EB-5 Visa Backlogs and How HR 1044 or Proposed USCIS Regulations Could Affect Them
Wishing to show a new proposed rule to improve EB-5 visa backlog, however does this offer an optimal solution? The following article will show how H.R.1044 will affect EB-5 visas if approved.
Regional centers and related EB-5 professionals are now well aware of the massive EB-5 visa backlog for China, the substantial one for Vietnam, the soon-to arrive EB-5 visa backlog for India, and the possibly modest future backlogs for a few other countries. At the same time, H.R. 1044’s proposed removal of per-country caps or USCIS’s proposed regulations could completely change everything. This article therefore explains how EB-5 visas are allocated generally, why they are so backlogged now for China and other countries, and how these backlogs could drastically change if congress or the administration move forward on pending proposals.
Congress created the EB-5 visa category in 1990, and only congress has the authority to set numerical limits on the issuance of all types of U.S. visas, including EB-5 immigrant visas. Although most in the industry use the shorthand figure of “10,000” visas per year, the actual annual quota for EB-5 is 9,940, plus or minus technical adjustments prescribed by various sections of the Immigration and Nationality Act (INA). This roughly 10,000-visa supply must be allocated among not only EB-5 investors but also their spouses and eligible children (unmarried and under 21 years of age), which means that the annual quota is enough only to cover a few thousand EB-5 investors per year.
The INA sets forth procedural rules governing the allocation of EB-5 visas, cascading as follows:
- General Rule: First-In/First-Out (FIFO). INA 202(a)(1)(A) states that with some exceptions, such as the 7% Per-Country Limit, visa allocation cannot discriminate based on a person’s race, nationality, place of birth, Effectively, this means that the general rule for EB-5 visa allocation is FIFO on a worldwide basis.
- Exception: 7% Per-Country Limit. INA 202(a)(2) provides that natives of any single foreign state under any of the family- and employment-based categories, including EB-5, may not exceed 7% in any fiscal Further, the INA generally makes “country” assignments on the basis of country of birth, not country of current citizenship or residence.
- Override of 7% Per-Country Limit: INA 202(a)(3) allows the 7% Per- Country Limit to be overridden to the extent that imposing the 7% Per-Country Limit would cause visa numbers to go unused during the quota period. By analogy, nobody cares who ate how many slices of pizza if slices still remain at the end of dinner.
In turn, the foregoing rules cause the INA to allocate EB-5 visas through the following four conceptual steps:
Start with worldwide FIFO—i.e., starting with the oldest priority date (I- 526 filing date) irrespective of country of birth—and continue until at least one country (e.g., China) hits its 7% Per-Country Limit of approximately 700 visas per fiscal year. Temporarily block additional investors from any country that has already reached the 7% Per-Country Limit while still allowing all other countries’ investors to continue to use visas. If a second or third or fourth, etc. country (e.g., Vietnam, India, etc.) also reaches the 7% Per-Country Limit, temporarily block investors from that country or those countries, too, but continue to allow everyone else to use visas.
Once the number of “leftover” visas is known or can be predicted, allocate any “leftover” visas on a worldwide FIFO basis until the annual quota of approximately 9,940 EB-5 visas is completely used. Under current realities, this step allows the longest- waiting applicants from China to use several thousand EB-5 visas every year while the 7% Per-Country Limit restricts each other country to only approximately 700 visas per country per year.
On February 7, 2019, Reps. Zoe Lofgren (D- CA-19) and Ken Buck (R-CO-4) introduced H.R.1044, the “Fairness for High-Skilled Immigrants Act of 2019” in the House of Representatives. With respect to the EB-5 program, the bill proposes to eliminate the per- country numerical limit for employment-based immigrants, effective October 1, 2019. Because approximately 50,000 currently projected Chinese EB-5 visa applicants have older priority dates than those of investors from elsewhere in the world, the enactment of H.R. 1044 would effectively ensure approximately 5 years of nearly exclusively Chinese investors at the front of the EB-5 visa line while investors from the rest of the world wait to get to the front of the line.
Thereafter, visas would be allocated to a mix of investors from China, Vietnam, and India (the top three countries for EB-5 demand presently), followed finally by a mix of investors from other countries based on priority dates. Eventually, a truly diverse worldwide FIFO line would exist consisting of a mix of investors determined primarily by each family’s willingness to withstand whatever the worldwide backlog is at any given time. Preliminary analysis of Lee Li of IIUSA is that the initial worldwide backlog for new EB-5 investors upon passage of H.R. 1044 would be about 9 years.
Practically, passage of H.R. 1044 would ensure that regional centers would have substantial difficulty raising new money from countries other than China for several years or more, unless or until something else changes, such as:
- Congress enacts a law specifically increasing the visa numbers available to the EB-5
- A court rules in favor of the plaintiffs in the class action case that Ira Kurzban and his partners have filed in Feng Wang, et v. Michael R. Pompeo, Civil Action No. 18-1732 (TSC) (D.C. Cir. filed 07/25/2018), which argues that the U.S. Department of State should have—from day one— been allocating an EB-5 visa only to the principal investor and allowing derivatives to complete their green card process without the need for an EB-5 visa number.
Currently, the EB-5 program is still being extended to September 30, 2019 and remains the same level of investment and program regulations. One thing that can be certain about the change is the level of investment through regional centers in projects in the region with high unemployment rates increasing the minimum EB-5 investment from $500,000 to $1.35 million. As with all legislative or regulatory proposals, H.R. 1044 and the currently proposed regulations may or may not become law. Regional centers and affiliated professionals should none the less prepare for the possible negative impact such changes could have on their operations and ongoing projects. Current EB-5 visa backlogs already reduce investment and job creation in the United States. Potential legislative or regulatory changes could drastically affect regional centers, projects, and existing and future investors. The entire industry must therefore continue to advocate for positive change on behalf of EB-5 investors and the U.S. workers who directly benefit from the industry’s efforts.
(Source: IIUSA Magazine May, 2019 | Vol. 7, Issue 1.)
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