As you probably know already, the EB-5 regional center program is currently on hold until Congress acts to reauthorize the program. This came in the aftermath of Congress’ failure to pass the EB-5 Reform and Integrity Act sponsored by Senators Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vermont). Behind the scenes Congress and the EB-5 industry were in talks to pass a reform and reauthorization package that all sides could agree on, and for a time it appeared that the Grassley/Leahy bill was the best chance for that to happen. However, the push to pass the Grassley/Leahy bill was largely motivated by a desire to avoid the Regional Center program’s authorization lapsing. Now with the program already on hold Congress and the industry will have more time to work with to create a reform bill that ensures the EB-5 Regional center program can continue. With that in mind here’s an overview of changes that could potentially be included in an EB-5 reform bill.
Long Term Reauthorization
The EB-5 industry’s first and foremost priority for any bill involving the EB-5 program is to secure long term reauthorization for the regional center program. In the past, the regional center program’s authorization was tied into Congress’s yearly federal budget legislation, which all but guaranteed that the program would be renewed each year. However, last December the regional center program was only given a 6 month extension, which has since ended and resulted in the suspension of the program. It’s obvious that ending the current hold on the regional center program is the top priority for those who support EB-5, it remains to be seen exactly how long the program will be reauthorized for.
Increased integrity measures are without a doubt the least controversial aim for EB-5 reforms. While different interest groups may have their own view on what integrity measures are necessary, in concept no one opposes the idea. Passing integrity measures is popular with the public, popular with those opposed to reauthorization of the regional center program and popular with supporters of the program. Exactly what these integrity measures would be remains to be seen, but they would likely resemble the measures included in the proposed Grassley/Leahy bill.
One of the biggest changes to the EB-5 program in recent months was the Court ruling which repealed the 2019 EB-5 modernization regulations, including increased investment requirements. While the current lower investment requirements are undoubtedly popular with investors it’s highly unlikely that they’ll remain unchanged. Prior to the court’s ruling in the Behring case, DHS Secretary Alejandro Mayorkas tried to quash the suit against USCIS by ratifying the 2019 modernization regulations himself. While this measure failed to stop the repeal of the regulations by the Court, it indicates that the federal government is in favor of the increased investment requirements returning. Investors should expect that any EB-5 reform bill will likely include provisions that raise investment requirements.
Addressing the Visa Backlog
Unfortunately, one of the biggest issues the EB-5 program has faced in recent years is the backlog of approved investors waiting to receive their EB-5 visa. While it’s clear that the backlog needs to be addressed, it’s also a complicated issue that cannot be solved with the stroke of a pen. For example, while it’s technically possible for Congress to include provisions to clear the backlog through legislation, this would almost certainly trigger public opposition from those against immigration, as well as those who see backlogs in other visa categories as more important than EB-5. A more likely scenario would be the inclusion of provisions similar to those in the Grassley/Leahy bill, which called for USCIS to adjust processing fees to address the inefficiencies at the agency causing the backlog.
The Future of The Regional Center Program.
As of now, the most likely route for regional center program reauthorization is to include it in September’s budget and appropriations bills. Attempting to pass a reauthorization bill without attaching it to other legislation would likely be unsuccessful, as we saw in June with the failure of the Grassley/Leahy bill. However, EB-5 investors should remain optimistic as the debate surrounding regional center reauthorization is focused on how the program can be changed and improved, not whether or not it should be allowed to exist at all. It remains to be seen exactly what reauthorization will entail, but by focusing on long term reauthorization, integrity measures, and addressing the visa backlog, Congress can remake the regional center program, drawing in billions of dollars and thousands of jobs to the American economy.
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