Settlement Agreement Clarifies Rights and Duties of EB-5 Regional Centers

Following the March 15, 2022 enactment of the EB-5 Reform and Integrity Act of 2022 (the “Integrity Act” or “RIA”), United States Citizenship and Immigration Services (“USCIS”), a component agency of the Department of Homeland Security (“DHS”) faced multiple federal suits brought by several EB-5 regional centers and an EB-5 Regional Center trade association.[1]

The suits challenged a USCIS announcement that all regional centers previously certified by USCIS before the Integrity Act’s enactment were required to be recertified before they could continue doing business. In June, ruling on a motion for preliminary injunction, the federal district court found that USCIS “violated the [Administrative Procedures Act]” and determined that USCIS “was almost certainly wrong in assuming that the Integrity Act affirmatively deauthorized existing regional centers, so the agency was almost certainly wrong to announce that the centers are no longer authorized.” 

On August 24, 2022, the parties filed a Settlement Agreement that clarifies the status of previously certified regional centers and other procedures for filing forms relating to the EB-5 program.  The highlights of the Settlement Agreement are:

• Previously approved regional centers are subject to the Integrity Act if they sponsor new projects or new investors. 
• Previously approved regional centers must have been “in good standing” under the Integrity Act in order to sponsor new investors.
• Previously approved regional centers that wish to continue to participate in the EB-5 program and sponsor new EB-5 projects under the Integrity Act must file Form I-956 (Application for Regional Center Designation) by December 29, 2022.
• Previously approved regional centers that file the I-956 as an amendment may, absent any other changes that might need to be identified, indicate in Part I of the form that the amendment is being filed to confirm compliance with the Integrity Act.
• Previously approved regional centers may include proof of their prior regional center approval along with any amendments as an attachment to Form I-956.
• Previously approved regional centers may sponsor new projects or new investors and file other EB-5 related forms prior to USCIS’s adjudication of their I-956 filing.
• As required in the instructions to Form I-956, previously approved regional centers are still required to provide evidence that they have established procedures to comply with the new requirements under the Integrity Act, including procedures intended to ensure compliance with applicable securities laws.
• Form I-956F (Application for Approval of an Investment in a Commercial Enterprise) must be filed for any project previously approved on a pre-Integrity-Act form, the former Form I-924, if an investor files a petition for EB-5 classification after adoption of the Integrity Act.  Generally any aspect of the project previously approved in the I-924 would continue to be granted deference in connection with the USCIS’ review of the I-956F.
• Form I-956F, whether submitted for previously approved or new projects, must be filed before an investor may file a visa petition on Form I-526E (Immigrant Petition by Regional Center Investor).
• In cases where an approved regional center does not receive from USCIS a receipt or notice of a filed Form I-956F within 10 calendar days of physical delivery of the form, with respect to an EB-5 investor submitting Form I-526E, the USCIS will accept alternative forms of proof that the I-956F had been duly filed. Such evidence may include proof of payment of the I-956F (cashed check or credit card charge); the names of regional center, new commercial enterprise and, if available, the job creating entity; and the approximate date of filing of the I-956F in lieu of the receipt number for the I-956F.  There are similar provisions allowing new regional centers to provide information in lieu of the receipt.
• USCIS will not challenge any claims that a regional center did not receive a filing receipt for a Form I-956F.
• USCIS will consider any necessary conforming changes to the currently issued forms and make such changes by December 1.
• USCIS will initiate notice and comment rulemaking soliciting comments regarding Forms I-956, I-956H, I-956F, I-956G, and I-526E; these forms will remain in use during the interim.
• The parties to the litigation will meet with USCIS at least quarterly for the next year to iron out implementation procedures for the settlement and any new, related issues that may arise.

The Settlement Agreement provides much-needed clarity concerning the requirements for previously approved regional centers to file a new Form I-956 and to comply with the provisions of the Integrity Act.  It also provides welcome guidance on alternative methods to confirm the receipt by USCIS of Form I-956F filings.

Many questions under the Integrity Act have arisen because of its length and complex nature.  We encourage you to contact your legal representative or a member of Seyfarth’s EB-5 Specialty Team if you wish further information or assistance with an I-956 filing or any aspect of the EB-5 program.

 

[1] EB Capital et al vs. US Department of Homeland Security et al, Case No. 3:22-cv-3948-VC (ND Cal.) and Behring Regional Center LLC vs. Alejandro Mayorkas et al, Case No. 3:22-cv-2487VC (ND Cal.). The  EB-5 program allows investors (and their spouses and unmarried children under 21) to apply for permanent residence provided they make the necessary investment (currently $800,000 to $1,050,000) in a commercial enterprise in the United States; and plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers.