For more than 8 months, noncitizens with approved immigrant petitions for investments in regional centers have been in limbo. Congress has now ended that limbo, by reauthorizing the EB-5 regional center program.
At midnight on June 30, 2021, the congressional authorization for the EB-5 regional center program investor category expired. U.S. Immigration and Citizenship Services (USCIS) stopped approving green cards for people in the expired category who had applied to adjust their status to permanent resident in the United States. Consular officers also stopped issuing immigrant visas for people who were processing at U.S. embassies or consulates abroad.
Processing resumed on March 15, 2022, when the EB-5 Reform and Integrity Act of 2022 became law as part of the Consolidated Appropriations Act, 2022. Visa numbers can be allocated now because Congress preserved the eligibility (“grandfathered”) people who filed an immigrant investor petition before President Biden signed the new law. Congress authorized the regional center program through September 30, 2027, although the program provisions do not take effect until May 14, 2022.
Immigrant investors are the fifth employment-based preference category (EB-5) that Congress established in the Immigration Act of 1990. Generally, an immigrant investor applicant must invest at least $1,050,000 in a “new commercial enterprise,” which will create at least 10 full-time jobs that meet certain requirements.
The new law requires that the applicant expect their capital to remain invested for at least two years. A lower minimum amount, now $800,000, applies for investments in targeted rural and high unemployment areas, and in a new category of infrastructure projects.
After USCIS approves an immigrant investor petition, the immigrant investor has not finished the process. The next step is to become a “conditional” U.S. permanent resident, either by immigrant visa processing abroad and then being admitted to the United States or by adjusting status in the United States. The length of this process depends on whether an immigrant visa number is available and the processing time at the consular post or USCIS. An investor’s spouse and children may also become permanent residents, if eligible, but each requires a separate immigrant visa number.
“Conditional” permanent resident status is limited to two years. To end the “conditional” status, the immigrant investor must file a petition with USCIS within the 90-day period before the two years end, showing that they meet investment and job creation requirements (with some provisions for changed circumstances during the conditional period). The investor may include the spouse and children in their petition; otherwise each person must file a separate petition. USCIS must approve the petition for the person to become a permanent resident without conditions. This can be a lengthy and stressful process since it is tied to the investment.
The EB-5 regional center program began as part of a pilot program in 1993. An EB-5 regional center is a public or private unit designated by USCIS for participation in the Immigrant Investor Program. A regional center investment provides certain advantages to noncitizens seeking approval as immigrant investors.
For example, noncitizens may pool their capital only in a regional center investment. Another example is that noncitizen investors in a regional center may establish that they meet the job creation requirements by relying on “economically and statistically valid methodologies” to determine how many jobs the program created.
The annual numerical limit for employment-based immigrant visas is 140,000. The EB-5 category has an annual limit of 9,940 (7.1%). Under prior law, Congress set aside 3,000 of the 9,940 annual limit for regional center investors and also required at least 3,000 visa numbers be available for investors in targeted “rural” or “high unemployment” areas.
In FY 2019, consular officers issued 7,659 EB-5 visas to regional center investors, their spouses, and children (of which only seven were not based on investments in targeted areas). In FY 2020, when visa issuance was curtailed by COVID-19-related restrictions, consular officers issued only 2,266 EB-5 visas to regional center investors, their spouses, and children (of which 13 were not based on investments in targeted areas). Far fewer noncitizens applied to adjust their status to permanent resident in the United States. USCIS did not provide separate statistics for regional center investors but identified only 1,613 adjustments of status in the EB-5 category as a whole for FY 2019 and only 1,213 for FY 2020.
Under the 2022 law, Congress did not preserve a set-aside of visa numbers for regional center investors. But as reflected in FY 2019-20 visa number use, regional center investors were not limited to the 3,000 visa numbers set aside and most had invested in regional centers within targeted areas. In the 2022 law, Congress instead reserved 20% for investors in targeted rural areas, 10% for investors in targeted high unemployment areas, and 2% for investors in infrastructure projects. Any unused visa numbers in these categories in a fiscal year would roll over to the same category in the next year, and any numbers still unused would roll over to the next fiscal year for EB-5 investors generally.
Because family-based immigrant visa numbers unused in a fiscal year are allocated (rolled over) to employment-based categories in the very next fiscal year, an estimated 19,850 visa numbers will be available in the EB-5 category in fiscal year 2022 (October 1, 2021 through September 30, 2022). The unusually high number of visas presents a significant opportunity for people whose application process was halted by the termination of the regional center program.
However, processing backlogs at consular posts and at UCSIS raise serious concerns about whether the additional visa numbers will all be allocated by September 30. But the new visa number rollover provisions may preserve some numbers in targeted areas and infrastructure projects—visa numbers which otherwise would have been lost as of October 1, 2022. We also do not know at this time whether citizens born in certain countries will face backlogs because of visa demand exceeding per-country supply. In June 2021, the last month regional center visa numbers were made available, noncitizens born in China faced a backlog.
Other important changes to the EB-5 program include:
- A regional center must submit its application to USCIS for approval of a “specific capital investment project” before investors may file their petitions for immigrant investor status with USCIS. The lead-time required to prepare an application likely means a significant delay before investors begin filing petitions under the new law. USCIS must give priority to regional center applications for targeted rural areas.
- USCIS is now required to conduct a site visit of each project. Congress also provided USCIS with strong sanction mechanisms if regional centers do not comply with reporting and other requirements.
- Because Congress repealed the prior regional center program law, there is concern that regional centers with prior approval from USCIS will have to apply again, or as some attorneys have theorized, submit an amendment, in order to meet new requirements concerning the “bona fides of persons involved with regional centers” and safeguards to protect the integrity of a regional center’s operations.
- Consistent with USCIS’ efforts in past years to make sure that an applicant’s investment is at risk of loss, the law contains various restrictions on financing arrangements, such as an investment in exchange for a note from, or other debt arrangement with, the new commercial enterprise.
- Beginning January 1, 2027, and then every five years, the minimum investment amounts will be adjusted, based on a specified consumer price index, and apply to petitions filed on or after the change becomes effective.
- Investors, their spouses, and children who are in a lawful immigration status in the United States can now file applications to adjust their status to permanent resident at the same time the investor files the immigrant investor petition, if visa numbers would be available to them. This change treats the EB-5 category like the other employment-based immigrant visa categories. Applicants for adjustment of status also may apply for and receive authorization to work in the United States.
Reauthorizing the EB-5 regional center program is a step in the right direction for immigrant investors, though it remains to be seen how some of the changes will play out in the coming year.