Why EB-5 regional centers need to act by Dec. 29
By Anayat Durrani
When the EB-5 Reform and Integrity Act was passed in March 2022, it reauthorized the expired Regional Center program for five years through September 2027. Along with the RIA came changes as well as much confusion and litigation regarding new criteria for regional centers going forward. One important date for regional centers to take action on is the fast approaching Dec. 29, 2022 deadline.
“I-956G is the new annual compliance form that replaces the I-924A. For the Regional Center’s intent to continue to be approved they must file the 1-956G. If a Regional Center does not file form I-956G it will be subject to termination by USCIS,” says Ed Beshara, attorney at law/managing attorney for Beshara Global Migration Law Firm.
Beshara says all Regional Centers designated on or before Sept. 30, 2022, whether they plan to sponsor new offerings or not, should file form I-956G annual report of the Regional Center by Dec. 29, 2022.
“For pre-RIA RCs whose principals do not want to sponsor new investors, it appears that they can refrain from these filings and fade away and without harming their pre-RIA investors,” says Robert Divine, leader of the Global Immigration Group at Baker Donelson. “Nevertheless, they might want to make both filings anyway to be safe, to keep options open for later, or to be able to sell the regional center while the market for that is good.”
Impact of the EB-5 settlement for regional centers
EB5 Capital, et al vs. US Department of Homeland Security, et al reached a Settlement Agreement in September 2022 that stated that previously approved Regional Centers should file for an amendment of their current regional center designations in order to meet RIA requirements if they plan to sponsor new projects and new investors.
“For pre-RIA RCs who do want to sponsor new investors, they needed to file the I-956 amendment before September 29. If they filed an I-956F project application before September 30, 2022, they should file I-956G,” says Divine. “If they have not filed I-956F before September 30, it is not clear that they need to file I-956G, but it is probably prudent to do so, and I think they can explicitly leave pre-RIA projects out of the filing, but they should discuss with counsel.”
EB-5 RIA questions remain unanswered by USCIS
Many EB-5 stakeholders say they have repeatedly reached out to USCIS for clarification. They have attempted to confirm that there will be no termination of Regional Centers not sponsoring new projects or new investors that did not file Form I‑956 but want to continue to exist to meet their obligations to grandfathered investors, but USCIS has failed to provide confirmation, says Kate Kalmykov, co-chair, Global Immigration, Greenberg Traurig, LLP.
“Instead, the USCIS has erroneously stated that such regional centers may be subject to termination. This is incorrect and likely to be challenged should the USCIS choose to proceed to terminate any Regional Centers as it clearly violates the plain language of the RIA,” says Kalmykov.
Greg Sheehan, a former USCIS EB-5 adjudicator and licensed immigration attorney who serves as director of EB-5 Platform and USCIS Compliance at Behring Co. says the question of ‘what if a regional center wants to wind down’ has come up in a lot in settlement talks with USCIS and by several members of the AILA EB-5 Committee.
He says at a fundamental level, if a regional center wants to continue, Form I-956 amendment is required and not filing this form could result in a Notice of Intent to Terminate and may be the basis of a Termination.
According to the settlement language, Sheehan says, the material change created by not filing will not be held against a Regional Center’s ongoing projects and investors. He says he can see there is some risk posed if a previously approved Regional Center decides not to file, based on the gaps in the language.
“Will their investors and projects be told that they are protected or not protected? Will internal systems correctly reflect that despite being terminated for failure to file their projects and investors are protected? When will the Policy Manual reflect the terms of the binding settlement agreement?” says Sheehan. “Will their full I-924 stack be correctly stored or will those files sit with other terminated regional centers? Is the records team relying on colored paper on a file to make the distinction between the two? It’s concerning.”
As a former adjudicator, Sheehan says he would consider all of these concerns and suggest going ahead and file or be ready to by Dec. 29.
“Use the past couple of years of intel that we have to hedge against future hiccups despite the settlement language,” says Sheehan.
With the Dec. 29 deadline fast approaching, Sheehan says Regional Centers may not get the information or clarification they need from USCIS by the deadline. Sheehan says he was on the 956 team before and after the settlement and knows things can change quickly.
“I-956G is more straightforward in my view,” says Sheehan. “If you feel comfortable not filing I-956 but you want to continue your project, it looks like you’re going to need to file I-956F and G anyway.”