In 1990, with the creation of the Immigration Act of 1990 (IMMACT90), the U.S. Congress opened the opportunity for foreign entrepreneurs to invest in American new commercial enterprises. This investment in turn gives them the right to live and work in the United States permanently. This part of the act, the EB-5 Program, was created to stimulate the U.S. economy. The IMMACT90 also included other important revisions to the U.S. immigration system; notably, it increased legal immigration limits and made changes to the non-immigrant visa categories as well as to deportation rules.
To increase interest in the EB-5 Visa program, Congress created the Investor Pilot Program in 1993. EB-5 Regional Centers were established by United States Citizenship and Immigration Services (USCIS) to oversee EB-5 investments and create jobs.
USCIS Overhauls EB-5 Visa Program during the 1990s
The discovery of fraud in EB-5 investments by the U.S. District Court v. O’Conner prompted the Administrative Appeals Office (AAO) and USCIS to make additional changes to the program. Effective 1998, investors were required to adhere to several changes.
Investors must now prove that investments into the program come from lawful sources. They must also demonstrate they are actively involved in their EB-5 projects. Additionally, no guarantee can be offered of returns on EB-5 investments. An attempt by USCIS to apply these new regulations to previous EB-5 cases was made illegal in the Chang v. U.S. ruling. After these changes to the program went into effect, however, the number of EB-5 applicants dropped significantly.
During the 1990s, four important precedent decisions were made in an attempt by the AAO to regulate new applications: Matter of Soffici, Matter of Izummi, Matter of Hsiung, and Matter of Ho. These decisions clarified the types of commercial businesses that can qualify for EB-5 investment, established the procedures for administering the investment, and required affirmation that the funding came from legal sources.
Additional Reforms in the 2000s
In an attempt to revitalize the EB-5 Program, the Basic Pilot Program Extension and Expansion Act of 2003 was passed by Congress. An investigation of the EB-5 Program by the Government Accounting Office (GAO) showed that few of the 10,000 visas allocated to the program each year were being granted. The Investor and Regional Center Unit (IRCU) was created in 2005 to oversee the EB-5 Program. IRCU’s role included policy creation, case auditing, form design, and the development of regulations, and it has implemented better coordination and reliability within the program.
Additional Changes Summarized
- In 2009, USCIS established the EB-5 processing center at the California Service Center (CSC), eliminating the previous two centers in California and Texas.
- In 2009, the Immigrant Investor Pilot Program was extended by President Obama through September 30, 2012.
- On September 28, 2012, the program was once again extended by President Obama until 2015.
- Most recently, the program has been extended by President Trump until September 30, 2020.