Newsletter #8: What happens next?

The Lay of the Land

The next few weeks will decide the fate of the EB-5 Regional Center program. The Omnibus is expected on March 11th (although there is some speculation it could happen later in March), and it has a real chance of including legislation to reform and reauthorize the EB-5 Regional Center Program. We have consistently maintained that the dates previously speculated (i.e., September 30th, December 3rd, December 17th, and February 18th) did not have any realistic possibility of any program legislation. Although there are a lot of factors at play here, we expect the following to occur over the coming days and weeks. Our information comes from various credible Congressional sources.

1. Senators Leahy and Grassley, who have been working to refine and tweak their EB-5 reauthorization language, will put forth their proposed reauthorization and integrity language. Their proposal will almost certainly be based on bill S.831 (the EB-5 Reform and Integrity Act of 2021) along with provisions of the 2019 EB-5 Modernization Regulation (that was vacated through a court’s ruling in 2021). It is expected that this bill text will be mostly devoid of the industry’s ‘wishlist’ items but may possibly contain modest changes based on the industry consensus proposals. AIIA has always maintained that EB-5 regional center reauthorization will be dictated by these two offices. It is certainly playing out that way.
2. Both offices will, in earnest, circulate bill language with offices on the Hill, particularly before it is released in public.  [Since the publishing of this article, we have confirmed that the revised bill has now been circulated with select offices on the Hill]
3. Once Senators Grassley and Leahy have made their proposal, Senator Schumer, among others, may negotiate on behalf of the industry to make the final deal more palatable for urban Regional Centers and developers. We believe that major political capital will not be deployed in this process, particularly from Senator Schumer, but we do expect the minimum investment amounts and TEA definitions to be the key negotiating points.
4. While it remains to be seen what concessions will be made towards industry segments, particularly the urban developers, the final offer is expected to be a take-it-or-leave-it deal from Senators Leahy and Grassley. If the industry accepts the deal and it is passed with Omnibus appropriations, then the EB-5 Regional Center Program will restart immediately, including adjudication of existing and new investor petitions, adjustment applications and visa issuances.
5. Meanwhile, the so-called ‘industry consensus bill’, which has been rechristened as the ‘Nadler bill’ is still being advocated for by certain members of the industry. AIIA has succeeded in having grandfathering language included in this bill text, and substantially amended, with assistance from the office of the Chief Counsel of the House Immigration Subcommittee. However, it is our belief that this bill will not progress further as Senators Leahy and Grassley are driving the process and it is their bill which will form the foundation for any reauthorization.
6. It goes without saying that there are factions of the industry that will not be happy with the final deal and will attempt to block it. A successful attempt to block the deal likely will be a fatal blow to the EB-5 Regional Center program, something the program will likely not recover from.
7. The fact remains that the longer America goes on without the Regional Center program, the less it is likely to bring it back. Bringing the program back from such a long suspension would no longer be viewed as an attempt to restore the status quo but would rather be a new immigration initiative that will face an uphill battle in Congress.

The process of negotiating an EB-5 bill needs to conclude well before March 11th (or a subsequent new date for the Omnibus) in order to give Congress the time to move it through the complex procedures of passing the appropriations bills.

We are aware that the picture we paint above is in stark contrast to messaging by some that Senator Schumer would be in the driver’s seat and that the terms of an eventual reauthorization will be dictated by the Majority Leader acting on behalf of segments of the industry. Bottomline: a deal on EB-5 can only be had if the Majority Leader is satisfied that the industry and Leahy-Grassley are on the same page.

What are the Possible Roadblocks?

1. No agreement on reauthorization language: This issue has plagued the EB-5 industry for years now. It remains a distinct possibility that certain factions within the industry and/ or certain real-estate developers continue to maintain hardline positions on the terms of an EB-5 reauthorization. Certain developers had become accustomed to certain patterns of past capital flows and a change in that is something on which they might take a hardline stance.  Particularly contentious issues are TEAs and minimum investment amounts. Quoting from our Newsletter #5 published back in November, “The success of the reauthorization effort will depend on how the industry protects its own interests while recognizing that it does not have the political capital required to play hardball with key Senators who can easily sink it.”
2. Equally importantly, other developments divert Congress’ attention: A war is being waged in Ukraine as we speak. It is possible that this crucial geopolitical issue will lead Congress to focus on assistance to Ukraine instead of getting the Omnibus funding bill enacted by March 11th. As the Omnibus will be the likely legislative vehicle of an EB-5 reauthorization, its delay in turn will translate into a delay in EB-5 legislation. 

Ultimatum from USCIS

AIIA was recently informed that USCIS has made it clear to the Chamber of Commerce that the agency does not plan on holding existing EB-5 Regional Center-related petitions and adjustment applications in abeyance indefinitely. We perceive this to be an effort by the service to nudge Congress and the industry towards a reauthorization deal on the upcoming Omnibus. 

For investors, this decision has raised the stakes manifold for any miscalculations within the sensitive EB-5-related negotiations.  If the Omnibus does not contain any EB-5 reauthorization or grandfathering, it is now very much a possibility that USCIS will start denying all pending Regional Center-related I-526s and I-485s.

Progress update on FIFPA

Firstly, to reiterate, AIIA’s priority is to get grandfathering enacted either as part of reauthorization measures or as a standalone measure. While we have commented on the prospects of the Leahy-Grassley bill versus the Nadler bill, it is paramount that we are part of any and all EB-5 proposals. We favor the most expedient path towards grandfathering. As mentioned, AIIA has been successful in getting substantial changes made to the grandfathering sections of the Nadler bill. The language adopted in the bill now reflects the spirit of the bill we drafted called the Foreign Investor Fairness Protection Act (FIFPA).

As far as the Leahy/Grassley bill is concerned, as we mentioned, the first released bill text from those offices is expected to be only a slight rewrite of their previous S.831 bill. AIIA has been in touch with both offices and has received positive feedback on our proposals. We were specifically asked to submit the bill text of FIFPA for their consideration into the amalgamated new language. AIIA is uniquely positioned to work with the two senators’ offices, as we have since the beginning of the lapse. Our team has acknowledged them as the key drivers of the EB-5 issue.

We still believe that Congress does not have the desire to deal with multiple EB-5 issues separately and would rather deal with all the EB-5 issues in a single stroke. However, a breakdown of negotiations, or an attempt to yet again block Leahy/Grassley’s attempt to reauthorize the program, could leave grandfathering as the only viable way forward for the Congress. We continue to advocate for grandfathering both on any reauthorization or as a standalone measure in the form of a drafted bill like FIFPA.

Lastly, the industry’s support for grandfathering continues to accelerate. We are currently in touch with multiple investment issuers, associations and EB-5 service providers who unconditionally support grandfathering/FIFPA and are providing us with valuable support. AIIA is working on building a united front on grandfathering and it is working.  

Litigation Against USCIS

We have maintained that litigation against USCIS is not a guarantee, and we continue to believe that our lobbying efforts would be a more effective and expedient path towards achieving our goals.

However, given the looming threat of denials and the need to protect our members in the event that legislative efforts are not successful, we are open to litigation options. Following discussions with a number of attorneys across multiple firms over the course of the past eight months, AIIA believes that the recently proposed lawsuits from both Galati/IMMPACT and Wasden Banias have the greatest merit. As such, we have decided to make these options accessible to our members.

At this time, AIIA does not plan to fund any litigation efforts. Our funding remains committed towards the goals which we raised donations for – lobbying and public relations efforts. That said, we are committed to supporting our members who are interested in litigation for themselves. 

AIIA will strongly consider filing suits as the lead plaintiff in the event that no EB-5 related legislation gets attached to the Omnibus. Having a non-profit organization like ours join a suit would add greatly to the credibility and weight of the complaint in the eyes of the court. However, in order to do so AIIA would be required to establish ‘standing’ in the matter by demonstrating direct harm to our members. Hence, AIIA is launching its new membership program!

Membership with AIIA

Eligible AIIA members will be able to avail a discounted legal fee for both the Galati/IMMPACT and Wasden Banias suits. New and existing donors/members, please email [email protected] (with the name of the lawsuit you wish to join in the subject line of the email), and we will be glad to send you the necessary information package along with a confirmation of membership. Existing donors can also find the full details of the membership program under the Announcements channel on our Microsoft Teams community.

Membership fees will be set at $500 annually. Given that we have primarily been funded by donations so far, we will be counting existing donor contributions towards membership.

AIIA recognizes the role that all donors have played in getting the organization off the ground. Now, as we look to solidify the organization and bring it on a track towards long term sustainability, we recognize the role that both membership and donations will play in funding to help achieve the goals of our community. Starting with the lawsuit discounts, AIIA plans to continue to make valuable services available to all its members over the coming time. We aspire to make our members’ immigration and investment journeys smooth and stress-free with regular immigration and litigation clinics as an option for our members.

As we roll out our plans, we will continue to release further information about the membership program and additional benefits to our members.