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A Pragmatic (and Realistic) Approach to EB-5 Regional Center Reauthorization


Developing public policy should always yield pragmatic utilitarian outcomes, i.e., the greatest good for the most people. Therefore, to pragmatically reauthorize the EB-5 Regional Center Program (“the Program”) stakeholders must consider the entire EB-5 ecosystem and what is politically possible given everyone’s needs and wants.

The EB-5 ecosystem includes regional centers, immigrant investors and their families, immigration attorneys, and state and local economic leaders. There are others, of course, but these stakeholders have the most to gain (or lose) by reauthorizing the Program. Each stakeholder has their own priorities – many overlap and are critical to the long-term success and growth of the Program while some of them are critical to protecting good-faith investors. However, when balanced against the Program’s survival, its reauthorization, all these items are “wants,” not “needs.” It is not utilitarian, pragmatic, or even realistic to pursue our wants at the expense of our most essential need.  

As we engage in the political process to reestablish the Program, we must be aware of what is politically possible. For example, if doubling the number of EB-5 visas from 10,000 to 20,000 is not politically feasible; if it is a provision that can’t pass political muster among Members of Congress and would drag down the broader reauthorization effort, is it worth insisting on including it in a reauthorization bill?

However, “understanding our political realities” does not mean capitulating or shrinking away from improving the Program beyond a reauthorization. In fact, many Congressional staffers and Members of Congress acknowledge the Program needs reform. Further, many policymakers and their staff want a long-term reauthorization as much as the EB-5 community. The key for them and for the EB-5 community is to find that politically palatable and pragmatic balance of what we all want with what we all need to ultimately assure the Program’s reestablishment and longevity.  

Among the Program reforms and improvements on which policymakers and EB-5 stakeholders agree are integrity reforms to protect investors and hold members of the EB-5 ecosystem accountable. Most also agree that immigrant investors should be permitted judicial review of administrative decisions impacting their applications and immigrant status.

It is likely there are many more items on which we agree. However, that does not mean that those items will be included in a reauthorization package. Politics and perhaps even Congressional schedules may preclude policy items that we know are beneficial. But fighting for them at the expense of everything else accomplished thus far, and worse, at the expense of a reauthorization itself, is foolish.

The EB-5 community still has an opportunity to secure a long-term program with perhaps more than a few badly needed (wanted) improvements and the entire EB-5 ecosystem will reach that goal with prudence and pragmatism.

More Opinion

Aaron Grau argues that some EB-5 regional center program advocates, in their pursuit of an ideal but unfeasible reform package, are risking re-authorization altogether.

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On a factual and legal basis, the investigation fails to support claims that Vanuatu accepts criminals or money launderers, writes Martin St-Hilaire.


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Clear Answers to All the Questions You Have About EB-5 Right Now

Matthew Galati

For the uninitiated, the EB-5 visa program may seem impossible to understand. Conditional residency? Targeted Employment Areas? Visa retrogression? Redeployment? What is all that about? The EB-5 program’s most basic concepts are really, really complicated; and that’s when things are stable.

But for the past month, things have been far from stable. A major court case invalidated comprehensive regulatory reform (at least for now). The “Regional Center” branch of the EB-5 visa program has also lapsed. Just what does all this mean? In this piece, I will try to explain where things are and perhaps where they are going.

Is EB-5 dead? What is this lapse thing?

EB-5 is far from dead, but where we are isn’t great. The program was created in the Immigration Act of 1990 and originally required direct investor-employer to employee job creation (we like to call this “Direct EB-5”). It wasn’t terribly popular.

However, in 1992, the US Congress created the “Immigrant Investor Pilot Program” in order to encourage greater immigrant investment in a range of business and economic development opportunities sponsored by designated entities called “Regional Centers.” Although we dropped the word “Pilot” about nine years ago, the Regional Center EB-5 visa program (we will call this the “RC Program”) is subject to continued renewal by the U.S. Congress.

The latest renewal of the RC Program needed to happen before June 30, 2021. It failed. Accordingly, we call this a “lapse” of authorization. The last time this happened was in December 2018 – January 2019, albeit arising in a very different context as the RC Program authorization was tied to legislation to fund the entire federal government. The 2018 legislation had failed in a very different context and the RC Program was reauthorized only when there was overwhelming pressure against the White House as basic governmental functions ceased. 

The current lapse is unique in recent EB-5 history because it is not tied to any other legislation or government funding that must be passed in order to keep the US government working. 

What’s a Direct EB-5 and why isn’t it as popular as regional center investment?

According to Fiscal Year 2020 statistics, over 91% of visas issued in the EB-5 program went to RC investors and their families. Direct EB-5 has never been that popular at any point in the program’s recent history. Remember that the “centerpiece of the EB-5 Program is the creation of jobs.” The quintessential difference between the RC Program and Direct EB-5 is how the requisite 10 full-time jobs can be created and evidenced by the investor. 

In the RC Program context, an investor can receive credit for indirect job creation, generally measured by “reasonable methodologies”, essentially economic modeling. For example, if a project spends X number of dollars on economic activity (e.g., construction), then an economist’s model can credit the project’s EB-5 investors with Y number of jobs. Job creation, therefore, is measured by the application of one of several input-out economic models generally accepted by the government. So long as Y divided by 10 is larger than the number of EB-5 investors in the project, then all should expect approvals and Green Cards.

The approach is different for Direct EB-5, as mentioned above. In Direct EB-5, an EB-5 investor’s investment must create at least 10 full-time jobs in an employer-employee context, whereby workers are hired by the EB-5 enterprise and must work a minimum of 35 hours a week. This of course is much harder to scale and does not fit popular industries such as real estate development where the vast majority of workers are employed by third-party service providers retained to build and administer a project (e.g., architects, general contractors). 

For example, think of a shopping mall. While a particular retail store inside the mall might qualify for Direct EB-5 through the hiring of the 10 new workers to sell its wares, the developer of the mall will probably not hire anyone except maybe perhaps general mall administration. Job creation by its tenants and security or sanitation contractors would not count for Direct EB-5 because the EB-5 investors that invested in the developer’s project are not employing the retail workers. Those workers are on the payroll of totally independent entities.

Necessarily then, developers have utilized the RC Program to market EB-5 to investors around the world. While it is true that Direct EB-5 can pool multiple investors into a project (a manufacturing facility would be an excellent opportunity for this), it is simply much more difficult to scale. Most Direct EB-5 investors are hands-on entrepreneurs themselves, seeking to own and operate their own businesses.

When is the Regional Center Program coming back?

As of right now, nobody knows for sure. The Senate is in session until August 9, then takes around a one-month break. There are several must-pass bills that reauthorization legislation could be tied into, such as the historically viable omnibus funding bill that needs to pass on or before September 30th. Several other temporarily authorized immigration programs relating to the verification of employees, placement of foreign medical doctors to underserved areas, and relating to religious workers also expire on September 30th. RC Program reauthorization has historically been included with those programs and could be re-attached.

Standalone legislation might also be possible, but similar efforts had failed in June 2021 and it remains unclear whether such standalone efforts could pass if brought to unanimous consent or a floor vote.

What happens to people with immigration plans that are pending?

Direct EB-5 investors and their families are wholly unaffected by the RC lapse. If anything, they should expect to see their processing times accelerate rapidly, although whether that will materialize remains to be seen. The government is also accepting new Direct EB-5 investors’ filings in all contexts.

Further, RC investors and their families that already have Conditional Green Cards are also unaffected. The US government continues to adjudicate petitions to obtain non-conditional Green Cards in the normal course. Several of our firm’s clients received approvals in July.

However, the government’s guidance indicates that no new RC-related filings will be accepted for processing, except for very minor amendments to Regional Center administration. This includes not only new RC Program investors starting the EB-5 process by filing new I-526 petitions but also RC investors who have approved I-526 petitions and are seeking conditional Green Cards to be processed within the US, which is known as “Adjustment of Status”. 

The treatment of investors with approved I-526 Petitions outside of the US – those seeking conditional Green Cards/Immigrant Visas at consulates abroad – is a bit more nuanced. The Department of State is signaling that it will continue to process visa applications up until the point of holding interviews but will eventually cancel interviews since visas are currently unavailable during the “lapse.” However, several of our firm’s clients are scheduled for interviews as early as tomorrow. This may simply be a bureaucratic left hand not realizing what the right one is doing. 

Essentially, those RC investors with pending I-526 Petitions or Adjustment of Status applications are on pause. The guidance indicates that the Government “will not act on any pending petition or application of these form types that is dependent on the lapsed statutory authority until further notice.” 

Is it true the minimum investment amount is back to $500,000/$1,000,000?

Yes, for now at least. The court’s decision in the Behring Regional Center lawsuit which invalidated Nov. 2019 regulations that raised the minimum investment amounts remains the law of the land. The Government has issued guidance that it will “apply the EB-5 regulations that were in effect before the rule was finalized […] including […] the required standard minimum investment amount of $1 million and the minimum investment amount for investment in a Targeted Employment Area (TEA) of $500,000.”

Will it go back to $900,000/$1,800,000?  

Perhaps. The Government says it is considering the decision. It has 60 days from the date of the judgment issued on June 22, 2021 (so that should be August 23, 2021, as the general deadline falls on a Saturday) to file an appeal. An appellate court could stay (pause) the outcome of a decision, reverse it, or uphold it.

Nevertheless, the Government could issue new regulations. Or, perhaps as part of reauthorization, Congress will raise the minimum investment amounts. Their next move is anyone’s guess.

The post Clear Answers to All the Questions You Have About EB-5 Right Now appeared first on Investment Migration Insider.

Grau: EB-5 Regional Center Program Lapse is a Temporary Setback


The EB-5 industry was dealt a major setback on June 24, 2021, when one senator objected to Senators Grassley’s, Leahy’s, and Cornyn’s request for unanimous consent for the Senate to pass S.831, the EB-5 Reform and Integrity Act of 2021. It was a bipartisan bill designed to protect investors, assure the Program’s integrity, and secure its longevity. The objection prevented S.831 from being passed before the Senate adjourned for its Fourth of July recess, resulting in the EB-5 Regional Center Program’s lapse. 

Since its inception in 1990, the EB-5 Program has served as a catalyst for hundreds of projects, hundreds of thousands of jobs, and was an impactful part of the country’s economic recovery after the 2008 recession. S.831 is truly a bipartisan bill that has widespread support among EB-5 stakeholders, particularly those who welcome changes to the Program that would improve oversight and accountability. Investors who have already placed their investments in our communities will now have to continue to wait for conditional green cards and the certainty of a long-term authorization. 

Invest in the USA (IIUSA), the only non-profit trade association for the EB-5 Regional Center industry, is not only working on Capitol Hill to protect the Program but also working with U.S. Citizenship Immigration Services (USCIS) to get clarity on the process and investor priorities moving forward. This is the first time the Program has lapsed without a safety net of must-pass legislation. In previous Program lapses, USCIS was patient in making decisions on petitions, indicating an expectation of eventual reauthorization. 

Although the Program lapsed, these bills are still pending in Congress and still benefit from industry support and continually growing bipartisan Congressional sponsorship. Currently, over 25 members of the House of Representatives are sponsors or cosponsors of H.R. 2901, S. 831’s House companion bill. There is great confidence in the power of our Program and the difference it has made in communities across the country, both rural and urban. 

Despite the temporary setback, IIUSA’s commitment to the Program and to the EB-5 investors and stakeholders who make it work is stronger than ever and we are proud to continue our active role in the Program’s legislative efforts. There are countless positive stories to uncover and share with our united voice. The EB-5 community and its partners must rally behind efforts to reauthorize the Regional Center Program, or the U.S. economy faces the possibility of losing billions of investment dollars and missed opportunities for tens of thousands of American jobs. 

More Opinion

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Though the Senate rejected Grassley and Leahy’s request for unanimous consent, reauthorization bills are still pending, writes Aaron Grau.

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Senate Rejects Grassley-Leahy Reauthorization Bill: EB-5 Regional Center Program Will Sunset Next Thursday

The 11th-hour “hotlining” of the EB-5 regional center program bill, sought by Senators Chuck Grassley and Patrick Leahy on Tuesday, yesterday failed in the Senate.

Because yesterday was the Senate’s last working day prior to its recess, which will last until July 4th, the EB-5 regional center program will expire on June 30th, an outcome many observers had feared.

The bill’s failure will not affect the EB-5 program as such (direct EB-5 investments remain available) but puts an end to regional center investments, at least until/if it obtains another reauthorization.

Commenting on the effects of the bill’s failure, Suzanne Lazicki – author of Lucid Text, the world’s best source of EB-5 news and data – indicated yesterday’s outcome would affect those regional center investors who have not yet reached the green-card stage, including those who have filed and/or are awaiting processing of their already-approved i-526 petitions:

 The lapse will put a freeze on pre-green card regional center petitioners and applicants, until the RC program is reauthorized.

USCIS has yet to publish guidance for how exactly they will handle regional center petitions during this program lapse/expiration. There’s informed speculation that the policy will initially be similar to what was published in December 2018 during the last lapse.

As many as 100,000 investors could be affected

In April, EB-5 expert Robert C. Divine – who has served as Chief Counsel and Acting Director of the USCIS – commented on the practical outcome of such a lapse in an article for EB5 Investors Magazine:

The shocking reality is that expiration of the program without renewal would invalidate the immigration processing of every regional center investor who has not already been admitted to the U.S. as a conditional permanent resident, even if they already have filed their I-526 or have an approved I-526 and is waiting for a visa number or processing.  That would affect as many as 100,000 investors who have already placed their capital in a project and who might remain stuck in the investment while losing all immigration benefits.  The investors would not be able to “change gears” to try to count only the direct operational jobs of the project (if there would be any) if they invested through an NCE separate from a JCE (extremely typical). 

USCIS probably would hold I-526 petitions in abeyance for several months waiting for a retroactive legislative solution, but eventually if that solution did not come, USCIS would deny all pending I-526 petitions and revoke all I-526 approvals for all investors who had not already been admitted to conditional permanent residence.  Affected investors might bring lawsuits against USCIS arguing that the expiration of legislation should only be prospective, but that would be an uphill battle. Investors who already were admitted as conditional residents would not be affected and would be able to file I-829 petitions to remove conditions.

The battle over reauthorization of the regional center program, which accounts for some 95% of all EB-5 applications, will resume on July 4th when the Senate is back in session.

More Policy Updates

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What many had feared has happened: The regional center program will expire next week, potentially affecting as many as 100,000 investors.

Following a ruling yesterday, the EB-5 Modernization Rule, which raised the program’s minimum investments in 2019, is no longer in effect. That could change quickly.

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EB-5 Min. Investment Back to US$500k as Court Vacates Modernization Rule – For Now


The US Northern District Court of California yesterday ruled in favor of Behring Regional Center in its case against Chad Wolf (Acting Secretary of the Department of Homeland Security).

Initially filed in December, the regional center’s lawsuit alleged that the DHS violated federal law by issuing an arbitrary and capricious rule when it instated the EB-5 Modernization Rule in November 2019. The plaintiff, represented by leading immigration law firm Greenberg Traurig, also alleged that the DHS did not have the necessary legal authority to enact the Rule.

The Modernization Rule, among other effects, raised the minimum investment requirements for the US EB-5 program from US$500,000 and US$1 million to US$900,000 and US$1.8 million.

Acting without proper authority

The court yesterday ruled in favor of Behring Regional Center, finding that former acting DHS Secretary Kevin McAleenan had acted improperly under the Federal Vacancies Reform Act when promulgating the Rule. As a consequence, the court further ruled that the Modernization Rule of 2019 must be vacated, i.e., set aside.

The court further ruled that current DHS Secretary Mayorkas’ March 2021 ratification of the Modernization Rule did not “cure” the initial improper implementation.

One firm that had hinted that hopes for such a ruling were more than a “Hail Mary” when the news of the lawsuit first surfaced was the Galati Law Firm, as indicated by its January 8th post:

While some in the EB-5 industry may be quick to dismiss suits seeking to set aside unfavorable regulations, the allegation that federal officials (namely Former acting DHS Secretary Kevin McAleenan, current Acting DHS Secretary Chad Wolf, and de facto USCIS Chief Ken Cuccinelli) did not have authority to enact the Rule has strong precedent in federal court decisions and government actions of late. For example, in September 2020, a Maryland Federal judge ruled that Wolf was illegally appointed, resulting in the partial blocking of the Trump Administration’s restrictive asylum regulations. In November, a New York judge came to a similar conclusion regarding Wolf in restoring the Deferred Action for Childhood Arrivals program. Decisions holding Cuccinelli’s appointment as being illegal stretch back roughly a year. Indeed, last summer the Federal Government itself – through the independent investigative Government Accountability Office – issued findings that all three men had been illegally appointed.

Today, the same firm wrote that it was “ecstatic” about the outcome, which immediately vacates the Modernization Rule and, by extension, brings the EB-5 program’s minimum investments back to pre-November 2019 levels.

The Galati Law Firm, however, tempered its jubilation by pointing out the DHS may yet decide to appeal and ask the judge to stay the ruling.

Implications for long-term reauthorization bill

In a parallel development yesterday, Senators Grassley and Leahy informed their respective caucuses that they would seek a unanimous consent vote on their EB-5 Reform and Integrity Act, a standalone bill that seeks long-term reauthorization for the regional center program, using what’s known as the “hotline process”. In an update to members, Aaron Grau, Executive Director of IIUSA, explained how the hotline process works:

The ‘hotline’ process is designed for a Senator(s) to seek unanimous consent for a legislative proposal without an official debate. A hotline message is sent by the Democratic and Republican Cloakrooms to their respective members with the Senator’s intent to bring a bill to the floor for immediate consideration. If a Senator objects to the hotline and blocks the attempt at unanimous consent, the legislative sponsor can seek floor time to debate the objection by the opposing Senator.

Barring passage of the EB-5 Reform and Integrity Act, the regional center program’s authorization will expire on June 30th.

Matthew Galati, Principal of the Galati Law Firm

Questioned by IMI as to what implications the ruling will have for the Leahy/Grassley bill, Matthew Galati, Principal of the eponymous firm, indicated the Behring-case outcome will raise a number of strategic questions.

“First, we don’t know whether the bill’s proponents had secured unanimous consent, so I am not sure whether the hotlining tactic would work. Second, as we know Grassley was a fan of the Modernization Rule, he may want to tweak the bill to override the Behring decision legislatively.”

For the moment, he emphasizes, it’s difficult to say definitively what the final outcomes of either yesterday’s ruling or hotlining will be:

“The entire landscape could change by the hour. This decision is only about 12 hours old right now and Washington had already closed for business when it was issued.”

More Policy Updates

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Following a ruling yesterday, the EB-5 Modernization Rule, which raised the program’s minimum investments in 2019, is no longer in effect. That could change quickly.

If you can prove that you have a Bulgarian parent, grandparent, or great-grandparent, you are eligible for citizenship in Bulgaria – and, by extension, the right to live in any of the 27 member states – thanks to a recent change to Bulgaria’s citizenship law.

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