United States Citizenship and Immigration Services (USCIS) regularly releases comprehensive processing data on the different types of petitions it works with on its Immigration and Citizenship Data page, albeit with a several-month-long delay. In November 2020, the immigration body finally published the processing data for FY2020 Q3 (April to June 2020), and it doesn’t paint an overly welcoming picture for those involved in EB-5 investments. Low adjudication rates, high denial rates, and a shift from I-526 petitions to I-829 petitions characterize USCIS’s processing activity throughout spring 2020.

EB-5 Petition Processing Data for FY2020 Q3 in Numbers

The figures for EB-5 petition processing from April to June 2020 show an astonishingly low number of adjudications carried out over the three months. Particularly noteworthy is the high rate of I-526 denials, with denials accounting for a whopping 37% of all I-526 adjudications during the period. The focus on I-829 petitions over I-526 petitions is also clear, with the number of I-526 adjudications only moderately higher despite the far higher supply of pending I-526 petitions.

I-526 Petition Processing Data
Receipts: 40
Approvals: 576
Denials: 346
Pending: 15,955

I-829 Petition Processing Data
Receipts: 739
Approvals: 725
Denials: 23
Pending: 10,332

What do these figures mean for foreign nationals pursuing an EB5 investment? Read on for an in-depth analysis.

High Rate of Denials under Sarah Kendall

Since FY2019, when Sarah Kendall was appointed chief of the Immigrant Investor Program Office (IPO), processing volumes have taken a nosedive. But denial rates haven’t—the IPO has been issuing denials steadily under Kendall’s watch, with the dramatic decrease affecting only I-526 approvals. Kendall claims she’s strengthening program integrity, which is resulting in both lower processing volumes and lower approval rates. It may be that EB-5 investment petition processing volumes won’t improve until the IPO has a new leader.

Increased EB-5 Investment Amounts Result in Lower I-526 Receipts

With only 40 I-526 receipts from April to June 2020, USCIS is reeling from the consequences of its own policies. In November 2019, the Modernization Rule went into effect, nearly doubling the minimum required EB5 investment amounts from $1 million (or $500,000 for projects in targeted employment areas, or TEAs) to $1.8 million (or $900,000 for TEA projects).

USCIS proposed the increases as a method to raise more funds to sustain the agency, but without the foresight to consider the law of demand, the immigration body has failed to draw in the EB5 investment capital it was hoping for. In fact, the poorly executed policy changes resulted in 45 times less EB-5 investment funds per quarter in FY2020 than in the previous six years and likely contributed to USCIS’s budget crisis in August 2020 that almost resulted in a massive furlough. The COVID-19 pandemic ravaging the globe and the excessive EB-5 demand in countries such as China and Vietnam are also likely factors contributing to the low rate of I-526 receipts.

A Preference for I-829 Petitions

Even though I-526 petitions account for a larger portion of backlogged petitions, the FY2020 Q3 processing data make clear that USCIS has been prioritizing I-829 petitions. I-829 adjudication has remained steady, with no obvious trends either upward or downward, and the rate of approval is as high as ever. The number of adjudicated I-829 petitions during the quarter indicate that the IPO is prioritizing I-829 adjudication over I-526 adjudication.

Current Processing Volumes Are Unreasonably Low

If productivity at the IPO doesn’t improve, it will be 4.3 years before all I-526 petitions that were pending at the end of June 2020 are adjudicated. Similarly, it will take 3.5 years to clear up the I-829 backlog up to June 2020 at this processing rate. If indeed processing volumes continue at this rate, the EB-5 investment process will take about seven times longer than Congress had intended. While such a scenario would truly highlight USCIS’s ineptitude, productivity will likely improve.

Low processing volumes don’t only affect processing times, either—they also impact the number of EB-5 visas claimed. Every fiscal year, the EB-5 program is allotted approximately 10,000 visas to grant to EB-5 investors and their families, but at the FY2020 Q3 rate, barely 20% of available EB5 investment visas will be claimed. The unused visas would then be recycled through the EB-1 program in the following fiscal year, spelling a slow death for the EB-5 program.