The New EB-5 Regulations: The Good, the Bad, & the Unknown

On November 21, 2019, the EB-5 industry entered a new era; the Department of Homeland Security implemented new regulations, and these regulations constitute the most substantial change the EB-5 industry has seen since the implementation of the Regional Center Program in 1993. The most significant changes affecting investors and regional centers are as follows:

  • Priority Dates:
    • USCIShas clarified that Applicants are entitled to the earliest priority date if multiple immigrant visa petitions are filed.
    • In the event a regional center is terminated, an investor can retain the priority date of an original approved EB-5 petition if the investor chooses to file a new EB-5 petition. However, if the petition was revoked for fraud or willful misrepresentation, the investor will not retain the original priority date.
  • Targeted Employment Areas (“TEA”):
    • States will no longer be able to designate TEA’s. The Department of Homeland Security will make such designations directly.
    • Only towns or cities of 20,000 outside of any Metropolitan Statistical Areas will be considered a specific or separate area that may warrant TEA designation.
  • Investment Amounts:
    • The minimum investment in a non-TEA is $1,800,000; the minimum investment into a TEA must be $900,000.
    • The Department of Homeland Security will modify the minimum investment amounted every five (5) years to account for inflation, and they will maintain the TEA investment amount at 50% of the non-TEA investment amount. Furthermore, future inflation adjustments are based on original investment amounts from 1990, so as to track inflation amounts more accurately using the 1990 numbers.
  • Removal of Conditions
    • The new regulations clarify that derivative family members must file their own petitions to remove conditions on permanent residence when they are not included in an I-829 filed by original investor.
    • DHS will also provide flexibility in determining where the interview location will be; previously, I-829 interviews were scheduled at the location of the new commercial enterprise.

But what does all this mean? Some naysayers are heralding the death of the EB-5 industry, while most believe the industry will prevail and continue to benefit the American economy and people. The reality is that the evolution of the industry provides great opportunity, and without further ado, we present the good, the bad, and the unknown as they pertain to the new EB-5 regulations:

The Good: The new investment amounts provide a lot of opportunity for direct investors; previously, it was difficult to create ten jobs while simultaneously scaling a business through a $500,000 investment into a designated TEA. Achieving both goals becomes a lot more feasible with the new investment amounts. Additionally, the rules provide protections for investors who received approvals into regional centers that were later terminated. It should also be noted that regional centers will need less investors to reach their investment goals.

The Bad: The most obvious detriment that results from the new regulations is the reality that many investors may not be able to afford the $900,000 needed for a U.S. green card. However, there are many ways to raise EB-5 capital for investment, and all prospective investors with interest in obtaining an EB-5 visa should contact an experienced immigration attorney so that the eligibility can be assessed. Additionally, now that TEA designation is in the hands of DHS, we will see many projects lose their TEA designation.

The Unknown: The biggest unknown is how DHS’s TEA designations will play out. The agency is already notorious for sluggish and inconsistent adjudications, and it is likely that determining TEA designations will slow the agency down.

There is also the question of whether the regulation implemented on November 21 are here to stay. On November 26, 2019, a petition for injunctive relief was filed in federal court challenging the new rules.  Additionally, a bill was introduced into the Senate (S.2778) on November 5, 2019 proposing further changes to the EB-5 program. It is unclear if either of these measures will be successful, but both have been welcomed by many in the industry as positive changes and an improvement over the regulations implement on November 21.

If you are an entrepreneur wishing to start a business in the United States, a project or regional center seeking guidance in the face of the new regulations, or simply an investor looking for second citizenship, please feel free to reach out to the team at Darren Silver & Associates. Our firm has decades of collective experience in the EB-5 industry, and we have hundreds of EB-5 approvals under our belt. Our EB-5 team has guided investors for over two decades, and we look forward to continuing our award-winning service into the new era of the EB-5 industry.