Top things I learned from the October 11, 2023 EB-5 Questions and Answers from USCIS

Since the EB-5 Reform and Integrity Act of 2022 (RIA) was enacted, stakeholders have had urgent open questions about the status and treatment of pre-RIA investors and regional centers, and about how to interpret RIA provisions related to the investment period and redeployment.

In the April 25, 2023 EB-5 stakeholder engagement, IPO Chief Alyssa Emmel said: “While we’re unable to discuss the regional center operations and investment period topics today, please rest assured that USCIS is engaged in ongoing efforts at the immigrant investor program office and across the agency to ensure that when we do have updates, we’re equipped to provide the EB-5 stakeholder community with clear guidance.” Now we have a substantial first installment of that promised guidance, with the EB-5 Questions and Answers (updated Oct. 2023), published on the USCIS website on October 11, 2023.

I appreciate that this Q&A engages with stakeholder questions, and dares to provide some interpretation. I can tell that whoever wrote the Q&A read the feedback on regional center operations and investment period sent to USCIS in advance of that April meeting, including from IIUSA and AIIA. And the Q&A sticks its head out to provide specific some guidance, not only giving safe cop-out responses that rephrase what we already know – a brave move, considering that any new interpretation is going to displease someone and probably inspire litigation.

I also appreciate the spirit of the Q&A, which expresses an intent to protect both regional centers and investors from adverse retroactive impacts from the new law. To my welcome surprise, the Q&A seems to be trying to say “we care, and here’s our best effort to be clear, generous, and fair and to avoid harming anyone.” Or to give an actual quote from the Q&A: “After a consideration of reliance interests and potential retroactive impacts, we believe the interpretations and guidance explained above provide flexibility and lessen the burdens on EB-5 entities.” It’s important to account for that spirit and expressed intent as we respond to any interpretations that we find to be unclear, ungenerous, unfair, retroactive, or burdensome in fact.

Here are my top takeaways the Q&A.

1. Grandfathering: The Q&A suggests that USCIS broadly interprets the investor grandfathering provision in RIA Section 105(c), such that it not only protects future investors from expiring legislation (the literal language of the law), but also protects pre-RIA investors from retroactive impacts of RIA. (The Q&A interprets this to be the spirit of the law with reference to Senator Grassley’s quote: “the bill allows petitions filed by immigrant investors under the old pilot program to continue to be adjudicated under the law as it existed when they were filed.”) I am not sure how far this will apply in practice, but delighted to see the intent by USCIS to be generous and fair with grandfathering for pre-RIA investors.
2. Good faith investors: USCIS interprets the RIA provision for “treatment of good faith investors following program noncompliance” (INA 203(b)(5)(M)) to apply to pre-RIA investors. This surprises me, and I’m trying to think whether it’s good news.  For investors with regional center or project problems, pre-RIA policy had the disadvantage of no change options for pre-green card investors, but the advantage of protections and flexibility during Conditional Permanent Residence. Subsection M offers change options, but they’re fraught, and subsection M presupposes no protection from CPR status. More analysis to come once I’ve had more chance to consider and discuss this. (See also Robert Divine’s analysis.) One major concession that USCIS already makes in the Q&A, in attempt to make the subsection M recourse more usable, is to change the deadline for investor action following a regional center termination or NCE debarment.
3. Regional Center Termination Impact: The Q&A expresses USCIS intent to mark out a path to eligibility for pre-RIA investors in terminated regional centers, which is good news for regional centers. In my previous post on the Integrity Fee and I-956G, I concluded that regional centers would be forced into expensive compliance just for the sake of protecting past investors, regardless of their own EB-5 activity or plans. If USCIS does offer investors a viable option to support eligibility apart from regional center sponsorship, then otherwise inactive regional centers face much less pressure. (I say “if,” because so far I’m more sure of the USCIS intent than the practical outcome. But I’m cautiously optimistic.)
4. Regional Center Termination Likelihood: USCIS expects that “there is a large volume of investors that could be affected by terminations of previously designated regional centers based solely on noncompliance with certain new administrative requirements added by the RIA” considering that “Before March 15, 2022, there were 632 regional centers and as of June 30, 2023, we have received only 357 Form I-956, Application for Regional Center Designation, applications or amendments for previously designated regional centers, and only 250 of previously designated regional centers have paid the Integrity Fund Fee.” So, again, it’s good to hear that “We interpret the RIA in a manner we hope permits good faith investors of terminated regional centers to retain their eligibility.” (Also, I note that USCIS has yet to officially say whether filing I-956 is an administrative requirement for a regional center that wishes to avoid termination.)
5. Status of Previously-Approved Regional Centers: USCIS states a position that the new RIA provisions and requirements apply equally to all regional centers, regardless of whether the regional center was designated before or after RIA, and regardless of whether the regional center intends to promote new projects for new investors under RIA. This has been the subject much litigation over the past year.
6. Investment Period: USCIS confirms its interpretation that RIA does change the minimum investment period for post-RIA investors. Instead of being required to sustain their investment throughout the period of conditional permanent residence (the pre-RIA law), investors who filed I-526 or I-526E post-RIA are expected to maintain investment at least two years from the time that investment was made available to the job-creating entity (plus at least until I-526 filing, and at least until the job creation requirement is satisfied). I would’ve expected USCIS to also say that the investment at least needs to be sustained until the I-526 is adjudicated, but no – USCIS agrees that post-RIA investors could theoretically have return of capital even before I-526 approval so long as they met the two-year investment and job creation requirements. As before, the USCIS-required investment period is only a minimum – the Q&A reminds us that USCIS does not control the maximum time that EB-5 investment can be held. Post-RIA investors are also still subject to the redeployment requirement — but decoupling the investment period from unpredictably-long immigration times almost eliminates redeployment risk. The investment period change will have a seismic effect on the industry, and will no doubt be targeted by litigation. (Again, see Robert Divine’s analysis.)
7. Redeployment: The Q&A focuses on RIA interpretation and does not address other longstanding questions around redeployment for pre-RIA investors, such as whether the “at risk” requirement actually justifies/forces serial investments decoupled from any job creation requirement. The Q&A does convey some sympathy when it recognizes “the burden on the investor to keep their investment in place for an extended period, due to circumstances beyond the investor’s or the NCE’s control, such as visa backlogs or other such circumstances.” The redeployment conversation will continue, drawn by the established reliance by regional centers on redeployment policy and the rebellion by investors against that policy.
8. Practical questions: The Q&A answers some technical questions and provides filing tips for a number of EB-5 forms. (Robert Divine’s analysis also covers this nicely.)