EB5 Investors Magazine "Top 25 Awards Edition" Volume 8 Issue 1 - Page 8

judge agreed with the general approach that challenges to reasonableness of delay are best considered on an evidentiary record and that finding a period of delay reasonable as a matter of law on the pleadings is improper. In the same month, a separate U.S. District Court judge stated that courts “have concluded that a reasonable time for agency action is typically counted in weeks or months, not years” and ruled that “it is plausible that USCIS’s delays here—of approximately two years in length, per plaintiff—are unreasonable.” Raju et al. v. Cuccinelli. In February 2021, yet another U.S. District Judge rejected USCIS’ attempt “to adopt a bright-line rule for what constitutes an unreasonable delay in the APA context” and denied USCIS’ motion to dismiss due to “the numerous disputed factual issues” “that can only be resolved on an evidentiary record.” Gutta v. Renaud. 2 These decisions demonstrate that EB-5 investors and Regional Centers should not be discouraged by denials by USCIS that are incorrect as a matter of law and to use litigation to hold USCIS’ feet to the fire and make them explain their reasoning or explanation to a federal judge. These cases show the plain language of the INA and applicable regulations take precedence over USCIS’ policy considerations and ambitious adjudicators unlawfully denying EB-5 petitions. Until USCIS gets its act together and starts adjudicating at the rate it was in 2017 and 2018, we will likely continue to see more mandamus litigation. Additionally, it is important to note that these circuit court decisions carry more weight, in particular as it relates to the AAO, who has ruled that it is not bound to follow published decisions of U.S. district courts in matters within the same jurisdiction, but should for case law of a circuit court (except in unusual circumstances). EB-5 INVESTORS ARE CHALLENGING USCIS’ DECISIONS EB-5 APPLICANTS INCREASINGLY CHALLENGE USCIS’ POLICIES Another possibility for litigation occurs when USCIS makes an improper decision based on the plain reading of Immigration and Nationality Act or applicable regulations. In Zhang v. USCIS et al. 3 , two EB-5 investors challenged USCIS’ interpretation of the terms “cash” and “indebtedness” that resulted in denied Form I-526s based on an abrupt policy change announced during an EB-5 stakeholder meeting in 2015, and won after years of courtroom battles. The issue at hand in this case was whether loan proceeds count as “cash,” which automatically qualifies as capital, or as “indebtedness,” which qualifies as capital only if it is secured by the foreign investor’s assets. Both the U.S. District Court of the District of Columbia and the D.C. Court of Appeals determined that USCIS’ interpretation was arbitrary and capricious violating APA. The appellate court ruled: “Cash is fungible, and it passes from buyer to seller without imposing on the seller any of the buyer’s obligations to his own creditors. The buyer’s source of cash — whether paycheck, gift, or loan — makes no legal or practical difference.” Further, the district court determined that, by requiring investors to personally collateralize loan proceeds invested as cash, USCIS added an additional requirement to the regulatory definition of "capital" not found within the original regulation, and was thus a legislative, not interpretative, rule requiring formal notice and comment rulemaking. Finally, EB-5 stakeholders are litigating against USCIS when it creates new rules or policy without following the correct procedures set forth in the Administrative Procedures Act. In Civitas Massachusetts Regional Center LLC et al. v. Alejandro Mayorkas et al., eight Regional Centers challenged USCIS’ July 24, 2020 policy relating to redeployment, which limited redeployment options to within the geographic area of the same regional center, including any amendments to the regional center’s geographic area approved before the further deployment. 5 The plaintiffs argue that the implementation of this policy was a legislative rule and that USCIS did not Another EB-5 litigation success story occurred at the D.C. Court of Appeals in Mirror Lake Village, LLC et al. v. Wolf 4 , which challenged USCIS’ interpretation of the term “at risk” found in 8 C.F.R. § 204.6(j)(2). The appellate court found that language in the new commercial enterprise’s Operating Agreement – which allowed repayment only if the company had enough money to continue operations and pay the purchase price of investors whose conditions on residency were removed – still provided “a risk of loss and a chance for gain” since repayment was contingent on “sufficient available cash flow.” For those frustrated by USCIS’ adjudication policy, it is rather enjoyable reading this decision, as the court 8 disparaged the government’s explanations for denial and its misjudged dependence on cherry-picked sentences in Matter of Izummi. EB5 INVESTORS MAGAZINE