by Matthew T. Galati
Most investors commence the EB-5 process with one overarching goal in mind: I-829 approval. Indeed, removal of conditions on permanent residence signals the end of the EB-5 road. At that point, capital can be redeemed, new commercial enterprises can be reorganized, wound up, or sold, and the uncertainty that every immigrant feels until that 10 year Green Card is in his or her hands finally fades away. While the agency has considerable experience in adjudicating I-526s and have made significant improvements in the past few years, I-829 demand has to date been relatively modest. But the number of filings will skyrocket soon. Consider that in FY 2014, 2,516 I-829s were filed – compared to 10,928 I-526s.
USCIS should therefore consider implementing improvements to adjudications now in order to meet these new demands, lest already troublesome processing times and inefficiencies in adjudication be exacerbated.
Respectfully, here are four suggested measures:
1. Re-recognize and adhere to adjudication mandates
Under the Immigration and Nationality Act’s provisions,[1] adjudicators are given a time limit to adjudicate removal of conditions, subject to their right to interview an immigrant investor, which is rare. For example, the applicable regulation controlling for I-829 adjudications provides that USCIS “must either waive the requirement for an interview and adjudicate the [I-829] petition or arrange for an interview within 90 days of the date on which the petition was properly filed.” [2] When legacy INS was crafting the regulations, they made it very clear that the INA explicitly requires this timely adjudication.[3] Put another way, Congress unambiguously intended that the entire two-step residency process should be completed in the normal course within 27 months after an investor received his or her conditional residency. The very nature of the I-829 is a fraud deterrent measure, designed to ensure the investment was made in good faith and that the required jobs were created. EB-5 immigration was never considered to require a permanent or indefinite commitment.
The current problem, however, is that the latest published processing times for I-829s is 11.4 months, not 90 days.[4] There is no signal that the processing times will be reduced to their statutory mandates anytime in the foreseeable future. In fact, the template I-829 receipt notice itself bears the words “Processing your form will require a minimum of 150 days.” Beyond violating the law, this creates practical hardships for investors.
The regulations can be interpreted to require that an investor’s capital contribution and new commercial enterprise be sustained through I-829 adjudication, not just filing.[5] But by dragging the process out to nearly a year later than anticipated, investors face ultra vires burdens – investments cannot be timely wound up or material changes to the new commercial enterprise be made without risking immigration consequences. Beyond compliance itself, because the I-829 receipt notice only provides evidence of extension of status for one year, investors with petitions pending longer require new evidence of proof of status and face additional bureaucratic hurdles in receiving that proof in order to enable international travel, employment authorization, and renewal of driver’s licenses. As immigrants are bound by the INA, so too is USCIS.
Further, investors pay a significant and disproportionate amount in I-829 filing fees, which are currently $3,750 plus $85 per person for biometrics. This is more than twice the cost of an I-526. Compare this to premium processing in business cases, which mandates a decision or RFE on a case within 15 days, and only costs an additional $1,225 on top of much lower base fees. Given that I-829s are so much more expensive, perhaps those funds be better spent in an effort to ensure they are processed more efficiently.
2. Give immediate and clear guidance regarding loan-models now that Chinese retrogression is looming, enabling funds to be repaid back to the NCE prior to I-829 approval in line with the regulations.
At the time of I-829 filing and adjudication an investor must have “invested or [be] actively in the process of investing the requisite capital,” and “substantially met the capital investment requirement of the statute and continuously maintained his or her capital investment over the two years of conditional residence.” Although the regulations have not changed in 21 years, the use of EB-5 funds by stakeholders has changed drastically. USCIS deserves considerable credit for recognizing this through guidance such as the May 30, 2013 memorandum.[6] But perhaps the biggest change to the landscape in the program’s history occurred in August 2014 when Chinese EB-5 visas were made unavailable. New guidance is needed to reflect how a shortage in immigrant visa numbers will affect I-829 adjudications.
Here’s why: the EB-5 loan model has become the most prevalent form of job creation today. In this model, the investor’s new commercial enterprise operates as a pooled investment vehicle to provide EB-5 financing to a project entity (also known as a job creating enterprise or “JCE”) in the form of a loan. The JCE’s use of the loaned funds spurs indirect job creation, to be credited to the investors. Interest on the loan is paid to the NCE.
Investors born in Mainland China constitute approximately 85% of EB-5 immigrants. But now with retrogression for these petitioners imminent, years could go by after I-526 approval but before assumption of conditional residency. If an EB-5 loan contract calls for repayment to the new commercial enterprise prior to an investor achieving I-829 approval, how will USCIS adjudicate the petition given that there is no longer any risk of loss to the investor? How long should the loan term last given that the period of retrogression remains uncertain?
One reading of the regulations at 8 C.F.R. § 216.6(c) would indicate that the petition should nonetheless be approved, provided the investor’s investment was sustained in the NCE, not necessarily the JCE. Consider that at the I-829 stage the capital investment must be “continuously maintained … over the two years of conditional residence” whereas at the I-526 regulations require the capital must be placed “at risk for the purpose of generating a return on the capital placed at risk.”[7] While repayment of the loan to the NCE might end the risk associated with the investment, the I-829 regulations do not necessarily mandate a denial on these grounds. There is room here for clarifying guidance without regulatory changes.
But so far, USCIS has have not endorsed this view. In the May 30 Memorandum, the guidance provides that the investment must be at risk throughout the period of conditional residency. Officials have also not stated a firm position on this point in recent stakeholder calls. Without Congressional intervention or Executive Action changing the calculations of visa usage, retrogression is a near certainty in the coming months. Immediate guidance – if not new regulations themselves — is sorely needed for regional centers and petitioners so that loan contracts can be drafted with greater confidence and without worry of investors that have otherwise complied with the terms of the program will face denials.
3. Allow for the option of electronic and template-based I-829 filing, ensuring more uniform adjudication for all investors.
Presently, USCIS allows for electronic filing through the ELIS system for Form I-526. In the regional center context, principals can electronically store documents for investors to link to in an online document library. An investor would only need to upload his or her personal documents (i.e. biographical documents, source and path of funds documents), to ELIS and leverage the already existing documents for the remainder of the filing.
Why not expand this to the I-829 process? Relatively speaking, Form I-526 includes a far greater number of investor-specific documentation. Because most regional centers prefer to have the largest degree of control over I-829 filings through dedicated and uniform templates, such petitions might only involve minimal documentation unique to a given petition such as copies of the family’s green cards, evidence of funds leaving escrow, and IRS schedule K-1s to prove a sustained investment. This would allow for much more efficient adjudication and distribution of project materials, as well as the possibility for USCIS to “pre-approve” the template materials substantiating that the NCE and job creation requirements were met. Most day-to-day adjudications of investor’s petitions would then only involve the review of the investment itself and ensuring the applicants did not commit acts resulting in inadmissibility or removability.
4. Allow for concurrent USCIS adjudication in cases of I-829 denials
Presently, should an I-829 be denied, the investor’s only hope may be to plead his or her case to an immigration judge. Having concurrent adjudication with the AAO and/or in a motion to reopen / reconsider is a better option.
The INA[8] and attendant regulation[9] provides that when a petition is denied, an investor may request review of that denial in a removal proceeding. But why limit jurisdiction to immigration judges who may be inexperienced with the nuances of EB-5? Neither provision on its face exclusively vests jurisdiction with immigration court, unlike other kinds of denials.[10] The regulations also provide that a petitioner may file a motion to reopen and/or reconsider with USCIS absent certain limited circumstances, none of which would appear to be applicable to an I-829.[11] Nonetheless, based on personal experience, USCIS will not entertain a motion to reopen or reconsider following an I-829 once a Notice to Appear is issued. This presents a problem relating to consistency and timeliness in adjudication.
Given the general demographics of the immigration court dockets, most ICE trial attorneys and immigration judges lack the day-to-day expertise that USCIS has in adjudicating investors’ petitions. Otherwise binding documents such as USCIS’ May 30, 2013 Memo, would on their face be non-binding to EOIR as it is part of the Department of Justice, leading to inconsistent adjudications between two entities. On its face it is also not binding to ICE, which could presumably take a position inconsistent with the Memo in a removal proceeding.
Consider as well that with immigration enforcement a priority, immigration court dockets can stretch on for several years before a merits hearing can be scheduled and the question ultimately addressed. Facts relating to an I-829 can change drastically over such an extended period of time. ICE trial attorney memoranda prioritize the deportation of criminals and material status violators over investors whose projects might have come up short of their inputs to the I-526 economic model. Further clogging the docket presents an avoidable opportunity cost to increasing national security through more efficient removals. A better option is to allow for concurrent review of denials.
[1] INA § 216A(c)
[2] 8 C.F.R. § 216.6(b)(1).
[3] 59 Fed Reg. 26587 – 26593 (May 23, 1994).
[4] See USCIS.gov, “USCIS Processing Time Information for the Immigrant Investor Program Office” (last accessed Mar 5, 2015, describing data through Dec. 31, 2014).
[5] 8 C.F.R. § 216.6(c)(1)(iii).
[6] See Policy Memorandum, PM-602-0083 (May 30, 2013).
[7] Compare 8 C.F.R §204.6(j)(2) to 8 C.F.R. § 216.6(c)(iii).
[8] INA §216A(c)(3)(D)
[9] 8 C.F.R § 216.6(d)(2).
[10] See for example, 8 C.F.R. § 245.2(a)(1); § 1245.2 (providing exclusive jurisdiction to immigration court for adjustment of status for aliens in removal proceedings).
[11] 8 CFR 103.5 (a)(1)(i); see also instructions to form I-290B (1/23/14 ed.)
EB5Investors.com Staff
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