Premium processingis unlikely to be implemented in the very near future.  My best estimate is the first half of calendar year 2012, and maybe the first quarter.  It will likely be limited to regional center designation applications and exemplar I-526 (project pre-approval) petitions.  There is a possibility that individual I-526 investor petitions will be eligible for premium processing at a later date.  In the meantime, regional centers and investors should file petitions in the normal fashion.  If premium processing is implemented, almost certainly it will apply to pending petitions.

There appears to be agreement between Republicans and Democrats in the House of Representatives for a long term and hopefully permanent extension of the regional center pilot program.  The biggest area of disagreement may be whether, as part of the extension, Congress implements a new EB-6 program for venture capital financing of startup ventures in the U.S.  If so, there is some indication that at least the Republicans in the House of Representatives may want to take the visa numbers for the EB-6 program out of the EB-5 quota.  EB-5 advocates will be arguing against any attempt to reduce EB-5 numbers.

USCIS has already hired three new business analysts and is in the process of hiring one or more economists.  Hiring and training these individuals will be a critical part of implementing premium processing and implementing the proposed Decision Board, which would allow for in-person or telephonic discussions between regional centers and CIS prior to decisions on regional center designations and project pre-approvals.

Even without premium processing, regional center designation applications and project pre-approval applications will likely be processed more promptly than the present 8 to 10 months.  Now that USCIS has mostly completed the November 2010 filings, and since there were far fewer filings in the months following November 2010, processing times should improve.  It is not as clear that processing times will improve on the investors’ I-526 petitions.

USCIS will not commit to a formal position on three legal issues “for several weeks” and likely will include most or all of the positions in a new policy memorandum.  The three issues are:

• Deference to safe designation letters with respect to geographical areas of TEAs;
• EB-5 money used to pay down bridge financing;
• Definition of “material change” for purposes of condition removal and what must be done in the event of a material change.
• It appears likely that CIS will agree that it should defer to state designation of geographical areas of TEAs and that EB-5 money can be used to pay down bridge financing.  Until issuance of a policy memorandum, there are indications that CIS adjudications on these issues have been more favorable since we had our meeting with Director Mayorkas on August 10.  The material change issue will likely be the subject of a separate USCIS stakeholders engagement meeting prior to issuance of any memorandum.

Following our August 10 meeting, it appears that USCIS is rethinking its policy on exemplar.  Hopefully, the policy memorandum will include a commitment that, if the documentation regarding the regional center and the project in the investor’s I-526 petition is identical with the exemplar 526, CIS will be bound by the approval of the exemplar.  Unless and until that happens, there does not appear to be any good reason for waiting the necessary time for approval of the exemplar 526 if it will be filed independently of a regional center designation application. If it will be filed concurrently with a regional center designation application, since the processing time will be the same as the regional center designation processing time, it may be sensible to continue filing the exemplar 526 for the first project.

Following the approval of the EB-5 petition, the investor needs to apply for adjustment of status or consular immigrant visa processing.  The immigration attorney can handle that work even if he does not handle the EB-5 petition.  Likewise with reentry permit applications, which are very common for EB-5 investors who become permanent residents.

Five years after obtaining conditional permanent residence based on an EB-5 petition, the investor and his family may choose to naturalize.  This is further spin off work for the immigration attorney.  After naturalization, the investor may sponsor family members for permanent residence, which creates even further spin off work.

Some immigration attorneys perform non-immigration legal services.  The EB-5 process leaves plenty of room for other services, including tax advice, corporate structuring advice, real estate purchases, employment law issues, etc.

Finally, the immigration attorney may receive a finder’s fee from a regional center even if he does not perform the legal work for the investor.  However, the finder’s fee should not be accepted until the attorney does a careful review of both securities law ramifications and the rules of professional responsibility in his jurisdiction of practice.

–a regional center designation has absolutely nothing to do with whether any particular project within a regional center is a good project for EB-5 purposes.

2. Don’t just accept an I-526 or I-829 package prepared by a regional center.

–if the package prepared by the regional center raises questions or issues in the mind of the investor’s attorney, it may very well raise questions in the minds of USCIS. The issues should be resolved in advance of filing.

3. It’s all about the I-829.

–the I-526 EB-5 petition must be prepared with the I-829 condition removal application in mind.

4. Only 6 regional centers have I-829 approvals.

–this does not mean that the other regional centers have had their I-829 applications denied. A very large majority of regional centers have not been around long enough to reach the I-829 approval stage.

5. An investor is best advised not to be the first or last investor in a project.

–the first investor may find to his chagrin that the project does not attract sufficient investors to be fully funded. The last investor might discover that insufficient jobs were created, and all of the created jobs were allocated to the earlier investors.

6. It is critical for a regional center to have a more general and conservative business plan, rather than a specific, aggressive business plan.

–any change in a business plan might be considered a “material change.” The more specific the business plan, the more chance of a change. Also, a more conservative business plan may have more reachable targets.

7. The availability of a reduced $500,000 investment is not known until each investor’s I 526 petition is approved.

–USCIS regulations and interpretations are that the targeted employment area (TEA) issue is not decided until the time of investment. In the case of an investment put in escrow until the I-526 is approved, the date of investment is considered the date that the escrow is released following the approval.

8. An investor does not have to prove the lawful source of all of his or her money.

–an investor only has to prove the lawful source of $500,00 or $1,000,000, depending on the amount of the investment.

9. There is a difference between a direct job as defined by USCIS and a direct job as defined by an economist.

–USCIS defines a direct job as being a W-2 employee of the new commercial enterprise in which the investor invests. Economists define direct jobs as direct employees of the job creating enterprise or the construction company, as opposed to indirect or induced employment.

10. It is better to rely on indirect and induced jobs, rather than direct jobs.

–reliance on direct jobs could result in condition removal denial if there are less direct jobs than projected or if some of the employees can’t be proven to be U.S. citizens or permanent residents. Relying on indirect or induced jobs, such as through an economic model that relies on expenditures, may result in the regional center having more control over proving the required facts for condition removal.

In no particular order, here are my thoughts:

1. Either USCIS must provide far more extensive business training to EB-5 examiners or it should partner with another agency in the government that can provide such expertise.

2. USCIS must increase the number of fully-trained adjudicators in order to bring processing times of both individual EB-5 petitions and regional center applications to acceptable levels commensurate with the needs of developers for capital on pending projects.

3. Both the regional center application process and the project pre-approval (exemplar I-526) process must be consultative rather than adversarial and must be completed promptly.

4. The notorious December 2009 “Neufeld Memo” must be rescinded and replaced with a policy that is both consistent with the regulation and that recognizes that business plans constantly change. Irrespective of a “material change” in the business plan, if an investor has sustained his investment and created 10 jobs, his conditions should be removed.

5. USCIS should publish statistics on regional center activity, including number of investors, number of approved and denied I-526 petitions and number of approved and denied I 829 petitions. This information is material in enabling investors to make intelligent choices in their investments.

6. USCIS should actively monitor regional centers. Regional centers with a record of denied petitions or with a long record of inactivity should be subject to careful review.

7. USCIS should follow the law in adjudicating EB-5 petitions and condition removal petitions. If USCIS believes that the regulations are inadequate, it needs to go through notice and comment rulemaking rather than adjudicating based on policy memos and other “lore” that is not supported or supportable by the statute, regulations or precedent decisions.

8. USCIS should implement premium processing and concurrent processing of I-526 and I 485 applications, as is done with other employment-based petitions, to provide expedited consideration as is provided for family members and employees of businesses.

9. In pooled investments and regional center investments, the determination of a “targeted employment area” should be made at the time of the first investor’s investment. Multiple investors in the same projects should not have to invest different amounts of money to qualify based on the same project, and developers should be able to have the assurance of the number of investors that will be required to meets its capital investment needs.

10. Although not within the realm of USCIS, Congress needs to make the regional center pilot program permanent in order to remove any fears in the investment community that this is a temporary program that could be shut down, jeopardizing their potential immigration future.

One option is applying to be designated as a regional center.  A second option is seeking to have an already-designated regional center “adopt” the developer’s project.  The third option is to have prospective investors in a pooled investment project file individual EB-5 petitions. 

A new article entitled “Three Options for Developers Seeking Capital under the EB-5 Program” has been added to our EB-5 website www.eb5immigration.com.  This article provides a list of advantages and disadvantages of each of the three options.

The Neufeld Memorandum states that a “new petition”, rather than an “amended petition”, must be filed.  The distinction is critical.  If an amended petition must be filed, the investor keeps his conditional permanent resident status.  If a new petition must be filed, the investor must abandon his conditional permanent resident status.  USCIS states that the investor can then readjust status but must incur a new two year conditional residence period.  This is contrary to law, since INA§245(c)(7) prohibits such an adjustment of status.

The impact of this distinction is a serious one for the investor.  It is even more serious for family members.  USCIS states that, if a conditional resident spouse has been divorced, or if a conditional resident child has turned 21, the spouse or child cannot gain the benefit of the new I-526 petition.  Presumably, the spouse or child is subject to removal from the U.S.  This is wrong both as a matter of policy and as a matter of law. 

The Neufeld Memorandum relating to material change should be rescinded or challenged.

The investor often thinks that the regional center’s certification means the specific project in which he or she is investing has been pre-approved by USCIS.  In fact, that is not the case.  Rather, the qualification of the project in which the investor has invested is adjudicated at the time the individual investor files an I-526 petition.  This means that, if a project has 100 investors, there will be 100 individual adjudications of the qualifications of the same project, and the adjudications may be inconsistent between different adjudicating officers.

If one of the adjudicating officers has questions regarding the project, the questions are addressed to the individual investor, since the regional center is not a party to the EB-5 petition.  The individual investor generally does not know the answers to the questions in the RFE.  Likewise, if there is a denial of a petition based on the qualification of the project, the regional center, which is the real party in interest, cannot appeal the denial based on the qualification of the regional center’s project, again because the regional center did not file the petition.

In the present scenario, everyone loses.  The investor has to invest before knowing whether the project is approved.  The regional center is subject to varying interpretations by varying officers and has no standing to address the issues.  USCIS wastes precious resources by adjudicating the issue of the project’s qualification multiple times instead of one time.

Happily, change may be on the way, albeit not soon enough.  USCIS has now stated that it is in the process of creating a government form whereby the regional center will be able to request pre-approval of a specific project before the investor invests.  Presumably, such pre-approval would eliminate re-adjudication of the qualification of the project in connection with the individual EB-5 petitions of the individual investors.

Unfortunately, this important change is not going to happen overnight.  USCIS estimates at least one year for the form to be approved and this new process to go through necessary channels.  Advocates concerned about the success of the EB-5 program are and will be making efforts both at higher levels of USCIS and in Congress to create a streamlined and workable process in a much shorter time frame.  In doing so, it is critical that any new process not simply add another level of delay and bureaucracy.  Timing is critical for major development projects, and any new system must have very specific and short adjudication time-frames.

The four programs include:

1. The EB-5 Regional Center Program, which allows immigrant investors seeking a greencard to invest $500,000 in a USCIS approved regional center;

2. E-Verify the internet-based Employment Eligibility Verification System run by USCIS that allows employers to electronically verify the employment eligibility of certain employees;

3. The Conrad 30 J-1 program which allows state health agencies to annually hire up to 30 foreign physicians to practice in rural and inner-city communities that often have difficulty recruiting physicians. The sponsored physicians are released from their two year home residency requirement if they work for a minimum of three years with the medically underserved population; and

4. The EB-4 Religious Worker Program which provides up to 5,000 permanent immigrants visas for religious workers which include ministers, professionals working in a religious vocation, and other workers in religious vocations.

Among the more likely topics for possible inclusion in EB-5 legislation are the following:

1.    Permanent extension of the regional center program.  In fact, this is already included in the Senate’s DHS Appropriations Bill.
2.    Pre-approval of regional center projects.
3.    Premium processing and possibly concurrent filing of EB-5 petitions and adjustment of status applications.
4.    Clarification of the issues to be adjudicated in the condition removal process.
5.    Changes to the definitions and designation procedures for targeted employment areas.

With the possible exception of the permanent extension of the regional center program, it is likely that other changes will have to await comprehensive immigration reform.