Behring Co. Wins Landmark Decision to Revive EB-5 Immigrant Investor Visa Program
U.S. District Court of Northern District of California strikes down 2019 rule changes by DHS that brought EB-5 investment to a near halt
Behring Co., a vertically integrated real estate developer and the operator of Behring Regional Center, today praised the U.S. District Court of the Northern District of California’s decision to rule in favor of its request to vacate the EB-5 Modernization Rule implemented by the Department of Homeland Security (DHS) in 2019. The decision by U.S. Magistrate Judge Jacqueline Scott Corley supports Behring’s argument that the DHS officials responsible for enacting the rule, which updated various regulations governing the EB-5 Immigrant Investor Visa Program, were unlawfully appointed in violation of the Federal Vacancies Reform Act of 1998, and therefore had no legal authority to promulgate the changes.
The court’s decision restores the original rules for the EB-5 program, which was created by the Immigration Act of 1990 as a method for providing qualified immigrant investors the opportunity to obtain a permanent green card. The program required a minimum $500,000 investment in a U.S. business that would create at least 10 full-time jobs for American workers. The now-defunct EB-5 Modernization Rule of 2019 increased this minimum investment threshold to $900,000 — an update that contributed to stifling participation in a program that was already in need of reform.
“We are strong supporters of positive EB-5 reform and modernization, but the 2019 rule did none of that,“ said Colin Behring, CEO of Behring Co. “The 2019 regs were simply putting the ‘cart before the horse’ — Congress should be addressing holistic reform through legislation and then finalizing regulations. Although imperfect, the EB-5 program has been one of the most successful and efficient job creation programs the federal government has ever enacted. Our hope is that lawmakers will see how severe our situation is and provide a solution that results in the passing of a new bill that achieves positive long-term reform. Our vision for reform includes creating a clear operating environment with transparent and workable regulations, strong integrity measures, and marketable investment requirements. Reviving the EB-5 program, and the economic powerhouse that it is, could not come at a better time as the nation is reeling from the economic impact of the pandemic.”
In addition to the prohibitive investment threshold, the Modernization Rule made problematic changes to the program’s Targeted Employment Area (TEA) designation process, removing the states’ authority to determine TEA eligibility without a viable replacement and resulting in processing times that could take years to complete. As a result of these changes, new EB-5 investor petitions dropped by more than 99 percent since November of 2019.
“We had many concerns with the Modernization Rule. There were many legal problems that were challenged under the Administrative Procedure Act. The minimum investment ignored industry data, and TEA rules were completely unworkable. The plummeting participation proved that it had a devastating impact on the industry,” said Laura Foote Reiff, an immigration attorney with Greenberg Traurig, who represented Behring Co. “The court’s decision to right this wrong will provide a positive opportunity for EB-5 investors and regional centers to unite with policymakers in forging meaningful legislative change that ultimately leads to creating American jobs and economic growth.”
With the original rules in effect, EB-5 investors may once again invest $500,000 in TEA-qualified locations that create at least 10 full-time jobs for American workers. Since its inception, EB-5 investors have injected more than $41 billion and created over 820,000 full-time jobs at no cost to U.S. taxpayers.
“Construction is one of our nation’s greatest job creators, and EB-5 provides capital that is the catalyst to getting projects off the ground,” said Behring. “We currently have multifamily projects on the boards that could amount to creating over 10,000 jobs in the next three years if sufficient capital was available.”
Reverting back to the original EB-5 rules will likely be short-lived as the program is set to expire on June 30, with several lawmakers considering legislation to modify various components of EB-5.
“EB-5 reform must aim to create a long-term sustainable program that benefits all stakeholders and creates American jobs,” said Reiff. “Today’s decision reinforces that DHS needs to create workable solutions to improve the EB-5 program, clarify operating procedure, add integrity measures, increase immigrant investor protections, and solve the salient problems that are negatively impacting the EB-5 program, such as long processing times, retrogression, and child age-out issues.”