Greenberg Traurig attorney, Nataliya Rymer, was recently cited in the Notice of Proposed Rulemaking (NPRM) seeking to amend the current EB-5 regulations, which was published in the Federal Register pursuant to the Administrative Procedure Act. Rymer’s article U.S. Department of State Announces EB-5 Visas for China Unavailable Until October 1, 2014, which appeared in the National Law Review on August 23, 2014 (and is also available on GT’s EB-5 Insights Blog), was cited in connection with the language in the NPRM which seeks to address priority date retention. To learn more about retention for priority dates and for additional information please contact Nataliya Rymer.
On Jan. 17, 2017, the Department of Homeland Security (DHS) published its final rule to implement discretionary parole authority to increase, promote, and encourage entrepreneurship, innovation, and job creation in the United States. This final rule will add new regulatory provisions that will allow DHS to grant parole in certain circumstances and by discretion to entrepreneurs of start-up entities who are able to show through evidence the potential for business growth, job creation, and public benefit to the United States. Potential may be evidenced by the receipt of capital investment from U.S. investors or obtaining awards or grants from government entities. The criteria will be discussed in more detail below. If the parole is granted, the entrepreneur will be allowed a temporary stay of up to 30 months that may be extended for an additional 30 months. The final rule will be effective on July 16, 2017.
Requirements to qualify for parole for entrepreneurs:
- Meet the definition of entrepreneur: An entrepreneur is defined as an alien who possesses a substantial ownership interest in a start-up entity and is actively engaged in the operations of the entity, and who has the qualifications to perform such duties. A substantial ownership interest means possession of at least 10 percent of the start-up entity for the first parole application, and at least 5 percent ownership interest if applying for a renewal of the parole. During the initial period of parole, the entrepreneur must maintain at least 5 percent ownership interest in the entity, and during the subsequent period of re-parole, may reduce the ownership interest, but must always maintain an ownership interest in the entity.
- Entity must meet the definition of start-up entity: A start-up entity is defined as an entity created within the five years immediately preceding the filing of the alien’s initial parole application. If the entity has received a grant, award, or investment, then it will be considered as recently formed if it was created within five years preceding the receipt of the above-mentioned items.
- Definition of a government award or grant: This means an award or grant for economic development, research and development, or job creation that has been given by a U.S. federal, state, or local government entity.
On January 13, 2017, the Department of Homeland Security (“DHS”) published a Notice of Proposed Rulemaking Making (“NPRM”) seeking to amend the current EB-5 regulations. As required by the Administrative Procedure Act, DHS has published the NPRM in the Federal Register for notice to the public and has given the public a three (3) month period to provide comments. All public comments are due to DHS by April 11, 2017. We previously summarized the NPRM; this blog takes a more in depth look at the proposed new regulations.
The new regulations have been expected for quite some time from the Department. Generally, the NPRM covers several areas, including: (1) priority date retention for approved I-526 Petitions; (2) an increase to the minimum investment amounts required for EB-5; (3) modifications to how targeted employment areas (“TEAs”) are determined and designated; and (4) other clarifications to the EB-5 program.
Priority Date Retention
The NPRM brings the concept of priority date retention to the EB-5 program; it has long been available in other categories of business immigration. A priority date is the date on which the I-526 Petition is received at the U.S. Citizenship and immigration Services (“USCIS”) for processing (i.e. the filing date). In an era of visa retrogression where demand for EB-5 green cards exceeds the annual allotment of EB-5 green cards, an earlier priority date is more advantageous than a later one, as the priority date establishes the investor’s place in line to obtain conditional permanent residence.
DHS is proposing to allow an investor to retain an earlier priority date from a previously approved I-526 Petition. If an investor needs to file a new I-526 petition due to a material change in his or her investment, or if USCIS terminates the regional center from the initial investment, retaining an earlier priority date from a previously approved petition will be very advantageous and may save the investor years of waiting to obtain a new conditional green card.
It should be noted that a priority date cannot be retained if the original I-526 Petition was revoked by USCIS due to fraud or misrepresentation or USCIS material error. Moreover, the priority date cannot be transferred to another investor. Consequently, an investor cannot transfer his or her priority date to another family member if the family chooses to switch members acting as the principal investor. For example, a parent born in Mainland China fearing that his or her child may “age out” and become ineligible for immigration benefits cannot transfer his or her priority date to a child if the parent now seeks to make the child the investor and the child files a new I-526 Petition with USCIS.
Increased Investment Amount
DHS is proposing to increase the minimum investment amount for both TEA and non-TEA investments to “ensure that program requirements reflect the present-day dollar value of the investment amounts established by Congress in 1990,” as stated by DHS. To that end, DHS seeks to raise the minimum investment amount to $1.35 million for EB-5 projects located in a TEA and to $1.8 million for EB-5 projects that are not located in a TEA. This change would represent an adjustment for inflation from 1990 to 2015 as measured by the unadjusted Consumer Price Index for All Urban Consumers (CPI-U).
Many stakeholders had expected, and feared, an increase to the minimum investment amounts for EB-5 for some time. Several bills were introduced in the 114th Congress seeking to increase the investment amount required for EB-5; however, none were passed. Additionally, several of the legislative proposals sought to retroactively apply the increased investment amount to investors who previously had filed an I-526 Petition with USCIS.
Importantly, it seems that the NPRM does not seek to retroactively apply the new increased investment amount to investors that have filed their I-526 petitions with USCIS. However, the final rule will need to be clarified with respect to transition and grandfathering. The proposed rule states that the increased investment amount will only be required for those I-526 Petitions filed by investors on or after the effective date of the new regulations. That effective date is not yet known, but given that public comments are due on April 11, 2017 and USCIS will likely take many months to review and analyze the public comments (at least 90-120) days) and then incorporate any changes from those comments into the new regulations, it is likely that the effective date will not be until sometime in the summer of 2017 or later. It is also very possible that DHS will decide not to proceed with the NPRM, as there will be a new administration overseeing and directing DHS/USCIS as of January 20, 2017.
DHS notes in the NPRM that almost all EB-5 Petitions filed with USCIS are for projects or new commercial enterprises located within a TEA. Much like the increased investment amount, reforming the TEA designation process was another frequent issue raised in the EB-5 reform bills considered by Congress over the past two (2) years and considered during Judiciary Committee Hearings. With the NPRM, DHS does several notable things: (1) modifies the definition of TEAs to have a consistent national standard; and (2) remove the states from the TEA designation process and vests USCIS with sole power to designate TEAs.
DHS is proposing to amend the definition of “rural area” to mean any area other than an area within a metropolitan statistical area (“MSA”) or within the outer boundary of any city or town having a population of 20,000 or more based on the most recent decennial census of the United States. High unemployment TEAs are now defined as any of the following that have at least 150% of the national unemployment rate: (1) a Metropolitan Statistical Area (“MSA); (2) a county; (3) a city or town with a population of more than 20,000; (4) a census tract; or (5) a group of contiguous census tracts. If the MSA, county, city/town, and individual census tract do not meet at least 150% of the national unemployment rate, a TEA still can be designated by looking at a group of census tracts. Previously, many states designated TEAs using a grouping of contiguous census tracts, with the average unemployment rate determined by taking the normal average of each census tract. Additionally, many states put no numerical limitation on the amount of census tracts that could be aggregated to make a high unemployment TEA.
The NPRM, however, limits the amount of census tracts that can be used. Specifically, the EB-5 project can look to the census tract(s) where the project is located. From there, the EB-5 project also can include the surrounding census tracts that are immediately adjacent to the census tract(s) where the project is located. Thus, DHS has not numerically limited the amount of census tracts that can be aggregated to make a TEA area as some states, such as California, have done previously. Instead, DHS chose to geographically limit the census tracts to only those immediately adjacent to the tract(s) in which the project is located.
Moreover, USCIS now will use a weighted average when determining the unemployment rate for the grouping of census tracts instead of using the normal average. To do this, USCIS will divide the labor force data for the census tract by the total labor force data for the grouping of census tracts, and then multiply it by the unemployment rate for that census tract. By using a weighted average in this manner, DHS may be seeking to curtail the use of census tracts with high unemployment with little population to obtain a high unemployment rate TEA designation. DHS has stated they believe using the weighted average mirrors the Congressional intent of the statute that allows for high unemployment TEAs.
Finally, states will no longer have the ability to designate high unemployment rate TEAs. Instead, USCIS will make the designation using the standards outlined above and in the NPRM. What is not clear from the NPRM is whether there will be any ability for designations to be made prior to I-526 Petition or I-924 Application adjudication. Thus, it seems impossible for an EB-5 petitioner or project to obtain a high unemployment rate TEA designation in advance of filings with USCIS.
There are several other miscellaneous provisions in the NPRM. First, the NPRM allows derivative applicants (spouses and children of the investor) to file an I-829 Petition on their own if the investor is unable or unwilling to file the I-829 Petition, assuming that the investor was otherwise eligible to have the conditions removed on permanent residence. While the regulations previously allowed for dependents to file their own I-829 Petition if the investor is deceased or if the spouse is divorced from the investor, the NPRM seemingly expands this to include situations where the investor is simply not willing to file the I-829 Petition. Interestingly, this may protect dependents where the investor has abandoned his or her conditional permanent residence, but this will need to be clarified through the notice and comment process.
Finally, DHS is amending the “active management role” requirement of the regulations, which previously required investors to have an active role in the investment, either through day-to-day management or policy formulation rights. DHS recognizes that investors, particularly in a pooled investment vehicle, may have minimal policy formulation rights in the new commercial enterprise, and that a mostly passive role is sufficient to meet the requirement.
Greenberg Traurig intends to submit comments to USCIS on the NPRM to address procedural issues and to clarify various issues contained in the proposed regulations. If you have questions on the DHS Notice of Proposed Rulemaking, please contact the EB-5 team at Greenberg Traurig LLP.
In much anticipated news for both the United States and Israeli companies and entrepreneurs, Israeli nationals will soon become eligible for the E-2 Treaty Investor visas. The Israeli authorities have announced that the procedures and rules for the B-5 investor visa for U.S. citizens are expected to be released in March 2017. One of the vital effects of the B-5 visa implementation and availability is that it will enable the reciprocal availability of the E-2 visas for Israeli citizens.
The E-2 Treaty Investor visa aims to provide foreign nationals and corporate entities with a path to invest in the U.S. economy through reciprocal treaties of commerce. Where available, this visa option allows investors and employees of the same nationality to live in the United States and work for the U.S. enterprise. In addition to the requirement that the majority ownership of the enterprise must be held by nationals of the treaty country, E-2 visa requirements include a substantial investment into the U.S. enterprise, as well as the entity’s growth and expansion.
President Obama first signed the legislation adding Israel to the list of approximately 80 other countries eligible for E-2 treaty investor visas in 2012. However, the implementation of this law was on hold, awaiting Israel to likewise ratify the treaty serving as the basis of E-2 eligibility. The reciprocal terms and conditions included the availability of a reciprocal visa path for U.S. investors to Israel. On Aug. 13, 2014, the Israeli Knesset ratified the necessary legislation to enable E-2 visa availability to Israeli nationals. Subsequent to the ratification, the Israeli authorities took additional time to confirm the details of the legislation and its implementation.
With the recent announcement that the B-5 investor visa procedures and rules are anticipated to be released in March of this year, the much anticipated E-2 Treaty Investor visa availability is expected to be released around the same time. GT will continue to provide updates on this key issue as they become available and is available to answer any questions regarding E-2 visa eligibility.
The Department of Homeland Security (DHS) has issued a notice of proposed rulemaking to be published on January 13, 2017 to amend the regulations in relation to the employment-based, fifth preference (EB-5) immigrant investor classification and associated regional centers. The purpose of the proposed amendments is to modernize the EB-5 program. DHS will accept comments for 90 days, which must be received on or before April 11, 2017. The program is currently set to expire on April 28, 2017, after having been given two short-term extensions from its original September 30, 2016 expiration date as part of the Continuing Resolution.
The notice of proposed rulemaking (NPRM) proposes a number of amendments that would greatly change the EB-5 program. A summary of the major provisions are provided below:
Increases to the Investment Amounts – Increasing the Minimum Investment Amount
– Increasing the Minimum Investment Amount for High Employment Areas from $1 million to $1.8 million
– Increasing the Minimum Investment Amount for TEAs from $500,000 to $1.3million
– Adjust the Minimum Investment Amounts every 5 years
– No mention of grandfathering or transition periods
– Allows any city or town with high unemployment (150% of the national average) with a population of more than 20,000 to qualify as a TEA
– Specific Counties within MSAs
– Defines a TEA as a Census Tract (CT) or contiguous CTs in which the New Commercial Enterprise (NCE) is located if there is high unemployment
– Also defines a TEA as a CT where the NCE is located and all other CTs spooled around the NCE CT if there is a weighted average of the unemployment at least 150% of the national average.
– Rural areas qualify as TEAs, but would be redefined to include areas within the outer boundaries of any city or town having a population of 20k or more if in an MSA
– Eliminated the ability of states to designate areas at high-unemployment. This would all be done at the federal level
– No mention of grandfathering or transition periods
Priority Date Retention – This would allow EB-5 Investors to retain their place in the priority date line, if through no fault of their own, their petition is denied e.g. the RC is terminated, or if business conditions change that would result in an underperforming or failing investment project
Other Technical Changes
– Derivate family members must file their own petitions to remove conditions from their permanent residence in cases where they are not included in a petition to remove conditions filed by the principal investor (except in limited circumstances)
– Allows for flexibility of interview location at the I-829 stage
– Process for issuing permanent resident cards updated to conform to other procedures, i.e. the immigrant investor and derivatives will not need to report to a district office for processing of their permanent resident cards after approval of Form I-829
The NPRM’s stated aim is to reflect statutory changes and to modernize the EB-5 program. Stakeholders are encouraged to review all materials and prepare to comment.
On Jan. 9, the Office of Management and Budget (OMB) published a notice that, as of Jan. 6, it had completed its review a proposed rulemaking that the Department of Homeland Security (DHS) United States Citizenship and Immigration Services (USCIS) had drafted to make changes to the current regulations as they relate to the EB-5 Immigrant Investor Program. The title of this rule is “Improvement of the Employment Creation Immigrant Regulations.”
On Jan. 10, DHS released the Advance Notice of Proposed Rulemaking (ANPRM), which will be published in the Federal Register Jan. 11, to gather more information relating to Regional Centers. An ANPRM invites feedback and information to shape a proposed rule and starts the notice and comment period. Comments will be accepted for 90 days from the date of publication. The ANPRM seeks comments on several topics relating to the EB-5 Regional Center Program, including the process for designating entities as regional centers, establishing requirements for regional centers to utilize the exemplar filing process, the process to maintain regional center designation, the process to terminate regional center designation, and measures for ensuring safeguards for monitoring and oversight.
OMB clearance is the last procedural step in the rulemaking process. DHS can now release a Final Proposed Rule at will. Those regulations, as previously reported, will purportedly include changes that will result in increased investment amounts and change the way targeted employment areas (TEAS) are determined. We anticipate that further proposed rules could be released in the next few days and will include changes to TEA designation and minimum investment amounts. If these proposed rules are released, we will publish our analysis on www.eb5insights.com. We will also let our readers know how they can respond and comment on the proposed regulation. We expect that there will be at least a 60 day comment period. It is also unclear whether the new administration will support the proposed rules.
In this Law360 article, Greenberg Traurig Shareholder Laura Reiff discusses immigration legislation and regulations to watch in 2017. Reiff addresses the Legal Workforce Act, requiring employers to use E-Verify, the BRIDGE Act, and EB-5. To read the full article, click here.
Much attention has been focused of late on the impact that the incoming president will have on President Obama’s executive orders and rulemaking relative to a great number of issues where the president determined that he could not work with the Republican Congress. President-elect Trump has repeatedly promised to ’roll back’ virtually all of the rules and regulations promulgated by the current President. While the new president can rescind executive orders within minutes of the inaugural ceremony, any effort to roll back a final rule is ordinarily subject to the same process that those rules were subject to when created, which includes notice, a period for public comment and litigation. This process can take years. Examples of rules that may be ripe for scrutiny include virtually all rulemaking related to Clean Power, Waters of the U.S., Labor and Employment, and the Affordable Care Act.
˘ Not admitted to the practice of law.
On Dec. 20, 2016, the Department of Homeland Security (DHS) United States Citizenship and Immigration Services (USCIS) requested that the Office of Management and Budget (OMB) review a proposed rule making that would make changes to the current regulations as it relates to the EB-5 Immigrant Investor Program. The title of this rule is “Improvement of the Employment Creation Immigrant Regulations.”
DHS had previously released the Fall Unified Agenda and updated it in Nov. 2016 reflecting the date of Notice of Proposed Rulemaking (NPRM) to Jan. 2017. The proposed changes by DHS, as stated in the summary, include measures to promote predictability and transparency in the adjudication process, enhance program integrity, clarify requirements for regional center designation, retain priority dates in certain circumstances, and streamline the adjudication process for petitions. At a USCIS Stakeholders meeting in April 2016, DHS had stated that the rule making will include changes to minimum investment amount, job creation, targeted employment area requirements, and regional center designation.
Now that the OMB’s Office of Information and Regulatory Affairs (OIRA) has received the rule making for review, there will be a review period, typically restricted to 90 days, though there is no minimum number of days set. The period of review can extend beyond 90 days by the rulemaking agency, or by the OMB director.
The OMB can then send the regulations back to USCIS with or without comments. USCIS will have the opportunity to review any received comments and take administrative action, such as the issuance of notice of proposed rulemaking (NPRM) in the Federal Register. It is unclear what position the new Administration will take on regulations promulgated in the final days of the previous Administration, although press reports are that the new Administration will “freeze” or even cut regulations rather than allow new ones to advance. If the NPRM is issued, there will typically be a 60 day notice and comment period. USCIS will then review and revise the rule accordingly, and can issue a final rule that is published in the Final Register.
Greenberg Traurig will continue to monitor the status of the proposed rule making as it is reviewed by OMB’s OIRA.