Despite the wide variety of views on the EB-5 program, most industry members would certainly agree on one point: the EB-5 investment industry needs significant reform. For example, the more than six-month-long suspension of the regional center program has been detrimental to many projects and investors. In fact, since United States Citizenship and Immigration Services (USCIS) is no longer able to adjudicate I-526 petitions from regional center investors, these foreign nationals could eventually try to get their invested capital back. Attempts to do so through litigation could be disastrous for regional center-sponsored projects and would deprive the U.S. economy of millions of dollars of funding.
In mid-2021, EB-5 policies underwent another major overhaul: a district court determined that the EB-5 Modernization Rule, a controversial set of new EB-5 regulations, had been implemented unlawfully by the Department of Homeland Security (DHS). Consequently, all the changes made by the Modernization Rule were reversed to the relief of many EB-5 industry members. Since the court ruling, EB-5 businesses in targeted employment areas (TEAs) have been authorized to accept investments of only $500,000. However, it remained unclear if the DHS or USCIS would successfully bring back these regulations—both agencies went as far as to file an appeal against the court decision.
Now, it seems that these two crucial issues in the EB-5 investment industry will finally be solved. The recent leak of a potential EB-5 bill may reveal what changes will be made by Congress in the upcoming weeks.
Potential Changes to the EB-5 Program
The new EB5 investment thresholds may become $700,000 for TEA projects and $850,000 for non-TEA offerings. Even though this minimum amount for TEA projects is not as high as the Modernization Rule-threshold of $900,000, it still represents a significant increase. For any foreign nationals planning to make an EB-5 investment of only $500,000, now may be the last opportunity to find an EB-5 offering and subscribe. All EB-5 projects must be direct for the time being, and several suitable offerings are currently available.
On the other hand, the potential EB-5 bill also reauthorizes the regional center program through 2027. This is likely the most important and urgent change to be made to EB-5 policies. Even if Congress does not pass legislation reauthorizing the regional center program, measures need to be taken to grandfather in regional center investors with pending I-526 petitions. These investors, who subscribed to EB-5 offerings in good faith and complied with the applicable regulations, should be given a chance to continue with the EB-5 process. Failure to make provisions for these individuals would reflect poorly on the EB-5 program.
The coming weeks will likely be crucial for the EB-5 industry. EB-5 stakeholders, including business owners, immigration attorneys, broker-dealers, and investors, all look forward to positive reform.