22 Feb The Future of the EB-5 Program
The EB-5 Regional Center Program was renewed until June 30, 2021 a part of the continuing legislation passed by Congress and approved by the former president. These incremental approvals for the continuation of the EB-5 Regional Center program have been in place since around 2015. Below, Donoso & Partners, a leading immigration law firm based in Washington, D.C., outlines the initiatives that could have an impact on the EB-5 program.
1. Immigration legislation. The new Biden presidency has made clear that immigration reform is one of its key goals. There is strong potential for reforms to the EB-5 Regional Center program to become part of broader immigration reform proposals that deal with long waiting lists for skilled workers and the challenge of the large population of undocumented workers. A single immigration bill appears difficult due to the Senate’s 50-50 split in members between Democrats and Republicans, and the 60-vote majority required to overcome a filibuster in the Senate. Nevertheless, the budget process known as reconciliation offers a potential solution that could lead to EB-5 legislation passing in the next 6 months. Our law firm has already been asked to comment on potential legislative changes, all of which would improve the EB-5 Regional Center program.
2. Litigation and EB-5 Regulations. A lawsuit currently before federal court in California seeks to take us back to the future, by challenging the November 2019 EB-5 regulations. Those regulations entered into force on November 21, 2019. Their impact was felt immediately. The minimum investment threshold increased to $900,000 for Targeted Employment Areas and $1.8 million elsewhere. The Targeted Employment Area system was centralized into the Department of Homeland Security rather than at the state-level. And, inexplicably, the Department of Homeland Security offered no system for pre-approval of Targeted Employment Areas. In sum, three problems were created by the new EB-5 Regulations, while solving none of the issues that were caused by the EB-5 Regional Center program’s tremendous popularity prior to 2019: long waiting lists and slow adjudication of investor petitions. The result has been to slow down new EB-5 petitions to a trickle. The strategy of the lawsuit is quite simple: the official who signed and approved the new EB-5 Regulations in 2019 was not duly authorized to do so because he was not properly appointed to occupy their position. This simple argument has worked in other litigation regarding the workings of the Department of Homeland Security during the Trump presidency, and appears to have potential merit in the context of the EB-5 Regulations. If successful, the new EB-5 Regulations from 2019 would be null and void, and the regulatory framework would revert back to the old EB-5 Regulations in effect prior to November 21, 2019.
Overall, the likelihood of significant legislative action on the EB-5 Regional Center program is higher than it has been in several years, primarily because of the Biden Administration’s stated goal of improving and modernizing the US immigration system.
We certainly need it. Sadly, the Trump Administration’s policies managed to slow down adjudication of all immigration cases — including EB-5 petitions — to a crawl, leading to extraordinary delays. Coupled with the COVID19 pandemic, the impact on the EB-5 program was to leave investors in limbo, waiting months longer than normal for any sign of progress on their cases. A fair number of investors, in fact, resorted to filing mandamus lawsuits in federal court to compel the government to act. Such delays, ironically, came even in the face of progress on the EB-5 visa waiting lists for countries such as China, Korea and India that indicate the potential for large numbers of immigrants who have been waiting patiently to finally move forward — if only the Department of Homeland Security would process their cases.
U.S. Immigration Fund will continue to monitor the progress of the EB-5 Regional Center program.