By H. Ronald Klasko and Tammy Fox-Isicoff
1. What changes have occurred in the EB-5 program in June 2021?
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.
2. Will the regional center program be extended and, if so, when?
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 program will not be extended until September, if not later.
3. Will there be changes to the program if/when it is extended?
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.
4. How long will the investment amount remain $500,000?
- The investment amount will remain $500,000 unless and until one of three things occurs:
Congress passes legislation to increase the minimum investment amount and/or change the definition of TEA;
- The U.S. Court of Appeals for the 9th Circuit, which would be the court hearing any appeal of the District Court decision overturning the 2019 regulation, stays or reverses the District Court decision;
- USCIS issues a new regulation to increase the investment amount and change the definition of TEA.
5. Whenever one of those three events occurs, will the investment amount go back to $900,000 or $1,800,000 depending on the geographical area?
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.
6. Can I-526 petitions be submitted for regional center investments?
We anticipate that USCIS will not accept I-526 petitions for regional center investments unless and until the regional center program is reinstated.
7. What will happen to pending I-526 petitions for regional center applications?
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.
8. What will happen to pending I-485 applications or DS260 immigrant visa applications based on approved regional center I-526 petitions?
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.
9. Will USCIS issue employment authorization documents and advance parole documents to applicants with pending I-485s based on regional center EB-5 petition approvals?
We believe the answer should be yes, but we are awaiting USCIS confirmation.
10. Will the National Visa Center continue to process immigrant visa applications based on approved regional center EB-5 petitions?
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.
11. How do these changes affect direct EB-5 petitions?
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.
12. If USCIS stops adjudicating EB-5 petitions, can the investor withdraw his EB-5 petition and seek return of his investment capital?
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.
13. Will the lapse in the EB-5 regional center program affect the quota waiting times for direct EB-5s?
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.
14. Will USCIS continue to adjudicate direct EB-5 petitions?
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.
15. How will USCIS assign EB-5 adjudicators?
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.
16. Do these developments affect the definition of a TEA?
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.
17. What will happen to I-526 mandamus cases in federal court?
Nothing will happen automatically. It is possible that the government will move to dismiss mandamus cases for regional center EB-5 petitions. Plaintiffs' counsel may suggest that the matters be held in abeyance until the regional center program is reimplemented. Plaintiffs do not want USCIS to be compelled to adjudicate, since the adjudication would presumably be a denial.
18. Should investors invest now to maximize the chances of having I-526s approved based on a $500,000 investment?
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 return of their investment amounts, especially in the event that the Court of Appeals reverses the District Court decision.
19. Do these changes affect I-829 petitions?
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.
20. Will it be possible to file mandamus complaints for long pending I-829 petitions?
21. Can regional centers file I-924 petitions for new regional centers, regional center amendments or project exemplar approvals?
We are awaiting guidance from USCIS on this question. Even if USCIS allows such applications to be filed, it will not have the authority to adjudicate the applications until the regional center program is reauthorized.
22. Should regional centers and new commercial enterprises revise project documents based on the new developments?
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.
23. For how long will the investment amount be $500,000?
No one knows. It will depend on action either by Congress, by USCIS or by the 9th Circuit Court of Appeals.
24. What if an investor invests at the $500,000 investment amount and the minimum investment requirement is subsequently raised?
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.
25. Can an investor invest less than the full required amount and file the EB-5 petition?
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.
26. What if an investor files with less than the full amount and the minimum investment amount is increased before the I-526 petition is adjudicated?
The required investment amount should be determined based on the required investment on the date of the filing of the petition.
27. What will happen to AAO appeals of I-526 or I-924 denials?
Presumably, the appeals will remain in abeyance and not be decided unless and until the regional center program is extended.
28. What will the lapse in the regional center program do to I-526 processing times?
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.
29. What can USCIS or Congress do to alleviate this problem?
USCIS is powerless to do anything to reinstate the regional center program. Only Congress can do so.
30. What can investors, regional centers or project developers do to improve the chances of a prompt reauthorization of the regional center program?
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 enabling 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 is not continued, will result in loss of faith internationally in the integrity of investing in the U.S.