Why was the regional center EB-5 program once again not extended?
Last week, Congress passed the continuing resolution that served to fund the U.S. government until December 3, 2021, but the continuing resolution did not contain a provision for extending the regional center EB-5 program. When I found this out, I went looking for answers.
On the website of IIUSA, the leading industry group representing EB-5 regional centers, I found an open letter from IIUSA’s president, Aaron Grau, which provided some background information on what has been going on in connection with the program extension. According to Mr. Grau’s explanation, IIUSA and regional centers who are not members of IIUSA have been negotiating, since mid-August through the mediation of the U.S. Chamber of Commerce, with Members of Congress, in particular, with Senators Chuck Grassley and Patrick Leahy, who are leading advocates for reform of the EB-5 program and have legislation pending in Congress for reform and improvement of the EB-5 program. According to Mr. Grau, IIUSA has accepted the ethical and regulatory provisions demanded by Senators Grassley and Leahy, as well as proposed other provisions beneficial to EB-5 investors such as:
- Protections for good-faith EB-5 investors (to enable investors to keep their green cards even if the project is denied due to the bad faith or incompetence of the project developer or regional center);
- Grandfathering of investors in order to protect them from any future lapses in the program (enabling investors to complete the immigration process regardless of whether the EB-5 program expires);
- Visa backlog relief (offering to those EB-5 investors who are currently subject to a backlog (EB-5 investors from China and Vietnam) immigrant visas that were not used up in prior years);
- Processing time reduction (requiring USCIS to invest more resources into hiring and training more examiners in order to shorten the processing times for I-526 and I-829 petitions); and
- Advance parole (offering EB-5 investors a travel document to visit the U.S. while their case is being processed).
According to Mr. Grau, IIUSA and other EB-5 industry groups developed a “term sheet” where they listed out the EB-5 program requirements that they all agreed to and would support in the legislation to extend the EB-5 program. Their “term sheet” included the requirements set by Senators Grassley and Leahy in their legislative proposal. IIUSA and the other EB-5 industry groups presented their list of terms to Congress to see whether members of Congress are in agreement with their additional terms. IIUSA and other EB-5 industry groups are working to gain passage of the EB-5 program’s extension by the end of 2021. The next continuing resolution (budget authorization bill) must be passed by December 3, 2021, and so that is the most likely next vehicle for gaining passage of the EB-5 program extension.
While it is extremely frustrating that Congress has not yet extended the regional center EB-5 program, there will most likely be some improvements to the program that will benefit EB-5 investors. There is also some logic behind why Congress allowed the regional center EB-5 program to lapse. It is Congress’ way to place financial pressure on the regional centers to negotiate with Congress in good faith and to accept certain ethical and regulatory provisions, which Senators Grassley, Leahy, and some other senators consider non-negotiable. In previous years, some regional centers had avoided negotiations and ignored Senators Grassley’s, Leahy’s, and other senators’ demands for reforms by giving large campaign contributions to other members of Congress simply to insert a provision for extension of the regional center EB-5 program into continuing resolutions, which needed to be and were subsequently passed. Senators Grassley and Leahy became very angry at these regional centers and vowed to bend the EB-5 regional center industry to their will by letting the program lapse if the regional centers did not accept their reforms.
Behind the lapse in the regional center EB-5 program is a conflict of wills between EB-5 regional centers and Congress. There are promising signs that this conflict will be resolved and the program extended by the end of 2021, hopefully by December 4, 2021.