By Mona Shah, Esq. and Rebecca S. Singh, Esq.
Is U.S. Citizenship and Immigration Services (“USCIS”) facing an EB-5 efficiency crisis in the wake of the COVID-19 pandemic and the resulting labor shortage? The question—which is gaining traction among practitioners following USCIS’s release of discouraging data on EB-5 petitions—puts a spotlight on the impacts of the virus and the concomitant personnel exits, colloquially known as “The Great Resignation.” Now, as we approach the end of the third quarter of fiscal-year 2023, practitioners are becoming concerned that this deluge of walkouts, two-week notices, and official resignations has made a huge dent in USCIS’ capabilities while spurring a deluge of Notices of Intent to Deny (“NOIDs:”) and denials.
EB-5 is complicated and nuanced. It takes years to become proficient. Recent adjudications show a naivete along with irresponsible errors. Have all the experienced proficient adjudicators resigned? It appears that the situation cannot be rectified without major additions to the agency’s employee corps.
The difference between the pre- and post-pandemic agency environments is striking. David Hirson, Esq., Managing Partner of David Hirson & Partners, LLP, and Co-Founder of Gravitas Strategies and Compliance, LLC noted that before COVID-19, USCIS was handling EB-5 cases “slightly less inefficiently than it did after the pandemic struck,” and that the examiners “had at that point gained great experience and understanding, both from their own learning and from input from attorneys and other sources.”
In the last few years, however, something changed. “Unfortunately, and for reasons not understood,” Hirson said, “the highly experienced team of examiners were moved out of the EB-5 arena and were replaced by far less experienced and possibly even inexperienced examiners.”
That is not good news for the EB-5 set, which already is well used to USCIS’s inefficiencies, including processing delays and vague communications. With the agency hit hard by the pandemic (the Great Resignation derived from businesses’ and workers’ adaptations to COVID-19, including bolstered unemployment benefits and the trend of remote work), fears of longer waits and the exacerbation of problems such as unnecessary, even unfounded requests for evidence (“RFEs”), NOIDs, and denials are gathering steam. The numbers are scary: Industry expert Suzanne Lazicki, owner of EB-5 blog Lucid Professional Writing, outlined on her Processing Data page that according to the most recent official USCIS report, from October 1, 2022 to December 31, 2022, 207 I-526 and I-526E forms were denied out of 556 received, while 29 I-829 forms were denied out of 81 received during the same period.
It is likely that USCIS is exacerbating these issues by focusing on minutiae and petition facets that were not part and parcel of the adjudication process before. “I think they are doing some extreme vetting,“ said John Pratt, partner at Kurzban Kurzban Tetzeli & Pratt, P.A., defining the term as a “heightened standard for adjudication.” Clarifying that USCIS is “asking for a lot more documentation” while “reviewing the applications a lot more thoroughly” and poring over inconsistent content, Pratt added that these efforts have contributed to the delays. Among the components being scrutinized more are source of funds, the use of such money, and other project-related information.
USCIS’s approach that has affected other areas outside EB-5, too. Pratt observed that such “extreme vetting” also is impacting the review process for the EB-1A (aliens of extraordinary ability) and EB-1C (certain multinational managers or executives). Adding another wrench to the mix is the heightened presence of fraud detection and national security officers “embedded” in USCIS’s Immigrant Investor Program Office (“IPO”); in other words, these professionals are not adjudicators, though they communicate with adjudicators on money laundering and other issues. “They’ve clearly put more resources on that,” said Pratt.
But more does not necessarily mean better. Citing a number of job openings at the IPO, Lazicki noted in a recent post that “[none] of the advertised positions asked for any educational qualifications in immigration law, securities law, business, or finance,” and that “[none] asked for experience with business or investment.” That suggests USCIS may not require such experience from prospective hires, even though these credentials would be beneficial for adjudicators as they review EB-5 petitions—which are saturated with dense financial data, complex legal language, and other content requiring special skills to decipher.
Such issues would be cause for anxiety in other eras, but in this COVID-19-scarred one, they are even more potent. Inflicting a tremendous blow on the U.S. economy and work force, the pandemic has rampaged through industries across the board for more than three years. Things came to a head in November 2021: By that point, a staggering 4.53 million American workers had quit their jobs, and this void has yet to be completely filled.
As an example, take the agency’s penchant for denials. An inexperienced or short-staffed team is more likely to overlook key factors that could prevent petitions from being rejected. This issue may be exacerbated by a lack of preparedness on the part of new government employees hired after The Great Resignation. EB-5 covers myriad industries. A new examiner may not have the time needed to understand industry nuances. Some RFEs and NOIDs are displaying a basic lack of mathematical prowess, with attention to details that are not relevant.
The chart below via The Proceedings of the National Academy of Sciences (“PNAS”) represents just how massive the decline in the overall employment-to-population ratio is. Keep in mind, the following data account for all full- and part-time workers, not just those deemed “essential.” While a great number of these cases was found in frontline environments such as healthcare and retail, where the danger of exposure was most present, the effect of The Great Resignation was also felt in the government sector.
One factor to consider is that quitting begets quitting. Professionals at employers where huge numbers of people have quit or resigned often are left with a substantially larger amount of work to do in their absence. This can lead to job dissatisfaction, a sense of feeling overwhelmed, further resignations, and, ultimately, an ineffective workplace. For EB-5, that ineffectiveness can have dire consequences, and USCIS has demonstrated that all too frequently.
All this disruption supports the theory that those working for USCIS are continually denying or approving petitions based on limited understanding, and perhaps even defaulting to a denial decision when faced with any doubt. Just as new EB-5 practitioners sometimes struggle to understand the industry, adjudicators seem to be suffering the same setbacks.
In a sector that was already underfunded and understaffed prior to the pandemic, this issue has spelled trouble for the agency. By February 2022, USCIS managed to amass more than 8 million applications across all types of immigration benefits. Later that year, in an October stakeholder engagement, IPO Chief Alissa Emmel revealed that IPO adjudicators have responsibilities beyond just adjudication, such as addressing Freedom of Information Act (“FOIA”) requests. Given that mandate, as well as furloughs, office closures, and the fact that many staffers had to be reassigned to cover vacancies elsewhere, the agency’s workforce clearly is stretched far too thin.
The effects of being short-staffed are apparent in USCIS’s productivity and output. Assembled from USCIS quarterly reports, the chart below via IIUSA details the statistical trends in I-526 approval and denial rates since 2018. Particularly noteworthy are the numbers for Q2 FY 2020, a watershed period that points to the moments when the pandemic began to affect the agency’s output. While the approval rates skyrocketed, the number of petitions received had dropped dramatically. Then, in Q3, the approval rate plummeted to a startling -19%, despite the number of petitions increasing to only 40. Meanwhile, the processing of I-829 petitions has also experienced a decline, if less steeply: USCIS received 604 I-829s in Q2 FY 2020, down 40% from 1,013 the previous quarter.
Subsequent quarters were a bit of a roller coaster for the I-526, with approval rates fluctuating between a high of 89% and a low of 16% despite an increasing number of petitions received. Could this inconsistent data simply indicate the reality of I-526 petitions? Or is this a sign of the incompetence brought on by the lack of a sufficient workforce?
While some of the decline can be blamed on the pre-EB-5 Reform and Integrity Act (“RIA”) regional center program lapse, many experts suspect that USCIS has chosen to simply shirk its commitment to EB-5. Indeed, this sentiment has become more pervasive since the recent, ill-received stakeholder engagement, which was largely thought to be a failed attempt at placating an industry desperate for answers and movement. As practitioners are so often—intentionally or not—kept in the dark about USCIS’s actual processes, such theories have begun to carry substantial weight.
So, given the lack of direct information from USCIS, why else do we suspect that adjudicators are fumbling their way through the process? The evidence lies in the frequent, baseless denials that make up the above numbers, and those denials’ accompanying, aforementioned RFEs—which, per Hirson, are often “ridiculous and irrelevant.” Raising issues that were already “fully discussed, resolved, and thought never to be seen again prior to COVID,” these RFEs feature “boilerplate questions [that] include requests for documents and information initially provided with the filing,” Hirson added. “The RFEs need to be better-vetted,” he stressed.
In addition, practitioners are complaining that NOIDs are being issued in place of RFEs. Vetting all of the NOIDs and RFEs could be a tall order for USCIS. Stuck with scarce, inexperienced staff, the agency has failed to ameliorate the backlogs that have been plaguing EB-5 for years, despite last year’s promise to do just that. And NO, simply denying petitions is not an efficient or empathetic way of clearing cases from the adjudicator’s desk. A major push to recruit veteran adjudicators could be just what the doctor ordered, yet such an endeavor would require not only room in the budget, but also the will to effect transformative change. Does USCIS have that capability?
So far, that is unclear—though there are signs that things are gradually getting better. Many industry observers now believe that the age of The Great Resignation is over, and that we are entering an era known as “The Big Stay.” During this period, the gap left by the sudden drop in employment is decreasing as the world approaches its new version of normal. Since that November 2021 peak, the number of resignations has fallen dramatically; in April, it was down to about 3.8 million, according to the U.S. Bureau of Labor Statistics.
Retention is no substitute for competence, though. With that in mind, practitioners stress that USCIS must improve its processes, including its interactions with members of the industry, to pull its weight. “There’s no communications with stakeholders to determine is this policy feasible, is it workable—and we don’t have that feedback,” said Pratt. What could help mitigate these problems, he explained, are notice-and-comment outreach, clear policies, stakeholder engagement, appropriate training of employees, and transparency.
Are those improvements realistic for an agency that has been notoriously slow to change? Well, in order for any transformation to happen, USCIS must make a concerted effort to keep refining its understanding of EB-5—which means that adjudicators rubber-stamping NOIDs and RFEs en masse instead of providing comprehensive, good-faith reviews of petitions have to get better.
Despite this seemingly challenging mandate, there is cause for optimism … particularly if the aforementioned USCIS job openings are filled with candidates who are more qualified than the job descriptions suggest they should be. As Hirson put it: “The system is not yet working, but there is some improvement.”
If that is to continue, resignation is not an option.
Aaron Muller and Simon Butler contributed to this article.