EB-5 Program Regional Centers Oppose Being Compliant with Federal Labor Laws, December 7, 2015

As we inch closer to meaningful EB-5 reform, some regional centers, and related groups, in opposition have focused on one sentence of the draft bill:

(VII) a certification that the regional center has policies and procedures in place that are reasonably designed to ensure that the regional center and any associated new commercial enterprises and job-creating entities comply with Federal labor laws.

When I first heard of the opposition, I was shocked. After all, the EB-5 program is a JOB CREATION program that is supposed to benefit AMERICAN workers. It is not an entitlement program for large real estate development firms or other sponsors. The new requirement above is exactly the kind of reform the program needs to help ensure that the American people get the benefits they deserve for providing Green Cards to immigrant investors. Any objections to following the law should leave a foul taste in the mouth of anyone who wants the EB-5 program to produce the benefits it claims for our society. This is not even asking Regional Centers to certify that their NCEs are in fact compliant with the law. All that it requires is that they put ‘reasonably designed’ policies and procedures in place.

Is there any real burden at all? Shouldn’t every business in America have reasonable policies and procedures in place to help ensure that the business is in compliance with Federal Labor laws? It is true, Regional Centers are separate organizations (entities) from the New Commercial Enterprises that they sponsor to gain the benefits afforded by the EB-5 program, so this does require them to have an extra set of procedures in place. My answer to any objection is, Exactly! The Regional Center allows the NCE to get the benefit, so it makes perfect sense to require the regional center to have a reasonable set of policies and procedures in place to help ensure that America gets its share of the value of the grand bargain for allowing the EB-5 program to exist. Without this requirement, the Regional Center program would have an enormous moral hazard. The Regional Centers may then have little regard for the labor practices of the NCEs under their umbrella.

Some of the objectors have raised gloom and doom arguments about how this kind of regulation might create over reaching and unintended consequences under the Federal Labor Laws by ‘grouping’ Regional Centers together with the NCEs they sponsor. Once again, Exactly! They are grouped already. The Regional Centers should be underwriting the labor practices of their NCEs and if they do not comply, then THEY SHOULD NOT BE PART OF THE EB-5 PROGRAM! If there are labor laws or decisions by the National Labor Relations Board that are over-reaching or that create too great a burden on employers, then seek to amend those statutes or overrule those rulings. The current labor laws are the law of the land, too little, or too much.

To be compliant, the Regional Centers must simply make sure their NCEs are trying to comply. It’s not particularly burdensome. Is it that hard to run an eVerify report? Or to hire an HR administrator or firm to comply? Millions of businesses do it every day. For goodness sake, it is not like the proposed regulation requires procedures to ensure that all indirect and induced labor associated with the project go to qualified workers, it is only their direct employees. Under the draft bill, that would only be 10%. It is only hard if the underlying business really cannot comply, if a large part of their workforce cannot pass eVerify. Then, it is a real problem. My answer to that is: GET OUT OF THE EB-5 PROGRAM. This is supposed to be about creating jobs for people who are authorized to work in America.

Just before I wrote this piece, I signed a letter pledging that my firm and all EB-5 business associated with it, would comply with paragraph VII quoted above. I will do this regardless of whether the reforms are passed. I call on all EB-5 sponsors to do the same so we can prove to America that we are serious about helping our country and not just enriching ourselves. If you agree, kindly, sign a letter with the text that follows and send to any (and preferably all) members of the House Appropriations committee and the leadership in both parties. Also, continue to voice your support for including the EB-5 reforms in the Omnibus bill this week. If you do not agree, kindly get out of the EB-5 program. I, and everyone in my organization, are working every day not only for ourselves, but to create the promised value for America. Are you?

Letter Text:

Dear Members of the United States Congress,

We the undersigned sponsors in the EB-5 program, including the sponsors of direct employment new commercial enterprises and USCIS approved EB-5 Regional centers, hereby pledge that our organizations enact policies and procedures that are reasonably designed to ensure any and all associated new commercial enterprises and job creating entities comply with State and Federal labor laws. Thus, we support Section 102(G)(VII) of the proposed bipartisan proposed legislation reauthorizing the EB-5 Regional Center Program.


About The Author

Matt Gordon is a noted policy expert in the visa-based investments field and is an authority on structuring visa-based investments. Mr. Gordon’s career spans business operations, finance and law. He is the editor of the EB-5 Book, the legal treatise on the EB-5 program and a frequent lecturer to immigration attorneys. Mr. Gordon has participated in policy events, including those hosted by the White House and Harvard University’s Kennedy School of Government. Prior to founding E3iG, Mr. Gordon was an investment banker for a decade and ran the US division of a Swiss multi-national corporation. Mr. Gordon is a licensed attorney, having practiced mergers and acquisitions law at the beginning of his career with the largest and most reputable Wall Street firms including Fried Frank and Sullivan & Cromwell. Mr. Gordon received his B.S. in Policy Analysis from Cornell University and his J.D., cum laude, from the University of Pennsylvania School of Law.