By Marta Lillo
As the EB-5 industry braces for a significant rise in the administrative fee required on Apr. 1, 2024, the American Immigrant Investor Alliance (AIIA) and IT Service Alliance have sued the Department of Homeland Security to block the new regulation from taking effect.
However, the restraining order was unsuccessful, said the AIIA in a statement on Mar. 29. “Our attempt to stop the fee increase from going into effect on Monday was unsuccessful but the overall lawsuit continues on.”
“Despite our attorneys’ best efforts, the court disagreed with our argument that the increased fees would cause irreparable harm between Apr. 1st and post trial. The judge reasoned that the financial burden on EB-5 investors, though substantial wasn’t great enough compared to the investment already made and the harm wasn’t immediate since deadlines to file applications were months away. Stopping the fee increase would also cost USCIS millions daily,” the AIIA said.
On Apr. 1, EB-5 form I-526/I-526E fees are set to grow by 204% to $11,160, while form I-1965G by 47% to $4,470. Notably, the cost to apply a form I-956F to obtain approval for regional center designation will increase 168% to $47,695.
The plaintiffs filed the lawsuit on Mar. 19 and the restraining order on Mar. 25 before the Colorado District Court to prevent the U.S. Citizenship and Immigration Services (USCIS) from fulfilling the DHS mandate.
The case file is Moody et al v. Mayorkas et al and was assigned to Judge Charlotte N. Sweeney.
Despite the court refusal of the restraining order, AIIA’s president Ishaan Khanna remains determined pursuing legal action. “The fight is not over,” he said in an emailed statement to eb5Investors.com. “Last week in our original complaint, we made the argument that not only is USCIS’s new fee increments a direct violation of federal law, but it will also severely harm the EB-5 community financially by charging exorbitant fees without ever improving the quality of their service.”
The AIIA has created a special fundraising campaign to help pay for this lawsuit and the ongoing legal costs. “The attorneys have gone ahead to draft the complaint and filed the lawsuit without payment. There are going to be several legal costs in this case, from expert testimonies, court filing fees, etc. and we need your support to fund this suit,” said AIIA in a blog.
The legal argument against the EB-5 fee hike
Attorneys Jonathan Wasden from Wasden Law, Matthew Galati from The Galati Law Firm, and Jesse Bless from Bless Mitigation, represent the plaintiffs. They filed both motions arguing that the fee hike announced on January, claiming it violates the Administrative Procedure Act and the EB-5 Reform and Integrity Act of 2022 (RIA).
Khanna also explains the increase “would do irreparable harm with the financial burden it would place on EB-5 immigrant investors and with its unfairly targeting of immigrant investors to essentially subsidize other immigration programs, doing imminent harm to our members who we, as an organization, represent,” Khanna insisted.
The U.S. government replied on Mar. 28 denying the fee hike would cause harm to the program and the industry but it would financially hurt USCIS.
“In our reply [], we emphasized that the fee increase violates federal law due to the lack of a required fee study and not following mandated processing timelines and that the lawsuit’s delay would cause irreparable harm because investors would be forced to pay potentially illegal fees upfront, with suing for reimbursement later being impractical,” said Khanna.
The abovementioned required fee study concerns an RIA provision mandating USCIS to conduct this analysis to explain any price increase. It was supposed to be submitted six months after the law was passed (March 2022). To date, the study is pending.
In an emailed statement on Feb. 21, USCIS told eb5investors.com that the DHS had begun the fee study required by RIA “to meet the additional fee guidelines and processing time requirements. The law requires DHS to set fees for EB-5 program-related immigration benefit requests at a level sufficient to recover the costs of providing such services and completing the adjudications within certain time frames.”
Wasden explained in a LinkedIn post that the U.S. government must clarify the absences of this performance-based fee study “prior to raising EB-5 related fees? See Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). I think this is a hard question for the government to answer in the negative and still maintain credibility.”
The attorney later explained to eb5investors.com that USCIS is “exorbitantly jacking up fees on EB-5 applications to subsidize other categories that the agency intends to process below cost. The problem for the government is that Congress expressed what I believe to be a clear intent that USCIS conduct a performance-based fee study prior to new EB-5 fees. This study was required by the RIA, and was supposed to create benchmarks for fees. In effect, USCIS has looked at a statute created by Congress and said ‘nah, we aren’t going to do that.’ It’s a tough spot to be in for the government, which likely explains why they did not contest our case on the merits, but instead argued plaintiffs do not face irreparable harm.
DISCLAIMER: The views expressed in this article are solely the views of the author and do not necessarily represent the views of the publisher, its employees. or its affiliates. The information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal, immigration, and financial experts prior to participating in the EB-5 program Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.
