June 2021 EB-5 Investor Visa Program Changes: Your Questions Answered

Major changes were affected on the EB-5 Investor Visa program in June. Because of both federal court rulings and legislative challenges, EB-5 has seen significant, though possibly temporary, changes. In this article we will lay out some of the key facts and answer key questions that have arisen out of these changes.

A. KEY CHANGES TO EB-5 IN JUNE 2021

• The November 2019 change that increased the minimum investment amount in a targeted employment area (TEA) from $500,000 to $900,000 was ruled invalid by a federal court. This regulation also shifted the definition of a TEA and increased the minimum investment amount outside of a TEA to $1,800,000. This ruling being struck down means that, at least temporarily, minimum investment amounts will be decreased to $500,000 and $900,000.
• Following an objection by Lindsay Graham (R-S.C.) the regional center program expired on June 30.

B. REGIONAL CENTER EXTENSION

We expect that the Regional Center Program will be extended. It is unclear when this program might be extended, especially with upcoming congressional recesses. With that said, the Regional Center Program has been extended over 20 times, and most people involved in the program feel confident that it will be extended again.

C. EXPECTED TIMELINE FOR LOWERED MINIMUlM INVESTMENT AMOUNTS

There are 3 ways that the minimum investment amount could be changed:

1. Congress may pass new legislation to increase the minimum investment amount and could also shift the TEA definition;
2. The federal court decision that came down in June is likely to be appealed. The next court that will hear this case is the U.S. Court of Appeals for the 9th Circuit. If this court overturns the June ruling the minimum investment amount could increase again;
3. The US Citizenship and Immigration Service could issue a new regulation increasing the minimum investment amount and/or changing the TEA definition.

D. CERTAINTY OF INVESTMENT INCREASE

Each of the possible scenarios in section C could carry different outcomes for the investment amount. If the Court of Appeals does overrule the federal court decision from June that would automatically increase the minimum investment amount to its prior levels. However, both Congress and USCIS have the flexibility to change the minimum investment amount, or leave it the same. Given this, it is hard to predict whether or how the investment amount may change in the coming months.

E. EFFECTS ON DIRECT EB-5 PETITIONS

We do not expect to see any meaningful impact on direct EB-5 petitions due to the change to the Regional Center Program. However, the changes to the TEA rules will likely impact petitions. New direct EB-5 petitions will be based on the earlier, reduced minimum investment amount and the TEA definition from November 2019 if filed after the June court decision. It is our understanding that both newly filed petitions, and petitions filed over the past 17 months will be adjudicated based on the regulations that were in place before November 2019.

F. DIRECT EB-5 ADJUDICATION

We expect that USCIS will continue to adjudicate direct EB-5 petitions. EB-5 adjudicators do not adjudicate regional center applications, so they should continue to focus on direct EB-5 petitions.

G. IMPLICATIONS FOR INVESTMENT TIMING

Clearly, these changes create potentially significant benefits for investors, who hope to have their I-526 petitions approved based on a $500,000 investment. It is our view that investors should file their I-526 petition as soon as possible. However, it is uncertain whether or how the investment amount might increase, so it is important that any potential investor understand how a prospective investment project qualifies under pre-November 2019 regulations.

Anyone looking to invest in an EB-5 project should review the job creation requirements, project offering documents, business plan and other fundamentals of the project relative to pre-November 2019 regulations to ensure that their project will still qualify.

Investors should also be sure to understand the potential risks at hand if the Court of Appeals reverses the June federal court decision.

H. EXPECTED EXPIRATION OF $500,000 INVESTMENT AMOUNT

It is unclear how long the minimum investment amount will remain at $500,000. Because this amount could be changed by USCIS, Congress or the Court of Appeals, it is difficult to predict how long this current investment amount will remain in place.

I. IMPLICATIONS OF A FUTURE MINIMUM INVESTMENT ACCOUNT INCREASE

If the 9th Circuit Court of Appeals does reverse the June district Court decision, this will likely reinstate the November 2019 regulation. If that happens, it will probably mean that I-526 petitions filed under the current situation would be denied, or at least that investors would be asked to increase their investment amounts.

However, if the Court of Appeals does not reverse the June decision, investors who file I-526 petitions now will be protected against future minimum investment amount increases. The investment amount requirement is based on the date that an investor’s I-526 petition is filled, not on the date of the investment. So investors who file petitions now would be filing under the reduced, pre-November 2019 minimum investment amount.

The material contained in this article does not constitute legal advice and is far informational purposes only. An attorney-client relationship is not presumed or intended by receipt or review of this presentation. The information provided should never replace informed counsel when specific immigration-related guidance is needed.