Insights on the April 13th Senate Committee on the Judiciary Hearing
by Kristen Ng, Laura Foote Reiff and Matthew Virkstis
The Senate Judiciary Committee held a hearing titled“ The Distortion of EB-5 Targeted Employment Areas: Time to End the Abuse” on April 13, 2016, convened by Chairman Charles Grassley. The hearing consisted of two panels: one member panel that included Representative Bob Goodlatte, Representative John Conyers, and Representative Mark Amodei; and one witness panel that included representatives from the following organizations: Daniel Healy from Civitas Capital Group; Timothy Whipple from the Iowa Economic Development Authority; Peter Joseph from Invest in the USA( IIUSA), and Gary Friedland from New York University.
Senators John Cornyn, Jeff Flake, Thom Tillis, Patrick Leahy, Charles Schumer, Amy Klobuchar, and Richard Blumenthal were present at the hearing and asked thoughtful questions regarding both Targeted Employment Areas( TEAs) and minimum investment amounts. Chairman Grassley began the hearing by discussing the changes he believes are needed to determine TEA designation so as to not disadvantage rural areas in the United States. Senator Leahy agreed in his opening statement that reform is much needed. Senator Leahy discussed the bicameral, bipartisan proposal introduced at the end of the first session of the 114th Congress that addressed the need for reform, not only with regard to integrity measures, but also to give incentives for investing in rural and economically disadvantaged areas.
The Members on the first witness panel discussed the need for reform. Representative Goodlatte focused on the need for TEA reform as it relates to minimum investment amounts. Representative Conyers discussed legislative intent as it applies to TEAs and urged Congress to change the rules to disallow the manipulation of TEAs that some have criticized. Representative Amodei focused his testimony on the benefits of the EB-5 program and recognized the need for reform, stating that the EB-5 Integrity Act, which he co-introduced, would address many concerns.
The second witness panel, consisting of representatives of the EB-5 industry, all agreed that reform was needed for the EB-5 program. Specifically, Healy( Civitas Capital Group) encouraged Congress to enact reforms to TEA policy, and proposed using alternative metrics to determine TEAs, such as poverty rates and median income levels. Whipple( Iowa Economic Development Authority) called for reform to current TEA policy so that rural areas such as Iowa can compete with urban areas for EB-5 investment, suggesting that 20 percent of visas should be reserved for true TEAs. Joseph( IIUSA) recognized the EB-5 program for its growth and contribution to the U. S. economy. He noted that there is a diverse set of interests in the EB-5 industry, but that ultimately reforms are necessary, and that visa numbers are a consistent issue as demand keeps growing. Friedland
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