New EB-5 Rule Clears Federal Review

On June 28, 2019, the new EB-5 rule has been cleared by the Office of Management and Budget’s review. The rule was originally sent to the OMB in February 2019. The contents of the regulation will remain confidential until the regulations are published. However, in January 2017, DHS published a proposal rule that sought significant changes to the EB-5. Below is a summary of the 2017 proposed changes.

• Increase in Investment Amounts. The current targeted employment area (TEA) investment is $800,000, this amount is proposed to increase to $1.35 million, a 170% increase. The current non-TEA investment is $1 million, this amount is proposed to increase to $1.8 million, an 80% increase.
• Federal Authority to Designate TEAs. Currently, the economics departments of each individual States have the authority to designate a TEA. The proposed rule will change this authority to federal only and change the methodology of calculating TEAs to one that will significantly restrict areas that can be designated as TEAs. If implemented, this would limit the types of urban development projects that are the most desirable for foreign investors.
• Priority Date A positive change. If passed, Petitioners would retain their priority date if there are circumstances beyond their control that will cause them to file a subsequent application. These circumstances would include the termination of a Regional Center or a material change in the business and business plan.
• Ability of dependents to file separate Form I-829, application to remove conditions on permanent residency. If passed, dependents that were not included in the Principal applicant’s Form I-829 application will have the ability to file a separate application to remove the conditions on their permanent residency. This would apply for divorced spouses or estranged children.

Changes to the EB-5 program will not take effect until the final regulation is published and implemented. Publication could occur in the coming days. Implementation is expected to occur no less than 30 days after publication; DHS could not implement the rule immediately upon publication unless it shows good cause to do so. This has no impact on the existing EB-5 rules at this time, EB-5 investors can continue to submit their applications based on the current guidelines until the new proposal is implemented. However, interested investors should move very fast as the long-rumored changes to the EB-5 program can occur within the month. To learn more about the program, please click here.