Immigrant Investor Visas, New Projects Imperiled by Unpaid Fees

Two years after lawmakers restarted a lapsed visa program for immigrant investors, scores of enterprises pooling investor funds are facing loss of authorization because of the government’s hard-line approach to payment of a required fee.

Although there’s no public data on those terminations, attorneys say US Citizenship and Immigration Services this summer began issuing notices of intent to terminate to roughly 100 EB-5 regional centers for unpaid program integrity fees.

The EB-5 visa program allows immigrants a fast-tracked pathway to permanent residency by investing a minimum amount in businesses that create jobs in the US. Most of those funds flow through the regional centers.

But the spate of termination notices is the latest hiccup the program has experienced since Congress reauthorized the operation of regional centers in a 2022 spending package. A trade group sued USCIS over a policy requiring existing regional centers to re-apply for approval, ultimately reaching a settlement allowing them to maintain their status under the program.

Lawmakers added the $10,000 annual program integrity fee—or $20,000 for regional centers with at least 20 investors—in the reauthorization law to cover the cost of policing a program that had become notorious for fraud.

On July 30 a Montana regional center won a temporary injunction in federal district court blocking USCIS from terminating its operation under the EB-5 program. District Court Judge Donald W. Molloy wasn’t persuaded by the Northern Rockies Regional Center’s argument that USCIS didn’t provide proper notice of the late payment, but found that the agency’s position was “internally inconsistent” because it had flexibility to change deadlines for the 2023 fee but now argued it had no choice but to terminate delinquent regional centers.

NRRC and other “good faith delinquents” who failed to submit the fees because they didn’t know about deadlines are “begging to pay,” said Brad Banias, an attorney at Banias Law LLC who represents the Missoula-based regional center.

But government attorneys have argued that the law requires the agency to terminate regional centers that didn’t pay within 90 days of the deadline.

Immigration attorneys now expect more litigation unless USCIS changes its handling of late payments.

The agency didn’t respond to a request for comment.

Shifting Deadlines

Northern Rockies said it missed the payment deadline in part because of a change in ownership. USCIS approved the transaction in May, after this year’s deadline for paying the integrity fee, without notifying the new owners of any outstanding payments related to the regional center.

Northern Rockies received initial approval to operate in 2011 and has sponsored seven EB-5 projects with $375 million in capital raised through the program. It’s focused on mixed-use real estate projects and alternative energy projects. The pending termination would put more than 500 visa petitions at risk for would-be immigrants who each invested between $500,000 and $800,000, NRRC said its lawsuit. Those investors could demand return of their capital, preventing projects from moving forward and impacting jobs in Montana, the organization argued.

Some regional centers that received recent termination notices may have chosen not to pay the annual fee because they plan to wind down operations anyway, Banias said. Others were likely confused by multiple changes in the fee deadline, multiple attorneys said, or received notices of termination even after submitting the payments.

The 2022 reauthorization law dictated that the integrity fee be paid at the beginning of the fiscal year on Oct. 1. But because of confusion over the new law, the final deadline for the 2023 fiscal year was pushed back multiple times, and eventually set for Oct. 1, 2023—the same day as the FY 2024 fee was due.

Despite that earlier flexibility, attorneys said USCIS has taken a stricter stance on those FY 2024 payments that were due last October, going straight to notices of termination for unpaid fees rather than extending the deadline again or taking late payments with penalties.

It was clear from the language of the reauthorization legislation that lawmakers intended for the agency to allow for late payments with penalties, said Robert Divine, a shareholder at Baker Donelson and former chief counsel at USCIS. The law stated that the Secretary of Homeland Security shall “impose a reasonable penalty, which shall be deposited into the [EB-5 Integrity Fund], if any regional center does not pay the fee required” within 30 days and “terminate the designation of any regional center that does not pay the fee required” within 90 days after it is due.

And the agency had previously used its discretion to allow those late payments last year, he said.

“Just acknowledge this was confusing for everybody,” Divine said. “Congress wants them to receive the penalty fees.”

Uncertainty Abounds

The termination notices are “a huge headache” for both regional centers and investors, said Joey Barnett, a partner at Wolfsdorf Rosenthal LLP.

Regional centers that lose authorization are on the hook for paying a new application fee of nearly $48,000—a provision added in new USCIS fee regulations issued earlier this year. The previous application fee for a regional center was $17,795.

EB-5 visa applicants have some protections if a regional center they invested in is terminated, Barnett said. Under the reauthorization law, a business associated with a terminated regional center can affiliate with a separate entity that is still authorized under the program, allowing those investors to transfer over without losing their chance at permanent residency, he said.

Even so, the judge’s order granting the injunction for NRRC said there was no evidence that those new investments would be made in Montana. And the terminations could rattle would-be immigrant investors and hurt the market for regional centers trying to raise funds, Divine said.

“Investors will be kind of freaked out,” he said. “I can’t for the life of me understand why they would insist on this.”