443 F.Supp.3d 7
D.D.C.2020Background
- The EB-5 Program (established by Congress) permits foreign investors to obtain U.S. permanent residency by investing capital that creates at least ten U.S. jobs; statutory thresholds originally were $1,000,000 (standard) and $500,000 (targeted employment area, or TEA).
- In July 2019 DHS promulgated a final "Modernization" Rule raising the thresholds to $1.8 million (standard) and $900,000 (TEA), narrowed the TEA definition (excluding certain cities/towns within MSAs), and shifted TEA designation authority to USCIS; the Rule took effect November 21, 2019.
- Florida EBS Investments, LLC (a Regional Center that sponsors EB-5 projects) sued five days after the Rule went into effect and moved for a preliminary injunction to block the Rule’s implementation.
- Plaintiff asserted four principal challenges: (1) the Rule is arbitrary and capricious for failing to gather/consider economic data about investor deterrence; (2) the Department failed to satisfy the Regulatory Flexibility Act re small-business impacts; (3) the Rule exceeds statutory authority by altering TEA definition and giving USCIS designation power; and (4) the Rule violates the Tenth Amendment by stripping states’ designation authority.
- After briefing and oral argument, the Court denied the preliminary injunction on March 5, 2020, primarily because plaintiff failed to demonstrate likely irreparable harm from the Rule; the court also held the balance of equities and public interest favored the government.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule is arbitrary and capricious for failing to collect/consider economic data on investor deterrence | Rule ignored or failed to collect economic evidence showing higher thresholds would deter investors | Rule adjusted thresholds for inflation, considered effects, and DHS reasonably predicted capital shifts | PI denied; plaintiff failed to show likely irreparable harm; court did not decide merits |
| Whether DHS violated the Regulatory Flexibility Act by not analyzing impacts on small businesses | DHS failed to assess effects on small businesses (regional centers) | DHS compliance adequate and any RFA claim does not justify PI absent irreparable harm | PI denied; court did not reach merits due to lack of irreparable injury |
| Whether Rule exceeds statutory authority by redefining TEAs and vesting designation authority in USCIS | Rule contradicts INA’s TEA definition and exceeds agency authority | Congress delegated substantial authority to DHS/USCIS to administer EB-5, including raising thresholds and implementing definitions | PI denied; court noted delegation to DHS but declined to resolve merits because plaintiff failed to show irreparable harm |
| Whether Rule violates the Tenth Amendment by removing states’ role in TEA designation | Rule unlawfully preempts state designation authority | Federal control over immigration and visa admission is a valid federal interest; regulation falls within federal authority | PI denied; public interest and DHS regulatory interests outweigh plaintiff’s asserted harms; merits not resolved |
Key Cases Cited
- Winter v. Nat. Res. Def. Council, 555 U.S. 7 (U.S. 2008) (establishes preliminary injunction standard)
- Wis. Gas Co. v. FERC, 758 F.2d 669 (D.C. Cir. 1985) (economic loss generally does not constitute irreparable harm absent threat to business's existence)
- Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290 (D.C. Cir. 2006) (high standard for irreparable injury in this circuit)
- Nken v. Holder, 556 U.S. 418 (U.S. 2009) (balance of equities and public interest weigh heavily when enjoining government action)
- GEO Specialty Chems., Inc. v. Husisian, 923 F. Supp. 2d 143 (D.D.C. 2013) (failure to show irreparable harm is dispositive on preliminary injunction motion)
- Art-Metal USA, Inc. v. Solomon, 473 F. Supp. 1 (D.D.C. 1978) (example where government action effectively debarred plaintiff and caused irreparable harm)
- Nat'l Mining Ass'n v. Jackson, 768 F. Supp. 2d 34 (D.D.C. 2011) (single data point insufficient to show trend of regulatory harm)
- Blackie's House of Beef, Inc. v. Castillo, 659 F.2d 1211 (D.C. Cir. 1981) (recognizes government interest in uniform application of visa and immigration regulations)