By Marta Lillo
A group of Regional Centers and the EB-5 trade association Invest in the USA (IIUSA) filed a lawsuit against the Department of Homeland Security (DHS) and the U.S. Citizenship and Immigration Services (USCIS) to invalidate the final rule that increased EB-5 filing fees.
The claim states that the January 2024 final rule by USCIS allowing the EB-5 fee hike violates several immigration and administrative laws, particularly a mandate by the EB-5 Reform and Integrity Act (RIA) to complete a fee study prior to issuing any fee rule; the requirement to set fees to meet designated processing times; and accuses the U.S. immigration agency of allocating additional fees to the EB-5-related petitions in violation of statutory requirements.
“The Final Rule is arbitrary and capricious, as Defendants based the rule on faulty projections, flawed assumptions, and failed to take into account public comments on the rule,” the case document says.
The plaintiffs filed the claim in the U.S. District Court for the Northern District of Texas on Apr. 22 (case file Case 3:24-cv-00984-L) requesting the court reverse the EB-5 fee increases that took effect on Apr. 1 until USCIS completes the obligatory fee study.
The regional centers that filed the claim are Civitas Capital Management, LLC, CMB, Texas Regional Center, LLC; Visitar’s Business Alliance of Texas Regional Center and DC Partners d/b/a Houston EB-5 Regional Center; USA EB5 Immigration, LLC d/b/a EB-5 Capital; CanAm Enterprises, LP; American Life, Inc. Regional Center – Seattle d/b/a Golden Rainbow & Gateway Freedom Fund; Advantage America New York Regional Center, LLC, American Dream Fund, LLC;
EB-5 New York State, LLC; PG EB5 Sponsor, LLC; Pine State Regional Center, LLC; and Advantage America EB-5.
In an emailed statement to EB-5 Investors Magazine, Daniel J. Healy, CEO of Civitas, said: “We fully expect to prevail. USCIS’s actions here are clearly contrary to law, as the agency readily admits.”
The rules provide 60 days for the government to answer the complaint. I expect that both parties will file Motions for Summary Judgment on a time schedule that the Court will establish.
The U.S. government has 60 days since the filing to answer the complaint. “I expect that both parties will file Motions for Summary Judgment on a time schedule that the Court will establish,” Ron Klasko, EB-5 attorney and counsel to the plaintiffs, told EB-5 Investors Magazine.
This is the second legal motion against the hike, after the lawsuit and restraining order to block the new regulation filed by American Immigrant Investor Alliance (AIIA) and IT Service Alliance a few days before Apr. 1.
“While the IIUSA/Regional Center lawsuit borrows the core strategies with the earlier-filed lawsuit by AIIA, the IIUSA lawsuit invokes the Regulatory Flexibility Act (RFA) and expands upon the concerns of the EB-5 regional centers,” AIIA’s president, Ishaan Khanna, told EB-5 Investors Magazine.
Klasko added: “The AIIA lawsuit challenges the entire Fee Rule; ours only challenges the EB-5 fees. The AIIA lawsuit is on behalf of investors and petitioners for other benefits; ours was filed by regional centers on their own behalf and on behalf of their investors. The AIIA lawsuit sought a temporary restraining order; ours does not. Our lawsuit raises many additional grounds for overturning the EB-5 fee rule that were not included in the other complaint.”
Khanna also said: “AllA took decisive action three weeks ago by filing a complaint to address our shared concerns. We reached out to the regional centers for their support in this critical effort. While their recent decision to file a lawsuit is a positive development, we would have welcomed their active engagement from the outset. As we move forward together in this battle, we remain fully committed to pursuing a just resolution on behalf of our community.”
Pending EB-5 fee hike study among lawsuit’s key arguments
The EB-5 industry faced the new prices with reluctance when the increase became official. However, many continued to question their legality because of the pending study.
In the claim, the plaintiffs state that “as of the date of this Complaint, more than 2 years after the date of enactment of
the RIA, and more than 1 year following the deadline set by Congress, USCIS has failed to conduct the fee study. In fact, in the preamble to the Final Rule, DHS admits that the fee study is ‘required by the RIA,’ that it has not complied and that it used a ‘different…fee calculation method” than what “that law requires”, the claim document states.
In a press release, Civita-s Healy said that the raised EB-5 fees add financial pressure on investors and regional centers despite USCIS’s argument that the fee increase is necessary to meet funding needs.
“USCIS has a job to do and needs funding from fees to do it. No problem, that’s the law. But Congress was quite clear about how these fees should be calculated. It’s obvious that if and when USCIS conducts the required fee study using accurate data in place of their wildly erroneous assumptions, the resulting fees will be far, far lower,” he said.
The prices for EB-5 forms I-526E (regional centers) and I-526 (direct investor) increased by 204% to $11,160. The fee for form I-829 to remove conditions on residence also increased from $3,835 to $9,525. Further, filing prices for form I-956F, which regional centers must file to obtain approval for their designation, increased 168% to $47,695.
“USCIS is charging $48,000 to adjudicate a petition to establish a new regional center. We will prove this fee is egregious, but at least they’re charging it for reviewing a substantive filing,” Healy said in the press release. “They are charging the same $48,000 to review a simple form noticing them of a regional center name change, where there is literally nothing to adjudicate. Same fee to be informed of the departure of a senior employee. What could possibly justify this?”
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