The EB-5 Program: The Road to Citizenship Less Traveled

Maria del Carmen Ramos
Maria del Carmen Ramos

Bipartisan immigration reform in an election year? And it creates jobs without adding to the deficit? Too good to be true? Well, earlier this year, Sen. Patrick Leahy (D-Vt) introduced legislation—co-sponsored by five Republicans (Sens. Collins, Grassley, Hatch, Lee & Rubio) and three Democrats (Sens. Conrad, Kohl & Schumer)—to extend the EB-5 Regional Center Program for three years.[1] After several amendments, that legislation was passed unanimously by the United States Senate.[2] It later passed the House of Representatives by a 412-3 vote and was ultimately signed into law by President Barack Obama. The legislation, as enacted, extends the EB-5 Regional Center Program—which had been set to expire on September 30, 2012—for an additional three years.[3] 

The EB-5 Regional Center Program is part of the Immigrant Investor Program.[4] Congress passed the Immigrant Investor Program (known as the EB-5 visa) as part of the Immigration Act of 1990 to attract foreign investment and stimulate the economy.[5] Under the Immigrant Investor Program, the United States Citizenship and Immigration Service (“USCIS”) allocates 10,000 visas annually for foreign investors who make significant investment in a new, reorganized, or restructured business that will create jobs for qualified workers.[6]

To qualify for an EB-5 visa under the Immigrant Investor Program, a foreign investor must contribute $1 million to a new (one created after November 29, 1990) or expanded (which is defined as a business that will expand to 140% of its pre-investment number of employees or net worth) commercial enterprise that will create at least 10 jobs.[7] If the commercial enterprise is in a targeted employment area (defined as a rural area or an area where the unemployment rate is 150% of the national average),[8] then the required initial investment is only $500,000.[9] Once the EB-5 visa petition is approved, the foreign investor is granted conditional permanent residence for two years.[10] After two years, the foreign investor can seek to have the conditions removed—and, therefore, become a legal permanent resident—if the investor has made the required capital investment and that investment has created or preserved at least ten jobs for qualified workers in the United States.[11]

Two years after creating the Immigrant Investor Program, Congress created the EB-5 Regional Center Program (also known as the Investor Pilot Program).[12] The requirements for the Investor Pilot Program are the same as under the original Immigrant Investor Program, except that the investment under the Investor Pilot Program can be with a “regional center.”[13] A “regional center” is a business entity that coordinates foreign investment under the Immigrant Investor Program within a specified geographic area.[14] There are currently 90 approved regional centers operating in 34 states.[15] There are another 70 proposed regional centers pending before USCIS.

The Investor Pilot Program offers two distinct advantages over the original Immigrant Investor Program. First, the ten jobs that must be created before the investor can become a legal permanent resident can be “direct” or “indirect” jobs—a lower standard than under the Immigrant Investor Program.[16] Second, federal law provides that priority should be given to individual petitions under the Investor Pilot Program.[17]

Sponsors of the Immigrant Investor Program predicted the program would lead to an influx of new capital, which, in turn, would lead to job creation. According to the sponsors, 4,000 millionaires would apply for EB-5 visas annually, generating $4 billion in new investments and creating 40,000 jobs each year.[18] Over the 20 years that the Pilot Program has been in place, that would mean $80 billion in new investments and 80,000 jobs. But the impact of the program, at least initially, has been far less than predicted.

For starters, only 6,204 of the approximately 130,000 visas that had been allocated during the first 12 years of the Pilot Program were actually issued to foreign investors and their dependents.[19] And of those 6,204 visas holders, only 653 had met the requirements for obtaining permanent legal status.[20] Worse, a 2005 study by the Government Accountability Office (“GAO”) concluded that only $1 billion had been invested under the program—not the $48 billion predicted.[21] The GAO was unable to determine how many jobs had been created under the Pilot Program.[22]

What was the reason for the less than stellar performance? In its 2005 report, the GAO cites a number of factors leading to the low participation in the program. Those factors—identified in interviews with USCIS officials and immigration lawyers—include (i) the rigorous application process compared to other employment-based visa applications; (ii) lack of expertise among USCIS employees adjudicating EB-5 applications; (iii) the lack of clear guidance; and (iv) the lack of timeliness in adjudicating applications.[23] Those factors combined to create uncertainty among foreign investors.

But perhaps the biggest cause of uncertainty was certain “precedent setting decisions.” Those decisions arose out of a series of events beginning in 1996 and 1997. During that time, EB-5 adjudicators determined that a number of EB-5 petitions exhibit questionable financial arrangements. For instance, businesses were financed with debt, not equity. Or in some cases, the foreign investor was not personally at risk for the required investment. In other cases, the full amount of the capital investment was not available for business operations or job creation. In December 1997, the Immigration and Naturalization Service determined that financial arrangements exhibiting any of those characteristics (or other characteristics designed to limit the investor’s risk) did not satisfy the EB-5 requirements. INS later suspended processing over 900 EB-5 applications until it could issue guidance to EB-5 adjudicators. In June and July 1998, the INS issued the “precedent setting decisions” that provided that guidance. These new guidelines were much more restrictive. And under these new guidelines, the INS determined that most of the 900 applications that had been placed on hold should be denied.[24] The result of all of this was that the number of visas peaked in 1997 and then, as a result of the uncertainty among foreign investors, steadily declined through 2003.

Since 2004, however, there has been a steady increase in the number of EB-5 visas issued. And by some accounts, the program has generated over $1 billion capital investments since 2008—about the same amount raised during the first 14 years of the program.[25] More and more, state and local government officials are looking to EB-5 regional centers to spur economic growth in targeted sectors, such as renewable energy (currently there are eight regional centers focusing on renewable energy and green jobs).[26] And the federal government appears to have made the EB-5 program a priority as well. The President’s Council on Jobs and Competitiveness recently issued an interim report recommending that the current administration enhance the EB-5 program by creating EB-5 review teams with expertise, engaging re-engineering experts to streamline the application process, launching a new premium processing service, and evaluating additional options for maximizing the program’s potential.[27]

With Congress having extended the EB-5 program for an additional three years, and federal, state, and local government officials looking to the program as a way of encouraging capital investment and creating jobs without adding to the deficit, the EB-5 program may live up to the high hopes its sponsors had after all. And that may provide foreign investors a streamlined avenue to legal permanent residency. Not a bad deal.

[1] S. 3245, 112th Cong. (2011-12). [2] AILA InfoNet Doc. 12080343 (posted September 28, 2012). [3] Id. [4] Id. [5] 8 U.S.C. § 1153(b)(5). [6] Id. [7] 11 U.S.C. § 1153(b)(5)(A)(i)-(ii); 8 C.F.R. § 204.6(f)(1) (establishing capital requirements); § 204.6(h)(1)-(3) (defining commercial enterprise). [8] 8 U.S.C. § 1153(b)(5) (B) (ii) (defining “targeted employment area”). [9] 8 C.F.R. § 204.6(f)(2) (establishing capital requirements for “targeted employment areas”). [10] The requirements for an EB-5 visa petition are outlined in 8 C.F.R. § 204.6(j). [11] The requirements for removing the conditions and obtaining permanent legal residency are set forth in 8 C.F.R. § 216.6. [12] Department of State, Justice, and Commerce, the Judiciary and Related Agencies Appropriations Act of 1992, Pub. L. No. 102-395 § 610. 106 Stat. 1828 (Oct. 6, 1992). [13] 8 U.S.C. § 1153 note. [14] 8 C.F.R. § 204.6(e). [15] A complete list of approved regional center can be found at [16] 8 C.F.R. § 204.6(j)(4)(iii). [17] 8 U.S.C. § 1153 note. [18] “Employment Creation Immigrant Visa (EB-5) Program Recommendations,” Office of the United State Citizenship and Immigration Services Ombudsman, at 1 n.3 (March 18, 2009). [19] “Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors,” United States Government Accountability Office, Report to Congressional Committees GAO 05-526, at 7-8 (April 2005). [20] Id. [21] Id. at 16. [22] Id. [23] Id. at 8-11. [24] Id. at 11-14. [25] “This Week in Clean Economy,” Inside Climate News (March 30, 2012), available at [26] “EB-5 Visas: A Cleaner, Smarter Plan,” The New Republic, April 4, 2012, available at [27] “Taking Action, Building Confidence: Five Common Sense Initiatives to Boost Jobs and Competitiveness,” President’s Council on Jobs and Competitiveness, at 7, 19 & 35 (October 2011), available at

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