John Burson  edited Friday, August 30, 2024

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USCIS Cracks Down on EB-5 Regional Centers: Notices of Intent to Terminate Issued Over Integrity Fee Non-Payment

Confusion Over Fee Deadlines Leads to Legal Battles and Uncertain Future for EB-5 Regional Centers

KEY TAKEAWAYS

• USCIS Issues NOITs: Regional centers receive Notices of Intent to Terminate for not paying Integrity Fees.
• Integrity Fees Confusion: Many centers missed the payment deadline due to unclear communication from USCIS.
• No Late Payments Accepted: USCIS refuses to accept late payments, leaving centers without recourse.
• Legal Challenges: A lawsuit in Montana challenges USCIS's rigid enforcement and lack of communication.
• Industry Response: EB-5 stakeholders call for USCIS to allow late payments to maintain program integrity.
• Uncertain Future: The future of many regional centers remains unclear as legal and policy battles continue.

August 12, 2024 — In a significant development within the EB-5 Immigrant Investor Program, U.S. Citizenship and Immigration Services (USCIS) has begun issuing Notices of Intent to Terminate (NOITs) to numerous EB-5 regional centers that failed to pay the mandated Integrity Fees. These fees, introduced as part of the 2022 EB-5 Reform and Integrity Act (RIA), are designed to fund new oversight measures intended to enhance the integrity and transparency of the program.

What Are EB-5 Integrity Fees and Why Do They Matter?

The Integrity Fees, set at $20,000 or $10,000 annually depending on the number of investors a regional center sponsors, are a crucial component of the RIA. These fees finance essential USCIS activities such as site visits, audits, and overseas investigations, all of which aim to ensure that the EB-5 program operates fairly and effectively.

However, the implementation of these fees needs to be clarified. On March 2, 2023, nearly a year after the RIA’s passage, USCIS announced that the first Integrity Fee payment was due by April 3, 2023—just 32 days after the announcement. The short notice left many regional centers scrambling to understand the requirements and meet the deadline.

Confusion and Controversy: A Rocky Rollout

Due to widespread uncertainty about calculating and paying these fees, USCIS extended the payment deadline to October 1, 2023, for the 2023 and 2024 fiscal years. However, this extension was communicated solely through updates on the USCIS website, leaving many regional centers unaware of the change.

This lack of direct communication led to the current situation, where regional centers that missed the payment deadline now receive NOITs. USCIS has clarified that these centers will face termination with no opportunity to rectify the situation by making late payments despite the unprecedented challenges in the rollout process.

The Consequences of Non-Payment: What’s at Stake?

For regional centers that have deliberately decided to "wind down" operations, USCIS has clarified that EB-5 investors who filed I-526 petitions before the RIA’s passage in March 2022 may still have their petitions approved, assuming they meet all other eligibility criteria, such as job creation requirements.

However, other regional centers that intended to remain operational now face an uncertain future. With the NOITs in hand, these centers cannot correct their nonpayment, as USCIS has refused to accept late Integrity Fee payments. This rigid stance has sparked significant concern within the EB-5 community.

Understanding the EB-5 investment repayment process is crucial, especially amidst USCIS's recent enforcement actions on regional centers.

Legal Challenges and Industry Response

The USCIS enforcement action has already led to legal challenges. A lawsuit filed in federal court in Montana argues that USCIS acted arbitrarily by allowing deadline extensions for the Integrity Fees while refusing to permit late payments from regional centers that wish to maintain their designation. The judge in the case questioned USCIS's decision-making process, noting that it appeared inconsistent and potentially unfair.

The EB-5 industry has responded with widespread calls for USCIS to reconsider its position. Industry groups and legal associations advocate for accepting late payments, arguing that doing so would bring additional funds into the Integrity Fund and allow more regional centers to continue participating in the program. They contend that this approach would enhance the program's integrity by keeping more centers compliant and under USCIS oversight.

For those filing I-526E petitions, conducting thorough research using an EB-5 due diligence checklist is essential to ensure compliance and avoid pitfalls amid the latest USCIS updates.

Looking Ahead: The Future of the EB-5 Program

The fate of the affected regional centers remains uncertain. USCIS has yet to announce whether it will appeal the Montana court’s decision or reconsider its policy on late payments. Meanwhile, EB-5 stakeholders anxiously await further developments that could determine the program's future.

The controversy surrounding the Integrity Fees highlights the challenges of implementing new regulations within a complex immigration program. How USCIS handles this situation could have lasting implications for the EB-5 community, particularly for investors and regional centers seeking stability and clarity in an evolving regulatory landscape.

All eyes are on USCIS as the agency navigates this critical moment in the EB-5 program's history. Will it choose flexibility and collaboration with the industry or maintain its hardline stance? The coming months will be crucial in shaping the future of EB-5 investments in the United States.

Source:

• https://natlawreview.com/article/uscis-terminates-regional-centers-have-not-paid-ria-integrity-fees-implications