Immigrant Investors: Small Number of Participants Attributed to Pending Regulations and Other Factors

In fiscal year 2005, we analyzed information about the investor visa category-referred to as EB-5, whereby immigrants are granted conditional residence and after 2 years, permanent residence status in the United States if they invest in a commercial enterprise that will benefit the U.S. economy and create at least 10 full-time jobs. We reported that the number of visas granted under the program had been a small fraction of the approximately 10,000 allocated annually by the authorizing legislation. Immigration officials and lawyers who represent immigrant investors that we interviewed attributed the low program participation to DHS' failure to issue implementing regulations to adjudicate hundreds of EB-5 permanent residences applications, that left the investor in conditional resident status--some for as long as 10 years, among other things. It has now been 4 additional years since GAO recommended that the Secretary of the Department of Homeland Security finalize and issue these regulations and 7 years since Congress required DHS to issue regulations for adjudicating EB-5 applications. According to DHS, it has not promulgated these regulations because this action is a lower priority among other competing department and agency regulatory priorities. According to DHS, it has made some progress to mitigate the hardships imposed on some EB-5 applicants awaiting promulgation of implementing regulations based on a preliminary review. But it has nevertheless not issued the required implementing regulations for completing adjudication of most of EB-5 applications. According to DHS, upon completion of the preliminary review of the entire group of Special Class cases, USCIS will continue to hold all the still open cases that were determined to be "not-grantable" (about 564 cases), and upon promulgation of the special class regulations, will then proceed with a re-review of those and other open cases in accordance with any Special Class regulations that are eventually published and put into effect. As of July 2009, USCIS has not promulgated the regulations and can not provide an estimate of when the regulations will be issued. As such, we have decided to close this recommendation as not implemented.