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February 2 2013

Breaking News — Senator Leahy Bill

Senator Leahy (D-Vt.), Chairman of the Senate Judiciary Committee, has been a strong supporter of the EB-5 visa program. He is circulating a draft bill making major revisions to this program. I am very pleased to see that it contains a concept that I developed and crafted when I was a member of the AILA EB-5 Committee. This provision, a good faith waiver, allows investors to have conditions removed from their lawful permanent resident status if, through no fault of the investor, the project fails, the investment is not maintained, or the jobs are not created. This is an important provision, since many potential investors immigrate to other countries instead of the United States because of concerns about USCIS refusing to approve I-829s if the project in which they invest underperforms.

Here are the highlights of the draft Leahy bill (which will undoubtedly change):

  • Permanently extends the EB-5 regional center program
  • Recognizes investment funds (the “venture capital model”), which permits investment in multiple projects that do not have to be identified at the I-526 level
  • Requires USCIS to define reasonable methodologies for measuring job creation, including full-time equivalents and intermittent construction jobs
  • Requires USCIS to develop standards to define the required elements of project business plans
  • Allows expedited processing for a fee (this sounds good, but everyone will take advantage of it so it is unclear how much more quickly applications will be processed)
  • Requires USCIS to establish procedures for project preapproval, which is then binding unless there is a “material change”; also allows the applicant to cure any deficiencies
  • Defines the term “material change” to mean a change in the commercial enterprise or economic circumstances resulting in the likelihood that fewer than 10 jobs per investor will be created in a reasonable time for each investor in the project
  • Requires financial statements and biannual reports from regional centers
  • Requires rules, minimum qualifications, and registration with USCIS for all direct and third-party promoters of regional center projects; regional centers must oversee them or face penalties
  • Improves the definition of Targeted Employment Areas:
    • TEA designations would be valid for five years
    • High unemployment is defined as 8% or 150% of the national average, whichever is less
    • “Rural” TEAs do not need to be outside an MSA (this is a major improvement)
  • Allows for revised business plans during the I-829 application process to overcome material changes
  • Allows removal of conditions where the immigrant acted in good faith to sustain the investment and any failure to create jobs was not within the immigrant’s control
  • Creates concurrent filing of EB-5 petitions and adjustment of status and gives immigrant investors the benefit of INA § 245k, which permits up to six months unlawful status
  • Requires regulations within six months of enactment

These are only some of the changes that Senator Leahy’s bill would make to the current EB-5 statute. Overall, the changes in this bill are extremely positive, although I have some concerns about some of the provisions.

I strongly urge you to contact your senators and ask them to support and advocate for approval of this important legislation that will attract capital to the United States and create jobs. I will update you as we analyze the bill further and it progresses.