by Cletus Weber, Founder & Partner, Peng & Weber PLLC; Elizabeth Peng, Founder & Partner PLLC
Regional centers and related EB-5 professionals are now well aware of the massive EB-5 visa backlog for China, the substantial one for Vietnam, the soon-to arrive EB-5 visa backlog for India, and the possibly modest future backlogs for a few other countries. At the same time, H.R. 1044’s proposed removal of per-country caps or USCIS’s proposed regulations could completely change everything. This article therefore explains how EB-5 visas are allocated generally, why they are so backlogged now for China and other countries, and how these backlogs could drastically change if Congress or the Administration move forward on pending proposals.
EB-5 Annual Quota of Approximately 10,000 Visas Per Year
Congress created the EB-5 visa category in 1990, and only Congress has the authority to set numerical limits on the issuance of all types of U.S. visas, including EB-5 immigrant visas. Although most in the industry use the shorthand figure of “10,000” visas per year, the actual annual quota for EB-5 is 9,940, plus or minus technical adjustments prescribed by various sections of the Immigration and Nationality Act (INA). This roughly 10,000-visa supply must be allocated among not only EB-5 investors but also their spouses and eligible children (unmarried and under 21 years of age), which means that the annual quota is enough only to cover a few thousand EB-5 investors per year.
How the U.S. Government Currently Allocates EB-5 Visas
The INA sets forth procedural rules governing the allocation of EB-5 visas, cascading as follows:
- General Rule: First-In/First-Out (FIFO). INA 202(a)(1)(A) states that with some exceptions, such as the 7% Per-Country Limit, visa allocation cannot discriminate based on a person’s race, nationality, place of birth, etc. Effectively, this means that the general rule for EB-5 visa allocation is FIFO on a worldwide basis.
- Exception: 7% Per-Country Limit. INA 202(a)(2) provides that natives of any single foreign state under any of the family- and employment-based categories, including EB-5, may not exceed 7% in any fiscal year. Further, the INA generally makes “country” assignments on the basis of country of birth, not country of current citizenship or residence.
- Override of 7% Per-Country Limit: INA 202(a)(3) allows the 7% Per-Country Limit to be overridden to the extent that imposing the 7% Per-Country Limit would cause visa numbers to go unused during the quota period. By analogy, nobody cares who ate how many slices of pizza if slices still remain at the end of dinner.