A central part of a controversial visa program that allows wealthy foreign investors to gain green cards in exchange for investment, and has faced bipartisan calls for reforms over concerns it is rife with fraud and abuse, expired this week after an effort to pass a reform bill was blocked in the Senate.
The EB-5 investor visa program allowed foreign investors to obtain residency, leading to fears on both sides of the aisle that it amounts to a dollars-for-residency scheme, and raised national security concerns about the use of the program by the Chinese Communist Party. Most of the investors who have used the program came from China or other parts of Asia.
Efforts had been underway for years to reform the program, which required an investment of $1 million – or just $500,000 in areas of high poverty – and the creation of just 10 jobs in exchange for residency for the investor and their immediate family members, as well as the ability to apply for citizenship.
It also involved the creation of "regional centers" that pooled the visa money and funded large investments across the country. While intended to promote growth in poor or rural areas, the drawing of regional maps around specific impoverished pockets was used to pump money into luxury projects in places like New York City and San Francisco.
Republicans have cited statistics showing that, between 2012 and 2018, nearly 80% of the nearly 10,000 EB-5 visas available each year went to Chinese-born investors and the majority of investors in the backlog are also Chinese.
"Although the EB-5 program’s goal of stimulating capital investment and job creation in the United States is laudable, it has become clear in recent years that the CCP may be abusing the program to gain access to U.S. permanent residency for their members," House Republicans said in a letter to the Government Accountability Office last year.
The Trump administration issued regulations in 2019 that increased the minimum amount of money needed to invest in the program from $500,000 to $900,000 and a series of other regulations — but it was shot down earlier this month by a federal judge.
Those regulations had been initiated by the Obama administration and supported and defended by the Biden administration. They were rejected by the court because they were issued by then-acting DHS Secretary Kevin McAleenan, who it was determined had been improperly appointed. The Biden administration could re-issue the regulation if it chooses to.
In Congress last week, Sens. Chuck Grassley, R-Iowa and Patrick Leahy, D-Vt., attempted to pass a bill through the Senate that would have created additional regulations using unanimous consent.
It was blocked by Sen. Lindsey Graham, R-S.C., who in the past has back legislation to ease restrictions rather than add additional regulations, but Congress could still try to pass a simple extension of the program without reform.
"Senator Graham was not prepared to codify the changes Senator Grassley was proposing for two and a half years," Kevin Bishop, a spokesman for Graham, said. "He would like to negotiate a long term compromise with all parties that allows for the program to be successful while improving program integrity. "
The bipartisan bill would have extended the program to 2026 while making regional centers take measures against fraud and file project plans with DHS. It also included additional background checks, audits of regional centers and site visits of EB-5 projects.
It also established tighter definitions of EB-5 capital, strengthened DHS powers to vet foreign capital to make sure it is lawfully sourced, and required foreign agents and third-party promoters of the program to register with DHS. It created an EB-5 integrity fund as well, in which centers and investors would pay fees to be used by DHS to conduct additional scrutiny.
Grassley and Leahy responding to the bill's scuppering by blasting what they saw as the influence of real estate interests in places like New York who benefit from foreign nationals pouring money into their projects because of the program.
"A narrow subset of big moneyed and corrupt interests has now shown that they would rather kill the program altogether than have to accept integrity reforms designed to clamp down on their bad behavior," Grassley said on the Senate floor.
Leahy warned that one of the immediate effects of the block was that the program immediately expired.
"It’s really unfortunate that a bipartisan bill supported by the overwhelming majority of EB-5 stakeholders was blocked at the behest of a small minority that blindly opposes much-needed accountability and transparency in the program," he said.
"Now that our bill has been blocked, the EB-5 visa program is unfortunately going to lapse in the days ahead and have untold economic consequences throughout the communities that rely on the program for development projects," the Vermont Democrat said.
U.S. Citizenship and Immigration Services announced that it was rejecting visa petitions for the regional center program as a result of its expiration – although those seeking a visa unconnected to the regional center program are not affected. While the shutdown of the program may be seen as an initial win for immigration hawks and skeptics of the program, it also opens the door for an attempt for other senators to try and extend the program without reforms in place.
How successful any push to extend the program as is remains unclear. The Grassley/Leahy bill marked a moment of bipartisanship in a broader immigration debate which is frequently split down party lines, and so an extension could face significant opposition.
The Associated Press contributed to this report.