EB-5 Reform and Integrity Act of 2022
The EB-5 Regional Center Program, which had expired in June 2021, was finally reauthorized as part of the Omnibus Spending Bill signed into law by President Biden on March 15, 2022. This provides relief for the thousands whose EB-5 petitions and applications were still in process when the prior authorization expired.
Entitled the EB-5 Reform and Integrity Act of 2022, the bill revises many aspects of the EB-5 landscape. It will take time to for U.S. Citizenship and Immigration Services (USCIS) to implement all the changes. Some of the main points are highlighted in this article. Some provisions took immediate effect allowing USCIS to process applications on hold while others will be taking effect over time.
The Required Amount
As part of the renewal, the investment thresholds for immigrant investors have increased — in targeted employment areas (TEAs) from $500,000 to $800,000, and in non-TEAs from $1,000,000 to $1,050,000. The Regional Center Program is extended for five years and all applications filed during the five years would continue to be processed even if further extensions are not approved or delayed.
Adjustment of Status
Investors and family already legally in the U.S. and eligible for a visa number may concurrently file applications for adjustment of status (avoiding consular visa processing) along with or while awaiting adjudication of the investor’s I-526 petition. This is a big change because applicants do not have to wait the months and years it took USCIS to process the I-526. EB-5 investors are also now eligible to use INA section 245(k), forgiveness of up to 180 days of status violations when they apply for adjustment.
Statutory Definition of Targeted Employment Areas and Associated Visa Set-Asides
A significant change to the RC Program is the inclusion of a statutory definition for TEAs, which include high unemployment areas, rural projects and infrastructure projects. Under the new law, TEAs qualify for both the lower investment level and visa set-asides. High unemployment areas are areas that can only be designated by DHS and where the unemployment rate in a given census tract (or contiguous census tracts) is no less than 150 percent of the national average unemployment rate. Rural projects are those that are outside a metropolitan statistical area, or within the outer boundary of any city of town with a population of 20,000 or more. Importantly, under the new law, Department of Homeland Security is obligated to “prioritize” processing of investor applications for rural projects. Infrastructure projects are a “capital investment project” that must be a “public works project” administered by a “government entity” that contracts with a regional center.
There is a reserve of visas set aside annually for TEAs — 20 percent of visas available under the RC Program each year will be reserved for immigrant investors in rural projects; 10 percent will be reserved for investors in DHS-designated high unemployment areas; and 2 percent of the visas will be reserved for immigrant investment in infrastructure projects. An additional highlight from the reformed RC Program is that any unused visas from the above-referenced 32 percent reserve that remain unused from any given year will carry over to the following fiscal year, creating potential for a greater investment pool in a given year, depending on the timing of the project being considered and the number of unused visas from the prior year.
Security and Integrity Measures
In an effort to increase integrity and security throughout the RC Program, regional centers must now adhere to a set of statutory requirements that have been more robustly defined. USCIS now has clear authority to deny regional center business plans where applicants have engaged in fraud, criminal conduct or where a plan would threaten national security, and no person convicted of a crime in the last 10 years, or civil fraud resulting in liability of more than $1 million can be involved in the EB5 program. USCIS is now also obligated to audit each regional center at least once every five years and conduct site visits, and regional centers are obligated to submit annual investment activities statements to USCIS. Failure to submit these statements or submitting inaccurate statements can result in USCIS imposing civil penalties on a regional center, suspension of a regional center’s ability to operate and even permanent “debarment” of a regional center. In addition, new “source-of-funds” requirements will ensure investor funds are from legitimate sources. The reauthorizing language also specifies that U.S. securities laws apply to all aspects of EB5 offerings.
Special Rules on Pooled Investments
Going forward, all I-526 filings with pooled investments (two or more EB-5 investors) must be sponsored by a RC and meet lots of new RC requirements including the RC’s filing of an exemplar about the project (not required to wait for exemplar approval before I-526 filing). Simple, “direct” pooled investments will not be allowed, even among friends who would all be active in the business. And solo investors will not be able to use indirect arrangements and indirect job creation even if sponsored by an RC.
The new law is a welcome relief for many. The provisions have far-reaching consequences and new investors should be cautious and wait for USCIS to issue guidance and implement the new program.
Dilip Patel of Buchanan Ingersoll & Rooney PC, a board-certified expert on immigration law, can be reached at (813) 222-1120 or email firstname.lastname@example.org