Pursuant to the Immigration and Nationality Act (INA) § 286(m), 8 U.S.C. 1356(m), the Department of Homeland Security (DHS) retains express authority to set fees for immigration adjudication and naturalization services at a sufficient amount to “ensure recovery of the full costs of providing all such services, including the costs of similar services provided without charge to asylum applicants or other immigrants.” The capital generated by these surcharges serves as the primary source of funding for the U.S. Citizenship and Immigration Services (USCIS), which utilizes the fees to cover expenditures related to processing immigration benefit requests.
In 2015, USCIS executed a comprehensive internal fee review and concluded that the existing fee schedule provides insufficient revenue to fully recover the annual operational expenses for EB-5 services performed by the agency. The USCIS calculated its FY 2016/2017 total operating cost would significantly exceed overall projected revenue; thus, if USCIS maintains the current operational fee levels, it will experience an estimated $560 million deficit.
Recognizing the apparent necessity to adjust the current fee schedule to recover the total base cost of filing EB-5 immigration requests, along with further expenditures needed to improve the process for increased applications, the DHS published a notice of proposed rulemaking in the Federal Register on May 4, 2016. They provided an invitation for public comment on a proposed adjustment in the USCIS Fee Schedule that had not been updated since Nov. 23, 2010. If passed, the DHS proposal would increase USCIS fees by a cumulative weighted average of 21 percent, with a far greater percentage increase for EB-5 applications specifically.
Under the DHS’ proposed rule, EB-5 program applications are subjected to excessive fee increases as compared to other programs. The rule would implement both new fees in addition to fee bumps of more than 100 percent for Forms I-526, Immigrant Petition by Alien Entrepreneur (from $1,500 to $3,675), and I-924, Application for Regional Center Designation Under the Immigrant Investor Program (from $6,230 to $17,795).
Following the establishment of the Immigrant Investor Program Office (IIPO) at USCIS in 2012, agency records indicate a significant increase in workload, with USCIS receiving a total of 412 Form I-924 Applications for Regional Center Designation in the thirteen-month window between Aug. 1, 2014, to Aug. 31, 2015. As a result, staffing needs have increased to maintain regulatory compliance, manage operational efforts, and ensure identification of fraudulent activity, national security threats, and public safety concerns related to the program.
Furthermore, the DHS claims that USCIS intends to conduct more site visits to regional centers and commercial enterprise partners to authenticate data provided in the regional applications and investor petitions. However, the DHS proposal does not include a guarantee for more efficient processing times or improved services as a result of the proposed fee hikes.
Additionally, the proposed rule would implement a new fee of $3,035 for filing the EB-5 Form I-924A (Annual Certification of Regional Center), which is an annual filing requirement for all approved EB-5 regional centers to demonstrate ongoing eligibility as designating processing locations. Despite the fact regional centers are required to file Form I-924A on an annual basis, there is no current fee specifically earmarked for the procedural requirement, and the DHS does not recover the processing costs related to these filings.
The proposed rule justifies the new fee by claiming significant expenditures incurred by the USCIS to review Form I-924A applications and administer the expanding EB-5 regional center program that has added 460 new centers since the end of FY 2013. Further increasing expected costs, the USCIS plans a comprehensive regulatory revision of Form I-924A to include a new segment enabling regional centers to independently withdraw their designation and discontinue participation in the EB-5 program.
The window for public commentary on the DHS’ proposed rule officially closed on July 5, 2016. If adopted, the rule would take effect sometime in the fall of 2016. Clients currently considering creating or expanding an EB-5 regional center, or planning to submit an EB-5 investment as an alien entrepreneur should consider completing the process as soon as possible to avoid these potentially increased filing fees.
Efforts to reform the EB-5 visa program have stalled in Congress, with legislators instead choosing to continue funding the program until April 28, 2017, without any fundamental changes. The continuing resolution was passed despite efforts from some lawmakers to add greater oversight to a program that has seen its share of fraud. Senator Patrick Leahy, D-Vt, has pushed reform legislation with others in Congress, saying, “Almost everyone agrees it is broken. It is time we fix it. If EB-5 cannot be reformed due to a paralysis of leadership, the time has come for it to end, not be extended, without debate, in a continuing resolution.”
President Trump has already issued orders to reexamine the viability of the H1B visa program that allows businesses to bring in skilled foreign workers to fill vacant U.S. jobs. It remains to be seen how the incoming administration will address the growing fraud issues seemingly permeating throughout EB-5 projects, and when they will begin their review of the continued feasibility and integrity of the program.
