EB-5 Regulation Published
July 24, 2019 36 Comments
The EB-5 Immigrant Investor Program Modernization Regulation (RIN 1615-AC07) has been published today in the Federal Register as a Final Rule. The final rule is effective in 120 days, on November 21, 2019. For every investor who files I-526 on or after November 21, 2019, the required minimum investment amount will be at least $1.8 million, or $900,000 in a Targeted Employment Area, with TEAs being subject to redefined rules. Those are the headlines. The final rule also retains the limited priority date retention provision, I-829 process tweaks, and minor clarifications as proposed in the Notice of Proposed Rulemaking (NPRM) in 2017.
For a solid summary of the rule’s content and implications, I recommend Robert Divine’s 5-page article for IIUSA The Rush is On: New EB-5 Rule Nearly Doubles Minimum Investment in 120 Days (July 23, 2019).
For those concerned to understand the rule and its background in detail, I recommend reading all 61 pages of the final rule itself. The actual regulatory amendments can be found on the final three pages. The rest of the document explains the final rule, how it differs from the NPRM and current regulations, DHS thinking behind the rule, and why the agency did or did not agree with industry comments.
My post will not duplicate Divine’s excellent analysis, or obviate the need to read the rule itself to know what it contains. But I’ll consider a few basic questions.
1. Will this rule actually take effect?
The rule will take effect in November, unless there is litigation against USCIS to stop the regulation, or Congress passes a new EB-5 law that would overrule the regulation. Both litigation and legislation have been bruited in the past. 120 days gives the industry a bit of time to pursue such alternatives, given inclination and opportunity. I guess that inclination depends on a calculation by the regional centers with budgets for lawyers and lobbyists. Their new markets will be damaged by the regulations. But does this matter to them, in light of the damage already resulting from oversubscription and wait times? Do they see sufficient long-term potential for new EB-5 demand to keep fighting for marketable investment amounts supported by TEA flexibility? The opportunity for a successful lawsuit does not look wide, considering the care DHS put into this regulation. I doubt imminent legislation, considering the political climate, and I would not want legislation based on the scandalous so-called industry consensus with TEA set-asides. But I do not discount these possibilities in the next few months, so long as the motivation exists to fight for an alternative to the regulations.
2. Should I hurry to file an I-526 petition before November 21, 2019?
I would ask a couple questions first. (A) Is it important to you that the investment amount is $500,000 rather than $900,000 or $1.8 million? and (B) Is it important to you that the investment result in a visa? If the answer to (A) is yes, then file. If the answer to (B) is also yes, then don’t hurry too much. Skipping due diligence, skimping on source of funds analysis, risking incomplete investment, pushing premature projects, neglecting to consider backlogs and timing issues … these timesavers are likely to leave you with a faulty petition that never results in a visa due to I-526 denial, and/or to visa wait problems not to mention investment problems. So waste no time, but don’t be hustled. Heed experienced lawyers like Robert Divine and Dan Lundy, who warn against skeletal filings. As a business plan writer, I aim to work twice as hard over the coming months to accommodate accelerated deadlines without sacrificing quality.
3. Will it be practically possible to raise EB-5 funds after November 21, 2019?
You know best whether your market has any taste for a $900,000 or $1.8 million investment, under current conditions. The IIUSA TEA mapping tool can help give a general idea of whether your project location could qualify at the $900,000 level going forward. (The tool was designed for the NPRM proposal, but the TEA provisions in the final rule are essentially the same as in the NPRM. A precise determination would require examining the underlying data and guessing how USCIS will implement the rule.) The final rule makes very clear that investment amount and TEA changes apply to all I-526 filed from the rule effective date onward, with no exceptions. (e.g. regardless of whether the project is in the middle of a raise, or has I-924 approval under the old rules). I do not think that EB-5 will die entirely, unless changes to visa allocations make the visa wait unacceptably long for all countries. But certainly, demand has not been and will not be remotely close to the numbers in Figure 1 and Table 3 of the final rule. And new EB-5 investors will want to consider the likelihood that the project they’re investing in will be able to successfully complete the capital raise before November 21, or risk a very tough market after November.
4. What did DHS spend two years doing with the EB-5 rule? Did they listen to industry input? Whose input and interests swayed their thinking?
The discussion in the final rule shows that DHS did indeed read the hundreds of public comments submitted on the NPRM in 2017, and engaged seriously with them. I can judge this because I also read all the comments. Most of the final rule consists of methodical response to the specific points made by the public. Sadly DHS dismissed many good ideas just for lack of supporting data and analysis, but at least they recognized the ideas. The content of the final rule shows that DHS was not manipulated by the much-maligned “powerful moneyed interests”. For example, Related NYC Metro Regional Center submitted over a hundred pages of comments personally and through proxies and had two in-person meetings with OMB about the regulations. The final rule acknowledges the arguments but does not soften any of the TEA restrictions or incentives opposed by Related. On the other hand, the final rule makes a major change from the NPRM – changing the TEA investment amount from $1.35 million to $900,000 – based on good input from someone of no importance. I can judge this, because I wrote the four-page comment that’s extensively cited in the final rule’s discussion of investment differential. (If only I’d written as compellingly about TEA designation! I didn’t occur to me DHS might decide to eliminate both itself and states from the designation business, and just leave petitioners and adjudicators with individual unguided judgment regarding which unemployment data and methodology make most sense.)
5. What does the rule mean for people who filed I-526 prior to November 21, 2019, and still making their way through the immigration process?
Changes to the investment amount and TEA rules do not apply to anyone who filed I-526 prior Nov. 21, 2019. Starting on Nov. 21, people between I-526 approval and conditional permanent residence may be able to take advantage of the rule’s new priority date retention provision. (Update: see my post on this topic.) Starting on Nov. 21, the relatively minor I-829 clarifications/changes will affect anyone reaching the I-829 stage. The rule includes no change to redeployment policy, material change policy, or visa availability.
6. Where do I go with my questions?
Your immigration lawyer and regional center should be there for you. Many webinars will be hosted. For example, Wolfsdorf Rosenthal have a webinar on Thursday, Klasko Law has a webinar on Monday, and ILW has a webinar on Tuesday. I will write additional blog posts as time permits.
And finally FYI, a copy of the email sent out by USCIS.
From: U.S. Citizenship and Immigration Services
Sent: July 23, 2019 10:16 AM
Subject: New Rulemaking Brings Significant Changes to EB-5 ProgramMinimum Investments, Targeted Employment Area Designations Among Reforms
WASHINGTON—U.S. Citizenship and Immigration Services (USCIS) will publish a final rule on July 24 that makes a number of significant changes to its EB-5 Immigrant Investor Program, marking the first significant revision of the program’s regulations since 1993. The final rule will become effective on Nov. 21, 2019.
New developments under the final rule include:
- Raising the minimum investment amounts;
- Revising the standards for certain targeted employment area (TEA) designations;
- Giving the agency responsibility for directly managing TEA designations;
- Clarifying USCIS procedures for the removal of conditions on permanent residence; and
- Allowing EB-5 petitioners to retain their priority date under certain circumstances.
Under the EB-5 program, individuals are eligible to apply for conditional lawful permanent residence in the United States if they make the necessary investment in a commercial enterprise in the United States and create or, in certain circumstances, preserve 10 permanent full-time jobs for qualified U.S. workers.
“Nearly 30 years ago, Congress created the EB-5 program to benefit U.S. workers, boost the economy, and aid distressed communities by providing an incentive for foreign capital investment in the United States,” said USCIS Acting Director Ken Cuccinelli. “Since its inception, the EB-5 program has drifted away from Congress’s intent. Our reforms increase the investment level to account for inflation over the past three decades and substantially restrict the possibility of gerrymandering to ensure that the reduced investment amount is reserved for rural and high-unemployment areas most in need. This final rule strengthens the EB-5 program by returning it to its Congressional intent.”
Major changes to EB-5 in the final rule include:
- Raising minimum investment amounts: As of the effective date of the final rule, the standard minimum investment level will increase from $1 million to $1.8 million, the first increase since 1990, to account for inflation. The rule also keeps the 50% minimum investment differential between a TEA and a non-TEA, thereby increasing the minimum investment amount in a TEA from $500,000 to $900,000. The final rule also provides that the minimum investment amounts will automatically adjust for inflation every five years.
- TEA designation reforms: The final rule outlines changes to the EB-5 program to address gerrymandering of high-unemployment areas (which means deliberately manipulating the boundaries of an electoral constituency). Gerrymandering of such areas was typically accomplished by combining a series of census tracts to link a prosperous project location to a distressed community to obtain the qualifying average unemployment rate. As of the effective date of the final rule, DHS will eliminate a state’s ability to designate certain geographic and political subdivisions as high-unemployment areas; instead, DHS would make such designations directly based on revised requirements in the regulation limiting the composition of census tract-based TEAs. These revisions will help ensure TEA designations are done fairly and consistently, and more closely adhere to congressional intent to direct investment to areas most in need.
- Clarifying USCIS procedures for removing conditions on permanent residence: The rule revises regulations to make clear that certain derivative family members who are lawful permanent residents must independently file to remove conditions on their permanent residence. The requirement would not apply to those family members who were included in a principal investor’s petition to remove conditions. The rule improves the adjudication process for removing conditions by providing flexibility in interview locations and to adopt the current USCIS process for issuing Green Cards.
- Allowing EB-5 petitioners to keep their priority date: The final rule also offers greater flexibility to immigrant investors who have a previously approved EB-5 immigrant petition. When they need to file a new EB-5 petition, they generally now will be able to retain the priority date of the previously approved petition, subject to certain exceptions.
EB-5 Updates 
Congratulations to Suzanne – your comments will have a lasting and positive impact for future EB-5 investors that do not belong to the category of multi-millionaires! I am lucky that I got through the closing gate before the new rules take place, since 900k would have been stretching my budget beyond acceptable levels. Time for another donation to you!!
As to the new rules, I think EB-5 will take a multi-year hiatus until another Congress revisits the current immigration policies of the US. Hope I will still see it in my life-time – the U.S. is the only country in the world which was succesfully thriving since inception because of immigration. It would be a shame if this changes because the doors are being closed now *not just in the US, but quite a few “old-world” countries are heading down the same road. Grumpy white old men are no help for my kids future life….
Thank you Chris for your encouragement!
Sorry to say this, but this comment from Chris feels somewhat like the marketing campaign to rush others to file a petition before the new rule effective date, just like the industry did every single time before the sun-set date of the RC program…
as a 2018/09 investor I am a huge fan of your blog which provides so many information about the EB5 process. Thank you.
For people waiting in line for I526 approval like me, I am wondering how the new regulations will hit or change the ability to stay in line via redeployment of the funds ? What will happen if the project in which we have invested our money has to redeploy the money and there is no more project (because fewer TEAs) to redeploy ? And will it be OK to redeploy only 500 k$ in a new TEA project ?
The new investment amounts would only apply to you if you file a new I-526 petition after the effective date. Redeployment policy does not say that redeployment needs to be in a TEA, and does not say that redeployment requires filing a new I-526. Redeployment is at the will of your regional center, however. If you wanted to redeploy the funds yourself, withdrawing from one regional center and choosing a new project yourself, that would involve filing a new I-526. Such action would keep your priority date under the new rules, but the newly-filed I-526 would be subject to the higher investment amount/TEA revisions under the new rules. I’m a little exhausted by all the free time I spend not only writing up information but also answering questions one-by-one. So I hope that this kind of question could be directed to my EB-5 consulting page if you want my detailed response. Or there are free answers to be found in personal reading of the regulations and policy. But thank you for being a devoted reader!
Hi Suzanne
Thank you for one more a great write-up.
One question please… If an investor filed his I526 under the “old” rules and then had to go through redeployment, can be still follow the “old” files for the mount and the TEA designation?
See my answer to francois
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Thanks for the wonderful blog..!! My question is on in-flight projects which are not fully funded and now due to increased investment, may not be able to complete the funding ..!! Is there a risk for those who have invested into these kinds of projects?
There is no protection in the final rule for past investors from the risk that any offering/project will fail because unable to complete its capital raise under the new rules. There’s the limited protection that if offering documents needs to be changed mid-stream for new investors due to the new rules, that will not be considered a material change for past investors.
Hi, Suzanne, thanks for providing a comprehensive analysis on the new regulation. I wonder if the regulation has indicated anything related how to maintain At risk status while waiting for visa due to the backlog? many thanks!
It does not offer any changes or clarifications to the material change or at-risk policy, unfortunately.
What are your thoughts on future viability of regional centers due to changes in the TEA designation regulation?
I’ve talked to some regional centers that are optimistic, and others ready to give up on EB-5. We shall see.
Sameer did you invest with Shaikh? If you are still waiting this is your last chance to do it the legit way 😉
Compelling arguments by our favorite blog master! Nice work! Although I don’t understand your comment in the parenthesis.
“On the other hand, the final rule makes a major change from the NPRM – changing the TEA investment amount from $1.35 million to $900,000 – based on good input from someone of no importance. I can judge this, because I wrote the four-page comment that’s extensively cited in the final rule’s discussion of investment differential. (If only I’d written as compellingly about TEA designation! I didn’t occur to me DHS might decide to eliminate both itself and states from the designation business, and just leave petitioners and adjudicators with individual unguided judgment regarding which unemployment data and methodology make sense for a given case.)”
Did you read the final rule content related to the new TEA designation non-process? Looks like a big mess waiting to happen, unless there’s more guidance.
I see what you’re referring to. I took a more simple view and thought that it shouldn’t be difficult to ascertain whether or not it is in a rural area, or one with high unemployment.
High unemployment TEAs are complicated by the fact that for any given area, there are generally at least three available not-quite-matching datasets for unemployment, and none are so very easy for the public to consult. Try ascertaining whether your office is in a TEA with reference to, separately, Census, BLS, and state data.
I don’t have to try hard…my office is definitely a high unemployment area! I’m here! 🙂
We have two different voices at the moment. One saying that investors who fall under previous policy not qualify for PD retention, the other saying that the PD retention is the one part who will work retroactively.
Luckily we now have the text of the final rule itself, so anyone can read it and discover where the truth lies.
For once I TOTALLY disagree with you, Suzanne: the comment which correctly guided USCIS to the 50% amount for bona fide TEA projects was submitted by one of the industry’s most respected voices.
Thank you on behalf of AVSEB5’s future, bona fide TEA investors…. (-:
Wow, the processing time estimate went up againg to 27.5 months today. Are there any news about it? I remember that somebody requested explanation from the USCIS about that.
IPO has been going through a lot recently, I hear. I-924 is the worst update, with I-924 applications now not considered “outside normal” unless filed before August 1, 2012!
Hi Suzanne,
Thanks for your efforts to provide clarity as always. On question of whether it will be possible to raise eb5 money after number, I want to mention a rule of thumb from the auto industry. Across car segments, it is well known that any time the price of a car goes up 2x, the size of addressable market goes down by 10 times. Thus I would estimate that 80-90% of eb5 investors will be priced out of the market. This is without including any additional difficulties that result from TEA designation changes. I wonder if DHS has any comment about the market reduction or maybe they do not care ? I do suspect they are underestimating the scope of market reduction.
This is a good point, and the 2017 comments made some similar arguments. You can read DHS’s reaction in the final rule discussion. In handling the investment amount, DHS faced one primary burden: to modernize the program by using some objective measure to update the investment amounts set in 1990. Regarding the potential market impact of any given dollar increase by itself, DHS felt that they couldn’t possibly assess that with any assurance, and in any case such was not their burden.
EB5 industry will collapse . the administration is a turd one who has no idea other than run on MAGA and blah blah blah
Suzanne, i was wondering if you or anyone new why they have changed my i829 case received date from june 2017 to March 2018? Very strange indeed, not sure if thats happened to others.
Well that’s one way to get processing times down, haha. Only not funny. I have not heard other such reports, and would assume some system glitch. But I’ll mention this next time I write about processing issues, and ask whether others have had a similar experience.
Thank you
I know everyone blames RCs, too many investors, middlemen etc., but in my view, lawmakers and USCIS are most to blame for this mess.
Pretty profound statement. Are we suppose to guess why you would want to blame the lawmakers and the USCIS? I don’t think they got rich off this “mess”.
I have wondered about lawmakers, actually. The campaign finance system does seem like a disincentive to solve problems, because people keep lobbying and donating so long as their issues remain pending. EB-5 has made huge war chest contributions over the past decade of reauthorization chaos.
The big money goes to lobbyists and the politicians receive some political contributions, that they probably would have gotten anyway. Coachella boy made some money peddling projects after he was thrown out of office, but doubtful it was much.
EB-5 isn’t that big of a deal in the world of U.S. politics and it was easier to reauthorize than terminate the legislation. The new rules by the USCIS basically terminated the program so the politicians didn’t have to mess with it. If Congress does something, other than reauthorization, prior to the sunset date of September 30th, that would be news.
Suzanne…it has been three weeks since the publication of the new EB-5 regulations. Has there been any rush to make investments and get applications completed? Curious as to whether activity from India has materialized that was greatly anticipated by the legal community. Is there concern from investors as to the ability of the Regional Centers to raise the required funds by the effective date? Your sources are excellent and wondered if you have heard anything.
It may be early, but the days are slipping away and at least one reader of your blog is interested. 🙂