EB-5 in the News

Court Orders Reinstatement of $500,000 Minimum EB-5 Investment

Court Orders Reinstatement of $500,000 Minimum EB-5 Investment

July 28, 2021 On June 22, 2021, a US District Court in California struck down the Trump Administration’s 2019 rule which raised the minimum investment to $900,000. Behring Regional Center v. Wolf, Case No. 3:20-cv-09263 (N.D. Cal).[1] USCIS now accepts I-526 petitions based on a $500,000 minimum investment.[2] USCIS now follows the EB-5 regulations that were in effect before the 2019 rule, including state designations of high unemployment TEAs. Evidence in the Behring case showed an 95% drop in all EB-5 filings with the price tag increase to $900,000. With this new court decision, we can expect a significant increase in EB-5 filings.

Next Steps by USCIS

USCIS appeal unlikely

The USCIS has 60 days to file an appeal, but it seems unlikely to do so. The Court found that Kevin McAleenan, who signed the 2019 regulation, was not authorized to act as Homeland Security secretary, without the approval of the US Senate. Since Mr. McAleenan was improperly appointed, his official acts, such as signing the 2019 EB-5 regulations, were invalid. Several other federal courts have made similar findings and the government has not appealed, so it seems likely USCIS will not appeal this case too.

New EB-5 regulations unlikely

Current Homeland Security Secretary Alejandro Mayorkas was appointed with the approval of the US Senate, so he is authorized to reissue the 2019 EB-5 regulations. This is unlikely since the regulations had a major impact on US businesses: EB-5 funding was reduced by more than $100 million after the 2019 regulation went into effect. This type of impact requires the government to follow a more complicated and lengthy process before issuing regulations.

Congress must reauthorize the Regional Center program

As a separate matter, after June 30, 2021, new I-526 petitions for projects affiliated with Regional Centers cannot be filed until Congress reauthorizes the Regional Center (‘RC’) program.[3] Since 1990, Congress has repeatedly reauthorized the RC program, without change. Until Congress reauthorizes the RC program this time, only non-RC affiliated investments (‘stand-alone EB-5’) of $500,000 will be accepted by USCIS. It is possible Congress may change the EB-5 requirements when reauthorizing the RC program, including raising the minimum investment.