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EB-5 Litigation Updates Page

January 22nd, 2021 Kyle Behring

Behring Regional Center v. Wolf, et al. 

 

Get the latest updates straight from the source. 

Welcome to Behring’s EB-5 Litigation Update Page. Here, we aim to provide stakeholders in the EB-5 Program frequent updates on Behring’s lawsuit against the DHS stemming from the adverse effects of its implementation of the EB-5 Modernization Rule. See all of the EB-5 litigation update posts at the bottom of this page.

Case Summary:

 

On December 21, 2020, Behring Regional Center LLC filed a complaint against the Department of Homeland Security requesting that the US District Court for the Northern District of California to block implementation of the EB-5 Modernization Rule that went into effect in November 2019.  

We argue that the EB-5 Modernization Rule violates the Administrative Procedure Act because acting DHS officials had no legal authority to enact the Rule and that the Rule is arbitrary and capricious because DHS essentially failed to consider properly the economic impact the Rule would have on the EB-5 Program and on small businesses and the US economy. We argue further that DHS exceeded its statutory authority when it implemented a national TEA designation process and that its current process is completely unworkable. 

The Rule’s negative impact has been severe. We have witnessed a 95% drop in new EB-5 filings for regional centers across the country since its implementation. Prospective investors are not only deterred by the minimum investment amounts, but also by the uncertainty surrounding the convoluted national TEA designation process. Compounded by excruciatingly long processing times for I-924, I-526 and I-829 petitions, fewer and fewer investors and developers are interested in participating in the EB-5 Program, adversely affecting the positive economic impacts the EB-5 Program brings to the US economy. 

Parties: 

 

Plaintiff: 

Behring Regional Center LLC, formerly known as Berkeley Regional Center Fund, LLC (“Behring”)established in 2013, has over $612 million developments in active progress, with EB-5 investors from 26 countries and a 100% track record on adjudicated I-526 petitions. As a developer, Behring has a 60-year family history of real estate investment and development. Behring focuses on multifamily residential housing in the San Francisco Bay Area. Learn more about Behring’s experience. 

Behring is represented by Greenberg Traurig LLP. 

Defendants:  

Chad Wolf, in his official capacity as Acting Secretary of DHS; Kenneth Cuccinelli, in his official capacity as Acting Director of USCIS; and Edie Pearson, in her official capacity as Policy Branch Chief of the Immigrant Investor Program Office. Neither Wolf nor Cuccinelli were properly appointed with the advice and consent of the United States Senate.

Background:  

 

EB-5 Modernization:

In July 2019, DHS, acting through USCIS, published the EB-5 Modernization Rule and announced it would take effect on November 21, 2019. The Rule increased the minimum investment amount from $1 million to $1.8 million, and for TEA-eligible projects, from $500,000 to $900,000. EB-5 investors would now have to invest 80% more to participate in the EB-5 Program. 

The Rule also eliminated the long-standing practice of having local state authorities designate high unemployment areas within its own borders and instead centralized that authority, giving it to DHS alone, while providing minimal guidelines as to how DHS would designate TEA status.  

The Rule failed to incorporate any integrity measures which was both expected and desired by all stakeholders in the EB-5 Program to strengthen the oversight and transparency of the program and enable EB-5 investors to invest in competitive US projects while having their EB-5 petitions processed in a timely and fair manner.  

Learn more about the background and details of the EB-5 Modernization Rule. 

Invalid Order of Succession:

From the U.S. Government Accountability Office August 14th, 2020 report: “The Federal Vacancies Reform Act of 1998 (Vacancies Reform Act) provides for temporarily filling vacant executive agency positions that require presidential appointment with Senate confirmation. 5 U.S.C. § 3345. GAO’s role under the Vacancies Reform Act is to collect information agencies are required to report to GAO, and GAO uses this information to report to Congress any violations of the time limitations on acting service imposed by the Vacancies Reform Act. 5 U.S.C. § 3349. As part of this role, we issue decisions on agency compliance with the Vacancies Reform Act when requested by Congress. The Vacancies Reform Act is generally the exclusive means for filling a vacancy in a presidentially appointed, Senate confirmed position unless another statute provides an exception. 5 U.S.C. § 3347. The Homeland Security Act of 2002 provides an order of succession outside of the Vacancies Reform Act when a vacancy arises in the position of Secretary of the Department of Homeland Security (DHS). 6 U.S.C. § 113(g).

Upon Secretary Kirstjen Nielsen’s resignation on April 10, 2019, the official who assumed the title of Acting Secretary had not been designated in the order of succession to serve upon the Secretary’s resignation. Because the incorrect official assumed the title of Acting Secretary at that time, subsequent amendments to the order of succession made by that official were invalid and officials who assumed their positions under such amendments, including Chad Wolf and Kenneth Cuccinelli, were named by reference to an invalid order of succession. We have not reviewed the legality of other actions taken by these officials; we are referring the matter to the Inspector General of DHS for review.”

 See the full U.S. GAO report for more information 

Goal: 

 

Our goal is to revive and strengthen the EB-5 Program. By vacating the Rule, everyone will have a fresh start to engage in positive discussion for reform. Reform is welcome, but we need a program that works. We need a program that meaningfully addresses the problems of unacceptably long processing times, retrogression and the counting derivative family members towards the annual visa quotas, while also strengthening the Program’s integrity so that both investors and developers have the security and confidence of participating in the EB-5 Program and bring needed economic stimulus to our communities.  

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Litigation Update Posts

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