EB-5 news continues to be grim for the industry

By David North on August 15, 2023

The news continues to be grim for the EB-5 (immigrant investor) industry, and the two most recent bits of it come from reliable sources, a federal judge and the U.S. State Department.

The EB-5 program gives a family-sized set of green cards to alien families investing at least $800,000 in a DHS-approved – but not guaranteed – investment in the states. While DHS routinely rubber-stamps 85-90% of the various kinds of applications before it, it has been rejecting a majority of the EB-5 applications in a recent 21-month period, as we reported recently.

The federal judge is Darrel Papillion of the Eastern District of Louisiana. He is presiding over yet another attempt by the industry to overturn reform, this time in a case filed by one of DHS’ regional centers, Gulf States Regional Center, LLC. Regional centers, routinely run by U.S. citizens, are the middlemen agencies that pool and manage the alien’s EB-5 investments.

What Gulf States wants in this instance is to deny an effort by DHS to make all the regional centers re-apply for permission to operate. DHS says that the recent legislation that renewed (and reformed) the program meant that it had to cause the regional centers to re-apply, on the grounds that the Congress had substantially changed the rules.

The judge, according to a recent LAW360 report has said that the regional center is likely to lose its case.

Meanwhile a new part of the program, setting aside 30 percent of the visas for truly depressed areas, continues to operate at about 5 percent of its capacity. Bear in mind that the ceiling for all EB-5 visas is about 10,000 a year, or about 830 a month; and 30 percent of that equals to 250 a month. That is the capacity of this part of the program. 

The State Department’s June figures on issuance of visas world-wide show that only 13 visas were issued for this segment of the program. There were four in Canada, three in China, one in Kuwait, two in Pakistan, and three in Saudi Arabia. The slowness of the program will slow the number of aliens using it but not decrease the total amount of immigration, as the unused visa numbers will “fall down” into other categories, allowing the admission of aliens through other programs.