Court Vacates EB-5 Regulation Increasing Investment Requirements: Northern District of California | Practical Law

Court Vacates EB-5 Regulation Increasing Investment Requirements: Northern District of California | Practical Law

In Behring Regional Center LLC v. Wolf, the US District Court for the Northern District of California vacated an EB-5 Immigrant Investor Program Modernization Rule issued in 2019 because the Department of Homeland Security's (DHS) Acting Secretary had been improperly appointed and was not lawfully serving that role when he issued the rule.

Court Vacates EB-5 Regulation Increasing Investment Requirements: Northern District of California

by Practical Law Labor & Employment
Published on 29 Jun 2021 • USA (National/Federal)
In Behring Regional Center LLC v. Wolf, the US District Court for the Northern District of California vacated an EB-5 Immigrant Investor Program Modernization Rule issued in 2019 because the Department of Homeland Security's (DHS) Acting Secretary had been improperly appointed and was not lawfully serving that role when he issued the rule.
On June 22, 2021, in Behring Regional Center LLC v. Wolf, the US District Court for the Northern District of California:
  • Held that Former Acting Secretary of the Department of Homeland Security (DHS) Kevin McAleenan exceeded his statutory authority in issuing the EB-5 Immigrant Investor Program Modernization Rule in July 2019 because he was not lawfully serving as Homeland Security Secretary when he promulgated the final rule (see Federal Vacancies Reform Act of 1998 (FVRA), 5 U.S.C. § 3345 et seq.).
  • Based on McAleenan's lack of authority, vacated the final rule, which had increased:
    • the standard EB-5 investment threshold to $1.8 million (from $1 million); and
    • the reduced investment threshold to $900,000 (from $500,000).
  • Concluded that current DHS Secretary Alejandro Mayorkas's ratification of the final rule in March 2021 did not cure the defects stemming from McAleenan's improper appointment.
  • Granted summary judgment in favor of the plaintiffs.
( (N.D. Cal. June 22, 2021).)
In granting summary judgment for the plaintiffs, the Northern District of California vacated the July 2019 EB-5 Immigrant Investor Program Modernization Rule and refused to stay the vacatur. As a result, the EB-5 rule reverts back to the minimum investment requirements previously in effect. However, this is unlikely to be the last word on this matter. While the court rejected Secretary Mayorkas's attempt to ratify the rule after the fact, the rule may be reissued or the USCIS may appeal the Behring decision.
Complicating the state of affairs for the EB-5 program is the imminent sunset on June 30, 2021 of the Regional Center program, which permits investors to pool their investment funds and is a popular alternative to individual investments. The Regional Center program is typically authorized for a year during the annual appropriations process, but the 2021 appropriations bill limited the Regional Center program authorization to June 30, 2021 (see Legal Update, Congress Passes and Trump Signs Year-End Appropriations and COVID Stimulus Bill with Key Employment Benefits: Key Immigration Law Provisions). The program may be extended further by Congress, either before or after the June 30, 2021 date, but the imminent sunset of such a popular investment program creates a lot of confusion.