Court Vacates 2019 EB-5 Modernization Regulations – Minimum Investment Lowered to $500,000

In a June 22, 2021 ruling by Judge Jacqueline Corley of the Northern District Court of California, in the case Behring Regional Center, LLC v. Chad Wolf, the court vacated the November 2019 EB-5 Modernization Regulations which raised the minimum investment for EB-5 visas.

Behring’s suit against the Department of Homeland Security (DHS), filed in December 2020, argued that then acting Secretary of DHS Chad Wolf did not have the authority to promulgate the EB-5 Modernization regulations, and that Wolf’s appointment (as well as that of his predecessor Kevin McAllen) as Acting Secretary of DHS was illegal. Behring further alleged that the regulations were “arbitrary and capricious”, that DHS had failed to properly consider the economic impact of the regulations, and that DHS has exceeded its authority by assigning itself the power to designate Targeted Employment Areas (“TEA”). 

DHS first attempted to transfer the suit to the U.S. District Court for the District of Columbia, where a similar case against the EB-5 regulations is currently pending. After denying this motion, the Court converted Behring’s earlier motion for a preliminary injunction to a motion for summary judgement on Behring’s claim that the regulations were improperly implemented on March 25, 2021.

It appeared that Behring’s hopes of victory were quashed on March 31, when newly appointed Secretary of DHS, Alejandro Mayorkas, ratified the 2019 regulations.

Mayorkas argued that regardless of whether or not the rule had been originally implemented by an improperly appointed official, his ratification of the regulations resolved any questions about their legitimacy. 

However, in yesterday’s ruling, Judge Corley refuted the government’s arguments and agreed with Behring. 

Judge Corley ruled that after Senate appointed Secretary of DHS, Kristjen Nielsen, resigned in 2019 the appointment of subsequent acting Secretaries of DHS, Kevin McAllen and Chad Wolf, were invalid; Furthermore under the Federal Vacancies Reform Act (FVRA)  neither McAllen nor Wolf had the authority to to promulgate the 2019 Modernization regulations.

Judge Corley went on to say that Mayorka’s ratification of the regulations was also in violation of FVRA. 

Corley ruled that the 2019 EB-5 modernization regulations should be vacated, in effect undoing the changes to the EB-5 program those regulations implemented. As a result, EB-5 investment requirements are technically back to the pre 2019 Modernization regulation price of $500,000 (provided that the investment is in a TEA). However, Corley did not go so far as to bar Secretary Mayorkas from reimplementing the regulations, leaving open the possibility of investment amounts being raised again in the future.

What Does this Mean for EB-5 Investors?

As of now, EB-5 investors seemingly have a small window to take advantage of these lower investment requirements. It remains to be seen if DHS will appeal Judge Corley’s decision and if Congress will act to renew the EB-5 program before it expires on June 30, but until then EB-5 investors could potentially file an I-526 petition and only need to invest $500,000. 

It’s likely that DHS will work to reimplement the 2019 modernization regulations in some form but the agency would be wise to analyze the impact these regulations have had on the EB-5 program since they were implemented. 

While the 2019 modernization regulations included provisions beneficial to the EB-5 program, such as increased anti-fraud measures, the benefits of increased investment requirements are harder to quantify. 

Since raising the minimum investment for the EB-5 program, interest from foreign nationals has been on the decline and potential investors have been driven away by the increased investment amount. Allowing the EB-5 program to continue with lower investment requirements would only serve to increase demand for EB-5 visas, growing the American economy and creating more jobs. As the country looks to rebuild after the Coronavirus pandemic, the capital and jobs created by the EB-5 program are an invaluable asset, and we would be wise to maximize their impact by implementing regulations that drive demand upwards, not down.

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The EB-5 program is currently set to expire on June 30, 2021. Don’t wait, fill out our evaluation form below and contact an experienced immigration attorney today to see if you can take advantage of a lower minimum investment for an EB-5 visa.