EB-5 Regulations (2/2018?)

Update: For current status, check the Regulations Detail section of my Washington Updates page.

— Original Post —

While we have our eye on the legislation ball, the Office of Management and Budget has given us a new EB-5 deadline to think about. The Spring 2017 Unified Agenda had mentioned April 00, 2018 as a “Final Action Date” for regulations dealing with EB-5 investment amounts and TEAs (RIN 1615-AC07), but now the Fall 2017 agenda has advanced that prediction to February 00, 2018. I’d doubted the April date because so many factors seemed likely to delay regulations (the prospect of legislation instead, the fact that Congressional intent as expressed in draft legislation looks so different from what DHS put in the proposed regulations, the administration’s coolness to regulation in general, government inertia in general), but advancing the date to February looks like positive intent to really get the EB-5 regulations done.

We don’t know yet what will be in the final Rule 1615-AC07, since it may have been revised significantly since the Notice of Proposed Rulemaking. But as a reminder, here’s what the NPRM proposed:

  • Increase the standard minimum EB-5 investment amount to $1,800,000, or $1,350,000 in a TEA.
  • A TEA is based on high unemployment and incentivized with 25% reduction to the investment amount (not other factors or incentives as proposed by Congress).
  • A TEA can only be designated for a high-unemployment MSA, county, city, single census tract, or limited group of census tracts. DHS, not the states, is responsible for TEA designation.
  • Give priority date protection (an investor with an approved I-526 could choose to file a new I-526 while keeping the original priority date, subject to certain restrictions)
  • Spouse and children may be able to file I-829 even if not included on the principal investor’s petition.
  • Other technical changes.

The federal rulemaking process requires that “At the end of the process, the agency must base its reasoning and conclusions on the rulemaking record, consisting of the comments, scientific data, expert opinions, and facts accumulated during the pre‐rule and proposed rule stages.” In April 2017, the public responded to the NPRM with challenging questions and criticism, and some persuasive data and policy arguments. The agency must take these into account. If USCIS revised the proposed rule in response to public comment, they might have modified the proposed investment amount increases (nearly all commenters argued strongly for this), either narrowed or expanded the gap between TEA and non-TEA investment (there were spirited arguments on both sides), modified the restrictions on census tract TEAs, or reconsidered giving DHS the burden of issuing TEA designations. On the other hand, USCIS is not well known for changing track in response to evidence and arguments presented by the public. The Fall 2017 OMB notice reiterates USCIS thinking about the potential costs and benefits of the proposed regulations:

The proposal to raise the investment amounts and reform the targeted employment area (TEA) geography could deter some investors from participating in the EB-5 program. The increase in investment could reduce the number of investors as they may be unable or unwilling to invest at the higher proposed levels of investment. On the other hand, raising the investment amounts increases the amount invested by each investor and thereby potentially increases the total economic benefits of U.S. investment under this program. The proposed TEA provision would rule out TEA configurations that rely on a large number of census tracts indirectly linked to the actual project tract by numerous degrees of separation, and may better target investment capital to areas where unemployment rates are the highest.

If a final rule were published in the Federal Register in February 2018, it could go into effect as early as March 2018, and apply to petitions filed on or after the effective date. (See A Guide to the Rulemaking Process for an explanation of the typical process.)

On the other hand, the threat of immanent regulations may inspire Congress/industry to finalize EB-5 legislation ASAP instead.

Meanwhile, the OMB Unified Agenda has pushed back the estimated date for a Notice of Proposed Rulemaking for RIN: 1615-AC11, the EB-5 rule dealing with regional center designation, the exemplar filing process, continued regional center participation, and regional center termination. The Spring agenda had estimated April 2018; the Fall agenda has October 2018. We previously responded to this as a Advance Notice of Proposed Rulemaking. The agenda’s cost/benefit comment notes that:

DHS is still in the process of reviewing potential changes it would propose to the regional center process. DHS may propose to implement an exemplar filing requirement for all designated regional centers that would require regional centers to file exemplar project requests. An exemplar filing requirement could cause some projects to not go forward, but DHS is still in the process of assessing the impacts on the number of projects that may be affected. DHS anticipates that any proposed changes to the regional center program would increase overall program efficiency and predictability for both USCIS and EB-5 stakeholders.

About Suzanne (www.lucidtext.com)
Suzanne Lazicki is a business plan writer, EB-5 expert, and founder of Lucid Professional Writing. Contact me at suzanne@lucidtext.com (626) 660-4030.

28 Responses to EB-5 Regulations (2/2018?)

  1. C says:

    1. Current CR will be extended to Jan 2018. Do you think Congress will have enough time or effort to finalize an EB-5 reform bill by that time (in one month)?

    2. If Congress does not act by Jan 2018, and the new funding bill is extended to Sep 30, 2018 for whatever reason, this essentially means that Congress won’t be able to implement the reform unless it passes an independent EB-5 bill to avoid DHS regulations. Given this current political climate, do you think Congress will be able to do it? Or do you think Congress will let the DHS regulation become official for a period of time, and revisit it later next year?

    3. Trump is demanding a comprehensive immigration reform, and he uses DACA as a bargaining chip. What’s your opinion on this? Do you think this so called “comprehensive reform” will directly affect EB-5 in certain way? Do you think any comprehensive reform may reshuffle the visa numbers which may be beneficial to EB-5?

    • I don’t know how to answer these excellent questions, but will update my blog with links to other expert commentary as I find it. I understand that lobbyists hope to get EB-5 legislation attached to some other “must-pass legislation,” which they’d probably need and want to do in such a way that the EB-5 piece doesn’t require or attract too much time and effort from Congress. Congressional reps who have spoken on EB-5 (at the 3/8/2017 House Judiciary Committee hearing on the regs and in a comment to the regs) mostly encouraged DHS to finalize regulations rather than waiting on legislation. But all the industry people negotiating legislation absolutely do not want regulations first (and it would be very awkward and time-wasting for DHS to implement new regs for just a short period of time). The list of immigration priorities released by the White House in October 2017 looks good for EB-5 in principle (favoring prosperous immigrants) but not necessarily in fact (since the preliminary proposal would do away with many existing visa categories including EB-5 and replace them with an awkward points system). I’m not up-to-date with the latest talk about comprehensive reform, however.

  2. L N Reddy says:

    “An investor with an approved I-526 could choose to file a new I-526 while keeping the original priority date”

    I don’t understand the above line. Why would an investor with an approved I-526 need to file a new I-526 ? Does that mean his original I-526 approval is no longer valid and that he will be subjected to the new investment amounts ?

    I thought the DHS regulations wouldn’t be applied retroactively to approved I-526 petitions. Am I wrong on that ?

    • You can read the text of the NPRM for detail on rationale and implementation of the priority date provision. It’s a voluntary option for past investors, not a requirement. Here’s a quote from the intro:
      DHS proposes to authorize certain EB–5 petitioners to retain the priority date of an approved EB–5 immigrant petition for use in connection with any subsequent EB–5 immigrant petition. Petitioners with approved immigrant petitions might need to file new petitions due to circumstances beyond their control (for instance, DHS might have terminated a regional center associated with the original petition), or might choose to do so for other reasons (for instance, a petitioner may seek to materially change aspects of his or her qualifying investment). DHS is proposing to generally allow EB–5 petitioners to retain the priority dates of previously approved petitions so as to avoid further delays on immigrant visa processing associated with the loss of priority dates.

  3. jonharris90 says:

    Thanks for this really useful info. Just to be clear if you wanted to submit an application for an EB-5 investment at $500,000 – what do you think the cut off date would be before they increase the threshold ? And what would the threshold be increased to? Thanks so much

    • I’m not sure. March would be the last date to file at $500,000 if new regulations become final in February and effective in March. Any day could be the last date to file, if Congress surprises us by enacting new legislation in advance of regulations. The investment thresholds were $1.35M to $1.8M in the proposed regulations, and $0.95M to $1.25M in the last legislative proposal I saw.

  4. jonharris90 says:

    Okay great. I’ll keep checking back in for updates. Thank you !

  5. James C says:

    Is it still possible that there will be a new version of the regulations sufficiently different to justify a second round of public comments? Thank you very much.

    • It seems that if they were anticipating a new comment-able version, then the OMB agenda would have listed another NPRM as the next step. Since the agenda lists Final Action as the next step, I guess that we won’t get another opportunity to comment on RIN 1615-AC07. But I’m not an expert in the process.

  6. happy says:

    Great post. Technically what’s the meaning of “final action date”?

  7. MT says:

    Any idea when the i-526 will be approved if someone has applied in April 2017.

  8. SL says:

    If we apply for I-526 now, will those application be on hold till EB-5 program is restored?

  9. Dan says:

    I have just seen the IPO has updated the processing time. There has been no change in 2 months now. Still processing I829’s from September 2015, nearly 2.5 years ago!

  10. Dennis says:

    which date in Feb of 2018 will release final rule in the Federal Register?

  11. TeshChan says:

    Feb-2108 is over. Still no update on the rule. Any idea whats going on?

  12. Dhruvin Shah says:

    Any Idea if the minimum Investment amount of $500,000 is going to be increased?
    Also if it proposes to increase, how much time do we have till it goes into effect & can we apply before the effective date so that we have to invest only $500,000.

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