EB-5 Anomaly Suspends Immigrant Investor Green Card Applications, Indefinitely

In 2002, President Bush signed into law the 21st Century Department of Justice Appropriations Authorization Act. The lack of regulations implementing this legislation has had the effect of freezing certain EB-5 immigrant investor applications indefinitely.

In 1990, Congress created the fifth employment-based (EB-5) preference category for foreign investors seeking to enter the United States to engage in a commercial enterprise that will benefit the U.S. economy and directly create at least ten full-time jobs. The immigrant must invest at least $1 million or $500,000 for commercial enterprises located within a rural targeted employment area. The annual quota for EB-5 investment visas is 10,000; however, this amount has never been reached since its inception.

The problem with the EB-5 category is chiefly due to the draconian nature of USCIS adjudication of EB-5 cases. Since inception the EB-5 category has been one of the most underutilized and overly restrictive visa categories. Many immigrant investors believe it is not worth their while to pursue a green card under this category (perhaps immigration reform will address this issue but will be left to another article). To make matters worse, many immigrant investors subject to the 2002 act have had their cases put on the shelf. There is a genuine lack of guidance under the 2002 act so these cases will remain pending until the regulations implementing the 2002 act are drafted.

The Administrative Appeals Office (AAO) of the USCIS issued four precedent decisions in 1998 that substantially restricted the already restrictive EB-5 category. These decisions altered guidelines and established more restrictive interpretations of the law. As a result approval rate dropped below 44% and concern among current and potential EB-5 investors spread. After these decisions, many Immigrant investors decided not to move forward with their EB-5 cases. More importantly, USCIS began removing some existing investors based on the retroactive application of the legal precedent set in the AAO decisions. This was the final straw for a large number of immigrant investors. Many decided that doing business in the U.S. was simply not worth the trouble, and rightfully so.

The AAO decisions created a retroactive application of the law. What this means is that immigrant investors whose cases were submitted before 1998 had to meet the guidelines created by the AAO decisions. How can one meet a guideline if they didn’t know it existed? While I am not arguing the efficacy of retroactive legal precedent, I do believe that it is inequitable in many instances and is just another black eye for the EB-5 category. Fortunately, the retroactive application of the law was successfully challenged in one Federal Court. This decision led the way for the 2002 legislation.

In 2002, President Bush signed into law legislation that sought to fix the damage caused by the 1998 AAO decisions. The 21st Century Department of Justice Appropriations Authorization Act offered guidance to EB-5 investors to cure deficiencies in their previously submitted EB-5 petitions. These EB-5 investors include those foreign investors whose Immigrant Petition by Alien Entrepreneur (Form I-526) were filed and/or approved between January 1, 1995 and before August 31, 1998. However, if you fit into this category, USCIS cannot adjudicate your case because the final regulations implementing the 2002 act have not been drafted.

Until the final rules are issued, the Immigrant investors subject to the 2002 cannot have their cases adjudicated. This places the immigrant investor in a sort of limbo. It also creates significant burdens on the alien such as having to leave the country to renew their green card every few years. As it stands today, there are many immigrant investors who are left with EB-5 applications that are pending. Given the lack of guidance on when the regulations will be implemented, these investors have no idea on when their cases will be finally adjudicated. In the most sophisticated and advanced society in the world, I would expect more – but then again, I’m a hopeless optimist.

A solution to the problem may be filing a lawsuit against the federal government in Federal Court in an action called a “mandamus suit.” A mandamus suit essentially forces a government agency to perform a duty required by law. For example, the government is required to adjudicate family-based green card applications within 6-8 months. If your case is pending for 2 years, and USCIS will not adjudicate it, you can file a mandamus action to force USCIS to make a decision on the case. It may be approved or denied, but the mandamus action has the effect of forcing the government to do its job.

The main problem with the mandamus suit in EB-5 cases is that USCIS simply cannot do its job. It cannot adjudicate the EB-5 case until Congress publishes the final rules implementing the regulations under the 2002 act. USCIS will issue a decision stating simply that it cannot adjudicate the case because it does not have the required regulations to make an informed decision. It’s basically like forcing someone to abide by rules that don’t exist. These cases need to be pushed through to force implementation of the final regulations. Lawyers should not tire in the efforts to bring these cases into Federal Court as attention leads to action.

A viable EB-5 Immigrant Investor Visa category is instrumental in a healthy economy. The visa category was enacted to create jobs for U.S. citizens and lawful permanent residents. By restricting the category, the United States is missing a great opportunity. The Law Firm of Shihab & Associates has filed mandamus actions in Federal District Court to force the USCIS to adjudicate certain cases. One such EB-5 case remains pending in court. The Federal Court has the power to force regulations to be implemented. If enough mandamus suits are filed, enaction of the regulations implementing the 2002 act appears plausible.

The Law Firm of Shihab & Associates has over 15 years of experience in handling complex Immigrant Investor cases. Contact one of our experienced attorneys today to discuss your options under the EB-5 program. Call the Law Firm of Shihab & Associates, Co., LPA at (800) 625-3404.