CLIENT ALERT: Federal Court Orders USCIS to Permit Previously Deauthorized Regional Centers to Resume Operations under the Reform and Integrity Act

Dear Valued Clients:

In March 2022, Congress enacted the Reform and Integrity Act (the “Act”) which reauthorized the EB-5 Regional Center Program. However, the United States Citizenship and Immigration Services (“USCIS”) interpreted the Act as deauthorizing the 600-plus previously authorized regional centers.

In a June 24, 2022 decision, Judge Vince Chhabria of the Federal Court in the Northern District of California called USCIS’ interpretation “almost certainly legal error” and enjoined USCIS from treating existing regional centers as deauthorized while the litigation (Regional Center LLC v. Mayorkas et al, Docket No. 3:22-cv-02487 (N.D. Cal. Apr 22, 2022)) is pending or at least until USCIS makes a clear, reasoned decision regarding how to treat those previously authorized regional centers under the Act.

The Court ruled that the Act is silent or ambiguous as to whether it affirmatively deauthorizes existing regional centers. The Court added that some portions of the Act suggest that Congress does not intend to deauthorize existing regional centers.

According to the Court, the agency may do “whatever is reasonably necessary to ensure the existing regional centers comply with the Integrity Act.” However, those regional centers must be presently 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, just as USCIS would for newly approved regional centers.”

What this means for Investors:

EB-5 investors may now file new I-526 petitions under approved and current regional centers with existing projects. But these petitions must meet the requirements under the Act. Once approved, investors are grandfathered regardless of future changes to the law. This preliminary injunction will remain in place until the earlier of:

1. A ruling on summary judgment by the Court; or

2. A reasoned decision by USCIS about how regional centers should be treated given the ambiguity of the Act.

This means that presently, USCIS must allow existing regional centers to operate until the Court makes a ruling for or against USCIS after taking the Parties’ arguments into consideration or until USCIS conducts a reasoned decision-making process with respect to existing regional centers.

This decision does leave the possibility for future deauthorization of regional centers. However, it makes clear that presently USCIS cannot deem existing regional centers deauthorized without engaging in a reasoned-decision making process.

USCIS Next Steps:

USCIS will continue to argue their case and hope that Judge Chhabria will reverse his decision upon final summary judgment. If Judge Chhabria rules against USCIS, the agency can appeal to the California Court of Appeals. However, Judge Chhabria’s opinion is well reasoned and any appeal will be difficult to argue.

USCIS may implement new regulations which first must undergo a 30-60 day notice and comment period. Through this process, it may take 12-18 months before the new regulation becomes a final rule.

Alternatively, USCIS, through the Department of Homeland Security, may publish an interim final rule if the agency finds it has good cause to issue the final rule without first publishing the proposed rule. Good cause exists: 1) in an emergency; 2) where prior notice would subvert the underlying statutory scheme, or 3) where Congress has shown it intends to waive the notice and comment requirements.

For the time being, investors may rest-assured that new I-526 applications will be accepted under the Act while the litigation remains pending or until USCIS creates new regulations regarding existing regional centers.

The aforementioned is based upon a preliminary analysis. This post is for informational purposes only and does not constitute legal advice in any way. Please contact Meyer Law Group directly for your specific immigration questions or concerns regarding this client alert. We will continue to keep our clients apprised of any updates in this matter.

Brandon Meyer – Managing Partner

Paul Chen – Partner

Jennielyn Alcarion – Senior Attorney