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Monday, February 6th, 2023

EB-5 experts weigh in on solving I-829 petition processing backlogs

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The USCIS Investor Program Office (IPO), which processes EB-5 foreign investor visas and I-829 petitions, can’t seem to get its processing act together.

With the processing time for a 1-829 petition taking years to complete, EB-5 experts say immigrant investors seeking permanent residency in the United States via the EB-5 investment route are being harmed by another inefficiency at the United States Citizenship and Immigration Services (USCIS), the program’s oversight agency.

“EB-5 forms processed by IPO have by far the worst processing times in the entire immigration service,” said EB-5 expert Suzanne Lazicki, pointing to USCIS’s own processing data. “This could not happen without mismanagement enabled by a lack of oversight.”

It also reflects decisions by IPO management to prioritize extreme vetting-style “integrity” over efficiency, Lazicki told Homeland Preparedness News, “not recognizing that efficiency is also an integrity issue.”

The I-829 petition is the final step an immigrant investor takes in the investor visa EB-5 process to become a lawful permanent resident of the United States. It includes evidence that the immigrant investor has successfully met all of the criteria set by the USCIS for the United States EB-5 visa, employment-based fifth preference category or EB-5 Immigrant Investor Visa Program, which provides a method for eligible immigrant investors to become lawful permanent residents — informally known as green card holders — by making specific investment amounts in certain commercial projects, according to EB5 BRICS, an EB5 visa consultancy.

Once an I-829 is approved, the investor’s conditional residency restriction is removed so that the investor, his or her spouse and their unmarried children under the age of 21 can permanently live in the U.S.

An EB-5 investor may file a I-829 petition with USCIS starting 90 days before the end of the two-year conditional permanent status period. The applicant’s conditional residency is extended while the I-829 is in process. The I-829 application must be filed within 21 to 24 months of the investor’s two-year conditional residency period, otherwise the ability to obtain a permanent residency card can be jeopardized, according to EB5 BRICS.

The problem is that I-829 petitions aren’t being processed in that timeframe.

In fact, I-829 processing volume has dropped steadily every quarter since September 2020, according to the fiscal year 2022 first-quarter USCIS Processing Report that Lazicki, owner of Lucid Professional Writing, compiled and posted on her March 14 blog. 

For example, the report, which is based on USCIS Immigration and Citizenship performance data for the FY 2022 period October to December 2021, shows that 326 I-829s were processed, compared to 682 for the same period in FY 2021. 

Aaron Grau, executive director of Invest in the USA (IIUSA), a not-for-profit industry trade association for the EB-5 Regional Center Program, said there are only two primary reasons for the EB-5 backlog: 1) lack of enough visas, and 2) processing inefficiencies.  

“Over the past months there have obviously been other factors, not the least of which were COVID-19 and the lapse of the Regional Center program,” said Grau. “The former shut down government offices across the globe and the latter disallowed authorization for DHS to do its work.”  

But, added Grau, the core issues remain the same. “There are not enough visas and the federal processes are inefficient at best,” he said.

Attorney Ronald Fieldstone, partner in the Miami office of Saul Ewing Arnstein & Lehr LLP, said the decline is due to a combination of lingering COVID-19 factors, the re-arrangement of internal policy guidance — especially given that the EB-5 Regional Center Program lapsed between July 1, 2021 and March 14, 2022 — work associated with providing guidance to Congress regarding a new bill, and the departure of a prior chief at the IPO.

“The expectation was that during the lapse of the regional center program, USCIS would dedicate the bulk of the IPO’s resources toward driving down the delayed processing times,” said Fieldstone, whose practice includes serving as counsel in EB-5 immigrant visa investor offerings for an array of industries.

But that didn’t happen and Fieldstone said that the USCIS just last week announced it is pushing to recover from the delays on all types of petitions, not just I-829s, and has set up more optically pleasing internal timelines that it is hoping to meet.

“Given the rather large set of pending petitions, the only way I see this working is if the agency staffs up and trains more adjudicators,” he said. “Absent that, it will be difficult for the agency to drive down the lengthy processing times.”

Lazicki said the decreased I-829 processing volume is not specifically correlated to the regional center (RC) program lapse that started in July 2021.

“One would’ve expected I-829 productivity to increase after the lapse since IPO had nothing to do during the lapse but I-829 and the few direct EB-5 I-526,” she said. “But apparently IPO did not redirect its temporarily unused RC adjudication and compliance resources to I-829.”

Lazicki explained that the USCIS is a fee-funded agency, “so any underfunding is its own fault.”

Annual I-829 receipts, she said, are predictably between 3,000 and 4,000 per year, as a function of the fixed number of conditional green cards issued two years previously. USCIS is mandated and empowered to set form filing fees at whatever level is necessary to allow it to recover costs and provide acceptable service. 

“Obviously, the current reported 41-month I-829 processing times is not acceptable service,” said Lazicki. “If USCIS lacks resources to offer any better, that’s because it has failed to plan for a predictable workload, and failed to set fees that would provide sufficient resources.”

Fieldstone said that the newly enacted EB-5 Reform and Integrity Act, signed into law as part of the FY 2022 omnibus spending package, gives USCIS the authority to increase fees in order to process petitions quickly. And he said there are also a host of other fees that RCs will have to pay.

“So at the end of the day, USCIS will have a huge reserve to address any concerns it has previously stated with respect to financial constraints,” he said. 

That being said, it is also important to note that the IPO has consistently had the highest fee schedule within EB-5, said Fieldstone.

“The IPO is also a small unit with roughly 240 or so officers,” he said. “Given the already large fees it has collected, the financial constraints should not have been an issue. The agency does have quite a bit of money already to address staffing constraints.”

Lazicki said that the IPO’s processing future doesn’t appear to be getting brighter anytime soon.

“I expect that the recent RC program reauthorization will make backlogs worse for the foreseeable future, as it unleashes new EB-5 demand plus diverts IPO’s attention to developing new policies and procedures and training,” Lazicki said.

The new EB-5 law “has a nice provision requiring USCIS to publish a fee study for timely EB-5 processing within a year,” she said, and then to set sufficient new fees 60 days after completing the study. 

“If that fee rule process happens on schedule in 2023, then IPO may have recruited and trained more staff, improved technology, and be ready to offer better service by about 2025,” said Lazicki. “But I’m not very optimistic, considering how hopeless recent USCIS fee studies have been, from a business planning perspective.” 

Lazicki also said that budget problems will naturally result when an agency “habitually relies on baseless volume forecasts, declines to make price increases sufficient to cover anticipated workload/cost increases, declines to budget for the cost of pending inventory whose associated fees were already spent, and operates on a Ponzi system that depends on continually incoming receipts to cover costs.”

Suggested Solutions

The EB-5 experts suggested some ways the IPO might fix its I-829 processing backlog.

“Outside of additional staffing, stronger guidance by the new chief of IPO and more transparent dialogue with the stakeholders would be helpful,” said Rohit Kapuria, associate attorney and partner at the Chicago office of Saul Ewing Arnstein & Lehr LLP.

And while Congress has finally enacted the 2022 EB-5 Reform and Integrity Act, Kapuria said “there is much that is clear in the act and much that is not clear.” 

“USCIS will have to issue new guidance and regulations in the coming weeks and months,” he explained. “Until it does so, we will be operating in a vacuum. The quicker the agency provides us with its interpretation/expectations and the more it engages with the stakeholders, the better the backlog can be managed.” 

So far, Kapuria said that new IPO Chief Alissa Emmel appears to be taking a strong and central role at the agency, and has been responding quickly to certain stakeholder questions. “We hope that the consistent engagement will continue,” he said. “We are hopeful that these delays and frustrations will be well addressed under Chief Emmel.”

Lazicki said change may come if the Biden administration and/or Congress decides to demand performance and efficiency from the IPO. She noted that the previous administration was very comfortable with slow and inefficient processing, and for the current administration, EB-5 isn’t even on its current immigration priority list. 

“And industry advocacy appears to be held back by mixed motives, with slow processing having potential to increase the time of EB-5 funds under management, defer oversight, and, in the case of I-526, to disguise oversubscription that would otherwise discourage new investment,” said Lazicki. 

“Immigrants, who most need efficient processing, have historically had little voice or ability to exert pressure,” she added.

On the plus side, “new organizations may help change this,” said Lazicki who pointed to the recently formed American Immigrant Investor Alliance (AIIA), a Washington, D.C. based 501(c)(4) organization dedicated to informing, educating, and advocating on behalf of EB-5 investors from across the globe.

IIUSA’s Grau said that reauthorizing the RC program will help the backlog situation, “but only insofar as the administration’s ability to turn the faucet on at all.”

“Short of creating more EB-5 visas beyond the annual 10,000 allocation, the best ways to alleviate the backlog are to: eliminate the derivative count; and incentivize or somehow otherwise assure that the DHS [U.S. Department of Homeland Security] processing times become shorter,” said Grau.

To put the derivative count in context, Grau explained that currently, of the 10,000 annual allowable EB-5 visas, only one-third are given to actual immigrant investors. The other two-thirds go to their “derivatives,” i.e. their spouses and children.

“IIUSA believes that congressional intent was to allow all 10,000 visas to go to immigrant investors,” he said. “Unfortunately, that’s not how the law has been applied and consequently rather than 10,000 people receiving visas only 3,333 do.  

“By opening up the other 6,666 visas to other immigrant investors rather than tying those visas up with derivatives, the country would see an exponential rise of investment dollars and the backlog would all but disappear,” said Grau.

Kapuria and his colleagues are “very bullish” on the new energy behind the IPO and the new reform law.

“EB-5 demand is exploding and the more transparent the communication with the stakeholders and the quicker the pace of adjudications, the more confidence the market will have in the agency,” he said. “This is a wonderful program that has created well over 400,000 jobs and brought in more than $40 billion into the U.S. economy in just the last decade. USCIS should handle it with care and give it the importance it deserves.”