Throughout the beginning of 2021, EB-5 investment participants have faced an uncertain battle for the continued authorization of the EB-5 Regional Center Program, through which more than 95% of EB5 investments are made. The EB-5 Immigrant Investor Program itself is a permanent government program, but the regional center program, which allows United States Citizenship and Immigration Services (USCIS) to designate commercial entities to sponsor EB-5 projects and pool together the EB-5 investment funds of multiple investors, remains a temporary program almost 30 years after its initial introduction. For EB-5 investors, who can take years to obtain their conditional permanent resident status, that’s a problem.
For most of the EB-5 Regional Center Program’s history, it has been bundled together with an omnibus government funding bill, which has guaranteed renewal. Thus, even though the regional center program was constantly facing expiration, the EB5 investment community generally had little to worry about. But in December 2020, Congress separated the popular regional center program from the funding bill that had always carried it along, leaving the program to fend for itself. With the sunset date of June 30, 2021, fast approaching, the EB5 investment community is pushing for EB-5 reform viewed as necessary to secure reauthorization for the ever-important regional center program. But the EB-5 Reform and Integrity Act, which many EB-5 stakeholders have rallied behind, is only a temporary solution.
The EB-5 Reform and Integrity Act
The EB-5 Reform and Integrity Act, introduced by Republican Senator Chuck Grassley and Democratic Senator Patrick Leahy, focuses, as the name suggests, on strengthening integrity measures in the EB-5 program to better weed out fraud and protect honest EB-5 investors, developers, and regional centers. It also includes provisions aimed at improving the overall usability of the program, such as shorter processing times for EB-5 investment petitions. Among the provisions is longer-term reauthorization for the EB-5 Regional Center Program, to the tune of five years. If passed, the EB-5 Reform and Integrity Act would reauthorize the program through 2026.
However, in the context of the EB-5 program, five years is short. If the regional center program is renewed for five years, Congress will soon be faced once again with an anxious EB5 investment community pushing for further reauthorization. It can take two to three years for USCIS to adjudicate an I-526 petition, and then, depending on an investor’s country of origin, it could take as many as 10 years to actually obtain conditional permanent residency. An investor—provided they are investing through a regional center, as most do—must be continuously wary of the EB-5 Regional Center Program’s authorization status until they receive their conditional green card, because expiration of the program could potentially destroy their dreams of a life in the United States.
What Would Happen If the Regional Center Program Expired?
What would happen if the regional center program expired? This is the question at the forefront of every EB-5 stakeholder’s mind as June 30, 2021, careens ever closer. At best, it would cause a temporary delay—although more delays are the last thing EB-5 investors need. At worst, it would nullify as many as 100,000 EB-5 investments, slashing the dreams of that many investors and their immediate family members.
The expiration of the EB-5 Regional Center Program would impact every regional center investor who has not yet obtained conditional permanent resident status in the United States. Thus, every investor with a pending I-526 petition would be affected, as well as the thousands of Chinese and Vietnamese applicants stuck in backlogs waiting for visa availability. At first, USCIS would likely suspend processing of these I-526 petitions and visas, holding out for retroactive legislation to reactivate the popular EB-5 investment route. But if that retroactive legislation did not ultimately come, USCIS would deny all pending I-526 petitions and revoke I-526 approval for the EB-5 investment participants who were waiting on EB-5 visa availability.
The result would be chaos—tens of thousands of investors, who had already deposited their $900,000 (if the project was in a targeted employment area, or TEA) or $1.8 million (if it was in a non-TEA) and fulfilled all the criteria that makes up a successful EB5 investment, would suddenly have their bright future taken away, through no fault of their own. Lawsuits would likely abound, but it’s uncertain what outcome they would come away with. Only investors who had already obtained conditional permanent resident status would be safe, and USCIS would continue to adjudicate I-829 petitions even for investors in regional centers.
The good news is that Congress is unlikely to let a program as lucrative as the EB-5 Regional Center Program permanently expire. After all, doing so would mean cutting off an important source of funding for thousands of U.S.-based projects. But until Congress makes the regional center program permanent, this uncertainty will plague the program, and Congress will always be faced with EB-5 stakeholders demanding permanent authorization. The program has already been around for nearly 30 years, and it’s helped funnel billions of dollars into the U.S. economy. It’s about time it was authorized permanently.