EB-5 Policy Update with Ron Klasko: Congress Letter to DHS, Pending Litigation with a Star Wars Reference, Form I-956, Visa Set Asides, and Direct EB-5

EB5AN and Top EB-5 Attorneys Ron Klasko, Dan Lundy, and Jessica DeNisi to Hold Webinar on the Evolving EB-5 Regional Center Situation on Monday, May 16th at 12:00 p.m. EDT

Our webinar will cover the following questions:

  • What is the status of EB-5 regional center program reauthorization?
  • When can new EB-5 investors start to file I-526 petitions?
  • Will all EB-5 regional centers need to be redesignated?
  • Could pending litigation change the USCIS position on redesignation?
  • Will a letter from four members of Congress change USCIS’s position?
  • What is required in the new Form I-956 for regional center redesignation?
  • How do the EB-5 visa set asides impact new EB-5 investors?
  • Can new EB-5 investors file now in a single-investor direct project?

A bipartisan letter dated May 9, 2022, from select congressional leaders suggests that some members of Congress did NOT intend to deauthorize all existing Regional Centers by passing the EB-5 Reform and Integrity Act of 2022.

On May 9, 2022, four congressional leaders published a bipartisan letter to U.S. Department of Homeland Security (DHS) Secretary Alejandro Mayorkas. Below is a summary of the content of the letter and a general update on the evolving situation and path forward for EB-5 regional centers and EB-5 investors seeking EB-5 investments.

From page 1 of the letter from congressional leaders to Secretary Mayorkas:

“…requiring all regional centers to go through a process to be redesignated is not required under the EB-5 Reform and Integrity Act of 2022 and will put an immense burden on the agency [USCIS].”

The letter has been signed by four important members of Congress, including Senate Majority Leader Schumer (NY), Chairman Nadler (NJ), Senator Graham (SC), and Senator Cornyn (TX). However, it is of note that EB-5 Reform and Integrity Act of 2022 co-authors Senator Leahy (VT) and Senator Grassley (IA) have not signed the letter along with many other Congressmen and Senators who voted on H.R.2471 – Consolidated Appropriations Act, 2022.

The letter admonishes USCIS for posting confusing EB-5 regional center guidance on its website.

From page 2 of the letter from congressional leaders to Secretary Mayorkas:

“…Current guidance on the USCIS website requiring new regional center designations for every existing regional center is confusing and causing great concern in the EB-5 stakeholder community.”

USCIS issued guidance on its website on April 29, 2022, explaining its interpretation of the EB-5 Reform and Integrity Act of 2022. This guidance has caused significant concern in the EB-5 regional center community and is the primary impetus of the referenced letter from select congressional leaders to Secretary Mayorkas.

The letter argues that USCIS has the tools available to confirm compliance with new integrity measures without a full-scale redesignation of existing EB-5 regional centers.

From page 2 of the letter from congressional leaders to Secretary Mayorkas:

“The agency [USCIS] currently has the authority and the tools to confirm compliance with the new integrity measures without the need for a full-scale redesignation of existing regional centers.”

In pending litigation, USCIS argues that the passage of the EB-5 Reform and Integrity Act of 2022 repealed the prior regional center program, thus requiring all EB-5 regional centers to be fully redesignated.

From USCIS’s opposition motion in pending litigation regarding regional center redesignation requirements:

“Congress explicitly put the proverbial ‘nail in the coffin’ and established a clean slate for the new Regional Center Program.”

USCIS also relies on remarks from Senator Chuck Grassley to further support its position that EB-5 regional center redesignation was the goal of the EB-5 Reform and Integrity Act of 2022.

Floor remarks prepared by U.S. Senator Chuck Grassley of Iowa:

“The bill, which Senator Leahy and I primarily authored, formally repeals the pilot program created by Congress in 1992 and codifies in its place a new regional center program reflecting a number of reforms that we’ve pursued for many years…” 

“All EB-5 regional centers that operated under the lapsed and repealed pilot program will be expected to seek a new regional center designation...”

Conclusion and path forward for EB-5 regional center operators and foreign nationals considering an EB-5 investment

The bipartisan letter from select congressional leaders shows its authors belief that EB-5 regional centers do not need to be redesignated prior to submitting new EB-5 Project documents and immediately sponsoring new I-526s. And while this letter was signed by four senior members of Congress, Senators Leahy and Grassley, the co-authors and arguably the driving force behind the EB-5 Reform and Integrity Act, were not included on this letter.

Because of the confusion surrounding regional center redesignation, pending litigation with USCIS may result in a court order to temporarily halt the implementation of a full-scale EB-5 regional center redesignation requirement. This pending litigation argues that the online update by USCIS regarding regional center redesignation contradicts the plain meaning of the EB-5 Reform and Integrity Act. The plaintiff argues that the reform bill merely reauthorized the EB-5 program and intended that previously designated regional centers remain designated.

In response to this litigation, USCIS claims that the plaintiff’s argument is based on language from one of the law’s section titles, not the content of the law itself, and is thus without merit. USCIS argues that the law clearly repeals the original regional center pilot program authorized in 1992 and replaces it with the new act. USCIS points to statements by Senator Grassley that the reform act would repeal the lapsed regional center program and that all regional centers designated under the lapsed program would need to seek redesignation.

USCIS also has Star War’s Obi-Wan Kenobi on its side – – USCIS’s opposition motion references a well-known quote from Star Wars Episode IV: A New Hope, and directly states that the plaintiff’s position is the legal equivalent of “These aren’t the droids you’re looking for”.

If the court were to grant a temporary restraining order, EB-5 regional centers would presumably be able to accept new EB-5 investment without further delay. If, however, a court order is not issued, then it would be months, potentially years, before EB-5 investors could join EB-5 investments sponsored by EB-5 regional centers. Due to the potential lengthy delay, near-term clarity is critical for the EB-5 Program. In the meantime, the only EB-5 investment allowed are single-investor direct EB-5 investments. More information should become available in the coming weeks, but for now, EB-5 regional centers should review the forthcoming Form I-956 for EB-5 regional center redesignation and prepare to comply with new forthcoming USCIS compliance requirements.