On Friday, February 22, 2019, the U.S. federal Office of Management and Budget (OMB) received final regulations from USCIS concerning its “EB-5 Immigrant Investor Program Modernization” proposed rules submitted on January 13, 2017. The regulations were proposed several days before the Obama Administration left office, and included proposed changes to the EB-5 Program including an increase of the minimum investment from $500,000 to $1.35 million for capital contributions made within Targeted Employment Areas (TEAs), and from $1 million to $1.8 million.

USCIS also has proposed to make regular inflation-based adjustments in the standard minimum investment amount “every 5 years, beginning 5 years from the effective date” of the regulations. As well, another significant change will require the federal government to determine whether a geographic area falls within a TEA. Previously, TEA determinations were made solely by each state or territory.

The reasons why USCIS has stated it wishes to make changes to the minimum investment are because it believes that when the EB-5 Program was created in 1990 the Congress only wished for 30 percent of investors to invest at the $500,000 level. However, from 1990 to 2015, 97 percent of investors invested at the lower level of investment.  As a result of this, as well as because the maximum investment amount has not been increased since then, USCIS calculated the inflation-adjusted amount of $1 million in today’s dollars and calculated $1.8 million. Rather than applying a 50 percent reduction to its proposed new amount (i.e. making the minimum investment $900,000), USCIS has decided to apply a 25 percent reduction. Thus, it has arrived at $1.35 million, which will be the minimum investment amount unless USCIS revises its approach.

So, as many investors and developers may ask: What’s next? We will continue to monitor when the final regulations are published in the Federal Register. Upon their publishing, it is my opinion that under the Congressional Review Act (CRA), the USCIS should be required to have the regulations be delayed by a minimum of 60 days before becoming final and effective. This is the norm for many past immigration regulations. The CRA states that regulations which have an annual impact of $100 million on the U.S. economy are reasons why the U.S. Congress should have the ability to pass a resolution opposing the new regulations. With an estimated $38 billion contributed to the U.S. GDP since 2008, as well as nearly 300,000 jobs for U.S. workers, and billions in dollars in taxable revenue, it would be surprising if there weren’t a delayed effective date.

It will be important that prospective EB-5 investors file their I-526 petitions before an effective date is revealed that could increase the minimum investment amount. Stay tuned for more to come.