The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.
I have been barraged with questions from investor, regional center and developer clients, and from others in the EB-5 industry, regarding the impact of the election on EB-5. My short answer is that the impact on EB-5 is likely to be less than its impact on other areas of immigration law and on all other aspects of American life and jurisprudence. However, that would make for a very short and uninteresting blog. So, I will expand on my thoughts using a combination of facts and speculation.
At one level, everything remains the same. The Republicans controlled the Senate and House before; the Republicans still control the Senate and House. Senator Grassley was the Chair of the Senate Judiciary Committee, and Congressman Goodlatte was the Chair of the House Judiciary Committee before; they remain so. Senator Leahy has the option to remain the Ranking Member of the Senate Judiciary Committee, but indications are that he may choose a different Committee. If so, Senator Feinstein or Senator Durbin will likely take his place. In either event, Minority Leader Senator Schumer – a pro-EB-5 advocate – will have great influence. Representative Conyers will remain the Ranking Member of the House Judiciary Committee. The key players in the Senate, in addition to Senators Grassley and Leahy, remain Senator Schumer (Democrat), Senator Cornyn (Republican) and Senator Flake (Republican). No changes there. On the Republican side, both Senators Cornyn and Flake were not supporters of the President-Elect; and there is no reason to believe that their favorable positions on EB-5 would change as a result of the election.
What’s changed is that President Obama is being replaced by President Trump. It has always been assumed that President Obama would almost certainly sign any EB-5 legislation that passes both Houses of Congress. His subordinates have played somewhat of a behind the scenes role in shaping proposed legislation, but it’s fair to say that his Administration has not provided any pro-EB-5 advocacy that is critical to the future of the EB-5 industry.
In his place is President Trump. Although his views on so many aspects of U.S. immigration policy are well known, that does not apply to EB-5. What we do know is that the Trump Bay Street Project was the beneficiary of EB-5 capital, and one of his family members and chief advisors is a developer who has deployed EB-5 capital.
There are three other players with new prominence. Senator Jeff Sessions of Alabama has been a long time member of the Senate Judiciary Committee. During the campaign, it was obvious that Senator Sessions was the primary advisor to candidate Trump on immigration policy. One of his former staffers is the head of immigration policy implementation on the transition team, and his former chief of staff is likely to be a close advisor to President Trump in the new Administration. All of this is not good for progressive immigration policies; and, in fact, Senator Sessions has been perhaps the primary supporter of immigration restrictionists in the Senate. However, the one exception to his anti-immigration stances may be EB-5 since Senator Sessions is on record as supporting EB-5 projects in Alabama.
The other key player is Kansas Secretary of State, Kris Kobach, who has been added to the immigration policy transition team. He has a history of being a restrictionist on all aspects of immigration policy. It is premature to know whether he will be setting his sights on the EB-5 program.
Putting all this together, the key players in the Senate and House remain the same; and the role of the White House, if any, is not at all clear. With that as the big picture, let’s drill down to the immediate future of the EB-5 program and then venture, with trepidation, to a longer term prognostication.
We all know that the Regional Center EB-5 Program was extended to December 9 as part of the Continuing Resolution for all government programs. Although, as of this writing, there is certainly some chance that an EB-5 bill could move forward by December 9, I would consider the chance to be small – and, in fact, smaller given the results of the election. If the Senate and/or Presidency had gone Democratic, the Republican House and Republican Senate might have been more motivated to agree to a final budget to fund all government operations by December 9 in order to avoid turning the authority over to a Democratic Senate and/or a new Democratic President. Given the results of the election, the opposite motivation may govern. Specifically, it seems reasonable to conjecture that Congress may extend the Continuing Resolution until March or April at which point the Republicans will control all branches of government. In that event, EB-5 will almost certainly continue as part of the Continuing Resolution and be subject, again, to a very short term extension.
If you are following along so far, the next logical question is what do we expect will happen in the first quarter of 2017. Here the crystal ball gets cloudier.
There are three possibilities.
The least likely possibility is that Congress will let the program lapse. This was the least likely possibility before the election, and there is nothing in the election results that, in my opinion, makes it more likely now. In addition to the fact that the program has many key advocates in Congress and that lapsing of the program would create widespread disruption of many projects around the country, the chances of a lapse are minimalized as long as EB-5 remains tied to the three other immigration programs requiring extension – E-Verify, religious workers and doctors. Each of those programs has important advocates who would want to make certain the programs don’t lapse. Most especially, E-Verify has been mentioned on a number of occasions by candidate Trump as an important part of his immigration enforcement policy. I would begin to worry if EB-5 were separated from the three programs, but so far there is no indication of that on the horizon.
The next possibility is a replay of 2016 – the program is extended through September 30, 2017 without any substantive changes. Before the election, I thought that was an unlikely scenario. If anything, I believe that the election results make this possibility at least slightly more likely. There are at least two reasons. The new Administration with its totally new set of priorities may keep the Senate Judiciary Committee’s agenda fully packed in the first quarter of 2017, leaving little or no time for a substantive debate on EB-5. This includes, of course, the likely confirmation hearings for a Supreme Court Justice and many other federal appointments.
Another reason why a debate on substantive provisions of EB-5 immigration law might be deferred – and this is purely speculation – would be if the Trump Administration, which is making reform of the immigration laws a priority, might prefer that no substantive debate on any immigration issue go forward until the Administration’s new team has a chance to devise its overall immigration policy strategy.
In my opinion, the most likely possibility before the election – and still the most likely possibility – is that, in the first quarter of 2017, Congress will finally agree on comprehensive EB-5 legislation, which would include a long term – probably 5 year – extension. I believe that many in Congress want to get this issue behind them. If Senators Grassley and Leahy (advocating for rural interests) and Senators Schumer, Cornyn and Flake (advocating for urban interests) can bridge the rural-urban divide, we will have a new law and a long-term EB-5 extension.
To end on a down note, I believe that the biggest impact of the election is to diminish the chances of a legislative fix to the substantial EB-5 quota backlog for Chinese investors. While I have been advocating – and will continue to advocate – for inclusion in the EB-5 bill of a provision to recapture unused employment-based immigrant numbers (and possibly to apply those numbers to projects of special interest to the Congress, such as infrastructure, high poverty areas, manufacturing, etc.), the chances of that legislative strategy being successful remain somewhat slim.
Before the election, I had thought that our greatest hope for addressing the backlog problem was Comprehensive Immigration Reform, which was likely to be one of the earliest initiatives of the Clinton Administration. Comprehensive Immigration Reform – and certainly comprehensive immigration reform that would increase immigrant numbers – is now no longer a proposition that can be considered a realistic option. Also, any executive action to alleviate the problem is certainly off the table. If legislative recapture through the EB-5 bill cannot be accomplished, litigation on the issue of improper counting of family members toward the 10,000 numbers could become the only option. The chances of that happening are equivalent to the chances of the Chicago Cubs winning a World Series in our lifetime.