Government programs often undergo significant changes throughout the years as they adapt to the needs of stakeholders. The EB-5 visa program is no exception. Since it was created in 1990, it had changed and evolved significantly, but never as much as it has since June 2021, when the regional center program expired. Since then, industry stakeholders have had to adjust to significant changes to EB-5 regulations. Current EB-5 investment industry members and foreign nationals who aspire to apply for an EB-5 visa should review the recent industry developments. This will help them understand the state of the program, as well as anticipate future trends in 2022 and beyond.
Significant Changes to the EB-5 Program
One of the most significant changes to the EB-5 industry was the expiration of the regional center program in June 2021. Since it was created in 1992, the program has been dependent upon regular reauthorizations from Congress. That is, Congress must decide to revalidate the program before each expiration date. There was a brief expiration in 2018, but beyond that, the program has continued without any issues. Now, not only has the program been allowed to expire, but as of February 2022, it has yet to be reauthorized. As a result, approximately $15 billion investment dollars have been put at risk. Additionally, regional center investors whose I-526 petitions were pending are in processing limbo.
United States Citizenship and Immigration Services (USCIS) has suspended processing pending I-526 applications. With the regional center program’s future at stake, USCIS is dependent on action from Congress before it can move these applications forward. For many foreign nationals, their family’s life savings are tied up in these investments. The lapse in the regional center program means that they are not able to continue the EB-5 visa process. In the long run, this lapse in the program, and the lack of swift action by Congress, could severely damage the program’s reputation as a safe pathway to citizenship, discouraging others from participating in the process in the future. This is significant, as U.S. businesses also benefit tremendously from EB-5 investment projects.
Just before the expiration of the regional center program – days before, in fact – industry stakeholders had been welcoming a different kind of change with open arms. On June 22, 2021, the EB-5 Modernization Rule was found to have been improperly implemented. This was an unpopular EB-5 investment reform, as it increased the minimum investment thresholds. The U.S. court ruling on June 22 invalidated the rule immediately, bringing minimum EB5 investment thresholds back down to $500,000.
Will The Regional Center Program Be Reauthorized in 2022?
There has been some speculation among industry stakeholders that EB-5 program reform is forthcoming. This speculation was heightened on February 3, 2022, when a draft of a potential EB-5 bill was leaked. The draft proposes many changes, including the reauthorization of the regional center program, changes to investment amounts, and a redefinition of targeted employment areas (TEAs).
The most urgent issue in the EB5 investment industry is the reauthorization of the regional center program. Many suspect that if the program is not reauthorized, Congress will at least implement a grandfathering clause for current investors, allowing them to continue in the EB-5 process. If they fail to do either of those things, there could be consequences as severe as the loss of billions of investment dollars and widespread litigation.
It is important to note that, although the industry is facing turbulent times, it has continued to see success through the use of the direct EB-5 investment model. This model offers distinct advantages that allow investment projects to continue, though it may not be as attractive to foreign nationals as the regional center program. Given that it is a historically secure path to U.S. citizenship, the EB-5 investment program will likely continue to thrive and attract investments from foreign nationals in the future.