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In January 2017, the Department of Homeland Security (DHS) proposed to amend its regulations governing the employment-based, fifth preference (EB-5) immigrant investor classification.  In general, under the EB-5 program, individuals are eligible to apply for lawful permanent residence in the United States if they make the necessary investment in a commercial enterprise in the United States and create or, in certain circumstances, preserve 10 permanent full-time jobs for qualified U.S. workers. This rule sought public comment on a number of proposed changes to the EB-5 program regulations. Such proposed changes included: raising the minimum investment amount; allowing certain EB-5 petitioners to retain their original priority date; changing the designation process for targeted employment areas; and other miscellaneous changes to filing and interview processes. 

Statement of Need:

The proposed regulatory changes are necessary to reflect statutory changes and codify existing policies, more accurately reflect existing and future economic realities, improve operational efficiencies to provide stakeholders with a higher level of predictability and transparency in the adjudication process, and enhance program integrity by clarifying key eligibility requirements for program participation and further detailing the processes required. Given the complexities involved in adjudicating benefit requests in the EB-5 program, along with continued program integrity concerns and increasing adjudication processing times, DHS has decided to revise the existing regulations to modernize key areas of the program.

Summary of the Legal Basis:

The Immigration Act (INA) authorizes the Secretary of Homeland Security (Secretary) to administer and enforce the immigration and nationality laws including establishing regulations deemed necessary to carry out his authority, and section 102 of the Homeland Security Act, 6 U.S.C. 112, authorizes the Secretary to issue regulations. 8 U.S.C. 1103(a), INA section 103(a). INA section 203(b)(5), 8 U.S.C. 1153(b)(5), also provides the Secretary with authority to make visas available to immigrants seeking to engage in a new commercial enterprise in which the immigrant has invested and which will benefit the United States economy and create full-time employment for not fewer than 10 U.S. workers. Further, section 610 of Public Law 102-395 (8 U.S.C. 1153 note) created the Immigrant Investor Pilot Program and authorized the Secretary to set aside visas for individuals who invest in regional centers created for the purpose of concentrating pooled investment in defined economic zones, and was last amended by Public Law 107-273.

Alternatives:

Anticipated Costs and Benefits:

Due to data limitations and the complexity of EB-5 investment structures, it is difficult to quantify and monetize the costs and benefits of the proposed provisions, with the exception of application costs for dependents who would file the Petition by Entrepreneur to Remove Conditions on Permanent Resident Status (Form I-829) separately from principal investors, and familiarization costs to review the rule.

The proposal to raise the investment amounts and reform the targeted employment area (TEA) geography could deter some investors from participating in the EB-5 program. The increase in investment could reduce the number of investors as they may be unable or unwilling to invest at the higher proposed levels of investment. On the other hand, raising the investment amounts increases the amount invested by each investor and thereby potentially increases the total economic benefits of U.S. investment under this program. The proposed TEA provision would rule out TEA configurations that rely on a large number of census tracts indirectly linked to the actual project tract by numerous degrees of separation, and may better target investment capital to areas where unemployment rates are the highest.

Risks: