Will an EB-5 Decision by a Judicial Mouse Influence a Political Lion?

By David North on May 3, 2021

You might phrase the question this way: Can a decision by a judicial mouse influence a decision to be made by a lion in American politics, a decision about the EB-5 program?

We used to report, over the years, that the main part of the EB-5 program, the pooling of investments by regional centers, was up for congressional renewal; this segment of the program has only temporary authorization.

Time after time the then-Minority Leader of the Senate, Charles Schumer (D-N.Y.) would insist on inserting the renewal in some bit of “must-pass” legislation and his opposite number, then Majority Leader Mitch McConnell (R-Ky.) would go along, despite virtually no EB-5 activity in his state (but lots in Manhattan). There were never any committee hearings or floor votes on this issue. The renewals always went through.

A couple of years ago, we stopped the reporting on these renewals because they hardly seemed to be news any more.

EB-5 is an element of the broader immigration system that grants a family-sized set of green cards to aliens (who are not otherwise qualified to migrate) if the investor puts up $900,000 (formerly $500,000) for a Homeland Security-approved, but not guaranteed, investment, usually in glitzy parts of our biggest urban areas.

However, after the Trump administration ordered new, and appropriately more restrictive, regulations that had been drafted by the Obama administration, interest in the program dropped considerably. Aliens were discouraged by the increase in the cost of the program, and the regional centers were discouraged by the termination of economic gerrymandering that had allowed the authorization of investments in highly prosperous places in town, linked in the proposals’ maps to often distant, low-income areas in order for the project to qualify as being in a depressed area.

What we now gather from an unimpeachable source is that there is less industry pressure on Sen. Schumer this time around — the next renewal deadline is June 30 — because the program is considerably less profitable for the middlemen, but, if a pending judicial decision goes a certain way, that both the industry and the senator will become more interested in EB-5's renewal than they are now.

This brings us from a lion of the Senate to a mouse of the judiciary; she is Jacqueline Scott Corley, a federal magistrate judge (i.e., a civil servant, not a presidential appointee) who is presiding over a court case in California in which an EB-5 regional center is seeking to overturn the Trump era regulations, which, in fact, have been blessed by the new administration.

If she rules that the new regulations are invalid (essentially against the Obama, Trump, and Biden administrations) because they were issued by one of the acting secretaries of DHS when that person was not legally appointed to the office, then the industry and the senator, we are told, would become more interested in renewing the program. So we will, yet again, track the proposed renewal of the program.

The case is Behring Regional Center LLC, plaintiff, v. Alejandro Mayorkas, Secretary of Homeland Security, et al., defendants; it is being argued in the Northern District of California. The Pacer file number is 3:20-cv-09263-JSC; the last brief, filed by the government on April 27, argued that the regulations are appropriate, and (incidentally) the appointees named in the earlier regional center briefs, are no longer in office.