BY: Kyra Aviles, Sarah Salarano, and Mona Shah
Last month, the EB-5 investment community was rocked with two major revisions to the program. On June 22nd, Judge Jacqueline Scott Corley issued a ruling on the Behring Regional Center lawsuit, effectively reverting the EB-5 investment program to pre-November 2019 regulations. The most notable change was decreasing the minimum investment amount from $900,000 to $500,000 if the project if located in a Targeted Employment Area (TEA). Read more about this decision and its implications in our previous blog post.
Shortly afterwards, on June 30th, the EB-5 Regional Center Program lapsed after Congress failed to pass the EB-5 Reform and Integrity Act, with no clear plan for reauthorization in sight. Without a Regional Center program, applicants can only invest in direct projects. One of the main differences between Regional Center and direct projects is the job creation standard, which requires direct projects to solely count direct jobs in the single enterprise that receives the investment. Additionally, direct projects need no sponsorship and do not have a pre-approval process with USCIS. Direct projects also are not vulnerable to sunset dates.i Learn more about direct programs and what a lapse in the program means by listening to our podcast episode.
With these big legislative changes, many are left wondering what’s next for EB-5 investments – specifically, if the Regional Center program will be reauthorized and if investment amounts will once again rise. Fortunately, the legislative process for implementing new regulations will forewarn us of any upcoming changes.
Any proposed rules or notices from federal agencies and organizations, including USCIS, must be published by the Office of the Federal Register. The Federal Register, an online database, requires at least 30 days’ notice before new regulations can be enacted. This provides EB-5 investors and attorneys with a grace period to adapt to any changes in the program, should they arise.
Additionally, the is a 9-step process for implementing new administrative regulations, which is outlined below. This process ensures that regulations cannot be instituted overnight without proper evaluation. Except in extraordinary circumstances, the rule does not become effective for some time after its initial publication to allow regulated parties to come into compliance. Some rules provide several years for compliance. The issue is whether the Behring lawsuit constitutes “extraordinary circumstances” –we would argue not. Should USCIS try to assert the same, they would be open to challenge.
It is important to note that the Office of Management and Budget does not review every new regulation, but only those that are deemed to be “significant.” OMB review is the final step before the Final Rules can be published and a date is set for implementation.
Between the Federal Register and the 9-step process, we can adequately prepare for any new regulations to the EB-5 investment program. Be sure to follow our blog and listen to our podcast to stay up to date on all things EB-5.
About the Authors
Sarah Salarano is a paralegal at Mona Shah & Associates Global. She graduated from Emory University in December 2020 with a degree in Political Science and English.
Kyra Aviles is a paralegal at Mona Shah & Associates Global. She graduated from Oberlin College in May 2021 with a degree in Political Science and Law & Society.
Mona Shah, Esq. U.K. born and a former British Crown Prosecutor, Mona has over 28 years of legal experience with extensive knowledge of all facets of U.S. immigration law. Recognized as one of the industry leaders in EB-5, tackling complex issues, Mona has received many accolades for her work, including being voted a top 25 EB-5 attorney in the U.S. seven years in a row; top Global Migration Lawyer (U-Global), Top lawyer by Who’s Who International; and Top attorney of North America. A part-time adjunct professor at Baruch College, Mona is also a published author, and Lexis Nexis Practice Editor. Mona regularly speaks worldwide and has been interviewed by mainstream news channels, including Fox Business News and Al Jazeera, and quoted in major newspapers, including the New York Times, Bloomberg and Axios. Mona hosts and produces Global Investment Voice Podcast series (145+ episodes). MSA have worked with the top echelon within the industry and have been instrumental in the success of numerous projects. Marketing overseas for many years, MSA have successfully raised millions of dollars in investor capital.