As calendar year 2020 comes to an end, fiscal year 2020 already ended on September 30, 2020. The year constituted the most unpredictable and volatile one on record in the EB-5 Immigrant Investor Program’s 30-year history, with the COVID-19 pandemic sweeping the globe, destroying economies, and placing EB-5 investors waiting for visa interviews in limbo. The program managed to escape President Trump’s immigration ban unscathed, but while immigration based on EB-5 investment remained legal, global travel restrictions, reduced flight schedules, and the suspension of routine visa services at U.S. consulates and embassies resulted in a de facto ban.

COVID-19 wasn’t the only change the EB-5 program faced in FY2020. In April 2020, United States Citizenship and Immigration Services (USCIS) introduced the visa availability approach for I-526 processing, shifting away from the classic first-in, first-out approach it had been using since its inception. By prioritizing I-526 petitions from EB5 investment applicants whose countries of origin had immediately available visas, the approach was meant to increase processing efficiency, but it disadvantaged the heavily backlogged Chinese investors.

The enactment of the Modernization Rule on November 21, 2019, was, however, the first blow to the EB-5 program in FY2020. The Modernization Rule entailed a stark increase to the minimum required EB-5 investment amounts, with both regular and targeted employment area (TEA) investment amounts increasing by 80% to $1.8 million and $900,000, respectively. This naturally resulted in the disqualification of countless prospective EB-5 investment applicants. The Modernization Rule furthermore altered the rules surrounding TEA designation, resulting in mass terminations of EB-5 regional centers that continued throughout FY2020.

The unprecedented circumstances of FY2020 created atypical I-526 processing patterns throughout the fiscal year. In this post, we dive into the specifics to discover the full story behind I-526 processing in FY2020.

Major Increase in I-526 Filings Before Modernization Rule Effective Date

Those considering making an EB5 investment were given advance warning of the planned implementation of the Modernization Rule in November 2019. With the 80% fee increase undoubtedly rendering an EB-5 investment unviable for numerous investors, applicants rushed to submit their I-526 applications before November 21, making for a steep increase in I-526 filings in the first half of FY2020. With 4,285 I-526 petitions filed between October 1, 2019, and March 31, 2020, USCIS recorded an 80% increase in I-526 petitions compared to the same period in FY2019.

Of the 4,285 I-526 petitions filed in the first half of FY2020, a whopping 4,264 were submitted in the first quarter, comprising the period of October 1 to December 31, 2019. While a more detailed breakdown of the data is not available, we can assume that most of these petitions were filed before November 21, 2020, when the previous investment amounts of $1 million and $500,000 were still permissible. Subsequent filings were dramatically lower, likely due to both the enactment of the Modernization Rule and the onset of the COVID-19 pandemic.

I-526 Approval Rate Fell, Denial Rate Remained Steady

In the first half of FY2020, USCIS processed a total of 1,359 I-525 petitions, continuing the steep downtrend that began after Sarah Kendall’s takeover as chief of the Immigrant Investor Program Office (IPO) in FY2019. Coming off Julia Harrison’s all-time high in FY2018, Kendall’s abysmal figures were all the more disappointing, and FY2020 brought little improvement. According to the IPO, the low processing volume can be attributed to a greater focus on integrity and fresh training for I-526 adjudicators.

USCIS’s adoption of a visa availability processing approach for I-526 petitions in April 2020 could also have a positive impact on I-526 processing figures, with USCIS focusing its efforts on petitions from countries with readily available visas. But as of December 17, 2020, detailed processing statistics for the latter half of FY2020 remain unavailable. Going by the processing time data published on USCIS’s website, however, the situation does not look to have improved much.

It’s important to note that while adjudications overall have declined significantly, the denial rate has not fallen. The I-526 approval rate in the first half of FY2020 was 81%, the lowest figure since FY2016’s 76%, but the statistics prove that the approval rate is well within EB-5 norms. EB-5 investment applicants have reported increased instances of requests for evidence (RFEs) and notices of intent to deny (NOIDs), but these seem to have largely resulted in delays, not denials.

I-526 Processing Times Hit an All-Time High

With the COVID-19 pandemic wreaking havoc across the globe and I-526 processing almost grinding to a halt, the record-breaking high wait times for I-526 petitions in FY2020 should come as no surprise. One of the many shocks that FY2020 presented to the EB-5 investment industry was the sharp increase in I-526 estimated processing times in August 2020, nearly doubling from 29.5–44.5 months to 46–74.5 months. Fortunately, the range fell back down, standing at 30.5–50 months as of December 17, 2020, but the steady increase of processing times is nonetheless disconcerting.

In August 2020, USCIS also added a separate estimated processing time range for Chinese I-526 petitioners, given that their petitions are deprioritized under the visa availability approach adopted in April 2020. The Chinese processing times have remained far above those for EB5 investment participants from elsewhere, maintaining a gap of roughly two years.

Despite the unprecedentedly high processing times indicated on the USCIS website, actual processing times have been significantly quicker. In many cases, EB-5 investors received their I-526 adjudication sooner than suggested by USCIS, but the trend is still increasing. The EB-5 industry can only hold its breath and wait for USCIS to finally increase its processing capabilities.