Foreign investors are navigating a challenging situation with the suspension of the EB-5 Regional Center Program, which, as of February 2022, has now gone on for over seven months. The regional center program had been the most commonly used EB-5 investment model since the financial crisis of 2008. Despite its popularity and the multitude of benefits that it has offered foreign investors and U.S. business owners alike, the program has depended on periodic reauthorization since its introduction in 1992—that is, Congress must renew the program periodically. This is what led to its brief expiration in 2018 and its longer suspension in June 2021.
In addition to putting billions of investment dollars at risk, the suspension of the regional center program has caused another, more significant challenge for EB-5 investors. Thousands of investors and their families are unable to move forward with the EB-5 visa process, as United States Citizenship and Immigration Services (USCIS) has put a pause on pending I-526 petitions from investors with regional center projects. In addition, USCIS requires EB-5 investment funds to be committed at the time of Form I-526 adjudication, so many EB-5 investors worry that their petitions and all of the work they put into them will be wasted. In support of the regional center program and its investors, EB5AN has reached out to Congress to request the program’s quick reauthorization and that investors whose applications were pending to be “grandfathered” in.
It is truly in the best interest of the EB-5 investment industry to reauthorize the program. While a decision is being made, however, investors are still left wondering if there is anything they can do.
Are Investors Able to Take Legal Action?
Regional center investors may wonder if they are able to take legal action against the U.S. government. However, this type of litigation has a very low chance of success.
EB-5 investors may also feel inclined to take legal action again their regional centers, but that would almost certainly be counterproductive. There would need to be proof that regional operators engaged in fraud or provided misleading information to investors. Moreover, if a regional center is grappling with a lawsuit and faces hardships as a result, it may be forced to shut down its projects, thus ending the EB-5 process for all investors involved. A much more effective course of action would be to continue to ask Congress to reauthorize the regional center program or to implement a grandfathering clause for investors whose EB-5 applications are still pending. The Foreign Investor Fairness Protection Act (FIFPA) is a clause that could potentially protect investors who find themselves in a situation like this, both now and in the future.
The EB5 investment industry has rallied in support of investors and other stakeholders. As of February 18, 2022, the Senate has approved a short-term funding bill to extend the U.S. government’s budget until early March 2022. Hopefully, the upcoming appropriations bill will include EB-5 reform; the industry could clearly benefit from a decision in favor of the reauthorization of the program or a grandfathering clause.