Federal Alienage Distinctions in First Step Act Time Credits: Second Circuit Holds § 3632(d)(4)(E)(i) Survives Rational Basis Review and Creates No Protected Liberty Interest

Introduction

In Cheng v. United States (No. 24-1131-pr, decided April 1, 2025), the U.S. Court of Appeals for the Second Circuit issued a precedential decision addressing the constitutionality and reviewability of a key limitation in the First Step Act (FSA). The challenged provision—18 U.S.C. § 3632(d)(4)(E)(i)—renders inmates who are subject to a final order of removal ineligible for the application of FSA “time credits” toward earlier transfer to prerelease custody or supervised release.

Plaintiff–Appellant Sheng‑Wen Cheng, a Taiwanese national serving a federal sentence for COVID-19 relief fraud and subject to a final order of removal, argued that § 3632(d)(4)(E)(i) violates equal protection and due process (under the Fifth Amendment) and is arbitrary and capricious under the Administrative Procedure Act (APA). The Second Circuit affirmed the district court’s dismissal, holding:

Equal Protection: The statute is reviewed under rational basis (not heightened) scrutiny and survives that review.
Due Process: The FSA does not create a protected liberty or property interest in the application of time credits for prisoners with final removal orders.
APA: No unlawful agency action was alleged; the Bureau of Prisons (BOP) followed the statute.

The opinion, issued per curiam by Judges Lohier, Sullivan, and Kahn, has significant implications for noncitizen inmates and for litigation at the intersection of criminal punishment, immigration status, and federal prison administration.

Summary of the Opinion

The Second Circuit affirmed the Southern District of New York (Broderick, J.) in full. The court held that federal classifications based on alienage—whether between citizens and noncitizens or among categories of noncitizens—do not trigger heightened scrutiny. Relying on longstanding Supreme Court and Second Circuit precedent, the court applied rational basis review and concluded that the bar on applying FSA time credits to prisoners with final removal orders is rational. Rationales include reducing flight risk and ensuring that deportable noncitizens who commit felonies serve their sentences.

On due process, the court ruled that the FSA does not create a protected interest for prisoners who are statutorily ineligible for application of time credits. Because eligibility is the threshold to any claim of entitlement to earlier transfer or release, Cheng had no protected liberty or property interest. The APA claim failed because the complaint identified no unlawful agency action; BOP’s enforcement of the statutory ineligibility was consistent with law.

Analysis

Precedents Cited and Their Influence

Mathews v. Diaz, 426 U.S. 67 (1976): The Supreme Court held that federal classifications based on alienage are generally subject to rational basis review because the political branches have plenary authority over immigration. The Second Circuit invoked Mathews to reject any call for heightened scrutiny here.
United States v. Lue, 134 F.3d 79 (2d Cir. 1998): Clarifies the distinction between state and federal alienage classifications. Strict scrutiny applies to state alienage classifications (e.g., Graham v. Richardson), but not to those made by the federal government, which receive more deferential review. The panel relied on Lue to confirm rational basis as the correct standard.
Yuen Jin v. Mukasey, 538 F.3d 143 (2d Cir. 2008): Reiterates the federal government’s wide latitude in distinguishing among noncitizens in immigration contexts—supporting the court’s conclusion that no heightened scrutiny applies even to intraclass distinctions (such as noncitizens with versus without final removal orders).
Jankowski‑Burczyk v. INS, 291 F.3d 172 (2d Cir. 2002): States the deferential equal protection standard: a classification survives if any reasonably conceivable set of facts provides a rational basis. The court used this formulation to uphold § 3632(d)(4)(E)(i).
Demore v. Kim, 538 U.S. 510 (2003) and Skelly v. INS, 168 F.3d 88 (2d Cir. 1999): These decisions recognize Congress’s concerns about flight risk and ensuring that deportable noncitizens serve criminal sentences—rationales the panel expressly cited to justify the FSA’s exclusion.
Wolff v. McDonnell, 418 U.S. 539 (1974); Bd. of Regents v. Roth, 408 U.S. 564 (1972); Washington v. Glucksberg, 521 U.S. 702 (1997); Victory v. Pataki, 814 F.3d 47 (2d Cir. 2016); Bangs v. Smith, 84 F.4th 87 (2d Cir. 2023): These authorities frame when statutes create protected interests for due process purposes. Applying these cases, the court concluded the FSA’s text forecloses any legitimate claim of entitlement to earlier release for prisoners with final removal orders.
FCC v. NextWave Personal Communications, Inc., 537 U.S. 293 (2003): Stands for the principle that agencies must follow unambiguous statutory commands; actions consistent with clear statutory directives are not arbitrary or capricious. The court cited NextWave in rejecting the APA claim.
Procedural points: Palmer v. Amazon.com, Inc., 51 F.4th 491 (2d Cir. 2022) (de novo review on a motion to dismiss), Publicola v. Lomenzo, 54 F.4th 108 (2d Cir. 2022) (liberal construction of pro se filings), and Vill. of Willowbrook v. Olech, 528 U.S. 562 (2000) with Drabinsky v. Actors’ Equity Ass’n, 106 F.4th 206 (2d Cir. 2024) (abandonment of a “class of one” claim not raised in the opening brief).

Legal Reasoning

1) Equal Protection: Rational Basis Applies and Is Satisfied

The court squarely rejected heightened scrutiny. Under Mathews v. Diaz and its Second Circuit progeny, federal alienage classifications—including differences drawn within classes of noncitizens—are generally reviewed under rational basis, not strict or intermediate scrutiny. The FSA provision distinguishes:

Between citizens and noncitizens; and
Among noncitizens: those with a final order of removal versus those without.

Neither distinction triggers heightened scrutiny in the federal context. Applying the deferential rational basis standard, the court found multiple “reasonably conceivable” justifications:

Reducing risk of flight by individuals who have final removal orders and may face imminent removal proceedings upon release.
Ensuring that noncitizens who commit felonies in the United States serve their full criminal sentences before removal.
Administrative and public-safety concerns associated with placing in prerelease custody those who are not expected to reenter the community domestically due to removal orders.

Because these reasons suffice, and equal protection tolerates under- and over-inclusiveness in line drawing, the court concluded the classification is constitutional.

2) Due Process: No Protected Liberty or Property Interest

To state a due process claim, Cheng needed a protected interest in the earlier transfer or release that FSA time credits may facilitate. Although the FSA uses mandatory language about earning credits, § 3632(d)(4)(E)(i) declares prisoners with final removal orders ineligible for application of those credits toward prerelease custody or supervised release. Without eligibility, there can be no “legitimate claim of entitlement” (as required by Roth and Victory) to an accelerated release or transfer based on those credits. The interest asserted thus amounted to a unilateral expectation or hope, which is insufficient under Bangs.

The court therefore held the FSA creates no protected interest in the application of time credits for this category of inmates, defeating both substantive and procedural due process theories.

3) APA: No Unlawful Agency Action

Cheng’s APA claim failed at the threshold because the BOP’s conduct tracked the clear statutory ineligibility in § 3632(d)(4)(E)(i). Under NextWave, an agency that applies an unambiguous statutory command is not acting arbitrarily or capriciously. The panel thus found no plausible allegation of unlawful agency action.

Notably, the court resolved the APA claim on the pleadings without reaching other potential barriers sometimes raised in FSA litigation (such as the scope of 18 U.S.C. § 3625’s preclusion of APA review of certain BOP determinations).

Impact and Practical Implications

Cheng sets or confirms several important rules within the Second Circuit:

Equal Protection Standard: Federal alienage-based classifications in the FSA context are reviewed for rational basis, not heightened scrutiny. Challenges to § 3632(d)(4)(E)(i) on equal protection grounds face a steep uphill climb.
Due Process Baseline: For inmates subject to a final removal order, the FSA does not create a protected interest in the application of time credits. Absent eligibility, there is no entitlement to earlier transfer or release.
APA Litigation Narrowed: Where BOP implements the statute’s express ineligibility, APA challenges will typically fail for lack of unlawful agency action.

For practitioners and stakeholders:

Sentencing and Immigration Counseling: Defense counsel should advise noncitizen clients that a final removal order will foreclose the application of FSA time credits. This can materially affect expected time in custody and opportunities for prerelease placement.
Status Matters: Noncitizens without final removal orders remain potentially eligible for the application of FSA time credits, subject to other statutory criteria. The distinction between an ICE detainer and a final order of removal is legally consequential.
Program Incentives and Institutional Planning: Because credits cannot be applied for those with final removal orders, institutions may need alternative incentives to encourage participation in evidence-based programs for that population, even though Congress accepted this tradeoff for other policy reasons.
Litigation Strategy: Equal protection claims premised on heightened scrutiny or “class-of-one” theories face procedural and substantive obstacles (the latter was deemed abandoned on appeal here). Due process claims will turn on statutory eligibility; APA claims must identify an unlawful agency deviation from the statute or its valid regulations.

Complex Concepts Simplified

First Step Act “time credits” vs. “good conduct time”: The FSA introduced “earned time credits” for completing approved programs and productive activities (§ 3632(d)(4)). These credits, if applicable, can accelerate transfer to prerelease custody or supervised release. This is distinct from “good conduct time” under 18 U.S.C. § 3624(b), which reduces a sentence based on compliant behavior. Cheng concerns the application of FSA time credits—not the accrual of good conduct time.
Final order of removal: A legally operative immigration order determining that a noncitizen must be removed from the U.S., and that is final under the immigration laws. A mere ICE “detainer” is not the same thing.
Rational basis review: The most deferential constitutional standard. A law is upheld if any reasonably conceivable facts could provide a rational reason for the classification. Courts do not require empirical certainty; under- and overinclusive lines can be rational.
Protected liberty/property interest: To invoke due process protections, a person must show a legitimate entitlement created by law—not just a hope or unilateral expectation. If a statute expressly makes someone ineligible for a benefit, there is generally no protected interest in that benefit.
APA “arbitrary and capricious” review: Courts set aside agency action that conflicts with law, lacks a reasoned basis, or ignores important aspects of a problem. But if Congress clearly mandates a result, an agency’s adherence to that mandate is typically not arbitrary or capricious.

Conclusion

Cheng v. United States clarifies—and in the Second Circuit effectively settles—that Congress may condition the application of FSA time credits on immigration status without triggering heightened equal protection scrutiny. The categorical ineligibility of prisoners with final removal orders for the application of FSA time credits is rationally related to legitimate governmental interests, such as reducing flight risk and ensuring service of criminal sentences. Because those inmates are statutorily ineligible, the FSA does not confer a protected liberty or property interest in earlier transfer or release for due process purposes. Finally, when BOP follows the statute’s plain text, APA challenges will ordinarily fail for want of unlawful agency action.

The decision’s principal takeaway is that federal alienage-related classifications embedded in the FSA’s time-credit regime are constitutionally sound under rational basis review and do not create enforceable entitlements for noncitizens with final removal orders. Going forward, the ruling provides clear guidance to courts, practitioners, and correctional administrators: eligibility is the gateway to any FSA time-credit entitlements, and for those with final removal orders, that gateway is closed by statute.