Settlement Agreement Clarifies Rights and Obligations of EB-5 Regional Centers | Seyfarth Shaw LLP

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Upon the enactment of the EB-5 Reform and Integrity Act of 2022 (the “Integrity Act” or “RIA”) dated March 15, 2022, United States Citizenship and Immigration Services (“USCIS”), a subsidiary of the Department of Homeland Security (” DHS”) faced multiple federal lawsuits filed by several EB-5 regional centers and an EB-5 regional center trade association.[1]

The lawsuits challenged a USCIS announcement that all regional centers previously certified by USCIS prior to the passage of the Integrity Act would need to be re-certified before continuing operations. In June, the federal district court ruled on a motion for an injunction that USCIS “voided the [Administrative Procedures Act]noting that USCIS “almost certainly wrongly assumed that the Integrity Act confirmed the authorization of existing regional centers, so the agency was almost certainly wrong when it announced that the centers were no longer authorized.”

On August 24, 2022, the parties filed a settlement agreement that clarifies the status of previously certified regional centers and other form submission procedures related to the EB-5 program. The highlights of the settlement agreement are:

  • Already approved regional centers are subject to the Integrity Act when sponsoring new projects or new investors.
  • Previously approved regional centers must have been “in good standing” under the Integrity Act in order to sponsor new investors.
  • Previously approved regional centers that wish to continue participating in the EB-5 program and sponsor new EB-5 projects under the Integrity Act must apply Form I-956 (Application for appointment as Regional Center) by December 29, 2022.
  • Previously approved regional centers filing I-956 as an amendment may, unless other amendments are required, indicate on Part I of the form that the amendment is being submitted to confirm compliance with the Integrity Act.
  • Previously accredited regional centers may attach proof of their previous regional center licence, along with any changes, as an attachment to Form I-956.
  • Previously approved regional centers may sponsor new projects or new investors and submit other EB-5-related forms before USCIS decides on their I-956 filing.
  • As required by the Form I-956 instructions, previously authorized regional centers must still demonstrate that they have procedures in place to comply with the new Integrity Act requirements, including procedures designed to ensure compliance with applicable securities laws.
  • Form I-956F (Application for Approval of an Investment in a Commercial Enterprise) must be submitted for any project previously approved on a pre-Integrity Act form, formerly Form I-924, if, after acceptance, an investor submits an application for an EB-5 -Classification represents the law of integrity. In general, any aspect of the project previously approved in I-924 would continue to receive consideration in the context of USCIS review of I-956F.
  • Form I-956F, whether submitted for previously approved or new projects, must be submitted before an investor can submit a visa application Form I-526E (Immigrant Petition by Regional Center Investor).
  • In cases where an accredited regional center does not receive a receipt or notification of a filed Form I-956F from USCIS within 10 calendar days of physical delivery of the form, with respect to an EB-5 investor filing a Form I-526E, USCIS accepts alternative forms of demonstrating that the I-956F was properly filed. Such evidence may include proof of payment of the I-956F (cashed check or credit card charge); the names of the regional center, the new commercial enterprise and, if any, the job-creating institution; and the approximate filing date of the I-956F instead of the receipt number for the I-956F. There are similar provisions that allow new regional centers to provide information in place of the receipt.
  • USCIS will not contest claims that a regional center has not received a receipt for an I-956F filing.
  • USCIS will review any necessary compliant changes to the forms currently issued and will make those changes by December 1st.
  • USCIS will initiate rulemaking notifications and comments to solicit comments on Forms I-956, I-956H, I-956F, I-956G, and I-526E; these forms will continue to be used in the meantime.
  • The parties to the litigation will be meeting with USCIS at least quarterly for the next year to iron out settlement implementation procedures and any related new issues that may arise.

The Settlement Agreement provides much-needed clarity regarding the requirements for previously licensed regional centers to file a new Form I-956 and comply with the Integrity Act. It also provides welcome guidance on alternative methods for acknowledging receipt by USCIS of Form I-956F filings.

Many questions about the Integrity Act have arisen because of its length and complexity. We encourage you to contact your legal representative or a member of Seyfarth’s EB-5 Specialty Team for additional information or assistance with an I-956 application or any aspect of the EB-5 program.

[1] EB Capital et al. vs. US Department of Homeland Security et al., Case No. 3:22-cv-3948-VC (ND Cal.) and Behring Regional Center LLC vs. Alejandro Mayorkas et al., Case No. 3:22-cv- 2487VC (ND Cal.). The EB-5 program allows investors (and their spouses and unmarried children under the age of 21) to apply for permanent residency provided they make the required investment (currently $800,000 to $1,050,000) in a commercial enterprise in the United States; and plan to create or maintain 10 permanent, full-time positions for skilled US workers.

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