What happens to investors after regional center termination (interpreting subsection (M) investor protections)

USCIS is in process of terminating many regional center designations for “purely administrative non-compliance” – meaning that the regional center didn’t do anything actively wrong, but left administrative steps undone. The most common scenario is a regional center that has not and does not intend to raise new EB-5 investment under the new law, and therefore has not paid the annual Integrity Fee required under the new law. (Also possible: a piece of paperwork was missed accidentally either by the regional center or USCIS in the confusion of a new RIA procedures. At this point USCIS is just sending Notices of Intent to Terminate, not final terminations yet, giving opportunity for clarification.)

USCIS understands that regional centers may not want or need to stay in business forever, and has attempted to set up a system that allows good faith investors to stay eligible for EB-5 benefits even if their regional center sponsor exits the program.

The options, process, and conditions for protecting EB-5 investors following regional center termination are described in the law at INA 203(b)(5)(M), elaborated in the USCIS Policy Manual Volume 6 Part G Chapter 3(E) and Chapter 8, and further discussed in multiple sections of the EB-5 Questions and Answers (updated July 2024) on the USCIS website and in “Questions and Answers Updated March 19 2024” posted by the CIS Ombudsman. I painstakingly parsed and sorted this volume of content, and organized it into tidy table format. For others who’d like to be spared this trouble, and have a handy summary for reference and analysis, here is my table “Interpreting Subsection (M) Investor Protections.” The table format helps me to process this complicated and critically important topic, and is designed to facilitate considering: what has been said, and what still needs to be clarified?

Investors face several possible scenarios following regional center termination:

1. No Action Required: The investor remains eligible for EB-5 benefits, and neither the investor nor the NCE need take any action or make any amendment in response to the regional center termination
2. Action Required and Allowed: The investor can stay eligible for EB-5 benefits, but only if an amendment is filed and approved
   • Amendment Option A: the investor’s NCE associates with another approved regional center, OR
   • Amendment Option B: the investor makes a qualifying investment in another commercial enterprise
3. No Action Allowed: The investor has no option to stay eligible for EB-5 benefits (this applies if the investor is considered a knowing participant in the conduct leading to regional center termination)

See my table for detail on each scenario. Generally the first no-action scenario is the ideal – if the investor can simply continue his or her immigration process with no effect from the regional center termination, and no need for any amendments by the investor or the NCE. I’m copying below what USCIS has said so far about the specific conditions under which that no-action path is open to the investor. Note that the conditions are different for pre-RIA and post-RIA investors, and depending on the progress of the project/investment. (Pre-RIA investors rightly get extra protection from terminations resulting from noncompliance with post-RIA requirements. All investors have more protection once having satisfied applicable job creation and sustainment requirements. Investors with project trouble on top of the regional center termination may not only need but welcome amendment options that are not normally allowed under the material change policy.)

Excerpts from USCIS guidance on conditions for maintaining investor eligibility following regional center termination (When are the amendment options under INA 203(b)(5)(M) (“subsection (M)”) required, and when can EB-5 investors stay eligible after regional center termination even without an amendment to the regional center affiliation or investment?)

• Conditions under which the investor WILL need to make an amendment under subsection (M) following regional center termination — either a new regional center affiliation or new NCE investment:
  • “for both pre- and post-RIA investors, if their regional center is terminated or their new commercial enterprise or job-creating entity is debarred and their capital investment project has failed or will only create less than the requisite number of jobs, they generally will not remain eligible and may use the protections under INA 203(b)(5)(M) to amend their petition to retain eligibility.” (Q#4 in “Retaining Eligibility” at USCIS Q&A)
• Conditions under which pre-RIA investors in a terminated regional center may remain eligible as-is and NOT need to take action under subsection (M) in order to stay eligible:
  • “where an investor’s capital remains invested and at-risk with their new commercial enterprise and the requisite jobs have been or will be created in accordance with their existing business plan, termination of their associated regional center for failure to pay the EB-5 Integrity Fund fee or for reasons related to a different new commercial enterprise would generally not, by itself, negatively impact the investor’s eligibility.” Policy Manual 3E
  • “In general, pre-RIA investors may remain eligible if their project is complete or will be completed in accordance with the comprehensive business plan, with sufficient job creation for all investors, and the investor’s capital has been and will be sustained through the requisite 2-year sustainment period of their conditional residency.” (Q#4 in “Retaining Eligibility” at USCIS Q&A)
  • “where regional center termination is based on purely administrative noncompliance that does not otherwise directly affect or implicate the underlying investment or job creation, officers may generally determine, in their discretion and on a case-by-case basis, that a pre-RIA investor associated with the terminated regional center continues to be eligible for classification as an immigrant investor, notwithstanding the regional center termination.” (Q#7 in “Regional Centers” at USCIS Q&A) For example “Regional center termination for failure to pay the required EB-5 Integrity Fund fee may generally not have an effect on pre-RIA investor eligibility in many, or even most, circumstances” (Q#3 in “General Implementation” at USCIS Q&A) “The phrase “purely administrative noncompliance” is not intended to be a new termination category, or a term defined by USCIS, but rather a plain language description of the potential circumstances of noncompliance on the part of regional centers that are not typically related to petitioner eligibility (illustrated in the context of failure to pay the EB-5 Integrity Fund fee required by the RIA). USCIS will evaluate the potential impact of noncompliance by regional centers on associated investors on a case-by-case basis.” (Q1 at “Ombuds Q&A”)
• Conditions under which post-RIA investors in a terminated regional center may remain eligible as-is and NOT need to take action under (M) in order to stay eligible:
  • “In general, post-RIA investors may continue to be eligible if their capital remained invested for at least 2 years after being placed at risk under applicable requirements and satisfied the job creation requirement before termination or debarment.” (Q#4 in “Retaining Eligibility” at USCIS Q&A)
  • “You may continue to be eligible notwithstanding the termination of your regional center where sufficient jobs were already created and your capital was invested for at least 2 years under applicable requirements before the termination of your regional center and subsequent denial or revocation of the associated Form I-956F.” (Q#5 in “Retaining Eligibility” at USCIS Q&A)
• Conditions under which amendments are NOT allowed, even if desired:
  • “The amendment options in (M) are only available to investors following RC termination or NCE or JCE debarment. Project failure, on its own, is not a basis to retain eligibility under (M). … If you wish to have your NCE reassociate with another regional center or make a qualifying investment in NCE because of a project failure separate from termination or debarment, you must file a new petition for classification based on post-RIA eligibility requirements.”(Q#16 in “Retaining Eligibility at USCIS Q&A)
  • An investor cannot request their regional center to be terminated in order to gain access to the amendment options under (M). However, a regional center may withdraw and request USCIS to terminate its designation.  (Q#14 in “Retaining Eligibility at USCIS Q&A)
• • “Once you have responded within 180 days to the notice and identified that you either remain eligible notwithstanding the termination or debarment or that you are amending your petition based on the reassociation of your new commercial enterprise (NCE) with an approved regional center or you having made a qualifying investment in another NCE, you generally may not further amend your petition in order to retain eligibility on another basis.” (Q#12 in “Retaining Eligibility at USCIS Q&A)
  • “any investor who was a knowing participant in the conduct that led to the termination or debarment may not benefit from section 203(b)(5)(M) of the INA (for example, such would be the case if the petitioner knew of fraud and failed to terminate or report an agent that is engaging in fraud for the EB-5 entity).” (Q#1 in “Retaining Eligibility” at USCIS Q&A)

See my table “Interpreting Subsection (M) Investor Protections” for additional detail on amendment options following regional center termination. I will continue to update the linked document as USCIS releases additional guidance.