The EB-5 immigrant investor program allows foreign nationals to obtain U.S. residency (“green cards”) and eventually citizenship for themselves and their families through investment in the U.S.
On March 15, 2022, President Biden signed the “EB-5 Reform and Integrity Act of 2022”. Following the lapse of the EB-5 Regional Center Program on June 30, 2021, this new act reauthorizes the Regional Center Program and introduces changes to the EB-5 program for both Regional Center & Direct Investment EB-5 Investors. These changes may protect immigrant investors from predatory actors and combat fraud, in addition to speeding up the green card application process in many cases.
The EB-5 program seeks to attract international investment and stimulate the U.S. economy by providing a pathway to residency and citizenship for foreign nationals in exchange for making job-creating investments into U.S. businesses. The EB-5 Regional Center program is an outgrowth of the EB-5 visa wherein Investors may pool funds to engage in larger, more ambitious projects. Initially designed as a temporary initiative, the Regional Center Program requires regular reauthorization by Congress. For much of its history the Regional Center Program was tied to general spending bills in Congress and subsequently was regularly reauthorized without issue. However, during negotiations over the FY 2021 omnibus appropriations bill in December 2020, the program was decoupled from such bills requiring the program to be separately reauthorized. This decoupling led to the lapse of the EB-5 Regional Center Program on June 30, 2021 after Congress was unable to come to terms on its reauthorization. (The EB-5 direct investment program permitting individual investments into smaller projects did not lapse.) Since that time Congress and all active actors in the EB-5 space have been working to come to terms on an acceptable reform bill to overhaul and reauthorize the Regional Center program. The EB-5 Reform and Integrity Act of 2022 is the result of these efforts.
The Act implements several major changes to the EB-5 visa program both for Regional Center Investors and Direct Investment Investors:
New Minimum Investment Thresholds: The Minimum Investment amount is $1,050,000, which is reduced to $800,000 if the investment project is located in a Targeted Employment Area (TEA) or is an Infrastructure Project. A TEA includes an area of high unemployment or a rural area, and must qualify under the same requirements as the previous EB-5 regulations that were introduced in 2019. An infrastructure project is a public works project in which a governmental entity is the job-creating entity that receives the EB-5 capital from the new commercial enterprise.
Concurrent Adjustment of Status: Another significant change will allow certain investors to apply for green cards and work permits much faster. Investors and their dependents who are already legally in the United States (i.e. by virtue of possessing a non-immigrant visa such as an F-1 student visa, H-1B Specialty Occupation Worker visa or possessing some other form of legal status in the United States) may now file a form I-485 Application for Adjustment of Status simultaneously with the initial I-526 Immigrant Petition by Alien Entrepreneur, if a visa is currently available. Investor’s whose I-526 is pending may also do the same. This is a critical change to the program, as investors who file for Adjustment of Status along with their I-526 will be allowed to stay in the U.S. and get general work authorization (i.e. the ability to work for any employer in the United States without restriction) and may receive their work permits within months of filing. However, there must be a visa available at the time the adjustment of status application is filed, meaning concurrent adjustment will not be available for Mainland China born foreign nationals unless USCIS makes unprecedented progress clearing up the backlog of such visas.
Good Faith Investor Protection: The bill adds protections for innocent investors whose Regional Center or Investment projects are terminated or debarred. As long as the investment arrangements were generally qualified, Investors may associate with replacement entities or make additional investments to meet the job creation and investment requirements of the program.
Redeployment: The bill formally enacts USCIS Redeployment policy for completed projects with Investors who need to maintain their investment at risk. Specifically, the Act reinforces USCIS’ interpretation that, investor funds may be redeployed to meet the sustained at-risk investment requirement if all the requisite jobs were created and the redeployment is at risk in a commercial activity. Thankfully, the funds may be redeployed into commercial activities across the USA rather than being limited to the Regional Center’s currently approved area of activity.
Increased scrutiny and monitoring of Regional Centers and other EB-5 actors: In order to combat fraud, or unscrupulous actors taking advantage of foreign investors, the Bill enacts several measures to ensure the integrity of the program including requiring USCIS to audit each Regional Center every 5 years, requiring third party agent fees to be disclosed, requiring registration of direct & third-party promoters, implements fund administration guidelines, creates an “Integrity fund”, requires Regional Centers to be operated only by U.S. Citizens and Permanent Residents,
All Pooled Investments must go through Regional Centers: The Reform law requires all pooled investments (i.e. 2 or more EB-5 investors working together to invest in a single project to create jobs) to be sponsored by a Regional Center.
Indirect Job Limits: Indirect jobs (i.e. jobs counted towards the EB-5 job creation requirement that are not direct, full-time employees of the investment project) can count for no more than 90% of the EB-5 jobs, and only 75% of jobs can be from impacts from construction lasting less than 2 years (and those count only to the extent of the fraction of a two-year period).
The EB-5 Reform and Integrity Act of 2022 will significantly alter the EB-5 space and process, and may make the program safer and more flexible, while allowing certain investors to obtain green card and work permits more quickly. Current and potential EB-5 investors should consult qualified immigration attorneys to better understand how the Act will affect the specifics of their case.
