New EB-5 rule challenged in court by Florida regional center

  • Posted on December 6, 2019 | Updated on December 13, 2019 | 5 min read
New EB-5 rule challenged in court

A regional center has filed a complaint for injunctive relief and a temporary restraining order against the Department of Homeland Security (DHS). The regional center claims the new rule will have a severely detrimental economic effect on the economy and that DHS has no authority to strip individual states of the power to determine Targeted Employment Areas.

Florida EB-5 Investments, an EB5 regional center, makes a long list of serious allegations against DHS in their complaint, filed November 26, 2019.

Their over-arching challenge is whether DHS has the right to put the new EB-5 rule into effect, despite “ignoring data demonstrating the harmful economic impact of such a rule.”

Some of the allegations include the following:

  • the rule was enacted by DHS despite data that projects the negative impact on both regional centers and the United States in general
  • the rule will deter EB5 Green Card investors, thus undermining the objective of the EB-5 regional center program
  • DHS either “ignored or purposely disregarded” economic data pointing to the negative impact of the rule
  • DHS has no authority to “usurp” the “constitutional” right of individual states to determine TEA designations; and such determinations are “far outside its [DHS’s] expertise
  • a “cookie-cutter” national policy for TEA designation “cannot possibly account for the unique nuances of each state’s economically depressed areas”
  • developers looking for EB5 investment capital will be “locked out of building in larger cities that contain economically depressed areas”
  • the rule will force investors to invest in “riskier” rural projects rather than urban ones
  •  many developers will “walk away” from existing projects and leave the program
  • economic gains from the U.S.immigrant investor program will “suffer or disappear completely”
  • DHS clamed the new rule would not have an effect of more than $100 million on the U.S. economy to prevent the classification of the new rule as a “major rule”; a major rule classification would require Congressional approval; thus, “DHS was attempting to avoid heightened scrutiny by Congress”

The complaint is asking for the court to declare the new rule invalid and prevent DHS from implementing the new rule; to prohibit the new rule until a proper analysis satisfying Regulatory Flexibility Act requirements is made; and to cover the plaintiff’s legal cost.

See the official complaint

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