On June 30, USCIS released its Annual Report 2017 to Congress on matters relating to its mission – “Congress charged us with the duty to aid applicants and their sponsors who are experiencing difficulties applying for immigration benefits with U.S. Citizenship and Immigration Services (USCIS). In addition, Congress bestowed on us the responsibility of identifying trends and ongoing problems in the administration of our immigration system and, where possible, making recommendations on how to solve those problems.”

Specific to EB-5, USCIS identified the following Ongoing Concerns (at pp 32-33)-

Ongoing Concerns

Short-Term Regional Center Reauthorizations. Legislative efforts to reform the EB-5 program have stalled over numerous issues, including the methodology for determining TEAs, the two-tiered investment framework, and effective dates for any new provisions. In the meantime, Congress has reauthorized the Regional Center program in a series of short-term extensions. These short-term extensions trigger filing surges by investors seeking to secure a place in the queue before the minimum investment amount is increased or changes are made to other provisions. They also contributed to delays in updating EB-5 regulations as the agency yielded to signals from Congress that it intended to make statutory changes to the program. As this report was being finalized, the Regional Center Program was extended to September 30, 2017, without change.

Regulatory Reform. In late 2016 and early 2017, USCIS advanced two EB-5 regulatory proposals that would: (1) adjust the minimum qualifying threshold investment amount for inflation from $1 million to $1.8 million; (2) increase the investment threshold for TEAs from $500,000 to $1.35 million; and (3) reform the TEA designation process to prevent abuse. Members of Congress and stakeholders have expressed concern that the current regulations unfairly allow some Regional Centers to qualify their projects for the reduced EB-5 threshold investments in an otherwise low employment area.

EB-5 Backlogs. The EB-5 program continues to attract high net-worth foreigners on a worldwide basis, and disproportionately from China. As a result, processing times are long and are getting longer, currently at 16 months for Form I-526, Immigrant Petition by Alien Entrepreneur and 27 months for Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status. As of September 30, 2016, DOS reported there are just over 10,000 approved investor petitions awaiting an immediately available immigrant visa. The IPO also reported it received 4,395 Forms I-526 in the first quarter of FY 2017, and attributed this surge to the then-looming sunset of the Regional Center program scheduled for December 5, 2016. However, the oversubscription of the EB-5 category by Chinese nationals specifically is significantly larger than it appears. Historical data reveal that, on average, two dependents accompany each principal EB-5 investor to the United States. As such, the roughly 10,000 approved EB-5 petitions represent approximately 30,000 foreign nationals (including spouses and qualified dependents) currently awaiting immigrant visa issuance.

Additional examination of Form I-526 data reveals that as of September 30, 2016, USCIS had a  pending inventory of 20,804 petitions. With an 81 percent petition approval rate in the first quarter of FY 2017, using the ratio of three immigrant visas for every I-526 petition approved, the oversubscription of the EB-5 category grows even larger, adding another 58,043 eligible investor immigrants in USCIS’ current pending inventory. Taking together the 30,000 likely immigrants currently awaiting immigrant visas with DOS and the pending petitions at USCIS, there are now approximately 88,000 intending EB-5 investor immigrants worldwide—far in excess of the maximum annual statutory allocation of 10,000 immigrant visas to this employment preference category. EB-5 immigrant visas remain immediately available to nationals of all countries except China, whose nationals will likely wait 10 years or longer for their EB-5 immigrant visas due to oversubscription, absent an increase in or recalculation of the annual quota.

The Ombudsman will continue to examine the EB-5 program, engaging USCIS and stakeholders as the agency implements any statutory changes, considers regulatory changes, and expands its compliance activities.

The report ‎notably includes information that addresses DHS’s efforts to address concerns raised by allegations of fraud and backlog issues. Specifically, the IPO has the authority to employ 247 individuals, but 90 positions are still unfilled. In addition, DHS, along with the SEC, DOJ, and FBI, are working together to address fraud concerns, including conducting 250 site visits to verify information and confirm the EB-5 program is fulfilling its purpose.

GT will continue reviewing the Ombudsman report. Please subscribe to this blog for updates.