EB–5 Reform and Integrity Act of 2019

II 116TH CONGRESS 1ST SESSION S. 2540 To reauthorize the EB–5 Regional Center Program in order to prevent fraud and promote and reform foreign capital investment and job creation in American communities. IN THE SENATE OF THE UNITED STATES SEPTEMBER 24, 2019 Mr. GRASSLEY (for himself and Mr. LEAHY) introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To reauthorize the EB–5 Regional Center Program in order to prevent fraud and promote and reform foreign capital investment and job creation in American communities. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘EB–5 Reform and In- 4 tegrity Act of 2019’’. 5 SEC. 2. REAUTHORIZATION AND REFORM OF THE RE- 6 GIONAL CENTER PROGRAM. 7 (a) REPEAL.—Section 610 of the Departments of 8 Commerce, Justice, and State, the Judiciary, and Related 9 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 2 •S 2540 IS Agencies Appropriations Act, 1993 (8 U.S.C. 1153 note) 1 is repealed. 2 (b) AUTHORIZATION.—Section 203(b)(5) of the Im- 3 migration and Nationality Act (8 U.S.C. 1153(b)(5)) is 4 amended by adding at the end the following: 5 ‘‘(E) REGIONAL CENTER PROGRAM.— 6 ‘‘(i) IN GENERAL.—Visas under this 7 paragraph shall be made available through 8 September 30, 2024, to qualified immi- 9 grants (and the eligible spouses and chil- 10 dren of such immigrants) pooling their in- 11 vestments with 1 or more qualified immi- 12 grants participating in a program imple- 13 menting this paragraph that involves a re- 14 gional center in the United States, which 15 has been designated by the Secretary of 16 Homeland Security on the basis of a pro- 17 posal for the promotion of economic 18 growth, including prospective job creation 19 and increased domestic capital investment. 20 ‘‘(ii) PROCESSING.—In processing pe- 21 titions under section 204(a)(1)(H) for clas- 22 sification under this paragraph, the Sec- 23 retary of Homeland Security— 24 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 3 •S 2540 IS ‘‘(I) may process petitions in a 1 manner and order established by the 2 Secretary; and 3 ‘‘(II) shall deem such petitions to 4 include records previously filed with 5 the Secretary pursuant to subpara- 6 graph (F) if the alien petitioner cer- 7 tifies that such records are incor- 8 porated by reference into the alien’s 9 petition. 10 ‘‘(iii) ESTABLISHMENT OF A RE- 11 GIONAL CENTER.—A regional center shall 12 operate within a defined and limited geo- 13 graphic area, which shall be described in 14 the proposal and be consistent with the 15 purpose of concentrating pooled investment 16 within such area. The proposal to establish 17 a regional center shall demonstrate that 18 the pooled investment will have a signifi- 19 cant economic impact on such geographic 20 area, and shall include— 21 ‘‘(I) reasonable predictions, sup- 22 ported by economically and statis- 23 tically valid and transparent fore- 24 casting tools, concerning the amount 25 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 4 •S 2540 IS of investment that will be pooled, the 1 kinds of commercial enterprises that 2 will receive such investments, details 3 of the jobs that will be created di- 4 rectly or indirectly as a result of such 5 investments, and other positive eco- 6 nomic effects such investments will 7 have; 8 ‘‘(II) a description of the policies 9 and procedures in place reasonably 10 designed to monitor new commercial 11 enterprises and any associated job- 12 creating entity to seek to ensure com- 13 pliance with— 14 ‘‘(aa) all applicable laws, 15 regulations, and Executive orders 16 of the United States, including 17 immigration laws and securities 18 laws; and 19 ‘‘(bb) all securities laws of 20 each State in which securities of- 21 ferings will be conducted, invest- 22 ment advice will be rendered, or 23 the offerors or offerees reside; 24 and 25 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 5 •S 2540 IS ‘‘(III) attestations and informa- 1 tion confirming that all persons in- 2 volved with the regional center meet 3 the requirements under clauses (i) 4 and (ii) of subparagraph (H). 5 ‘‘(iv) INDIRECT JOB CREATION.—The 6 Secretary of Homeland Security shall per- 7 mit aliens seeking admission under this 8 subparagraph to satisfy only up to 90 per- 9 cent of the requirement under subpara- 10 graph (A)(ii) with jobs that are estimated 11 to be created indirectly through investment 12 under this paragraph in accordance with 13 this subparagraph. An employee of the new 14 commercial enterprise or job-creating enti- 15 ty may be considered to hold a job that 16 has been directly created. 17 ‘‘(v) COMPLIANCE.— 18 ‘‘(I) IN GENERAL.—In deter- 19 mining compliance with subparagraph 20 (A)(ii), the Secretary of Homeland Se- 21 curity shall permit aliens seeking ad- 22 mission under this subparagraph to 23 rely on economically and statistically 24 valid methodologies for determining 25 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 6 •S 2540 IS the number of jobs created by the pro- 1 gram, including— 2 ‘‘(aa) jobs estimated to have 3 been created directly, which may 4 be verified using such methodolo- 5 gies, provided that the Secretary 6 may request additional evidence 7 to verify that the directly created 8 jobs satisfy the requirements 9 under such subparagraph; and 10 ‘‘(bb) consistent with this 11 subparagraph, jobs estimated to 12 have been created indirectly 13 through capital expenditures, rev- 14 enues generated from increased 15 exports, improved regional pro- 16 ductivity, job creation, and in- 17 creased domestic capital invest- 18 ment resulting from the program. 19 ‘‘(II) JOB AND INVESTMENT RE- 20 QUIREMENTS.— 21 ‘‘(aa) RELOCATED JOBS.— 22 In determining compliance with 23 the job creation requirement 24 under subparagraph (A)(ii), the 25 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 7 •S 2540 IS Secretary may include jobs esti- 1 mated to be created under a 2 methodology that attributes jobs 3 to prospective tenants occupying 4 commercial real estate created or 5 improved by capital investments 6 if the number of such jobs esti- 7 mated to be created has been de- 8 termined by an economically and 9 statistically valid methodology 10 and such jobs are not existing 11 jobs that have been relocated. 12 ‘‘(bb) PUBLICLY AVAILABLE 13 BONDS.—The Secretary shall 14 prescribe regulations to ensure 15 that alien investor capital may 16 not be utilized, by a new com- 17 mercial enterprise or otherwise, 18 to purchase municipal bonds or 19 any other bonds, if such bonds 20 are available to the general pub- 21 lic, either as part of a primary 22 offering or from a secondary 23 market. 24 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 8 •S 2540 IS ‘‘(vi) AMENDMENTS.—The Secretary 1 of Homeland Security shall— 2 ‘‘(I) require a regional center— 3 ‘‘(aa) to provide advance no- 4 tice to the Secretary of signifi- 5 cant proposed changes to its or- 6 ganizational structure, owner- 7 ship, or administration, including 8 the sale of such center, or other 9 arrangements which would result 10 in individuals not previously sub- 11 ject to the requirements under 12 subparagraph (H) becoming in- 13 volved with the regional center, 14 before any such proposed 15 changes may take effect; or 16 ‘‘(bb) if exigent cir- 17 cumstances are present, to pro- 18 vide the notice described in item 19 (aa) to the Secretary not later 20 than 5 business days after a 21 change described in such item; 22 ‘‘(II) approve any amendment re- 23 ferred to in subclause (I) only after 24 the Secretary determines that the re- 25 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 9 •S 2540 IS gional center would remain compliant 1 with this subparagraph and subpara- 2 graph (H) after implementing the pro- 3 posed changes; and 4 ‘‘(III) notwithstanding the pend- 5 ency of a determination described in 6 subclause (II) relating to an amend- 7 ment of a business plan or petition, 8 adjudicate business plans under sub- 9 paragraph (F) and petitions under 10 section 204(a)(1)(H). 11 ‘‘(vii) RECORD KEEPING AND AU- 12 DITS.— 13 ‘‘(I) RECORD KEEPING.—Each 14 regional center shall make and pre- 15 serve, during the 5-year period begin- 16 ning on the last day of the Federal 17 fiscal year in which any transactions 18 occurred, books, ledgers, records, and 19 other documentation from the regional 20 center, new commercial enterprise, or 21 job-creating entity used to support— 22 ‘‘(aa) any claims, evidence, 23 or certifications contained in the 24 regional center’s annual state- 25 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 10 •S 2540 IS ments under subparagraph (G); 1 and 2 ‘‘(bb) associated petitions by 3 aliens seeking classification under 4 this section or removal of condi- 5 tions under section 216A. 6 ‘‘(II) AUDITS.—The Secretary 7 shall audit each regional center not 8 less frequently than once every 3 9 years. Each such audit shall include a 10 review of any documentation required 11 to be maintained under subclause (I) 12 for the preceding 3 years and a review 13 of the flow of alien investor capital 14 into any capital investment project. 15 To the extent multiple regional cen- 16 ters are located at a single site, the 17 Secretary may audit multiple regional 18 centers in a single site visit. 19 ‘‘(III) TERMINATION.—The Sec- 20 retary shall terminate the designation 21 of a regional center that fails to con- 22 sent to an audit under subclause (II) 23 or deliberately attempts to impede 24 such an audit. 25 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 11 •S 2540 IS ‘‘(F) BUSINESS PLANS FOR REGIONAL 1 CENTER INVESTMENTS.— 2 ‘‘(i) APPLICATION FOR APPROVAL OF 3 AN INVESTMENT IN A COMMERCIAL EN- 4 TERPRISE.—A regional center shall file an 5 application with the Secretary of Home- 6 land Security for each particular invest- 7 ment offering through an associated new 8 commercial enterprise before any alien files 9 a petition for classification under this 10 paragraph by reason of investment in that 11 offering, which shall include— 12 ‘‘(I) a comprehensive business 13 plan for a specific capital investment 14 project; 15 ‘‘(II) a credible economic analysis 16 regarding estimated job creation that 17 is based upon economically and statis- 18 tically valid and transparent meth- 19 odologies; 20 ‘‘(III) any documents filed with 21 the Securities and Exchange Commis- 22 sion under the Securities Act of 1933 23 (15 U.S.C. 77a et seq.) or with the 24 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 12 •S 2540 IS securities regulator of any State, as 1 required by law; 2 ‘‘(IV) any investment and offer- 3 ing documents, including subscription, 4 investment, partnership, and oper- 5 ating agreements, private placement 6 memoranda, term sheets, biographies 7 of management, officers, directors, 8 and any person with similar respon- 9 sibilities, the description of the busi- 10 ness plan to be provided to potential 11 alien investors, and marketing mate- 12 rials used, or drafts prepared for use, 13 in connection with the offering, which 14 shall contain references, as appro- 15 priate, to— 16 ‘‘(aa) any investment risks 17 associated with the new commer- 18 cial enterprise and the job-cre- 19 ating entity; 20 ‘‘(bb) any conflicts of inter- 21 est that currently exist or may 22 arise among the regional center, 23 the new commercial enterprise, 24 the job-creating entity, or the 25 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 13 •S 2540 IS principals or attorneys of such 1 entities; 2 ‘‘(cc) any pending material 3 litigation or bankruptcy, or ad- 4 verse judgments or bankruptcy 5 orders issued during the most re- 6 cent 10-year period, in the 7 United States or in another 8 country, affecting the regional 9 center, the new commercial enter- 10 prise, any associated job-creating 11 entity, or any other enterprise in 12 which any principal of any of the 13 aforementioned entities held ma- 14 jority ownership at the time; and 15 ‘‘(dd)(AA) any fees, ongoing 16 interest, or other compensation 17 paid, or to be paid by the re- 18 gional center, the new commer- 19 cial enterprise, or any issuer of 20 securities intended to be offered 21 to alien investors, to agents, find- 22 ers, or broker dealers involved in 23 the offering of securities to alien 24 VerDate Sep 11 2014 22:52 Sep 30, 2019 Jkt 089200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S2540.IS S2540 lotter on DSKBCFDHB2PROD with BILLS 14 •S 2540 IS investors in connection with the 1 investment; 2 ‘‘(BB) a description of the 3 services performed, or that will 4 be performed, by such person to 5 entitle the person to such fees, 6 interest, or compensation; and 7 ‘‘(CC) the name and contact 8 information of any such person, 9 if known at the time of filing; 10 ‘‘(V) a description of the policies 11 and procedures, such as those related 12 to internal and external due diligence, 13 reasonably designed to cause the re- 14 gional center and any issuer of securi- 15 ties intended to be offered to alien in- 16 vestors in connection with the relevant 17 capital investment project, to comply, 18 as applicable, with the securities laws 19 of the United States and the laws of 20 the applicable States in connection 21 with the offer, purchase, or sale of its 22 securities; 23 ‘‘(VI) a certification from the re- 24 gional center, and any issuer of secu- 25 VerDate Sep 11 2014 22:52 Sep 30, 20 [Text truncated for display. Full text available on Congress.gov.]