Congress nearly averted a shutdown last week, but just missed the mark when Sen. Rand Paul (R-KY) temporarily blocked Senate passage of the fifth – and supposedly final — continuing resolution (CR) of this fiscal year temporarily extending current-level funding for federal activities until March 23, and lifting for Fiscal Year 2018 and Fiscal Year 2019 the spending caps established in the Budget Control Act of 2011. Senator Paul gave a barnstormer of a speech criticizing the increased spending levels and their impact on the deficit. Ending what was perhaps one of – if not the – shortest government shutdowns in history, the Senate approved the CR in the early hours of February 9, followed several hours later by the House of Representatives. With passage of the new two year budget (with increased spending levels for both defense and non-defense) and another short-term CR, congressional appropriators will spend the next several weeks leading up to the March 23 deadline drafting a Fiscal Year 2018 spending bill that reflects the new increased budget numbers.
Three days into the government shutdown, Senate Majority Leader McConnell (R-KY) and Senate Minority Leader Schumer (D-NY) took to the Senate floor Monday afternoon to announce an agreement to end the impasse and reopen the government. The Senate voted later in the day 81-18 in support of a short-term continuing resolution (CR) running through February 8, sending it to the House of Representatives where it was quickly approved 266-150. The CR was then signed by President Trump, allowing Federal workers to return on Tuesday.
Setting the Stage for Immigration & DACA Negotiations?
Democratic support, while not universal, was secured with a promise from Majority Leader McConnell to open bipartisan talks on various immigration issues, including the proposed border wall and the so-called “Dreamers” impacted by President Trump’s decision to end the Obama-era Deferred Action for Childhood Arrivals (DACA) program. The commitment from Majority Leader McConnell is for any bipartisan immigration proposal to go through the committee hearing process, debate on the Senate floor, and an open amendment process. If the Senate has not voted on an broad-based immigration agreement by February 8, the agreement is that DACA would be brought before the Senate for an up-or-down vote.
As the CR will continue current programs and authorizations, the EB-5 immigrant investor program will also extend through February 8, allowing House and Senate leaders to continue their work to reach agreement on a reform and reauthorization of the program. There are now three plausible scenarios for action on EB-5:
(1) A Broader Immigration Bill? Reauthorization is included as part of a broad immigration bill. We have been told by senior staff for key congressional negotiators that EB-5 was not part of the bipartisan proposal rejected by President Trump on January 11. However, with the renewed focus on finding a path forward on immigration, it remains a possibility that EB-5 could be included in whatever final agreement is negotiated – although conventional wisdom is that initial immigration bill, which will focus on key issues like DACA and the wall, is not likely to carry EB-5 reauthorization;
(2) Omnibus Appropriations Vehicle? Reauthorization is included in an omnibus appropriations package. With the February 8 deadline to fund the government, we could see a large spending bill that includes various other policy matters, such as EB-5. While reauthorization of EB-5 has largely been driven by Republicans in this congress, the 60 vote threshold in the Senate means that Democrats will by necessity have a seat at the table for an omnibus bill and will have some say on policy priorities in any reauthorization of the EB-5 program; or
(3) Existing Program Extension? The EB-5 program is simply extended once again by another CR, which could last for a period of weeks, or months, or stretch through the end of the fiscal year on September 30 should no omnibus bill come together, or the program is not included in a broad immigration package. This is the least likely scenario and is not something that is actively discussed on Capitol Hill – yet – but stakeholders should be mindful that it is a possibility.
The Senate agreement to end the government shutdown certainly adds momentum to the drive toward an immigration bill, however there are potential hurdles that will have to be overcome. During last week’s negotiations with President Trump to avert a government shutdown, Minority Leader Schumer had offered to support funding for the proposed border wall in exchange for action on DACA. In the aftermath of the shutdown the Senator rescinded that offer yesterday. President Trump in response tweeted that without funding for the wall he will not support any effort to resolve DACA. To that, add resistance in the House of Representatives, where conservative Republicans are urging Speaker Ryan (R-WI) to push an immigration bill that would be far to the right of any potential bipartisan agreement in the Senate. From the perspective of Senate Democrats, the hope is that if – and “if” is the operative word – they are able to secure a bipartisan immigration deal in the Senate it will put enough political pressure on House Republicans and President Trump that they have no choice but to support it.
This leaves a number of questions.
If the Senate doesn’t approve an immigration bill or hold a vote on DACA by February 8, will Senate Democrats be willing to force another government shutdown?
What happens if the Senate approves an immigration bill or DACA solution, but the House declines to do so?
And, of course, what will President Trump do if he doesn’t get funding for his proposed border wall, but is presented with an immigration or DACA bill for signature?
Stakeholders Need to Remain Focused
With action on immigration of some sort more likely than not in the Senate by February 8, stakeholders interested in immigration reform and the EB-5 program should remain focused on advocating for their concerns over the coming days and weeks.
With the House and Senate both in session for only six days before February 8 the next two weeks will be intense, and we will be posting more as the debate unfolds.
With just hours to spare in order to avoid a government shutdown, the House and Senate approved on December 21 a short-term continuing resolution (CR) funding federal activities through January 19. The CR was approved in the House in a 231-188 vote, and in the Senate by a vote of 66-32. With passage of the CR, Congress has departed for the holiday break and is set to return on January 3. The CR extends the current authorization for the EB-5 Immigrant Investor Program while congressional leadership and interested stakeholders continue to negotiate a long-term measure to reform and reauthorize the program. A long-term reauthorization is unlikely to move as a stand-alone bill and could be included in any spending measure approved in January. Another option for a legislative vehicle would be immigration reform legislation, which has been highlighted by Senate Majority Leader Mitch McConnell (R-KY) as an opportunity for bipartisan cooperation in 2018.
With all eyes in Washington focused on tax reform, let’s not forget that there is a hard deadline approaching to address funding of federal activities with the current continuing resolution (CR) set to expire soon. The CR has been in effect since the start of the current fiscal year on October 1 and runs through December 8. This CR is the current vehicle for extension of the EB-5 Immigrant Investor Program, and is a temporary measure. Continue Reading Proposed Framework for EB-5 Reform – Headed for Omnibus in December?
Like Elsa, the Princess in Disney’s classic Frozen, once again the Securities and Exchange Commission (SEC) has utilized its power to freeze. In this case, the freezing of assets. In what has become an increasingly common tactic, the SEC successfully sought to freeze assets of several individuals and corporate entities in a complaint it recently brought alleging fraud in connection with securities offerings for projects under the EB-5 immigration program. As we have reported previously, particularly in the EB-5 space, the SEC has in recent years utilized the asset freeze as an enforcement tool. The EB-5 program allows foreign investors to apply for green cards in exchange for a minimum $500,000 investment in a job-creating enterprise. Continue Reading “The cold never bothered me anyway!” SEC again uses its power to freeze an alleged EB-5 scam
The chances of a stand-alone EB-5 bill gaining consensus with lawmakers on Capitol Hill are low. With the GOP failing to repeal the Affordable Care Act, lawmakers may be spending time readjusting priorities in unexpected ways for the remainder of 2017. The EB-5 Program is unlikely to be a priority. Also, stand-alone EB-5 legislation has not proven to be a successful way for lawmakers to achieve reforming the Program. As we approach 2018, odds are that lawmakers won’t spend political capital on an EB-5 bill. Check out our recent Advisory.
Our colleague Rebecca Zeidel just published a terrific blog posting on the U.S. Supreme Court’s recent decision in Kokesh v. SEC, in which the Court imposed a five-year statute of limitations on agency-sought disgorgement in SEC enforcement actions. This decision resolved a Circuit split and definitively categorized disgorgement as a statutory “penalty” under 28 U.S.C. § 2462. That statute applies a five-year limitations period to any “action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise.”
This development is relevant in the EB-5 litigation context, where we see the SEC impose disgorgement in administrative proceedings as one penalty, among others, against issuers or other parties who have engaged in securities fraud or other violations of the securities laws in EB-5 transactions. Continue Reading U.S. Supreme Court Blocks SEC from Imposing Disgorgement beyond Five-Year Statute of Limitations
As we head into the summer, there is no certainty that we will see changes to the EB-5 Program. Lawmakers may simply not act, which may result in EB-5 being included in Continuing Resolutions alongside other immigration programs that are temporary, at least in the near future. We also don’t know the fate of the EB-5 rulemaking process underway at the Department of Homeland Security (DHS). The EB-5 ecosystem is in limbo.
That said, regional centers and developers can’t be ignoring that change to fundamental aspects of EB-5 could happen quickly. In this environment, regional centers and other recipients of EB-5 capital have to gear up for changes to deals that could take effect midstream, while offerings are on the market.
Now is a good time for regional centers and issuers to develop plans for accommodating potential changes to deals that are on the market or being launched this summer. Having a solid plan of action before the law changes is sensible. Continue Reading Getting Ready for Change in the EB-5 Ecosystem
Douglas Hauer, Co-Chair of the EB-5 Financing Practice and a Member of the Corporate and Securities and Immigration Practices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., is speaking at the North American Securities Administrators Association’s (NASAA) 2016 Corporation Finance Training. The event is taking place November 18-19 at the Westin Oaks Hotel in Houston, TX. Continue Reading Mintz Levin Attorney Douglas Hauer to Speak at NASAA 2016 Corporation Finance Training
Our colleagues at ML Strategies have just published a helpful alert about the status of the EB-5 Program, which is awaiting an extension as we gear up for a lame duck session of Congress.