There is cause for some concern as in the past when the EB-5 Program was to sunset the decision piggybacked on the must-pass appropriations bill. Another change is that the EB-5 Program is no longer linked to other immigration pilot programs like the E-Verify, religious workers, and Conrad 30 shortage area physicians’ programs. Separate groups advocate for each of these programs and the combined efforts helped the EB-5 Program too. Industry stake holders are optimistic that the EB-5 Program will be reauthorized but there is no certainty. In this article we will address some of the most pressing, investor questions.
What is re-authorization of the EB-5 Program?
Reauthorization refers to the official extension of the EB-5 Regional Center Program. Please note that this is different from direct investments through EB-5, which is a permanent provision under the law and is not subject to sunset. The EB-5 Program was created in 1993 for a finite period of 5 years and has been extended several times. Currently, it is extended until June 30, 2021 and must be reauthorized for the program to continue after this date.
Is the EB-5 Program likely to be reauthorized?
One cannot be a 100% sure about it but industry stage holders believe that the EB-5 Program will be reauthorized beyond June 30, 2021. One of the reasons is the importance of the program to the U.S. economy and potential support from both parties as the program infuses investment into the country and creates jobs.
What happens if the program is not reauthorized on June 30?
One of two things could happen – the EB-5 Program could lapse, and this could be temporary until it is reinstated or reauthorized. However, there is a chance (albeit an unlikely one) that the EB-5 Program could end permanently.
Can investors expect any legislative change rather than ad hoc extensions of the EB-5 Program through reauthorization?
There is the EB-5 Reform and Integrity bill to continue the EB-5 Program, create more stability as it seeks to reauthorize the EB-5 Program for 5 years, while it protects investors, compliant regional centers and new commercial enterprises. The bill also provides for “reasonable oversight” of the EB-5 Program. A large number of legislators are expected to support this bill as it creates jobs and does not cost the U.S. Treasury to do so. Other than this bill there are no current, legislative initiatives pertaining to the EB-5 Program.
However, if for some reason the bill doesn’t pass, it is possible that the EB-5 Program becomes part of an omnibus bill later in the year and hence could get reauthorized.
What if the EB-5 Program sunsets i.e. it is not reauthorized beyond June 30, 2021?
If the EB-5 Program is not reauthorized (or it expires) it could result in a temporary lapse of the EB-5 Program would be permanently discontinued.
What does the sunset of the EB-5 Program mean for pending and new EB-5 cases?
There is nothing in the statute, regulations, government policy or case law to provide a definitive answer. In past, the USCIS would make announcements about how it would handle EB-5 cases during a sunset. We anticipate that the USCIS will follow this practice and make some announcements should the EB-5 program sunsets on June 30, 2021.
What would a temporary lapse mean for investors?
The EB-5 Program lapsed for a short period of time at the end of 2018 because the government shut down. The EB-5 Program was shut down for about a month from December 22, 2018 until January 25, 2019. When the EB-5 Program is not in effect no visas can be issued under the EB-5 category – this meant that no investors, even those with approved I-526 petitions could be issued a visa or be granted adjustment of status.
During the one-month period, I-526 and I-485 applications from investors were accepted but were placed on hold. No EB-5 visas were processed during this time. The USCIS resumed processing the petitions and the Department of State began processing visas after the EB-5 Program was reauthorized.
What would a permanent lapse mean for investors?
If the EB-5 Program is not reauthorized at all, no visas will be available for any investors waiting in the EB-5 queue. If you examine the visa bulletin that is published by the Department of State each month, the columns for EB-5 visas would be marked with a ‘U,’ which indicates that visas are “unavailable.”
However, since billions of dollars are at stake and several influential stakeholders are working on reauthorization it is likely that the lapse may be temporary.
Should new investors rush to get their EB-5 petitions filed before June 30, 2021?
There are two ways to look at this question:
- Yes, investors should file their EB-5 petitions before June 30, 2021 because even if the EB-5 Program is not reauthorized the U.S. government might announce that all investors with pending applications will be processed and qualifying investors will be given visas. But there is no certainty of this.
- No, it is best to wait and see if the EB-5 Program is reauthorized and better still to wait and only invest if the EB-5 Program is extended for a longer period than the typical annual extension so that there is more stability and predictability. But, even in this case, if a bill like the EB-5 Reform and Integrity bill is passed, the EB-5 Program is likely to be extended for only 5 years. This may not protect investors from India who may be subject to visa retrogression of 5 to 7 years as per current estimates.
Why are Indian investors going to be subject to visa retrogression?
The demand for EB-5 visas far exceeds the supply, i.e. the number of applications the USCIS has received from Indian nationals exceeds the number of visas available. The overall, worldwide limit for the number of EB-5 visas is 10,000 per fiscal year. The fiscal year runs from October 1 of one year to September 30 of the following year. Further, there is a per-country limit of 700 visas. Although visas leftover, or those that have not been taken up by countries for which demand is low, are assigned to countries with higher demand at the end of each fiscal year, these are allocated as per the priority date of the investor. The priority date of 1000s of Chinese investors is way ahead of most Indian investors. So, by the time the backlog of more than 5,500 EB-5 visas that will be required for existing investors is cleared up it could take more than 7 years (from the priority date) for some of the investors to get their visas.
In view of potential retrogression and looking at the sunset of the EB-5 Program, what happens to existing investors?
For an investor to get a visa, if outside the U.S., or adjust status within the U.S., a visa number has to be available. If the EB-5 Program is not reauthorized no EB-5 visas will be available for investors under the program. For an investor to get an EB-5 visa the EB-5 Program must be in existence at the time his priority date becomes current and a visa must be available.