Comment: EB5 Chicken Turkey and Goose

The rural and urban lobbies in EB5 are at loggerheads. They see their relationship as a zero-sum situation (and they are right about that - absent a quota increase, politically impossible in 2021, rural and urban lobbies are in a win-lose situation with respect to each other). We understand that they are not even directly talking to each other. Immigration Daily has learnt that Senate majority leader Chuck Schumer is carrying water for the large developers in New York City and the urban lobby, and will work to prevent the Grassley bill’s inclusion in any measure that comes up for a vote before September 30. Both the urban and rural lobbies are playing a game of chicken and this impasse may last past Turkey time and beyond. The EB5 industry is not prepared for that long of an RC lapse.

What are the consequences of such a long delay of reauthorization beyond September 30 or beyond Thanksgiving or even beyond Christmas?

  1. Pooled Direct projects are already enjoying three bonanzas (1) Exit of 97% of their RC competitors (2) the lower $500k investment amount & (3) relaxed TEA criteria. They now have a 4th bonanza. USCIS is not processing any 526s for RCs (which were 97%+ of USCIS’s 526 volume), USCIS will likely process the small number of Direct 526s at lightning speed effectively expediting all direct project 526s. 
  2. If Congress fails to reauthorize by September 30th, USCIS may decide to start denying or returning I-526 applications of investors that have already invested in RCs years ago. This will lead to an unprecedented quantity of litigation and loss of trust in the EB5 industry itself--cooking the goose of not only the investors involved, but of the EB5 industry as a whole.

We suggest a three pronged Congressional strategy, arranged in decreasing likelihood of Congressional passage in 2021.

  1. Protect Past Investors: If Congress cannot agree on anything else, it should at least make provisions for USCIS to continue processing of RC I526s already filed against the existing EB5 quota, even if RC reauthorization is otherwise delayed.
  2. Pass clean reauthorization (with possibly some integrity measures) - without an RC program, both urban and rural RCs will be equally dead.
  3. Consider the industry wish list (this has several elements which are controversial both within the EB5 industry and within Congress) which requires an increase in EB5 quota. The EB5 industry may have to resign itself to 2022 for this wish list.

For the EB5 industry at the moment the following ornithological aphorism may be apt - if we all play the game of chicken past Turkey-time, all our gooses will be cooked.

Please let us know your thoughts by writing to us at editor@ilw.com

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