By Marta Lillo
In October, a group of EB-5 investors won a legal claim against the U.S. Citizenship and Immigration Services (USCIS). The ruling resulted in adjudications of their delayed Form I-526 applications filed before 2019.
The adjudications happened after the Chief Judge of the U.S. District Court for the Western District of Kentucky (Sixth Circuit) ruled in the Guthikonda case in September. The decision stated that the EB-5 investors had valid claims and concerns about the government’s handling of their petitions.
Halston Chavez and Matthew Galati, attorneys from The Galati Law Firm who represented the Guthikonda case, explain that the ruling is significant because it is the only instance where EB-5 investors have won an I-526 mandamus case since the Da Costa case ruling in August 2023. The Da Costa case favored the U.S. government instead of the EB-5 investors who filed it.
“Importantly, Guthikonda appears to be the first (and to date only) I-526 mandamus victory for EB-5 investors following the D.C. Circuit’s August 2023 ruling in Da Costa v. Immigrant Investor Program Office, 80 F.4th 330. In Da Costa, the D.C. Circuit upheld a dismissal of three investors with filing dates similar to Guthikonda,” Galati says.
This legal victory could also set a precedent for other applicants considering suing to have the USCIS issue decisions on pre-2019 petitions filed before the Reform and Integrity Act of 2022 (RIA) that remain without adjudication.
Although the legal victory doesn’t guarantee that USCIS will change its procedures, it’s an important legal step, Chavez adds.
“The win in Guthikonda also reaffirms the industry’s frustrations that USCIS is not adjudicating cases under a rule of reason. We settled this case, and therefore, we won’t receive the discovery that we have long wanted. And we won’t know, at least for some time, whether this decision alone will encourage USCIS to change their policies and become more transparent. Until we see reform at the Agency level, pre-RIA EB-5 investors will likely continue to face unreasonable delays and inconsistent processing. But it does keep the door open for using a different method of justice to obtain adjudications of long pending I-526 petitions: sue,” the attorney says.
Meanwhile, Ishaan Khanna, president of the American Immigrant Investor Alliance (AIIA), underlines that the Guthikonda ruling emphasizes the need of holding the U.S. immigration agency accountable for how it manages the EB-5 Investor Visa program.
“The government’s lack of transparency in its EB-5 operations, policies, and processing times causes great distress to EB-5 investors who await the adjudication of their cases. The Guthikonda decision underscores the need for more accountability from USCIS. We at AIIA are immensely proud of the Galati Law firm for their relentless advocacy for immigrant investors. They have represented us in multiple FOIA litigation efforts, which have enabled us to gain more insight into the obscure world of USCIS,” Khanna says.
Ruling says USCIS did not use “rule of reason” for delayed I-526 petitions
The Guthikonda case involves EB-5 investors who submitted their I-526 forms between May and November 2019. They received their adjudications on Oct. 25 after a negotiation period in which they settled with the USCIS per the court ruling.
According to the attorneys, the crucial aspect of this case is the legal discussion of whether the agency has a “rule of reason” that governs its adjudications of I-526s and whether it had applied that rule when processing the petitions involved in Guthikonda.
Galati explains that the Kentucky judge analyzed all TRAC factors in this case to reach its ruling. TRAC is a legal framework that guides a court to assess legal claims based on delay. He affirms that the first factor was crucial for the court ruling to favor the EB-5 plaintiffs.
“My response would be too long if I went through our arguments on each factor, so I will just speak on the first factor, which the Court declared to be the most important. The first factor asks whether USCIS has a rule of reason governing its adjudications of I-526 petitions. Plaintiffs argued that USCIS does not have a rule of reason when adjudicating I-526 petitions, and even if it did, it clearly did not actually govern adjudication of their I-526 petitions,” Galati says.
The USCIS argued that it does follow its “visa availability approach” as the rule of reason when adjudicating I-526 petitions. “In other words, it adjudicates petitions for investors for whom a visa is available, or soon to be available, in a first-in, first-out order. We provided substantial evidence that USCIS does not actually follow the visa availability approach. The crux of which showed many petitions adjudicated before plaintiffs but that were filed after plaintiffs, and for all of whom a visa was available,” the lawyer affirms.
Ultimately, the judge accepted the USCIS’ visa availability approach as the rule of reason “as a matter of law.”
“The judge seemingly accepted the visa availability approach as a rule of reason, so the decision fell on ‘have plaintiffs plausibly alleged that USCIS does not follow the purported rule of reason?’ And the judge held that, yes, they have,” Galati says.
Therefore, the Court found that the EB-5 plaintiffs alleged “sufficient facts” to question whether this approach is being used as a rule of reason to adjudicate I-526 petitions.
This particular argument helped the EB-5 plaintiffs win the case, Chavez adds. “That is precisely what led to our win in this case. The judge found the first TRAC factor to be in our favor because we were able to show instances where USCIS was not following its rule of reason. The judge did not conclude ‘USCIS does not have a rule of reason,’ but rather that plaintiffs plausibly alleged that USCIS’ adjudications of their I-526 petitions were not governed by one, if they have one.”
Implications for I-526 delays and adjudications for EB-5 investors
Khanna from AIIA highlights the significant implications the Guthikonda case can have for future mandamus cases from EB-5 investors in the same circuit court (sixth). “Unreasonable delay claims are contingent on the particular circumstances of each case, and the Galati Law firm was able to demonstrate in Court that USCIS violated their rule of reason in at least one instance, by using evidence obtained from FOIAs and other sources. This evidence and the arguments presented by the firm persuaded the judge to find that the Guthikonda plaintiffs plausibly alleged that USCIS has not followed its purported rule of reason in the adjudication of their petitions. This decision has significant implications for all future Mandamus cases filed in the same circuit court.”
Regarding this impact, Galati argues that it “certainly provides support for an EB-5 investor with a pending I-526 from 2019 to file a mandamus in the Sixth Circuit. As explained further below, different courts have approached this question differently, and it is important to know the case law of the jurisdiction where you would be suing. However, given this huge win in the Western District of Kentucky, we feel that it has opened the door for filing suits in the Western District of Kentucky and the other district courts in the Sixth Circuit (Michigan, Ohio, and Tennessee). Perhaps it has also opened the door to file in jurisdictions that have not yet made a decision on I-526 unreasonable delay cases and to fight for the best possible outcome as we did here.”
Chavez cautions that the court where an EB-5 investor files for a mandamus claim regarding an I-526 petition delay can impact the outcome. “Different U.S. courts have come out differently on this issue. And courts are inclined to follow whatever is precedential and binding in their circuit. For example, if someone files an I-526 mandamus in D.C., they will have the monumental task of taking on Da Costa, which ruled in favor of the government, and is binding there. If someone files an I-526 mandamus in the 6th Circuit, taking Guthikonda and Barrios Garcia, there is more breathing room as the Court could have followed Da Costa, but didn’t. Regardless, this is a case that all litigation attorneys should be citing in their I-526 mandamuses. And it also has provided more context on how we can make our I-526 mandamus even stronger. We have learned throughout our fight in Guthikonda how we are able to make our arguments more and more powerful to continue helping more EB-5 investors.”
Both attorneys agree that the case is a step in the right direction for the EB-5 industry as a whole since RIA. “Even under the new program, we are left with many questions as to the way that USCIS operates. Having a court say, and I am paraphrasing, that there is legitimate doubt that USCIS is doing what it says is doing, is significant ammunition for obtaining much needed answers as we assist EB-5 clients, both under the old and new program. Transparency from USCIS will make for a much more effective EB-5 program and benefit EB-5 investors around the world,” Galati concludes.
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