The lawsuit that could bring back the $500,000 capital investment for the EB-5 program.
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April
5, 2021
4 min read
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The EB-5 immigrant investor industry has been on edge for the past two months closely following a case that could drastically change the investor program. The Behring Regional Center v. Wolf, Case No. 3:20-cv-09263 (N.D. Cal) is a lawsuit by Behring Regional Center against the Department of Homeland Security requesting the U.S. District Court of North California to disallow the implementation of the EB-5 modernization rule of 2019. In the lawsuit, Behring claims that the processes used for the implementation of the EB-5 modernization rule of November 2019, which has had grave adverse effects on the program, was done so beyond the scope of power of the then acting Department of Homeland Security officials. Therefore, a clear violation of Administrative Procedures Act as the acting officials had no legal authority to enact this rule.
The EB-5 modernization rule updated various regulations governing the EB-5 immigrant investor program and in doing so subsequently affected the number of investors filing for EB-5 petitions. The main change in the rule was to increase the required capital investment amount from $500,000 to $900,000. Various industry leaders have voiced several concerns that the drastic increase of the investment amount has made the program unattainable for the middle class who have proved to be the main applicants under this program. These middle class families use their entire life savings, retirement annuities and other means to obtain the required investment required for participation in the program. While the program was already perceived as a niche avenue because it was so expensive, the increase in investment capital has altered its positioning of the program and placed it as mostly for the higher class audience. Due to this evaluation Behring Regional Center has argued that the acting Department of Homeland Security Officials failed to fully account for the adverse economic impact this rule would have on the program.
The Behring case which has been in court since December 2020 questions other regulations which were changed in November 2019 under the EB-5 modernization rule. The success of this case will result in the reversion of the capital investment back to $500,000 along with the other regulations such as the Targeted Employment Area (TEA) designation process.
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Does Behring Regional Center have a chance at winning this lawsuit?
Based on a similar case regarding legal authority in September 2020 the courts ruled that Chad Wolf ( acting Secretary of the Department of Homeland Security) was illegally appointed and thus his policies on asylum restrictions were blocked. In November his Deferred Action for Childhood Arrivals program was also blocked on the grounds that Chad Wolf was illegally appointed. Therefore, it can be assumed that there will be a similar ruling regarding the EB-5 program as he along with other officials were behind the enactment of the EB-5 modernized rule of 2019.
Will the reduction of the capital investment be forever?
We at the American Legal Center do not envision the capital amount to remain at $500,000 for long. It is possible that after a few months of the program being at $500,000 it will either go back to $900,000 or increase to keep up with the inflation rate. For families considering undertaking the process, we encourage you to contact us immediately and gain a free initial consultation to discuss your options. As of this moment a hearing is scheduled for 25 February 2021. We all continue to wait in anticipation.
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