May 2022 Visa Bulletin with Reserve Visas

The May 2022 Visa Bulletin is out, reflecting seismic changes for EB-5.

For discussion, I recommend Joseph Barnett and Bernard Wolfsdorf’s article EB-5 Visa Availability for the May 2022 Visa Bulletin and Reservations on Reserved Visas-Skipping the Waiting Line is Un-American.

The tragic situation described in my article on reserved visas is being realized.

DOS Alert on Visa Processing

Today April 12, 2022, the Department of State US Visas News page published “Announcement on Resumption of Processing of EB-5 Visas Associated with the Regional Center Program“:

On March 15, 2022, President Biden signed a law that made changes to the EB-5 program, authorized a new EB-5 Immigrant Investor Regional Center Program, and directed that certain “grandfathered” immigration benefits be processed. The Department has resumed processing visas associated with the Regional Center Program based on approved USCIS Forms I-526 (Immigrant Petition by Alien Entrepreneur), including those filed on or before the expiration of the previous regional center program on June 30, 2021. Further, pursuant to the new legislation, processing of visas associated with the new Regional Center Program may begin 60 days after enactment of the law.

Thank goodness for the push from well-drafted grandfathering language in the new law. Notice the two policies: one for Regional Center 1.0, and one for Regional Center 2.0. The Department “has resumed” processing visas based on approved I-526 based on previous regional center program authorization. For I-526 based on the “new Regional Center Program,” DOS “may begin” processing after 60 days.

Commenters, let me know if you can access your NVC accounts, or have any other evidence that the Department has actually resumed processing for pending applicants.

USCIS Alert on I-526 processing

The USCIS Form I-526 page was updated today April 11 (and the main EB-5 page on April 12) with this message.

We have resumed processing regional center-based Form I-526, Immigrant Petition by Alien Entrepreneur, filed on or before the sunset of the previous regional center program on June 30, 2021. We will adjudicate all Form I-526 petitions filed before March 15, 2022, according to the applicable eligibility requirements at the time such petitions were filed (that is, the eligibility requirements in place before the enactment of the EB-5 Reform and Integrity Act of 2022, Div. BB of the Consolidated Appropriations Act, 2022 (Pub. L. No. 117-103) (Sec. 101 and 102). We will continue to process Form I-526 petitions under the visa availability approach, prioritizing those Form I-526 petitions for investors with an available visa or a visa that will be available soon. We will continue to reject all Form I-526 petition received on or after July 1, 2021, when it indicates that the petitioner’s investment is associated with a regional center.

I’m glad to see that USCIS does not intend to hold pending regional center petitions in abeyance pending regional center recertification. I have noted a recent uptick in I-526 processing, with around 10 actions and at least two or three completions most working days this month. That’s a great improvement over last month (but still far from the volumes needed to process over 13,000 pending I-526 petitions in a timely manner).

USCIS alert on regional center designation

The USCIS EB-5 page was updated today April 11 with this message.

Congress repealed Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993, in the EB-5 Reform and Integrity Act of 2022, Div. BB of the Consolidated Appropriations Act, 2022 (Pub. L. No. 117-103) (Sec. 101 and 102). Therefore, regional centers previously designated under section 610 are no longer authorized. The EB-5 Reform and Integrity Act of 2022 requires all entities seeking regional center designation to provide a proposal in compliance with the new program requirements, which will be effective on May 14, 2022. We will provide further guidance to entities desiring to be designated as regional centers under the new program. We are not accepting Form I-924, Application For Regional Center Designation Under the Immigrant Investor Program, for this purpose.

Sigh. The EB-5 Reform and Integrity Act text does not does not, in fact, say that all previously-designated regional centers lose designation and need to reapply. But we’d been wondering about this since Senator Grassley expressed his impression that the law included such a provision. I guess I shouldn’t be surprised that USCIS has chosen the interpretation that will lead to maximum delays for future regional center investment and maximum confusion for in-process EB-5 projects and pending regional center applicants. There were 632 regional centers at last count as of October 25, 2021, and over 100,000 pending EB-5 applicants associated with the previously-designated regional centers. What happens next? Are billions of dollars in regional center investment suddenly stateless, pending the USCIS timeframe to review hundreds of new regional center applications? I would bet that as of today, USCIS intends no retroactive harm but simply hasn’t thought anything through and doesn’t know what further guidance it’s going to provide.

Impact of Reserved Visas in the EB-5 Reform and Integrity Act of 2022  (analogy, law, data, application, Oppenheim comments)

Introduction

This post tackles a momentous question: what is the impact of the 32% reserved visas provision in the EB-5 Reform and Integrity Act of 2022?

In the zero-sum visa game, newly-reserving visas for some means newly-restricting visa availability for others. That’s self-evident. But who wins and loses, and how much?

I’ll start with my conclusions, then take a deep dive into the detail, calculations, and questions behind the conclusions.

  • Reserved visas will probably not harm pending EB-5 applicants from countries other than China, Vietnam, and India, because country caps still protect minority-country visa availability, and demand under per-country limits has always been well under 68% of the annual EB-5 quota.
  • Reserved visas also have no incentive value for incoming EB-5 applicants from low-demand countries, since these applicants already have visa availability protected by country caps, and no visa backlogs to avoid.
  • Reserved visas can have incentive value for incoming EB-5 applicants from high-demand countries with backlogs (China, Vietnam, India) provided that the reserve visas are exclusive to incoming applicants, and thus offer a way to avoid standing in line behind thousands of pending applicants with earlier priority dates.
  • Reserved visas have a devastating cost for pending China-born applicants, because reserved visas drain the pool of “otherwise unused” numbers normally generally available at the end of every year to applicants with the oldest priority dates. The magnitude of the negative impact depends on whether or not Department of State interprets and applies the new law as making all reserve visas practically exclusive to post-March 15, 2022 priority dates, and thus inaccessible to the 80,000+ pending EB-5 applicants already queued up for visas. [6/21/2022 Update: DOS has announced that it interprets reserve visas as only available to applicants who file I-526 after March 15, 2022, and unavailable to the backlog.] But even with optimal interpretation, the China backlog is poised to lose access to at least 2,000 visas a year.

This article has five parts:

  1. Analogy:  To set the stage, I suggest the analogy of an airport (like EB-5, a multi-stage process), and passengers waiting on standby (analogous to oversubscribed EB-5 applicants waiting on unused visas).
  2. Law: I list out all the provisions in existing law that govern EB-5 visa availability, and the specific changes made in the EB-5 Reform and Integrity Act of 2022. This exercise highlights ambiguities and room for interpretation. I transcribe comments on the ambiguities from Charles Oppenheim, recently retired from Department of State, at a March 22 webinar with Wolfsdorf Law.
  3. Data: I lay out data for historical EB-5 visa demand, supply, and allocation.
  4. Application: I review how EB-5 visa wait time estimates worked under the old law, and consider the marginal impact of the new law on visa supply and wait times.
  5. Conclusion: I consider possibilities for making the reserve visas law turn out less bad for our past clients than it could be

(This post replaces my previous analysis in opposition to set-aside visas in March 2018, May 17, 2019, May 21, 2019, May 2021, and Sept. 2021.).

Part 1: Analogy

Airport AnalogyEB-5 Parallel
Three stages: buy a ticket, wait in the security queue to get to the gate area; wait in the gate area to get on a flight. Only passengers who reach the gate area are practically as well as theoretically eligible to use their tickets to get seats on a flight.File I-526, wait for I-526 processing, then wait in the consular or adjustment process for a visa. An I-526 priority date is a kind of ticket to maybe claim a visa in the future, but only people who are documentarily qualified at the visa stage can use their priority dates to claim visas.
Standby tickets:  Flying standby means that my ticket doesn’t lock in a specific designated seat, but I still have a chance to get a seat — assuming that a flight will have enough undesignated seats leftover for standbys to take.  Most EB-5 applicants from China are waiting on standby status for visas. Most Chinese do not have designated places in the annual EB-5 visa quota thanks to overbooking (under country caps, only 7% of annual visas can go to any one country by right). But having the oldest priority dates, Chinese are at the front of the standby line for any annual visas left unclaimed after by-right per-country allocations. Historically, at least over 40% of annual EB-5 visas have been “otherwise unused” and therefore leftover for the standby queue. Chinese have been able to depend on flying standby, because (1) they’ve been waiting longest and therefore at the head of the standby queue, and (2) a good number of “otherwise unused” visas have been reliably available to standby given the inherently low EB-5 demand from most other countries in the world. (Vietnam and India, while also overbooked, have not been able to expect any visas over the per-country limit, because they’re more recent and thus behind tens of thousands of Chinese in the standby queue.)

I believe that in real life, an airline will try to fill a flight with whoever at the gate can board, with people registered on the standby list getting otherwise unused seats in first come first served order.

Imagine if an agent at a crowded gate suddenly announced that 32% of seats on the flight are now exclusively reserved for passengers with codes that don’t yet exist in the boarding area or current standby list, but can be sold on tickets outside to prospective passengers who had been deterred by the long standby queue already at the gate. That’s the closest analogy I can think of to the 32% reserved visa provision in the new law (and particularly the 20% rural reserve, given very few past rural investments).

In the picture, I tried to illustrate who’s happy (the ticket seller), who’s sad (the displaced standby passengers at the gate), who’s confused (the pending standby passengers who technically match reserve conditions, but not sure yet how/if they can claim new codes only being stamped outside on new tickets), who doesn’t care (the passenger who has a designated seat anyway and not dependent on standby or reserves), who’s frustrated (the guy at the gate who looks around, sees no one positioned yet to use up the reserved seats, and realizes that planes will have to take off partly empty until new reserve-eligible passengers finally make it to the gate, meaning existing standbys get further delayed for nothing), who’s conflicted (the prospective passengers standing in a crowd outside the ticket counter, wondering how to interpret the pitch that they won’t find themselves stuck in a crowd once they get to the boarding gate), and who’s two-faced (the airline, with different messages at the ticket counter and the gate).

Part 2: Law

The EB-5 Reform and Integrity Act of 2022 introduces two changes to the law for EB-5 visa allocation:

  • it repeals/replaces the two pre-existing categories of EB-5 set-aside visas (3,000 regional center, 3,000 TEA), and adds three newly-defined reserved visa categories (20% rural, 10% high unemployment, 2% infrastructure);
  • it introduces an instruction to preserve unused reserved visas from year to year within the EB-5 category (without, however, repealing or amending the parts of the existing law that define/cap the annual EB-5 limit and allocate any used EB-5 visas to other visa categories).
Law prior to the EB-5 Reform and Integrity Act of 2022Specific changes made by the EB-5 Reform and Integrity Act of 2022
INA 201(d): The Employment-Based category is allocated a base 140,000 visa annually. The EB limit for a given year is the base 140,000 plus any unused Family-Based visas from the previous year.RIA specifies no change to INA 201(d)
INA 203(b)(5)(A) Each year, the EB-5 category is allocated a maximum of 7.1% of the EB limit for that year.RIA specifies no change to INA 203(b)(5)(A)
INA 203(e)(1) Available EB visas are generally issued to eligible immigrants in the order in which the immigrant petition was filed.RIA specifies no change to INA 203(e)(1)
INA 202(a)(2) states a per-country limit: that no more than 7 percent of visas available within an EB category in a fiscal year can be made available to natives of any one country. INA 202(a)(3) and (5)(A) provide an exception: that EB immigrants are not subject to the per country limit allocation in a period where available visas exceed the number of qualified applicants to take them.RIA specifies no change INA 202(a)
INA 203(b)(1) If visas still remain unused within the EB-5 category near the end of a fiscal year, such unused visas are made available for use by priority workers (EB-1/EB-2)RIA specifies no change to INA 203(b)(1)
INA 201(c): If the EB category as a whole does not use all its allocated visas in a fiscal year, such unused visas are made available within the Family-Based category in the next fiscal year.RIA specifies no change to INA 201(c)
I’m not sure where this is in the INA, but DOS explains in its document on Operation of the Numerical Control Process that DOS allots visa numbers monthly to consular posts and CIS to be given to reported documentarily-qualified applicants within established cut-off dates. Significantly, visa numbers do not get allotted to applicants earlier in the process; including not when petitioners invest or file I-526.RIA specifies no change to the timing of visa allotment.
Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note) sets aside 3,000 visas annually for regional center applicants.RIA Section 103(a) repeals Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note), thus doing away with the regional center visa set aside in that section. RIA Section 103(b) says that “visas under this subparagraph shall be made available” to a new program for pooled investment, but does not specify a specific number of visas to be made available specific to regional center applicants.
INA Section 203(b)(5)(B) specifies that “Not less than 3,000 of [EB-5] visas made available in each fiscal year shall be reserved for qualified immigrants who invest in a new commercial enterprise … which will create employment in a targeted employment area.”RIA Section 102(a) (2) “amends” (i.e. apparently deletes and replaces) the old INA Section 203(b)(5)(B) to read as follows:   “(B) DESIGNATIONS AND RESERVED VISAS.— “(i) RESERVED VISAS.— “(I) IN GENERAL. —Of the visas made available under this paragraph in each fiscal year— “(aa) 20 percent shall be reserved for qualified immigrants who invest in a rural area; “(bb) 10 percent shall be reserved for qualified immigrants who invest in an area designated by the Secretary of Homeland Security under clause (ii) as a high unemployment area; and “(cc) 2 percent shall be reserved for qualified immigrants who invest in infrastructure projects. “(II) UNUSED VISAS.— “(aa) CARRYOVER.—At the end of each fiscal year, any unused visas reserved for qualified immigrants investing in each of the categories described in items (aa) through (cc) of subclause (I) shall remain available within the same category for the immediately succeeding fiscal year. “(bb) GENERAL AVAILABILITY.—Visas described in items (aa) through (cc) of subclause (I) that are not issued by the end of the succeeding fiscal year referred to in item (aa) shall be made available to qualified immigrants described under subparagraph (A).   ERIA Section 102 has an effective date of March 15, 2022.  

Notes on what did and didn’t change in the law, and what’s ambiguous

Minority Country Protection: The new law does not change the rule that protects low-volume countries with an annual 7% per country limit – a cap that high-volume countries may only exceed if and when there’s insufficient demand for available visas. Even if the new law does make 32% of 10,000 annual EB-5 visas practically unavailable to the backlog of pending applicants, that shouldn’t hurt minority countries in theory. An EB-5 applicant from Ireland doesn’t depend on a total 10,000 visas available anyway, but only on one of the 7% of EB-5 visas that must be made available to the few Irish applicants ready to claim them before other countries can start to exceed their 7% caps. Thus far, the highest that EB-5 demand under per-country limits has ever gone is 5,851 total in FY2019 (other visas that year were “otherwise unused” and thus issued to the oldest Chinese applicants). So even reducing generally-available EB-5 visas to about 6,800, if set asides have that effect, may not threaten applicants under per-country limits. At the same time, reserved visas don’t stand to benefit minority countries, since applicants from low-demand countries don’t have visa backlogs/visa wait times to avoid.

Eliminating RC and TEA Visa Set-asides: The new law explicitly repeals or replaces the EB-5 visa set asides in previous law: 3,000 for regional centers and 3,000 for TEA. Those set-asides were popularly forgotten because they hardly mattered in practice. There never were over 7,000 non-regional center or over 7,000 non-TEA investors ready to request visas in a year, and thus no one ever ran up against the old set-aside limits. With the backlog dominated by RC and TEA investors, the previous RC and TEA set-asides gave no short-cut around the backlog. So, who cares about eliminating those insignificant set-asides? At minimum, pending applicants are confused now, since their pending applications and the Visa Bulletin are marked for visa codes (C5, T5, I5, or R5) that correspond to the now-eliminated reserved visa categories. The reserve categories around which they invested have suddenly disappeared. For applicants not dependent on the Visa Bulletin anyway, this records confusion shouldn’t affect their actual visa availability. But it’s a reminder that the grandfathering fight is not done; we need to improve the law so that filing I-526 locks in something for future visa availability, not just regional center status. As it is, the law and situation that exists when you commit to the EB-5 process guarantees nothing for visa availability; people are dependent on the visas that exist and the rules for allocating them once they finally reach the visa stage. If the law changes midstream, too bad.

Creating New Reserved Visa Categories: The new law creates three new EB-5 set-aside categories: 20% rural, 10% DHS-designated high unemployment, and 2% infrastructure. These changes are effective as of the date of enactment — March 15, 2022 – which means that someone filing I-526 today should be assigned a new code that marks him or her as belonging or not to one or more of the three new categories. What’s not clear: are any of those these reserved visas theoretically or practically available to the 80,000+ people in the EB-5 visa backlog, who are coded C5, T5, I5, and R5 under the now-abolished RC and TEA set-aside categories? [6/21/2022 Update: DOS has announced that it interprets reserve visas as only available to applicants who file I-526 after March 15, 2022, and unavailable to the backlog.]

In fact, most of the backlog invested in TEAs based on high unemployment. Whether or not those applicants can touch the new 10% high-unemployment set-aside would depend on (1) whether or not DOS interprets the new set-asides as theoretically available to people who started the process pre-enactment and under slightly different high-unemployment area definitions, and (2) whether or not DOS can get USCIS to go back and re-code all the backlogged TEA applicants as being either high unemployment or rural investors, such that DOS is practically able to offer reserve visas to the backlog as well as to new investors.

Of course, the people who drafted the reserved visa law must have wanted the reserve visas available to incentivize new investment. Reserved visas can only have an incentive function if they can offer a priority/timing advantage to new investors, which is only possible if the visas are not absorbed by the many people already in the backlog waiting for visas.  Thus the talking point that reserved visas should only apply “prospectively.” This has long been an industry lobbying focus (e.g. this 2019 industry letter to Congress requesting set-asides that apply only to new I-526 petitions and not pending applicants.)  

Of course, pending applicants do not want reserved visas to be prospectively available only to incoming I-526. The China backlog must particularly fight to lose as few visa numbers as possible, which means keeping their access to reserve visas if possible.  At least, the backlog has a potential chance to access the 10% of visas newly reserved for high unemployment investment. Many backlogged applicants in fact invested in high-unemployment areas, and just need to be re-coded and recognized as such – something for investor associations to fight for. The 20% rural set-aside is probably largely an inevitable loss to the backlog because, as a practical matter, few past investments were in rural projects. Most rural reserves are therefore effectively off the table for the backlog even if DOS decides that past rural applicants could theoretically qualify for rural reserves.

On March 22, Bernard Wolfsdorf and Joseph Barnett held a wonderful webinar with special guest Charles Oppenheim, recently retired chief of Visa Control at Department of State. A webinar recording is now available on Youtube, and I’ve transcribed below a few of Charlie’s comments on the reserved visas provision in the new law.

[Quoted from minute 32] Oppenheim: I do believe that the State Department will have to have new visa categories, and issuance codes or issuance symbols need to be established to identify the applicants who are going to be eligible for processing under the 10, 20, and 2 percent set aside limits. This may actually eventually result in there being five EB-5 visa listings in the visa bulletin. Right now there are only two for non-regional centers and regional centers. Again, with the establishment of new codes to cover the set-asides, I think that is likely to go to five listings.

[Quoted from minute 40]  Oppenheim: It’s important to note that the use of the use of the new codes to distinguish the 20, 10, 2 set-asides is going to be necessary for Department of State to compare the amount of numbers which have already been used in those categories, the amount of documentarily complete demand ready for immediate processing, and to know the potential demand requiring use of a number in the future. That information is used not only for the set-asides, but for the determination of any of the preference category’s final action dates. And it’s necessary to apply that to control number use under the respective limits. Therefore it is going to be very important for the officers to know which of the visa codes to be used for final action on a case so that the number use can be accurately tracked and then reported to the visa office for numerical control purposes. Unfortunately my previous position did not require me to know the detailed information which is included on these petitions, so I can’t really say how easy it’s going to be for them to make that distinction between the rural and high unemployment applicants for these set asides.

[Quoted from 1:01:36] Question: Do the reserved visa categories create even longer delays for Mainland China, with the fact that 3,200 visas are being pulled from the general category? Oppenheim: I think there is the potential for that. Although, it’s unknown how many of the Chinese applicants that are in line may be able to benefit by this new set-aside. I think that is one of the unknowns at this point, and I don’t think it’s worth worrying about too much until we know in terms of the official determination of the implementation of the set-asides. [end Oppenheim quote]

Impact of Reserved Categories: If the reserved visas are genuinely reserved for post-enactment I-526, not available to the pending backlog, who wins? In the near term, reserved visas benefit incoming applicants from oversubscribed countries, who would otherwise be stuck in line behind many thousands of fellow-countrymen for generally available visas.

The new law creates visa reserves that work if they restrict 32% of visas such that those visas can’t be issued to the oldest priority dates, and must be issued to post-2022 priority dates or go unused.  For example, in 2023 Department of State will have about 2,000+ visas restricted for rural investment. If Department of State has already issued 700 visas to the oldest applicants from every country in 2023 and sees 1,000 rural set-asides still lying unused on the table, it will have to start waving up whichever remaining rural applicants are eligible for those visas, even if they’re Indians or Vietnamese or Chinese already over the 700 limit and with priority dates far more recent than their backlogged fellow-countrymen. That’s the queue-cutting opportunity. Genuinely reserved visas serve to create a new category of standby that can attract new applicants from China, Vietnam, and India who would’ve otherwise been at the back of the old generally-available standby queue. I emphasize “near-term” advantage for in-coming applicants, though, because a new standby category only benefits the people who start the new queue. 2,000 rural visas per year can sustainably accommodate around 700 investors per year, and will cease to offer a fast track when demand exceeds that level and creates new backlogs.

For the rest of the world, reserved visas should not be significant. Department of State already waves up minority-country EB-5 applicants as soon as they’re ready by virtue of their nationality priority under the per-country limits, with no need for other priority. (I still expect to see quite a few minority-country rural investors, though, because the I-526 processing priority provision for rural in the new law does offer time advantage for everyone.)

Unused Reserved Visas: It’s hard to tell whether the “unused visas” provision in the new law is careless or crafty. Maybe it was written by people who just forgot all those conflicting parts of existing law that prevent EB-5 visas from rolling over to EB-5 from year to year. Maybe it was written by people who ignored the existing law conflicts on purpose, gambling that Department of State might choose to settle the conflict in favor of EB-5, start allowing a limited amount of EB-5 visa recapture for the first time in history, and start letting the EB-5 annual limit exceed its statutory maximum 7.1%  of EB allocation for the first time. This could be a back door to recapturing at least FY2022’s large number of unused EB-5 visas, which would be very valuable. The darkest possible interpretation is that the “unused visa” provision was just put in the law to help ensure that no matter how interpreted – whether the unused set-aside visas are retained for new applicants or lost to other preference categories as usual — at least they’ll definitely not be generally available to the China backlog at each year-end, and thus conveniently serve to lengthen wait times for redeployable Chinese investment. I hope no one did think that way, because investors and their projects are not infinitely patient.

In the March 22 webinar, Oppenheim addressed questions about the unused visas provision in light of existing law.

[Quoted starting from minute 42] Oppenheim: In one way of looking at this, the INA guidelines clearly state how unused numbers within a preference category’s annual limit should be made available to other preferences. For example, Section 203(b)(1) indicates already that any unused employment fourth or fifth preference numbers should be added to the EB-1 annual limit. Also Section 201(c) says that any unused numbers from the previous year’s worldwide employment limit fall across and are to be used in the determination of the next year’s family sponsored annual limit. So, despite the fact there are these set aside provisions, I think it could be argued that the current year’s unused set-aside numbers could be made available to other EB-5 applicants, and then if they were still unused numbers under the overall EB-5 limit, such numbers could then fall up for potential use in EB-1 during the current fiscal year. And if you followed that logic, then the only numbers that ultimately remained unused after the fall-up provision would then fall across for the next year’s set-aside limit. That’s confusing, but I think that there’s room for interpretation, and it could be argued either way on this.  …I think that there likely will be a need for technical corrections. … I do think that there potentially will be some changes, at least to the language to clearly identify what is meant. Because, for example on this set-aside provision where it’s saying, ok, if there are unused numbers under the 20 percent set-aside, that those numbers should be reserved and added to the next year’s limit. That is fine in regards to the EB-5 applicants, but if you’re an advocate for EB-1 or EB-2 or family fourth or any other preference category, you may be saying, well why can’t we have the same benefit where our unused EB-1 numbers are reserved for the next year, etc. That type of “reserved for the next year” previously has only occurred through legislative action to recapture unused numbers. So this is kind of a whole new world. And again, I think that’s why it’s going to be important to clearly interpret how you distinguish unused numbers.

[Quoted from minute 58]  Joseph Barnett: Can I try to paraphrase what you mentioned before, Charlie, and let me know if I’m getting this right here. You think that the Department of State is going to have to create new visa categories to deal with the reserved visa classes. You don’t necessarily know how the existing investors are going to be included into those new visa categories without further action by investors or USCIS or some way to report that demand. And with regards to the unused visas provisions, there’s going to have to be some interpretation and discussion in DOS about how that’s going to play out and how it’s going to fall up or fall across – they’re just kind of unknowns at this point?

Oppenheim: Correct. [end Oppenheim quote]

Part 3: Data

After all this general talk, let’s look at numbers. I’ve copied below tidy tables of figures that represent the individual real people caught up in all this, and the history of how EB-5 visa demand and allocation has played out to date. (To interact with the data and see source citations, access the Excel file of Key Backlog data linked to my EB-5 Timing page.)

Points to note as you look at visa issuance numbers:

  • The variable number of EB-5 visas issued each year has followed from (1) the number of visas technically available to EB-5 and each country that year as calculated under the INA rules described above, and (2) the number of visas that applicants were practically able/willing to claim (by getting through I-526 processing to the visa stage) and that the government was practically able to issue (considering processing constraints).
  • Note the number of EB-5 visas actually issued to China-born applicants each year, from over 8,000 in FY2015 to just over 4,000 in FY2018 and FY2019. Those China visa numbers were a function of visa demand from the rest of the world. Each year, the oldest applicants received whatever was leftover of the EB-5 limit after DOS satisfied rest-of-world demand within per-country limits. (Except FY2020, when everyone got constrained by COVID-19.)

On the following I-526 table, note the number and timing of I-526 filings from countries other than China. See that China had its I-526 filing surge early, which is why it now leads the standby queue at the visa stage, while India had a later surge that’s thus further back in queue priority (and largely not at the visa stage yet, thanks to sluggish I-526 processing). Most significant of all, note the relatively flat line of I-526 filings from non-backlogged countries since 2015, even during years of peak EB-5 popularity and the $500,000 threshold. EB-5 just doesn’t have a big market in most of the world. That “all except China, India, Vietnam” column in the I-526 filing trend gave hope to the China backlog and concern to people selling EB-5. Backlogged Chinese applicants could rejoice to see on-going low rest-of-world I-526 filing numbers, which underwrote the hope that “otherwise unused” visas would continue to be leftover from the rest of the world in significant numbers for the oldest Chinese applicants. Marketers would lament the persistently and organically low ROW I-526 numbers, and strategize to get more visas to offer the historically fruitful China/India/Vietnam markets now constrained by backlogs of old priority dates.

Part 4: Application

For a reminder of how EB-5 visa distribution used to work, consider this slide from the “Visa Update with Charles Oppenheim and Roundtable Discussion” at the 2019 IIUSA EB-5 Industry Forum (October 29, 2019). The equation starts with the annual visa limit, then deducts all qualified demand from applicants at/under the per-country limit, and ends with a difference of “unused” numbers available for allocation to the oldest applicants regardless of per-country limit.

As it turned out, a global pandemic intervened and prevented Department of State from actually issuing the number of visas anticipated for FY2020. But in theory, the 11,000 visa available for FY2020 should’ve been distributed first to all prepared applicants up to their 7% country limits, with the balance then leftover for the oldest i.e. Chinese applicants. Oppenheim estimated in 2019 that over 5,000 visa could be allocated to Chinese in FY2020, as a function of the expected number of “otherwise unused” numbers.

Now here’s a version of the same slide, but marked up to show how the calculation would change with reserved visas — if reserved visas are indeed reserved in new categories and not accessible to pending pre-March 2022 priority dates.

As illustrated, the difference falls on the “unused numbers” calculation. Removing 32% percent of visas from the general pool does not affect visa allocation under per-country limits in this year, because more than 32% of visas were going to be leftover after per-country allocation anyway. The impact is on the number of available leftovers for the oldest applicants, and the applicants depending on leftovers for their visa allocation. In the year shown in the slide example, the number of leftover visas for the oldest (Chinese) priority dates falls from 5,200 to 1,670.

Let’s say I’m a China-born EB-5 applicant who can estimate 40,000 other Chinese applicants in process with earlier priority dates. How does my wait time calculation change depending on whether I can estimate the queue before me proceeding at an average rate of 5,000+ visas per year to China, or 1,700 per year?  40,000/5,000=8 years. 40,000/1,700=24 years.  That’s a huge difference.  Of course, real life is complicated.  For example 40,000 isn’t just a number but represents humans who are liable to giving up and aging out and dying, in increasing numbers as time goes on. So in real life, changing the denominator of a wait time equation – as reserved visas does for China – will change the numerator as well. In practice, if supply relief doesn’t bring down wait times, demand failure inevitably will. Meanwhile, a variety of factors besides reserved visas sway the denominator of the China wait time equation. Probably new minority-country investors who would’ve invested in EB-5 anyway will choose the new TEA categories, thus eventually blunting the marginal-difference impact of set-asides. Probably overall demand at the $800,000+ level will be lower than before, such that lower incoming demand will leave more visas unused and available to the China backlog eventually even above set-aside limits. Maybe the backlog will get some supply relief in three years if DOS actually allows recapturing unused reserve visas. Real life gives many moving parts to account for. But, all other factors being equal, reserved visas in themselves (if genuinely reserved) certainly have a dreadful impact on the wait time equation for backlogged Chinese applicants. (For detailed analysis, see EB5 Sir’s recent posts.)

Part 5: Conclusion

Anyone who made it to the end of this exhausting article obviously cares about the impact of reserved visas. What can we do now? The EB-5 Reform and Integrity Act of 2022 is law since March 15, 2022. Is there any room to stand athwart history yelling Stop?

Here are some theoretical possibilities for making the reserve visas law turn out less bad for our past clients than it could be.

  1. The China backlog will lose at least 1,000 fewer annual visas than it would lose otherwise if (A) Department of State interprets the new reserved visa categories as being available theory to pending applicants who happen to have invested in high unemployment area, rural area, or infrastructure projects, and also (B) DOS and USCIS communicate to mark pending applications that match the new set-aside categories.
  2. The China backlog will lose fewer visas if Department of State interprets the “unused visas” provision in the law to mean that 32% of the visas that will go unused in FY2022 (6,362 numbers) can be added to the EB-5 limit in FY2024, and generally available.
  3. The China backlog will lose fewer visas if Department of State disregards the “unused visas” provision in the new law as contradictory to the INA, and makes any unused EB-5 visas available to the oldest EB-5 priority dates at the end of each year, regardless of reserved status.
  4. The China backlog may lose fewer visas if we decline to promote reserve visas to new Chinese, Indian and Vietnamese clients, realizing that every one EB-5 visa taken to accommodate a new backlog-country client who wouldn’t have invested otherwise is one visa removed from the pool that would have been available to the oldest backlogged priority dates if not for visa reserves. But this grand gesture would only help our past clients if unused reserved visas can indeed eventually be accessed by the backlog – an open question.
  5. Investors and project companies can best manage impacts if they are realistic about what’s happening. Let’s refuse fallacies (“this is queue cutting with no queue cuts”) and cop-outs (“it’s complicated, so don’t bother thinking or worrying about it”)
  6. Most important, we need to pour advocacy dollars and energy into getting any possible backlog relief for the oldest EB-5 applicants, who need it now more desperately than ever. Regional centers who don’t want to deal with a fight for the exits will want to help fight for visa conditions that keep immigration hopes alive. The best way to incentivize new EB-5 demand is to create an environment where past EB-5 users can also be seen to flourish.

Text of EB-5 law enacted as of March 15, 2022

H.R.2471 – Consolidated Appropriations Act, 2022 was enacted on March 15, 2022, and contains the EB-5 Reform and Integrity Act of 2022 in Division BB (PDF page 1022 of the enrolled bill). This means that the regional center program will have a new authorization and new requirements as of May 15, 2022, and other EB-5 program changes are effective as of March 15, 2022 as I discussed in my previous post.

Now we wait for USCIS and Department of State to react with their interpretation and applications of the new EB-5 law. So far, the USCIS EB-5 page has still not been updated since December 2021. I hereby predict that the USCIS page will be updated later this week with one sentence saying “We are evaluating the EB-5 Reform and Integrity Act enacted on March 15, 2022 and will provide additional guidance as soon as practical,” followed by silence. But surprise me, USCIS! (3/17 UPDATE: The USCIS page is now updated to say almost exactly what I predicted.) The April 2021 Visa Bulletin published today has RC category Unavailable in Part A and mostly Current in Chart B, makes no changes yet to reserved visa categories, and says “The Consolidated Appropriations Act, 2022, which reauthorizes and reforms the EB-5 Immigrant Investor Regional Center Program, was signed by the President of the United States on March 15, 2022. Certain Regional Center Program aspects of this legislation go into effect 60 days after the date of the enactment of this Act. More information will be published in coming editions of the Visa Bulletin.”

Pending official interpretation, I’m continuing to update the Reauthorization page on this blog with links to a selection of industry articles and upcoming webinars, as they come to my attention.

In case this helps anyone else’s sanity and clarity, I’m sharing a folder of Word documents that I made for myself. The folder includes:

  • The text of the EB-5 Reform and Integrity Act of 2022 with heading styles applied. The text is copied from the “enrolled bill” version of H.R.2471 at Congress.gov (which has a few minor tweaks from the EB-5 bill text first released on March 6). I formatted to flag six layers of headings so that I can always track where I am using Word’s Navigation Pane.
  • The text of Immigration and Nationality Act sections referenced in the EB-5 Reform and Integrity Act of 2022, with headings applied. I didn’t redline the new law changes onto the INA (I just copied INA excerpts as-is), but at least this facilitates looking back and forth to see changes in context. We must be able to follow section headings in order to translate innocuous-looking sentences like “An alien seeking to pool his or her investment with 1 or more additional aliens seeking classification under section 203(b)(5) shall file for such classification in accordance with section 203(b)(5)(E)” and realize the explosive meaning: “from now on, an EB-5 investor may only invest with other EB-5 investors through a regional center; pooled direct EB-5 is no longer an option for new I-526.”
  • A document comparison showing the EB-5 Reform and Integrity Act of 2022 red-lined on the base of S.831 – EB–5 Reform and Integrity Act of 2021. S.831 is the bill that Senators Leahy and Grassley introduced back in March 2021 and  tied to pass last June before the RC program expired. No surprise considering Senator Leahy’s negotiating position, document comparison shows that the new EB-5 law largely reproduces S.831. There were no changes to the S.831 integrity measures, and no backlog relief additions. Negotiations just added higher investment amounts, new visa restrictions, new TEA definitions, redeployment policy, and grandfathering protection for the future.

I’m occupied with business plan deadlines at the moment, but will write more as soon as possible about reserved visas, the new EB-5 law change that most concerns me as resident EB-5 data collector and backlog Cassandra.

FY2022 Q1 USCIS Processing Report

USCIS has updated the Citizenship and Immigration Data page with performance data for FY2022 Q1 (October to December 2021).

Here, in one picture, is what’s happened to USCIS performance in adjudicating EB-5 forms.

Official data now confirms what I previously reported based on leaked information: the Investor Program Office reduced I-526 processing volumes to almost nothing at the end of 2021, and also had the lowest I-829 performance numbers in two years.

These charts show performance over the course of IPO’s history.

Comparing FY2022 Q1 volumes with the average for 2017-2018, IPO processed 2 times fewer I-829 and 54 times fewer I-526. And that’s despite having (or at least, paying) more employees in 2022 than in 2017/2018. I-526 productivity for the second half of 2021 was so low as to be almost invisible in the comparison chart, and not for lack of I-526 to process. The report shows quite a few I-526 receipts that must have been direct EB-5 in the second half of 2021, not to mention the hundreds of direct cases in the backlog. I have no idea why I-829, after having shown an improvement trend in 2020, actually got worse again in 2021, even after the regional center program lapse made more resources available to work on I-829.

I previously lamented how productivity tumbled after Sarah Kendall took over as IPO chief at the end of 2018, and celebrated when she moved on at the end of 2020. Now we know that her replacement Alissa Emmel (an internal promotion, unfortunately) is even worse. If you’re a Congressperson or journalist hungry to be the hero who tackles a hot scandal that’s tying up billions of dollars and endangering thousands of job-creating projects and inviting fraud, the USCIS Investor Program Office is red meat ready for you. The numbers alone tell a shocking story, and I could offer further spicy details about what’s been going on specifically with processing, lack of industry engagement, and some evidence of conspiracy. This government department desperately needs attention and accountability.

EB-5 Form Data from the USCIS FY2022 Q1 All Forms Report

DescriptionReceivedApprovedDeniedTotal completed FY2022 Q1Pending  at period endProcessing Time (months)
I-526Immigrant Petition by Alien Investor18916456113,13240.8
I-829Petition by Investor to Remove Conditions on Permanent Resident Status6182992732611,73141.2
I-924Application For Regional Center Designation Under the Immigrant Investor Program –   –   –   –  138 N/A
I-924AAnnual Certification of Regional Center344 –   –   –  1,734 N/A

Notes:

  • The I-526 denial number looks high, but many of these are actually withdrawals (which get coded with denials for summary reports).
  • I-526 receipt numbers were impressively high in Q1, considering that only direct cases could be filed in October to December 2021.
  • The 40+ month processing times reported for EB-5 forms reflect the fact that IPO spent the end of 2021 working on a low volume of very old petitions,. “Processing times are defined as the number of months it took for an application, petition, or request to be processed from receipt to completion in a given time period. The number of months presented is the median which is the time it took to complete 50% of all the cases processed in the quarter.” The “All Forms Report” conveniently shows that EB-5 forms have almost the worst processing times in the entire immigration service.

While USCIS does not report data specific to EB-5 I-485, I always check the category-wide I-485 report and look at performance numbers for the California Service Center, where most (all?) EB-5 I-485 get adjudicated. California Service Center productivity unfortunately also does not look good for the inventory of 5,400 Employment-Based forms. (I don’t know what fraction of the EB inventory is EB-5.)

Future processing times can be estimated by dividing inventory by processing volume. Looking at FY2022 Q1 I-526 data for example, I can see 13,132 I-526 pending and 61 I-526 processed in a quarter, and calculate that it would take 13,132/61=215 quarters (i.e. 54 years) to clear the inventory and reach my petition, if I file I-526 today and IPO does not improve on recent processing productivity. On the other hand, if IPO does improve and quickly returns to processing over 4,000 I-526 per quarter (as they did in the recent past and could do again), then the I-526 processing time estimate equation for a new I-526 becomes 13,132/4,000=3 quarters (i.e. less than one year). When prospective investors ask “how long will I-526 take?” they want an answer much closer to one year than 54 years. When Congressional reformers ask “how long will it take the agency to examine investor petitions and find any problems,” they also don’t want to hear about half centuries. IPO needs an intervention, ASAP.

The EB-5 Reform and Integrity Act just passed by Congress mandates USCIS to study the fees necessary to adjudicate I-526 in less than 240 days (or 120 days for a TEA investment) and I-829 in 240 days. IPO would have to process almost 5,000 I-526 per quarter and 4,400 I-829 per quarter to clear the the current inventory in 8 months.

I also have additional leaked data with processing detail for January to March 2022, including specific dates processed and RFE volume, and will report that as time permits. But my first priority is articles on the new law and how reserved visas will affect the China backlog. And I have my business plan writing day job to manage. (I hear the I-485 questions but I don’t know how to answer them. When a lawyer writes about who can use I-485 concurrent filing and when and how, I will link the article here. Or I welcome insights in the comments.)

EB-5 Reform and Integrity Act of 2022

The EB-5 program faces a second life thanks to the EB-5 Reform and Integrity Act of 2022, which passed the House on Wednesday and the Senate on Thursday night as part of the Consolidated Appropriations Act, 2022 (H.R.2471), and set to be signed by the President. For a content summary, I recommend Robert Divine’s March 8 article Analysis of New EB-5 Reform Bill Destined for Omnibus by March 11, 2022.

I appreciate the miracle that an EB-5 bill exists at all, considering the conflicting interests and story behind it. I am bubbling with reactions, but will start with what I love about this bill – that it passed. The bill is not the greatest good for the greatest number, but it’s some good for someone, and better than nothing for everyone. The immigration and economic promises of the regional center program still need a fight, but at least they’re still alive to be fought for.

The EB-5 Reform and Integrity Act of 2022 puts both the direct and regional center programs on a new footing, and makes changes that affect EB-5 investors past and future. USCIS will need to rewrite its policies and training and forms, I get new topics to address while marking my 12 years of past articles as all outdated, regional centers and direct EB-5 project companies will reorganize their processes and rethink their plans, past EB-5 investors will recalculate their wait time expectations and success prospects, and future EB-5 investors will enjoy new protections (including grandfathering protection, thanks to AIIA) and face new feasibility considerations.

While I wait for the Act as finalized with the President’s signature, I’ll start with a few points on timing, based on effective dates written in the text.

  • Date of enactment: The President has until March 15, 2022 to sign the Consolidated Appropriations Act; the date of enactment should be as soon as that happens (could be as early as today).
  • Regional Center program authorization timing: In the EB-5 law in Division BB of the Act, the new regional center program authorization is in Sec. 103(b), which has an effective date of “the date that is 60 days after the enactment of this Act.” So we’re looking at RC authorization in May. The regional center integrity requirements also in Sec. 103(b) share the 60-day effective date (giving RCs some time to organize compliance for a host of new rules, and USCIS some time to figure out new forms and procedures).
  • Investment amounts and TEAs: The new investment amounts ($1,050,000 or $800,000) and TEA definitions are in Sec. 102 of the new law, which has an effective date immediately “on the date of enactment of this Act.” Investment amount and TEA changes apply prospectively. Sec. 105 repeats the principle that “a petitioner shall establish eligibility at the time that he or she files a [I-526]. A petitioner who was eligible for such classification at the time of such filing shall be deemed eligible for such classification at the time such petition is adjudicated.”
  • New direct I-526 filings: Sec. 105 of the new law provides that immediately from the date of enactment, direct EB-5 I-526 can only be filed for projects with a single EB-5 investor. (If a project has more than one EB-5 investor, new I-526 must be filed through the regional center route).
  • New regional center I-526 filings:  The new law stipulates that regional center I-526 can be filed after the regional center sponsor has filed an “application for approval of investment in a commercial enterprise.” This application will be similar to an I-924 exemplar, but with different content requirements. At minimum, new regional center I-526 filings will wait for 60 days until the program is authorized. The wait could be longer if USCIS claims longer than 60 days to figure out the new process to accommodate the regional center approval filings that must now precede investor I-526. It will also be longer if USCIS interprets the repeal of the old statute to mean that all regional centers authorized under the old statute are voided and must reapply for designation under the new statute. (Considering processing times, I sincerely hope that’s not the interpretation.)
  • Regional center visa issuance: Department of State must wait to issue regional center visas until the regional center program is authorized. But since authorization in May is now certain, I hope DOS chooses to redeem the time in March and April with advancing paperwork and interviews at least up to the point of visa issuance. (But consular and I-485 processing have been backlogged and inefficient across the board since 2020, so I am not counting on very swift action specially for EB-5 – much as we need it to minimize the impending loss of over 10,000 FY2022 EB-5 visas.)
  • Visa issuance generally: The reserved visa provision in the new law is in Sec. 102, which is effective immediately on the date of enactment. The provision will not be felt immediately in practice because FY2022 has so many extra visas available in theory and so constrained by consular/USCIS processing capacity in fact that visa loss in FY22 was already overdetermined, regardless of the additional role of set-asides. I’ll write separately on this reserved visa issue, which is complicated in detail (thanks to the backlog and country caps and how EB visas roll over), but an obvious and serious concern on its face given the basics that 100%-32%=68% and that “reserved” means “reserved.”
  • Concurrent filing of I-526 and I-485: The nice provision that allows I-485 filing any time “if I-526 approval would make a visa immediately available to the beneficiary” is in the Sec. 102 of the Act that’s effective immediately. I’m not sure how the visa availability condition will play out. The Visa Bulletin will show regional center visas generally available starting in May, with likely changes to final action and filing dates. The window of availability for India and Vietnam will depend on how long it takes the thousands of petitions now stuck in I-526 processing to register as backlog for the visa stage.  If I were a direct investor with pending I-526, I’d talk to my lawyer about filing I-485 right away before the Visa Bulletin or USCIS have a chance to think about the regional center crowd. It looks to me as if the I-485 language in Sec. 102(d) simply references the EB-5 category, and doesn’t mention qualifications such as when the underlying I-526 was filed, but I defer to the lawyers.
  • I-526 processing: Section 105(c) says that DHS should continue to process I-526 and I-829 petitions during the implementation of this Act and its amendments. It’s not perfectly clear that this directive includes regional center I-526, and I wouldn’t put it past USCIS to wait 60 days before taking up RC I-526 processing. But at least there’s zero basis for USCIS to start bulk denials of RC I-526 after March 11, since RC petitions now certainly have statutory authorization coming. The major barrier for I-526 processing is that USCIS has just been hardly working at all on EB-5, for months. Here is the recent history of Form I-526 approval volume: three approvals in December, eight in January, and eight in February. Seriously! I hope the staff that hasn’t been working on I-526 adjudication since July 2021 hasn’t been lost permanently. But even if EB-5 can get its adjudicators back very soon, I don’t expect an instant pivot from <10 I-526 approvals per month to the 300+ decisions per month that we had before July 2021 (not to mention the 1,000+ decisions per month we had before Sarah Kendall). The battle to get USCIS to process petitions is only beginning. Thankfully the new law offers new resources for the battle. Sec. 106 of the new law mandates DHS to at least make a plan for “timely processing.”
  • Law interpretation: Having watched the progress of EB-5 policy and regulations since 2010, and witnessed how much time the agency takes to think or write about anything, I’m feeling faint as I contemplate how they’re going to deal with translating the hefty EB-5 Reform and Integrity Act into policies and procedures. Time to start praying for another miracle: this time, efficiency and sense at DHS. (And at the same time, to move advocacy energies toward assisting that miracle.)

Every so often, I put out the reminder that I welcome reader support for my effort on this labor intensive and otherwise unmonetized blog.  I have Paypal and Zelle accounts linked to my email address suzanne@lucidtext.com (and a Paypal button), and appreciate any contributions. Regardless, I will keep writing as time permits to support the community that’s developed here, and my clients who are still bravely trying to make good use of EB-5. I appreciate all of you who have taken time to write comments and share your insights and experience here, especially over the difficult past year.

Looking to March 11, 2022 (legislation and litigation)

The drama of regional center program reauthorization is racing toward the zero hour of March 11, 2022: the date when the FY2022 omnibus appropriations bill is now finally, firmly likely to pass with or without EB-5 legislation on board. The omnibus text should be released at the end of next week, and we’ll know then whether the industry has agreed with Senator Leahy on reauthorization (and/or grandfathering language). Advocacy groups have been working hard, taking the deadline seriously, and cautiously optimistic about a favorable outcome (including EB5IC, IIUSA, and AIIA in last week’s donor call). USCIS apparently believes in March 11 as a hard deadline as well. I heard 4th hand from multiple sources that USCIS told the U.S. Chamber of Commerce lobby that the current abeyance policy for regional center petitions will be ended after the omnibus passes. Such a message, assuming true, places scary but helpful pressure on the omnibus to actually carry reauthorization or at least protections for RC petition eligibility. Not that USCIS is likely to act very quickly starting March 12, whether on approvals or NOID (it appears that the Investor Program Office has maybe two employees left working on I-526), but at least there’s a line in the sand for Congress/industry to see. Now is the time for the legislative debate to produce a result.

For timely updates, look to your primary-source advocacy channels. Or look away and focus on your health, remembering that life is precious, whatever happens with EB-5. Comments are open, with the reminder that my blog is not a widely influential platform, and not Twitter.

Personally, I have been busy with business plan work, but also overcome with pity and fear over the EB-5 scene. Some people believe that this is some kind of modern Hollywood story full of sophisticated conspiracy and slick villains, but I don’t think so. The ingredients look to me like plain old-fashioned tragedy, with hubris and hamartia driving the action. As the end unfolds and pressure builds I’m torn between wanting to hide my eyes, just run from the theater, or maybe stand up and wave my arms and try to shout to the players onstage. Not that that works, but here’s what I’d say.

Regional center self-interest calls for action to protect past investment, because the past is also the future. EB-5 visa availability constraints necessarily limit how much more new EB-5 capital can be raised going forward, regardless of other factors. Meanwhile a huge fund of existing EB-5 investment remains to be either deployed into the future or lost. Profit depends on regional center actions today to protect the immigration eligibility that keeps past investors on board.

Please don’t let negotiations die in an investment threshold battle that couldn’t have helped even if won. We must avoid misjudging the role of investment amounts. Demand for regional center investment is based first on a chance to immigrate, and secondarily on the price of that chance. The large crowds who flocked to affordable investment levels in 2012-2018 did so because they believed in the promise of a visa, and weren’t apprised of overall or per-country visa limits. Those unsustainable crowds can’t return again, even with a good win on investment/TEA terms, because the ignorance that underwrote that excess demand has dissipated, and backlogs are in view for all major markets. With 80,000+ people queued up for visas only available at 10,000 per year, and backlogs concentrated by country caps on the few large EB-5 markets, the future has already been sold.

The visa availability/awareness damper on future demand precludes the possibility of any RCs with large past EB-5 raises depending on a Ponzi principle for their future. “But I need to replicate the past EB-5 investor stream or I can’t keep operating or repay past investors” (besides being a statement that the SEC might like to investigate) is not a reason to hijack legislation over investment amounts, since affordability alone couldn’t restore past demand anyway. Appetite for what’s possible has a point, but grasping for the impossible is not the vice of greed so much as of stupidity.

There are strong public policy arguments for accessible EB-5 investment thresholds, especially for small direct EB-5 projects, but it’s not a rational dealbreaker issue for the big regional centers.

Please don’t let negotiations die over a visa relief battle that couldn’t have been won. Getting actual extra visas for EB-5 would be a wonderful win, and essential to holistic reform, but it’s not on the table for March 11 — or anywhere outside multi-category immigration reform, considering that Republicans don’t want to increase overall immigration at all, Democrats have suggested relief for almost every visa category except EB-5, and no one would let EB-5 get first and only what more powerful interests want just as badly. This is all unfortunate, but understood. But there’s lingering thought in some corners: what’s the closest we could get to the unobtainable good? In absence of visa relief, what if we could at least manage half-measures? Something is better than nothing, and we might restore the historically-effective illusion of an immigration opportunity, if nothing else. Thus the ideas of set-asides and advance parole. Visa set-aside categories could only support a few hundred new annual Chinese investments before creating their own backlogs, but could still be effective marketing tools if the limits went unnoticed upfront. Regional centers with previous success in raising four Chinese investments for every one visa actually available to China might believe that a new set-aside category would significantly beguile/reopen the China market, despite not numerically supporting the desired demand. Advance Parole also sounds very promising, so long as one doesn’t look up what Advance Parole is and how it’s implemented. However, the China market is on the alert now, and equipped to calculate visa incentives and avoid illusion. Unexaggerated, how much could the small set-aside allocation or a limited advance parole program possibly help the market? On the other hand, how much could insisting on such half-measures in face of opposition still hurt the chance to pass any legislation at all? Advance Parole in particular, while not controversial for industry, is very controversial in Congress because it involves allocating immigration benefit, looks like expansion, and triggers the interests of other factions. The limited actual good of advance parole is worth at least trying for, but not worth forcing negotiation death in the attempt to get, if (and assuming) it’s too controversial for assent from the Congressional leaders who need to sign off on EB-5 legislation. Meanwhile, the extended legislation fight is losing already-available extra visas by the day: the nearly 20,000 EB-5 visas technically available in FY2022 will be lost without immediate action to restore RC investor eligibility.

Do not reckon without the gods. In calculating what’s possible in March 2021, remember Senator Leahy’s power over the omnibus, and his long-standing and passionately expressed personal motivations and public commitments with respect to his legacy in EB-5. Note that Senator Grassley sounds as unbending as ever, telling Roll Call last week: “The program is now dead, and it’ll remain that way until all corners of the industry wake up to the reality that Congress is not going to allow these abuses to continue.” Observe that Senator Schumer is powerful and there for his constituents, but can be counted on to do what’s expedient (which includes negotiating with but not railroading idealist and noisy Leahy and Grassley in an election year). Though motivated by his campaign contributors, Senator Graham is not placed to unilaterally include favorable legislation on the omnibus, Considering this configuration of the gods over the March 11 opportunity, industry compromise looks like the only possible path to March 11 success, painful as that will be. Our boldest industry ambitions will have to be modified or else fall from the sky with melted wings. See recent articles by Carolyn Lee and Ishaan Khanna for further discussion and insights and the lobby state of play and need for compromise.

Go ahead and try the Hail Mary pass, but do not rely on it. How about if we escape the regional center lapse tragedy by denying its existence? The regional center program itself is not temporary, but was established without time limit in 1992: so goes the case recently brought forward by multiple lawyers (e.g. Michael Chen last year, in a case that has a decision, and now with modifications by Wasden Banias/Orbit Law, GreenbergTraurig/Behring/EB5IC, Joseph and Hall/Galati/IMMPACT, and counting.) The basic case turns on a program authorization/visas authorization distinction that seems like it ought to exist, although grammar doesn’t put it in the regional center statute. The case stares down 30 years of recorded history, including Senator Leahy’s many published comments on his understanding of the program he has shepherded over the years (e.g. from 2008 and 2012), records from multiple Congressional hearings on the RC program, 12 reauthorizations (not counting CRs), and decades of agency and EB-5 industry communications. It seems we were all mistaken about RC program status all that time — even those Senators who are somehow still on the scene now 30 years after attending the birth of the regional center program. The litigation has attractions because it implies that we don’t actually need reauthorizing legislation, with its excruciating process and delays and unpalatable reforms. Even better for some purposes, it places full blame and responsibility for the current dreadful limbo of visa-less regional center investors on USCIS and DOS, exculpating the industry and Congress and getting them off the hook for further effort. How expedient if USCIS and DOS just made an administratively-fixable error of interpretation in December 2019 (repeating previously-published errors going back to at least 2009).  I understand that this Surrealist litigation has sophisticated legal nuances and represents the best that smart and well-regarded lawyers can offer us, under the circumstances, accommodating our demand for some kind of litigation alternative, and also having ancillary strategic functions.  But if I could shout more advice to the actors on the RC lobby stage, I’d say: do not count on this litigation to function as a plausible alibi for letting the legislative effort fail. You, we, and the Internet know too much for this line to fly: “But we genuinely believed that this litigation would protect regional center investors as a fallback, allowing us to give up a hard compromise for reauthorization or grandfathering legislation.” (For further comment on litigation, see attorney Robert Divine’s article EB-5 Reaches Crescendo of Confusion for Past and New Investors.)

My hope for our EB-5 industry future and face depends on some kind of EB-5 legislation passing with the March 11, 2022 omnibus. No matter how much painful sacrifice that will take, to avoid wider tragedy to come. Let’s get this done.

Looking to 2022

I will start 2022 by attempting a comment on where we are with regional center and direct EB-5, and what should be done

Regional Center Situation

Regional Center Legislation

In 2021, Congressional reformers and the industry lobbies delivered their best offers on EB-5 legislation, worked harder and more successfully than ever before to establish industry consensus around their respective proposals, and still ended up on the horns of their differences, demonstrating power to block each other and inability to overcome each other’s blocks.

Where can we look for resolution to an industry/Congress impasse that’s been ongoing since at least 2015? I’d say it’s theoretically impossible that personally-motivated reformers Senator Leahy and Senator Grassley will change their EB-5 priorities this year, or exercise less power in 2022 than in 2021.  Industry theoretically has more motivation to compromise our priorities, because we have more to lose from continued delay and growing investor frustration. Industry priorities are also more open to self-reflection. For example, simple calculation shows that 1,000 or even 3,000 set-aside visas would not accommodate enough investors to significantly re-open a now quota-aware China market, and would not significantly incentivize rural investment. The very limited practical benefit would not justify a bloody battle. Side-by-side comparison of the largely similar industry consensus vs Grassley/Leahy integrity measures begs a blushing question “and this is what we’re still fighting about?”. Narrowing the TEA investment differential to insignificance would be too-obviously bad politics and bad press today, and would be a worthless win in the future if an investor explosion in 2022 gets a chance to permanently stain the reputation of EB-5 at any price. I believe everyone now understands the near-term political impossibility of genuine EB-5-specific visa relief while larger immigration priorities remain unresolved. So maybe there’s realistically not much left to fight about this year. We shall see how realistic advocates will be in assessing costs, benefits and political possibilities in 2022. I hope that the sunk cost fallacy will be recognized and avoided.

At this point, my personal best hope for 2022 legislation is that everyone will unite around a few-sentence grandfathering provision to resume the immigration process for past investors. This would be an interim expedient to protect time for negotiations around substantial reauthorization legislation, otherwise threatened by the imminent mass bloodbath of past investor frustration. My slim hope would depend on all regional centers with lobbyists correctly realizing that near-term grandfathering is in their best interest to buy time, given the political realities delaying holistic reform and the increasing pressure from desperate investors who cannot tolerate further delay. It also depends on Senator Leahy not suspecting the regional center self-interest motive and time-buying tactic in grandfathering, but rather recognizing the unquestionable case of fairness and responsibility to people who invested in the authorized RC program, and/or the real need to protect existing EB-5-funded U.S. jobs and economic activity from being derailed by investor frustration. There’s a long road to making these cases, to regional centers especially, but I see a theoretical possibility at least.

I expect and hope that education will be a major difference between 2022 and 2021. Last year, a large part of the EB-5 ecosystem did not know what was going on. Industry associations tended to provide messaging rather than information. Most of us had no access to intel from lobbyists and Congressional staffers. The typical first-line advisors for EB-5 investors – immigration attorneys, regional centers, and agents – were often honestly unable or sometimes strategically unwilling to inform investors. We witnessed a few concerted efforts to spread misinformation, and some genuine (if still culpable) simple ignorance from advocates about their own proposals and the legislative process. All this ignorance had a function in 2021, deferring delay repercussions and avoiding dissension. But it came with a fearful cost for business and personal decision-making.

In 2022 and going forward, I see the EB-5 ecosystem demanding and getting better information and accountability. The fact and consequences of RC program expiration have had time to sink in. Messaging has had time to stand the test of history. Recent comments on this blog show how sentiment has developed, and the growing investment in education and action far beyond this occasional little blog. Personally, I donate to the EB-5 association AIIA because AIIA is motivated to communicate what their lobbyist finds out and what they hear in meetings with Congressional staffers.  I would love every EB-5 investor, service provider, and regional center to take advantage of donor access to the AIIA Microsoft Teams group and Telegram chat for the sake of the intel and collaboration offered, if nothing else. I do not know how much AIIA can accomplish in terms of advocacy in a few months, but even their emerging role in obtaining and sharing info about who’s doing and saying what in Washington DC is gold for accountability and educated action. No wonder my blog comments are filling with advertising “Donate to AIIA! Learn from AIIA!” and also “Do not donate to AIIA! Nothing happening there! Don’t look!”

Hopefully everyone on the front lines of regional center advocacy will step up their game this year, realizing that they are being watched. “Speak and act as those who will be judged” could be a good mantra for all of us in 2022. Along with the reminder “We’re all in this together.”

AIIA is holding a town hall webinar on Saturday January 15th at 6pm PT to discuss reauthorization and provide updates. Free to the public: register here.  [UPDATE: A partial recording now available on the AIIA Youtube channel.] AIIA’s informative December newsletter is also still available, in case you missed it.

If anyone else is holding RC-related events to share information plus host discussion, please let me know so that I can promote them. Let the year of information and accountability begin.

Regional Center Petition Processing

The USCIS website continues to have one alert saying that USCIS will hold regional center I-526, I-485, and I-924 and “at the end of calendar year 2021, unless there is new legislation for regional centers, we will reevaluate whether to keep this hold in place.” Now a second alert as of 12/30/2021 adds “USCIS is reevaluating the decision [and] will provide additional guidance as soon as practical.” I am not holding my breath for guidance or action from USCIS.

So far this month, IIUSA has filed a brief arguing that USCIS should process regional center petitions during a regional center program lapse, and sent a letter arguing that USCIS should not process regional center petitions during the regional center program lapse. Each document makes the argument for the sake of investor protection. I can’t tell whether a contradiction has been noticed.

In the case of Yuhua Zhu et al v. Antony John Blinken et al, 111 EB-5 investors with pending I-485 sued USCIS “to either adjudicate their applications, or issue them visas, under the EB-5 Immigrant Investor Regional Center Program.” On January 3, 2022, a judge assessed and dismissed the claim: “The court is persuaded that because the lapse in congressional authorization for the Regional Center Program prevents the court from granting effective relief, the claim is moot and must be dismissed.” (Thanks to Jason and Bunuel Yang who brought the litigation to our attention in their comments on my previous post.)

Unfortunately, we do depend on Congress to act to provide regional center petitions with a basis for approval and visas.

Direct EB-5 situation

Investment Amount

The stability of direct EB-5 investment improved since January 5, 2022 when DHS dismissed its appeal of the Behring Regional Center lawsuit. With the appeal pending, we had operated under the risk that DHS might eventually win the appeal, and that a future win could make today’s direct I-526 retroactively ineligible. With the appeal dismissed, that risk has disappeared, thankfully. I feel more comfortable now that each I-526 may be judged by the rules under which it was filed. (My confidence would be boosted if Congress passes the proposed grandfathering language to that effect.) The EB-5 investment amount is still subject to change, but at least not retroactive change for filed I-526. I’d also worried that the recent lack of I-526 processing might reflect an appeal-related abeyance policy. With the appeal dismissed, that possible explanation for processing delay disappears. All good news for direct EB-5 at least, though the Behring suit and the dismissed appeal complicate regional center legislation negotiations.

I-526 Processing

 I-526 processing times for direct EB-5 investors remain in question, as USCIS continues to have apparently almost no one working on I-526 adjudications. Here’s the total I-526 processing activity since January 5, 2022:

  • Thursday January 6: One RFE sent to an I-526 filed in 2016
  • Friday January 7: One I-526 filed in 2018 approved
  • Monday January 10: One notice sent to an I-526 filed in 2016
  • Tuesday January 11: No action
  • Wednesday January 12: Denied one I-526 filed in 2015 and one I-526 filed in April 2019

In the entire month of December 2021, USCIS approved three I-526 and denied four I-526 and that’s all. (I updated my previous processing post with the full month log.) The estimated I-526 processing time will be very long if we have to assume that the many hundreds of pending direct I-526 will continue to be processed at a rate of less than 10 completions per month. We should not have to assume an indefinite meltdown, since USCIS has over 200 EB-5-fee-funded employees who could be and ought to be working on EB-5 forms. For direct EB-5 to remain an attractive option for project companies and investors, pressure must mount on USCIS to use its EB-5 resources to adjudicate EB-5 forms. And for regional center investment to have a future, we must also press USCIS to retain and use its EB-5 processing resources today.

Direct EB-5 visa timing and availability

Today’s Visa Bulletin is wide open for EB-5, because RC program expiration combined with processing barriers means that the visa stage currently lacks excess demand to control. The future visa availability outlook and timing calculation are complicated. Incoming direct EB-5 investors from China, Vietnam, and India have a slender chance to avoid future delay at the visa stage. This chance is unrelated to visa bulletin conditions today, which only apply to people later in the process. The chance for incoming investors exists if rapid USCIS processing plus delayed Congressional action combine to allow incoming direct investors to eventually reach the visa final action stage while regional center investors are still prevented from claiming visas. If that window closes, and older regional center investors are able (and willing) to rejoin the queue while newer direct investors are still waiting for I-526 processing, then the Visa Bulletin will jump and recent investors from China, Vietnam, and India will find themselves at the back of large regional center crowds (a 7-10+-year queue) at the visa stage. I prefer to avoid bets on USCIS promptness and regional center program failure.

Direct EB-5 project availability and due diligence

I plan to write more about finding and assessing direct EB-5 projects, and I am considering a directory of direct EB-5 contacts. If you have a current or future direct EB-5 project available and might be interested in such a directory, please email me at suzanne@lucidtext.com.

As a business plan writer, I’ve been working with a number of direct EB-5 ventures that could be wonderful for the economy. I hope that EB-5 policy and administration will improve to better reward good projects and their investors.

USCIS website alert update: I-924A

Thank you to Carolyn Lee for noticing that the USCIS EB-5 page was quietly updated yesterday 12/20 to include this paragraph in the alert on regional center program expiration:

We will still accept and review Form I-924A, Annual Certification of Regional Center, including those filed on or after July 1, 2021. Regional centers should continue to submit Form I-924A, for fiscal year 2021.  

Regional centers have been asking about I-924 since September, and USCIS waited until Christmas week, just a few days before the deadline to file I-924A, to say yes, we do want you to file this form and especially to send us the fees, even though the program is expired and we’ve said we’re not reviewing I-924A. Happy Holidays.

The only nice thing I can think of to say is that the request for I-924A filings can only be based on USCIS assumption that the program will be revived. And if USCIS is making that assumption for I-924A purposes, they could hardly justify making the contrary assumption in context of deciding whether to keep holding regional center investor petitions.

FY2021 Q4 update on I-526 and I-829 Processing

USCIS has updated the Citizenship and Immigration Data page with performance data for FY2021 Q4 (July to September 2021).

EB-5 Form Data from the USCIS FY2021 Q4 All Forms Report

I-526 ReceiptsI-526 ApprovalsI-526 Withdrawals, Denials, RevocationsTotal I-526  Final ActionsPeriod-end Pending I-526
Oct – Dec 2020911,0041191,12313,746
Jan – Mar 20219875213088213,044
Apr – Jun 2021169 (incorrect, should be 512)59213572712,798
Jul – Sep 2021456 (incorrect, should be 113)5026631613,008
FY2021 Total8142,3986503,048
I-829 ReceiptsI-829 ApprovalsI-829 Withdrawals, Denials, RevocationsTotal I-829 Final ActionsPeriod-end Pending I-829
Oct – Dec 2020205641416829,894
Jan – Mar 20211,0535663760310,356
Apr – Jun 20211,2494024644811,160
Jul – Sep 20217944048749111,448
FY2021 Total3,3012,0132112,224

Notes on corrections:

  • This USCIS report mistakenly credits I-526 that were filed in the last days of June 2021 (the filing surge between the Behring decision and RC program expiration) as receipts in July to September 2021. The corrections I entered come from the different I-526 receipt data in this report: https://www.uscis.gov/sites/default/files/document/data/1-EB-5_New_Rule_Effects_Report_7.19.2021_Final_508C.pdf.
  • While the USCIS report simply uses the word “denied” in the column heading, the 4-point font notes at the base of the report clarifies that “Denied are the number of applications or petitions that were denied, terminated, withdrawn, or revoked during the reporting period.” This is particularly significant for I-526, as the majority of I-526 cases in the “denied” column for July to September 2021 were actually withdrawals. (i.e. not reflecting any adjudication work or petition problems, but USCIS simply acknowledging investor decisions to withdraw their petitions). An inside source tells me that from July to September 2021, there were 254 I-526 withdrawn and 48 I-526 denied. Not sure how USCIS gets to the number 266 – possibly again due to the confusion exhibited in the I-526 report about when months begin and end.

I started 2021 with hope for EB-5 processing. I foresaw improvement from the confirmation of Alejandro Mayorkas as the new DHS Secretary, since as USCIS Director under Obama he was attentive to EB-5 and personally responsible for getting resources to establish the Investor Program Office and fill it with high-grade staff. I had hopes for Ur Jaddou, who promised this year that “As USCIS director, I will work each and every day to ensure our nation’s legal immigration system is managed in a way that honors our heritage as a nation of welcome,” and who rightly opined that “USCIS must process applications fairly, efficiently, and in a humane manner.” I was excited to hear about the departure last year of IPO Chief Sarah Kendall, who was responsible for decimating IPO productivity in 2019/2020, and I looked forward to better new leadership at IPO. When the regional center program lapsed, thus temporarily reducing the I-526 processing workload by at least 90% and eliminating the I-924 and RC compliance workloads, I expected a silver lining in the form of more resources for direct EB-5 and I-829.

Data on EB-5 form processing has disappointed my hopes so far. (Oh how I miss reporting good news. I do truly search for it.) I-526 and I-829 processing productivity fell in FY2021, even below previous low levels. I-829 only got a little worse over the course of the year. I-526 got much worse, with post-RC-shutdown processing volume reduced by an even greater percentage than post-shutdown inventory.

EB-5 forms won first, second, and third prize for the worst processing times of all USCIS forms in FY2021. Form I-526 and Form I-829 continue to dominate in FY2022 so far, with median processing times so lengthy (48.8 and 41.8 months) that they’re almost double the third place finisher for worst processing in all of USCIS forms (Form I-730, at 25.4 months). (As an aside, note that the historical PT page that I linked is now more timely and worth checking now than the regular processing times page, which has changed to a 6-month average method to help hide fluctuations.) 

It’s important to remember that the median processing times reported by USCIS reflect the median PT time experienced by people at the end of the process, and not predictive for people starting the process under entirely different conditions. But I’m also alarmed by results from the equation for predicting future processing times: inventory divided by throughput. That equation looks disheartening when throughput falls (as has been happening for I-829, though I keep expecting the tide to turn), and impossible when both inventory and throughput are not in a trend but liable to go up or down by over 90% (the case with I-526). At the moment, the I-526 processing time prediction equation is flirting with what happens when a denominator reaches zero. In the entire month of November, only 14 I-526 were approved or denied. Many days in December have passed with no I-526 work completed at all, not even RFEs.

What’s going on? The numbers suggest that EB-5 is not a priority yet for the administration/USCIS. (I also note the absence of any EB-5 benefit in USCIS’s celebration of FY2021 accomplishments.) On-going lack of leadership at the Investor Program Office must be partly to blame. (IPO hasn’t had a chief since December 2020). The regional center program expiration has had an impact, with completion rates suggesting that IPO has, at least temporarily, lost most of its I-526 adjudicators. Instead of re-allocating resources to direct EB-5 and I-829, IPO appears to have merely let resources go.

The EB-5 program clearly needs to be stabilized, so that it can work again, and stop the bleeding at IPO. Clients are coming to me with wonderful job-creating business ideas, but we depend on USCIS processing to support that economic development potential, and to provide any chance of an immigration incentive for investment in good business. The current dire EB-5 processing situation provides yet more incentive and pressure for industry and Congress to get EB-5 legislation as soon as possible.  The status quo at the Investor Program Office is not good for anyone, not even direct EB-5.

I considered a possible innocent explanation for falling I-526 completion rates: USCIS has been working since July on direct EB-5 cases, which they usually RFE before approving or denying, and the direct EB-5 inventory is relatively small. However, even RFE issuance has been falling in recent months, even as direct I-526 receipts keep coming in. IPO has been assigning a miscellaneous but decreasing assortment of I-526 up to but so far (since July) never passing November 2019 priority dates, despite available direct EB-5 inventory that was filed more recently. Why is IPO not processing new I-526 receipts, as an alternative to doing almost nothing with I-526? I copy below a table of unofficial data from my leaker at IPO. I have reached out to number of lawyers to ask for help to interpret what’s happening here, and what might be done to hold IPO to account.

Data from an unofficial source for I-526 RFE and NOID issued since July 1, 2021

Number of I-526 RFE+NOID sent from 7/21 to 11/21, by calendar year of I-526 priority date
Month that RFE or NOID was sent201620172018201920202021TOTAL
Jul-214433360077
Aug-21109890099
Sep-2123910400118
Oct-21143590067
Nov-21290260037

And finally, in case publicity helps to shame IPO into action, here is a day-by-day accounting of actions completed by I-526 adjudicators in December 2021 so far, according to my fly-on-the-wall source. Attention IPO, YOU ARE BEING WATCHED! Wake up and look busier! I want to take a Christmas vacation too, but this doesn’t look good for an office with over 200 EB-5-fee-funded employees.

Working DayFinal I-526 Actions CompletedIntermediate I-526 Actions Completed
1-Dec WednesdayDenied an I-526 filed in 2016 (after receiving an RFE response 13 months ago)RFE sent to an I-526 filed in October 2019
2-Dec ThursdayNoneRFE sent to an I-526 filed November 20, 2019
3-Dec FridayNoneRFE sent to an I-526 filed September 2017 (after receiving response to a previous RFE 31 months ago)
RFE sent to an I-526 filed September 2019
6-Dec MondayNoneNotice sent to an I-526 filed in February 2017
7-Dec TuesdayDenied an I-526 filed in September 2018RFE sent to an I-526 filed March 2018
RFE sent to an I-526 filed November 20, 2019
8-Dec WednesdayNoneNone
9-Dec ThursdayNoneNotice sent to an I-526 filed in April 2019
10-Dec FridayNoneNone
13-Dec MondayNoneNone
14-Dec TuesdayNoneNone
15-Dec WednesdayNone (re-issued an approval notice sent to the wrong address)None
16-Dec ThursdayApproved an I-526 filed in 2017
Approved an I-526 filed in May 2021
RFE sent to an I-526 filed November 20, 2019
RFE sent to an I-526 filed November 20, 2019
Notice sent to an I-526 filed November 20, 2019
17-Dec FridayNoneNone
20-Dec MondayDenied an I-526 filed in 2017RFE sent to an I-526 filed November 20, 2019
21-Dec Tuesday Notice sent to an I-526 filed November 20, 2019
22-Dec WednesdayNoneNone
23-Dec ThursdayNoneNone
24-Dec FridayHoliday 
27-Dec MondayNoneNone
28-Dec TuesdayNoneNone
29-Dec WednesdayNoneNone
30-Dec Thursday RFE sent to an I-526 filed July 2019
31-Dec FridayNoneNone

Looking forward to new legislation and new leadership at IPO to turn this situation around.

How and why RC program law affects RC petition processing

I observe confusion about how and why regional center program expiration affects various stages of the EB-5 process.

What specifically is the “lapsed statutory authority” that USCIS cites as the reason for not accepting regional center I-526 and not acting on pending regional center I-526 or I-485, but continuing to act on I-829 for everyone (in theory)?

What specifically is the “legislative action extending this category” that the Visa Bulletin states as necessary before I5 and R5 visas may be issued overseas, or final action taken on adjustment of status cases?

What all is to blame for the fact that regional center I-526 petitions are currently not being processed and visas not issued, and – therefore – what are the possible options to change the situation?

To help think about these questions, let’s back up and look at the law and the process.

The Law

Statutory authority for the regional center program came from Section 610(b) of Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (Public Law 102-395). You can review the 1993 law (see PDF p 47), or even better this section from USCIS EB-5 training materials that presents the text together with amendments up to 2012. I’ve copied the 1993 language below, with underlines added at key points. This is it: three short paragraphs upon which stand billions of dollars. After the quote, I comment on significant points in the regional center statute.

Quoted from Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 SEC. 610. PILOT IMMIGRATION PROGRAM-
(a) Of the visas otherwise available under section 203(b)(5) of the Immigration and Nationality Act (8 U.S.C. 1153(b)(5)), 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 regional productivity, job creation, and increased domestic capital investment.
(b) For purposes of the pilot program established in subsection (a), beginning on October 1, 1992, but no later than October 1, 1993, the Secretary of State, together with the Attorney General, shall set aside 300 visas annually for five years to include such aliens as are eligible for admission under section 203(b)(5) of the Immigration and Nationality Act and this section, as well as spouses or children which are eligible, under the terms of the Immigration and Nationality Act, to accompany or follow to join such aliens.
(c) In determining compliance with section 203(b)(5)(A)(iii) of the Immigration and Nationality Act, and notwithstanding the requirements of 8 CFR 204.6, the Attorney General shall permit aliens admitted under the pilot program described in this section to establish reasonable methodologies for determining the number of jobs created by the pilot program, including such jobs which are estimated to have been created indirectly through revenues generated from increased exports resulting from the pilot program

Discussion of the law

The 1993 law said “shall set aside visas” for a program that “shall involve a regional center.” Details here and there in the law have been amended over time, but note the key point that the regional center program difference is baked into visas. The Visa Bulletin therefore sets specific categories for regional center applicants — I5 and R5 – and stops issuing visas in the I5 and R5 categories whenever the regional center program authorization expires.

The 1993 law specified a time limit on setting aside visas for the regional center program: “five years.” It’s those two little words “five years” that have been replaced over and over again since 1993, in successive laws reauthorizing the regional center program. Reauthorizing legislation started by substituting the original “five years” with new time durations, and eventually moved to providing calendar date deadlines. The most recent reauthorization in 2020 simply said: “Section 610(b) of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note) shall be applied by substituting ‘June 30, 2021’ for ‘September 30, 2015.’” When no new law appeared to substitute the June 30, 2021 date, then regional center visas became unavailable as of July 1, 2021, and all the processing stages leading up to visa issuance therefore screeched to a halt. At its most basic, regional center program authorization has just meant giving a new expiration date in place of the five-year time limit in the 1993 law. (Here’s my log of reauthorizations to date.)

The 1993 law specified that regional center category visas are for “such aliens as are eligible for admission under section 203(b)(5) of the Immigration and Nationality Act and this section.” The law further specified that the government “shall permit aliens admitted under the pilot program described in this section to establish reasonable methodologies for determining the number of jobs created by the pilot program, including such jobs which are estimated to have been created indirectly.” These words help explain why regional center program authorization is an issue leading up to and at the visa stage, but not a problem for people who have already been admitted to the U.S. on a regional center visa, and now in the Conditional Permanent Resident or I-829 stages.

The key word is “admission” i.e. starting U.S. residence on an EB-5 visa. The 1993 law puts pre-visa regional center investors in a vulnerable position, because it specifies that they must be “eligible for admission” under the core EB-5 program at INA 203(b)(5) AND “this section” i.e. the temporary regional center program authorization. Lawmakers in 1993 surely did not foresee that inefficient USCIS processing and backlogs would insert many many years between (A) investing in the regional center program and (B) becoming eligible for admission to the U.S.  Proposed “grandfathering” language now seeks to rectify that vulnerable long gap between A and B by specifying that the investor eligibility can rely throughout the process on the statutory authority that existed at Point A: the time of filing I-526. By simply focusing on eligibility at the time of admission — the visa stage that can be delayed for years into the EB-5 process — the 1993 law provided no such protection.

Meanwhile, the 1993 law does at least effectively lock in/grandfather regional center eligibility from the time of admission on a visa. The government “shall permit aliens admitted under the pilot program described in this section to establish reasonable methodologies for determining the number of jobs created by the pilot program, including such jobs which are estimated to have been created indirectly.” If you were admitted under an I5 or R5 visa, you may then go on to remove conditions on that visa under the regional center rules that apply to that visa, including using economic methodologies to count indirect jobs. The 1993 law permits you to do so because you were admitted to residence under the RC program. Based on the statute, EB-5 policy confirms that even following loss of regional center sponsorship, “The conditional permanent resident investor will continue to have the opportunity to demonstrate compliance with EB-5 program requirements, including through reliance on indirect job creation.”

The Process

The following figure summarizes stages and actions in the EB-5 process. Under the law as described above, the regional center applicant needs the regional center program to stay authorized throughout the grey-shaded stages, such that the applicant stays eligible until the point of being able to cash in on regional center eligibility by getting an I5 or R5 visa at Step 4.

Suggested “grandfathering” language for EB-5 legislation would change this risky scenario by clarifying the law to lock in regional center eligibility based on regional center program authorization status at Step 1. Then future investors could start the process with confidence, knowing that their future eligibility at Step 4 — whenever that time comes — will still follow the rules and authorities that existed at Step 1. The proposed grandfathering language does not merely protect existing applicants (indeed, it’s irrelevant for many past investors if there’s a significant near-term reauthorization), but essential to protect all incoming demand from the future threat of expiring legislation. AIIA’s suggested grandfathering language proposes to amend the INA as follows: “(E) In the case of statutory provisions that establish temporary authority for visas to be made available under paragraph (A) to beneficiaries of such authority, the suspension or termination of such temporary authority shall not suspend or terminate the allocation of visas to such beneficiaries, provided that the petition seeking such allocation was filed when the authority was in effect.”

Note that all regional centers have a self-interest in ensuring that such protective language gets included in any new reauthorization legislation. Future investors will want to avoid the vulnerability to change that’s been on display during the current lapse. Who will commit to a program that’s liable to disappear before it’s needed? Eligibility should be securable at the time an investor commits to the regional center program, and such assurance requires an addition to the law.

Implications

I hope that looking at the regional center statute and contemplating the EB-5 process chart helps to clarify thinking about where we are now, and possible paths forward.

The key lesson that I take: the core problem in regional center program expiration is loss of authority to issue regional center visas and loss of eligibility to receive regional center visas. The current stop to all RC processing leading up to visa issuance is a side effect of that core problem, not the problem itself. Further, the authority to issue RC visas and eligibility for RC visas is based in statute, and thus the solution must be statutory: to get a law passed that renews authority and eligibility for regional center visas. It would not be a solution to simply force USCIS to receive and process regional center I-526 and I-485, and Department of State to process visa applications. If we did that, we could force USCIS and DOS to start denying applications. Because how could agencies possibly approve applications for benefits that don’t currently exist? To quote EB-5 immigration attorney Ron Klasko, from an email kindly sent to me on this topic: “I can advise you of the general legal principle that prevents a government agency from approving a petition or a visa unless there is statutory or regulatory authorization to do so.”

USCIS and Department of State do not make laws or create benefits, they just administer them. By choosing to pause regional center application processing, USCIS and DOS chose to put the regional center patient in a coma, pending a RC program revival by Congress. The regional center processing coma is not the problem in itself – in fact it’s a kindness, to defer the final action of death.  In that case, begging or suing USCIS to resume processing RC petitions during an RC program expiration would not be a solution, and indeed would harm any RC applicants who do not want denials.

Congress must pass a law that enables EB-5 visas to be issued in the regional center categories. A law that reauthorizes the regional center program would accomplish that purpose. A reauthorization law will inevitably include many provisions in order to pass, but the minimum necessary content to protect existing investors is an RC program expiration date that’s in the future. Reauthorization legislation is the top priority, and Plan A. If Congress does not act to reauthorize the RC program for the future, Congress should at least pass a law that keeps faith with past investment by allowing applicants who filed I-526 while the regional center program was authorized to remain eligible for regional center visas. The one-sentence grandfathering proposal quoted above could be enough, if a minimal Plan B becomes necessary. So far, I have heard no Plan C path to regional center visa issuance that sounds promising to me. I do not know what litigation argument could work for visas in light of what’s in the law and EB-5 process as reviewed above. The top EB-5 lawyers will try their creative best if necessary, but do not speak optimistically about litigation prospects in lieu of legislative solution. The one RC visa lawsuit attempt I’ve read so far did not make sense to me (except for the couple pages of it that were copied from my blog). But if you can see a solid Plan C option, or note any problems with my analysis, please comment, and make your case in detail. Or email me at suzanne@lucidtext.com.

Updates: I’ll continue to update this final section with other ideas as they occur to me, or suggested in the comments. Lawyers, please weigh in on whether there’s any traction here.

  1. Regional Center Investor A has a clear and well-documented case that “I would have had a regional center visa by now were it not for egregious government agency processing delay.” Is that an argument that can be taken anywhere or accomplish anything? If so, with whom to pursue it?
  2. Is the USCIS “material change” policy the primary reason that people who filed I-526 as regional center investors cannot possibly get direct EB-5 visas? If so, is there any hope of or path to a policy-level remedy of changing the material change policy?

Call for investor stories to support RC program authorization

I do not have definitive news about regional center program reauthorization, but will pass on action items suggested by EB-5 advocates. (Personally, I have decided to celebrate EB-5 legislation as a miracle once it happens, and to avoid predictions before it happens. When a miracle is a necessity, it’s risky to comment in advance on its probability and timing.)

The first condition for EB-5 legislation is a vehicle to which it can attach, and that condition has not been available yet in our crazy Congress. The date for one hoped-for vehicle — the FY2022 omnibus appropriations — remains unknown. It was due by December 3, but political news shows that Congress is still heading to miss that deadline (due to issues much larger than EB-5). (12/3 UPDATE: We now know that a new CR has extended the deadline to February 18, 2022, and per usual is a brief bill with no special interest content, including no RC program authorization.) But knowing the new CR deadline will still not support predictions about EB-5 legislation, since I won’t know whether the new CR is the last CR, or whether appropriations remains the best/nearest available vehicle for EB-5 legislation. Everyone in the EB-5 industry feels the urgency, and will at least try for nearer opportunities as the appropriations act opportunity gets deferred by Congress. (FYI, here again is my Excel file logging the recent history of appropriations bills.)

 “Congress’s goal in December: Avoid shutdown and default,” reported The Hill yesterday. If only the headline referred to avoiding shutdown of the job-creating regional center program, and avoiding U.S. government default on the EB-5 visa promise to over 80,000 past foreign investors whose over $40+ billion investment is now at work in the U.S. economy! Those are major concerns, yet overshadowed. The shutdown and default threats occupying Congress involve funding for the entire federal government and the $20+ trillion national debt. Not to mention dealing with President Biden’s social spending and climate bill priorities.  No wonder EB-5 struggles for attention.

With the nation’s solvency and Biden’s legacy teetering on the brink, what room is there for any other concerns? And yet I notice the disproportionate power of catchy individual stories. Even reading The Hill, I have had to scroll far down the page to get to major news about the national debt and Build Back Better, down below headlines about the wheelchair shoplifter and Lindsey Lohan’s engagement. People respond to stories about individual experience, especially when featured in print and in a position to get shared.

EB-5 advocates have been thinking about the power of stories. The regional center lobby just conducted a PR blitz with a message to EB-5 investors: please call Senator Leahy and Senator Schumer and tell your story, to urge action on reauthorization. The word used to be: stand back and relax because we have this under control, the key Congressional representatives are on board, and we possess the political capital to get this done. The new messaging acknowledges that reauthorization is not in the bag, that Congressional support is not a given, and that we need all the political capital we can get, including from EB-5 investors who can talk about their important contributing work and/or investment projects in the U.S..  While the case for reauthorization has many planks, the case for urgent reauthorization comes specifically from the plight of past investors, whose pending immigration petitions may be reevaluated after December. The plight of past investors also provides the moral motive for reauthorization. Regional centers and investors equally need that plight to be highlighted, to help motivate urgent action on reauthorization legislation.

EB5IC representatives have particularly encouraged EB-5 investors to call or email Senator Leahy’s office, and tell a personal story about the impact of regional center program lapse. While Senator Leahy practically founded the regional center program and does not need to be educated about EB-5 or the need for reform legislation (as discussed in my previous post), investor stories may help stoke his sense of urgency about the current EB-5 situation, in midst of many competing priorities.  

Meanwhile, AIIA is working to gather and disseminate EB-5 investor stories for maximum impact in the media and in personal meetings with Congressional representatives. The media drive is supported by IIUSA and its PR firm FischTank, which can help to get stories placed. Additionally, AIIA is planning a trip to Washington DC next week, and has an urgent call for investors to join in meetings with Congressional reps. If you can assist either or both of these efforts, please reach out to them ASAP. I cannot promise the success of these campaigns, but the effort can only help. And the more participation, the more potential impact.

Quoted from https://goaiia.org/blog/f/eb-5-investors-share-your-story

FischTank would like to develop a media campaign that focuses on the investors’ personal stories, highlighting what you and your families have sacrificed, where you are in your immigration process, current obstacles you are facing, and what you have contributed to your local community.  Once FischTank has had a chance to connect with those of you who are willing to share your story, it would then like to package it together to focus on the importance of the program, the impact of the lapse on investors and the communities that have benefited from the program and pitch it to relevant local and national media. If you are interested, consent to your identity and story being made public, and are prepared to speak with members of the press about your story and how this program lapse has affected you, please reach out to us right away at info@goaiia.org

Quoted from an email sent by info@goaiia.org on November 28, 2021

Dear EB-5 Stakeholder,

You may remember we had previously sent an email asking for personal stories of how the EB-5 lapse has affected you. We received a few responses, although honestly, we would have liked to receive more.

As a result of that request, we received a response from Dr. Chandra Ojha, an interventional cardiologist, who lives in El Paso, Texas. Despite being a highly trained doctor, he was not able to extend his full service to the society during the raging pandemic last year as a result of the delay in processing his EB-5 visa. His story was published in a local newspaper. You can read it here: Opinion: I’m an El Paso doctor. The immigration system has put my future in jeopardy – El Paso Matters

Within hours of the publication of his story, the office of a sitting Senator reached out and asked to speak with him.

This is how grassroots campaigning works! It moves things one little step at a time. If this is the power of just one genuine story, published by a constituent living in America, imagine hundreds of such voices being heard all across America and the power they would have to move things in our favor.

We need more people to speak up and advocate for themselves. We need more voices to be heard. We need you to step forward to help our community that is hurting because of the Regional Center program lapse.

There is something we urgently need your help with now. We are looking for EB-5 investors (or their dependents) to visit lawmakers with us in Washington, D.C. on December 9 and 10.

We hope that issuers and immigration attorneys alike can also help us with this effort. We are lining up a series of meetings with members of Congress and are seeking investors that have invested in a project in these following areas:

–        Texas (especially Houston)
–        Iowa
–        South Dakota
–        South Carolina
–        Illinois
–        Vermont
–        California (specifically Silicon Valley)
–        Arizona (Phoenix)
–        Upstate NY (Syracuse)
–        Ohio (North of Cleveland)
–        Georgia (South of Atlanta)

As a reminder, locations of investment is more important than residence and we are seeking investors whose projects are located in the areas mentioned above. Attorneys, we request you to forward this email to your clients and we appreciate getting your support in working together to achieve our common goal of helping EB-5 Regional Center investors continue their immigration process.

Read more at https://mailchi.mp/goaiia/dc-trip

December 2021 Visa Bulletin (airport analogy)

The December 2021 Visa Bulletin has a “Current” Final Action Date and Filing Date for China in the 5th Non-Regional Center preference category (C5 and T5).  This means that in the month of December, direct EB-5 Chinese applicants who are documentarily qualified at the visa stage can proceed to get visas, regardless of priority date. Even more exciting, Chinese direct investors with I-526 approval can file visa applications (and probably I-485, though USCIS hasn’t updated its AOS page yet).

According to the visa bulletin methodology, the current final action date means that the number of Chinese direct EB-5 applicants who are documentarily qualified at the visa stage must be quite small – well under the total EB-5 visas currently available for China. That is no surprise, considering that direct EB-5 has historically accounted for less than 10% of EB-5 demand from Chinese, and that USCIS’s slow-walking of Chinese I-526 processing under the visa availability approach has prevented many applicants from reaching the visa stage. Shame on USCIS, for contributing to visa loss by not processing petitions! (The Visa Bulletin adds a warning note just in case the number of direct EB-5 Chinese applicants proves larger than Department of State expects: “if China-mainland born number use were to materialize at a level which could potentially jeopardize visa availability under the overall FY-2022 Employment-based Fifth preference annual limit it would then be necessary to once again impose a final action date.”)

The Visa Bulletin Section D clarifies how the situation will change if the regional center program is reauthorized soon. “If there is legislative action extending this category for December, the final action dates would immediately become “Current” for December for all countries except China-mainland born I5 and R5, which would be subject to a November 22, 2015 final action date.”

This is the first time that the Visa Bulletin has allowed direct EB-5 priority dates to move ahead of regional center dates at the visa stage. Presumably Department of State made the move for December 2021 to minimize visas simply going to waste during the on-going regional center program expiration, as I discussed in a previous post. At most a few thousand visas issued out-of-order to China-born direct EB-5 investors is a couple thousand fewer visas to go unused in FY2021. Chinese regional center investors are losing visa availability by the day during RC program expiration regardless, so I don’t see the announcement as much additional harm for them. Visas that don’t go to direct EB-5 applicants would likely otherwise just be lost to EB-1 this year or family next year. The visa bulletin change is good news for those few Chinese direct investors who are in a position to protect children by filing visa applications, or far enough along with paperwork to jump at the chance for final action.

When interpreting the Visa Bulletin, be sure to remember that EB-5 is a multi-step process. Visa Bulletin announcements reflect and pertain to Step 2 (visa application stage), not Step 1 (I-526 processing stage).  A “current” final action date in December 2021 reflects low demand and high supply at the visa stage as of December 2021, and applies to people who have visa/I-485 processing nearly complete as of December 2021. It does not necessarily mean anything for people earlier in the process.

Consider that the Visa Bulletin was “Current” for China in April 2015, but a Chinese who filed I-526 in April 2015 was not “current” by the time he reached the visa stage, and indeed didn’t get a chance for a visa until March 2020. The Chinese investor who started the process in early 2015 waited five years for visa availability as a natural function of demand leading up to 2015 and supply since 2015 (and naturally regardless of supply/demand conditions that determined wait times for people finishing the process in 2015, and the visa bulletin in 2015).

Think about the analogous situation of gate announcements in the airport, and what such announcements mean for people who are not yet checked in and through airport security.

Here’s an airport with crowds at the gate and at check-in. Flights are overbooked and check-in is understaffed, but suddenly there’s a special gate announcement: all green shirts in the boarding area can get the seats on the flight. What should be the thought process of that green-shirted guy in the outside right corner, as he thinks about whether or not to bother going to the airport?

On the one hand, there’s a special deal right now at Gate 3, and green-shirted people in the boarding area are being given seats on the plane with no wait. This guy has a green shirt. On the other hand, the guy isn’t in the boarding area and can’t just go straight there – he has to check in and get through security first. His future experience at Gate 3 will not be determined by gate announcements at the time he walks in the airport door, but by gate announcements when he’s finally at the gate. He has to think about how long it will take to get ticketed and checked in and through security, and what conditions are likely to be at Gate 3 by the time he gets there. There aren’t so many green-shirts ahead of him, but large crowds generally, a question of how long the green-shirt-priority boarding will last, and apparently just one employee working on check-in. The guy will be wise to consider factors such as these, in addition to the current gate announcement, when calculating his potential wait to get a seat on the plane. Such factors are particularly important in the EB-5 context, with multi-year processing times and crowds in the thousands and tens of thousands.

Understanding the Audience: Senator Leahy

The FY2022 Appropriations Act is the nearest-term hope as a vehicle for regional center program authorization, and I hear that all sides are committed to grasping that opportunity. (The appropriations act is due by December 3, 2021, and could well be delayed by Congressional fights unrelated to EB-5. But I’m relieved to hear that EB-5 negotiators are not counting on delay, but still hustling to be ready to catch the opportunity as soon as it could possibly come.) The appropriations opportunity focuses attention on Senator Leahy, who has a gatekeeper position as Chairman of the Senate Appropriations Committee. What are Senator Leahy’s interests and motivations when it comes to EB-5 legislation?

Senator Leahy is a long-time regional center program champion. His website celebrated in 2013 “Senator Leahy was the driving force behind every reauthorization since enactment.” He is also passionate about program integrity and reform, and long instrumental in EB-5 legislative efforts. The successes and difficulties of Vermont Regional Center have colored his efforts. Over the decades, Senator Leahy has published thousands of words about his EB-5 interests. I’m sharing below notes that I made when reading articles tagged with the “EB-5” category at leahy.senate.gov. I hope that reviewing Senator Leahy’s perspective can help shape advocacy that’s responsive to his priorities.

Senator Leahy’s EB-5 perspective as expressed in articles posted at leahy.senate.gov

Regional center program authorization

  • Committed supporter of long-term regional center program authorization with reforms
  • 7/22/2009: For years this program has been reauthorized on a temporary basis.   Currently, it is set to expire at the end of September.  Making this program permanent is a critical first step to its continuing success.  …I also remain committed to considering changes to improve the overall program. … I hope that this hearing will initiate a dialogue about how Congress, the agency and stakeholders can work together to ensure that the goals of job creation and security can be met, and at the same time make the program as effective and efficient as we can for those who are developing projects in communities around the country.  I strongly believe this program has the potential to grow as a meaningful source of positive economic development around the United States.”
  • 9/28/2012: “I appreciate the President’s support for this bill and the support we have drawn from both sides of the aisle.  The president’s signature on this bill is one more step toward my goal of a permanent charter for the EB-5 program, along with additional measures to give U.S. Citizenship and Immigration Services (USCIS) the tools it needs to keep this program a strong, secure and vital part of our economy.”
  • 12/4/2015: “The Regional Center should be reauthorized, but only if reformed.  There is now bipartisan consensus around these reforms, and we cannot squander this opportunity.”
  • 12/08/2016: “I believe we can still fix EB-5. But I cannot support simply extending it, yet again. While I do not come to this decision lightly, I cannot support a continuing resolution that leaves these flaws in place. The time has come to reform EB-5, or to end it.”
  • 01/12/2017: “I remain committed to protecting investors and rooting out the rampant fraud within the program.  If we cannot take these critical steps, I believe the time has come for the program to end.”
  • 9/25/2019: “We are hopeful that Congress will finally take decisive action to address the fraud and other vulnerabilities that have come to define this program.”
  • 6/25/2021: “Now that our bill has been blocked, the EB-5 visa program is unfortunately going to lapse in the days ahead and have untold economic consequences throughout the communities that rely on the program for development projects.  I remain committed to reforming the EB-5 program should there be another opportunity to do so.”

Integrity Measures

  • Promote accountability and transparency
  • Prevent fraud and address national security vulnerabilities
  • “Improve accountability of applicants, project managers and the projects themselves”
  • “I remain committed to doing more to protect investors and to root out fraud within the program, such as increasing fraud investigations and requiring additional oversight of investor funds.”
  • “Our proposal would require background checks and third party oversight of funds.  It would create protections for defrauded investors. It would ban foreign government ownership of an EB-5 company.”
  • “Congressional action is required to rectify documented fraud and national security vulnerabilities within the EB-5 Regional Center Program. The bipartisan EB-5 Reform and Integrity Act of 2021 establishes new disclosure requirements for EB-5 regional centers in order to protect investors and certify regional center compliance with program rules. It also requires the Department of Homeland Security to perform regular audits of and site visits to regional centers.”
  • “I will not support mere window dressing.  Proposals that do not require transparency and accountability for every EB-5 project are just that.”

TEA Incentives

  • Protect “central purpose of promoting investment in rural and economically challenged regions” by “reining in abusive gerrymandering”
  • The incentives that Congress created to promote investment and create jobs in rural and high unemployment areas—the sole reason why I championed this program—have been rendered obsolete through economic gerrymandering.
  • “The fact that a luxury hotel in Beverly Hills can use gerrymandering to claim it is located in a distressed community is troubling.  But the fact that this type of abuse now represents almost 90 percent of the entire EB-5 program is appalling.  And an untold number of these luxury developments would be pursued regardless of EB-5 financing, casting doubt on whether the program is creating any jobs at all.”

Investment amounts

  • Modernize EB-5 by providing “a much-needed increase” to “inadequate investment levels.”

Visa Relief

  • (The website posts do not discuss this topic. Leahy’s co-sponsored bills have included age-out protection and concurrent filing. He has spoken warmly about the general goal of protecting investors, but not discussed EB-5 visa relief.)

Industry Prejudices

  • “Small but powerful corporate interests must not be allowed to derail improvements that can help our most distressed communities. They must not be given credit for window-dressing reform proposals that do little to change the status quo.” (2/2/2016)
  • “Gluttonous, shortsighted corporate greed blocked these critical reforms.  Greed that was given a voice by the U.S. Chamber of Commerce.  Republican leadership has allowed a couple of powerful developers who exploit this program’s flaws to derail critical reforms.  I find it shameful: the worst abusers of this program have been given veto power over its reform.” (12/08/2016)
  • “It’s really unfortunate that a bipartisan bill supported by the overwhelming majority of EB-5 stakeholders was blocked at the behest of a small minority that blindly opposes much-needed accountability and transparency in the program.” (6/25/2021)

This history can be a resource for people speaking with Senator Leahy today. Assuming industry can’t all to agree to just ask Leahy to attach Leahy’s own proposed EB-5 reform bill to FY2022 appropriations (of if only!), let’s at least carefully frame the alternative proposed EB-5 legislation in Leahy’s terms. Show him how any alternate TEA provisions and integrity measures still check his priorities for distressed and rural areas, accountability, and transparency. Identify and preemptively concede any proposed language that projects the opposite message. Discuss the integrity measures that likely mean much to Leahy in light of the Vermont RC case: fund administration, investor reporting, and regional center audits (previously not included in the industry bill). In choosing the advocacy approach, be cautious to navigate Leahy’s unfortunate image of parts of the industry. Speak to his goals, commitments, and existing knowledge. I trust that negotiators are being smart and strategic, and thinking in terms of audience. We can maximize the FY2022 appropriations chance by presenting language that makes Appropriations Chair Leahy able to respond “yes, this is something I want to help advance because it addresses my priorities and will help to protect my legacy in EB-5 and my reputation in Vermont.”

Minimizing FY2022 Visa Loss

Today’s “Chat with Charlie” on the November 2021 Visa Bulletin included a slide with another reminder of the cost of delay in regional center program authorization.

As the chart shows, the E5 (EB-5) category has a record 19,880 visas available this year (even higher than the 18,602 previously anticipated), and so far only about 368 applicants eligible to claim them. Those 368 applicants represent the inventory of direct EB-5 (C5 and T5) applicants at the visa stage as of September 2021, except for China-born applicants with priority dates more recent than November 22, 2015 (the China final action date in the October 2021 visa bulletin).  

So close to visa relief, yet so far! FY2022 offers massive extra supply (thanks to roll-over from unused family-based numbers last year) but we’re held back from using it.

Hypothetically, if the regional center program had stayed authorized and USCIS and DOS worked efficiently enough to issue the almost 20,000 EB-5 visas available, then the EB-5 backlog at the visa stage could have been reduced by about 40% this year alone. (As of November 2020, DOS reported 50,936 total EB-5 applicants registered at the National Visa Center.)

The story is particularly sad for applicants from China, who could have theoretically gotten up to 15,000 leftover EB-5 visas this year (about 20,000 quota total minus about 5,000 visas required to satisfy rest-of-world demand at the National Visa Center). The loss is only theoretical (the backlogged Guangzhou consulate probably lacks capacity to schedule that many EB-5 interviews in a year even without the regional center issue), but still painful.

What needs to happen to minimize EB-5 visa loss this year?

One. The industry needs to make all possible concessions to get the regional center program reauthorized as soon as possible, so that RC visas can be issued again as soon as possible. Assuming that getting attached to the FY2022 Appropriations requires agreeing to reforms and conditions demanded by Senate Appropriations Committee Chair Leahy, then please agree. Regional center applicants represent over 90% of the EB-5 backlog, and lack legal basis to get visas until the law changes to provide reauthorization and/or grandfathering. Negotiators will not be thanked if they hold out too hard for the “bird in the bush” of visa relief in legislation, at a cost of losing the “bird in the hand” of tens of thousands of EB-5 visas available in 2021 and 2022 on a “use it or lose it” basis.

Two. USCIS needs to speed up processing of direct EB-5 I-526, so that at least direct EB-5 applicants can maximize visa use this year. DOS reports only 368 eligible direct EB-5 applicants at the visa stage as of September 2021. Meanwhile, there are probably at least 1,000 direct EB-5 investors with I-526 pending at USCIS (considering the total pending inventory of about 13,000). At previous productivity levels, USCIS could have already finished adjudicating 1,000 direct I-526 and sent them off with their families to the visa stage since June 30, thus adding another 3,000 or so applicants eligible for direct EB-5 visas. Instead, here’s what’s happened with I-526 adjudications since June 30, 2021 according to my leaker friend: July, 45 I-526 approved; August, 15 I-526 approved; September, 15 I-526 approved; October to date, 7 I-526 approved. This inexcusably low productivity needs urgent management intervention.

Three. The small number of EB-5 applicants eligible for visas in FY2022 could also increase if Department of State decided to move China Visa Bulletin dates just for direct EB-5. If DOS made China direct EB-5 (C5 and T5) “current” in the Visa Bulletin, that would make around 4,000 more Chinese direct EB-5 applicants eligible for visas even while the RC program is lapsed. That could effectively lower EB-5 visas loss in FY2022 by about 4,000 visas. In previous visa bulletin chats, however, Charles Oppenheim gave no indication that he would consider such a move. There’s a strong principle to keep the visa queue in order and avoid date progression that has to be corrected later with date retrogression. Moving China visa bulletin dates just for direct EB-5 would implicitly give up on regional center authorization happening any time soon, and displace regional center applicants from China. I guess DOS would not be eager to make that call. This puts us back to option one: do whatever it takes to get the regional center program reauthorized as soon as possible.

As a side note, see minute 36 of the Chat with Charlie linked above for a brief comment in response to my question about why, despite “current” Chart B for I5 and R5, NVC has been emailing regional center applicants that it “will not act on any new or pending EB-5 visa petitions as described above until further notice. Please do not submit any additional fees or forms to NVC.”)

Finally, warm appreciation due to Charles Oppenheim, Chief of the Immigrant Visa Control Office at Department of State. He is now retiring after 43 years, and I hope the government remembers and learns from his wonderful example. We need more civil servants like Charlie who are true experts plus committed to communication and process improvements. He spent decades doing everything he could as an individual toward the Herculean task of making U.S. immigration as fair, functional, and understandable as possible. Thank you Charlie for your generosity, integrity, and hard work! What will we do without you?

No news yet on RC program authorization

We remain, so far as I can see, in the position described in my previous posts about reauthorization efforts.

As previously discussed, we are waiting for a legislative vehicle to arrive, and for Congress to be willing to load an EB-5 bill onto that vehicle. Industry advocates are striving behind the scenes to make these conditions come true as soon as possible.

Industry hopes for a vehicle are currently focused on the FY2022 appropriations act, which is due by December 3, 2021, unless delayed again. (Delay looks likely, considering the number of contentious issues before Congress.) See Aaron Grau’s article A Lesson in Legislation for helpful background and definitions, and my September Updates post for examples of how omnibus timing has worked in recent years.

Industry hopes for an EB-5 bill are now focused on a consensus bill that has reportedly been agreed-to by EB-5 advocates, and presented to key members of Congress (who may also make changes). EB5IC has talked about this for awhile, and IIUSA acknowledged a consensus effort on October 1 (a significant development). The text of this consensus bill remains a tightly-held secret, possibly because it is agreed-upon and uncontroversial. The drafts I’ve seen show a revised version of S.2778 from last Congress. The bill is a holistic alternative to Senator Grassley and Leahy’s reform-focused EB-5 bill (S.831/HR 2901).

Considering the lack of fallback for reauthorization, I can only hope the best for the industry consensus EB-5 bill, whatever its quality, wisdom, and chances in Congress. This is what industry decided to ask Congress to pass as part of FY2022 appropriations, or the soonest available vehicle. It is the candidate.

The content of FY2022 appropriations is still being debated. So far, no EB-5 language was included in the Democrats’ preliminary draft FY2022 Appropriations bill text, which was released on October 18 by Senator Leahy as Chairman of the Senate Appropriations Committee. (Full text available here, the Republican reaction here. If there were a clean RC program extension, it would be together with the other immigration extensions on p. 62 of the Homeland Security bill. But a simple extension is not in the draft bill, and is not expected. All sides expect reauthorization conditional on program reforms, after Congress chose to break the cycle of clean RC extensions in December 2020.) It’s early days yet, and much negotiation remains before appropriations bill content gets finalized. Who knows, maybe Senator Leahy will decide that he likes and wishes to advance the industry alternative competitor to his EB-5 reform bill. Maybe other influences will prove stronger. We the public may not know until the last minute before passage whether EB-5 legislation of some kind (the industry’s hoped-for bill, or minimum investor protections) can finally get a seat on the appropriations vehicle. or another near-term vehicle. And we may not know until December whether “the last minute” for appropriations is indeed December 3, or a later date. (From what I’m hearing so far, a later date is likely.)

Considering the nature of the process, I do not expect to have anything very significant and unambiguous to report on EB-5 legislation before late November at earliest. It will probably be later, considering that the contentious appropriations process looks likely to extend beyond the immediate December 3 deadline. My next EB-5 articles, as time permits, will be on USCIS processing updates, visa availability, and due diligence. In the meantime, I am busy with my regular work of writing business plans.

While I do not expect much public information in the next month, I do expect intensive activity behind the scenes that advocacy group members may still have a chance to influence. If your life depends on this, join an advocacy organization to keep informed and involved. (Even better, join more than one group, to reduce vulnerability to messaging. And hold on to personal sense and knowledge, as defense against doublethink. One hears quite a bit of “2+2=5.”)

As a reminder, IIUSA posts updates on its blog, EB5IC reps post videos here, and AIIA has a blog here and holds regular donor update calls (with one upcoming this week Friday).

I have reopened comments, to facilitate input from readers. (As before, a reader’s first comment on this blog gets held for manual approval, while subsequent comments post automatically.) Let’s focus on what could be helpful, and language we would use face-to-face. Twitter can have the snap reactions, while advocacy groups are the best place to organize efforts and channel emotion toward constructive outcomes. Ideally, this small corner here can stay safe for thoughtful discussion and info-sharing, as it has been for many years.

USCIS Website Alert 10/4 Update

The EB-5 page at USCIS.gov has updated its alert regarding policy for processing during the regional center program sunset. I’ve copied below a redline that compares the Alert published on October 4, 2021 with the the Alert previously published on July 1, 2021. The major difference is that USCIS now gives a deadline for re-evaluating its “hold” policy (end of calendar year 2021), and states that Form I-765 and I-131 continue to be accepted and adjudicated for “these” (undefined) pending Forms I-485. The Alert does not say that USCIS will start denying petitions on January 1 if the RC program is not reauthorized by that time, but does warn that they’ll reevaluate at that point. Congress seems to need cliff-hanger deadlines to make them act, and USCIS is now offering one.

I haven’t enabled comments for this post, because I’ve noticed my blog discussion tending in an unconstructive direction. In lieu of commenting on this post, I encourage contacting legal advisors with any questions about the policy, and contacting advocacy groups to support efforts to expedite reauthorization and protect in-process regional center applicants and their investments.

— * —

USCIS Website Alert as of July 1October 4, 2021

Alert: Statutory authorization related tofor the EB-5 Immigrant Investor Regional Center Program expiredended at midnight on June 30, 2021. This lapsesunset in authorization does not affect EB-5 petitions filed by investors who are not seeking a visa under the Regional Center Program. Due to the lapsesunset in authorization related tofor the Regional Center Program, USCISwe will reject the following forms received on or after July 1, 2021:

  • Form I-924, Application for Regional Center Designation Under the Immigrant Investor Program, except when the application type indicates that it is an amendment to the regional center’s name, organizational structure, ownership, or administration; and
  • Form I-526, Immigrant Petition by Alien Investor, when it indicates that the petitioner’s investment is associated with an approved regional center.; and
  • In generalForm I-485, Application to Register Permanent Residence or Adjust Status, and any Form I-765, Application for Employment Authorization, and Form I-131, Application for Travel Document, associated with a Form I-485 application that is based on a Form I-526 filed by an approved regional center.

Until further notice, we will hold (that is, not act on) any pending petition or application of these form types that is dependent on the lapsed statutory authority until further notice.and was filed before the end of the statutory authorization. At the end of calendar year 2021, unless there is new legislation for regional centers, we will reevaluate whether to keep this hold in place. If we wrote to you were issued written correspondence regardingabout your petition or application on or before June 30, 2021, you should review theour written correspondence and respond by the due date (as applicable). Although USCIS is unable to we cannot review your response at this timeright now, we will receive and maintain thekeep your response for review if circumstances change.

We will continue tostill accept and review Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status, in the normal course,Form I-829, Petition by Investor to Remove Conditions on Permanent Resident Status, including those filed on or after July 1, 2021.

We will begin rejecting all Forms I-485, Application to Register Permanent Residence or Adjust Status, and any associated Forms I-765, Application for Employment Authorization, and Forms I-131, Application for Travel Document, based on an approved Regional Center Form I-526.

In addition, we will keep on hold (that is, not act on) any Form I-485 that is based on a Form I-526 for an approved regional center; the Form I-526* must have been filed before the end of the statutory authorization. At the end of calendar year 2021, unless there is new legislation for regional centers, we will reevaluate the hold. We will accept and adjudicate Forms I-765 and I-131 relating to these pending Forms I-485.

We will provide further guidance to the public if circumstances change or further guidance becomes necessary.

*Suzanne’s note: I guess this is a typo, and USCIS meant to say “Form I-485.” Otherwise, it’s puzzling.

Data insights for the future of EB-5

Visa availability is a key issue shaping discussion around EB-5 legislation and future potential.  I have prepared a series of charts with data to help inform the discussion.

First, let’s look at who uses EB-5 visas. EB-5 gets just 7.1% of total employment-based visas, or about 10,000 visas per year. Lawmakers may assume that by making about 10,000 EB-5 visas available, they have incentivized about 10,000 EB-5 investments annually. That’s not the case.  In FY2019, minor children received 41% of EB-5 visas issued, while just 36% of the quota went to EB-5 investor principals. In previous years, spouses and children received an even larger percentage of EB-5 visas. So long as the EB-5 quota must be shared between principals and their families, it can sustainably incentivize fewer than 4,000 investments annually. More investors do not fit within visa availability.

Clarifying that the @10,000 EB-5 visa quota applies to principal applicants would increase EB-5’s potential sustainable economic benefit by almost 300%. It could also reduce the EB-5 backlog by about 64%. I do not know if Congress would do this for EB-5. But certainly, an adjustment to visa allocation would be immensely and broadly beneficial — not least to the economy and job creation.

In the excitement of welcoming EB-5 investment following the economic crisis of 2008, many investors and issuers did not notice the hard limit on sustainable investor numbers created by the EB-5 quota. EB-5 investment – as reflected in I-526 filings – exceeded the sustainable level every year since 2011.

In the glory days of 2014-2017, EB-5 investment was at least three times more popular than it could afford to be under an annual visa quota of about 10,000, with only about 36% going to investors. That popularity was wonderful for the U.S. economy, which got tens of billions of dollars in investment and hundreds of thousands of jobs, but it was not good for immigration. Thanks to the mismatch between EB-5 demand potential and available EB-5 visas since 2011, EB-5 has ended up with a backlog of over 80,000 applicants still awaiting the visa incentive for their economic contributions.

I hear hopes that legislative reform could restore the EB-5 market to what it was a few years ago, such that regional centers could do business at previous levels. Look at the numbers, and think what will need to change to make that possible. EB-5 raised almost $8 billion dollars in 2015 alone, from enough investors to claim at least five years of EB-5 visas. If Congress and issuers want another $8 billion dollars a year from EB-5, they can (1) free up visas for the investors who contributed the first billions (an estimated 80K-100K visas are needed to clear the EB-5 backlog), and also (2) increase the EB-5 visa quota so that it can sustainably accommodate up to 16,000 investors a year (i.e. make the limit 3x to 4x higher than it has been). Or (3) recapture the past blissful ignorance of visa limits and backlog risk.  At least two of those conditions must be met for EB-5 to possibly raise again the kind of investment that it did a few years ago. Otherwise, future expectations must be moderated. As it happens, expectations have generally been moderate for most of the EB-5 ecosystem. In 2016, DHS estimated that the average regional center project had 15 EB-5 investors, while large projects in 2016 were associated with just a few regional centers.

I highlighted per-country I-526 receipt numbers (in the years for which I have per-country data), because per-country limits also affect EB-5 visa allocation and market potential.

Under current law, EB-5 visas get allocated first to the earliest I-526 filing priority dates from each country, up to a country cap limit of about 700 visas per country. Then any leftover visas are available to the oldest priority dates regardless of origin. Country caps plus sharing visas with family means a sustainable level of just 300-400 investments per year from investors born in any one country. EB-5 demand from China vastly exceeded the per-country level several years ago (by 52x in 2015), then fell to almost nothing. EB-5 demand from China was relatively early, thus now at the head of the line for any visas leftover after organically low EB-5 demand from other countries. Here’s how per-country EB-5 visa allocation has happened so far, in practice.

Backlogged Chinese applicants – the oldest applicants and thus at the head of the line for any leftover visas — have gotten as many as over 8,000 EB-5 visas per year (back in FY2015 when EB-5 interest had not diversified), and at least over 4,300 visas per year (in FY2018 and FY2019, even after a demand increase from the rest of the world). Growing demand from Vietnam and India reached the visa stage by 2018/2019 (but not able to get visas beyond the country limit of around 700, since not near the front of the leftover visa line). All other countries combined have absorbed at most about 3,700 EB-5 visas per year so far.

The charts above have important messages for EB-5 issuers thinking about the future, and for past Chinese investors. Both should focus on the blue segment in each column – the numbers representing EB-5 visa demand from all countries below per-country limits. This number reflects market potential for EB-5 outside of backlogged countries, and is also the variable factor determining visa supply for China.

People trying to calculate future market potential may be concerned to see the “Other Countries” row hitting a plateau in I-526 filings and visa numbers since 2017, even in absence of any visa constraint. At the height of EB-5 program popularity and with the $500,000 investment level, the whole world outside China, India, and Vietnam has yielded fewer than 2,000 investors per year, and used fewer than 4,000 annual visas. Going forward, EB-5 issuers hardly want to all compete for only one to two thousand investors a year spread across miscellaneous countries — and that’s a best case assuming affordable investment levels. Issuers may be concerned to see Vietnam and India visa availability already used up for the next 7-8 years, according to Department of State estimates, and over 4,000 visas getting “leftover” every year to old applicants instead of leveraged to incentivize new investment. Thus the idea of setting aside 3,000 visas in categories reserved for new TEA applicants. With set-asides, total EB-5 market potential going forward could be not only <2,000 investors from non-backlogged countries with organically low EB-5 demand, but also another 1,000 or so investors (36% of set-aside visas) from the high-demand countries otherwise discouraged by backlog wait lines.

While the history of relatively low “Other Countries” demand is a concern for program potential, it’s an encouragement for backlogged Chinese applicants. The China visa wait time equation is China demand/leftover supply, so backlogged applicants welcome reductions to the new demand that reduces leftover supply. Wait time expectations for the China backlog will continue to improve if EB-5 demand continues to fall, as it has done since 2018/2019. China estimates will only get worse if EB-5 gets more popular than it’s ever been before in small countries. Or, if new EB-5 usage expands thanks to “TEA set-asides” providing an exclusive path around backlogs for high-demand countries. Consider the example of a past China-born investor who’s #50,000 in the queue for leftover visas. His wait time outlook changes by orders of magnitude depending on whether the 50,000-long queue before him is likely to advance at a rate of over 6,000 average annual visas available to China (the long-term average I predict, considering falling demand), or 50,000/4,000 (if rest-of-world demand stabilizes back at 2017/2018 levels), or 50,000/1,000 (if TEA set-asides divert 3,000 out of the 4,000 or so annual visas otherwise leftover to the backlog).

In light of these calculations, consider the cost/benefit of increasing total EB-5 market potential by about 1,000 investments a year via 3,000 set-aside visas for new TEA investors. Would that TEA incentive be worth the trade-off a 2x to 5x increase to backlogged Chinese investor wait time expectations?  Especially when the market and incentive potential depends on finding welcome in the home of the painful backlog?  And what if backlog relief (queue elimination) were proposed together with TEA set-asides (queue-jumping)? Such a combo proposal must logically presuppose that either the backlog relief provisions will fail, or the TEA incentive will be null. There’s no attraction to bypassing a painless queue.

I’ll close with a chart summarizing the current state of the EB-5 backlog (with and without derivatives), and with a slide that I made earlier this year for an AILA conference. The backlog chart reiterates how much good would result if Congress clarified that the @10,000 EB-5 visa quota applies specifically to EB-5 investors (principal applicants). The slide reflects an insight that came to me as I struggled to think through realistic EB-5 wait time predictions. “If EB-5 visa wait times are untenable, then something must give to reduce them. If not supply relief, will be demand failure.” If only legislative change can put us on the path of positive relief, and a sustainable and productive future. If that’s not possible today, let’s at least do what it takes to get reauthorization and protection for past regional center investment as soon as possible, to protect the possibility for future relief,

(For links to data sources referenced in this article, see my Timing Data Room page. For those who prefer to interact with charts in Excel, here you go. If the effort and resources that I put into these articles is worth something to you, please consider my PayPal contribution link.)