05 Dec Post Regulation Update – Episode 92
The new EB-5 regulations did, in fact, take effect on November 21st as planned. On this episode, Mona, Mark and Rebecca discuss the uncertainty in the program in a post-reg world and the lawsuit filed in response to the new rules. Listen in to understand what this litigation means for the EB-5 and how it might force Congress to take action around the proposed EB-5 legislation.
Leading up to the November 21st deadline, the lawyers at MSA did six months of work in three weeks, rushing to file EB-5 petitions for clients before the rules changed. But what has happened now that the new USCIS regulations have gone into effect? Has a complaint been filed against DHS in response, as predicted? What does that mean for investors who want to file today?
On this episode of EB-5 Investment Voice, Mona, Mark and Rebecca sit down to discuss the uncertainty surrounding EB-5 in the aftermath of the new regulations. Mona discusses the lawsuit filed by Florida EB-5 Investments in response to the new rules, sharing her take on the complaint’s claims that USCIS has exceeded its expertise and violated the 10th Amendment in taking on the TEA designation.
Mona, Mark and Rebecca go on to address the potential for a temporary restraining order (TRO) to suspend the new regulations and weigh in on the pros and cons of the current proposed legislation: The Relief Act and the EB-5 Reform and Integrity Act. Listen in for insight around the good things happening in EB-5, including the opening of chart B for adjustment of status applicants and the 10% increase in the number of EB-5 visas, and learn how the uncertainty in EB-5 is likely to impact you.
Confusion Around the New EB-5 Regs
- There is a great deal of confusion in the EB-5 world at present. Despite the rumors, the new regulations DID go into effect on November 21st as planned. The minimum investment was raised to $900K and the TEA designation is now in the hands of USCIS.
- A continuing resolution to extend the Regional Center program through December 20, 2019, was passed as well. However, the program extension did not impact the implementation of the new regs.
The Florida EB-5 Investments Lawsuit
- On November 26, 2019, Florida EB-5 Investments filed a complaint for Injunctive Relief and a Temporary Restraining Order (TRO) against DHS in response to the new regulations. The suit points out that the rules will have a significant negative impact on the EB-5 industry.
- The litigation also calls attention to the general lack of clarity around economic modeling. Under the new rules, USCIS doesn’t recommend any one data set (REDYN, RIMS II or IMPLAN) for the development of an EB-5 project.
- In addition, the suit against DHS emphasizes the fact that the TEA designation isn’t determined until a case is adjudicated. Investors and developers simply cannot wait two to four years to find out if their project qualifies.
- Mona and Rebecca agree with the lawsuit’s claim that USCIS has exceeded its expertise and violated the 10th They argue that the TEA designation should be left to the states, as they are in the best position to determine what constitutes a targeted employment area.
What If You Want to File for EB-5 Today?
- There is a possibility that this litigation will bring about a TRO that suspends the implementation of the new regulations. But until then, we must follow the law as it stands today.
- It is to your benefit to hold off on filing until there is more certainty in around the EB-5 program. But if you need to file an EB-5 petition today (e.g.: a child is aging out), the safe route is to choose a project that will qualify for TEA under both the current AND opportunity zone rules.
The Immigrant Investor Program Relief Act
- The Relief Act introduced by Senators Rounds, Graham and Cornyn reauthorizes the EB-5 program through September of 2025 and redefines TEAs to include rural areas and distressed urban areas or opportunity zones (per the Tax Cuts and Jobs Act). In addition, it changes minimum investments to $1M for TEA and $1.1M for non-TEA projects.
- The Relief Act also has provisions for expedited processing and backlog relief. New investors would be asked to pay a $50K improvement fee to help accelerate processing times, and the Secretary of Homeland Security would have the option to temporarily parole petitioners in backlog in the US.
The Pros & Cons of the EB-5 Reform Bill
- Introduced by Senators Grassley and Leahy, the EB-5 Reform and Integrity Act doesn’t replace the TEA definition. The bill’s many restrictions and fees would effectively eliminate urban stakeholders from taking part in EB-5, and the cost to do projects in distressed and rural areas would skyrocket.
- The Reform and Integrity Act does require that USCIS meet reasonable processing time goals for EB-5 investor petitions. Mona anticipates that Congress will pass a combination of the Reform and Integrity and Relief Acts early next year.
Good News in EB-5
- USCIS has now opened chart B for those who wish to apply for an adjustment of status. This allows you to file the I-45 application in conjunction with your I-765 (Employment Authorization Form). If your priority date on chart B is current, you can join the line for a green card and receive your EAD and travel permit within 90 days.
- The US State Department recently published its Annual Numerical Limits, raising the number of visas for EB-5 from 10K to 11,101. That translates to a 10% increase (778 additional visas) for each country.