Suggested RC program changes (Jeh Johnson letter)

The EB-5 Regional Center program needs another reauthorization from Congress before September 30, 2015, and debate is heating up as to what program changes may be packaged with the reauthorization. The last couple program extensions included only minor tweaks (and were for a shorter period than hoped), but some significant changes are likely this time around. An important document in the debate is a April 27, 2015 letter from Secretary of Homeland Security Jeh Charles Johnson to Senator Grassley and Senator Leahy (click the link to read the letter). Here’s my summary of (and parenthetical comments on) Secretary Johnson’s proposals:

• That Congress define additional bases for terminating regional centers and denying applications and petitions, with a particular focus on fraud risk and national security concerns. (This doesn’t look like a big change from current practice, as USCIS has already fit a wide variety of reasons for Regional Center termination under the official justification of “no longer promoting economic growth,” and petitions can already be denied and revoked for fraud and misrepresentation. And one hopes that broader authorization wouldn’t turn into excuse for decisions based on mere suspicion or without notification or due process.)
• That Congress provide USCIS with the options of fining or temporarily suspending a regional center, in addition to the option of terminating it.
• That Congress authorize USCIS to require that all regional center principals be U.S. citizens or lawful permanent residents. (This would be an important change from current practice.)
• That Congress authorize USCIS to prohibit participation in regional centers and commercial enterprises by people with certain criminal and civil violations.
• That Congress authorize USCIS to request reporting on and certification of regional center compliance with securities laws. (It’s not clear what exactly this would involve, and to what extent such a requirement would put a regional center in the position of having to certify compliance for activities by sellers or loan recipients that it doesn’t control.)
• That USCIS be authorized to require and publish regional center annual reports that would include project progress reports, description of fund usage, and accounting of job creation. (It’s not clear how this would differ exactly from the current I-924A. With USCIS having omitted for years to follow up on promises to publish I-924A data, and hardly releasing any documents except as forced by FOIA, I’m skeptical of the promise/threat to publish.)
• That USCIS be authorized to charge regional centers $20,000 per year to fund an “EB-5 Integrity Fund” that would underwrite audits and site visits.
• That Congress refine the TEA definitions to limit them to a specified number of continuous census tracts and to include closed military bases by default. (Kudos, CMB lobbyists!)
• That Congress increase the EB-5 investment amount for both TEA and non-TEA investments, and to link the investment amount to an inflation index from now on. (Mr. Johnson does not suggest an amount for the increase, but states that USCIS is separately writing an increased minimum investment into revised regulations.)
• That Congress authorize USCIS to require regional centers to file business plans and offering documents in advance of individual investor filings. (Apparently, a sort of “dummy-I-526” process, which we’d like if processing times weren’t so long. Mr. Johnson also notes that this requirement is already being incorporated in regulations under revision.)
• In the letter, Mr. Johnson also notes that he has approved a new protocol specifically defining and limiting how members of the public and Congress may communicate with USCIS, and limiting senior leadership intervention in case adjudications.

Secretary Johnson is not the only one who can write to senators and advocate for changes. Consider getting on board with advocacy efforts and contacting your Congressional representatives to express your views about Regional Center program reauthorization. IIUSA has drafted a letter with helpful comments on suggestions in the Johnson letter.