Department of Homeland Security Issues Notice of Proposed Rulemaking for EB-5 Investments

JORDAN ISICOFF – The Department of Homeland Security (“DHS”) has recently issued a Notice of Proposed Rulemaking indicating that it will be publishing a rule changing the EB-5 Immigrant Investor Regional Center Program. The Notice of Proposed Rule Making reflects that DHS will seek to raise the amount of the EB-5 investment for a targeted employment area from $500,000 to $1,350,000 and for a non-targeted employment area from $1,000,000 to $1,800,000. DHS has also indicated that it intends to re-define what areas will qualify as targeted employment areas (“TEA”), likely reducing the areas that are considered targeted employment areas which require the lower investment amount.[1]

The impact of the proposed rule will likely result in a rush to file EB-5 petitions before any proposed rule becomes final, but it is questionable whether any proposed rule will ever become final. There is no time for the Obama administration to promulgate new regulations; thus, any changes to the EB-5 program would need to be blessed by the Trump administration. The Trump administration has indicated that it wants to streamline and eliminate unnecessary regulations. [2] Adding regulations is in clear opposition to the Trump anti-regulation philosophy. Since 2008, the EB-5 program has brought 16.9 billion dollars in total direct investment to the U.S. [3] This represents substantial foreign investment in the U.S., and Trump ran on a platform of economic growth.

Perhaps, more significantly, the EB-5 program will expire on April 28, 2017. [4] It has already been extended twice previously as part of the continuing resolution. Each time, the program was due to expire, various members of Congress came up with statutory changes to the program oriented towards increasing the integrity of the program, restricting areas considered targeted employment areas, and raising the requisite investment amount. [5] Congress never sought to raise the investment amount as high as that sought by DHS in the Notice of Proposed Rulemaking. Should Congress renew the program when it expires in April of 2017, they may make changes to the program mooting DHS’ efforts to raise the investment amount and restrict TEA designation. One questions with the program expiration around the corner, and clear Congressional action needed to renew the program, why DHS has chosen this time, so late in the Obama administration, to publish a Notice of Proposed Rulemaking.
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[1] EB-5 Immigrant Investor Program Modernization, Federal Register (2017), https://www.federalregister.gov/documents/2017/01/13/2017-00447/eb-5-immigrant-investor-program-modernization.

[2] Regulations, Donald J Trump for President, https://www.donaldjtrump.com/policies/regulations.

[3] EB-5 Is Working, Invest In the USA, https://share.geckoboard.com/dashboards/F7C1F0339D47813D.

[4] Robert Y. Maples, Kristen W. Ng & Laura Foote Reiff, Business Immigration & Compliance Attorneys | Greenberg Traurig EB-5 Insights (2017), http://www.eb5insights.com/.

[5] S.1501 – 114th Congress (2015-2016): American Job Creation and Investment Promotion Reform Act of 2015, S.1501 – 114th Congress (2015-2016): American Job Creation and Investment Promotion Reform Act of 2015 | Congress.gov | Library of Congress, https://www.congress.gov/bill/114th-congress/senate-bill/1501.

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