Law360 (August 19, 2022, 5:27 PM EDT) -- U.S. Citizenship and Immigration Services told a California federal court it was following Congress' intent to reform the EB-5 visa program when it told regional centers managing money from foreign investors seeking a green card that they need to be reauthorized to stay in business.
The agency, in a motion for summary judgment filed Thursday, argued that Congress wanted to purge the existing EB-5 regional center program and establish a new and improved program when it passed the EB-5 Reform and Integrity Act of 2022 as part of an appropriations bill in March. The motion comes as the agency is negotiating with multiple regional centers, a trade group, and a real estate company to settle the case.
U.S. Citizenship and Immigration Services argued Thursday that it acted within Congress' intent to reform the EB-5 visa program when it notified regional centers that handle foreign investors immigrating to the U.S. that they must be reauthorized under new regulatory standards to operate. (AP Photo/Wilfredo Lee, File)
USCIS argued that the law, in fact, repealed the existing EB-5 visa program and replaced it with one that carries stricter oversight requirements for regional centers that process the visas and doesn't give regional centers a set number of visas for foreign investors, unlike the previous system.
"Ample evidence suggests that Congress was tired of business as usual with the old regional center program and USCIS' interpretation was not just reasonable, but far from arbitrary and capricious," according to the agency's motion.
Trade group Invest in the USA, real estate investment firm EB5 Capital and a group of EB-5 regional center operators challenged USCIS' determination in March that centers would need to seek reauthorization to operate after the program lapsed last summer.
The regional centers are back in business, however, after U.S. District Judge Vince Chhabria in June decided the agency committed a legal error with its March decision and allowed 632 EB-5 regional centers to keep operating while the lawsuit continues.
Meanwhile, Paul Hughes, an attorney for the regional centers, said negotiations to settle the dispute are ongoing, despite the government's motion to dismiss the case. He said the group was encouraged by Chhabria's reasoning that allowed the regional centers to keep working amid the lawsuit.
"My clients have reached an agreement broadly," he told Law360 on Friday. "We're hopeful we can resolve this case."
The regional centers claimed in a motion for summary judgment last month that USCIS misinterpreted the language Congress passed in determining that regional centers needed to be reauthorized.
The suit is one in a series of challenges to the agency's action. Others from the Behring Regional Center, in which Invest in the USA is an intervenor, and another launched by EB5 Capital, CanAm Enterprises LP, Civitas Capital Management LLC, Golden Gate Global, and Pine State Regional Center LLC claims the agency's mandate threw existing regional centers into an untenable financial situation, spooked investors and left existing investors uncertain about their immigration status.
The agency, meanwhile, argues that the court doesn't have the authority to hear the dispute because its March interpretation didn't represent a final agency action on the question, but rather a preliminary determination. The Administrative Procedure Act likewise doesn't provide an avenue to challenge the agency's interpretive rule, USCIS argued.
USCIS likewise argues the regional centers are wrong to argue that the law passed by Congress simply reauthorized the EB-5 program. The law removed the entire statutory foundation for the previous EB-5 program and directed the agency to build up a new EB-5 program under different rules, according to Thursday's motion.
"This was no minor revision or reenactment of previously existing regulatory actions," the agency wrote. "This was a wholesale makeover of the regional center program because Congress was upset with how the prior program had been operating."
USCIS did not respond to a message seeking comment on Friday.
USCIS is represented by Glenn M. Girdharry, Joshua Samuel Press, Joseph G. Nosse, and Vanessa Molina of the U.S. Department of Justice's Civil Division.
Invest in the USA and the regional center operators are represented by Paul W. Hughes, Andrew A. Lyons-Berg, Alex C. Boota, and William G. Gaede III of McDermott Will & Emery LLP and H. Ronald Klasko and Daniel B. Lundy of Klasko Immigration Law Partners LLP.
The case is Behring Regional Center LLC v. Mayorkas et al., case number 3:22-cv-02487, in the U.S. District Court for the Northern District of California.