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A Lawsuit Challenging the 2019 EB-5 Regulations May Be DeniedApril 5, 2021

Current EB-5 Regulations Appear More Likely to Remain in Place


A lawsuit filed in December 2020 by an EB-5 regional center seeking to overturn the 2019 EB-5 Immigrant Investor Program Modernization regulations (Behring Regional Center v. Wolf, Case No. 3:20-cv-09263 (N.D. Cal)) has been monitored closely by CMB Regional Centers due to its wide ranging ramifications if they succeed. However, a recent action taken by the Secretary of Homeland Security, Alejandro Mayorkas, may put an end to that challenge and keep the minimum investment amount for the program at $900,000 USD.

The 2019 EB-5 regulations significantly reformed the EB-5 program by, among other things, increasing the minimum investment amount and making the requirements of a Targeted Employment Area (TEA) more restrictive. The lawsuit filed by Behring claimed that these regulations were unlawful, and they made various arguments to support that claim.

Based on the most recent hearing on March 25th, 2021, the only claim that seemed to have the court’s attention was whether the Acting Secretary of Homeland Security that signed the 2019 regulations, Kevin McAleenan, was lawfully appointed.  Behring claimed that when the last lawfully appointed, Senate-confirmed Secretary of Homeland Security, Kirstjen Nielsen, resigned, the Department of Homeland Security did not follow the lawful order of succession for Acting Secretaries when Mr. McAleenan was appointed, and therefore the regulations were unlawful because Mr. McAleenan did not have the authority to sign them into effect.  After the hearing, the court ordered both parties file supplemental briefs to support their arguments, including what would be the remedy if the court found the appointment of Mr. McAleenan was unlawful, which possibly indicated that the court would side with Behring.

However, prior to the parties filing their respective supplemental arguments, on April 1, 2021, the government notified the court that the current lawfully appointed Secretary of Homeland Security, Alejandro Mayorkas, has ratified the 2019 regulations, which the government argues cures any possible alleged defect in the legality of the regulations based on Mr. McAleenan’s appointment. The court has subsequently ordered Behring to file its response by April 9, 2021 as to whether this ratification by Mr. Mayorkas renders Behring’s claim as moot, meaning that there is no more controversy regarding that claim for the court to hear and rule on. While it is still unknown how the court will ultimately rule in the case, this latest update may prove to be fatal to Behring’s pursuit to overturn the 2019 regulations. Additionally, the ratification by Secretary Mayorkas, a Biden Administration appointee, highlights the bi-partisan support for the 2019 regulations that have more closely aligned the program with the original intent of congress to drive job creation in truly high-unemployment and rural areas.

CMB Regional Centers, as the leader in the EB-5 industry, will continue to monitor the events of the case. However, no matter what the ultimate outcome is, CMB, as one of the oldest and most successful regional centers, will continue to provide first-class customer service to its clients by providing quality EB-5 opportunities that adapt to any possible change in the EB-5 requirements.

 

CMB Regional Centers engages Prevail Capital, LLC, a broker-dealer registered with the SEC and a member of FINRA and SIPC, to be the administrative placement agent for all CMB EB-5 limited partnerships. If you would like to learn more about the EB-5 Investor Visa Program, please contact us today.
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