Federal Court requires USCIS to reinstate EB-5 Regional Centers
There is good news for intending EB-5 investors and the EB-5 industry: on June 24, 2022, the U.S. District Court for the Northern District of California blocked USCIS from enforcing its misguided policy of invalidating EB-5 regional centers pursuant to its incorrect interpretation of the EB-5 Reform and Integrity Act of 2022 (“RIA”), the law that reinstated the regional center EB-5 program. Below, I will discuss, in further detail, what this means in practice.
To give you some background to this situation, the EB-5 Reform and Integrity Act of 2022 (“RIA”) entered into law on March 15, 2022, and had the effect of reinstating the regional center EB-5 program. In the RIA, Congress did impose a requirement that EB-5 regional centers submit to reauthorization of their regional center designation, which included the vetting of the owners and managers of the companies operating the EB-5 regional centers in order to ensure that they not have any history of criminal activity, particularly any history of defrauding investors, and that the regional centers all accept the newly expanded rules for ensuring the integrity of the EB-5 program, including stronger protections of investors and closer compliance with the securities laws in the U.S. USCIS misinterpreted the RIA as necessitating that it invalidate all regional centers while it went through a process of approving regional centers anew in accordance with the new rules imposed by the RIA, and announced its invalidation of all existing regional centers through an announcement on its website on April 20, 2022.
Promptly on April 22, 2022, Behring Regional Center LLC (“BRC”) filed suit against USCIS, in the Federal District Court for the Northern District of California, in order to block USCIS from enforcing this policy. On June 24, 2022, the federal court granted to BRC a temporary injunction, which had the effect of blocking USCIS from enforcing this policy of invalidating existing regional centers until the same court can issue a final decision on the lawsuit. This means that the federal court prohibited USCIS from invalidating any regional center, not just BRC’s regional center. As a result, all existing regional centers were reinstated and can now offer new projects to investors while the federal court renders a final decision, provided that the regional centers abide by all new requirements imposed by the RIA and that any projects that they offer meet all new requirements imposed by the RIA.
While the injunction issued by the U.S. District Court for the Northern District of California is only temporary, it is very likely that this court will decide in BRC’s favor to grant a permanent injunction, since the court accepted BRC’s legal reasoning that USCIS violated the Administrative Procedures Act, which governs how administrative agencies go about creating and promulgating new regulations, and misinterpreted the new legal requirements under the RIA. If the federal court, from the beginning, is concluding that USCIS violated the law by invalidating the existing regional centers, then it is extremely unlikely that the federal court would then, effectively contradict itself by deciding in USCIS’s favor, effectively enabling USCIS to violate the law, namely the Administrative Procedures Act, and to misinterpret the RIA by how it is going about creating and implementing regulations in order to implement the RIA.
Long story short, it is now possible for those, who are interested in launching the immigration process under the EB-5 program, to invest in a project under an existing EB-5 regional center, which is set up in compliance with the requirements of the RIA, file the I-526 petition, and pursue immigration under the EB-5 program.