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Over the years, the issues plaguing the EB-5 Immigrant Investor Program have grown, with backlogs continuing to grow under the remarkably slow and inefficient adjudication practices of United States Citizenship and Immigration Services (USCIS) and retroactive changes to redeployment policy throwing EB-5 investment participants for a loop. The need for reform is larger than ever, and the entire EB-5 world agrees. So dire has it become, in fact, that the EB-5 Regional Center Program runs the risk of termination should the EB-5 community fail to enact meaningful reforms. EB-5 industry leaders, such as Invest in the USA (IIUSA), have made statements on the need for reform, requesting that Congress implement reform and make the EB-5 Regional Center Program permanent.
The EB-5 Reform Bill That Was Almost Passed in 2020
It’s no secret that the EB-5 Regional Center Program has by and large driven the growth and development of the EB-5 program. Given the myriad of advantages of making an EB-5 investment through a regional center, most investors opt for this route, and as a consequence, billions in foreign capital that has entered the U.S. economy can be attributed to the regional center program. The program can also take credit for fostering the local economies of in-need targeted employment areas (TEAs) and establishing new, full-time jobs for U.S. workers there. Regardless, opponents still hurl criticisms at the program, suggesting that EB5 investment participants are abusing the program and that the integrity measures are too weak. It is in this environment that IIUSA has published a statement on the need for EB-5 reform and relevant legislation.
Reform is the key to attaining other legislative goals in the EB-5 program, according to IIUSA. To appease critics, the EB-5 industry must introduce wide-reaching reforms to reinforce security measures and crack down on the low levels of fraud in the program. This long-awaited reform almost came to fruition at the end of 2020, but in the end, it didn’t.
Senators Chuck Grassley and Patrick Leahy, long-time allies of the EB-5 program, have engaged in bipartisan cooperation for years to introduce reform to the EB-5 program. In 2020, they drew up the EB-5 Reform and Integrity Act and presented it in the Senate, advocating for stronger integrity measures and requesting a five-year reauthorization of the EB-5 Regional Center Program. It was the incompletion of the bill that prevented it from being passed in December 2020, as if it had been ready, it would have been included in the year-end federal spending bill.
Reauthorization Might Depend on Reform
When the EB-5 Regional Center Program was extended in December 2020, it was given a new expiration date of June 30, 2021. Of course, that’s not a guarantee of termination on that date—in fact, EB-5 investment participants are accustomed to sunset dates and the extensions that have accompanied them every time thus far. But this time, termination might be more likely than normal. In the past, the regional center program has always been extended alongside a wider government spending bill that includes a number of other programs. But this time, Congress has divorced the EB-5 Regional Center Program from the bill by setting its sunset date as June 30 instead of the conventional September 30.
While a divorce from the government funding bill could set the EB-5 Regional Center Program up for permanent reauthorization, it could simultaneously be the segue into termination. Being separated from the other programs in the government spending bill means the regional center program can rely only on itself to attain reauthorization, and without adequate EB-5 reform, that could be challenging. In fact, according to IIUSA, EB-5 reform may be the only way to achieve reauthorization at the end of June 2021.
Across the EB-5 investment world, leaders have come together to make similar calls. While everyone acknowledges the need for increased integrity regulations, some leaders have even made calls for further EB-5 reforms, such as taking dependents out of the annual EB-5 green card allocation pool. Such a move would free up thousands of EB-5 visas for investors, helping clear up the backlogs and allowing those with active EB-5 investments to more quickly and reliably begin their life in the United States.
Collaboration on EB-5 Reform Necessary to Move Forward
Since its debut in 1992, the EB-5 Regional Center Program has survived through frequent reauthorizations, never attaining the status of permanent despite its proven efficacy in aiding the U.S. economy. As a result, EB5 investment participants are no strangers to uncertainty, but the uncertainty is magnified this time as the possibility of termination grows larger.
This is not to say that EB-5 investment stakeholders should panic. On the contrary, now more than ever is the time for cooperation and collaboration in the EB-5 world. Working together, EB-5 stakeholders can work to enact the reform necessary to safeguard the EB-5 Regional Center Program. The deadline is looming, but cooperation can ensure the regional center program lives on to stimulate the U.S. economy and improve the lives of countless foreign investors.
