USCIS has announced dramatic increases to filing fees for Regional Centers and EB-5 investors, providing major incentives for those who act now.
Among the many changes of the EB-5 Reform and Integrity Act of 2022 was an increase in fees for Regional Centers. Combining these added fees with the increased administrative burden of the integrity measures meant to combat fraud, the cost of operating a Regional Center went up significantly.
Now it’s happening again. A recently-released final rule increases application filing fees for both EB-5 issuers and investors, following a Notice of Proposed Rulemaking (NPRM) and public comment period in 2023. Here’s what’s in the final rule, how the industry is reacting, and what these changes mean for investors and Regional Centers.
What the final rule from USCIS says about filing fees
Released on January 31st, 2024, the text of the final rule from U.S. Citizenship and Immigration Services (USCIS) and the Department of Homeland Security (DHS) includes changes to the fee schedule for many types of visa applications and “provides additional fee exemptions for certain humanitarian categories and makes changes to certain other immigration benefit request requirements.”
According to USCIS, the agency “conducted a comprehensive biennial fee review and determined that current fees do not recover the full cost of providing adjudication and naturalization services. DHS is adjusting the fee schedule to fully recover costs and maintain adequate service.”
While the final rule does expand fee exemptions for many categories of petitioners and reduces fees for certain applications, some of the largest increases are in EB-5. I-526/526E petitioners will now have to pay $11,160 per application, up from $3,675, an increase of 204%. For Form I-829, applicants will have to pay $9,525, up from $3,750, an increase of 154%. Just between these two forms, petitioners will now have to pay $20,685, an increase of $13,260.
For Regional Centers, the changes are similarly drastic. An I-956 Application for Regional Center Designation used to carry a fee of $17,795. It now costs $47,695, an increase of $29,900, or 168%. The same cost has been assigned to Form I-956F, Application for Approval of an Investment in a Commercial Enterprise, meaning each project accepting EB-5 investment will now carry a fee of $47,695.
As has been noted by industry analysts, the fee increases in the final rule are identical to what was proposed in the NPRM, meaning absolutely nothing changed as a result of the public comment period. These fee increases are set to go into effect on April 1, 2024. However, USCIS has said it will accept prior editions of forms during a grace period between April 1 and June 3.
Why filing fees have been increased
USCIS has offered several justifications for the drastic fee increases. Director Ur M. Jaddou pointed out that USCIS has not raised filing fees in seven years, even though roughly 96% of its funding comes from filing fees and not from Congress. This may be of little consolation to Regional Center operators, who have already seen increased costs thanks to the RIA.
As the final rule states, “Full cost recovery means not only that fee-paying applicants and petitioners must pay their proportionate share of costs, but also that at least some fee-paying applicants and petitioners must pay a share of the immigration adjudication and naturalization services that DHS provides on a fee-exempt, fee-reduced, or fee-waived basis.”
In other words, other visa services are costing USCIS more than before, and EB-5 is being forced to foot the bill. It’s no surprise, then, that many in the industry are incensed by what they see as an unjustifiable fee increase that hurts immigrant investors without offering improved service.
Responses to the fee increases from the EB-5 industry
The American Immigration Lawyers Association and American Immigration Council released a lengthy comment in response to the NPRM on March 8, 2023. They critique many aspects of the proposal, with specific criticisms of the increases in EB-5 fees:
“There is no more egregious disconnect within USCIS than the one that exists between the fees charged for EB-5 services and the quality of the service provided to EB-5 investors,” it states, pointing out that “the idea that higher fees will lead to faster EB-5 related processing has no basis in historical or current performance in the EB-5 sector.”
The comment includes a full statistical breakdown of how increased fees have historically led to slower processing times, as well as a scathing review of the agency’s lack of transparency. The organizations assert (with a great deal of evidence) that USCIS has not based these fee increases on proper data or the procedures outlined in the RIA, merely expecting EB-5 applicants to “submit to the jaw-dropping fee increases because they can afford it.”
In a pair of blogs for EB5Investors.com, industry leaders lamented the increased burden on immigrant investors.
“The U.S. Citizenship and Immigration Services’ proposal to triple the filing fee for immigrant investors is outrageous especially since this program is designed to create jobs for Americans,” said Bernie Wolfsdorf of WR Immigration. “If we saw an improvement in adjudication times, a reasonable fee increase would be understandable but so far we have only seen adjudication times get longer, and longer.”
Daniel B. Lundy of Klasko Immigration Law Partners agreed: “The increased fees deter use of an already complicated and expensive program,” he said, pointing out that the final rule’s revenue estimates may be off. “Once a regional center is designated, it does not have to file an I-956 again unless there is a change, so I doubt there will be 400 being filed a year. I think 600 is also overly optimistic for the number of project applications (I-956F) being filed each year.”
Suzanne Lazicki noted another issue, which is the RIA-mandated EB-5 fee study intended to align fees with what is needed for timely processing. That study has yet to be completed, and these new fees are completely unrelated, meaning when that fee study is done, we could see even more fee increases.
“The EB-5 program not only has no cost to the US taxpayer, it actually helps to fund the government with form filing fees calculated to generate millions of dollars to USCIS above the anticipated cost to process EB-5 forms,” Lazicki writes.
“USCIS claims that this study is underway, but conveniently released this fee rule and increased all EB-5 fees dramatically without the benefit of that study,” said Lundy. “In light of the implausibility of the need for such high fees to cover the cost of adjudicating EB-5 petitions and applications, one is left with one simple question — what is USCIS going to do with all the EB-5 revenue it collects?”
What will be the effects of increased EB-5 filing fees?
The much higher filing fees will no doubt have ripple effects throughout the industry. Investors might believe that if they’re paying so much more, they can expect faster adjudication, but there’s no indication that will be the case. As Lundy put it, “if history is any guide, investors are likely to be disappointed.”
With that said, how might this change affect investor appetite for projects? It may greatly increase the demand for TEA projects that have a lower minimum investment amount. If they know they’re going to have to pay more in filing fees, investors will want to save wherever they can, meaning projects offering lower fees and greater efficiency will stand out.
Not every EB-5 investor is a high net-worth individual who can easily pay $11,160 for an I-526 application while also investing $800,000 or more and dealing with their other immigration-related expenses. Some applicants are working professionals seeking a way to stay in the country, while others are putting their life savings at risk to help their families. For these investors, getting applications in before April 1st could save them unnecessary hardship from the increased expense. Projects that are ready to take investment now could take advantage of a surge in rush investments before the deadline.
For applicants from some countries, this rush to get applications in before the deadline could be an issue. Countries with remittance restrictions present problems for getting funds to America, and these investors might not be able to make their entire investment in such a short period of time. Regional Centers that offer partial investment solutions could allow them to get their applications in before the deadline.
How to prepare for the new realities of EB-5
Investors aren’t the only ones who will have to deal with higher fees. Regional Centers will have to pay more for designation as well as a much higher fee for each project. This means larger projects could allow Regional Centers to save on filing fees.
Imagine a Regional Center choosing between one $20 million development and two $10 million projects. The filing fee for the single $20 million project would be $47,695, while for the two smaller projects it would be double that, $95,390. Over many years and many projects, the cost of those application fees could really add up. But larger projects mean more investors, more complexity, and a need for better administrative solutions.
With more efficient administration, issuers can potentially reduce the fees they need to charge investors. That’s why JTC works with Regional Centers in a variety of ways, from banking & escrow to fund administration & cosignatory to immigration workflow and on-demand document creation for investors. We help Regional Centers find efficiencies and offer greater value so they can continue helping immigrant investors accomplish their goals.
Learn more about JTC’s full suite of EB-5 services.
