This story is from February 14, 2021

Cash for green card: Will the popular EB-5 Regional Center programme survive?

The EB-5 programme, popularly dubbed as the ‘Cash for green card’ programme, has been gaining traction in India and among Indians based overseas (mainly H-1B workers facing decades-long backlog for an employment-based green card). Wealthy Indians use it as a quicker route to the US, especially if they are keen that their children should study and ultimately settle in the country.
Cash for green card: Will the popular EB-5 Regional Center programme survive?
MUMBAI: The EB-5 programme, popularly dubbed as the ‘Cash for green card’ programme, has been gaining traction in India and among Indians based overseas (mainly H-1B workers facing decades-long backlog for employment-based green card). Wealthy Indians use it as a quicker route to the US, especially if they are keen that their children should study and ultimately settle in the country.
Today, the Damocles sword hangs over the heads of investors as the Regional Center programme, that was instituted in 1991, is at risk of expiration.
Time is running out and no one says it better than IIUSA, a dominant EB-5 regional center trade association.
In its message to stakeholders, IIUSA (Invest in the USA) emphatically states: "Be clear about this! If the EB-5 Regional Center programme is not reauthorised before June 30, it will cease to exist. Its elimination would leave thousands of good-faith investors uncertain as to their status at best and potentially without the immigration benefits they had sought in pursuing an EB-5 investment. Also significant for the future, the EB-5 Regional Center’s elimination would jeopardise funding efforts for economic development projects across the country – just when our country needs it most."
Between 2008-2015, the Regional Center programme is estimated to have pumped $20.6 billion into the US economy and created thousands of jobs for Americans.
Understandably, investors are worried that if the programme is not reauthorised the pending petitions may not be grandfathered and the money already invested may be stuck with regional centres.
The only hope lies in reauthorisation – and all hopes appear to be pinned on the EB-5 Reform and Integrity Act – a bill yet to be introduced in the Congress by Senators Chuck Grassley and Patrick Leahy.
Risk of expiry
Under the EB-5 programme, individuals can apply for lawful permanent residence in the US if they make the necessary investments and create at least 10 permanent full-time jobs for American workers.

The investors are granted conditional permanent residence (a conditional green card is given) for themselves, their spouse and children below 21. After two years, they have to apply for lifting of the "conditions". If approved, they get a green card which allows them to permanently live and work in the US.
Not more than 10,000 EB-5 visas can be allotted each year. Further, there is a country cap of 7%. However, if a country uses less than its allotted percentage, the remaining visas are made available to investors from other countries.
EB-5 offers two routes of investments, one is the direct or standalone route where the investor directly sets up his own business. The other is via investments in recognised regional centers, which in turn sponsor business entities. Most of the investments (upward of 90%), are typically routed via regional centers.
Rohit Kapuria, partner at Saul Ewing Arnstein & Lehr, a law firm, explains: “The EB-5 programme (meaning, the direct EB-5) is permanent and is not at risk. It is the Regional Center (pilot) programme, which was instituted in 1991, that is at risk of expiration. This programme has been subject to multiple extensions over the last few years. Previously, the extensions were lengthier, but in the last 6 years, it has been subject to several short extensions that were tied to the government’s budget appropriations process.”

“However, in the last appropriations process, it was decoupled (spun-off) from the appropriations process and now stands on its own. The expiration of that legislation is June 30, 2021. Therefore, the consequences of what happens if there is no extension beyond June 30 are more severe,” adds Kapuria.
Understandably, investors are worried. Afterall, we are not talking of pennies here. With effect from November 21, 2019, the investment requirements under the EB-5 programme were hiked to $1.8 million (as opposed to $1 million earlier). For Targeted Employment Area (TEA) investments - in rural areas or areas of high unemployment, the investment required is $900,000 (as opposed to $500,000 earlier).
Concerns of investors
Dilip (last name withheld on request), one of the several investors, told TOI, “If the programme expires on June 30, all the existing petitions cannot, by law, proceed to the next stage: the initial I-526 petitions cannot be approved, people with approved petitions cannot file documents, people who have filed documents cannot go for interviews, and even those who have a visa on their passport after the interview cannot enter the US.”
His additional fear is that if the programme lapses, the investments made so far could also get stuck with the regional centers, depending on the specific wording of the investment documents.

“At this stage, people who are thinking of investing in EB-5 need to be aware of the risks. The programme might not be extended beyond June 30; if it is extended only for a short term, they would face similar sunset points every few months,” he adds.
What legal experts say
“The fate of pending and approved I-526 petitions, that were predicated on regional center investments, is entirely up to USCIS,” states Mitch Wexler, partner at Fragomen, a global immigration law firm.
“United States Citizenship and Immigration Services (USCIS) has been intentionally vague on its intended treatment of I-526 petitions if the regional center loses authorisation, and the existing law does not address this issue. Historically, USCIS has held I-526 petitions in abeyance while awaiting regional center programme reauthorisation,” adds Wexler.
According to EB-5 legal experts, the longest lapse of the Regional Center programme in recent times, was between December 21, 2018 and January 25, 2019, when the US government was effectively shut down. During this period, USCIS held the pending Form 1-526 petitions (applications) and adjustment of status applications, in abeyance. While new submissions were allowed, these were not processed.
Filing of the Form 1-526 is virtually the first step in the EB-5 process, post investment, the investor has to file an application for a conditional green card, using this form (see graphic of the process and timelines). For Indian applicants the processing time can be as much as four years.
“Given that the situation is somewhat unprecedented (because the prior lapses were still reasonably assured of renewal as the Regional Center programme was tied to the government’s budget), we do not know what USCIS will actually do,” echoes Kapuria.
According to Wexler, “Grandfathering is the norm when there is a regulatory change, and we expect a lot of litigation if USCIS chooses to not grandfather the I-526 petitions that have been filed. However, there is no guarantee here. EB-5 investors who have already received conditional permanent residence will not lose their status even if the regional center programme is not reauthorised.”

IIUSA appears to be optimistic.
“Given the recent transition in the US administration and its completely opposite disposition toward immigration, it is more likely than not that there will be no termination and if for some reason there is, grandfathering is just as likely,” says Aaron Grau, executive director, at this trade association.
A worse case scenario could be that there is no grandfathering of pending petitions (applications) and that USCIS will deny new and existing petitions.
According to Kapuria, in such a scenario, nearly 60,000 individuals would be impacted, this includes not just those whose I-526 petitions are pending, but those awaiting EB-5 visas at consulates and those whose status adjustment approval is pending.
Hope lies in the EB-5 Reform and Integrity Act: IIUSA is pushing the EB-5 industry to get behind the bill so that it can be passed. “While some of the contents of the proposed bill are controversial, the main idea is that there is no other option. Absent this bill or some other bill, we face an expiration of the Regional Center programme,” says Kapuria.
The draft of the Grassley and Leahy bill proposed to extend the EB-5 Regional Center programme through September 2024. It empowered government agencies to terminate applications where there was a fraud, criminal misuse or on grounds of national security. Regional centers and projects into which investments flowed were to be subject to greater checks. It also proposed establishment of an ‘Integrity Fund’ to which regional centers and investors would contribute in terms of a fee. The funds collected would help government agencies to conduct site visits and investigate frauds.
“Currently, IIUSA and the senators are finalising technical edits to introduce the bill as a standalone measure as soon as possible in 2021. This will give policy-makers the opportunity to fully understand the programme and the vast economic benefits it brings to US communities,” states Grau.
Wexler adds that the Biden administration has proposed increasing employment-based visa numbers and recapturing unused visas, which will help clear the EB-5 visa backlog and invigorate the programme as a whole. “This is, of course, dependent on the reauthorisation of the EB-5 Regional Center programme in June 2021,” he states.
While support for the bill appears to be growing, the clock is ticking.
author
About the Author
Lubna Kably

Lubna Kably is a senior editor, who focuses on various policies and legislation. In particular, she writes extensively on immigration and tax policies. The Indian diaspora is the largest in the world; through her articles she demystifies the immigration-policy related developments in select countries for outbound students, job aspirants and employees. She also analyses the impact of Income-tax and GST related developments for individuals and business entities.

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