by Robert C. Divine, Baker Donelson
I would like to clear up a few things from the IIUSA meeting in Seattle this week, with hope this helps someone take a better course of action than they might have otherwise in a critical moment as we dash to the end of the original era and into the new regulations taking effect on November 21, 2019.
Important Note: I said something totally wrong in my panel on “Busted Deals,” and I provide correction in the first section (and a footnote) below.
Re-Filings to Fix a Mess Using New Priority Date Retention
One of the really unfair phenomena in EB-5 is that an investor can get left in the cold if something adverse happens to his project after I-526 filing: the offering documents is found to contain an impermissible redemption clause or debt arrangement, the project never gets off the ground for lack of needed permits, funding, etc.; the project changes materially; the sponsoring regional center becomes terminated, or the organizers spend the capital inappropriately. If these happen before the investor becomes admitted to conditional permanent residence, by USCIS policy the investor is subject to denial or revocation of his I-526 petition. The investor always has been able to cure by filing a new I-526 about investment in the same project (for instance, with the impermissible redemption clause removed, or reflecting the material change, or sponsored by a different regional center) perhaps with no additional investment, or for a different project with a new investment (which might come in part or all from a refund from the first project), but the new I-526 petition has established a new place in an increasingly long queue for visa numbers.
The new regulation gives rise to an opportunity for a certain subset of such adversely affected investors to take action to fix their problem without losing their place in the visa queue. If the investor has received I-526 approval and has not yet used it to enter the U.S. as a conditional resident, and he files a new petition on or after November 21, he can retain the original “priority date” (the place in the visa queue marked by the first I-526 filing) as long as the initial I-526 was not in fact ineligible at the time of filing. The new petition filed after November 21 is subject to the regulation’s increased minimum investment (generally $1.8 million, and $900,000 in a Targeted Employment Area) and restrictions on TEA eligibility for use of the $900,000 level. Thus, to fix a problem without losing one’s place in the visa queue, the investor would need to invest at least another $400,000 even if the project fits new narrower TEA rules. If the new I-526 involves staying in the original new commercial enterprise, the investor might be able to just add in another $400,000, as USCIS Investor Program Office Director Sarah Kendall mentioned in her September 19, 2019 listening session introductory speech. If the fix is through investment in a new NCE, it appears that the investor must invest a full amount: either $900,000 in a “new TEA” or otherwise $1.8 million, although some of that might be recovered from the initial investment.
Unfortunately, this priority date retention does not specifically protect the investor’s children from “aging out” of derivative eligibility, and the Child Status Protection Act calculation of the child’s age will be the child’s absolute age minus the USCIS processing time of the later I-526 petition as of the date a visa number becomes available, but at least a visa number will be available earlier due to priority date retention.