Not a Lexis+ subscriber? Try it out for free.
LexisNexis® CLE On-Demand features premium content from partners like American Law Institute Continuing Legal Education and Pozner & Dodd. Choose from a broad listing of topics suited for law firms, corporate legal departments, and government entities. Individual courses and subscriptions available.
H. Ronald Klasko and Tammy Fox-Isicoff, July 6, 2021
"The EB-5 Immigrant Investor Program saw two very important changes in June 2021. Below are the most common questions our EB-5 visa lawyer team members have been answering as the industry adjusts to these major, and likely temporary, changes.
Two major changes occurred. First, a federal court ruled that the November 2019 USCIS regulation that increased the minimum investment amount from $500,000 to $900,000 in TEA areas (and $1,800,000 in other areas), and that changed the definition of a targeted employment area (TEA), is invalid. Second, the U.S. Congress allowed the regional center EB‑5 program to expire on June 30, 2021.
Most observers believe that the chances that the program will be extended are extremely high. The regional center program, which is a temporary program, has already been extended approximately 20 times; and this is not the first time that there has been a lapse between extensions. In every case, the program was reauthorized. The more difficult question is when the program will be extended. The short answer is that nobody knows for certain. Congress will be in session for approximately three weeks in July and then not at all until September. It is certainly possible that the program will not be extended until September, if not later.
There are two possibilities. One possibility is that there will be a straight extension with no changes to the program. Another possibility is that there will be a significant legislative package that will include an extension of the program and many other changes to EB‑5. It is possible, but by no means certain, that any extension bill will include changes to the investment amount and/or the definition of TEA.
The investment amount will remain $500,000 unless and until one of three things occurs:
Not necessarily. If the Court of Appeals stays the District Court decision, the investment amount will go back to $900,000 /$1,800,000. If Congress changes the investment amount by legislation, it can choose that amount or any higher or lower amount. If USCIS issues a new regulation, most observers believe it will reissue the original regulation with the same definitions of TEA and the same investment amounts, but that is not certain.
We anticipate that USCIS will not accept I-526 petitions for regional center investments unless and until the regional center program is reinstated.
We expect USCIS will take no action until the regional center program is extended. We do not expect USCIS will deny or return pending I-526 petitions, which were filed before the program lapsed, but USCIS has not issued any definitive statement on that point.
We expect that USCIS will not take any action on pending I-485 applications and that the Department of State will not take any action on pending DS260 applications unless and until the regional center program is reauthorized. At this time, we do not believe USCIS or the Department of State will return pending applications.
USCIS had indicated in various court filings that it will do so.
The Department of State has not issued definitive guidance on this point. We think it is appropriate for the NVC to continue to process applications; However, immigrant visa interviews will not be scheduled until the original center program is reauthorized.
The expiration of the regional center program has no impact on direct EB-5 applications. These applications can still be filed, and USCIS can still adjudicate them. The invalidation of the regulation containing the definition of TEA and the increased investment amount does impact direct EB-5s. New direct EB-5 petitions filed after the date of the court decision can be filed based on the reduced investment amount that was in existence before November 2019 as well as the definition of TEA that existed prior to the November 2019 regulation. Presumably, newly filed and previously filed direct EB-5 petitions will be adjudicated based on the pre-November 2019 law.
This depends entirely on the rights conferred by the project offering documents and the policy of the regional center. There is certainly nothing that prevents an investor from withdrawing his petition. The issue of return of capital is not an immigration law issue, but rather a contractual issue.
The writers believe that all direct EB-5 petitions should have a current priority date since no regional center EB-5 visa is available to be issued unless and until the regional center program is reinstated.
The answer should certainly be yes. In fact, since EB-5 adjudicators cannot adjudicate regional center applications, it would make logical sense that USCIS would have its adjudicators work on direct EB-5 petitions, which should result in prompt processing times. We want to emphasize that that is a logical assumption and will not necessarily be reality.
We do not know for certain. However, it would make logical sense that the adjudicators would be assigned both to direct I-526 petitions and to I-829 petitions, which have exceedingly long processing delays.
The impact of the court decision is that the definition of TEA reverts to the definition that existed prior to November 2019. This would require states to resume issuing TEA letters as they did prior to the November 2019 regulations.
Nothing will happen automatically. It is possible that the government will move to dismiss mandamus cases for regional center EB-5 petitions. Plaintiffs do not want USCIS to be compelled to adjudicate, since the adjudication would presumably be a denial.
Investors who want to avail themselves of the $500,000 investment amount should invest and file as soon as possible since there is no certainty as to when the investment amount will increase. However, it is critical that the investor assess the investment project relating to its qualification under the pre-November 2019 regulation. For example, a significantly increased amount of job creation is required for projects with $500,000 investment amounts. In addition, the project offering documents have to be revised to reflect the possibility that the investment value may increase from $500,000 to a higher amount. The business plan likely will also need to be revised. The investor will also want to look carefully at the provisions regarding the return of their investment amounts, especially in the event that the Court of Appeals reverses the District Court decision.
No. The only possible impact could be more prompt adjudication times if adjudicators working on I-526 petitions and I-924 petitions are reassigned to I-829 petitions.
USCIS has indicated that it will not accept these filings until the program is reauthorized.
Yes. The project documents have to account for the possibility that, in the middle of the marketing and subscription process, the investment amount may increase. The project documents have to deal with differing job creation requirements depending on whether the investment amounts are $500,000 or higher since more investors and, therefore, more jobs will be required to meet the necessary capital raise and since 10 jobs for each investor will be required.
No one knows. It will depend on action either by Congress, by USCIS, or by the 9th Circuit Court of Appeals.
First, the issue is not the date of the investment but rather the date that the I-526 petition is filed. If the minimum investment amount on the date of petition filing is $500,000, the investor should be protected against a subsequent increase in the minimum investment amount by either Congress or USCIS. However, in the event that the 9th Circuit Court of Appeals reverses the District Court decision, it is likely that the impact of such a decision would be to retroactively reinstate the November 2019 regulation. In that event, presumably the I-526 petition would be denied; or possibly investors will be given the opportunity to increase their investments.
The answer is complicated. The investor can invest less than the full amount and file an EB‑5 petition as long as the investor can prove at the time of filing that he had the full investment amount available and can document the lawful source of the full amount of the investment, even the amount not yet invested.
The required investment amount should be determined based on the required investment on the date of the filing of the petition.
Presumably, the appeals will remain in abeyance and not be decided unless and until the regional center program is extended.
For regional center applications, processing times will increase because presumably there will be no processing during the lapse of the program. As previously stated, we are hopeful that direct EB-5 petition processing times will improve.
USCIS is powerless to do anything to reinstate the regional center program. Only Congress can do so.
It is of critical importance that everyone interested in the regional center EB-5 program should contact their congressmen and senators, emphasizing that this program is critical to project development and job creation in the US, to enable high net worth individuals who benefit the U.S. economy to immigrate to the U.S. and to ensure the continuity of a program which, if not continued, will result in loss of faith internationally in the integrity of investing in the U.S. © 2021 Klasko Immigration Law Partners, LLP. All rights reserved."