The first half of 2021 has been a suspenseful six months for the EB-5 investment community, with stakeholders bating their breath as they watched the rapidly unfolding developments in the EB-5 space. The EB-5 Regional Center Program has been a hallmark of EB-5’s success throughout the 2010s, when EB-5 demand reached an all-time high and the United States welcomed thousands of EB-5 investors from all around the world. But as successful as the regional center program has been, Congress has yet to make the program permanent, even though the base EB-5 Immigrant Investor Program is. So, when Congress separated the program from the omnibus funding bill it has traditionally been coupled with, it aroused panic in the EB5 investment community. Could the program vie for reauthorization all on its own?
As it turns out, no, it couldn’t—at least not without reform. That has been the concern of EB-5 industry leaders since January, who have steadily warned that failing to enact wide-ranging EB-5 reform would likely result in the suspension of the program. A bipartisan duo—Senators Chuck Grassley and Patrick Leahy—introduced the EB-5 Reform and Integrity Act to the Senate in late 2020, and while the bill wasn’t perfect, it would have implemented the integrity changes necessary for the EB-5 Regional Center’s all-important reauthorization. While most EB-5 investment stakeholders embraced the bill, despite its flaws, some continued holding out for a better option that ultimately never came.
Why Did the EB-5 Regional Center Program Expire?
On June 24, Grassley and Leahy, joined by fellow Senator John Cornyn, requested unanimous consent from the Senate to pass the EB-5 Reform and Integrity Act. They praised the regional center program and the positive impacts it has had on the U.S. economy, including the thousands of jobs it has helped create. The addition of Cornyn was a surprise to many who had been following the developments, as he was an original co-sponsor of the Immigrant Investor Program Reform Act, a different EB-5 reform bill that stood in opposition to the EB-5 Reform and Integrity Act, and it gave many hope for a positive outcome.
Unfortunately, one of the co-sponsors of the Immigrant Investor Program Reform Act—Lindsey Graham—was less willing to be flexible. Graham and another senator objected to the unanimous consent and thus halted the bill from being passed. Senator Chuck Schumer failed to bring forth temporary reauthorization to keep the program afloat until a decision on reform is reached, and that was that—once the clock struck midnight on July 1, 2021, the EB-5 Regional Center Program was officially suspended.
What Happens Now?
Don’t panic—the EB-5 Regional Center Program isn’t over. While the future is uncertain, this fiasco will probably at most cause a few months of delay instead of terminating this valuable program altogether. This isn’t the first time the regional center program has expired—it once expired temporarily in December 2018, remaining suspended for a month. While this temporary suspension resulted in extra delays for EB5 investment participants, many of whom were already stuck in backlogs, it didn’t have any long-term effects on the program, and processing resumed as normal following the reauthorization. In all likelihood, this time will be similar.
On June 30, 2021, United States Citizenship and Immigration Services (USCIS) updated its website to announce the changes coming to the EB-5 program over the period of suspension. The immigration agency will reject any Form I-924 petitions to set up a new regional center and Form I-526 petitions affiliated with a regional center EB5 investment, and processing on any currently pending such petitions has been halted. The announcement did state, however, that USCIS is still accepting I-829 petitions even for EB-5 investments affiliated with regional centers and that investors should continue to respond to requests for evidence (RFEs), notices of intent to deny (NOIDs), and other USCIS correspondence in a timely manner. On July 1, 2021, the agency updated its announcement to add that it would no longer accept I-485 petitions associated with regional center investments, either, even though overseas consulate processing is slated to continue.
As the EB-5 investment community careens into the future of the program, stakeholders should maintain a cool head and continue to push for meaningful reform. It’s not too late to pass the EB-5 Reform and Integrity Act and regain reauthorization for the critical EB-5 Regional Center Program. While the developments as of late are disturbing, they don’t spell the end of the world for the EB-5 program and the thousands of foreign nationals who have made EB-5 investments. Reauthorization is still likely in the future of the regional center program.
