Status of the EB-5 Immigrant Investor Program

Meredith W. Barnette, Esq., Partner
Meredith.Barnette@garfinkelimmigration.com

The Employment-Based Fifth (EB-5) preference category was created in 1990 as part of the Immigration and Nationality Act of 1990 and allows foreign nationals who invest a required amount of money into a U.S. commercial enterprise to benefit the U.S. economy and create at least ten full-time jobs to obtain U.S. permanent residence.1 The EB-5 program's intent is to stimulate the U.S. economy and promote immigration to the U.S. for individuals who invest in new, restructured, or expanded businesses and help to create or preserve U.S. jobs.

The statutory requirements and precedent case law have made the category challenging, and the program was not widely used until recently. In May 2013, the U.S. Department of Homeland Security (DHS) issued a Policy Memorandum concerning its EB-5 Adjudications Policy which thoroughly reviews the regulatory standards, definitions and the government's policy in adjudicating EB-5 immigrant visa petitions. However, a December 2013 DHS Office of Inspector General (OIG) report has stirred controversy regarding the EB-5 program and adjudications.

The OIG report notes several conditions that prevent U.S. Citizenship and Immigration Services (USCIS) from administering and managing the EB-5 regional center program effectively. The regional center program allows for a reduced investment amount if the job creating enterprise is located in a Targeted Employment Area (TEA). The report observes that the laws and regulations governing the program do not give USCIS the authority to deny or terminate a regional center's participation based on fraud or national security concerns, and also notes that USCIS has failed to ensure that regional centers always meet all program eligibility requirements, partly due to different interpretation and application of regulations and policies by USCIS officers. The report states that as a result, USCIS has limited ability to prevent fraud or national security threats, and has not been able to demonstrate that the program is improving the U.S. economy and creating jobs for U.S. workers.

USCIS has made an effort to improve processing and adjudication of EB-5 cases, however processing times are currently lengthy, with more than 13 months for adjudication of immigrant petitions. USCIS's new EB-5 Director Nicholas Colluci, however, is making changes to the EB-5 program with the intent to improve both efficiency and quality. Under Colluci's oversight, the adjudication of I-526 petitions has been transferred from the California Service Center to the USCIS Washington D.C. office. Since the transition, USCIS has released updated processing times which show USCIS is moving faster on EB-5 applications. Unfortunately, the wait time for processing I-526 petitions is still 13.2 months.

Applicants are able to communicate directly with the EB-5 Immigrant Investor Program Office via email in an effort to streamline the process and quickly raise and resolve issues and questions that arise during the adjudication process. Expedite requests will be considered pursuant to USCIS' criteria for all cases (severe financial loss, extreme emergent situation, humanitarian reason, nonprofit organization in furtherance of cultural/social interest of the U.S., Dept. of Defense or national interest situation, USCIS error, compelling interest of USCIS), are reviewed on a case-by-case basis, and are granted at the discretion of the Director.

The availability of immigrant visas for the EB-5 is governed by the allotment available to the category and the individual's country of birth. Investors born in China account for more than 80 percent of the 10,000 EB-5 visas available. If EB-5 demand continues at the current pace and exceeds the supply, then USCIS may establish a cutoff date for Chinese investors. In the past, the predicted establishment of a cutoff date for China EB-5s never occurred because of the slow pace of I-526 approvals.

If USCIS does establish a cutoff date, it will likely occur in August or September of this year. Chinese investors should not be alarmed by the prospect of a cutoff date, however, because a new supply of visas will be available at the beginning of the new fiscal year starting in October, eliminating the shortage. Colluci plans to increase staffing in the D.C. office to continue to reduce processing times, and by September 2014, Colluci aims to have at least 100 staff members working on the EB-5 program. Colluci plans to advance quality control by hiring staff with a background in economics, securities and immigration law to identify investment projects that are likely to succeed.

1 INA § 203(b)(5)