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EB-5 Regulations Published for Public Inspection

After more than two and a half years, Obama-era EB-5 immigration regulations are set to be published on July 24, 2019, with an effective date 120 days after publication or Nov. 21, 2019. See EB-5 Immigrant Investor Program Modernization.

These regulations have been opposed by many industry participants, as evidenced in a letter to Congressional Leadership in May 2019.

For years all involved have called for significant reforms and modernization to the program including:

  • Integrity Measures to Bolster National Security and Fraud Deterrence

  • Long-term Reauthorization

  • Revised Targeted Employment Area (TEA) Definitions

  • Revised Investment Amounts

  • New Set-Asides for Rural and Urban Distressed Areas

  • Visa Backlog Relief

Legislators on both sides of the aisle have specifically called for integrity measures to ensure against fraud. The new regulations do not do what Congress continues to seek to do legislatively, because the agency does not have the requisite authority.

The  EB-5 rule proposed by USCIS in January 2017 proposed two critical things:

  1. Drastically increased investment amounts to $1.35 million and $1.8 million from the current amounts of $500,000 and $1 million.

  2. Changed the definition of “Urban TEAs”, the areas that – along with “Rural” – qualify for the lower investment amount.

The new proposed Urban TEAs would be in the shape of a “donut” – that is, a single census tract that is the “hole” of the donut, surrounded by a ring of other adjacent census tracts. This “donut” approach to TEAs has no precedent in any other statute or regulation that directs capital to economically-distressed areas

The final rule would do the following:

  • The new investment amounts would be $900,000 at the lower level and $1.8 million at the top level.

  • The reported rationale: These are the levels calculated if indexed to inflation from 1992, when the current levels of $500,000 and $1 million first took effect upon the program’s creation.

The new TEA definitions differ from the “donut” approach as initially proposed, by rule “tweaks” to clarify that any city or town with a population of 20,000 or more outside of a metropolitan statistical area may qualify as a TEA and substituting “contiguous” to “directly adjacent” when describing census tracts that can be added for purposes of defining a TEA (under distress criteria). This is different from the proposed rule that allowed any city or town with a population of 20,000 or more to qualify as a TEA, regardless of being in or out of a TEA. In addition, these regulations remove any mention of “geographic and political subdivisions” for special designations.

The reported rationale: DHS believes this will ensure consistency in TEA adjudications that adhere closely to Congressional intent. DHS will make these designations, which eliminates the current practice of a state being able to designate certain areas as high unemployment areas.

The EB-5 Regional Center program expires on Sept. 30, 2019. Congress and stakeholders are working on a reauthorization with much needed policy and legislative changes. If such an extension occurs, the rule published today may never take effect. Only Congress can enact all of the reforms necessary to modernize EB-5. The EB-5 regulations do not address:

  • the fraud and national security measures that we all agree are necessary.

  • the rural and urban distressed visa set aside

  • the Opportunity Zone designations in urban areas.

As stated above, implementation of the new rule is set to occur 120 days from publication, or Nov. 21, 2019.

The regulations do make changes along the lines we reported in past blogs. See A Detailed Look at the Proposed EB-5 Regulations, OMB Completes Review of Obama-Era EB-5 Regulations, and Summary: Notice of Proposed Rule for the EB-5 Immigrant Investor Program.

©2019 Greenberg Traurig, LLP. All rights reserved.

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About this Author

Laura Foote Reiff, Greeberg Traurig Law Firm, Washington DC, Northern Virginia, Labor and Employment, Immigration Law Attorney
Shareholder

Laura Foote Reiff Co-Chairs the Business Immigration & Compliance Practice and is the Co-Managing Shareholder of the Northern Virginia Office. She also Co-Chairs the firm’s Labor & Employment Practice’s International Employment, Immigration & Workforce Strategies group. Laura focuses her practice on business immigration laws and regulations affecting U.S. and foreign companies, as well as related employment compliance and legislative issues.

Laura advises corporations on a variety of compliance-related issues, particularly related to...

703-749-1372
Robert Maples, Greenberg Traurig Law Firm, Northern Virginia, Washington DC, Government Policy
Director

Robert Y. Maples is experienced in the Washington, D.C. federal, state and public affairs arenas. He has also been an advocate for building pragmatic alliances to resolve major social issues and has pioneered strategies for addressing complex public affairs crises in collaborative versus confrontational contexts. He continues his advocacy of pragmatic alliances in furtherance of client/government collaborations among the Congress and federal agencies, and serves as state counsel on complex client public policy matters. He is experienced in complex problem solving in regulatory and legislative environments and his client interests have led to Food and Drug Administration (FDA) activities and cybersecurity representation.

Robert maintains a Washington presence for a consumer product manufacturer with matters before the FDA. He authors a daily FDA e-newsletter, FDA Tracker, and is active on FDA matters with daily posts and observations of FDA-related news with social media. Robert’s Twitter account, @FDA_Track, was recognized by the Regulatory Affairs Professionals Society for his FDA-related work on the "Using Twitter as a Regulatory Intelligence Tool: The 300 Accounts Worth Following" list.

202-530-8553
Kristen Ng, Greenberg Traurig Law Firm, Nortrhern Virginia, Immigration Law Attorney
Associate

Kristen W. Ng focuses her practice on business immigration and compliance matters. She advises individuals and companies on a wide range of immigration matters, including nonimmigrant and immigrant employment-based cases, citizenship issues (acquisition, retention and relinquishment) and investor cases (E-2 and EB-5). She communicates directly with clients, including HR managers, high-level executives, and employees to ensure comprehension of each respective immigration process and procedure and to collaboratively produce the best immigration strategy and approach for...

703-749-1388