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