Goodlatte EB-5 Reform Bill: Impacts For Investors and Promoters


We provided an initial analysis and a section-by-section summary of a draft EB-5 reform bill released late on Friday, September 9, 2016, by U.S. Representative Bob Goodlatte, chair of the House Judiciary Committee. That article is here.

The bill was re-released on September 12 with U.S. Representative John Conyers, ranking member of the House Judiciary Committee. The revised bill contains a two-page addition for good faith defrauded investors and has now been formally introduced as H.R. 5992. The House Judiciary Committee plans to mark up the bill on Wednesday, September 14.

In this article, we focus our discussion on the bill’s impact to investors if passed in the current form. The main problem is that the bill would retroactively apply to thousands of pending EB-5 petitions. All of these cases would be subject to the higher investment levels if this provision is passed into law, and some would have source of funds that would no longer qualify and therefore face possible denial.

Source of funds provisions are largely the same as in S. 1501, the main Senate EB-5 bill nearly enacted in late 2015. H.R. 5992’s key changes include:

  • Requirement to source administrative fees as well as the EB-5 capital contributions.
  • Specification of tax records of any kind filed within 7 years. Note: This does not actually require 7 years’ worth of tax returns. The language merely calls for tax returns filed within a 7-year period if they are available. The U.S. Citizenship and Immigration Services (USCIS) could interpret this language more restrictively to require tax returns, if this language is enacted.
  • Gift restrictions limiting donor relatives to a spouse, parent, son or daughter, sibling, or grandparent.
  • Loan restrictions that would allow EB-5 investment capital from loans only if the loan is secured by collateral owned by the investor. This provision would adopt the USCIS’s current “indebtedness” policy into law. Only chartered or licensed banking institutions could make loans. Accordingly, creditors may not be individuals and may also not be certain microlenders if they are not properly licensed.

Retroactive effect of new bill would result in petitions filed on or after June 1, 2015 being decided under the new law. There is a limited exception (“grandfathering”) for petitions associated with exemplars filed before June 1, 2015 or approved before the new law is passed. Thousands of petitions have been filed in the past 15 months and most of them would be decided under the new law if this bill passed.

The bill does not have a general provision allowing investors to amend or “supplement” their pending cases. S. 1501 contained such a provision, so this omission may be a technical error. If it is not an error, there would be no way for the many pending cases to be fixed to meet the new requirements.

New investment amounts would be $1,200,000 for investments not in targeted employment areas (TEAs) and $800,000 for investments in TEAs, manufacturing projects, or infrastructure projects.

TEA requirements are very different. The EB-5 regional center industry is studying how many current projects would no longer qualify under the TEA rules proposed in H.R. 5992. We expect that most current TEAs would no longer qualify. Investors would be allowed to “redesignate” into a TEA that qualifies under the new law as long as they do so within a year.

New visa reserves for rural and distressed urban areas would set aside 2,000 EB-5 visas for rural and 2,000 visas for distressed urban areas. These visa reserves would be permanent and not roll over to the general EB-5 pool if unused. Rural and qualifying distressed urban projects would benefit from immediate visa availability without backlog.

New document and fee requirements for EB-5 petitions include a $2,000 fee per I-526 petition for an “EB-5 Integrity Fund” to be used by USCIS for project site visits, oversight and interviews. Additionally, each investor would have to sign a disclosure listing all fees and compensation paid to agents, finders, or broker dealers, if this information was not already disclosure with the business plan.

Defrauded good faith investors would be allowed to have their petitions held, amend their petitions without fear of material change, retain their priority date, and possibly also receive age-out protection for derivatives. Non EB-5 funds recovered by a receiver or insurance and other monies could be used to create the necessary jobs. This is a helpful and important new section that would protect defrauded investors who had no participation in the fraud.

Promoters of regional centers and projects would have to:

  • register with USCIS for public listing;
  • provide “minimum qualifications”;
  • submit guidelines for offering investment opportunities and representing the immigration process to prospective investors; and
  • provide permissible fee arrangements.

Violation of this section could result in a suspension or permanent bar of the promoter. Fees that investors pay agents, finders, and broker dealers would also have to be disclosed in the business plan and also disclosed by individual investors.

Investors under the age of 18 would not be permitted to be EB-5 investors. This is a restrictive change from current USCIS policy stated in recent stakeholder meetings. If passed, it would force families to file now and risk the child aging out, or to wait several years until the child turns 18.

Residency without conditions would be allowed for investors who have already created the required number of jobs at least 24 months before admission to the United States. This would primarily benefit Chinese investors, who currently face a visa backlog of several years. When they are finally admitted to the U.S., they may be admitted as lawful permanent residents without conditions. The provision lacks detail about process, so greater clarity is needed.

Premium processing would be provided for a fee for I-924 applications, I-526 petitions, and I-829 petitions. For visa backlogged investors, premium processing of I-526 petitions will not be of much benefit because they will still need to wait until their I-526 filing date becomes current under the State Department’s Visa Bulletin. Premium processing for I-829 petitions also may have limited benefit if investors may be admitted without conditions in certain instances, although we do not yet have the details for that process to evaluate. Premium processing for I-924 amendments for exemplars or business plans would benefit investors because they would be able to determine whether their preferred project has received USCIS approval without waiting the many months the process currently takes.

About The Author

Carolyn S. Lee ( is the managing partner of the EB-5 practice group at Miller Mayer in Ithaca, NY. She has chaired, co-chaired, or been a member of the EB-5 committee of the American Immigration Lawyers Association since 2009. Her advocacy played a key role in in procuring important wins for EB-5 stakeholders in a 2013 EB-5 policy memorandum issued by the U.S. Citizenship and Immigration Services (USCIS). She also provided input on the Senate version of the EB-5 legislation that passed the Senate in 2013.
Stephen Yale-Loehr ( is co-author of Immigration Law and Procedure, the leading immigration law treatise, published by LexisNexis. He also teaches immigration and asylum law at Cornell Law School, and is of counsel at Miller Mayer. He founded and was the first executive director of Invest in the USA, the trade association of EB-5 regional centers. He has testified several times before Congress, including a July 2009 U.S. Senate hearing about the EB-5 program.
Nicolai Hinrichsen ( is the managing partner of Miller Mayer’s China office in Shanghai. Before joining Miller Mayer he practiced international corporate law in Paris for a U.S. Fortune 500 company, and then corporate and securities law in San Francisco for a large U.S.-based law firm.

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