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Judge Likely to Block Trump Era Changes to Immigrant Investor Program

EB-5 program changes that critics say make it harder to attract foreign investment in urban areas could soon be reversed due to illegitimate appointments of former Trump administration Homeland Security officials.

Former Department of Homeland Security Acting Secretary Chad Wolf. (AP Photo/Manuel Balce Ceneta)

There might be a window of opportunity for investors to file their I-526 petitions at the $500,000 investment amount after May 6th, 2021. In a lawsuit challenging Trump-era changes to the EB-5 immigrant investor program, a federal judge signaled on Thursday, March 26th, that she will likely abolish those changes based on the illegitimate appointment of acting Homeland Security secretaries in 2019.

If I were to vacate it because I find it was invalid, it goes back to the secretary who could reimpose it if he agrees with it,” U.S. Magistrate Judge Jacqueline Scott Corley said during a virtual court hearing Thursday.

The lawsuit against the Department of Homeland Security claims that the same issued an “arbitrary and capricious” rule in November 2019 which makes it harder for immigrant investors to qualify for the program. The rule raised the required investment amount from $500,000 to $900,000 for targeted employment areas (TEAs) and from $1 million to $1.8 million for non-targeted areas. TEAs are designated areas with high unemployment for which foreign investment is incentivized by lower spending requirements.

Judge Corley asked a few probing questions about the TEA designation changes but turned most of her focus to another issue — whether two acting DHS secretaries who were never officially appointed to the role had authority to issue the rule.

The proposed rule was first issued in July 2019 under acting DHS secretary Kevin McAleenan. The final rule was issued on Nov. 21, 2019 under acting DHS secretary Chad Wolf, who had assumed the role two days earlier after McAlennan resigned.

Multiple courts and congressional watchdogs have found that McAleenan and Wolf were improperly elevated to the role of acting secretary. According to the U.S. Government Accountability Office, the job should have gone to Christopher Krebs, who was then director of the Cybersecurity and Infrastructure Security Agency, when the Trump administration’s last confirmed DHS secretary, Kirstjen Nielsen, resigned in April 2019.

On Thursday, Judge Corley asked if any court has found McAleenan’s appointment valid.

U.S. Justice Department lawyer August Flentje acknowledged that no federal court has made such a finding.

Noting that the secretary’s legitimacy is a purely legal question that involves no factual disputes, Judge Corley said she would convert the request for a preliminary injunction into a motion for summary judgment on that issue.

That then sends it back to the secretary who’s going to have to take another look at it and decide what they want to do with it,” Judge Corley said.

Justice Department lawyers asked to submit further arguments on the “de facto officer doctrine,” which they say allows the rule to stand even if it was issued under an illegitimate secretary.

The doctrine is intended to prevent “chaos that could result if a defect in an officer’s appointment required the mass invalidation of the officer’s past acts,” according to the government’s written arguments.

The government also requested an opportunity to file written briefs on what the proper remedy would be if the court finds the rule is invalid.

Vacating the rule would be disruptive,” Flentje said. “People are preparing their investments based on the current standard.”

Judge Corley hinted that she would not be easily persuaded by that argument.

I don’t know how that disrupts any expectations because it just makes it broader,” Judge Corley said. “Someone who couldn’t apply under the new rule now could apply.”

Judge Corley ordered both sides to submit briefs on the “de facto officer” doctrine and remedy issue through April 22, and she set a tentative hearing date on the remedy for May 6.

We at American Immigration Group encourage investors to wire their $500,000 investment amount and prepare their I-526 petition as soon as possible. If Judge Corley determines that McAleenan and Wolf were improperly elevated to the role of acting secretary, investors could be presented with a short window of opportunity to submit their I-526 petition and be locked in at this price. It is not known at this time if the current Secretary of Homeland Security will either reimpose the rules back right away without leaving any window of opportunity, wait until the program reauthorization set for June 30th, 2021, or take time to review the rules.

In any case we are making a pledge to our investors that should this window of opportunity not present itself, we will give investors the following options:

  • An investor does not wish to continue the process should the amount increase to $900,000 without a window of opportunity for filing the I-526 petition at $500,000, can request their funds to be returned and we will return the entire amount wired to the investor, or
  • They can continue the process at $900,000, by simply investing the balance and continue to file their I-526 petition

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