What is the Behring Regional Center LLC v. Chad Wolf, et al. lawsuit?
Behring Regional Center filed suit against USCIS seeking to have the 2019 EB-5 Immigrant Investor Program Modernization Rule (“Modernization Rule”) invalidated on numerous grounds, including violations of the Federal Vacancies Reform Act (“Vacancies Act”). On June 22, 2021, a California judge ruled in favor of Behring Regional Center finding that the former acting Department of Homeland Security Secretary, Kevin McAleenan, was not properly serving in his position under the Vacancies Act when he effectuated the Modernization Rule, which raised the EB-5 investment from $500,000 to $900,000. Two months later, on August 23, 2021, USCIS filed a Notice of Appeal to challenge the California District Court’s decision that vacated the Modernization Rule on June 22, 2021.
Why did USCIS decide to dismiss its appeal?
There is no certainty as to why the motion was filed, but we can assume that the Biden Administration does not want to spend its resources on defending Regulations passed under the previous Trump Administration. On the other hand, the Biden Administration might intend on running its own Regulatory process in the future. At this point in time, it would not be wise to speculate on the reasons for the withdrawal. Nevertheless, this positive news brings a sense of temporary relief to the EB-5 industry.
How will the dismissal affect investors and Regional Centers?
The finality of the California District Court’s decision means that the $900,000 investment level effectuated through the Modernization Rule was invalid all along. Investors who filed with $500,000 after the District Court’s decision no longer need to be concerned that additional funds will be required of them. We anticipate investors who filed at the $900,000 investment level may seek a return of $400,000. Whether they are entitled to such a reduction in their capital contribution will depend on the offering documents they signed and/or whether the Regional Center can find new investors to replace any refunds of committed capital.