Though the EB-5 Regional Center Program (one of the two EB-5 investment options) has many strong benefits, amongst them its flexibility with regards to employment quota requirements, it has also been chronically dependent on reauthorization since its creation in 1992. As such, it experienced a slight interruption back in 2018, in addition to its current suspension. This undesirable situation has created troubles both within the industry at large, jeopardizing roughly $15 billion worth of funding, as well as with individual investors who were involved in regionally sponsored projects.
These investors are now unsure of how to proceed. Since the program’s suspension, United States Citizenship and Immigration Services (USCIS) has since discontinued its processing of I-526 petitions filed by regional center investors. To help these investors, EB5 Affiliate Network (EB5AN) has reached out to Congress to solicit the reauthorization of the regional center program and asked that a grandfathering clause be put into place so that the petitions of pre-suspension investors will still be considered.
This positive step on the part of EB5AN will hopefully spur Congress into reauthorizing the regional center program. In the present situation, both larger enterprises sponsored by the program and individual investors are forced to contend with various inconveniences and hindrances. The best overall outcome, not just for individuals but also, in a grander context, for the U.S. economy, would be for the regional center program to be active once more. How should regional center investors proceed for the time being?
The Possibility of Litigation
Many believe that regional center investors who are in a state of inaction due to the program’s suspension would seek legal action against the U.S. government. However, there is a high probability that those lawsuits would fail. On the other hand, investors with no way of moving forward might want to sue their regional centers. The only occasions in which such litigation would succeed would be in cases where fraudulence or faulty communication on the part of the regional centers has taken place.
Despite the difficulties that investors must currently contend with, they should approach the route of litigation with caution and be mindful that filing a lawsuit against regional centers would ultimately benefit no one. A financially diminished regional center may have to renounce the projects currently under its sponsorship and the investors would suffer the most from such a drawback. A better solution would mirror that of EB5AN’s entreaty to Congress: to campaign for the reauthorization of the program itself and for a grandfathering clause. A potential grandfathering clause that would assist and protect all pre-suspension investors would be the Foreign Investor Fairness Protection Act (FIFPA).
The Senate has approved a temporary spending bill extending the government’s budget until March 11, 2022. Now, the upcoming omnibus spending bill, which many believe to contain EB-5 investment reform, will be due on March 11. Since the regional center program’s expiration, the industry as a whole has made considerable effort to reauthorize the program and help those who had previously been involved with it. There is hope that the upcoming bill will indeed help regional center investors and boost the overall popularity of the EB5 investment industry.