In new developments, EB-5 stakeholders are concerned that Congress allowed the EB-5 Immigrant Investor Regional Center Program to expire on June 30, 2021. U.S. Citizenship and Immigration Services (USCIS) issued related guidance. Also, a new decision in the Behring case vacated a Trump-era final rule that raised the minimum investment amount, among other things.

The EB-5 program allows foreign investors to invest in projects in the United States and receive green cards (permanent residence) in return. The idea is to encourage investment and job creation in the United States. 

There are two types of EB-5 projects: direct, in which investors invest in their own projects and create jobs directly; and regional center, in which investors invest through a regional center, which in turn creates jobs indirectly. Only the regional center part of the EB-5 program expired on June 30; the direct EB-5 program continues. However, historically, the vast majority of EB-5 investors invest through a regional center.

Since 1990, when the EB-5 program was established, EB-5 regional centers have facilitated tens of billions of dollars in capital investments from foreign investors and supported hundreds of thousands of jobs for U.S. workers, according to Invest in the USA (IIUSA), a trade association of EB-5 regional centers founded by Miller Mayer immigration attorney Steve Yale-Loehr. U.S. Citizenship and Immigration Services (USCIS) statistics show that as of January 2021, there were 673 approved regional centers.

Highlights of the latest developments are summarized below.

EB-5 Regional Center Program Expires

As noted above, the EB-5 regional center program expired on June 30, 2021. Efforts in late June to extend the program failed in the Senate. Reauthorization is possible, but it is unclear when this will occur. This has created uncertainty for investors in regional center projects about both their investments and their immigration status. IIUSA called the outcome “disappointing” but “not the end of the road.” IIUSA is working on Capitol Hill and with USCIS to get clarity on process and investor priorities. Even if the program is reauthorized, the fact that it was allowed to lapse with no clear way forward could dampen investor enthusiasm and trust in the stability of the program.

It is highly unusual for Congress to allow the popular EB-5 program to lapse, as it brings money and jobs. The program temporarily lapsed in 2018 when the U.S. government shut down for several weeks. At that time, the EB-5 program was tied to the federal budget process, and USCIS put EB-5 petitions on hold until the government reopened several weeks later and the program was reauthorized.

USCIS Issues Guidance

Following expiration of the regional center program, USCIS released guidance on July 1, 2021, stating that the lapse does not affect EB-5 petitions filed by investors in direct projects. 

USCIS said that it will reject the following forms received on or after July 1, 2021:

  • Form I-924, Application for Regional Center Designation Under the Immigrant Investor Program, except when the application type indicates that it is an amendment to the regional center’s name, organizational structure, ownership, or administration; and
  • Form I-526, Immigrant Petition by Alien Investor, when it indicates that the petitioner’s investment is associated with an approved regional center.

The agency will continue to accept and review Forms I-829 (Petition by Entrepreneur to Remove Conditions on Permanent Resident Status), including those filed on or after July 1, 2021. USCIS is rejecting all Forms I-485 (Application to Register Permanent Residence or Adjust Status) and any associated Forms I-765 (Application for Employment Authorization), and Forms I-131 (Application for Travel Document) based on an approved regional center Form I-526.

Judge Rules in Favor of Plaintiffs in Behring Case, Vacates Final Rule

Several changes to the EB-5 immigrant investor program took effect November 21, 2019, under a final rule published by the Department of Homeland Security (DHS). The rule provided increased the required minimum investment amount to 900,000 for investments in targeted employment areas (TEAs) and $1.8 million in non-TEAs, gave DHS sole authority to make TEA designations, favored lower-population areas and limited sizes for TEA designations, and clarified USCIS procedures to remove conditions on permanent residence.

Behring Regional Center, which is operated by Behring Co., a real estate developer, subsequently sued, arguing that the rule was “arbitrary and capricious.” During a hearing in the case on March 22, 2021, a federal judge referenced the possible invalidity of those changes, referring to the appointments of acting DHS secretaries in 2019 that did not conform to laws governing the line of succession. DHS Secretary Mayorkas then signed a statement on March 31, 2021, attempting to retroactively ratify the 2019 rule. 

In the latest development in this case, on June 22, 2021, the U.S. district court ruled in favor of Behring Regional Center, finding that Kevin McAleenan was not lawfully serving as Homeland Security Secretary when he promulgated the 2019 rule, and that the final rule was therefore void. The judge noted that “neither Secretary Mayorkas’ after-the-fact ratification nor the de-facto officer doctrine save the Rule.” The judge said that “actions taken without authority cannot be ratified.” Since the final rule had no force or effect because it was issued by Mr. McAleenan while improperly appointed, the judge said, ratification by Secretary Mayorkas was prohibited.

The court considered various remedies, settling on “remand with vacatur” as the appropriate “default remedy for a rule that lacks the force of law.” The court therefore set aside the final rule and remanded the matter to the agency. This means that the increase in the minimum investment in TEAs for regional centers from $500,000 to $900,000, among other changes, is killed for now.

With the remand, DHS must decide what to do. The agency could appeal or restart rulemaking. In the meantime, prospective direct EB-5 investors may want to consider taking advantage of the window of opportunity while the $500,000 minimum investment stands.

For advice in specific situations, contact your Miller Mayer attorney.

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