Filing Date:November 26, 2019

Case:Florida EB5 Investment, LLC v. Wolf et al

Jurisdiction:Federal District Court for the District of Columbia

Status:Pending

Civil / Criminal:Civil

Breach of Contract

COMPLAINT INJUNCTIVE RELIEF SOUGHT

Plaintiff Florida EB5 Investments, LLC (“EB5 Investments”) seeks declaratory and injunctive relief against Defendants, the Acting Secretary of the Department of Homeland Security (“DHS”) Chad Wolf, the Acting Director of the United States Citizen & Immigration Services (“USCIS”) Kenneth T. Cuccinelli, and the Policy Branch Chief of the Immigrant Investor Program Office Edie Pearson, each in their official capacities (collectively “Defendants”) based on the following allegations.

NATURE OF THE ACTION

1. At issue in this case is whether a federal agency – DHS – has the right to promulgate a regulation that changes the requirements for a statutory-based visa program while ignoring data demonstrating the harmful economic impact of such a rule.

2. The EB-5 Immigrant Investor Program (“EB-5”, the “Program”, or the “EB-5 Program”) is an effective and essential program that provides an opportunity for foreign nationals and their families to apply to become permanent United States residences when they invest in American businesses that create jobs for American workers.

3. The Program was originally created in 1990 to encourage job creation and foreign investment in American businesses. It gained substantial popularity after developers had difficulty obtaining bank loans in the wake of the 2008 recession. Foreign investment through the EB-5 Program allowed large-scale construction projects to continue despite the recession, which led to substantial economic development and job growth.

4. Prior to last week, the Program provided that foreign investors could invest $1 million, or $500,000 in certain high unemployment or rural areas, in a business and if that investment created ten jobs, then the investor could be eligible for a visa.

5. On November 21, 2019, DHS issued a final rule amending its regulations for EB5 to change the Program (the “Rule”). See Ex. 1, Final Rule of EB–5 Immigrant Investor Program Modernization, 84 Fed. Reg. 35750 (July 24, 2019). This Rule proposed many changes to the Program, the most salient of which appear to be: (i) significant increases in the requisite investment levels; and (ii) a new targeted employment area (“TEA”) designation process that eliminates the input of the individual states in designating such areas in which investments are made.

6. This Rule will have a severe economic impact on regional centers like Plaintiff EB5 Investments that facilitate the process for foreign nationals to invest in American businesses through the Program. In addition, the significant increase in the requisite investment levels will deter foreign investors from using the Program, which will undermine the worthy policy goals of the Program.

7. DHS enacted the Rule despite available data in support of the severe economic impact on regional centers and the United States generally. Instead, the Rule claims that the impact is unknown, and blindly enacts the rule changes anyway.

8. In addition, DHS goes beyond the scope of its authority when it usurps individual states’ authority to determine TEAs within its own borders. Nothing in DHS’s enabling statute or other statutory authority permits DHS to make determinations so far outside its expertise. This determination and policy goal for fostering economic development is one that has traditionally been within the province of the states, and a cookie-cutter nationwide standard cannot possibly account for the unique nuances of each state’s economically depressed areas.

MEMORANDUM OPINION

Plaintiff Florida EB5 Investments, LLC, a Florida-based Regional Center that sponsors capital investment projects using funds from foreign investors who are EB-5 Immigrant Investor Program applicants, seeks a preliminary injunction against defendants, the Acting Secretary of the Department of Homeland Security Chad Wolf, the Acting Director of United States Citizenship & Immigration Services Kenneth T. Cuccinelli, and the Policy Branch Chief of the Immigrant Investor Program Office Edie Pearson. Plaintiff seeks to enjoin defendants from implementing certain changes to the U.S. Department of Homeland Security's EB-5 Immigrant Investor Program, including an increase to the minimum investment threshold for foreign nationals to obtain EB-5 visas and a new definition of and method of designating targeted employment areas subject to a reduced investment threshold. 

Upon consideration of the parties' briefing and argument, the relevant law, and the entire record, and for the reasons stated below, plaintiff's motion for a preliminary injunction is DENIED.

ANALYSIS

I. Irreparable Harm

Plaintiff must make a strong showing that it will suffer irreparable harm absent preliminary injunctive relief. Our Circuit "has set a high standard for irreparable injury." Chaplaincy of Full Gospel Churches v. England, (D.C. Cir. 2006). First, the injury "must be both certain and great; it must be actual and not theoretical." Wis. Gas Co. v. Fed. Energy Regulatory Comm'n, (D.C. Cir. 1985) (per curiam). A preliminary injunction is not appropriate unless "the injury complained of [is] of such imminence that there is a 'clear and present' need for equitable relief to prevent irreparable harm." . "Injunctions ....will not issue to prevent injuries neither extant nor presently threatened, but only merely feared." Comm. in Solidarity with People of El Sal. (CISPES) v. Sessions, (D.C. Cir. 1991) (alteration in original).

Second, it is "well settled" that economic harm "does not, in and of itself, constitute irreparable harm." Wis. Gas Co.,. "Recoverable monetary loss may constitute irreparable harm only where the loss threatens the very existence of the movant's business." 

Plaintiff asserts that the Rule "will have a devastating, irreparable impact on EB5 Investments" by deterring foreign investors from using the EB-5 Program. Pl.'s Mem. in Support of Mot. for Prelim. Inj. Plaintiff is a Regional Center that sponsors capital investment projects using funds from EB-5 Program applicants. It is undisputed that plaintiff's business model relies entirely on the Program's demand: plaintiff collects 1) annual fees from project developers affiliated with the center and 2) administration fees from individual investors, whom plaintiff provides with a designation letter certifying that their investment qualifies for the EB-5 Program. See Mot. for Prelim. Inj., Ex. 2, Decl. of Marty Cummins ("Cummins Decl.") ; Defs.' Opp. to Mot. for Prelim. Inj. Plaintiff cites studies indicating that the pre-Rule EB-5 Program had a positive and strong impact on job creation and business growth to conclude that increasing the investment thresholds would reduce demand for the Program. See Mot. for Prelim. Inj., Ex. 3, Decl. of Jeffrey B. Carr . As evidence of that predicted result, plaintiff claims that while the Rule was pending, plaintiff's affiliates were "uncertain" about interest from potential foreign investors, see Cummins Decl., and after the Rule went into effect, one of plaintiff's affiliates saw a real estate development project lose 23 of its 50 potential investors due at least in part to the increased investment thresholds, see Pl.'s Reply in Support of Mot. for Prelim. Inj., Ex. 1, Email from Catherine Venin-Clark ("Renin-Clark Email").

Unfortunately for plaintiff, these speculative economic injuries fail to establish irreparable harm. How so? Plaintiff's claim of irreparable economic harm relies on the Rule eliminating or significantly reducing foreign investment through the EB-5 Program, such that plaintiff's annual fees and administration fees associated with Program demand would significantly decline. Only then would the loss "threaten[] the very existence of the movant's business." Wis. Gas Co.,  This relationship has simply not been shown to be "certain" and "actual," rather than merely "theoretical." ; see also GEO Specialty Chems.,  ("Only where a plaintiff establishes that the economic loss is so severe as to threaten the very survival of its business can economic harm qualify as irreparable."). A preliminary injunction "will not be granted against something merely feared as liable to occur at some indefinite time." Connecticut v. Massachusetts, (1931). Plaintiff has provided one example of a real estate development project in Florida that lost some of its potential investors. See Heflin-Clark Email at 1. To say the least, one data point does not a trend establish. Put simply,. plaintiff has not shown that a significant number of existing investors on many projects will be deterred. See Nat Mining Ass'n v. Jackson, (D.D.C. 2011). Nor has it negated the Department's position that the increased investment threshold will actually increase the overall amount of capital by attracting fewer but larger investments. See 84 Fed. Reg. at 35,786 (while "reasonable to assume some number of investors will be unwilling or unable to invest at the increased investment amount," these capital contributions "may very well be more than replaced by other investors investing at the higher minimum investment levels"). The movant bears the burden of "provid[ing] proof that the harm has occurred in the past and is likely to occur again, or proof indicating [*5] that the harm is certain to occur in the near future." Wis. Gas Co., . Plaintiff has done neither.

Plaintiff's reliance on Art-Metal USA, Inc. v. Solomon, (D.D.C. 1978), is misplaced. There, the court found irreparable harm where the General Services Administration effectively debarred a company from entering into contracts with the GSA, which had been the primary source of the company's business. . The Department's Rule, on the other hand, poses no such bar. Plaintiff has failed to show through the email from one affiliate about one project losing investors that the Rule will cause all or significantly all foreign investment through the EB-5 Program to dry up. Plaintiffs estimate that its annual fee income will be reduced "to as little as $100,000" in administration fees, Cummins Decl. , amounts to nothing more than speculation. As plaintiff explained, it has approximately 40 active affiliates and has had annual profits ranging from $400,000 to $1.1 million.  Plaintiff acknowledged that its current affiliates "must continue to pay fees while-foreign investors await their visa approvals." . Indeed, the EB-5 Program was "hugely oversubscribed" at the pre-Rule investment thresholds, 84 Fed. Reg. at 35,762-63; plaintiff fails to show the increased thresholds will dramatically reduce this overwhelming demand. Mere "uncertain[ty] about the sustainability of the Program," Cummins Decl. , to say the least, is not the type of concrete harm that is required to justify preliminary injunctive relief.

Plaintiff's delay in seeking a preliminary injunction also undercuts its asserted harms. The Department published the final rule in July 2019, see Final Rule, EB- 5 Immigrant Investor Program Modernization, 750 (July 24, 2009), and made clear the Rule would go into effect on November 21, 2019. See id. Still, plaintiff waited until five days after the Rule went into effect in November 2019 to attempt to challenge it. See Compl. This delay directly undercuts plaintiff's 'argument that its economic harm is so imminent that there is a "clear and present need for equitable relief to prevent irreparable harm," Fed. Mar. Comm'n v. City of Los Angeles, (D.D.C. 2009). See Fund for Animals v. Frizzell, (D.C. Cir. 1975) (per curiam). Plaintiff's delay in filing suit-further weighs against granting preliminary injunctive relief.

II. Balance of the Equities and Public Interest

Because plaintiff fails to show irreparable injury would result from denying preliminary injunctive relief, the Court need not reach the other factors. See GEO Specialty Chems.,  However, the balance of equities and public interest factors, which merge when plaintiff attempts to preliminarily enjoin a government action, Nken v. Holder, (2009), also weigh against preliminary injunctive relief. Plaintiff alleges preliminary relief will serve the public interest because otherwise, "EB-5 regional centers will suffer under the current Rule through reduced interest from investors and developers." Pl.'s Mem. at 26. Plaintiff's primary motivation, in other words, is its own profits. The Court must "balance the [*6] competing claims of injury and the effect an injunction would have on each party." Fed. Mar. Comm'n, .

On the other side of the scale, plaintiff downplays the harm that an injunction would inflict on the Government's authority to regulate the admission of foreign nationals seeking employment-based visas. The Government has a strong interest in the uniform and proper application of its regulations governing the granting of visas to foreign nationals. See Blackie's House of Beef Inc. v. Castillo, (D.C. Cir. 1981). The Rule's changes were intended to account for inflation since the creation of the EB-5 program and "ensure that the reduced investment threshold is reserved for areas experiencing sufficiently high levels of unemployment, as Congress intended." 84 Fed. Reg. at 35,752. In the INA, Congress delegated to the Secretary of Homeland Security significant authority to administer and enforce the immigration and nationality laws, including to raise the level of capital investment required in order to account for inflation. Cf Arizona v. United States, (2012). As such, I find that the harm to the Department of Homeland Security's mandate to regulate the admission of foreign nationals that would result if I granted a preliminary injunction outweighs the potential harm to plaintiff's and other regional centers' business in the absence of injunctive relief. Accordingly, the balance of equities and the public interest also weigh against granting plaintiff preliminary injunctive relief.

CONCLUSION

For the above reasons, the Court DENIES plaintiffs motion for a preliminary injunction. An appropriate Order will issue with this Memorandum Opinion.

/s/ Richard J. Leon

RICHARD J. LEON

United States District Judge

ORDER

For the reasons set forth in the accompanying Memorandum Opinion, it is hereby ORDERED that plaintiff's motion for a preliminary injunction is DENIED.