The EB-5 Regional Center program, which is slated to expire June 30, will likely remain temporary now that the U.S. Senate blocked a proposed reauthorization and reform bill.
U.S. Sen. Chuck Grassley (R-IA), ranking member of the U.S. Senate Judiciary Committee, yesterday brought up his EB-5 Reform and Integrity Act on the Senate floor requiring unanimous consent. One colleague, U.S. Sen. Lindsey Graham (R-SC), objected to the bill, which would have reauthorized the EB-5 Regional Center program and instituted oversight requirements, among other reforms.
“A narrow subset of big moneyed and corrupt interests has now shown that they would rather kill the program altogether than have to accept integrity reforms designed to clamp down on their bad behavior,” Grassley said June 24 on the Senate floor. “Today’s objection, unfortunately, represents another victory for those same money-powerful, corrupt interests that have so often worked to kill reforms for a program that they love to abuse for nothing more than their own financial benefit.”
It also means that Congress will not be able to pass legislation to reauthorize the program and prevent its reauthorization on June 30 with the Senate adjourning, he said.
Grassley has been fighting for years to reduce fraud and abuse in the program, which was created by Congress in 1993 to attract investments from foreign individuals who meet specific capital and job creation requirements in exchange for a green card. And while EB-5 investments have filled funding gaps and provided capital for local economic development projects, more concerns have surfaced in recent years related to national security.
Continuing his fIght, Grassley teamed up with U.S. Sen. Patrick Leahy (D-VT) in March to introduce the EB-5 Reform and Integrity Act of 2021, S. 831, which specifically would have reauthorized the EB-5 Regional Center Program through fiscal year 2026 and provided additional transparency and integrity measures designed to improve accountability of applicants, Regional Centers and their economic development projects. U.S. Reps. Greg Stanton (D-AZ) and Brian Fitzpatrick (R-PA) in April introduced the identical companion bill, H.R. 2901, in their chamber.
This week, there was some opposition to the bill among senators, who tried to move the bill forward out of the Judiciary Committee. But that didn’t happen.
“It’s really unfortunate that a bipartisan bill supported by the overwhelming majority of EB-5 stakeholders was blocked at the behest of a small minority that blindly opposes much-needed accountability and transparency in the program,” said Leahy in a statement. “Senator Grassley and I have worked together for years to develop a thoughtful, careful compromise that would both keep the program alive and curtail the worst abuses of it.”
So, now what happens?
“Now that our bill has been blocked, the EB-5 visa program is unfortunately going to lapse in the days ahead and have untold economic consequences throughout the communities that rely on the program for development projects,” Leahy said, adding that he remains “committed to reforming the EB-5 program should there be another opportunity to do so.”
Technically, the bill expires, Andrew Grau, executive director of IIUSA, told Homeland Preparedness News this week.
“They would essentially need to bring it back and resurrect it,” Grau said, referring to the bill’s sponsors. “Starting from scratch could be pretty easy. The program has been around for 30 years. But the question is, who has the appetite for that?
“Then you have the question of the investors,” said Grau. “I do believe that the Department of Homeland Security [DHS] will do its best to hold in abeyance applications that are in the pipeline for some period of time, that’s what they’ve done in the past when there has been a lapse during the budget cycle. But at some point, nobody knows what happens. DHS would have to issue new regulations. It doesn’t mean that our bills are dead, we would still pursue some sort of resurrection or authorization with S. 831/H.R. 2901, but there would have to be some amended text.”
However, that realization is not what Regional Center operators and others wanted.
“Frustrated that a deal could not be reached even though it is undisputed that the EB-5 program has created hundreds of thousands of new jobs for American workers and resulted in billions in foreign direct investment into the economy,” Sam Silverman, managing partner and founder of EB-5 Affiliate Network (EB5AN), a USCIS-authorized regional center operator in several states, including Graham’s home state of South Carolina, wrote today in an email to Homeland Preparedness News.
Silverman added that the ongoing dispute on EB-5 regulatory changes — specifically the qualification of project locations as targeted employment areas for the reduced minimum investment amount that make urban projects in places like south Florida more popular with investors compared with rural projects in places like Montana — has now caused the entire EB-5 Regional Center program to lapse. And the timing isn’t good, he added, with EB5AN “seeing unprecedented demand.”
U.S. Sen. John Cornyn (R-TX) also highlighted the importance of the EB-5 Immigrant Investor Program and his support for the related Grassley/Leahy regional center reform bill on the Senate floor on Thursday.
“EB-5 investments are a major economic driver in Texas,” the senator said. “EB-5 projects use merit-based immigration to create thousands of American jobs and bring billions of dollars in investment to major urban areas like Dallas and Houston, as well as our rural communities across the state.
“These projects include investments in infrastructure for a wide variety of sectors, including energy, hospitality, residential and commercial,” Cornyn said. “I’m a supporter of the EB-5 program and the resources it delivers to the community, but there is no question, as Senator Grassley has said, that it could stand some reforms.”
According to EB5AN, while the regional center program’s expiration threat is real, EB-5 investment industry representatives should not panic because even if the program temporarily expires, the worst outcome would likely be some processing delays. The U.S. government isn’t likely to eliminate a program as valuable to the economy as the EB-5 investment program, said the operator.