Berhing Regional EB5 case made void the Modernization Rule of 2019 that had raised the minimum investment amount for the EB5 programme from US$500,000 to US$900,000. Before the EB5 5th Regional Center (I5 and R5) expires on the 30th June 2021, there is a window of opportunity for foreign investors to capitalize on this new development – at their own peril.
Berhing Regional EB5 Case Vs Chad Wolf
The Federal District Judge granted Behring Regional Centre summary judgement on the above case.
They ruled that the Administrative Procedures Act was contravened in November 2019 by the previous Secretary of Homeland Security. It was deemed that the DHS’s improper actions under the Federal Vacancies Reform Act resulted in the Modernization Rule being nullified.
The Modernization Rule is now void. Amongst other things, the Modernization Rule had increased the investment amount to US$900,000 from US$ 500,000.
Is this change here to stay? Is USCIS appealing?
If USCIS does file an appeal with the Court of Appeals and the court grants this stay, then the November 2019 rules would be back in effect. USCIS could go through a notice and consent period to implement these rules again. Alternatively, the appeal could be rejected and investors would benefit from this lower investment amount (pre-2019).
A Window of Opportunity for EB 5 Investors?
This has a huge impact on investors in the EB-5 programme. Those who invested under the updated US$ 900,000 rules will need to closely review the offering documents they entered into. What’s most important is they identify what impact these developments could have on their existing investment.
New EB5 Applicants on the other hand now have the right to invest in Targeted Employment Areas for US$ 500,000 as was previously the case.
Read more: With Biden what lies ahead in the American Immigration Landscape?
Behring Regional EB5 case – change in regulations takes immediate effect as of the 22nd June 2021.
It creates a lot of uncertainty too for some investors which might hinder further investment by prospective applicants.
They need to decide whether to file their I-526 petitions for US$ 500,000 ASAP, file two I-526s at both investment amounts as a backup plan or opt against proceeding entirely.
Congress could also pass legislation imminently to reinstate the US$900,000 amount which would close the window of opportunity instantly.
Whether it takes a month for USCIS or a few years if they even did reinstate new regulations – right now there is an interim moment of opportunity until the EB5 programmes expiry date on 30th June 2021.
The Arguments for and against the Modernization Rule
When the rules changed in 2019 increasing the investment amount for the EB5 programme, there were pockets of ardent support and of staunch opposition from industry players. Some argued that this higher rate reflected inflation and the actual value or demand for the EB-5 programme.
Demand from India, China and Vietnam was soaring as foreign investors sought a new gateway to the US both for their own business interests and to ensure their children benefitted from lower tuition fees (domestic rates) and prospects.
Others opposed to this change felt this increase in cost limited the number of potential investors who would have otherwise considered or applied for the EB-5 programme.
Times though have changed and a lot has happened since November 2019.
The US is battling through the beginning of a recovery period whilst the Biden Administration is spending at historic levels to ‘reboot’ the heavily impacted American economy and rebuild.
Would a more attractive price point lure more Foreign Direct Investment into the US at this critical moment, when it is needed most?
