Biden’s First 100 days…Any Changes with Policy at USCIS?
By: MSA Editorial, May 2021
“Blame it on the Trump Administration…” has been a common phrase for anyone working within this industry. Then came Biden and his whiz-kid, Alejandro Mayorkas! Excitedly, in anticipation of a return to a “brave new world” in EB-5, we discussed Mayorkas in podcasts and blog posts, noting his familiarity with and appreciation for the EB-5 program. 100 days in, desperate for change and an end to the interminable delays and frustrating adjudications in EB-5, are there any signs of change?
Yes and maybe and no! Granted, the Biden Administration has had a lot to deal with—halting border wall construction and ending some 1,500 Trump-era policies including broad restrictions on green cards. But what about that small but very important area, EB-5? A White House official said the Biden administration is focused on “rebuilding” the U.S. immigration system and reversing the hundreds of immigration policy changes made in the past four years.
“We’re taking our time to do it right. We’ve had to sort of crawl out of a bit of a mess from the previous administration” stated a White House official.[i]
We all knew EB-5 would not make it to the big screen, but we do hope that it at least makes the cut!
So here we go, a few possible signs that USCIS is being friendlier!
1. Deference Policy Reinstated
On February 2, 2021, President Biden issued an executive order—“Restoring Faith in Our Legal Immigration Systems and Strengthening Integration and Inclusion Efforts for New Americans”—providing a roadmap for immigration reform. Shortly thereafter, on April 27, USCIS reinstated its policy guidance providing deference to prior decisions to advance “efficient and fair adjudication of immigration benefits.”
Deference had been rescinded by a 2017 Trump-era policy memo that prevented USCIS officers from deferring to prior petition determinations “when adjudicating extension requests involving the same parties and facts unless there was a material error, material change, or new material facts.” The USCIS policy update reverts back to the previous policy originally established in 2004 that addresses the issue of deference in prior determinations of eligibility. The guidance restored the 2004 deference policy as effective immediately.
Trump’s rescission of USCIS deference policy has been a huge factor in adjudication delays and backlogs. Often the decisions EB-5 practitioners have been seeing from USCIS (NOID’s, RFE’s and Denials) have made little sense, and forced Investors and projects to move towards expensive federal litigation. With the reinstatement of the deference policy, USCIS will honor previous approvals, unless there is a material change or other factors.
2. USCIS’s Acceptance of the Circuit Court’s Decision in Zhang
Initially filed in 2013, the long pending Form I-526 Petition of a Chinese EB-5 investor, Huashan Zhang, was finally approved by USCIS on April 14, 2021. Although it might come across as a routine agency activity, it marks a momentous shift in the agency’s acceptance of unsecured loans as a valid source of EB-5 investment. This change of heart however did not occur overnight and is the result of years of litigation.
During a conference call on April 22, 2015, USCIS’s Immigrant Investor Program Office (IPO) first indicated that a cash investment in an NCE sourced from an unsecured loan will be treated as indebtedness (instead of cash). This meant that unsecured loans were effectively ineligible to qualify as ‘capital’ for the purposes of an EB-5 investment.
This controversial interpretation of “capital” had since been in the spotlight and had been the subject of litigation, until it was finally resolved on October 27, 2020 by the United States Court of Appeals for the District of Columbia. In Zhang v USCIS, No. 19-5021 (D.C. Cir. 2020), the court upheld the lower court’s decision, ruling that even if the loan proceeds were not secured by the petitioner’s own assets, the funds constitute “capital” under the EB-5 Program’s requirements.
USCIS decision to finally approve Zhang’s case indicates the agency’s decision to accept the circuit court’s decision instead of attempting to pursue an appeal in the U.S. Supreme Court. This key development also provides more certainty to industry stakeholders, content with the reassurance that unsecured loans are an acceptable source of funds for an EB-5 investment.
3. USCIS Q1 FY2021 Reports Show that the Approval Rate of I-526 and I-829 Petitions Continues to Increase
The U.S. Citizenship and Immigration Services (USCIS) has published its periodic performance report for Q1 FY2021, which contains data related to EB-5 form receipts and adjudications. The report does not provide the exact number of I-526 petitions filed in Q1 FY2021 but states that USCIS adjudicated 1,123 I-526 petitions in Q1 FY2021, which represents a minor decrease from Q4 FY2020, where USCIS adjudicated 1,140 petitions. However, USCIS’ Q1 FY2021 approvals increased to 1,004, representing an 89% approval rate of I-526 petitions compared to an approval rate of 79% in Q4 FY2020. The data shows that, likewise, I-829 approval rates remained high at a 94% approval rate in Q1 FY2021.
4. WOM’s and Federal Litigation Continues, Even at the Consulates
Processing delays due to COVID-19 and agency closures have pushed EB-5 investors to litigate in the federal courts. The Department of State estimates that there are five times the number of cases in the backlog as there were prior to the pandemic. Visa interview backlogs have increased from 75,000 in January 2020 to a whopping 473,000 by February 2021. Consular Affairs Acting Deputy Assistant Secretary for Visa Services Julie M. Stufft stated that the State Department has “prioritized the processing of immigrant visas, full stop, at every post[ii],” but we have yet to see it.
The issue remains that EB-5 investors are wedged in I-526 adjudicating backlogs or waiting for immigrant visa interviews, all while their funds remain at risk. This brings further issues of delayed return of their principal capital and redeployment in order to maintain the EB-5 capital at risk until investors are able to file for removal of conditions.
Further, while the industry is fighting for more visas, consulate closures and delays have resulted in the unthinkable – visas are getting wasted! It seems that the only way to obtain a visa this fiscal year is to file a Writ of Mandamus (WOM), which however causes further delays and wasted resources on lawsuits rather than adjudication of EB-5 petitions. Hopefully, the Biden Administration catches on and actually prioritizes these cases.
[i] https://www.cbsnews.com/news/biden-first-100-days-immigration-policy/
[ii] https://www.state.gov/briefing-with-consular-affairs-acting-deputy-assistant-secretary-for-visa-services-julie-m-stufft-on-the-current-status-of-immigrant-visa-processing-at-embassies-and-consulates/