544 F.Supp.3d 937
N.D. Cal.2021Background:
- Behring Regional Center (BRC), an EB-5 regional center, sued DHS under the APA challenging the July 2019 Final Rule that raised EB-5 investment thresholds.
- The Final Rule was signed/approved in July 2019 while Kevin McAleenan was serving as Acting DHS Secretary; Ken Cuccinelli, as Acting USCIS Director, issued the rule shortly thereafter.
- BRC alleges McAleenan was not lawfully serving because Secretary Nielsen amended the wrong DHS succession instrument (applicable to disaster/unavailability, not resignation), so McAleenan’s and Wolf’s subsequent service was invalid under the FVRA.
- The FVRA bars actions taken by persons not lawfully serving in a PAS office and forbids ratification of such non-delegable actions; DHS later sought to cure any defect by Secretary Mayorkas’s after-the-fact ratification.
- The court held McAleenan’s appointment was invalid, that prescribing EB-5 investment amounts is a statutory "function or duty" under the FVRA, that Mayorkas’s ratification and the de facto officer doctrine do not cure the defect, and vacated and remanded the Final Rule.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McAleenan was lawfully serving as Acting DHS Secretary when the Final Rule issued | Nielsen amended the wrong succession list, so McAleenan never lawfully became Acting Secretary | McAleenan (and subsequent designations) were valid under DHS succession/delegation rules | McAleenan was not lawfully serving; numerous courts and GAO support invalidity |
| Whether increasing EB-5 investment amounts is a "function or duty" of the Secretary under the FVRA such that an unlawful actor’s rule is void | Section 1153 vests the regulation-making power in the Attorney General/Secretary exclusively; thus it is a statutory duty | The power is delegable under the Homeland Security Act and thus not a non-delegable FVRA duty | The court held prescribing the EB-5 amount is a statutory "function or duty" within FVRA §3348(a)(2)(A); the government’s delegability argument fails |
| Whether Secretary Mayorkas’s later ratification cures the defect | Ratification cannot cure because FVRA expressly bars ratification of actions lacking authority | Ratification by a lawfully confirmed Secretary validates the rule | Ratification does not cure; FVRA §3348(d)(2) prohibits ratification of such actions |
| Whether the de facto officer doctrine validates the Final Rule despite FVRA violations | Doctrine should validate acts of apparent officeholders to avoid disruption | FVRA’s bar and statutory text control; de facto doctrine cannot override FVRA | De facto officer doctrine does not save the Rule given FVRA’s plain bar and relevant precedents |
Key Cases Cited
- N.L.R.B. v. SW Gen., Inc., 137 S. Ct. 929 (2017) (establishes FVRA as exclusive statutory scheme for temporary PAS appointments)
- Guedes v. Bureau of Alcohol, Tobacco, Firearms & Explosives, 920 F.3d 1 (D.C. Cir. 2019) (discusses FVRA and acting-official authority issues)
- Hooks v. Kitsap Tenant Support Servs., Inc., 816 F.3d 550 (9th Cir. 2016) (discusses de facto officer doctrine application)
- L.M.-M. v. Cuccinelli, 442 F. Supp. 3d 1 (D.D.C. 2020) (analyzes FVRA purpose and limits on delegation)
- NWIRP v. U.S. Citizenship & Immigration Servs., 496 F. Supp. 3d 31 (D.D.C. 2020) (counterpoint district court decision regarding delegation/ratification issues)
- CVS Health Corp. v. Vividus, LLC, 878 F.3d 703 (9th Cir. 2017) (statutory interpretation canon: plain meaning governs)
- Idaho Farm Bureau Fed'n v. Babbitt, 58 F.3d 1392 (9th Cir. 1995) (APA remedy principles for invalid regulations)
- Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139 (2010) (injunction and vacatur standards for agency action)