On Jan 06 2015 by H. Ronald Klasko
Open Letter to Director Rodriguez and Chief Colucci
I was heartened by the remarks of Director Rodriguez at the recent EB-5 stakeholders engagement in which he extolled the virtues of the EB-5 program and emphasized the importance of USCIS’s role in maximizing the benefits to the U.S. economy as Congress envisioned when it created the EB-5 program.
At the same time, I was struck by the inconsistency between these laudable goals and the continuation of procedures that do not further these goals but rather, in many ways, thwart the efficient processing of EB-5 petitions.
I have on many occasions suggested changes in policy and in legal interpretation that would improve the EB-5 program. That is not the purpose of this letter. Rather, the purpose of this letter is to suggest purely procedural processing improvements that could, without expending additional resources, significantly improve the EB-5 program in ways that would benefit investors, regional centers, project developers and the U.S. economy. Indeed, I would venture to say that the suggestions below would be beneficial to all parties, including USCIS, and detrimental to none. As such, I sincerely hope that you would reconsider implementing some, if not all, of the below suggestions.
Here is my list:
- USCIS must reduce processing times for project applications. This is absolutely critical for the success of the program. There is no question that it is to everyone’s benefit – USCIS, project developers, investors – to have USCIS adjudicate an approved project before investors invest and file I-526 petitions. However, this goal will never be achieved if project developers have to wait 8 months, 10 months, 12 months or longer for project approvals before investors can invest and file. It is the rare project that can afford a delay of that length before bringing investment funds into the project. If project developers are not assured of a consistent 4 month processing time, USCIS will continue to double its workload by forcing project developers to proceed to market the project, resulting in investors filings I-526 petitions, while at the same time filing I-924s with exemplar petitions. USCIS then must adjudicate the exemplar projects on I-924s, adjudicate the same projects on I-526s, issue RFEs on I-924s and issue perhaps hundreds of the same or inconsistent RFEs on the project on I-526s. This is the present system in which no one wins, and everyone loses. Eliminating these multiple filings and multiple RFEs would realize a significant saving in manpower and resources, which could enable USCIS to meet the 4 month processing goal without having to add additional staffing.
- USCIS should expedite I-526 processing for investors in an approved project. In order to encourage project developers to use the I-924 process to obtain project approval, there should be some benefit to the project and its investors. A logical benefit would be to have investors in such projects receive I-526 adjudications far more promptly than investors in other projects. This not only serves the benefit of motivating developers to obtain project pre-approval. It also recognizes that the adjudication process for such investors is far more streamlined and straight forward.The most time consuming aspect of the I-526 processing is the adjudication of the qualification of the project. Once this is completed, a separate dedicated staff of adjudicators whose only role is to adjudicate source and path of funds should be able to complete the adjudication in 3 to 4 months. It only makes sense that these petitions should have a prompter processing time than petitions that require full project adjudication. In fact, if the only issue is source and path of funds, USCIS should be able to reconsider the availability of premium processing for such petitions. Premium processing, in turn, would increase fee revenue, which could produce funds for more adjudicators. This procedure would put EB-5 in line with other family-based and employment-based petition processing since employer I 140 petitions and family I-130 petitions are adjudicated separately from permanent residence applications of alien beneficiaries.
- USCIS should process all project I-526s together. USCIS has been inconsistent in its application of two different concepts. On the one hand, USCIS at various times has stated that it will process all project I-526s together as a matter of processing efficiency. In fact, there were many examples where later investors in a project were processed far more quickly than earlier investors because all project issues were resolved.More recently, it appears that this laudable objective has fallen by the wayside in favor of a strict FIFO processing objective. This has resulted in processing inefficiencies whereby adjudicators are looking at investors in a project over a period of many months or sometimes even more than a year. This is also detrimental to many projects which require approval of a certain number of investors before any money can be released to the project. The result is that projects may be held in abeyance until it becomes clear that a minimum number of investors have been approved and their funds released from escrow.
- A separate processing queue should be implemented for investors who are subject to quota retrogression. This is another change that would have all winners, and no losers. Investors subject to quota retrogression gain no benefit upon the approval of the I-526 petition. Many suffer a detriment because longer processing times could enable their children to immigrate with them under the provisions of the Child Status Protection Act.Investors not subject to quota retrogression would also win because their petitions could be adjudicated far more expeditiously, and they can actually benefit from the adjudications of the petitions by being able to immigrate to the U.S. sooner.USCIS would benefit by devoting its resources in a manner that maximizes benefits to its stakeholders without any need to expand its resources. Such a procedure would not be novel since USCIS has long delayed processing of family-based I-130 petitions in categories with long quota backlogs simply as a matter of allocation of resources.
- USCIS should have a separate processing line for direct EB-5 investors. Up until the last year, when USCIS has tried to implement a straight I-526 FIFO processing scheme, direct EB-5 petitions were adjudicated far more promptly than regional center applications. This system made a lot of sense for some of the same reasons mentioned above with respect to I-526 petitions for investors in approved projects. Why should a direct EB-5 investor have to wait in line behind hundreds of investors in projects that require complex adjudication? By contrast, most direct EB-5 projects involve far fewer issues for the adjudicator to deal with.There is another reason why direct EB-5 investors should be in a separate – and shorter – queue. Unlike regional center investors, whose presence in the U.S. is not necessary for the development of the investment project, often the direct EB-5 investor is the hands-on manager of the investment project. As such, his presence in the U.S. is critical on a far more expeditious basis.
- The attorney for the investment project or the regional center should be recognized by USCIS. There are clearly two parties to an I-526 petition – the project developer and the investor. In many cases, the attorney for the project developer is different than the attorney for the investors. USCIS’ present modus operandi, which recognizes only the investor’s attorney on an I-526 petition, creates various anomalous results. The attorney for the investor has to file a petition consisting mostly of information about a project for which the investor’s attorney is not responsible and often has no knowledge of its veracity. If USCIS has questions about the project, it is in the anomalous situation of issuing an RFE to the investor, who does not know the answer. The project developer is in the anomalous situation of having to hope that the investor or the investor’s attorney sends the information to the project developer. The project developer is reliant on the investor’s attorney to submit its response, unaltered, even though the attorney does not represent the project developer. The present procedure invites different responses from different attorneys to the same RFE about the same project.Of course, this result would be obviated if USCIS adopts the earlier suggestions in this letter that would result in project issues being dealt with at the I-924 stage – a petition for which the developer’s attorney has filed a G-28. However, unless and until that happens, USCIS should act consistently with other employment-based petitions. In all of the employment-based petitions, USCIS recognizes that the employer may have different counsel than the employee. The I-526 petition is the only example in which USCIS forces two completely independent parties to have the same attorney, to the detriment of everyone.If USCIS recognizes the project developer as a separate party in the I-526 process, it would only be required to issue one RFE for the project instead of, for example, one hundred RFEs for one hundred investors in the project. This is clearly lose lose.
- ELIS is an example of a laudable goal with a seriously flawed implementation. ELIS should be implemented in such a manner that there is one set of project documents available to investors and their attorneys online. The almost total lack of usage of the system as implemented is proof positive of the user-unfriendly nature of the system as presently implemented. USCIS should work together with stakeholders to develop a system that meets the needs of USCIS and stakeholders. In this situation, those needs should be co-existent.
- USCIS should create an I-829 exemplar process. Less attention has been paid to the I-829 process, largely because only a small percentage of investors have reached the point of I-829 filing. As more and more such applications are being filed, the same kind of processing inefficiencies that have reared their ugly heads in the I-526 process are manifesting themselves in the I-829 process.Take a project with 100 investors. 100 different petitions with possibly 100 different attorneys are filed containing documentation of which the investors and their attorneys know very little and cannot certify the veracity. Virtually 100% of the I-829 petition involves documentation that is only available to the regional center and the project developer. Hopefully – but not definitely – all 100 I-829 petitions will contain the same information about the project and its job creation. If USCIS has questions about the job creation or the issue of whether the investors have sustained their investments, USCIS would need to issue 100 Requests for Evidence. Is all of this necessary? Does it really make any sense?This writer believes that the answer to both questions is in the negative. What makes more sense is to have an I-829 exemplar process whereby USCIS can adjudicate all issues relating to the project. This would be filed by the project and its attorney. Any issues specific to the investor could be filed on the I-829 by the investor’s attorney when his filing window is reached. Any issues relating to the project should be adjudicated before most investors file their I-829 petitions.Of course, there may be some instances in which there are enough jobs for the early investors at the time they file their I-829 petitions and then more jobs are created by the time later investors file their I-829 petitions. This can be dealt with through a procedure to update or supplement the I-829 exemplar petition.
- USCIS should provide a procedure for an I-829 exemplar petition to be filed immediately for projects that have been subject to material changes. When there is a material change in a project after the approval of conditional residence, the investor has to wait 21 to 24 months to learn whether the changed project will be sufficient for condition removal. A more efficient system for all concerned would be to have a procedure whereby USCIS could adjudicate the new materially-changed project for EB-5 compliance. If necessary, this would give the investor the opportunity to make a different investment or effectuate whatever changes would be necessary to enable him to remove conditions.
- USCIS should make information available to the public. Although this doesn’t clearly fit within the rubric of increasing processing efficiency, it does fit within the theme of no cost win-win fixes. USCIS is rightly concerned with protecting the public against investing in fraudulent projects. Why, then, would it deny the public necessary factual information that would enable investors to make a more informed decision regarding an investment project? Why would USCIS deny investors information regarding which projects have received approvals, and which projects have received denials? Why would USCIS deny investors factual information regarding how many investors have filed I-526 petitions in a project, how many have been approved and how many have been denied? Information could also be supplied regarding regional center statistics, although there is a possibility that such information could be misleading since investors invest in a project and not in a regional center.
I appreciate your consideration of these suggestions to make the EB-5 program a more efficient one, a more user-friendly one and a program that is more responsive to the public policy goals of Congress when it enacted the program, all without sacrificing any of USCIS’ important anti-fraud and national security concerns.
H. Ronald Klasko