On May 30 2014 by H. Ronald Klasko

A Creative Solution for Avoiding China EB-5 Quota Backlogs

Two of my recent blogs have focused on the possibility or likelihood that the EB-5 quota for China will be reached and that Chinese EB-5 investors will have a lengthy wait for a visa number that will allow them to enter the U.S. as conditional immigrants. This blog will focus on what can be done about that.

The most obvious answer is that Congress, which created the quota, can change the quota. This could be done by increasing the EB-5 quota above 10,000 numbers; by removing spouses and children from the quota; or by eliminating the per country limits. Unfortunately, today in Washington, none of these legislative options has any realistic chance of success outside of passage by Congress of comprehensive immigration reform. If you have at all followed the immigration debate in Washington, the chances of comprehensive immigration reform passing both Houses of Congress in the near future are exceedingly slim.

If Congress officially pronounces comprehensive immigration reform dead, there is then a possibility of piecemeal immigration legislation, including EB-5. If that were to happen, the issue of the EB-5 quota would be front and center. However, many members of Congress in key positions are unlikely to vote to increase EB-5 numbers unless at the same time voting to decrease numbers in other immigration categories. Any other category to be reduced likely has a constituency advocating for an increase in numbers and certainly fighting hard to make sure that no numbers are taken away.

In short, the legislative solution is not promising for the near or mid-term.

So what other option exists? The Administration, including USCIS or the Department of State, does not have authority to increase EB-5 numbers above 10,000. However, what if there were a way for the Administration to increase the number of investors while acting completely consistent with Congress’ 10,000 limitation? There is a way (and I give credit to my colleague Tammy Fox-Isicoff for suggesting this solution to me).

The answer lies in a review of the Immigration and Nationality Act. I suggest that a review of the statute reveals that Congress intended the 10,000 number to mean 10,000 investors. Logically, Congress decided on a number of investors who should be allowed to immigrate to the U.S. each year, which number should not be dependent on whether the average investor has one child or five children. But logic is not determinative – the language of the statute is.

Happily, the language of the statute is consistent with logic.

Section 203(b)(5) sets the worldwide quota for “qualified immigrants” seeking to enter the U.S. to invest in a new commercial enterprise. Spouses and children are not seeking to invest and, I suggest, should not be included in the 10,000 count. The relevant section of the law relating to spouses and children is Section 203(d). This is the section that is often cited to provide support for allocating most of the 10,000 numbers to spouses and children. However, that is not what it states. It states that spouses and children are entitled to the same “status” and “order of consideration” as the principal investor. The “status” referred to is the status of permanent resident. The “order of consideration” means that spouses and children should be able to immigrate at the same time as the principal. However, nothing in this language states or implies that separate visa numbers must be made available to the spouses and children.

In fact, the present system violates the statutory requirement of Section 203(d). Spouses and children do not necessarily have the same “order of consideration” as the principal investor. For example, if the principal investor obtains conditional permanent resident status when a quota number is available, the spouse or child who wants to immigrate subsequently is unable to join the principal investor if the quota has subsequently retrogressed. This is contrary to both the language and the intent of the law.

So what are the chances that this creative argument could prevail? There are two chances. One is that the Administration, which is looking for solutions to solve immigration problems that do not require legislative action, could implement this change unilaterally. Needless to say, that would take a lot of political courage. Efforts are presently underway to try to convince the Administration to take such action.

Absent administrative action, the other solution would be litigation. Although litigation is always difficult and the law could be interpreted differently, a purely legal issue such as this would be perfectly appropriate for a court’s review.

Impossible? I have always been a believer in creative solutions to complex problems. This is clearly a complex problem begging for a creative solution.