As we reported in December, the increased demand in the EB-5 immigrant investor visa category will most likely result in visa retrogression for Chinese born EB-5 investors in the Spring of 2013.

Some have reported that this type of retrogression will mean that EB-5 applications for Chinese investors will come to a standstill. This is not only false, but legally inaccurate. I-526 applications for Chinese nationals will still be processed by the USCIS. They will be assigned a priority date, and will need to wait until that priority is available before actually obtaining the conditional residence.

Here is a short review of the system as described in December 2012.

What is Retrogression?

The Immigration and Nationality Act limits the number of green cards issued annually within each fiscal year. The government’s fiscal year runs from October 1 through September 30. In the employment-based categories, immigration is divided into five preference categories: EB-1, EB-2, EB-3, EB-4 and EB-5. The law does not permit any one country to have more than a specific percentage of the total number of green cards annually. In situations where there is greater demand than availability and these category limits are exceeded for a particular nationality, a back log occurs. Immigrants are placed on a waiting list according to the date of their immigrant petition case filing. This date is called a “Priority Date”. While an applicant MAY continue to file an underlying immigrant petition at any time they may not file their actual green card application (Adjustment of Status if they are in the U.S. or consular processing if they are processing through their home country). When an individual’s priority date is reached on the Visa Bulletin then their green card application may continue to be proceed.

Who Will Be Impacted by Retrogression?

Investors born in Mainland China will be impacted by the predicted visa retrogression. It is important to note, that investors born in Mainland China but that later obtained citizenship or permanent residency in another country, would still be subject to the backlog. The backlog will not apply to investors born in Hong Kong, Macau, Taiwan or other countries. The predicted backlog in EB-5 would be the first of its kind. While new visas would become available on the first date of the next fiscal year i.e. October 1, 2013, there is a possibility that as more applicants from China continue to file EB-5 cases that the wait times for priority dates to become current could grow longer. This would have implications for investors with children who may age out prior to their 21st birthday and who may at that point not be able to derive the benefit from the principal investor. Ultimately, this could stymie the demand for EB-5 visas by Chinese nationals and have an adverse impact on regional center operators.