Despite proposals in both the U.S. House of Representatives and U.S. Senate seeking to either permanently or temporarily reauthorize the EB-5 Regional Center Program before its expiration on September 30, 2015[1], Congress was unable to pass any of the proposals before September 30, 2015.. Luckily, the EB-5 Regional Center Program (along with three other immigration programs dealing with electronic verification of employment eligibility (E-Verify), waiver of the two-year foreign residence requirement for foreign physicians (Conrad 30), and non-minister religious workers) was given a temporary reprieve when a short-term extension was included in the Continuing Resolution[2] passed by Congress and signed by the President, which temporarily funds the government for the 2016 Fiscal Year that began on October 1, 2015. The temporary extension is good until December 11, 2015.
Why has the EB-5 Regional Center Program Not Been Reauthorized Yet?
One of the first questions that actual and potential investors in the EB-5 Regional Center Program ask is “Why was the EB-5 Regional Center Program not reauthorized before September 30th?” The answer relates to a combination of reasons, but, in short, given the variety of issues and views raised by advocates and opponents of the EB-5 Regional Center Program, there were not enough legislative days left before September 30th to properly hash out the proposals and counter-proposals. Once this became obvious and as we got closer to September 30th, a temporary extension was better than a bad or rushed piece of legislation.
What Does the Extension until December 11, 2015 Mean for Me?
Another frequent question since September 30th has been, “What does the extension until December 11, 2015 mean for me as someone with a pending application at USCIS or as a prospective investor?” Simply put, it is business as usual. Pending applications will continue to be reviewed and new applications can continue to be filed.
What is the Outlook for the EB-5 Regional Center Program After December 11th?
A third question we continue to hear is, “What is the outlook for the EB-5 Regional Center Program after December 11th?” The good news is that there are no lack of legislative proposals in the House and Senate seeking to extend the EB-5 Regional Center Program. Three (3) separate proposals were filed in the Senate by Senators Pat Leahy (D-VT) and Chuck Grassley (R-IA), Senator Jeff Flake (R-AZ), and Senator Rand Paul (R-KY), respectively, and two (2) proposals were filed in the House by Representatives Mark Amodei (R-NV) and Jared Polis (D-CO), and Representatives Zoe Lofgren (D-CA) and Luis Gutierrez (D-IL), respectively. A brief recap of the proposed bills follows:
U.S. Senate:
In June 2015, Senators Leahy and Grassley introduced a bipartisan bill called the American Job Creation and Investment Promotion Reform Act (S. 1501), which proposes reauthorization of the EB-5 Regional Center Program for five years and substantial changes of key components of the Program. Quite notably for investors, the Leahy-Grassley bill proposes raising the minimum investment threshold from $500,000 for Targeted Employment Areas (“TEA”) to $800,000 and from $1 million for non-TEAs to $1.2 million as well as changing the definition of a TEA. Other notable changes require an annual $20,000 fee to be paid by Regional Centers, and in an effort to increase transparency, each Regional Center must publicly disclose its annual report. Under this bill, the Department of Homeland Security (“DHS”) will have increased authority to sanction or terminate Regional Centers for their lack of compliance and would require that investors now provide at least seven (7) years of income tax returns, as well as demonstrate that administrative fees above the capital contribution were acquired lawfully.
Senator Flake’s proposal, the Targeted Employment Areas Improvement Act (S. 2115), was presented on October 1, 2015, and focuses on reforms that would be beneficial for TEAs. Specifically, it calls for TEA designation to be valid for five years with a possibility of renewal, and reserves 5,000 visas under the annual cap for investments specifically made in TEAs. The bill redefines what “high unemployment areas” and “rural areas” would entail, and provides that investors who have invested in a TEA would not have to increase their investment should the TEA designation expire.
Also introduced on October 1st was Senator Paul’s proposal, the Invest In Our Communities Act (S. 2122), which proposes to permanently reauthorize the EB-5 Program. Other than making the Program permanent, Senator Paul’s bill calls for raising the total number of allotted visas available under the EB-5 category, counting only the Petitioner against that number (i.e., not counting the investor’s spouse and children against the quota), and maintaining TEA investment at $500,000. In contrast to the Leahy-Grassley bill, which seeks to modify the distribution of EB-5 investments, Senator Paul’s bill opens up the Program while still moving to enact measures to enhance its integrity and transparency.
U.S. House of Representatives:
In January 2015, Representatives Amodei and Polis proposed the American Entrepreneurship and Investment Act of 2015 (H.R. 616); an updated version of last year’s bill of the same name. Like Senator Paul’s bill, H.R. 616 calls for a permanent program, though much more regulated than before, and with new designations for TEAs, which would be up to each state’s discretion. Under the Amodei-Polis proposal, USCIS would be required to expedite its processing times not to exceed 180 days, and to adjudicate a petition within 30 days upon receipt of a response to a Request for Evidence. Also like Senator Paul’s proposal, the Amodei-Polis bill would not count derivatives against the annual EB-5 quota.
Proposed on July 29, 2015, Representatives Lofgren’s and Gutierrez’s bill, the Entrepreneurial Business Creating Jobs Act of 2015 (H.R. 3370), also would permanently reauthorize the EB-5 Program. A more general immigration bill, H.R. 3370 only addresses the EB-5 Program in some sections of the bill, primarily calling for 5,000 visas to be set aside just for the Program, $1 million investments for TEAs, and $2 million investments for non-TEA Regional Centers. If passed, DHS would be required to conduct random site visits for at least five (5) percent of Regional Centers, and would have to report back annually to Congress with updates on the site visits. Premium processing would be available for EB-5 petitions, processing times would have a goal of 60 days at the most, and concurrent filing of Form I-526 and Adjustment of Status applications would be permitted.
Between now and December 11, 2015, we will probably end up seeing one of the following three (3) scenarios playing out:
1) After extensive negotiations one of the foregoing proposals (or one yet to be presented) will work its way through the Judiciary Committee in either the House or the Senate and then voted upon by each chamber on or before December 11th;
2) After extensive negotiations one of the foregoing proposals (or one yet to be presented) will by-pass Committee and be presented on the floor of either the House and/or the Senate (though a legislative maneuver known as Unanimous Consent[3]) and be voted upon by each chamber on or before December 11th; or
3) We don’t see a bill make it all the way, and Congress instead settles on adding an amendment or clause to a budget bill that temporarily extends the EB-5 Regional Center Program under the same terms we have today.
The likely scenario? At this time, scenario number three (3) is the front runner. With only 34 legislative days[4] left in the Senate and 25 legislative days left in the House (as of October 8, 2015), EB-5 legislation may take a backseat to what may be considered more pressing matters at the moment. Congress will likely be focused on the budget and the debt ceiling (which Treasury Secretary Jack Lew predicts will be reached on or about November 5th), and the word in Washington is that unless there is an agreement that makes its way through Committee, Unanimous Consent is not likely and we will probably only see an amendment or clause addressing the EB-5 Program in a budget bill just as we just saw with the Continuing Resolution that kept the U.S. government open until December 11, 2015.
[1] Authorization for the EB-5 Regional Center Pilot Program was first enacted in 1993, for a period of five years. It has been reauthorized five times, most recently by legislation signed into law in September 2012, reauthorizing the program for three years.
[2] PL 114-53, H.R. 719 – Continuing Appropriations Act, 2016
[3] Unanimous Consent is a mechanism used to expedite the legislative process through the mutual agreement of all Representatives or Senators. Unanimous Consent allows for a fast-tracking of the time-consuming aspects of the legislative process. The key to Unanimous Consent is that it can only be used if all members agree
[4] A legislative day is one in which the legislature actually meets.