APPLICANTS LOOK FORWARD TO SEPTEMBER 30 RULING ON US EB-5 IMMIGRANT INVESTOR PROGRAMME
In an exclusive conversation with Gulf News, Preeya Malik, Managing Director of UAE-based immigration consultants, Step Global, explains the finer points behind the reauthorisation of the popular US EB-5 Regional Center Programme
What is the EB-5 Immigrant Investor Programme? The EB-5 Immigrant Investor Programme was first introduced by US Congress in 1990. This programme allows for investors to fund single projects for a US green card for the investor, spouse, and any children under the age of 21 as dependants. In 1993, the US government introduced a pilot programme under the original EB-5 Programme called the Regional Center Pilot Programme, which would allow investors to pool their investments in larger projects, to obtain a green card.
The Regional Center Programme picked up popularity in 2008 during the downturn of the US economy, when banks were no longer freely lending to large construction projects. Regional Centers and developers therefore utilised foreign funding through the EB-5 programme in place of such institutional debt.
What happened to the Regional Center Programme on June 30, 2021?
In previous years, the EB-5 Regional Center Programme has been part of an omnibus bill (a general spending bill that combines various measures on diverse subjects into one bill), which when approved by a single vote in each house automatically reauthorises the Regional Center Programme.
This year, however, the Regional Center Programme was removed from the general spending bill, which required standalone reauthorisation.
Unfortunately, by June 30 there was no agreement in Senate as to language for a new EB-5 legislation and therefore the programme lapsed and effectively ceased to exist.
For investors already funded under the Regional Center Programme, this means a delay in their application processing until the programme is reauthorised. For those who have not yet applied, it means USCIS (United States Citizenship and Immigration Services) will not accept applications under the Regional Center programme until there is a reauthorisation.
During this time, the permanent direct EB-5 programme still exists and therefore many investors have chosen direct projects as a way of ensuring they can apply under the EB-5 programme at $500,000, as there is no certainty on price point once the programme is reauthorised.
What will happen on September 30, 2021?
Since the programme was not reauthorised on June 30, industry experts are expecting a reauthorisation by September 30. This marks the end of the US fiscal year when budget spending must be approved for the coming year. If the EB-5 Regional Center Programme is included as hoped, it could mean a reauthorisation of the programme at that time.
The possibility of reauthorisation on or by September 30 is apparent, however, if the bill language is not agreed upon shortly or if the EB-5 programme is not included in the general spending bill, the programme could also be effectively kicked down the road without reauthorisation. Alternatively, there could be a short-term authorisation that occurs. Just as before June 30, there has to be a meeting of minds in Senate as to what any new EB-5 legislation would look like and then agreement by Congress in order for the programme to be reauthorised.
There have been avid discussions within government and lobbying by major EB-5 industry players like IIUSA (an industry organisation), large developers, as well as several Regional Centers, to try to get the programme reauthorised since its lapse on June 30th. No one has given up on the notion that the EB-5 programme is a multibillion dollar industry and has many benefits for job creation and the US economy. Therefore, the industry is pushing hard for an anticipated reauthorisation as soon as possible.
There is very little to no likelihood that the programme would not be reauthorised under these given circumstances as there is bipartisan support for the programme at this time. The question remains as to when a reauthorisation will occur.
Will the price of EB-5 increase again?
Outside of reauthorisation, the major question on everyone’s minds is what will happen to the price of the EB-5 programme once the Regional Center programme is finally reauthorised?
In November 2019, the price of the EB-5 programme jumped from its long standing $500,000 to $900,000 under the EB-5 Modernisation Rule.
On June 22 this year, a judge in the Northern District of California ruled in the Behring v. Wolf case, that changes made in November 2019 were unauthorised as the government official signing off on these changes was not lawfully appointed by the Trump administration. This judgement reversed the 2019 changes under the EB-5 Modernisation Rule and effectively brought the price of the EB-5 Programme back down to $500,000 since that date. USCIS has confirmed on its website that anyone who applies now for the EB-5 programme will be applying at the current price of $500,000.
On August 23, 2021, DHS (Department of Homeland Security) filed a notice to appeal indicating that they are planning to file an official appeal to this ruling. An appeal could take many months to move forward. DHS would have 40 days to file their arguments on appeal, and then the other party will then have 30 days to respond to the appeal. Moving forward from that, there will be another response period and so on and so forth. Extensions are also common in US litigation. One can infer, however, that by filing their notice of appeal, USCIS favours the EB-5 price of $900,000 and does not want the price to remain at $500,000.
Aside from judicial appeal, the other option is that the government will try to change the price of EB-5 through an administrative process. Again, this could be lengthy. If the new legislation does not speak to price, USCIS will have to follow proper measures to make changes after reauthorisation of the current programme. It is advisable that the government take all necessary steps to properly change the price in order to avoid further litigation and lawsuits such as the Behring v. Wolf case. This may include a notice and comments period mandated by Federal law, where the proposed changes are published and the public is given a 30 day period to comment and present views and arguments. These comments are then looked at internally prior to any changes being made official. A second notice and comments period is also possible. Again, this process could take some time if done properly, before any changes come to fruition.
There is also the slim chance that DHS could use an Interim Final Rule process to return the price to $900,000, even within days or weeks.
The EB-5 programme is a multibillion dollar industry and has many benefits for job creation as well as for the US economy. The industry is therefore pushing hard for an anticipated reauthorisation.”