The EB-5 Immigrant Investor Visa is a US federal program that allows qualified foreign investors and their immediate family members to obtain permanent residency in the US by making an investment of US$900,000 or US$1,8000,000 (depending on the location of the business) in the US that creates jobs.
The Regional Center component of the EB-5 Immigrant Investor Visa program, enacted in 1993, permits pooled investments so investors have gained the option to apply for an EB-5 visa through an investment in a fund, which in turn most commonly finances a job-creating development project.
While the base EB-5 Program enacted in 1990 is a permanent program, indirect EB-5 investment through Regional Center Program is not, even though it is used by ~95% of EB-5 applicants. Until the pinnacle of the program in 2014–2015, the EB-5 program had been regularly reauthorized and extended by the US Congress. Since then, however, many proposals to change the program have emerged. Such discussions have reached the US Congress multiple times, but without final agreement on all topics, the program continued to be extended without changes.
During the last Congress, (the 116th, 2019-2020), there was a significant change in the legislation that has authorized the EB-5 Regional Center program since 2015. Specifically, the EB-5 extension was decoupled from other immigration legislation “extenders,” which for several years had been enacted as part of the omnibus appropriations bill. This process of including these immigration extenders within the Congress’ appropriations legislation has kept them all authorized ever since the most recent standalone legislative enactment expired in 2015. Given this change in legislative process for EB-5, the deadline to renew the program is now June 30, 2021, instead of September 30, 2021 when the currently-enacted appropriations legislation is set to expire.
Unless there is new legislation to reauthorize or extend it, the EB-5 Regional Center program will "sunset" on June 30. This would cause the program to lapse. Such a lapse has happened before during the 31 times it has been reauthorized, but only for a short period of time.
The reauthorization of the program has sparked many vigorous policy discussions. To date, the program has not been fully reformed legislatively, but changes have occurred through the regulatory process. New policies and regulations have been updated through the federal rulemaking process, and various additional proposals for reform have been introduced in the Senate and House of Representatives in the last five to six years.
Understanding Regulation versus Legislation
For global families engaged in the EB-5 Immigrant Investor program, the first step is understanding how the US Federal government creates laws and regulations, such as those that enacted the EB-5 Regional Center program.
When a new law is needed, it is first introduced as a bill by a sponsoring senator or representative.
It is then assigned to the committee that jurisdiction over the subject matter to be debated, amended, and approved for passage in the full House or Senate. If the same bill passes both the House and the Senate, it is sent to the President to be signed. If the Senate and House pass different versions of the legislation, then those differing versions must be reconciled into a single bill that must then pass both houses of Congress before it is sent to the President. If signed (and not vetoed), it becomes law.
Legislation introduced by Congress that is enacted and signed by the President becomes public law that authorizes agencies of the Executive Branch to implement them through regulation. One way the Executive Branch can influence the way a law is implemented is by regulation, but such regulation must be within the bounds of the enacted laws.
To create or modify regulations, agencies such as USCIS generally follow a process called administrative rulemaking, which includes drafting new regulations, posting them for public comment in the Federal Register, and then codifying it in the Code of Federal Regulations when the regulation is finalized. The EB-5 Immigrant Investor Program Modernization regulation that was implemented by USCIS in November 2019 was an example of changing an existing regulation.
Where does the program stand now
As of this writing, the EB-5 program was extended on December 27, 2020 to be effective through June 30, 2021, through the Consolidated Appropriations Act. Because EB-5 reauthorization was detached from Congress’ omnibus spending bill by setting the sunset date at June 30, 2021, Congress must now reauthorize the EB-5 Regional Center Program as a standalone bill. While separating the EB-5 reauthorization from the other immigration program extenders may facilitate focused debate about the program, this change means that EB-5 will not be automatically reauthorized unless a Congress takes action on reauthorization legislation prior to June 30, 2021.
Industry stakeholders are making a strong case for reform and reauthorization by June 30, 2021. The EB-5 Reform and Integrity Act of 2021 has been introduced in the US Senate and the House of Representatives and is receiving more support from Members of Congress due to support from industry stakeholders such as many Regional Centers, immigration attorneys, and the industry’s trade association. The Invest in the USA (IIUSA) association has taken a leadership role in the process and has created the “Save and Create Jobs Coalition.” The EB-5 Reform and Integrity Act in particular adds another level of compliance to the program, protecting investors from noncompliant projects, increasing supervision for Regional Centers, and establishing the EB-5 Integrity Fund to fund program enforcement activities.
Even though the bill has bipartisan support, there are still important issues to be debated in Congress, and it is yet to be seen if this proposal will be voted on and passed before the current sunset. Since the legislative process is complicated and often difficult, it is possible that the deadline will pass while work is still being done on new legislation. It is possible Congress could enact a short term extension following a lapse , but to do so would require agreement from all 100 senators (“unanimous consent”), or if unanimous support was not available, the reauthorization could be attached to unrelated legislation expected to be passed by both the Senate and the House of Representatives.
If Congress does not act before the sunset, the program will expire. If the sunset occurs, the program gets suspended because the Congressional authorization given to USCIS to process existing EB-5 applications will not be available. It is anticipated that USCIS will issue guidelines on how it will proceed with pending petitions. One thing is certain, however: new investors will not be accepted under the program, as there would be no program authorization currently in place.
For those who have invested already, different scenarios may be faced according to where in the EB-5 process the applicant is. The farther along in the process, the less affected one should be. If you have applied to the program, you should consult with your immigration attorney to understand your situation and/or wait for USCIS to publish guidelines regarding how the agency will deal with the program. It is likely clarification will be issued closely around June 30 as USCIS will be aware that many people with petitions filed will be in limbo.
Even though there is a chance the program will lapse due to inaction by Congress, there are many possibilities to keep it going. It can be reauthorized and reformed through new legislation, or simply reauthorized and extended. As noted earlier, this can be done by a stand-alone vote, by being attached to another bill, or included in the new appropriations legislation that will need to be passed by September 30, 2021.
Congress is aware that the EB-5 program brings capital and jobs at no expense to US taxpayers and brings very successful and qualified immigrants who are likely to continue investing, working, and enhancing the US economy and their communities. Industry stakeholders are working closely to maintain the program’s authorization. In a post-COVID world, the EB-5 program may be an excellent source of capital and an important factor to economic recovery. All industry stakeholders, including EB-5 investors, are depending on Congress to act favorably to reauthorize this important program.
Views expressed above are the author’s own.
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