Grassley: The EB-5 Program Finally Received the Update it Needed

Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa

The EB-5 Program Finally Received the Update it Needed

Wednesday, March 16, 2022

 

I want to speak about reforms to the EB-5 investor visa program that were included in last week’s omnibus bill. I also addressed this issue before the vote, but I’d like to follow up on that statement with some brief remarks today.

 

First, I’d like to thank my friend and colleague Senator Leahy, who has worked with me for a long time on reforming the EB-5 program. He and his staff have put in a great deal of time and work on a number of legislative efforts to reform the EB-5 program. I appreciate the partnership we’ve had on this issue for many years.

 

As I mentioned in my previous statement, Congress originally authorized the EB-5 Regional Center program in 1992 as a pilot program and outgrowth of the EB-5 investor visa that was created by Congress in 1990.

 

When the EB-5 visa and regional center programs were established, Congress intended for them to help spur investment in rural and economically depressed areas.

 

Unfortunately, the EB-5 regional center program, in particular, has been plagued with fraud and abuse.

 

Rampant and abusive gerrymandering of the EB-5 program’s targeted employment areas also undermined congressional intent that lower investment thresholds be a tool for channeling investment into areas that truly need it. EB-5 investment levels had also not been adjusted by Congress since 1990.

 

The EB-5 Reform and Integrity Act of 2022, which was included in the omnibus bill, will address a number of these issues.

 

The bill, which Senator Leahy and I primarily authored, formally repeals the pilot program created by Congress in 1992 and codifies in its place a new regional center program reflecting a number of reforms that we’ve pursued for many years. These reforms will help to crack down on the fraud and abuse that have plagued the program for far too long.

 

As I said in my previous statement, all EB-5 regional centers that operated under the lapsed and repealed pilot program will be expected to seek a new regional center designation. They’ll have to certify compliance with all of the relevant requirements and reforms laid out in our bill in order to receive such a designation.

 

For the first time since 1990, the bill statutorily raises EB-5 investment levels and mandates that they be adjusted for inflation every five years.

 

The legislation also codifies certain aspects of the 2019 EB-5 Immigrant Investor Program Modernization Rule. Specifically, the bill codifies the 2019 Rule’s definition of a “high unemployment” targeted employment area and allows only DHS to make such designations.

The so-called “donut” targeted employment area (TEA) model from the 2019 Rule will significantly limit the number of census tracts that may be used to seek a designation as a “high unemployment” TEA.

 

This TEA model, combined with the exclusive authority of DHS to make high unemployment TEA designations, should crack down on TEA gerrymandering that has long deprived rural and economically distressed areas of the investment Congress intended they receive.

 

It’s also my belief and expectation that DHS should reserve “high unemployment” TEA designations for census tracts that have experienced persistently high unemployment for a number of years rather than brief spikes in unemployment due to temporary and extraordinary circumstances such as the COVID-19 pandemic.

 

Finally, the legislation puts in place specific visa set-asides for rural area projects, high unemployment area projects, and infrastructure projects. The visa set-aside for infrastructure projects is limited to true public infrastructure projects – that is, those that benefit the public and the American people – not public-private partnerships or projects for a private business.

 

I will continue to monitor the implementation of this bill as well as developments in the EB-5 program over the coming months and years.