Washington Updates

Washington Updates Page Contents:

Calendar Summary

  • August 2018: Possible date for Final Action on the EB-5 regulation RIN: 1615-AC07 regarding investment amounts and Targeted Employment Areas. (This is the date foreseen in the OMB Spring 2018 agenda, but USCIS Director L. Francis Cissna testified to Congress in June 2018 that he thought it would be difficult to finish the regulations before September 30, 2018.)
  • September 30, 2018: Next regional center program sunset date. Possible occasion for new immigration legislation in connection with/in advance of 2019 appropriations. (But another continuing resolution looks more likely.)
  • December 2018: Possible next regional center program sunset date and next opportunity for legislation affecting EB-5, assuming that there’s another continuing resolution in September to defer FY2019 appropriations until after the November midterm elections, as IIUSA seems to expect.

Latest Update

8/10: IIUSA says: “According to sources on both the House Appropriations Committee and the House Homeland Security Committee, the chances of the Homeland Security funding bill, which includes the Yoder amendment, of passing before the new fiscal year is very low.”

8/9: The USCIS FOIA reading room has posted a June 2018 letter from Senator Rand Paul attempting but not succeeding to convince USCIS to withdraw the regulations increasing the investment amount.

7/25: The House Appropriations Committee approved an amendment to the FY2019 Homeland Security Appropriations Bill that would affect EB-5 by removing the per-country cap and the deduction of EB-5 visas for Chinese under the Chinese Student Protection Act. (This post discusses the detail.)

Summary of EB-5 program status and potential changes

The EB-5 program can be changed through legislation, regulations, and policy. EB-5 was established by law as a permanent program in 1990, and the regional center branch of EB-5 has operated on a series of temporary authorizations since 1992. We depend on legislation to – at minimum — regularly reauthorize the regional center program.  Legislation, regulations, and policy offer paths to program changes and reforms.

Legislation

  • Process: Legislation originates with Congressional representatives and must be approved by the House, the Senate, and the President
  • Content:
    • Legislation can change any aspect of the EB-5 program
    • Legislation established EB-5 as a permanent program, and is the only way to terminate it
    • Legislation is the only means to reauthorize the regional center program, and eventually make it permanent
    • Legislation is the primary/only path to increase or decrease available visa numbers (the alternative is to convince agencies to change their interpretation of past legislation)
    • Legislation is the path to make EB-5 program changes that would involve giving DHS significantly more power, discretion, and/or money for administering EB-5 than it had before
    • Legislative changes can, in theory, be retroactive (though this is unpopular)
  • Prospects:
    • In recent years, EB-5 has not been part of the conversation about immigration legislation. Washington D.C. has instead focused on two primary issues – border security and status of undocumented minors – and occasionally on these secondary issues: diversity visas, family reunification, work visas. Immigrant investment has had bi-partisan support but also bi-partisan disinterest, as it does not fit with either party’s immigration talking points. To the extent that EB-5 has been mentioned at all in Congress, it’s been in stand-alone legislative proposals specific to EB-5, or in connection with annual funding bills that have carried regional center program authorization as one of many provisions.
    • Since 2015, Congress has given the regional center program 12 short-term reauthorizations as part of legislation extending government funding. All of these have been “clean” reauthorizations – with no changes besides changing the regional center program sunset date. However, major EB-5 legislation could possibly get included in a future spending bill. At minimum, we depend on Congress to include another regional center program authorization in the next funding bill due by September 30, 2018.
    • Senator Grassley, Representative Goodlatte, and Senator Cornyn have been behind most EB-5 reform bills since 2016. However, Grassley and Goodlatte have expressed frustration with the legislative process and called on the administration to achieve reform by finalizing regulations. If anyone is negotiating EB-5 legislation behind the scenes now, they haven’t said so publicly. Negotiators who worked on the most recent EB-5 Reform Act legislation (circulated in March 2018) announced its death when the legislation was not included in the March 23, 2018 funding bill.
    • Increasing EB-5 visa numbers through legislation requires (1) increasing total annual visa numbers, and/or (2) taking visa numbers away from another category and reallocating them to EB-5, and/or (3) redistributing visas within EB-5 by changing the per-country cap or adding set-asides. Recent legislative proposals have proposed reshuffling visa numbers, though so far not in a way with broad benefit to EB-5.

Regulations

  • Process: EB-5 regulations originate in the Investor Program Office at USCIS, initiate a public notice and comment period upon publication in the Federal Register, get reviewed and approved (or not) for final action by the administration through the Office of Management and Budget, and finally become effective (usually 30-90 days after the final action date).
  • Content:
    • Regulations are written to help implement and fill the gaps in legislation
    • There are currently two proposed EB-5 regulations, one dealing with investor/project-specific matters (including minimum investment amounts and targeted employment area designation), and other focused on regional center processes and administration.
    • The regional center program authorization cannot be extended by regulation (needs legislation)
    • EB-5 visa numbers cannot be increased by regulation (needs legislation)
    • Regulations are somewhat limited when it comes to integrity measures, since there’s a limit to how far an agency can propose to extend its power or increase its budget without approval from Congress
    • Regulations are not retroactive
  • Prospects:
    • DHS published proposed EB-5 rules in the Federal Register in 2017, and has expressed intent to advance them in 2018. Several prominent Congressional representatives who had worked on legislation covering the same issues have encouraged DHS to finalize the regulations instead.

Policy

  • Process: EB-5 policy originates in the Investor Program Office at USCIS, and is published in Volume 6 Part G of the USCIS Policy Manual. The policy process should involve public notice and opportunity for comment. However, USCIS has recently given notice and invited feedback only after having already published the new policy and made it effective
  • Content:
    • Policy translates the statute, regulations, and case law into policies to be followed by USCIS offers in the performance of their duties.
    • Policy is not supposed to set new legal standards or impose new requirements, but simply to interpret and apply existing regulations and statute.
  • Prospects:
    • USCIS has made several policy changes in recent years, including regarding tenant occupancy job counts, redeployment, and regional center amendment requests.
    • EB-5 stakeholders have strongly pressed USCIS to further clarify redeployment policy

Additional Reading

EB-5 Regulations Detail

The EB-5 regulation RIN: 1615-AC07 (with investment amount and TEA changes) is currently a Proposed Rule at Step 7 in the Rulemaking Process. (We’ll know that it has advanced to Step 8 OMB Review when “EB-5 Immigrant Investor Program Modernization” appears in the DHS section of List of Regulatory Actions Currently Under Review.)

Timing:

  • EB-5 Modernization Regulation RIN: 1615-AC07: Spring 2018 Unified Agenda suggests August 2018 for final rule; DHS leadership expect “this year” but probably not before October 2018. The rule would become effective at some point after it’s published, not immediately upon publication.
  • Regional Center Program Regulation RIN 1615-AC11: Spring 2018 Unified Agenda suggests October 2018 for the “Notice of Proposed Rulemaking.” The NPRM would be followed by a period for public comment, and another period for DHS to respond to public comment before the final rule.

Content Summary of EB-5 Modernization Regulation (RIN 1615-AC07):

The final rule may have different content, but here’s what the NPRM proposed:

  • Increase the standard minimum EB-5 investment amount to $1,800,000, or $1,350,000 in a TEA.
  • A TEA is based on high unemployment and incentivized with 25% reduction to the investment amount (not other factors or incentives as proposed by Congress).
  • A TEA can only be designated for a high-unemployment MSA, county, city, single census tract, or limited group of census tracts. DHS, not the states, is responsible for TEA designation.
  • Give priority date protection (an investor with an approved I-526 could choose to file a new I-526 while keeping the original priority date, subject to certain restrictions)
  • Spouse and children may be able to file I-829 even if not included on the principal investor’s petition.
  • Other technical changes.

Links:

Updates:

  • 6/19: USCIS Director L. Francis Cissna testified at a Senate Judiciary Committee hearing on EB-5 regarding the regulations that “USCIS is currently reviewing the comments and moving forward in the regulatory process with both of these items as expeditiously as possible.”  When asked whether he thought the regs could be finalized before the 9/30/2018 regional center program sunset date, Mr. Cissna said he didn’t know but that would be “hard to pull off.”
  • 6/14: According to letters posted in the USCIS FOIA reading room, Senator Rand Paul wrote a letter to USCIS asking that the regulations be withdrawn, considering excessively high investment amount increase, and that Congress should change the investment amount. USCIS responded that Congress had its chance, and that USCIS is considering public comment as it proceeds with the rulemaking process.
  • 6/4 and 6/8: Senator Charles Grassley sent a letter to President Trump and a letter to DHS Secretary Nielsen urging again that EB-5 regulations be finalized, and raising alarm at reports that “certain industry groups believe the White House will never allow the regulations to go into effect.”
  • 5/16: Charles Grassley and Bob Goodlatte publish Restoring Integrity to the Immigration System, an editorial in the Washington Times urging that EB-5 regulations be finalized
  • 5/9: The Spring 2018 Unified Agenda is published with a new estimated Final Action date of 8/00/2018 for  RIN: 1615-AC07.
  • 5/8: IIUSA sends an open letter to USCIS in support of proposed rule-making. IIUSA encourages USCIS to finalize the proposed EB-5 regulation, but with lower investment amounts ($1 million, or $800,000 in a TEA) than previously suggested.
  • 4/27: Speaking at the IIUSA conference, Kathy Nuebel Kovarik of the USCIS Office of Policy and Strategy reinforced her department’s position that they will try to get EB-5 regulatory reform done this year, as indicated on the Unified Regulatory Agenda. Here is a copy of her remarks.
  • 4/5: Senators Grassley, Goodlatte, and Leahy send a letter to DHS Secretary Kirstjen Nielsen urging the administration to finalize regulations. Meanwhile, the forces that successfully prevented efforts by these Senators to finalize EB-5 legislation are presumably at work advocating in the other direction. A quote from the Senators’ letter:

    As you are likely aware, since last May there have been new rounds of Congressional negotiations on the future of the EB-5 Regional Center Program. We understand that during the course of these negotiations your Department was encouraged by both individual Members of Congress and stakeholders to not finalize the proposed regulations, since a potential legislative solution could be imminent. Recently, these good-faith negotiations collapsed due to the opposition of the same special interest groups who have worked to derail all efforts to reform the program.

    Because we do not foresee a legislative solution in the near term, we believe that it is incumbent upon you to end all delays and issue the proposed regulations in final form. The proposed regulations are firmly within your explicit statutory authority provided by Congress when we created the EB-5 program, and there can be no dispute that they address a number of serious deficiencies in the program.

  • 3/1: I’m told that the regulations were not finalized in February to give Congress a chance to pass legislation, but may be back on the table in April since Congress didn’t act in March.
  • 2/23: ILW reports “Immigration Daily has learned that intense pressure is being brought by EB5 industry players on the White House to delay USCIS’s new EB5 regulation.” The article discusses factors and possible outcomes.

Regional Center Program Authorization History

The last time Congress voted a significant regional center program extension was 2012. Since then, the program has been extended a few months at a time, in connection with government funding.

The most recent extension is in PL 115-141 Consolidated Appropriations Act 2018, which includes regional center program authorization to 9/30/2018 on PDF page 702, as follows: “SEC. 204. Section 610(b) of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note) shall be applied by substituting ‘September 30, 2018’ for ‘September 30, 2015′” This language refers back to Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 (Public Law 102-395) Section 610 (PDF page 47), which established the regional center program. Congress will have to act on or before 9/30/2018 to reauthorize the regional center program again; otherwise, the program will sunset.

Legislation Detail

Congress has periodically proposed reforms to the EB-5 program, or immigration legislation that could affect EB-5.

Current legislation that could affect EB-5:

Past legislation with EB-5 provisions:

Recent immigration proposals that did not touch on EB-5:

  • President Trump’s immigration framework attempts to limit the immigration reform debate to border security, Deferred Action for Childhood Arrivals, family reunification/chain migration, and the Diversity Visa category/visa lottery
  • Secure and Succeed Act of 2018 (Senators Grassley, Cornyn, Tillis, Perdue, Cotton, Lankford and Ernst) follows the Trump framework. It proposes reallocating diversity visas to reduce backlogs in EB-1, EB-2, and EB-3, but not EB-5.
  • H.R. 4760 Securing America’s Future Act (Rep. Bob Goodlatte, with 92 co-sponsors) follows the Trump framework. It proposes reallocating diversity visas to reduce backlogs in EB-1, EB-2, and EB-3, but not EB-5.
  • S.2367 – USA Act of 2018 (Senators John McCain and Chris Coons), a mirror of H.R.4796 Uniting and Securing America (USA) Act (Will Hurd, Pete Aguilar and Jeff Denham) just deals with border security and DACA
  • S.2344 – Immigration Innovation Act of 2018 (Senators Hatch, Flake) would free up employment-related visas in a way that would help EB-5 among other categories. But I doubt the it will gain any more traction this time than it did before, since it doesn’t fit in the administration’s immigration framework, and Hatch and co-sponsor Flake have already said their goodbyes to the Senate. The Hatch bill text does not, as misreported in some media, include RC program reauthorization or any direct reference to EB-5.

Implications for Past & Future EB-5 Users

1. What happens if the regional center program is terminated?

If Congress moves to terminate the RC program, one hopes that the move will come with new language that protects good-faith regional center applicants already in the system. (I estimate about 95,000 people, regional center investors and family, are currently in the pipeline between I-526 filing and I-829 filing.) Current policy treats regional center termination as a material change that would abort the process for people waiting on a green card, but does not address what would happen were the entire program terminated.

Policy Manual 6 USCIS-PM G Chapter 4(C): Changes that are considered material that occur after the filing of an immigrant investor petition will result in the investor’s ineligibility if the investor has not obtained conditional permanent resident status. …Further, the termination of a regional center associated with a regional center immigrant investor’s Form I-526 petition constitutes a material change to the petition.

Policy Manual 6 USCIS-PM G Chapter 5(C): Further, with respect to the impact of regional center termination, an immigrant investor’s conditional permanent resident status, if already obtained, is not automatically terminated if he or she has invested in a new commercial enterprise associated with a regional center that USCIS terminates. The conditional permanent resident investor will continue to have the opportunity to demonstrate compliance with EB-5 program requirements, including through reliance on indirect job creation.

Direct EB-5 is not subject to reauthorization, and could continue as-is regardless of whether or not the regional center program is reauthorized

2. What happens if regional center program authorization lapses as part of a government shutdown?

See this post https://www.natlawreview.com/article/government-shutdown

3. Would any EB-5 program changes retroactively affect people who have filed I-526?

  • If the regional center program loses authorization, that would affect people who have already filed and depend on the regional center program for continued eligibility. (See question 1 above)
  • Changes to investment amounts and TEA rules proposed by the regulations would only apply to new petitions after a future effective date
  • Some people in Congress have called for investment amount and TEA changes to be applied retroactively to past investors, but there isn’t any current legislation on the table to this effect, to my knowledge.
  • Recent legislative proposals have suggested setting aside some visas as incentives for TEA investment. This could affect past applicants by reducing the visas available to them and making the backlog and visa wait time even longer.
  • If legislation increased available EB-5 visa numbers, people already waiting for a visa would benefit.
  • The priority date protection and I-829 process changes proposed by the regulations would affect people currently in the system.

4. Would proposed EB-5 changes affect direct EB-5?

Changes to investment amounts and TEA definitions would equally affect direct EB-5 and regional center EB-5. The main difference is that direct EB-5 doesn’t depend on re-authorization, and integrity measures in proposed legislation have largely ignored direct EB-5.

Benefit from this blog? Please consider supporting the effort behind it. As the EB-5 industry changes, your contribution can help preserve this space for conscientious and freely-available EB-5 reporting. Contributions go to Lucid Professional Writing (a for-profit business) to fund work on this blog. Thank you!

 

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