The Year 2023: Chronicle of EB-5 Frustrations Foretold
By Mona Shah, Esq., and Rebecca S. Singh, Esq.
From the debut of the Reform and Integrity Act (“RIA”) to the reversal of regional centers’ fortunes, 2022 had its share of momentous events that transformed the EB-5 industry in a positive way. Unfortunately, the New Year promises a heap of related (and unrelated) frustrations – ranging from fee upticks to processing delays – that could temper expectations of further progress from U.S. Citizenship and Immigration Services (“USCIS”), despite the agency’s stated goal of mitigating such issues.
In other words, the year 2023 likely will be a “plus ça change” kind of annum, though there may be some surprises. In light of that, we present this article, which aims to provide a handy, concise guide to the concerns that may make the biggest impacts through December and beyond. Read on for the deets.
Backlash to Proposed USCIS Fees
If there’s any indication as to the confusion surrounding the recent USCIS proposal to raise its fees for forms across the board, it’s the controlled chaos informing the agency’s January 11 listening session with regard to this proposal. During the session, USCIS Director Ur M. Jaddou – in what appeared to be a conciliatory admission – noted, “I fully understand that many of the proposed fee increases are not insignificant,” though these words may seem more like platitudes than actual, action-inducing empathy. Jaddou added, “Upholding our mission in these and so many other ways requires appropriate funding.” Thus the question arises: How, exactly, do these proposed fees constitute “appropriate funding” at a government outfit that clearly has mishandled its financial resources when it comes to processing EB-5s properly?
EB-5 practitioners may never know, and it is just as likely that USCIS will not listen to their complaints about its latest proposed fee schedule. Although a 60-day comment period seems like a long time – and USCIS staff, in an apparent effort to demonstrate how much the agency cares about these issues, actively encouraged listeners during the January 11 session to offer their thoughts via the requisite channels – it is not nearly enough for the industry to convey to the beleaguered agency all that is wrong about these proposed fees or, for that matter, how to rectify the situation for all parties. Will EB-5ers come together this year to supply convincing-enough arguments to USCIS during that two-month window that could lead the agency to rescind its proposed fee schedule?
Anyone hoping that our answer would be “yes” may be in for a rude awakening.
Still, the outlook for 2023 from a fee standpoint is not entirely dismal. As improbable as it may be, USCIS could turn over a new leaf by hearing the sector out and acting accordingly, as there are precedents. Remember the agency walking back its December 29, 2022 deadline for regional centers to file forms I-956 and I-956G? Public outcry has a way of effecting viable change, and this sector is no different. As such, there is a chance – a slim one, but a chance nonetheless – that USCIS could harken to EB-5 practitioners’ criticism and either remain status quo or raise the fees to more appropriate amounts reflecting inflation and other factors since last these fees were increased in 2016.
The reality is, USCIS’s seemingly capricious way of instituting fees is affecting people’s lives, including innumerable quality candidates for immigration to the United States who can create jobs by investing in projects. These jobs inject money into the economy while providing employment for thousands of workers. Without these jobs, these workers – many of whom are in targeted employment areas where joblessness is high and businesses are scarce – would be left stranded. Mix in an eruption of litigation that could cascade into a legal disaster for USCIS, and the agency has a lot to think about.
Big but, though: USCIS should not be expected to deviate from its traditionally insular path in terms of fee schedules. That, sadly, is a precedent the agency has well established.
Litigation Is Here … & More Is Coming
Already the industry is abuzz with talk about the possibility of heading once more unto the litigation breach left by USCIS’s continued policy carelessness. For one, American Immigration Lawyers Association (“AILA,”) is getting in gear for a lawsuit against USCIS. Saddled with the memory of the Behring lawsuit, USCIS claims it does not have the coffers to keep its fees at the same level they have been since 2016, but its legal war chest may be more substantial – as is the agency’s willingness to duke things out in the courts. Following the Behring decision, USCIS did lodge an appeal, so it is clear that it has the resolve and resources to fight any plaintiff challenging its behavior.
Then there is AILA. Because the organization has not often deemed the EB-5 sector worthy of support, practitioners need their own representation. Does this potentially look like a job for industry association Invest in the USA (“IIUSA”)?
It is certainly something to mull, and Behring is a big, juicy precedent. Plus, although the wheels of justice turn slowly, any litigation involving USCIS likely would speed through the courts, given the high-profile nature of these issues in the wake of Behring, as well as their urgency.
One obstacle to EB-5ers’ potential success is the track record left by recent litigants in the space. Last week, a federal judge threw out a Dutch investor’s suit claiming USCIS’s delays on his petition for permanent residency took too long, and although it is too soon to tell if this establishes a benchmark for such legal challenges, it definitely is cause for concern. Our suspicion is that fortune favors the government here, although that could change amid a potential onslaught of litigation resulting from the fee-spattered mess left by USCIS.
IIUSA has pointed to the question of involvement in lobbying legislators for EB-5-industry-friendly legislation. With Rep. Hakeem Jeffries (D-NY), an EB-5 ally, serving as House Minority Leader, the industry has a powerful voice in Congress.
EB-5 is all set to take advantage!
There is no doubt that IIUSA will continue to advocate for the sector and may reach out to Jeffries and other legislators for further support. It might even behoove the organization to put out feelers to Rep. Zoe Lofgren (D-CA), who unsuccessfully brought back the EAGLE Act for ratification last year, in an effort to clarify the industry’s position on per-country immigration caps and preclude the need for any subsequent reintroduction of this bill in the future. Then there is Speaker Kevin McCarthy (R-CA), whose anti-immigration campaigns could conceivably have repercussions for immigrant investors seeking entry to the United States, as the possibility of any amended immigration policy supported by McCarthy and fellow Republicans could potentially decrease the number of EB-5 approvals. That is a bridge the sector will cross when it comes to it, but this situation bears watching as this saga unfolds. All in all, we foresee lobbying to evolve as engagement between officials and EB-5 practitioners continues to grow, though one shouldn’t expect transformative changes to the industry … yet.
Delays, Delays, Delays
With only a handful of staffers actually reviewing EB-5 applications, and thousands upon thousands of such documents clogging up the backlog, delays will just keep getting, well … delayed. USCIS tends to paint a rosy picture of its efforts to reduce inefficiencies, but the truth is, the agency continually lags when it comes to processing times for EB-5 documents, and prospects for improvement are hardly inspiring.
That means the EB-5 contingent should just keep on keeping on. Waiting for USCIS to substantively speed the process may be Godot-esque, yet there are ways to at least endeavor to move things along (such as calling USCIS directly and asking to speak to an officer – a request that can take weeks to elicit a response). It is possible that the agency will take steps to upgrade its technological capabilities to help process applications more quickly via online submissions, as well as shore up staff, but we see this as a gradual development. Keep in mind that this is a government outfit that has been observed to take up to three months even to cash filing fees, so it is important to maintain low expectations. Though USCIS has cited the necessity of going digital and hiring more employees to help ease processing delays, it marches to a downtempo beat of a very different drum.
Now about that aforementioned public outcry. Both the pen and the voice are mightier than the sword, so clamoring for change via the appropriate channels could have noticeable effects. The EB-5 industry, led by IIUSA will be vociferous in this regard, and comments on issues such as the agency’s latest fee proposal are legion. Whether that will elicit action from USCIS is unclear, although one thing is certain:
There surely will be delays in the agency’s effort to mitigate delays.
Whither Regional Centers?
Hot take: USCIS will in 2023 clarify guidance on RCs that will amend its previous, threateningly existential proposal in an attempt to assuage EB-5ers’ concerns about the future of RCs and their funding. Does that sound implausible? Perhaps.
If there is one good thing, however, that has resulted from the agency’s move last month to scrap its December 29, 2022 deadline for RCs to file forms I-956 and I-956G, it is that the commotion EB-5 practitioners raised over this now-alleviated proposed burden showed that the industry can push back effectively against USCIS demands. We believe this issue will continue to be a pressing concern, but we also foresee USCIS becoming slightly more proactive vis-à-vis the confusion over RCs’ status – leading to the issuance of a less-immediate deadline later this year to file those forms.
Could RCs still be terminated if they do not file such forms, though? It is unlikely that USCIS will commit to such a potentially ruinous move, given the fact that it would impact so many EB-5 projects and would spur widespread condemnation from the sector.
The ongoing RC drama, however, hardly begins and ends with confusion over forms. In addition to the aforementioned mounting litigation, there seems to be a potential litany of lawsuits brewing in opposition to the Department of Homeland Security (“DHS”) and USCIS over potential unfairness in processing times and restricted access to reserved visas. Recently, a group of RCs and involved Chinese nationals filed a class lawsuit against the agencies for this very reason, citing, in a fashion similar to the Behring lawsuit, DHS and USCIS’s “unlawful, arbitrary, and capricious interpretation” of the RIA. The lawsuit argues that its Plaintiffs have invested specifically in infrastructure projects, something for which a provision of the RIA guarantees reserved visas.
Perhaps we ought to have predicted that Behring would not be the end of this saga; it is hardly the only entity affected by the RIA, and given the legislation’s oft-contested language, this is unlikely the last lawsuit that will be filed on the topic.
Our recommendation: Remain cautiously optimistic, but be prepared to be really, really frustrated.
Meet the New Forms, Not the Same as the Old Forms
The start of 2023 saw the beginning of a new era in the world of EB-5 forms, which welcomed the discrete yet familiar-seeming Form I-956K – focusing on registration for the vaguely defined direct and third-party promoters – into the fold earlier this month. In typical USCIS fashion, clarity on the terms, scenarios, and roles informing this form was scarce or even nonexistent, so once again EB-5 practitioners will be fending for themselves as they explore the need to include this document in their application packages. The good news: This form carries no associated fee. The potentially bad news: USCIS could conceivably launch other forms that it will insist be included in submissions, which would further burden the sector with red tape.
Thankfully, we do not see this happening soon, but we cannot discount the possibility, particularly as the year has barely started, and already there is new documentation to deal with. Why the agency would think the industry needs yet another form that could tie up reviewers in additional processing delays is beyond comprehension, but nothing USCIS does should surprise us.
As long as EB-5ers remain nimble in response, the industry will not be caught off guard.