Washington D.C., – July 17, 2019: The Office of Management and Budget (OMB) recently completed its review of draft of new regulations for the EB-5 Regional Center program, entitled EB-5 Immigrant Investor Program Modernization (“EB-5 Modernization Regulation”).

As with any proposed new regulations, OMB’s review is intended to be an objective assessment of the potential impact of a regulation. It is the second to last step in the regulatory process before any new regulation becomes effective. Typically, the regulatory agency that prepared the proposed regulations will publish them as a “Final Rule” in the Federal Register shortly after OMB completes its review. The public will usually receive between 30 days to 60 days of prior notice through the Federal Register to prepare for the new regulations.

The progress of the EB-5 Modernization Regulation, however, has not been predictable or transparent. The Department of Homeland Security (DHS) first proposed the EB-5 Immigrant Investor Program Modernization regulations on January 13, 2017, in the last days of President Obama’s Administration. DHS provided the public with 90 days to submit comments, and received nearly 300 comments. Most comments were negative, indicating that the EB-5 Modernization Rule would be unworkable and even lead, in practice, to the shuttering of the EB-5 program.

The reason for this backlash was simple: the EB-5 Modernization Regulation proposed in 2017 sought to more than double the minimum investment amount per investor, from $500,000 to $1.35 million for investments in Targeted Employment Areas (TEA’s), and from $1 million to $1.8 million for non-TEA investments. If adopted, the EB-5 Modernization Regulation would reduce significantly the potential pool of investors who are capable of investing such large amounts of capital, subject to the at-risk and job creation requirements of the EB-5 program, and are patient enough to wait years for a green card.

Now, almost two-and-one-half years after the EB-5 Modernization Regulation was first proposed, the EB-5 industry and investors are entirely in the dark about the content of the EB-5 Modernization Regulation and its ultimate fate. DHS has yet to release the new text of the draft EB-5 regulations to the public, and DHS has not issued any public statements or notices about the draft regulations.

The few details we know indicate that as recently as May and June 2019, EB-5 industry representatives sought to explain to the OMB and Congress the devastating impact that the EB-5 Modernization Regulation would have on the EB-5 program.

The only clue that OMB left for the public is the annotation that it completed its review “Consistent with Change”. The OMB’s vague terminology can best be understood as an indication that the original draft EB-5 Modernization Regulation did not survive untouched after OMB completed its review. What changes were requested by OMB remains a mystery to the general public.

That is why we will have to wait for the publication of the Final Rule in the Federal Register to finally know the fate the EB-5 Regional Center program.

Clearly, OMB’s action had the effect of shaking EB-5 investors and the entire EB-5 industry out of their summer slumber. At is core, the OMB made it patently clear that – unless the OMB sent the EB-5 Modernization Regulation back to the drawing board — new regulations are likely coming in the very near future. Whenever that occurs, the new EB-5 regulations are going to dramatically impact new investors.

Donoso & Associates, LLC, is a law firm based in Washington, D.C., and is recognized as a leading immigration law firm with recognized expertise in visas for EB-5 investors, businesses, professionals and academics.