Florida Eb5 Investments, LLC v. Wolf ( 2020 )

UNITED ST ATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FLORIDA EBS INVESTMENTS, LLC, )
)
Plaintiff, )
)
v. ) Civil Case No. 19-3573 (RJL)
)
CHAD WOLF, et al. )
)
· Defendants. )
MEMORANDUM OPINION
+fA
March 5 , 2020 [Dkt. #2]
Plaintiff Florida EBS 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. See
Cornpl. [Dkt. # 1]. 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. See id. ~~ 58-84; PL 's Mot. for Prelim. Inj.
[Dkt. #2].
Upon consideration of the parties' briefing and argument, the relevant law, and the
entire record, and for the reasons stated below, plaintiffs motion for a preliminary
injunction is DENIED.
BACKGROUND
I. Regulatory Background
Since 1990, the EB-5 Immigrant Investor Program ("the Program") has offered
foreign nationals and their families the opportunity to become permanent U.S. residents
when they invest money in American businesses
,,
that create at least ten American jobs. See
8 U.S.C. § l 153(b)(5). The Immigration and Nationality Act ("INA") prescribed that "the
amount of capital required" to obtain such a visa is $1,000,000 and that the Secretary of
Homeland Security "may from time to time prescribe regulations increasing the dollar
amount specified." Id. § l l 53(b )(5)(C)(i). The INA also allows a reduced threshold for
investments made in targeted employment areas, provided that the reduced threshold is set
at "not less than [50%] of' the standard investment threshold. Id. § l 153(b)(5)(C)(ii).
Under the INA, a targeted employment area subject to the reduced threshold may be either
"an area which has experienced high unemployment ( of at least 150 percent of the national
average rate)" or a "rural area," which is any area that is not "within a metropolitan
statistical area or within the outer boundary of any city or town having a population of
20,000 or more." Id. § 1153(b )(5)(B)(ii)-(iii).
Until recently, the U.S. Department of Homeland Security ("the Department")
maintained the standard investment threshold at $1 million and the reduced investment
threshold at $500,000, as originally set by the INA in 1990. See 8 C.F.R. § 204.6(f) (2018).
2
In July 2019, however, the Department finalized a rule increasing the standard investment
threshold to $1.8 million and the reduced investment threshold to $900,000. EB-5
Immigrant investor Program, Modernization, 84 Fed. Reg. 35,750, 35,751-72 (July 24,
2019) ("the Rule"). According to the Department, "[tjhis change represents an adjustment
for inflation from 1990 to 2015 as measured by the unadjusted Consumer Price Index." id
at 35,752. That was not the only significant change the Department made. The Rule also
excluded cities and towns with a population of 20,000 or more within a metropolitan
statistical area from being designated as high unemployment areas. See id Finally, the
Rule amended regulations allowing states to designate high unemployment areas, see 8
C.F.R. § 204.6(i), and instead gave U.S. Citizenship and Immigration Services the
authority to designate high unemployment areas. See 84 Fed. Reg. at 35,752, 35,809. The
Rule went into effect on November 21, 2019.
II. Plaintiff's Challenge
Five days later, on November 26, 2019, plaintiff Florida EB5 Investments, LLC,
brought the instant action, see Comp!., and filed a Motion for a Temporary Restraining
Order and/or a Preliminary Injunction, see Mot for Prelim. Inj. At a status conference on
December 6, 2019, plaintiff withdrew its request for a temporary restraining order. See
12/6/2019 Min. Entry. After the parties concluded briefing on the preliminary injunction
motion on January 3, 2020, I heard oral argument on January 16, 2020. See 1/16/2020
Min. Entry.
Plaintiff seeks preliminary injunctive relief to prevent the Department from
increasing the investment thresholds, from excluding cities and towns with high
3
unemployment from designation as targeted employment areas, and from precluding states
from designating high unemployment areas. Plaintiff argues the Rule is flawed in four key
respects. First, plaintiff argues the Rule is arbitrary and capricious because the Department
failed to collect and, in some cases, disregarded economic data regarding whether the
increased investment thresholds would deter foreign investments. Cornpl. iril 58-61; see
also id. ~~ 42-57. Second, plaintiff argues the Department failed to perform a proper
Regulatory Flexibility Act analysis of the Rule by not analyzing the impact on small
businesses. id. i1~ 62-68. Third, plaintiff argues the Rule exceeds the Department's
statutory authority by vesting Citizenship and Immigration Services with the authority to
designate targeted employment areas and by creating a standard for targeted employment
areas that is contrary to the INA's plain language. Id. iril 69-76. Fourth, plaintiff argues
the Rule violates the Tenth Amendment by removing states' authority to designate
localities as targeted employment areas. id. i1i1 77-84. Plaintiff's request for preliminary
injunctive relief is premised on the purported harm to its business that it believes will result
from a reduction in foreign investment in the capital investment projects it sponsors with
funds from applicants to the EB-5 Program.
LEGAL STANDARD
A preliminary injunction is an "extraordinary remedy that may only be awarded
upon a clear showing that the plaintiff is entitled to such relief." Winter v. Nat. Res. Def
Council, inc., 555 U.S. 7, 22 (2008). To obtain preliminary injunctive relief, a plaintiff
"must establish [l] that he is likely to succeed on the merits, [2] that he is likely to suffer
irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in
4
his favor, and [4] that an injunction is in the public interest." id. at 20. Of course, the
movant carries the burden of persuasion. See Cobell v. Norton, 391 F.3d 251, 258 (D.C.
Cir. 2004).
Although our Circuit has taken no position on the "sliding scale approach," see, e.g.,
Archdiocese of Wash. v. Wash. Metro. Area Transit Auth., 897 F.3d 314, 334 (D.C. Cir.
2018), "the movant must, at a minimum, 'demonstrate that irreparable injury is Likely in
the absence of an injunction."' Bili Barrett Corp. v. U.S. Dep 't of Interior, 60 l F. Supp.
2d 331, 334-35 (D.D.C. 2009) (quoting Winter, 555 U.S. at 22). The requirement of
showing irreparable harm is an independent requirement: ifa plaintiff does not demonstrate
that it is likely to suffer irreparable harm in the absence of preliminary relief, the Court
may deny the motion without considering the other factors. CityFed Fin. Corp. v. Office
of Thrift Supervision, 58 F.3d 738, 747 (D.C. Cir. 1995); see also GEO Specialty Chems.,
· Inc. v. Husisian, 923 F. Supp. 2d 143, 151 (D.D.C. 2013 ).
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, 454 F.3d 290,297 (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, 758 F .2d 669, 674 (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
5
harm." Id. (alteration in original). "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, 929 F.2d 742, 745-46 (O.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., 758 F.2d at 674. "Recoverable monetary loss may
constitute irreparable harm only where the loss threatens the very existence of the movant's
business." Id.
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. ("Pl.'s Mem.") at 2 [0kt. #2-1]. Plaintiff is a Regional
Center that sponsors capital investment projects using funds from EB-5 Program
applicants. See Comp!. ir 11. 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, Deel. of Marty Cummins ("Cummins
Deel.")~,[ 5, 11 [0kt. #2-3]; Defs.' Opp. to Mot. for Prelim. Inj. ("Defs.' Opp.") at 4, 36
[0kt. #15]. 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, Deel. of Jeffrey B. Carr ii~ 4~5 [Dkt. #2-4]. As evidence of that predicted result,
6
plaintiff claims that while the Rule was pending, plaintiffs affiliates were "uncertain"
about interest from potential foreign investors,.see Cummins Deel. il 9, 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 Herrin-Clark
("Benin-Clark Email") at 1 [Dkt. #16-1].
Unfortunately for plaintiff, these speculative economic mjunes fail to establish
irreparable harm. How so? Plaintiffs 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., 758 F.2d at 674. This relationship has simply not been
shown to be "certain" and "actual," rather than merely "theoretical." Id.; see also GEO
Specialty Chems., 923 F. Supp. 2d at 148 ("Only where a plaintiff establishes that the
economic Joss 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, 282 U.S. 660, 674 (1931 ). Plaintiff has provided one example of a real
estate development project in Florida that lost some of its potential investors. See Henin-
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 'l Mining Ass 'n v. Jackson, 768 F. Supp. 2d 34, 52 (D.D.C.2011 ).
7
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 that
the harm is certain to occur in the near future." Wis. Gas Co., 758 F.2d at 674. Plaintiff
has done neither.
Plaintiffs reliance on Art-Metal USA, Inc. v. Solomon, 473 F. Supp. 1 (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. Id at 3-4. 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 Deel. i, 11, 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. Id ~ 5. Plaintiff acknowledged that its current
affiliates "must continue to pay fees while foreign investors await their visa approvals."
Id ~ 11. Indeed, the EB-5 Program was "hugely oversubscribed" at the pre-Rule
8
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 Deel. ~ 9, to say the least, is not the type of
concrete harm that is required to justify preliminary injunctive relief.
Plaintiffs 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, 84 Fed. Reg. 35,750 (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 Comp!. [Dkt. #1]. This delay directly undercuts plaintiffs 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, 607 F. Supp. 2d
192, 202 (D.D.C. 2009). See Fund for Animals v. Frizzell, 530 F.2d 982, 987 (O.C. Cir.
1975) (per curiam). Plaintiffs delay in filing suit further weighs against granting
preliminary injunctive relief.
IL 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., 923 F. Supp. 2d at 147. However, the balance of equities and public interest
factors, which merge when plaintiff attempts to preliminarily enjoin a government action,
Nlcen v. Holder, 556 U.S. 418,435 (2009), also weigh against preliminary injunctive relief.
Plaintiff alleges preliminary relief will serve the public interest because otherwise, "EB-5
9
regional centers will suffer under the current Rule through reduced interest from investors
and developers." Pl. 's Mem. at 26. Plaintiffs primary motivation, in other words, is its
own profits. The Court must "balance the competing claims of injury and the effect an
injunction would have on each party." Fed. Mar. Comm 'n, 607 F. Supp. 2d at 203.
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. Compare Pl. 's Mem. at 26, with Defs.' Opp. at 39-40. 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, 659 F.2d 1211, 1220-21 (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, 567
U.S. 387, 408-09 (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 plaintiffs 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.
10
CONCLUSION
For the above reasons, the Court DENIES plaintiff's motion for a preliminary
injunction. An appropriate Order will issue with this Memorandum Opinion.
United States District Judge
11