RIA Implementation Status, one year later

On March 15, 2022, the EB-5 Reform and Integrity Act of 2022 (RIA) became law as part of the Consolidated Appropriations Act, 2022 (Public Law No: 117-103).  One year later, how far have we come? How much of the law has been implemented?

The following bullet points give status as of March 31, 2023 for steps that need to be taken to implement RIA.

Updating policy, forms and guidance based on the new law

• USCIS Policy Manual: Incomplete. On October 7, 2022, USCIS updated only the introductory Chapters 1-2 of the Policy Manual EB-5 section 6G, while EB-5 Chapters 3-6 remain untouched. The chapters still still not updated with RIA-compliant policy cover I-526 adjudication, I-829 adjudication, and regional center designation and reporting requirements.
• USCIS website: Incomplete.  Some new EB-5 content has been added to the USCIS website over the course of the year, and some outdated content remains in the mix. It’s still impossible to go to the USCIS website to find out which regional centers are approved or active under the new law.
• EB-5 forms: In Process. All EB-5 forms required by the new law have been published or revised but remain subject to change. (Indeed, new versions of all I-526 and I-956 were just published today.) USCIS has yet to respond to (and for I-956, even to post) the second round of public comments to the Federal Register on I-526E and I-956.

Prescribing regulations required by the new law

• Regulation for parameters on capital redeployment: Not done. (RIA does not state a deadline for this regulation.)
• Regulations prohibiting foreign involvement in a regional center: Not done. (The RIA deadline, 270 days after the date of enactment, has passed.)
• Regulation to ensure that EB-5 capital is not used on publicly available bonds: Not done. (RIA does not state a deadline.)

Monitoring and enforcing regional center compliance with new requirements

• Clarify how RIA requirements apply to previously-approved RCs not active under RIA: Not done.  The next EB-5 stakeholder meeting (previously scheduled for March 20, now delayed to April 25) will reportedly address this huge question.
• Review and approve regional center compliance procedures: Status Unknown. USCIS has not reported any decisions on I-956 Regional Center Applications.
• Vetting and background checks of persons involved with regional centers: Status Unknown. USCIS has not reported any decisions on I-956H forms.
• Review Regional Center Annual Statements and Certifications: Not done.  Form I-956G were not filed for 2022 because “USCIS is extending this deadline until we publish guidance that clarifies the requirements of these forms.”  Such guidance has yet to be published.
• Review regional center projects: Status Unknown. USCIS has not reported any decisions on I-956F Applications for NCE approval.
• Review registrations by direct and third party promoters: Status Unknown. USCIS has not reported any decisions on I-956K registrations, and has not made any lists publicly available.

Implementing visa availability changes

• Reshuffle visa availability to reserve visas for new TEA investment: In process. The Visa Bulletin and Annual Report of the Visa Office show new visa categories as required by RIA. Zero reserved visas were issued in FY2022, due to slow USCIS processing.
• Carryover of unused reserved visas: Not done?  The FY2023 Annual Limit report says cryptically “The employment chart (above) does not include numbers carried over from the previous fiscal year in the EB-5 category.”

Other requirements

• Timely Processing Fee Study: Not done. (RIA gave a deadline of 1 year from the date of enactment to complete a study of fees levels required to achieve timely processing goals. The USCIS Fee Study does not address timely processing for EB-5.)
• Announce appropriate channels of communication: Done.  The bottom of the EB-5 Support page has been updated with Channels of Communication. (Though I have received 0 response to the messages I have sent through these channels so far.)
• Publish Log of communications: Not done. The FOIA page for USCIS does not show a log of communications with Congress regarding EB-5.
• Transparency regarding Publication of Information: Not done. (For example, we know that USCIS is having court-ordered quarterly meetings with the Behring litigation plaintiffs and providing them with exclusive EB-5 information, but so far USCIS has not made these meeting minutes available to the public, except for one October meeting.)

Other questions

• Other Rule-Making: Not done. In response to I-956 comments in the Federal Register, USCIS indicated in December 2022 that it could not yet answer questions about but “may consider rule-making to address” each of the following issues:
  • Evidence to establish regional center geography;
  • Whether regional center policies and procedures need to be provided or only described;
  • What circumstances require an I-956F amendment;
  • Whether stand-alone investors need to use fund administration;
  • The definition of an infrastructure project;
  • Whether regional center annual reports need to cover funds raised prior to RIA.
• Implementing the RIA change to the sustainment requirement and investment period: Not done. The next EB-5 stakeholder meeting (previously scheduled for March 20, now rescheduled for April 25) will reportedly address the huge question of “investment period” definition. Public comments for the meeting by IIUSA and AIIA give a sense of the desperate interest in and range of suggested interpretation on this topic.

EB-5 Integrity Fund FAQ, with notes on regional center status and investment period

Today, USCIS sent out an email alert with the title USCIS to Start Collecting Fee for EB-5 Integrity Fund, published a new EB-5 Integrity Fund page on the USCIS website, posted a Federal Register notice with information about the Integrity Fund, and created a new page for EB5 – Annual Fee for Regional Center at Pay.gov.  

We’ve known that annual regional center fees were coming, since Section 103(b)(J) of the EB-5 Reform and Integrity Act (RIA) created this new requirement. But we’ve been waiting for USCIS to clarify questions around the fee, including how and when to pay it, who qualifies as the “each regional center designated under subparagraph (E)” who needs to pay the fee, and who counts as “investors in the preceding fiscal year in its new commercial enterprises” for the purposes of calculating how much to pay.

Here are answers gathered from the documents published today by USCIS.

Who needs to pay the new EB-5 Integrity Fund fee, and when?

USCIS interprets RIA to mean that every regional center, regardless of when designated and regardless of when or if it sponsored investors, needs to make its annual Integrity Fund payment of $10,000 or $20,000 to USCIS between tomorrow and March 31, 2023. The fee due this month will apply to FY2023. (The next annual fee, for FY2024, will then come due in October 2023.) The Federal Register notice indicates that USCIS expects that all 630 previously designated regional centers will pay the fee, including those with no investors at all. The announcements give no indication that USCIS considered exceptions for regional centers that were not designated under the new law and do not have investors under the new law.  

What does the USCIS fee policy imply about USCIS treatment of previously-approved regional centers?

The fee policy apparently takes for granted that when RIA created a fee requirement applicable to “each regional center designated under subparagraph (E),” RIA did not actually specifically mean RIA subparagraph (E), but also the 1993 law Section 610.  

USCIS has yet to designate any regional centers under subparagraph (E) by approving I-956 applications. An unknown number of previously-approved regional centers have filed I-956 and chosen to solicit investors under RIA. This creates a grey area for the many regional centers that were only approved and only raised investment under the old law.  USCIS admitted as recently as October 2022, in meeting with the litigation plaintiffs, that “USCIS has not determined what will happen to regional centers that choose not to file Form I-956” and “whether any of the RIA requirements apply to them.”

But whoever drafted today’s USCIS fee policy did not recognize a grey area. The policy simply assumes, without argument or explanation, that new requirements applicable to regional centers designated under RIA also apply to regional centers previously designated under Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993. The drafters of the fee policy apparently did not consider the arguments in my Comment on the RIA impact on pre-RIA Regional Centers and investors.

What will happen to any regional center that does not pay the EB-5 Integrity Fund fee by March 31, 2023?

On May 31, 2023, USCIS will start to send out Notices of Intent to Terminate to every regional center whose fee was not received on-time. (For some RCs, the NOIT may be the first they hear about the fee requirement. USCIS explained that today’s publications will be the only notice, and that USCIS will not individually notify or send invoices to regional centers.) A regional center’s designation will be terminated following the NOIT, unless the regional center can document that it did indeed submit the full required fee amount by the deadline of March 31, 2023.

The termination threat is a concern primarily because the new law defines devastating investor consequences from regional center sponsor termination (as further discussed in my previous post). INA 203(b)(5)(M) stipulates that I-526 petitions will be denied and even conditional permanent residence status terminated upon regional center termination. And the escape route offered in (M) is only theoretical, since USCIS permission is no guarantee that a good faith investor or NCE can – in fact – have a viable option to associate with another regional center. The termination consequence places great weight on today’s fee announcement.

What is the required amount of the EB-5 Integrity fee? What does the fee policy imply about who’s an investor, and what’s the investment period?

RIA states that the required fee for a regional center depends on the regional center’s number of investors in the previous year  – with the $20,000 annual fee reduced to $10K for “each such regional center with 20 or fewer total investors in the preceding fiscal year in its new commercial enterprises.”

But who counts as “investors in the preceding fiscal year” for the purpose of fee calculation? The statutory language could justify a reading as limited as “people who invested and filed I-526/I-526E in the previous fiscal year under RC sponsorship” to as broad as “people at any immigration stage whose investment was still in some sense under RC custody in the previous fiscal year.” The USCIS fee policy published today in the Federal Register presents this reasoning:

• A possible interpretation of “investor” is “someone still in the investment period”
• “Investment period” means the period from I-526 filing through the point of I-829 filing, on the authority of a 2021 blog post by Canadian financial professional Rupy Cheema of EB5 Diligence. (I don’t know whether to laugh or cry at this evidence that the USCIS Office of Policy and Strategy was apparently not sweating over statute, regulations, or precedent decisions or its own Policy Manual but just casting about the Internet to find a policy for the EB-5 investment period, but props to EB5 Diligence for catching OPS’s eye and earning the footnote citation in the Federal Register notice!)
• Since Rupy said in 2021 that the investment period goes approximately from I-526 filing to I-829 filing, and since USCIS has ready data for number of I-526 and I-829 filings while other calculations would be hard, therefore USCIS intends to estimate “total investors in the preceding fiscal year in its new commercial enterprises” as equal to the total number of pending and approved I-526 at year-end less the total number of I-829 filed at any time by principals. With the qualification that “USCIS adjudicators retain discretion to evaluate the Integrity Fund fee due and the number of investors on a case-by-case basis, accounting for any other facts or evidence in the record in the totality of the circumstances, including any evidence provided by a regional center that believes it has greater or fewer total investors.”

This is a sober recital of the content of the Federal Register notice.  What can we expect next from the Office of Policy and Strategy?

Everyone involved in the huge fight over defining the “investment period” (on the regional center side and investor side) will be interested in this paragraph from the Federal Register analysis:

“USCIS considered generally counting only the Forms I-526 that were filed within two years of the applicable period used for determining the EB-5 Integrity Fund fee given the expected two-year minimum timeframe for the investment, or sustainment period, under the 2022 Act. INA section 203(b)(5)(A)(i); 8 U.S.C. 1153(b)(5)(A)(i). However, that would likely be underinclusive given that many investors are actively in the process of investing (i.e. not yet fully invested) when they file their Form I-526 petition as permitted under applicable requirements and, additionally, would not align with the sustainment period for those who filed prior to the 2022 Act, which runs approximately to the point of the Form I-829 filing, regardless of when they filed their Form I-526 or made their investment.”

Do we have a chance to provide feedback on the fee policy?

The Federal Register notice states that “USCIS is imposing this fee without soliciting public comment prior because this is a general statement of policy and an interpretive rule exempt from notice and comment procedures.” The notice claims that “The statutory provision that requires the $20,000 and $10,000 fees contains little ambiguity for USCIS to resolve or explain.” (And this, after the notice grappled with ambiguities around the investor count and overlooked the major ambiguity of regional center applicability.)  I will update this post if I learn of a chance to respond with questions and concerns.

RIA impact on pre-RIA Regional Centers and investors (comment)

The following is the comment related to Regional Center Operations that I submitted to USCIS in advance of the EB-5 engagement on March 20, 2023. (The comment deadline is 4 ET today.) I approached the question theoretically, and would love to hear more input from regional centers and investors who are personally affected. How can we best navigate the threat of termination and the burden of how to operate and maintain investor eligibility since passage of the EB-5 Reform and Integrity Act? (Note that the table below only reflects my interpretation/suggestion to USCIS. I do not know what policy USCIS will create or how USCIS will interpret and apply RIA.)

From: Suzanne Lazicki <suzanne@lucidtext.com>
Sent: February 10, 2023 8:44 AM
To: ‘public.engagement@uscis.dhs.gov’
Subject: Question: EB-5 Engagement March 20, 2023

Regional Center Operations: We will discuss issues related to regional center operations, in particular those who wish to withdraw from the program and terminate their status and those who do not wish to solicit investments for new projects under the RIA.

Comment

Regional centers that do not wish to solicit investments for new projects under RIA may and should still wish to retain their designation, for the sake of protecting their pre-RIA investors. Not that RCs have much practically to do for in-process past investors; the issue is that INA 203(b)(5)(M) now defines devastating investor consequences from regional center sponsor termination. (M) stipulates that I-526 petitions will be denied and even conditional permanent residence status terminated upon regional center termination. The escape route offered in (M) is only theoretical, since USCIS permission is no guarantee that a good faith investor or NCE can – in fact – have an option to associate with another regional center. Such an option depends on real-world factors outside the investor’s or USCIS’s control, including the existence of another regional center willing to take the burden under livable terms, a willingness by the terminated entity to transfer sustained investment to the sponsorship of a new RC, and documents that practically allow for such a switch. Investors originally sponsored by bad actor regional centers may be thankful for a prospect – however slim – to change sponsors upon USCIS termination. But the risky, uncertain prospect is hardly solace or protection for investors who already have a good sponsor responsibly managing their investment.

If USCIS starts to terminate regional centers for no fault except declining to raise new funds under RIA, the result will be loss of eligibility among EB-5 investors due to RIA – an outcome that RIA sought to avoid in principle with Section 108 Protection from Expired Legislation. 

Regional centers wishing to retain designation for the sake of shepherding pre-RIA investment and projects, not for the purpose of soliciting new investment, could reasonably be held to RIA requirements that apply to shepherding investment, and not held to RIA requirements specific to soliciting investment.

Practically, this means that shepherd regional centers should continue to report on their management of EB-5 investment and be subject to penalties for reasons related to fund management, but should not have to file I-956 and I-956F, or to complete the portions of I-956G that are indexed to I-956 and I-956F and to requirements specific to capital raising activities.

The following table considers which requirements created by RIA are specific to raising and deploying EB-5 investment, and thus naturally not applicable to RCs/NCEs that raised and deployed EB-5 funds prior to RIA and will not continue such activity after RIA.

Table 1. Applicability of RIA requirements to Regional Centers not sponsoring new investors or projects under RIA

Incomplete EB-5 policy update

On October 7, the USCIS Policy Manual was updated with revisions to some of the policy affected by the EB-5 Reform and Integrity Act. In Volume 6 Part G “Investors,” which contains EB-5 program guidance, USCIS updated Chapters 1 and 2 but not Chapters 3, 4, 5, or 6. USCIS also made changes to Volume 7 to add concurrent filing for EB-5 (now allowed since RIA) and to delete priority date protection for EB-5 (now not available since the EB-5 Modernization Regulation was rescinded). The Policy Alert does not acknowledge that Volume 6 Part G is now a confusing mix of half updated and half outdated content, but I trust that USCIS realizes the fact and is still at work to finish the job. For reference, here is my redline document comparison of the October 7, 2022 version of Volume 6 Part G with the previous version dated July 22, 2021. I will comment more when USCIS completes the revision, and look forward to industry reactions. The USCIS website EB-5 pages have also been getting edits, but still not fully updated. Reading the policy manual and the website, I guess that writers have been instructed “as much as possible just quote the law and don’t add any clarifications or further guidance, which could get us sued.”

RIA Implementation Update (website, forms, litigation, processing)

Today marks five months since the EB-5 Reform and Integrity Act (RIA) was enacted on March 15, 2022, and three months since the regional center program gained new authorization. Where are we now?

Amidst the flux on the USCIS website, litigation disputes, questionable new forms, and guidance that’s here today and may be gone tomorrow, this reliable foundation remains: RIA is law. Every regional center application and new investor petition filed today will certainly be approved or denied with reference to the law as updated by RIA. Every interpretation/application question that’s open today will eventually have to be resolved with reference to the law as updated by RIA.

The word “back” has become extremely popular, but the regional center program is not “back” in the sense of “back to the way it was before.” Regional centers are moving forward and finding their feet on a new footing: a law with new requirements and restrictions.  Struggling to avoid RIA compliance can only lead to failure, for industry and investors. For better or worse, RIA is the law.

Can new regional center investors file petitions? The day is coming, but it’s been a long wait. The new law says that “a regional center shall file an application with the Secretary of Homeland Security for each particular investment offering through an associated new commercial enterprise before any alien files a petition for classification under this paragraph by reason of investment in that offering.” IPO Chief Alissa Emmel declared on July 15 that “We are currently accepting immigrant petitions based on previously approved exemplars from regional centers. We are also receiving Form I-956F applications from previously designated regional centers.” So far I have heard of just two I-956F receipt notices, though many I-956F applications have been filed over the past couple months and should be acknowledged shortly. For example, USCIS finally issued a receipt notice on August 11 for an I-956F that it received from CMB on July 1. Cautious prospective regional center investors are waiting on I-956F receipt notices so that they can file I-526E according to instructions. (Personally I would not file I-526 relying on an I-924 exemplar approval without I-956F, since I-924 had half the content required for an exemplar under the new law plus different approval standards, and any material change cancels exemplar deference according to the new law.)  IPO should at least issue I-956F receipt notices expeditiously, and should also approve or deny I-956F as soon as possible. The exemplar process will only be effective if IPO can process NCE approval requests quickly enough to provide a reliable basis for approvable investor petitions. I wish that IPO will publish a list of approved and denied NCEs, to help regulate the market and stop denied NCEs from still soliciting EB-5 investment and sponsoring I-526E that can never be approved.

The litigation Behring Regional Center LLC v. Mayorkas et al. is still underway. The Preliminary Injunction on June 24 preliminary enjoined DHS from treating pre-RIA regional centers as deauthorized (finding ambiguity in RIA about RC designation). The parties are still discussing how DHS should handle pre-existing regional centers and their existing and new investors under the new rules. The plaintiff regional centers are trying to preserve as much of the pre-RIA status quo as possible, while DHS is fighting for time and leeway to ensure RIA compliance. (For a sense of the back and forth see the IIUSA Notice of Motion for Summary Judgment filed July 21 and the DHS Cross Motion for Summary Judgment filed August 18.) The most recent docket item filed August 12 by DHS discloses that “the parties are substantially engaged in settlement discussions, and an administrative resolution that may render further litigation of this case unnecessary.”

Prodded by litigation, USCIS has made limited adjustments to the EB-5 pages on the USCIS website.

• EB-5 Home is updated as of 8/2/2022 to remove references to a repealed RC program and to add one “Alert” that USCIS will no longer accept combined fee payments for I-526/I-526E concurrently filed with status adjustment forms.
• About the EB-5 Visa Classification was updated on 7/28/2022 with new sections reflecting the new law on Job Creation Requirements, Capital Investment Requirements, and Immigrant Visa Set-asides.
• EB-5 Investors – This page is marked as last reviewed/updated on 8/2/2022, but the information provided on this page is outdated and inaccurate to the new law except for the “alert” in the header.
• EB-5 Filing Tips – This page is marked as last reviewed/updated on 6/23/2022, but only one form title was changed. The page continues to give info that was accurate in December 2020 but now outdated/inaccurate.
• EB-5 Regional Center Compliance Reviews – this page was last updated in 2020 and the info provided is now outdated/inaccurate
• Approved EB-5 Immigrant Investor Regional Centers – this page still shows the regional center list as of October 24, 2021.
• EB-5 Resources – This page links to the EB-5 Questions and Answers (updated April 2022) document most recently revised as of 7/11/2022. The latest Q&A deletes the previously-provided answers about regional center authorization repeal and investor petition grandfathering. The Q&A is currently silent on how USCIS treats pre-RIA regional center and their investors.
• EB-5 Support – This page has been updated as of 7/27/2022 to link to new EB-5 forms (and now interestingly links to no regional center annual statement form – not I-924A and not I-956G – though I-956G remains available on the USCIS website.)
• USCIS Policy Manual Volume G Part G Investors has not been updated at all as of August 15 except with an Alert noting that RIA was enacted and “USCIS is reviewing the new legislation and will provide additional guidance, including an eventual revision of Policy Manual content.”

USCIS has published six new forms that will need to be revised eventually in response to litigation and to correct errors and omissions: Form I-956 Application for Regional Center Designation, Form I-956H Bona Fides of Persons Involved with Regional Center Program, Form I-956F Application for Approval of an Investment in a New Commercial Enterprise, Form I-956G Regional Center Annual Statement, Form I-526, Immigrant Petition by Standalone Investor, and Form I-526E Immigrant Petition by Regional Center Investor. These forms can be filed despite their faults; lawyers and advisors just have to go the extra mile to think through what the law requires and what USCIS can be expected to request or should accept beyond what’s in the forms.  I particularly look forward to USCIS revising I-956G Annual Statement (which is predicated on the now discredited interpretation that RIA canceled pre-RIA regional center designations), and the new I-526E (which conflates ownership with decision rights over EB-5 investment in the definition of “persons involved”).

We’re used to living with inadequate instructions, as USCIS has a history of disconnect between form content and adjudication standards. For example among AAO I-526 denial decisions in 2021, a third cite lack of documentation for currency exchanger source of funds – a type of evidence that Form I-526 never has and still does not request. I-526 routinely get denied for not providing such evidence, because RFEs and decisions can point to justification in the law although USCIS doesn’t publicly request the evidence in their forms, instructions, filing tips, or policy manual. Or consider the issue of source of funds for enterprise owners not seeking immigration benefits. Form I-526 does not ask each petitioner to provide and depend on lawful source of funds documentation for every other investor in the NCE. But USCIS still denies I-526 for lack of such documentation. EB-5 practitioners have had to get used to looking past form instructions to figure out what EB-5 submissions need to succeed with USCIS. This challenge increases with room for interpretation in new EB-5 law. (And the new law sadly increases the stakes and risks of ambiguity, because RIA removed the possibility of judicial review for unreasonable USCIS interpretations.)

EB-5 processing volumes have yet to recover from the regional center program shutdown or the new law (not to mention the 2019 Reset Training at IPO), but I keep watching and hoping. I will shortly publish a separate post and new pages with the updates I’ve been collecting on I-526 and I-829 processing, adjustment of status, consular processing, the backlog and visa availability, and processing conditions generally. At least broader processing problems and the dire consequences have started to get better recognition from the government and media, which is a good step toward change.

People are welcome to use this blog comment section as a forum for sharing experience and asking questions, but note that larger and better arranged EB-5 groups are also available, including https://goaiia.org/, https://t.me/EB5VisaGroup, https://t.me/+NWEYhY6y81AzYzIx,  and https://t.me/+N0K7TuzrPYQwMDJl Email suzanne@lucidtext.com if you know of other groups that I should mention, or if you need help joining a group.

New Form I-526E and Revised FAQ

On July 11, USCIS deleted five Q&A from the EB-5 Questions and Answers (updated April 2022) document linked to the EB-5 Resources page. This update successfully deletes all references to repealed regional centers. The update also removes all input on important questions of when investors can file I-526, how USCIS treats I-526 filed before the new law, and how regional centers maintain and amend designation.

On July 12, USCIS announced a new Form I-526 and Form I-526E. The announcement includes the important reminders that “a potential immigrant investor cannot file Form I-526E until the regional center has filed Form I-956F for the particular investment offering” and “Forms I-526 and I-526E must be submitted in compliance with new program requirements.” I will analyze the new forms as time permits. [UPDATE: USCIS has now sent a second announcement email with slightly different content and additional info about fees, copied below.]

From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com>
Sent: July 12, 2022 2:12 PM
Subject: USCIS Releases New Forms for Immigrant Investor Program

From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com>
Sent: July 12, 2022 5:52 PM
Subject: Revision of Form I-526

Behring injunction shifts compliance risks

Who bears the burden of waiting for USCIS to ensure regional center compliance under the EB-5 Reform and Integrity Act of 2022 (RIA)? Who takes the risk that USCIS will find some pre-RIA regional centers and their projects not compliant under all the new rules?

At first, the answer was: regional centers bore the compliance wait and the risk of denial. On April 11 and April 29, the USCIS website posted announcements to the effect that regional centers needed to wait for USCIS to approve new designation applications before sponsoring EB-5 investment. (USCIS justified the announcement with the interpretation that RIA cancelled all pre-RIA regional center designations.) This approach offered some protection for incoming investors (who would benefit from advance compliance review by USCIS), confusion and alarm for past investors (who found their previous RC sponsor status and compliance responsibilities cancelled), and pain for regional centers authorized under the old law (who wanted to resume business, not be held back by lengthy USCIS processing times for compliance review under the new law).

Naturally, previously-designated regional centers sued USCIS over the April website announcements. On June 24, a judge took preliminary action on one of the lawsuits, Behring Regional Center LLC v. Mayorkas et al, issuing an “Order Granting Plaintiff’s Motion for a Preliminary Injunction.” The order does not change RIA, or regional centers’ responsibility to comply with RIA, or USCIS’s ability to control the process (and it doesn’t decide the lawsuit). But the order finds that USCIS was likely in error to take for granted that RIA cancelled all pre-RIA regional center designations. By pulling the legal justification out from under USCIS’s website announcements, the injunction potentially opens a window for formerly-designated regional centers to raise new capital during the transition period while USCIS implements and assesses compliance under the new law. (Hopefully, the injunction also makes USCIS reconsider regional center responsibility for capital raised under the old law.)

Today, prospective investors are invited to take the compliance wait and risk. I’ve already received several marketing emails from regional centers designated under the old law, urging potential immigrants to invest with them immediately and file I-526 right away. The approvability of such new I-526 will depend on the outcome of USCIS’s assessment of regional center and project eligibility under RIA (which assessment will happen in the context of I-526 review, if not earlier). But who needs to care about the immigration risk, if EB-5 investment can be banked today and deployed regardless of future USCIS decisions?

If I were a prospective EB-5 immigrant willing to gamble today, I would consider trying to mitigate the risk by asking for escrow, with release of funds on I-526 approval or I-956F approval, and an exit option after a defined period in case of no action by/response from USCIS. Regional centers fought to avoid the wait and risk of USCIS’s potentially lengthy and capricious process to figure out law interpretation and compliance. Investors may also want to protect themselves from that process and risk. Meanwhile, if I were a regional center, I would still go ahead with filing the new I-956 applications. These forms have material that RIA unambiguously requires USCIS to collect and review for all regional centers, including those designated prior to RIA, and RCs should benefit from getting that submission and review done as soon as possible.

I recommend that everyone read the text of the preliminary injunction, to see what it does and – more important — does not say. The order’s content has been misrepresented in the PR I’ve seen about it so far, so caution is needed. I’m also watching the USCIS website EB-5 page, to see if/when USCIS exercises their power to choose another basis for making regional center sponsors undergo some kind of review process before new regional center petitions can be accepted. And finally, a few key quotes from the injunction.

In short, the Integrity Act does not clearly answer the question whether Congress meant to strip existing regional centers of their authorization. But the agency provided no other explanation for its decision. It stated only that because Congress “repealed Section 610, . . . regional centers previously designated under section 610 are no longer authorized.” The agency’s conclusion therefore rests on a misreading of the law: USCIS thought itself compelled by the Integrity Act to treat the existing regional centers as deauthorized, even though the Act does not require that outcome. Had the agency considered the question, balanced the competing interests at stake, and arrived at a decision on the continued status of existing regional centers, perhaps the agency could successfully defend its action.

…Accordingly, USCIS is preliminarily enjoined from treating as deauthorized the previously designated regional centers based on its almost certainly erroneous interpretation of the Integrity Act. Of course, the agency may do whatever is reasonably necessary to ensure that the existing regional centers comply with the Integrity Act, but those centers must presently be permitted to operate within the regime created by the Act. This includes processing new I‑526 petitions from immigrants investing through previously authorized regional centers like Behring, just as the agency would do for a newly approved regional center.

The preliminary injunction will remain in place until the earlier of: (1) a ruling on summary judgment by this Court; or (2) a reasoned decision by the agency about how regional centers should be treated given the Integrity Act’s ambiguity. Perhaps, after engaging in a reasoned decision‑making process and considering the competing policy factors, the agency could conclude that Behring and the other previously authorized regional centers can no longer operate until they have successfully reapplied by submitting new I-956 petitions. Perhaps the agency could conclude that the centers must reapply but can operate consistent with the requirements of the Integrity Act pending their new applications. Or perhaps the agency could conclude that the centers can operate without reapplying so long as they otherwise comply with the Act’s requirements. But what’s clear is that the agency cannot deem the existing regional centers deauthorized without engaging in reasoned decision-making consistent with the APA.

Regional Center reporting and NCE approval forms released

From: U.S. Citizenship and Immigration Services <uscis@public.govdelivery.com>
Sent: June 2, 2022 2:50 PM
Subject: USCIS Releases New Forms for Immigrant Investor Program