By Marta Lillo
Litigation has emerged as a reliable tool in the EB-5 landscape to compel the US Citizenship and Immigration Services (USCIS) to address prolonged application delays and a growing backlog.
Since the pandemic, EB-5 investors and other stakeholders have increasingly turned to legal claims in frustration over the agency’s sluggish response times, impacting investment plans and overall immigration goals.
“Delay litigation took off during the pandemic, but litigating denials has always been part of EB-5 (and really, any regulated industry),” says Joseph Barnett, immigration attorney and partner at WR Immigration.
The USCIS faces an increasing demand for EB-5 applications, consequently wrestling with substantial backlogs and delays. As of August 2023, processing times total 52 and 81 months for I-526 petitions from India and China, respectively, and 56 months for foreign nationals from other countries.
Meanwhile, in the case of I-829 petitions to remove immigrant investors’ conditions on their permanent resident status already granted the EB-5 visa, the processing times border 66 months, according to official USCIS data.
“It does seem that in recent years, and particularly prior to the enactment of the RIA, investors have become increasingly frustrated by what they perceive to be unreasonably long processing delays at USCIS, and as a result have been more willing to challenge those delays by initiating litigation and seeking mandamus relief,” says Steven Reingold, litigation attorney and partner at Saul Ewing LLP.
The role of litigation in the EB-5 industry
The significance of litigation resides in its effectiveness in speeding the processing of petitions compared with conventional agency timelines. Barnett adds that its impact is relevant, especially to foreign nationals outside the United States and their investment in the process.
“Folks outside the U.S. invested a lot of money four years ago and have received no benefit from it, and they are rightfully frustrated. There are delays in getting the I-526 approved, delays in getting the case transferred from USCIS to NVC (National Visa Center), delays in getting a consular interview scheduled, and delays in removing the conditions on the green card. It is one delay after another, and the government doesn’t seem to care,” the immigration attorney explains.
However, although its practice is widespread, industry attorneys caution against overreliance on the tool. They also insist it is a final option rather than the first step in a strategy when seeking to push an EB-5 petition along.
Types of EB-5 litigation and their reach
Investors have become more inclined to challenge these delays by turning to two main types of litigation against the USCIS: Mandamus and class actions.
A Mandamus can involve groups or individual investors, developers, or regional centers claims and aim that a federal court mandates the agency to fulfill its duties and emit a resolution quickly, whether it’s a Request for Evidence (RFE), a Notice of Intent (NOI), or a Denial; a court cannot order the USCIS to approve a petition.
Meanwhile, a class action concerns a group of claimants, usually investors. It commonly results in a ruling or a settlement and is generally used to claim a lack of transparency or the agency’s failure to protect investors’ interests.
According to Edward Beshara, immigration lawyer and managing partner of Beshara P.A., one significant trend is the increasing reliance on Mandamus federal court actions to prompt USCIS into responding promptly to I-526 and I-829 petitions.
“The USCIS is stating that it is reasonable for the adjudicator to take five and half years to analyze and adjudicate an I-526 petition. Of course, a Mandamus action filed usually after two years of the I-526 delay in adjudication would be supported by evidence from the EB-5 investor that the delay is causing him/her and their family extreme hardship and is affecting their lifestyle in the US. In the case of an I-829 delay, the Mandamus action is usually filed after two years, and more likely USCIS will come back either with an RFE or an approval,” he adds.
However, according to Reingold, since the start of 2023, there has been a decrease in requests for Mandamus actions, suggesting that investors could be more content with the current pace of adjudications. However, regional centers have ongoing cases concerning I-956F forms, rural projects, and individual investor cases.
“Only a select few firms are doing them, but the pushback from the US Attorney’s Office is making this avenue harder to pursue, so one has to be careful about what is represented to the investors in terms of the potential for success,” he adds.
Therefore, until the USCIS resumes a reasonable adjudication timetable, the Mandamus litigation will remain necessary, Beshara states. “Any immediate response from USCIS is welcomed whether it is an RFE or NOID. Therefore, any response by the investor to the RFE or NOID should be adjudicated promptly by USCIS and hopefully approved.”
Evolution and future of litigation as a tool to expedite the EB-5 process
The use of litigation has evolved, with individual investor claims becoming less effective than group-based actions, Reingold says.
“When many individual investors started to resort to litigation a few years ago, USCIS and the attorneys assigned to represent it seemed to be caught off guard and a bit overwhelmed by the number of Mandamus actions and were willing to try to find amicable resolutions to the investors’ claims. As time went on, they seemed to find their footing and start pushing back, becoming less willing to negotiate and more willing to force investors to spend time and money opposing motions to transfer venue and motions to dismiss,” the litigation lawyer explains.
Accordingly, individual investor claims began to lose effectiveness as group litigation gathered momentum. “Over time, litigation has become a less effective tool for individual investors, as opposed to when the plaintiffs are groups of investors, the NCEs, or the regional centers, as we saw for example in Behring (Behring vs Wolf et al.),” Reingold adds.
However common and efficient as its practice may seem, industry attorneys emphasize that litigation only enters the conversation with clients once deemed necessary.
“It is a footnote in our initial call. I try to be hopeful and optimistic but also understand the need to be realistic and explain that litigation can be an option, depending on circumstances,” says Barnett.
EB-5 investors should understand from the beginning that the process will likely move slowly, Barnett says.
“Investors need to know that because of the processing delays, it could take quite a bit of time for them to achieve their ultimate goal of obtaining lawful permanent residency in the United States. They need to commit themselves to being patient and to accepting the fact that there is going to be some level of frustration with the process. So, too, investors need to be sufficiently capitalized to allow for their capital to be locked up for extended periods,” adds Reingold.
Although it has become a supplementary stage in the EB-5 process, accompanied by its challenges and requirements, lawyers emphasize that the industry still considers its employment a weapon of last resort and they warn against excessive reliance.
“It can be scary suing the U.S. federal government when you ask them to approve your case, and many are worried about retaliation for doing so. But I do believe it is an effective option when all else fails,” Barnett says.
“I do not believe litigation is the ‘new normal’ in EB-5. I think that investors understand the program and do not want to spend money litigating delay claims when at the end of the day, USCIS is going to continue processing applications in the manner in which it deems best and to try to implement improvements that it can point to in litigation to defend itself against allegations that it has acted arbitrarily and capriciously. That said, investors should not rule out litigation as an option, and it may be warranted in a particular instance depending on the facts and circumstances,” Reingold concludes.
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