New EB-5 Rule Sent to Office of Management and Budget for Review

The Department of Homeland Security has sent a new EB-5 regulation to the Office of Management and Budget (OMB) for federal review. 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.

There is no update at this time on when the draft proposal will be published. OMB has 90 days to preview the proposal. After review it will be published in the Federal Register, at which time organizations and individuals are expected to have an opportunity to provide feedback during a public comment period, which is typically 30-60 days long. After the public comment period closes, DHS will review the feedback it receives and prepare to issue a final rule to rescind the program. DHS does take the feedback it receives seriously and have been known to reverse decisions based on the information they received.

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 fast as the long-rumored changes to the EB-5 program have finally taken the next steps towards implementation. To learn more about the program, please click here.