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  • Article: A National Interest Solution to the EB-5 Legislation Impasse. By H. Ronald Klasko

    A National Interest Solution to the EB-5 Legislation Impasse

    by


    A long term extension of the regional center EB-5 program failed to pass Congress in 2015 mostly because of intractable differences between rural and urban interests. Various proposals were floated seeking to incentivize rural investments and discourage urban investments by providing a reduced investment amount based on various artificial configurations of census tracts. In the end, no agreement could be reached between the divergent interests.

    What if there were a way to bridge this divide by incentivizing investments in rural areas and possibly also urban high poverty areas while at the same time providing some benefit to investors in urban areas? And what if it could be done in a way that eliminates any need for gerrymandering, any need for creating a new USCIS bureaucracy with TEA adjudication delays and any need for legislating an artificial number of census tracts to qualify for TEA status? And what if there were a way to do this that removes all doubt about the investment amount required for all investors in the project, even investors in future years? And what if such a solution could ease some of the pressure on the lengthy EB-5 quota backlog that threatens to make the benefits of the EB-5 program unrealistic for most investors?

    I suggest that there is such a solution. I regret that I did not originally think of this solution – credit for the idea goes to Tammy Fox-Isicoff, a respected EB-5 attorney, colleague and friend.

    Let me set out the premises and then let’s see if the proposed solution achieves the stated goals, is politically palatable and furthers the national interest that Congress had in mind when it created the EB-5 program.

    Here are the premises:

    • Investments in rural areas and high poverty urban areas are in the national interest and should be incentivized.
    • Investments in projects that create employment for US. workers in urban areas should not be discouraged.
    • Given the extensive waiting list for most EB-5 investors, reducing or eliminating the waiting times creates a far greater incentive for investors than reducing the minimum investment amount.
    • It is logical to have no limit on investments that the federal government believes are in the national interest. Rather, the federal government should encourage national interest investments.
    • Carving out of the existing 10,000 numbers (3,000 to 3,500 investors annually) a substantial number for rural area investors, urban impoverished area investors and other investors in the national interest would result in the remaining investors, including a large majority of investors with pending petitions, having a waiting line that could well be in excess of 10 to 15 years. Such a waiting list is totally unrealistic, far too great a disincentive for investors to invest in urban areas and would likely create legal and foreign policy issues for investors who had no reason to believe that legislation would retroactively result in doubling or tripling anticipated waiting times. Such a result would, at best, cripple the EB-5 program.
    • Even if Congress can achieve compromise on a new definition of TEA, adjudication delays within USCIS to determine which projects qualify under a new TEA definition will create impediments and backlogs that will make the EB-5 program less amenable to the realities of raising capital for development projects in the U.S.

    If we agree with these premises, Tammy and I suggest that the following is a solution that addresses all of them:

    Create an EB-5 quota exemption for projects deemed by the U.S. government to be in the U.S. national interest.

    Here is how it would work:

    Given the political realities, and the fact that bipartisan leadership in both the House and Senate Judiciary Committees believe that investments in rural areas and urban impoverished areas are in the national interest, the legislation could include a provision deeming that rural and urban impoverished area investments are in the national interest. This would create a significant incentive for investors to invest in such national interest projects, and there would be no need to reduce the investment amount. At the same time, since the national interest investors would be exempted from the quota, it would remove some of the pressure on the numbers available for urban area investors. The result would be that urban area investors would not be harmed (and would actually receive a benefit) while investors investing in areas deemed to be in the national interest would be incentivized.

    USCIS would also have the authority to determine that any particular project is in the national interest. For example, given the pressing need for improving U.S. infrastructure, it could determine that an infrastructure development project is in the national interest. This is nothing new – USCIS has been adjudicating national interest waivers in the EB-2 category since 1990.

    Since the purpose of the targeted employment area was to incentivize certain investments, there would no longer be a need for targeted employment areas. The investment amounts for all investments would be the same. This would eliminate the divisive and artificial debate on where lines should be drawn for purposes of TEA qualification. The new governmental TEA bureaucracy would be eliminated; gerrymandering would be eliminated; the state versus federal jurisdiction issues would be eliminated; changes in investment amount for investors in a project based on TEA analysis in different years would be eliminated. Projects would be able to go to market immediately without waiting for a TEA determination.

    Significantly, creating a legislative quota exemption to accomplish a goal considered important by Congress is nothing new. Congress has already exempted immediate relatives (spouses, parents and children of U.S. citizens) from the immigrant quota. In addition, Congress has exempted universities and certain nonprofit institutions from the H-1B visa quota.

    Unless I am missing something, this solution could bridge the divide between rural and urban interests, and between rural and urban Senators and Congressmen. It would also be at least a small step toward addressing the quota backlog that threatens to render the EB-5 program – and its job creating benefits – unattractive and unrealistic. And it would break the logjam preventing the passage of legislation providing for a long term extension of the regional center EB-5 program. Most importantly, it would encourage investment in projects and in areas that clearly serve the national interest of the U.S. in furtherance of Congressional intent.

    I welcome feedback from all EB-5 advocates on this proposal.

    This post originally appeared on Klaskolaw.com. © 2016 Klasko Law. All Rights Reserved. Reprinted with permission.


    About The Author

    Ronald Klasko H. Ronald Klasko (Ron) is widely recognized by businesses, universities, hospitals, scholars, investors and other lawyers as one of the country’s leading immigration lawyers. A founding member of Klasko Immigration Law Partners, LLP and its Managing Partner, he has practiced immigration law exclusively over three decades. Under his leadership, the firm has been chosen every year for the last ten years by the highly regarded Chambers Global 2015 as one of the top five immigration law firms in the United States; Ron himself is recognized annually as being in Tier One of immigration lawyers by Chambers Global and U.S. News and World Report. In addition, he has been included in the highly regarded Best Lawyers In America for two decades and has also been repeatedly selected for inclusion in Lawdragon’s/Human Resource Executive’s list of The Most Powerful Employment Attorneys Guide. Who’s Who Legal in Corporate Immigration named him as the most highly regarded immigration lawyer in the world.


    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

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