Preliminary injunction reverses USCIS’s decision to deauthorize all existing regional centers

On Friday, June 24, 2022, the federal court in the Northern District of California granted a preliminary injunction overturning USCIS’s decision in April to deauthorize all existing regional centers. This means that new investors may now file I-526 petitions based on the March 15th Reauthorization of the Regional Center Program.

Importantly, this is a preliminary action taken by the court. A permanent outcome has yet to be determined. Until there is either a new decision from the courts or USCIS publishes new rules clarifying its implementation of the EB-5 Reauthorization and Integrity Act, investors can apply for their EB-5 visa under the current rules and be protected from future changes to the program because of grandfather provisions included in the most recent legislation.

The decision includes very clear statements from the court:

• Legal Error – Judge Chhabria stated that USCIS’s decision to deauthorize existing regional centers was “almost certainly legal error, because it is unclear whether the Integrity Act deauthorized existing regional centers or allowed them to continue operating under Congress’s new regime.”
• Violation of Agency Rule Making – In his ruling, Judge Chhabria stated “Behring has made an exceedingly strong showing that the agency violated the APA.” The Administrative Procedures Act defines how a federal agency demonstrates it has weighed competing interests when creating regulations. When the APA is not followed, courts are expected to “set aside”, “vacate” or overturn the agency’s actions.
• New Cases Must Be Allowed – The deauthorization stopped filing new I-526 cases which put regional centers’ existence under threat for not being able to conduct new business. “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.”

Length of the Preliminary Injunction

The court’s ruling is clear that 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.

This means that the agency can either argue in the court that the injunction is incorrect (the next set of briefs on July 7th and the next hearing on July 14th), or it can conduct a “reasoned decision-making process” that resets how regional centers must act under the new legislation.

For now, because the Preliminary Injunction has been granted, all existing regional centers must be considered authorized and be able to file new I-526 petitions under the terms of the EB-5 Reauthorization and Integrity Act.

Agency’s Potential Next Steps

Given the clarity of the Judge Chhabria’s ruling, the agency must question if they can have the decision reversed in his final summary judgment when the case is finished. They can appeal to the California Court of Appeals if Judge Chhabria holds his decision, but during this time the deauthorization of the regional centers will still be overturned.

USCIS can also implement its new forms and regulations through rule making.

The APA is clear on how agency decision making is conducted. In general, new regulations must go through a notice and comment period which can take 30 to 60 days at a minimum. Historically it takes at least 12-18 months for complex new regulations to move from proposed rule to final rule.

The Department of Homeland Security does have the ability to publish new regulation immediately via an Interim Final Rule “when an agency finds that it has good cause to issue a final rule without first publishing a proposed rule.” Good cause is typically cases where there is 1) an emergency, 2) where prior notice would subvert the underlying statutory scheme, or 3) where Congress has shown it intends to waive notice and comment requirements.

Of course, they must follow the APA or risk a new suit and request for injunction.

Implications for Investors

New Investors – Since the regional centers are reauthorized, approved and current regional centers with existing projects that have been filed can take investments and file petitions for investors. These filings will need to meet the requirements of the new legislation, which is still being interpreted, but once approved these investors will be grandfathered and processed regardless of future changes in the law or regulations.

Existing Investors – While the agency has been clear in its statements that the grandfathering clause in the statute means existing investors do not need a regional center to be processed, this ruling ensures that existing investors will have a regional center partner to turn to in case of any questions from the agency in their process.

Implications for LCR

LCR has always followed the integrity measures in the new legislation including clear record-keeping, third party fund administration, and consistent investor communications. We have confirmed our regional centers meet the new requirements by filing I-956 applications. We have also confirmed our management team has no history of misconduct by filing I-956H certifications. We are also confident our project’s business plans meet the requirements defined in the I-956F forms, and two of our projects already have approvals under the former I-924 application process.

We will continue to use all of our abilities to work with our client’s immigration attorneys to ensure new I-526 applications meet the requirements defined in the new legislation. We look forward to helping global families invest in the United States, create new jobs for the American economy and deliver immigration benefits to our LCR clients because we know they are a positive addition to the American community.