is rallying round and making positive statements. There’s some hope that language from S.2778 will get included in a funding bill this year, trump unwanted regulations, and provide desperately needed long-term authorization for the regional center program. Perhaps I too should pretend that S.2778 is an excellent bill and represents fair compromise.

A few links to other perspectives on the legislation:

11/6 USCIS Policy Manual Update

The USCIS Policy Manual has been updated as of today with some edits to the EB-5 section in Volume 6 Part G,  and Adjustment of Status section in Volume 7 Part A. As usual, I saved the revised EB-5 section as a Word document in my folder of PM editions, and made a comparison document that redlines changes since the previous version.  I approached the policy manual update with some excitement, wondering (1) whether the PM update would add guidance or detail on TEA designation or priority date retention, and (2) whether USCIS would try to slip in any other policy changes under the cover of a regulations update. The answer to both questions is: no.  The PM says even less about new TEA rules and priority date retention than the reg says. The 11/6 PM update does not reflect all changes in the reg (i.e. does not include the new provision regarding evidence of property transferred from abroad, and does not mention most I-829 changes.)

Update: Robert Divine has written an article for IIUSA that reviews the changes.

Here is the update notice email from USCIS.

From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com>
Sent: November 6, 2019 9:41 AM
Subject: Policy Update Notice on EB-5 Modernization Final Rule

USCIS is revising its policy guidance in the USCIS Policy Manual to align with the EB-5 Immigrant Investor Program Modernization Final Rule, published on July 24, 2019, and effective Nov. 21, 2019.

We are updating the USCIS Policy Manual to conform with the final rule’s provisions, which include:

  • Priority date retention for certain EB-5 immigrants;
  • An increase in minimum investment amounts;
  • Reforms to targeted employment area designations; and
  • Clarification of USCIS procedures for the removal of conditions on permanent residence.

Please see the Policy Alert for more detailed information on this update.

Conference Rumors (partial investment, visa wait times)

I heard IPO Chief Sarah Kendall and Department of State Visa Control Office Chief Charles Oppenheim speak last week at the IIUSA conference in Seattle.  I’ll blog in detail about these talks and other news and insights from the conference as time permits, but first to quickly address a couple misconceptions that may affect current decision-making.

Rumor credits Kendall’s talk with announcing that it’s now acceptable to file I-526 with less than $500,000 before November 21, and Oppenheim’s talk with announcing that EB-5 backlogs have fallen. These impressions are not quite accurate, in context.

Sarah Kendall confirmed a point related to TEA requirements as they intersect with the “investing or actively in the process of investing” requirement. Her comments did not create or change the “actively in the process of investing” alternative to investing the full amount prior to I-526 filing.  Partial investment remains an option that’s just as available, narrow, and risky as it has always been. For discussion, see Joey Barnett and Vivian Zhu’s article “EB-5 Minimum Investment Amount Increases to $900,000 November 21, 2019 – Can an EB-5 Applicant Invest Less Than the Full $500,000 Now and Still Qualify?” and Robert Divine’s article “Member Perspective: EB-5 Implications from IIUSA Conference Leading up to November 21 Effective Date of Regulations” (and his previous cautionary words about skeletal filings.) Personally, I would not file I-526 with less than $500,000 invested because USCIS makes it so tough on the business side to prove that funds not actually in the enterprise account still qualify as “at risk” in the enterprise, as required. For examples of petitioners who invested less than the minimum amount before I-526 filing, and specific problems that they faced, see: FEB012017_01B7203, Oct262009_01B7203, Apr162009_01B7203, Nov032008_01B7203, OCT072005_01B7203. The official policy is here in the policy manual.

In his presentation on October 29, 2019, Charles Oppenheim estimated EB-5 visa wait times for current investors from China, India, and Vietnam that are shorter than the wait times he had estimated back in April 2019. This reflects a reduced estimate of the total backlog of EB-5 applicants (visa applications+ estimated applicants associated with pending I-526). However, the number of investors in line for an EB-5 visa has likely not fallen since April 2019, considering the number of of I-526 filings and adjudications and visa issuances since then. Oppenheim’s total backlog estimate fell due to revised assumptions about the number of visas to eventually be claimed by those investors. Specifically, he’s now estimating fewer visa applicants associated with pending I-526, because he increased the I-526 denial rate assumption for all countries, and decreased the family size assumption for some countries. I’ll blog and spreadsheet the detail when IIUSA publishes the slides, which Oppenheim promised would include some data not in the conference presentation. But to the bottom line: Oppenheim’s revised estimates are mixed news.  Considering the surge of people starting the race, it’s worrisome to see Oppenheim looking at the finish line and estimating that a reduced number of people will make it to the end to claim a visa.  For EB-5 investors considering risks, they must assume (a) solid success rate with associated long wait times, or (b) shorter wait times predicated on high failure rate. It’s one or the other, considering demand. (B) is unfortunately plausible, considering IPO’s recent behavior, so I don’t necessarily question Oppenheim’s revised predictions with shorter wait times.