EB-5 Reform Bill Introduced in Senate; DHS Regulations Scheduled to Take Effect November 21

U.S. Capitol

A comprehensive legislative overhaul of the EB-5 investment program was introduced in the Senate on Tuesday – as both the program’s expiration and the effective date for new agency regulations are expected on November 21.

  • The Immigrant Investor Program Reform Act (S. 2778), sponsored by Senators Mike Rounds (R-SD), Judiciary Committee Chairman Lindsey Graham (R-SC), and John Cornyn (R-TX), would extend the EB-5 regional center program until September 30, 2025.  The bill includes a comprehensive suite of long overdue measures to deter fraud and optimize national security protections, in the context of inbound foreign investment capital that helps finance U.S. economic development and spur American job growth. 
  • Key elements of S. 2778  include provisions to: 
    • Establish an EB-5 Integrity Fund to provide rigorous program oversight, to be funded by regional center participants;
    • Provide DHS with improved investigative tools to ensure that an investor’s funds are derived from legitimate and lawful sources;
    • Clarify DHS’s authority to deny or revoke immigrant investor petitions for reasons including fraud, misrepresentation, or national security concerns;
    • Allow bona fide sovereign wealth funds to co-invest in projects supported by EB-5 capital;
    • Provide visa “set asides” to help direct EB-5 capital to projects in rural areas and census tracts designated by the U.S. Treasury as “opportunity zones”; and
    • Establish new investment levels to $1 million for projects in rural and opportunity zone Targeted Employment Areas (TEAs); and to $1.1 million for non-TEA projects.


  • Compromise reform principles set forth by a coalition of rural and urban stakeholders in May reflect a number of provisions in the new bill.  (Roundtable Weekly, May 17, 2019)
  • The rural and urban business interests recommending EB-5 modernization have consistently urged holistic reforms from Congress, as opposed to piecemeal regulatory changes by the Department of Homeland Security (DHS).  (Roundtable Weekly, March 8, 2019)  The imminent agency regulations – scheduled to take effect on November 21, unless they are superseded by Congress – do not accomplish important objectives set forth in the Rounds-Graham-Cornyn bill, such as the fraud deterrence provisions, national security enhancements, and visa set asides for investors in rural and distressed urban area projects.  (Roundtable Weekly, July 26, 2019

November 21 is also the date that the underlying legislative authorization of the program expires, as connected to the current continuing resolution (CR) that keeps the federal government running.  For the past five years, Congress has consistently extended the EB-5 regional center program concurrently with spending measures that continue federal operations.  The timing of the DHS rules’ effectiveness and the program’s expiration on November 21, along with S. 2778’s introduction, are expected to spur new rounds of legislative negotiation for long-term EB-5 reform in the coming weeks.

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DHS Issues New EB-5 Regulations

The Department of Homeland Security (DHS) on Wednesday published long-anticipated regulations governing key aspects of the EB-5 investment visa program. 

The  Department of Homeland Security (DHS) on Wednesday published   long-anticipated regulations governing key aspects of the EB-5 investment visa program.   

The new rule is scheduled to take effect on November 21, 2019 – assuming Congress reauthorizes EB-5 regional centers by September 30, and does not enact substantive reforms that supersede those program elements covered by DHS’s action.  For a detailed description of the rule, see “Greenberg Traurig Alert: Final EB-5 Regulations.”   The regulation includes:

  • Increases in Investment Amounts: 
    Investment amounts will increase to $900,000 for economic development projects in Targeted Employment Areas (“TEAs”), and to $1.8 million for non-TEA projects (from current levels of $500,000 and $1 million, respectively, which have not changed since the early 1990s).  The new amounts will adjust for inflation every five years back to 1990 dollars, with the first anticipated adjustment anticipated on October 1, 2024. 
  • TEA Definitions: 
    States no longer have a role in designating TEAs – those geographies that attract EB-5 capital at the lower investment threshold.  The new rules define “High Unemployment Area” TEAs –typically in urban locations – as the census tract where the project is located, plus any “directly adjacent” tracts to the project’s tract.  The weighted average unemployment rate across these tracts must be 150% of the national average unemployment rate. 
    • “Rural Areas” (with one exception) are not limited to high unemployment characteristics for TEA qualification.  As with current law, generally any area outside the boundaries of a U.S. Census Bureau Metropolitan Statistical Area (“MSA”) is a “Rural TEA.”  However, an entire town or city outside an MSA – with a population of 20,000 or more people – qualifies for TEA status only if that municipality has an unemployment rate 150% of the national average.
    • A number of stakeholders urged DHS to consider a “commuting pattern” approach for urban environments to qualify as a TEA.  DHS said it “appreciated” comments providing substantial evidence that workers who live in economically distressed neighborhoods typically commute to downtown job centers where core urban development is located.  In the end, however, DHS dismissed a “commuting pattern” option for TEAs because the agency found it “too operationally burdensome” and “posed challenges” that the agency could not figure out.
    • DHS also considered – and rejected – TEA delineations tied to census tract designations with a track record of success in other analogous economic development programs, like the established New Market Tax Credit (“NMTC”) program.
    • DHS’s new EB-5 rule does not comprehensively reform the program as urged by rural and urban stakeholders. (EB-5 coalition letter and  Roundtable Weekly, May 17, 2019) 


      Moreover, DHS failed to address the suggestion of rural and urban stakeholders to consider a recent Trump Administration Executive Order and assess the relationship between EB-5’s economically distressed TEA census tracts and “Opportunity Zone” census tracts, designated by the U.S. Treasury in the spring of 2018. (Roundtable Weekly, March 8, 2019).

  • Grandfathering and Transition Rules: 
    As noted above, the rule is scheduled to take effect on November 21, 2019 – assuming Congressional EB-5 reauthorization by September 30 and no legislative reforms on matters within the rule’s purview.
    • Investors who have already filed I-526 petitions, or who file by November 21, are subject to current program investment levels of $500,000 or $1 million.  They will not be required to post more money to meet DHS’s new amounts.  The rule states: “Petitions filed before the effective date will be adjudicated under the regulations in place at the time of filing.”  
    • Projects that do not complete intended EB-5 capital raises by November 21 will subscribe investors at different amounts.  For example, a project that currently qualifies as a TEA can attract investors at $500,000 until November 21.  Thereafter, if that project loses TEA status as per the new rule, it must attract investors at the $1.8 million level.  DHS rejected the concept for “project grandfathering,” stating such an approach “would grant existing projects in affluent urban areas that have been marketed as TEAs an unfair competitive advantage against new projects in such areas, which will need to attract investors at the higher minimum investment amount.”       

DHS’s rule does not achieve comprehensive reform of the “regional center” program – an objective that a broad coalition of rural and urban groups have urged Congress to achieve by the program’s legislative sunset date on September 30, 2019.  For example, the new regulation does not address EB-5 “integrity measures” that stakeholders have long requested to deter instances of fraud and maximize national security safeguards.  (Roundtable Weekly, May 17, 2019.)

The Real Estate Roundtable Calls On Congress to Reform and Reauthorize EB-5 Investment Program by Sept. 30

(Washington, D.C.) – Real Estate Roundtable President and CEO Jeffrey DeBoer today said congressional reauthorization of EB-5 “regional centers” needs to pass before the investment program expires on Sept. 30, and that the reauthorization should include measures to improve the program’s transparency and accountability along the lines of reforms outlined in an August 12 report by the U.S. Government Accountability Office:
“The Real Estate Roundtable strongly supports the EB-5 program. It provides unique gap financing for large and small projects across the nation and creates American jobs at no cost to taxpayers.  Congress should extend EB-5 regional centers before they expire on September 30, 2015, and at the same time make needed reforms to improve the integrity, administration and transparency of the program.  
“The August 12 Government Accountability Office report provides a blueprint to rally Congress into action after Labor Day.  The report outlines reforms to improve the decades-old EB-5 program that will continue to meet the overriding objectives of job creation and economic growth. This GAO report responds to bipartisan congressional requests to review and comment on the program. The report focuses on measures to safeguard national security, deter evolving risks of investor fraud, and clarify accepted government methodologies to show job creation.  Its findings are commendable and pending bipartisan bills presently address these identified concerns. This report can now be the catalyst that points the way toward reform and multi-year reauthorization by Congress.
“An estimated 136,000 American jobs – and nearly $7 billion in foreign investment dollars – could be forfeited if Congress fails to act.  Since the early 1990s, these regional centers have directed capital to help finance development projects and have always been reauthorized by wide bipartisan margins.  From 2005-2013, EB-5 brought in a minimum of $5.2 billion in private investment to the U.S. – with a minimum of $1.6 billion in 2013 alone.  
“Smart government policies are critical to enable America to compete in the global marketplace to attract foreign investment dollars – and put Americans to work – in rebuilding infrastructure, modernizing buildings, and developing resilient 21st century communities where we live, work, and play.  Businesses, local economic development agencies, and other key stakeholders should not wait.  They should now urge their Senators and Representatives to act swiftly