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  • Writer's pictureMatthew Galati

We are Closely Watching a Lawsuit that Could Bring Back $500,000 EB-5 Investments

A lawsuit was filed in late December that, if successful for the plaintiff, would result in the restoration of $500,000 EB-5 minimum investments and more liberal TEA designation rules.

In Behring Regional Center v. Wolf, Case No. 3:20-cv-09263 (N.D. Cal), a leading regional center is asking a judge to issue an injunction blocking the EB-5 Modernization Rule that went into effect in Nov. 2019. The plaintiff alleges that the Department of Homeland Security violated federal law by issuing an arbitrary and capricious rule, failed to examine a regulatory flexibility analysis, and exceeded statutory authority. Beyond the form and procedure of the EB-5 Modernization Rule – which resulted in the lowest numbers of new filings in modern EB-5 history – the plaintiff further alleges that key DHS officials lacked authority to enact the proposed regulations in law.

While some in the EB-5 industry may be quick to dismiss suits seeking to set aside unfavorable regulations, the allegation that federal officials (namely Former acting DHS Secretary Kevin McAleenan, current Acting DHS Secretary Chad Wolf, and de facto USCIS Chief Ken Cuccinelli) did not have authority to enact the Rule has strong precedent in federal court decisions and government actions of late. For example, in September 2020, a Maryland Federal judge ruled that Wolf was illegally appointed, resulting in the partial blocking of the Trump Administration’s restrictive asylum regulations. In November, a New York judge came to a similar conclusion regarding Wolf in restoring the Deferred Action for Childhood Arrivals program. Decisions holding Cuccinelli’s appointment as being illegal stretch back roughly a year. Indeed, last summer the Federal Government itself – through the independent investigative Government Accountability Office – issued findings that all three men had been illegally appointed.

Beyond the legal merits of the case, one too must wonder how the incoming Biden Administration – with a Department of Justice likely to be headed by D.C. Circuit Court judge and former Obama Supreme Court nominee Merrick Garland – will handle Behring and similar suits. Facing a flurry of legal challenges against the Trump Administration’s spurious anti-immigrant regulations, the Biden DOJ would be heavily incentivized to agree with plaintiffs (including Behring Regional Center) regarding Wolf's appointment, enabling an efficient and mostly unchallengeable method of casting such some of the Trump Administration’s most egregious administrative actions to the dustbin of history.

As of the time of this writing, the Behring docket reflects that the Government’s response to the plaintiff’s motion for preliminary injunction is due on January 28, slightly more than a week following Biden taking office. A hearing is scheduled for February 25. The plaintiff is represented by the highly-regarded international law firm (full disclosure: my former employer) Greenberg Traurig.

We will keep our readers apprised of notable future developments in this matter. For more information on EB-5 and its developments, contact us today.

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