Chapter 4 - Regional Center Applications

The goal of the Regional Center Program is to stimulate economic growth in a specified geographic area.^[1] Regional centers allow investors to pool their investments with other investors in already defined investment opportunities.

As of May 14, 2022, an entity seeking regional center designation to participate in the Regional Center Program submits a proposal using the Application for Regional Center Designation (Form I-956) accompanied by the Bona Fides of Persons Involved with Regional Center Program (Form I-956H).^[2]

As of May 14, 2022, a designated regional center may file an Application for Approval of an Investment in a Commercial Enterprise (Form I-956F) to request approval of each particular investment offering through an associated new commercial enterprise.^[3] An investor in that offering may file an Immigrant Petition by Regional Center Investor (Form I-526E)^[4] once the regional center has filed the project application. A regional center can be associated with one or more new commercial enterprises and files a Form I-956F for each particular investment offering.

A. Eligibility

A regional center must operate within a defined, contiguous, and limited geographic area as described in the application and consistent with the purpose of concentrating pooled investment within such area.^[5] The application for regional center designation must demonstrate that the pooled investment will have a substantive economic impact on the proposed geographic area.^[6]

B. Documentation and Evidence

In general, Form I-956 should include:

• Reasonable predictions, supported by economically and statistically valid and transparent forecasting tools, concerning the amount of investment that will be pooled, the kinds of commercial enterprises that will receive such investments, details of the jobs that will be created directly or indirectly as a result of such investments, and other positive economic effects such investments will have;
• A description of the policies and procedures in place reasonably designed to monitor new commercial enterprises and any associated job-creating entities to seek to ensure compliance with applicable federal and state laws;^[7]
• A description of the policies and procedures in place that are reasonably designed to ensure program compliance;
• Form I-956H for all persons involved in the regional center, as defined in the following subsection, confirming that all persons involved in the regional center meet applicable requirements;^[8] and
• A certification related to securities law compliance.^[9]

1. Persons Involved with the Regional Center Program

In general, and unless USCIS determines otherwise, a person is involved with a regional center, a new commercial enterprise, or any affiliated job-creating entity, as applicable, if the person is, directly or indirectly, in a position of substantive authority to make operational or managerial decisions over pooling, securitization, investment, release, acceptance, or control or use of any funding that was procured under the Regional Center Program. A person may be in a position of substantive authority if the person serves as a principal, a representative, an administrator, an owner, an officer, a board member, a manager, an executive, a general partner, a fiduciary, an agent, or in a similar position at the regional center, new commercial enterprise, or job-creating entity, respectively.^[10]

To be involved with a regional center, the person must be a national or a lawful permanent resident of the United States, and may not be in rescission or removal proceedings.^[11]

In addition, no agency, official, or other similar entity or representative of a foreign government entity may provide capital to, or be directly or indirectly involved with the ownership or administration of, a regional center, a new commercial enterprise, or a job-creating entity. However, a foreign or domestic investment fund or other investment vehicle that is wholly or partially owned, directly or indirectly, by a bona fide foreign sovereign wealth fund or a foreign state-owned enterprise otherwise permitted to do business in the United States may be involved with the ownership, but not the administration, of an unaffiliated job-creating entity.^[12]

Finally, a person may not be involved with any regional center, new commercial enterprise, or job-creating entity if the person:

• Has been found to have committed certain offenses;^[13]
• Is subject to a final order, for the duration of any penalty imposed by such order, of a state securities commission (or an agency or officer of a state performing similar functions), a state authority that supervises or examines banks, savings associations, or credit unions, a state insurance commission (or an agency or officer of a state performing similar functions), an appropriate federal banking agency, the Commodity Futures Trading Commission, the Securities and Exchange Commission (SEC), a financial self-regulatory organization recognized by the SEC, or the National Credit Union Administration, which is based on a violation of certain laws or regulations;^[14]
• Is determined by USCIS to be engaged in, has ever been engaged in, or seeks to engage in any illicit trafficking in any controlled substance or in any listed chemical;^[15] any activity relating to espionage, sabotage, or theft of intellectual property; any activity related to money laundering;^[16] any terrorist activity;^[17] any activity constituting or facilitating human trafficking or a human rights offense; any Nazi persecution, genocide, or commission of torture or extrajudicial killing activity;^[18] or the violation of any statute, regulation, or Executive Order regarding foreign financial transactions or foreign asset control; or
• Has been, during the preceding 10 years, included on the U.S. Department of Justice's List of Currently Disciplined Practitioners; or has received a reprimand or has otherwise been publicly disciplined for conduct related to fraud or deceit by a state bar association of which the person is or was a member.^[19]

2. Geographic Area

An applicant should submit a map or illustration of the geographic area, which must be defined, contiguous, and limited. An applicant should also include a list of the geographic components that make up the proposed geographic area of the regional center.^[20]

To demonstrate that the proposed geographic area is limited, the regional center applicant should submit evidence demonstrating the linkages between proposed economic activities within the proposed area based on different variables. Examples of variables to demonstrate linkages between economic activities include but are not limited to:

• Regional connectivity;
• The labor pool and supply chain; and
• Interdependence between projects.

Moreover, in assessing the likelihood that the proposed economic activity will have a substantive economic impact^[21] on the proposed geographic area, an officer reviews the impact of the activity relative to relevant economic conditions. The size of the proposed area should be limited and consistent with the scope and scale of the proposed economic activity, as the regional center applicant is required to focus on a geographic region of the United States.^[22]

3. Reasonable Predictions

An applicant must submit evidence that the regional center's pooled investment will have a substantive economic impact on the proposed geographic area. The proposal must include reasonable predictions, supported by economically and statistically valid and transparent forecasting tools, concerning the amount of investment that will be pooled, the kinds of commercial enterprises that will receive such investments, details of the jobs that will be created directly or indirectly as a result of such investments, and other positive economic effects such investments will have.^[23]

4. Policies and Procedures

An applicant must provide a description of the policies and procedures in place reasonably designed to monitor new commercial enterprises and any associated job-creating entity to seek to ensure compliance with applicable federal and state laws as well as the employment-based 5th preference (EB-5) program.^[24] Such evidence may include, but is not limited to, a written policy document that describes the policies and procedures in place reasonably designed to:

• Monitor new commercial enterprises and any associated job-creating entity to seek to ensure compliance with all applicable federal and state laws; and
• Ensure EB-5 program compliance.

Applicable federal and state laws that entities must comply with include:

• Applicable laws, regulations, and Executive Orders of the United States, including immigration laws, criminal laws, and securities laws; and
• All securities laws of each state in which securities offerings will be conducted, investment advice will be rendered, or the offerors or offerees reside.^[25]

C. Adjudication

1. Approval

If the applicant properly filed the application and the applicant has met the required eligibility standards, the officer approves the application. The approval notice provides information about the responsibilities and obligations of the designated regional center. The approval notice also lists the evidence to submit in support of regional center-associated individual EB-5 petitions, as well as details on the reporting, oversight and other compliance requirements for regional centers.

2. Denial

If the applicant has not established eligibility for the benefit sought, the officer denies the application. The officer should write the denial in clear and comprehensive language and cover all grounds for denial.^[26] In the denial, the officer should refer to the controlling statute or regulations and to any relevant precedent or adopted decisions. The decision must include information about the applicant’s right to appeal to the Administrative Appeals Office and the opportunity to file a motion to reopen or reconsider.

USCIS may deny an application if USCIS determines, in its discretion, that it was predicated on or involved fraud, deceit, intentional material misrepresentation, or criminal misuse^[27] or that the approval of such application is contrary to the national interest of the United States for reasons relating to threats to public safety or national security.^[28]

D. Amendments

A designated regional center must notify USCIS no later than 120 days before the implementation of significant proposed changes to its organizational structure, ownership, or administration, including the sale of such center, or other arrangements which would result in individuals becoming involved with the regional center that were not previously subject to the requirements under INA 203(b)(5)(H).^[29] Such notice is required within 5 business days after one of those changes if exigent circumstances are present.^[30] USCIS will continue to adjudicate business plans and petitions during any notice period as long as the amendment to the business or petition does not negatively impact program eligibility.^[31]

E. Record-Keeping and Audits

1. Record-Keeping

A regional center must make and preserve, during the 5-year period beginning on the last day of the federal fiscal year in which any transactions occurred, books, ledgers, records, and other documentation from the regional center, new commercial enterprise, or job-creating entity used to support:

• Any claims, evidence, or certifications contained in the regional center’s annual statements;^[32] and
• Associated petitions by investors seeking EB-5 classification or removal of conditions.^[33]

2. Audits

USCIS audits each regional center at least once every 5 years.^[34] Each audit includes a review of any documentation required to be maintained under the record-keeping requirements described above for the preceding 5 fiscal years and a review of the flow of immigrant investor capital into any capital investment project.^[35] To the extent multiple regional centers are located at a single site, USCIS may audit multiple regional centers in a single site visit.^[36]

F. Annual Statements

A designated regional center must submit a Regional Center Annual Statement (Form I-956G) for each fiscal year (October 1 through September 30) on or before December 29 of the calendar year in which the fiscal year ended.^[37] If the regional center was designated on or before September 30, it must file an annual statement on or before December 29 of the same calendar year. If the regional center was designated on or after October 1, it does not need to file its first annual statement until on or before December 29 of the following calendar year.^[38]

Each statement must include:

• A certification stating that, to the best of the certifier's knowledge, after a due diligence investigation, the regional center is in compliance with the statutory provisions pertaining to the bona fides of those involved with the regional center;^[39]
• A certification relating to compliance with securities laws;
• A certification stating that, to the best of the certifier's knowledge, after a due diligence investigation, the regional center is in compliance with the requirement to maintain written agreements with promoters operating on its behalf;^[40]
• A description of any pending material litigation or bankruptcy proceedings, or material litigation or bankruptcy proceedings resolved during the preceding fiscal year, involving the regional center, the new commercial enterprise, or any affiliated job-creating entity;
• An accounting of all individual immigrant investor capital invested in the regional center, new commercial enterprise, and job-creating entity; and
• A description of the regional center’s policies and procedures that are designed to enable the regional center to comply with applicable federal labor laws.^[41]

For each new commercial enterprise associated with the regional center, the regional center must also provide:

• An accounting of the aggregate capital invested in the new commercial enterprise and any job-creating entity by immigrant investors for each capital investment project being undertaken by the new commercial enterprise;
• A description of how the capital invested is being used to execute each capital investment project in the filed business plan or plans;
• Evidence that 100 percent of the capital invested has been committed to each capital investment project;
• Detailed evidence of the progress made toward the completion of each capital investment project;
• An accounting of the aggregate direct jobs created or preserved;
• To the best of its knowledge, a description of all fees collected from investors by the regional center, new commercial enterprise, any affiliated job-creating, other affiliated issuer of securities or any promoter, finder, broker-dealer, or other entity engaged to locate investors, an accounting of the entities that received such fees, and the purpose for which such fees were collected;^[42]
• Any documentation submitted with an Application for Approval of an Investment in a New Commercial Enterprise (Form I-956F) if there has been a material change during the preceding fiscal year; and
• A certification by the regional center that the information pertaining to each new commercial enterprise is accurate, to the best of the certifier’s knowledge, after a due diligence investigation.^[43]

G. Integrity Fund

Every October 1st, each designated regional center^[44] must pay the following amounts into the EB-5 Integrity Fund (the Fund):

• $20,000; or
• $10,000 if the regional center has 20 or fewer investors.^[45]

On March 2, 2023, USCIS exercised its discretion to set an enforcement policy for how it will evaluate whether a regional center has appropriately counted the number of its total investors and, accordingly, paid the correct fee.^[46] USCIS developed this policy to adhere as closely to the plain statutory language as possible and in line with the general understanding of the term “investors” by EB-5 stakeholders.^[47]

Under that policy, USCIS generally considers an individual to be an investor beginning from the filing of a petition for classification (either Immigrant Petition by Alien Investor (Form I-526)^[48] or Form I-526E) and through the filing of a Petition by Investor to Remove Conditions on Permanent Resident Status (Form I-829).^[49]

For example, a regional center may have investors who have filed the following petitions on or before September 30 of the relevant fiscal year (including filings from prior fiscal years):

• 30 associated Form I-526 petitions;^[50]
• 10 associated Form I-526E petitions; and
• 20 associated Form I-829 petitions.

In that situation, USCIS generally would estimate that the regional center has 20 total investors (30 plus 10, minus 20) in its new commercial enterprises for a given fiscal year for purposes of calculating the applicable Fund fee for the following fiscal year.^[51] Therefore, it would likely owe the reduced fee amount of $10,000.^[52] USCIS, however, retains discretion to review this question on a case-by-case basis that accounts for any other facts or evidence in the record in the totality of the circumstances, including any evidence provided by a regional center that believes it has greater or fewer total investors.^[53]

H. Terminations, Suspensions, and Other Sanctions

1. In General

In general, USCIS may impose a variety of sanctions on a regional center for violations of various statutory provisions. Depending on the violation, the range of sanctions may include:

• Fines of 10 percent or less of the total capital invested by immigrant investors in the regional center’s new commercial enterprises or job-creating entities directly involved in such violations, the payment of which must not in any circumstance utilize any of such immigrant investors’ capital investments, and which must be deposited into the EB-5 Integrity Fund;
• Temporary suspension from participation in the Regional Center Program, which may be lifted by USCIS if the individual or entity cures the alleged violation after being provided such an opportunity by USCIS;
• Permanent bar from participation in the Regional Center Program for one or more individuals or business entities associated with the regional center, new commercial enterprise, or job-creating entity; and
• Termination of regional center designation.^[54]

The regional center may appeal any suspension, termination, or other sanction to the Administrative Appeals Office.^[55]

2. Violations Permitting Various Sanctions

USCIS may sanction a regional center, including suspension or termination, in the following situations:

• The regional center fails to submit an annual statement or USCIS determines that the regional center knowingly submitted or caused to be submitted a statement, certification, or any information that contained an untrue statement of material fact or is conducting itself in a manner inconsistent with its designation;^[56]
• The regional center knowingly involves a person that does not meet statutory requirements for being involved with a regional center by failing, within 14 days of acquiring such knowledge, to take commercially reasonable efforts to discontinue that person’s involvement or provide notice to USCIS;^[57] or
• The regional center fails to provide an attestation or information on Form I-956H for a person involved with the regional center or knowingly provides false attestation or information on Form I-956H for a person involved with the regional center.^[58]

USCIS may, in its discretion, also sanction a regional center, including suspension or termination, if the regional center, or any parties associated with the regional center^[59] that the regional center knew or reasonably should have known:

• Are permanently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction in connection with the offer, purchase, or sale of a security or the provision of investment advice;
• Are subject to any final order of the SEC or a state securities regulator that bars such person from association with an entity regulated by the SEC or the state securities regulator; or constitutes a final order based on a finding of an intentional violation or a violation related to fraud or deceit in connection with the offer, purchase, or sale of, or investment advice relating to, a security; or
• Submitted, or caused to be submitted, a certification of compliance with securities laws that contained either an untrue statement of a material fact or omitted a material fact such that the omission renders the statement misleading.^[60]

3. Violations Requiring Termination

In addition to other sanctions that USCIS may impose, USCIS must terminate a regional center’s designation if:

• The regional center fails to consent to or deliberately attempts to impede an audit;^[61]
• USCIS determines that one of the regional center’s new commercial enterprises violates statutory provisions relating to redeployment of funds invested in the regional center;^[62]
• The regional center fails to pay the EB-5 Integrity Fund fee within 90 days after its due date;^[63] or
• USCIS determines, in its discretion, that the regional center’s designation is contrary to the national interest of the United States for reasons relating to threats to public safety or national security or was predicated on or involved fraud, deceit, intentional material misrepresentation, or criminal misuse.^[64]

Footnotes

[^ 1] See INA 203(b)(5)(E)(iii).

[^ 2] On March 15, 2022, Congress codified a substantially revised Regional Center Program into INA 203(b)(5). See the EB-5 Reform and Integrity Act of 2022, Division BB of the Consolidated Appropriations Act of 2022, Pub. L. 117-103 (PDF), 136 Stat. 49, 1070 (March 15, 2022). For information on the Regional Center Program as it existed before that date, see Appendix: Regional Center Program Prior to March 15, 2022 [6 USCIS-PM G, Appendices Tab].

[^ 3] For more information on the project application, see Chapter 5, Project Applications [6 USCIS-PM G.5].

[^ 4] See INA 203(b)(5)(F)(i). For more information on investor eligibility, see Chapter 2, Immigrant Petition Eligibility Requirements [6 USCIS-PM G.2].

[^ 5] See INA 203(b)(5)(E)(iii).

[^ 6] See INA 203(b)(5)(E)(iii).

[^ 7] For more information on requirements for these policies and procedures, see Subsection 4, Policies and Procedures [6 USCIS-PM G.4(B)(4)].

[^ 8] See INA 203(b)(5)(H)(iii). In addition to providing attestations and information confirming that all persons involved with the regional center meet applicable requirements, the regional center applicant must also separately identify all natural persons involved with the regional center on the Form I-956.   

[^ 9] See INA 203(b)(5)(I)(ii)(I).

[^ 10] See INA 203(b)(5)(H)(v).

[^ 11] See INA 203(b)(5)(H)(ii)(I).

[^ 12] See INA 203(b)(5)(H)(ii)(II).

[^ 13] Disqualifying offenses include a criminal or civil offense involving fraud or deceit within the previous 10 years; a civil offense involving fraud or deceit that resulted in a liability in excess of $1,000,000; or a crime for which the person was convicted and sentenced to a term of imprisonment of more than 1 year.

[^ 14] Relevant laws and regulations include those that prohibits fraudulent, manipulative, or deceptive conduct; or bars the person from associating with an entity regulated by such commission, authority, agency, or officer; appearing before such commission, authority, agency, or officer; engaging in the business of securities, insurance, or banking; or engaging in savings association or credit union activities.

[^ 15] As defined in 21 U.S.C. 802.

[^ 16] As described in 18 U.S.C. 1956 or 18 U.S.C. 1957.

[^ 17] As defined in INA 212(a)(3)(B).

[^ 18] As described in INA 212(a)(3)(E).