By: Aaron Muller and Mona Shah
Congresswoman Zoe Lofgren (D-Calif) is nothing if not persistent! For the third time in four years, Congress has once again introduced legislation eliminating country caps that would have a devastating effect on not only the EB-5 program, but on all employment-based immigration. The Eagle (Equal Access to Green cards for Legal Employment) Act is essentially the spiritual successor to bills like H.R.1044 and S. 386, both of which sought to eliminate the 7% per-country cap on granted visas.[1] Keep in mind: this is 7% of the 140,000 total allotted visas, not 7% of the applicant pool for each respective country.
The Eagle Act’s name suggests an optimistic patriotism, but the words comprising the acronym are misleading: “Equal” implies a fixed figure, much like the 7% per-country cap. But the act, if ratified, would do away with this measure, leading to the countries with the most EB-5 investor applicants – namely, China and India – having a monopoly on the allowed visas. This sort of bait-and-switch language is not unique to the Eagle Act; the full title of H.R. 1044 was the “Fairness for High-Skilled Immigrants Act.” These names paint an idyllic portrait of the proposed changes to the immigration system, but the realities of these changes have consequences that could ultimately be a detriment to diversity as it relates to immigration.
The Eagle Act was first introduced in June of 2021 and is sponsored by Lofgren. It proposes raising the cap of family-based immigration per-country from 7% to 15%, as well as eliminating the cap for employment-based immigration. Although the Act primarily applies to the H-1B, EB-2, and EB-3 programs, it may have troubling ramifications in the EB-5 community.
Despite its 83 cosponsors and largely bipartisan support, the Eagle Act seems unlikely to pass due to the history of this type of legislation. Still, the EB-5 community should be vigilant and examine just why bills of this nature are potentially harmful.
One of the major concerns surrounding the bill is the ever-present backlog of wait times. This has been a consistent issue in the immigration space, as petitions and applications are entrenched in red tape. Because the bill echoes the same sentiments as its predecessors, the warnings of immigration experts remain prescient; as of December 2020, according to Tammy Fox-Isicoff, a partner with Miami-based immigration law firm Rifkin & Fox-Isicoff, P.A., there was an astoundingly high number of EB-5 applicants from China. The Eagle Act would push these petitioners in line together, meaning that investors from countries such as Vietnam and Venezuela would experience increased wait times of 10-15 years.[2] Immigration Daily projects that, if the Eagle Act is passed, the wait times for EB-5 applicants could rise significantly, due in part to the fact that an estimated 80% of EB-5 visas would be awarded to Chinese applicants.[3]
Given these delays, immigrant investors from countries smaller than China and India would have less incentive to proceed with the immigration process. That means fewer petitions, leading to a far-less diverse pool of immigrants seeking residency and investment in the United States. The Department of Homeland Security has been opposed to legislation of this kind, confirming experts’ opinion that increased wait times would discourage immigrants from countries where the demand for EB-5 investors is not as great as it is for China and India.[4]
There is, however, a 9-year transition period built into the Eagle Act that would attempt to stave off China and India from developing a tight hold on this type of immigration. But Fox-Isicoff has said that the similar transitional plan included in H.R. 1044 was “inconsequential,” claiming that the percentage caps introduced in the plan would actually mean very little. According to Fox-Isicoff, this is likely because legislation of this kind is rarely crafted with the guidance of immigration lawyers – those who have acute insight into the realities of programs like EB-5.
(The new transition plan is detailed in the comprehensive rundown of the bill provided by Stilt Inc., a financial-services company geared to immigrants, visa holders and the underserved.)[5]
The potential effect on the EB-5 industry would be disastrous. Mona Shah & Associates Global’s own Mona Shah, managing partner of the firm, said bills like this would “strangle the EB-5 program and kill diversification.” The evidence for this is based in mathematics. Informational resource RedBus2US.com offers this example: “A country like Iceland with a 338,000 population gets the same number [of visas] compared to India which has [a population of] about 1.339 billion.”[6] Put plainly, the Eagle Act would mean that a more populated country could provide a much higher number of skilled immigrants than one with fewer people, regardless of merit, education, or skill. As such, the United States would potentially miss out on EB-5 investors of great promise who could infuse the economy with funds while providing for much-needed jobs.
Despite the relative infancy of this particular threat to EB-5, experts are already predicting what Lofgren’s proposed bill will mean. Aaron Grau, executive director of trade association Invest In the USA, noted that his organization opposes the bill but does so “with great caution.” It is wise to be prudent, especially as the industry awaits the bill’s landing in the Rules Committee.
This is not to say that the program does not warrant reform. Experts, however, say that the Eagle Act is not the answer. Shah described the complicated situation, assuring interested parties that “there has always been a general consensus that the program requires reforms.” Shah added that U.S. Citizenship and Immigration Services and the Securities and Exchange Commission “have made strides in moving the program forward. … We live in the hope that the lawmakers do not forget the numerous examples of the benefits of the program, not only [in] creating jobs but also in the draw of overseas investment.”[7]
Support of and opposition to this bill is hard to predict. Unlike so many other issues, opinions on employment and investment-based immigration are not split strictly down party lines. Perhaps this is because the support for the bill is not rooted solely in politics; it should be noted that, according to ILW, the Eagle Act is being pushed by a select few tech giants: Apple, Google, Amazon, Facebook, and Microsoft, all of whom seem to have a vested interest in eliminating the country cap.
Just this morning, the Biden administration released an official statement in support of the Eagle Act, mentioning its belief that the bill would lead U.S. employers to focus on hiring immigrants “based on merit, not their birthplace.” This is an appealing sentiment, but one that misrepresents the reality that would result from the bill’s passing. Evidence and expert opinion would suggest the opposite of what the White House says, in that the Eagle Act is more likely to lead to an influx of immigrants from China and India, and very few other places.
The bill is not without vocal opposition in Congress, however. Representative Yvette Clarke (D-N.Y.), chair of The Black Caucus immigration task force, has made public her opposition to the Eagle Act. She believes that Congress can “do better,” noting that the Act “does not appropriately account for the potential adverse impacts of eliminating per-country caps.” She also agrees that the nine-year transition plan will be ineffective and could be a specific detriment to Black migrants.[8] Her statement echoes the sentiment of experts: reforms do need to happen, but the Eagle Act is not the way forward.
As always, the future is uncertain. As the Eagle Act moves through the legislative process, it’s possible effects may become clearer. Despite the support by some government sectors, it is not certain the bill will pass both Houses of Congress and become law. No doubt another version of the same bill will emerge in the near future. Even if the bill should ultimately fail the industry should remain prepared for the next attempt. Importantly, making a note of its presence, its supporters, and the sentiment it ultimately represents.
[1] SB 386 vs Relief Act and the State of Play in Washington with & Tammy Fox-Isicoff – Episode 91 – Mona Shah & Associates Global (mshahlaw.com)
[2] H.R. 1044 Will Harm Immigrant Diversity & Decimate EB-5 – Episode 131 – Mona Shah & Associates Global (mshahlaw.com)
[3] Dec 5 – Congress to halt EB5 – ILW.COM Discussion Board
[4] Rand Paul Bill fixes HR 1044 Removal of Per Country Cap Bill with a Bill that would double Employment-based Green Cards – Mona Shah & Associates Global (mshahlaw.com)
[5] COMPLETE guide to the EAGLE Act in the U.S. [2022] (stilt.com)
[6] ULTIMATE Guide to EAGLE Act of 2021 Bill, News, Chances? (redbus2us.com)
[7] EB-5 REGULATIONS GET CLOSER TO THE FINISHING LINE…HR 1044…SHOULD THE EB-5 INDUSTRY BE WORRIED? – Mona Shah & Associates Global (mshahlaw.com)
[8] Yvette D. Clarke on Twitter: “I believe we can do better, and I believe we MUST do better. The #EagleAct is simply not the reform we’ve long hoped for, nor is it the change to our immigration systems we’ve long needed. And that is precisely why I’ve opposed it, today.” / Twitter