No announcement yet.

Article: New EB-5 Bill HR 5992 — Things I Like, and Things I Don’t Like So Much by Bernard P. Wolfsdorf


  • Article: New EB-5 Bill HR 5992 — Things I Like, and Things I Don’t Like So Much by Bernard P. Wolfsdorf

    New EB-5 Bill HR 5992 — Things I Like, and Things I Don’t Like So Much


    On Monday, September 12, 2016, U.S. Representative Goodlatte, Chairman of the House Judiciary Committee introduced a new EB-5 bill HR 5992, the American Job Creation and Investment Promotion Reform Act. Discussion on this bill has been postponed, and it is likely we will get a short extension of the Regional Center program, with no changes, until December 9, 2016 via a Continuing Resolution. The proposed bill did not have the full support of even the Republicans and or the EB-5 industry because of negative reaction to retroactivity.

    Two important senators, Senator Cornyn from Texas and Senator Grassley from Iowa, met this week to discuss the proposal. Senator Cornyn supports a clean extension, whereas Senator Grassley was seeking to pass a new law now.

    During the short “lame duck” session starting the first Monday of December 2016, this bill, or some variation of it, might be introduced again. My guess is there is not enough time to pass a law this year, and we will likely get another short extension into 2017. In January 2017, when we have a new President and new Congress, the debate regarding this bill will continue.

    Important Provisions for Investors

    1. Reauthorization and Extension of the Regional Center Program is for five (5) years.
    2. Increased investment amount with $1,200,000 million as the new threshold investment level for non-Targeted Employment Areas (TEAs); and $800,000 for TEAs, including rural, as well as certain priority urban area infrastructure and manufacturing projects, and certain closed military bases, as well as some single census tracts outside of metropolitan areas that have high poverty rates or low income rates.
    3. Retroactive application of the new law is being proposed for petitions filed after June 1, 2015. There is limited grandfathering of I-526 petitions associated with exemplars filed before June 1, 2015, or approved before the date of enactment. There is a lot of opposition to retroactivity as it would be unfair to investors with petitions filed after June 1, 2015 to expect them to increase their investment amount by another $700,000 as many of the existing projects would no longer meet the new TEA definition.

    Provisions Impacting Agents & Brokers & Regional Centers

    1. Disclosure of fees – Promoters of Regional Centers and projects will need to register with USCIS for public listing and must provide details of qualifications, submit guidelines for offering investment opportunities, and provide details of the fee arrangements. Investors would have to sign off on these fee arrangements as well.
    2. Management and Ownership of Regional Centers – the New Commercial Enterprises (NCEs) and the Job Creating Enterprises (JCEs) must be owned and operated by U.S. citizens or lawful permanent residents. Also no foreign government can provide funding or own, directly or indirectly an interest in a Regional Center, New Commercial Enterprise or in a Job Creating Enterprise.

    Here are parts of the bill I like, and other parts not so much.

    The Good

    1. Reauthorization of the Regional Center Program for Five (5) Years. The numerous short-term extensions over the past year have caused massive uncertainty to the EB-5 industry. The reauthorization and five-year extension is a huge step forward.
    1. Regional Center Termination for Public Safety and National Security Concerns. USCIS has indicated it only has authority to terminate a Regional Center if it failed to file a Form I-924A each year or if USCIS determines it no longer serves the purpose of promoting economic growth. The proposal provides that EB-5 benefits can be denied or revoked if approval “is contrary to the national interest of the United States for reasons related to threats to public safety or national security” or for fraud, misrepresentation, or criminal misuse.
    1. Protection for Child “Age-Outs” if Conditional Lawful Permanent Residence (LPR) Status is Terminated. Children with conditional permanent residence status who have since reached 21 years old can maintain status as a “child” even in the event the conditional LPR status is terminated, if another I-526 petition is filed by the principal alien less than 1 year after termination.
    1. Concurrent Filing of Forms I-526 and I-485. Presently EB-5 investors have to wait for the I-526 petition to be approved before being able to file the I-485 application to adjust status in the U.S. (if eligible). The proposal would allow certain investors and their family members to file an I-485 adjustment application together with their I-526 if a visa number is available. This provides work authorization and travel authorization a few months after filing.
    1. Some Protection for Good Faith EB-5 Investors after Regional Center Termination. Even though the proposed protections do not go far enough, in my opinion, to protect bona fide investors associated with a terminated Regional Center, it is encouraging to see Congress think about real-life consequences of EB-5 fraud and mismanagement.

    Changes That Could Improve the Program Depending on How Implemented

    1. Site Visits. USCIS would be required to perform site visits to Regional Centers and to EB-5 projects. Site visits conducted professionally and with advance notice to legal counsel and to affected persons could help increase the reputation and credibility of the EB-5 Immigrant Investor Program and could help Regional Centers boost the confidence of EB-5 investors.
    1. Additional Information Requirements in Annual I-924A Filings. The bill proposes extensive detailed financial and administrative updates from Regional Centers each year. The requirement that Regional Centers submit written agreements detailing any commissions or similar transaction-based compensation paid to any third parties locating individual investors as well as maintain records, data, and information relating to all offers, purchases, sales, and investment advice associated with an offering could be beneficial. However it must also be recognized that the success of the industry has been mainly because of the hard work of agents worldwide educating potential investors though expensive marketing endeavors. Realtors are critical to maintaining vibrant real estate markets, and insurance agents are critical to ensuring a robust economy. Automatically assuming that agents are not acting in good faith places these critical players in poor light.
    1. “One Size Fits All” EB-5 Integrity Fund Fee for Regional Centers. Starting January 1, 2017, the proposal requires all Regional Centers to pay an annual fee of $25,000 to USCIS to fund the “EB-5 Integrity Fund.” This amount is reduced to $10,000 if the Regional Center has 20 or fewer investors investing in the immediately preceding fiscal year in its new commercial enterprises. I like proposals that understand the business realities of companies who’ve entered, and want to enter, the EB-5 industry. Imposing another massive fee on Regional Centers without providing any explanation of what benefits will be provided is merely another unjustified tax. If, however, this fee is used to protect defrauded investors, or to ensure failed projects’ investors are protected, then this could be beneficial. Merely throwing vast sums of money at an issue, without defining how the funds will be used, is a formula for waste.

    Thing I Don’t Like So Much

    1. Retroactive Application of Rules. Petitions filed after June 1, 2015 would be required to meet certain provisions in the new rule. Retroactive application of any law or regulation is fundamentally unfair as it materially disadvantages investors who acted in good faith and who relied on the law to make critical decisions. Why punish EB-5 investors, Regional Centers, and EB-5 projects that followed the rules as set at the time? How many of the I-526 petitions filed since June 1, 2015 will now be un-approvable, throwing the industry into chaos and barring the completion of countless projects? Lawsuits and bankruptcies will abound, and this is not how a civilized nation conducts business. The law must be transparent and this undermines confidence and trust in the laws of the U.S.
    1. Increased Minimum Investment Requirements with No Additional Visas. While expected, the new minimum investment level of $1,200,000 for non-TEA investments and $800,000 for TEA investments or investments in infrastructure and manufacturing projects, rural and other projects is unnecessary. While some programs may have higher thresholds, the U.S. program is one of the very few where the investment must be in an “at risk” venture, and for some, the risk has been high. So while the minimum investment amount has remained the same since 1990 and needs to be updated, an increase from $500,000 to $1,200,000, more than doubles the amount of investment, is unduly prohibitive, and will stifle the program. With almost 1,000,000 green cards issued annually, including 55,000 authorized for a random lottery, it appears this job creating capital providing program could easily have another 10,000 or 20,000 visas allocated.
    1. Massive TEA Changes. The bill proposes to overhaul the current TEA analysis to limit investments in high profile “desirable” locations. While there are some limited protections for some early projects that filed exemplars or have approved petitions, it is likely very few will meet the new rules for “re-designated” with the likelihood that many projects will be devastated. Also, now only the Department of Homeland Security, rather than individual states, have the authority to determine whether an area qualifies as a TEA. While the bill mandates the Administrative Procedures Act (APA) be followed, the delays presently experienced would put up an additional barrier from projects, whereas state agencies are most familiar with the needs of their local businesses and which areas may benefit most.
    1. Gift Restrictions. Gifted funds would only be counted towards the minimum capital investment requirement if gifted to the EB-5 investor by his or her spouse, parent, son, daughter, sibling, or grandparent. It is not clear why gifts from other family members such as aunts, uncles, or cousins should be prohibited. Moreover, in today’s modern society couples may choose not to get married and there is no logical reason to bar girlfriends or boyfriends from gifting to each other. Most perturbing would be the possible retroactive application of these rules to pending I-526 petitions.
    1. “Direct” Job Creation for Regional Center Investments. Regional centers and projects associated with Regional Centers will be required to demonstrate that ten percent (10%) of job creation is being fulfilled through direct job hires. This type of provision was originally included in Senators Leahy and Grassley’s senate bill 1501. This provision is not yet clear, and it’s not clear how this will be calculated or implemented. What will happen to projects that focused on indirect jobs exclusively – will they now be rejected?
    1. Unclear Provision on Use of Construction Jobs for Regional Center Projects. The proposal is not sufficiently clear regarding the use of “direct” construction jobs which last less than 24 months for Regional Center projects. Economists will most likely need better guidance to understand how the “length of full-time construction activity jobs that last shorter than 24 months” can be “aggregated” to satisfy the job creation requirements.
    1. “Reserved” EB-5 Visas. The bill sets aside 2,000 visa numbers to immigrants who invest in rural areas and an additional 2,000 to immigrants who invest in priority urban investment areas. For Chinese investors who have already committed their capital and whose capital has already been deployed in many instances, this is simply “switch & bait” trickery. With a three to four year waiting line and massive ageing out of Chinese investor children, almost doubling the waiting line by removing almost half the visas available is simply not right. At the time these investors made good faith commitments, there were 10,000 visas, and they could roughly calculate whether their children would be included. To retroactively disqualify hundreds of derivative children by subsequently altering the quota, is bad policy. Moreover, forcing investors to apply in rural or less than desirable higher risk areas is sneaky to say the least. It is well known that most workers commute to work and merely because the jobs are located in sometimes desirable areas is not a reason to discriminate against the current TEA areas. Moreover, the waiting line for many Chinese investors will go from bad to absurd.
    1. No EB-5 for Public Bonds. EB-5 capital would not be available to purchase municipal bonds or other bonds available to the general public, either as part of a primary offering or from a secondary market. Again, if job creation is the goal of the EB-5 Program, why restrict these types of investments, as long as job creation can be shown? There is no logic other than possible pandering to projects that feel these type of investments are too popular.
    1. EB-5 Integrity Fee for Regional Center Investors. The bill proposes an additional $2,000 fee for each I-526 petition filed through a Regional Center project. This appears to be on top of the $2,175 increase proposed by USCIS earlier this year for all I-526 petitions. While EB-5 filing fees are already one of the most expensive in the Federal government, the USCIS already plans to collect over $7,510 from each investor, and now an additional $2,000 puts the total at close to $10,000. This exorbitant fee appears to have little or no correlation to the cost of adjudication and is an unfair tax on investors.
    1. Source of Funds Needed for Administrative Fee and Costs. The law presently does not provide for documenting the source of funds for administrative fees or costs associated with the investment paid by EB-5 investors. It is not clear how this prevents fraud or improves the program and appears to be another gratuitous barrier.
    1. Publicly Available Information of Regional Center Changes. A Regional Center would need to provide advance notice to, and obtain approval from, USCIS regarding significant proposed changes to its organizational structure, ownership, or administration before any proposed changes take effect (unless exigent circumstances are present). While it may be helpful to provide transparency regarding changes, requiring this extra step will adversely impact the ability of Regional Centers and projects to manage and administer their business.
    1. Wasted “Reserved” EB-5 Visas. The bill sets aside 2,000 visa numbers to immigrants who invest in rural areas and an additional 2,000 to immigrants who invest in priority urban investment areas. These 4,000 visa numbers are likely to go unused at the end of the fiscal year since virtually no projects are geared up to accommodate these categories. The requirement that they are to “remain available within the same category for subsequent fiscal years” means that they will never be available to existing investors which is manifestly unfair and makes no sense. It’s like having food go to waste when others are starving. In effect those who already invested based on the current rules were sold “snake-oil” by the U.S. government. Less than 2% of investors have invested in direct projects and it’s unlikely that more than a few of these reserved visas will be allocated annually exacerbating the already critical waiting line problem. Picking on Chinese investors who have turned this failed program into a gigantic success, is plain wrong. Why treat Chinese investors so badly? This borders on deception. It is shameful that this is how Chinese investors who made the program successful are treated. Let’s fix this bill and do it right! America is a nation that leads by example and stands for fairness. This bill isn’t fair to existing investors.

    This post originally appeared on Wolfsdorf Immigration Law Group. Copyright © 2016 Wolfsdorf Connect - All Rights Reserved. Reprinted with permission.

    About The Author

    Bernard Wolfsdorf Bernard Wolfsdorf is the managing partner of the top-rated law firm, Wolfsdorf Rosenthal LLP (, and the past national president of the 14,000-member American Immigration Lawyers Association (AILA). Established in 1986, Wolfsdorf Rosenthal LLP is known worldwide for providing exceptional quality legal services. With 19 lawyers and offices in Los Angles and New York, the firm was recently listed as a top-tier immigration practice by Chambers & Partners with several of the firm's attorneys listed in the 2015 International Who's Who Legal. Mr. Wolfsdorf specializes in EB-5 investment immigration in addition to the full range of global immigration matters.

    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

      Posting comments is disabled.





    There are no tags yet.

    Latest Articles


    • Article: Immigration Judges’ Union Fights for Judicial Independence By Karolina Walters
      Immigration Judges’ Union Fights for Judicial Independence by Karolina Walters The National Association of Immigration Judges (NAIJ), the union that represents the nation’s immigration judges, is challenging the government’s decision to remove an immigration judge from a well-known case and replace him with a judge who immediately ordered the immigrant in the case deported. NAIJ’s grievance addresses the treatment of one immigration judge, but its resolution will have implications for judicial independence throughout the entire immigration court system. The grievance was filed on behalf of Philadelphia-based immigration judge Steven A. Morley, who was presiding over the case of Mr. Reynaldo Castro-Tum. Castro-Tum’s case rose to national importance earlier this year when Attorney General Jeff Sessions chose to refer the case to himself to reconsider the Board of Immigration Appeals’ previous decision in the case. In reconsidering the decision, Sessions effectively eliminated judges’ use of administrative closure, a docket management tool. Sessions sent Castro-Tum’s case back to Judge Morley, noting that the immigration court order Castro-Tum removed if he did not appear at his next hearing. Castro-Tum did not appear at the next hearing. However, Judge Morley continued the case to resolve whether Castro-Tum received adequate notice of the hearing. Due process requires, at a minimum, that an individual be given notice of proceedings and an opportunity to be heard by a judge. But before the next hearing could take place, the Executive Office for Immigration Review (EOIR) replaced Judge Morley with an Assistant Chief Immigration Judge who ordered Castro-Tum removed when he did not appear at court again. In their grievance, NAIJ asserts that the decision to remove Judge Morley from Castro-Tum’s case and reassign many other cases from his docket resulted in unacceptable interference with judicial independence. The grievance specifically claims that EOIR’s actions violate immigration judges’ authority under the regulations to exerci...
      08-17-2018, 11:12 AM
    • Article: Indirect Refoulement: Why the US Cannot Create a Safe Third Country Agreement with Mexico By Sophia Genovese
      Indirect Refoulement: Why the US Cannot Create a Safe Third Country Agreement with Mexico by Sophia Genovese The Trump Administration is seeking to create and implement a safe third country agreement with Mexico . Under this agreement, asylum seekers arriving at the US border who have travelled through Mexico would be denied the ability to file their asylum claims in the US. Such an agreement would trample on the rights of asylum-seekers, violating both international and US asylum law. In particular, the US would be violating the international principle of non-refoulement , which provides that no State “shall expel or return (“refouler”) a refugee in any manner whatsoever to the frontiers of territories where his [or her] life or freedom would be threatened,” where Mexico has a proven track record of being anything but safe for asylum seekers . The US has also codified Article 33(1) of the Refugee Convention into Section 208(a)(2)(A) of the Immigration and Nationality Act (INA) which provides that it will not return an asylum seeker to his or her country of origin, but may, at the determination of the Attorney General, remove the asylum seeker to a “safe third country… where the [asylum seeker] would have access to a full and fair procedure for determining a claim to asylum or equivalent temporary protection.” Although Mexican officials have not yet indicated whether they would sign a safe third country agreement with the US, asylum advocates should proactively seek to prevent such a devastating policy with a country that lacks adequate asylum protections. As reported by Human Rights First and Amnesty International , 75 percent of asylum seekers apprehended and detained by the National Institute of Migration (INM), the Mexican immigration enforcement agency, were not informed of their right to seek asylum. Even if asylum seekers are able to make their claims, only 30% of the asylum proceedings are ever concluded , and even fewer are granted, leaving many bona fide asylum seekers stranded without a resolution. The treatment of unaccompanied minors’ asylum claims in Mexico are even more dismal. Of the 35,000 minors apprehended by the INM in the first half of 2016, only 138 were able to apply for asylum , of which only 77 were granted protection. Beyond the failing asylum system in Mexico, asylum seekers are also in extreme danger of kidnapping, murder, rape, trafficking, and other crimes by INM officers and civilians. A safe third country agreement with Mexico would violate the United States’ international obligations under the 1967 Optional Protocol to the Refugee Convention, to which we are a signatory, which adopts by incorporation the obligations outlined in the 1951 Refugee Convention, to which the US is not a signatory. Take the example of an asylum-seeker, Mrs. H, who is fleeing politically-motivated violence in Honduras. Her husband, Mr. H, was a vocal political activist who opposed the National Party and members of the Honduran government. Mr. H began to receive death threats due to his political beliefs and reported such threats to the authorities. The authorities, however, di...
      08-16-2018, 02:32 PM
    • Article: Flawed Statistics Undermine USCIS/ICE/SEVP’s Restriction of D/S for Unlawful Presence By Eugene Goldstein, Esq.

      Flawed Statistics Undermine USCIS/ICE/SEVP’s Restriction of D/S for Unlawful Presence


      On August 9, 2018 USCIS published a “Policy Memorandum” restricting the 20-year-old calculation of Duration of Status (D/S) for F-1, J-1 and M-1 entrants (and their derivative families).

      USCIS also published an announcement (hereinafter “announcement”) “USCIS Issues Revised Guidance on Unlawful Presence for Students and Exchange Visitors , and a general discussion “Unlawful Presence and Bars to Admissibility” ...

      08-15-2018, 12:57 PM
    • Article: Update On Express Entry Immigration To Canada By Edward C. Corrigan and Selvin Mejia
      Update On Express Entry Immigration To Canada by Edward C. Corrigan and Selvin Mejia On January 1, 2015 the Federal Conservatives introduced significant changes to Canada’s economic immigration program. Formerly called the Skilled Worker program the new program was re-branded as Express Entry which included Skilled Workers, the Federal Skilled Trades program, and the In-Canada Experience Program. Canada modelled its revamped economic immigration program on New Zealand’s. There is also an Atlantic Immigration program. In addition there is a separate Live-In Caregiver program where individuals can apply for Permanent Residence after two years employment in this category. EXPRESS ENTRY The initial object of the changes was to create a list of Applicants where the Federal Government could select the best and the brightest from the list of Applicants. The Express Entry was supposed have applicants who had an approved Labour Market Impact Assessment (LMIA) and a valid job offer from an approved Canadian Employer. Under the Comprehensive Ranking System (CRS) candidates were award 600 points for having an approved job offer. Applicants would have achieved a point score of around 1,000 with the 600 points for having a valid offer of employment under the CRS. The provinces in Canada were also allowed to select Applicants according to their economic needs and these applicants that were selected through the respective provincial nominee programs by a province were awarded 600 points to be added to their score. Ontario also has a program where graduates from an Ontario University with a Master’s or who were in a PhD. program would be approved and awarded 600 points which virtually assured that they would be approved and provided with an invitation to apply. There is a quota that governs this graduate program. LABOUR MARKET IMPACT ASSESSMENTS Things did not go according to plan with Federal Express Entry. Very few Applicants were able to attai...
      08-14-2018, 12:50 PM
    • Article: USCIS Finalizes Unlawful Presence Policy Putting F, J and M Nonimmigrants In Great Jeopardy By Cyrus D. Mehta
      USCIS Finalizes Unlawful Presence Policy Putting F, J and M Nonimmigrants In Great Jeopardy by Cyrus D. Mehta The USCIS finalized its unlawful presence policy for F, J and M nonimmigrants on August 9, 2018. The final policy makes no significant changes from the draft policy of May 10, 2018. My earlier blog noted the flaws in the draft policy, which persist in the final policy. The final policy incorrectly breaks down the distinction between violating status and being unlawfully present in the US. As of August 9, 2018, F, J and M nonimmigrants who have failed to maintain nonimmigrant status will start accruing unlawful presence. Individuals who have accrued more than 180 days of unlawful presence during a single stay, and then depart, may be subject to 3-year or 10-year bars to admission, depending on how much unlawful presence they accrued before they departed the United States. See INA § 212(a)(9)(B)(i)(I) & (II) . Individuals who have accrued a total period of more than one year of unlawful presence, whether in a single stay or during multiple stays in the United States, and who then reenter or attempt to reenter the United States without being admitted or paroled, are permanently inadmissible. See INA § 212(a)(9)(C)(i)(1). Prior to August 9, 2018, foreign students (F nonimmigrants) and exchange visitors (J nonimmigrants) who were admitted for, or present in the United States in, Duration of Status started accruing unlawful presence on the day after USCIS formally found a nonimmigrant status violation while adjudicating a request for another immigrant benefit or on the day after an immigration judge ordered the applicant excluded, deported, or removed (whether or not the decision was appealed), whichever came first. F and J nonimmigrants, and foreign vocational students (M nonimmigrants), who were admitted until a specific date certain accrued unlawful presence on the day after their Form I-94 expired, on the day after USCIS formally found a nonimmigrant status violation while adjudicating a request for another immigration benefit, or on the day after an immigration judge ordered the applicant excluded, deported, or removed (whether or not the decision was appealed), whichever came first. This will no longer be the case. Under the new policy effective August 9, 2018, any status violation will start the accrual of unlawful presence. The nonimmigrant will not be provided with any formal notice of a status violation, and any violation from the past that has been discovered would have already started the accrual of unlawful presence. According to the pol...
      08-14-2018, 10:51 AM
    • Article: PERM Book Practice Tip - Maintenance of Status in PERM Cases By Joel Stewart, Editor PERM Book III
      PERM Book Practice Tip - Maintenance of Status in PERM Cases by Joel Stewart, Editor PERM Book III Before beginning a PERM case, an employer must always check the immigration history of the foreign national to confirm that he or she is eligible to receive permanent residency, and whether the applicant may expect to apply by Adjustment of Status or by Consular Processing. Focus must be placed on determining that the foreign national has always maintained status in the United States – whether it by as a temporary visitor for pleasure, business, as a student or in an authorized category of work. In addition to the Resume and Diplomas of the foreign worker, it is recommended to ask the worker to provide a time line to prove maintenance of status. This can be done by establishing an unbroken line of authorized stay and status in the US, and by confirming that the applicant has not worked without authorization by proving the monthly income from the time of first entering the United States. The issue of maintenance of status is more acute for vi...
      08-13-2018, 02:21 PM