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Wang v. Pompeo

United States District Court, District of Columbia

December 6, 2018

FENG WANG, et al., Plaintiffs,
MICHAEL R. POMPEO, et al., Defendants.


          TANYA S. CHUTKAN United States District Judge

         In 1990, Congress created the EB-5 Immigrant Investor program, which grants the U.S. Department of State (“State”) the authority to issue visas to foreign investors who contribute a specific amount of capital to U.S. companies and create at least ten U.S. jobs per investment. The statute creating EB-5 visas provides a path towards permanent residency, but it also sets various limits on the number of visas that may be issued each fiscal year. It also accords accompanying spouses and children of EB-5 principals (or those following to join the principals) the same status and order of consideration as the principal investors. Since 1990, State has counted these derivative spouses and children of principal immigrant investors toward the yearly caps on EB-5 visas. Since that time, there have been no legislative, regulatory or judicial objections to State's counting policy.

         Plaintiffs, who contend that this counting policy is unlawful, are thirteen Chinese EB-5 investors provisionally representing a class consisting of:[1] children of investors who have lost or will lose their status as derivative children (i.e., age out) and the class members they provisionally represent; and American Lending Center LLC (“ALC”), which is a U.S.-based regional center sponsor of projects funded with EB-5 investment capital. The Defendants are Michael R. Pompeo, in his official capacity as Secretary of State, Edward J. Ramotowski, in his official capacity as Deputy Assistant Secretary of State for Visa Services, the U.S. Department of State (“State”), and the United States of America.

         Plaintiffs have moved for a Preliminary Injunction, ECF No. 2 (“Pls. Mot.”), prohibiting Defendants from counting derivatives against the EB-5 caps and requiring Defendants to make available the full number of EB-5 visas that would be available if derivatives were not counted.

         Having reviewed the parties' filings (including the brief of amicus curiae, Invest in the USA, and Defendants' Opposition), the record, and the relevant case law, the court, for reasons set forth below, hereby DENIES Plaintiffs' Motion for Preliminary Injunction.

         I. BACKGROUND

         A. EB-5 Visa Program

         The EB-5 program was created by the Immigration Act of 1990, Pub. L. No. 101-649, 104 Stat. 4978 (“The 1990 Act”). The 1990 Act amends the Immigration and Nationality Act, Pub. L. No. 82-414, 66 Stat. 163, 167 (1952) (“INA”), by providing visas under a fifth employment-based preference category, known as EB-5, 8 U.S.C. § 1153(b)(5). Through this program, immigrant investors can obtain lawful permanent residency in the United States for themselves and their spouses and children who are “accompanying or following to join” them, i.e., their derivatives. INA § 203(d). The program is “intended to attract foreign capital, encourage economic development, ” and “benefit the U.S. economy and labor market.” Compl. ¶ 33.

         The 1990 Act imposes certain caps on immigrant visas. First, the worldwide level of employment-based immigrants is capped each fiscal year. INA § 201(d), 8 U.S.C. § 1151(d). No. more than 7.1 percent of employment-based visa numbers can be awarded to qualified immigrants under EB-5. INA § 203(b)(5)(A), 8 U.S.C. 1153(b)(5)(A). This translates to roughly 10, 000 EB-5 visas issued annually. Within the 7.1 percent of the worldwide level, “[n]ot less than 3, 000” visas numbers are reserved for qualifying investors in high-unemployment or targeted rural areas. INA § 203(b)(5)(B), 8 U.S.C. § 1153(b)(5)(B). Second, the statute sets a per country limit by restricting visas accorded to immigrants from any single country to 7 percent of the annual overall EB-5 category. INA § 202(a)(2), 8 U.S.C. § 1152(a)(2). The Chinese Student Protection Act of 1992, Pub. L. No. 102-404, 106 Stat. 1969, further restricts the number of EB-5 visas available to Chinese immigrants by deducting 700 visa numbers from the EB-5 limit.

         A foreign investor seeking an EB-5 visa must first file a Petition on Form I-526 with the United States Citizenship and Immigration Services (“USCIS”) seeking classification as an EB-5 investor. 8 U.S.C. § 1154(a)(1)(H); 8 C.F.R. § 204.6(a). The investor must prove that he or she is 1) investing, or is in the process of investing, either $1, 000, 000 into a new commercial enterprise or $500, 000 into a new commercial enterprise if the investment is made in a rural area or area of high unemployment, and 2) creating, or is in the process of creating, at least ten new jobs from the investment. 8 U.S.C. § 1153(b)(5); 8 C.F.R. § 204.6(j). The petition must also demonstrate that the investor obtained the capital legally. Id. If USCIS approves the petition it is sent to State for immigrant visa pre-processing. Once the petition is approved, it is given a priority date, determined by the date on which it was filed with USCIS. 8 C.F.R. § 204.6(d).

         At the beginning of each month, State receives information from consular posts worldwide and USCIS and calculates how many visa number are available. Decl. of Charles Oppenheim ¶ 3, ECF No. 13-2, Defs. Ex. 1 (“Oppenheim Decl.”). Once a visa number becomes available, an EB-5 investor physically located in the United States may file an application for an adjustment of status to a lawful permanent resident with USCIS. Id. ¶ 2; 8 U.S.C. § 1255. An investor who is not in the United States when the petition is approved may file for an immigrant visa at a U.S. embassy or consulate. 8 U.S.C. §§ 1201-1202. Aliens physically present in the United States and those outside the United States are allocated numbers from the same group of available visas. 22 C.F.R. § 42.51(b). If, however, the number of qualified applicants in a visa category is greater than the amount of visa numbers available for allotment for the month, State considers the category to be “oversubscribed, ” and establishes and publishes a cut-off date, referred to as a “final action date.” Oppenheim Decl. ¶ 5. Only EB-5 investors with approved I-526 petitions filed before the cut-off date can obtain available visa numbers in order of priority date. Defendants describe the process as follows:

When visa numbers are ‘oversubscribed,' not all beneficiaries of approved petition who may seek adjustment of status or an immigrant visa can immediately be processed to conclusion. Only persons with priority dates earlier than a cut-off date are allotted a visa number and are thus eligible for final adjustment of status by USCIS or for issuance of an immigrant visa by State. Persons with a priority date on or after the cut-off date must wait until future movement of the cut-off date allows numbers to be allocated.

         Defs. Resp. in Opp. to Pls. Mot. for Prelim. Inj. (“Defs. Opp.”) at 8, ECF No. 13-1, (citations omitted).

         INA § 203(d) provides that derivative spouses and children of employment-based immigrants who are “accompanying or following to join” the principal immigrant are “entitled to the same status, and the same order of consideration” as the principal. 8 U.S.C. § 1153(d). The section states in full:

A spouse or child as defined in subparagraph (A), (B), (C), (D), or (E) of section 1101(b)(1) of this title shall, if not otherwise entitled to an immigrant status and the immediate issuance of a visa under subsection (a), (b), or (c), be entitled to the same status, and the same order of consideration provided in the respective subsection, if accompanying or following to join, the spouse or parent.

Id. Section 203(d) gives derivative spouses and children the option of either “accompanying” or “following to join” their principal. A derivative is accompanying his or her principal investor when the derivative seeks permanent residency within six months of the principal's admission. 22 C.F.R. § 40.1(a)(1) (“Accompanying or accompanied by means not only an alien in the physical company of a principal alien but also an alien who is issued an immigrant visa within 6 months of: (i) The date of issuance of a visa to the principal alien; (ii) The date of adjustment of status in the United States of the principal alien; or (iii) The date on which the principal alien personally appears and registers before a consular officer abroad to confer alternate foreign state chargeability or immigrant status upon a spouse or child.”). A derivative can “follow[]-to-join” the principal at any time after the investor obtains permanent residency. 9 Foreign Affairs Manual 503.2-4(A)(c)(1) (“A spouse or child acquired prior to the admission of the principal alien may be considered to be ‘following-to-join,' regardless of the time which may have elapsed since the principal alien's admission to the United States.”).

         Under the statute, a child must be unmarried and under twenty-one years old. 8 U.S.C. § 1101(b)(1). If an EB-5 principal investor's child turns twenty-one before a visa number becomes available to the principal, the child “ages out” and can no longer be considered a derivative. However, under the Child Status Protection Act, Pub. L. No. 107-208, 116 Stat. 927 (2002) (“CSPA”), a child's age “freezes” while the investor's I-526 petition is pending. If by the time the I-526 petition is approved a visa number is not available, the child's age “unfreezes” and resumes accruing until a visa becomes available to the investor. 8 U.S.C. § 1153(h)(1)(A)-(B). In order to qualify for CSPA protection, the child must seek permanent residence within one year of the time a visa number becomes available to his or her parent. Id.

         Immigrant investors, instead of investing directly in U.S. businesses, can invest through regional centers, and INA § 203(b)(5)(B) requires that 3, 000 of the annual EB-5 visas be set aside for immigrants investing in commercial enterprises associated with regional centers.

         State has always interpreted INA § 203(d) to mean that “[f]or all numerically limited visa categories, which includes all employment-based” categories, “visas issued to derivatives are counted toward the annual immigrant visa caps.” Defs. Opp. at 5. The parties agree that the demand for EB-5 visas from Chinese applicants currently exceeds the supply. Id. at 12 (citing Oppenheim Decl. ¶¶ 11-12); Pls. Mot. at 8, and Defendants concede that “applicants from China have a longer wait.” Defs. Opp. at 22 (quoting Oppenheim Decl. ¶ 12). In Plaintiffs' view, this “backlog” has been caused by the government's counting policy. Pls. Mot. at 17. Citing a government report, Plaintiffs allege that “Chinese investors who filed an I-526 petition in 2017 will need to wait over a decade before the Department of State allows them to immigrate to the U.S. based on their investments.” Pls. Mot. at 9. Moreover, “Chinese investors who file I-526 Petitions in Fiscal Year 2018 will likely be forced to wait approximately 16 years before they qualify to obtain permanent residency based on their investments.” Id.

         B. Plaintiffs' Request for Injunctive Relief

         Plaintiffs' motion for injunctive relief argues that State must allocate available EB-5 visas numbers only to investors themselves and may not count derivative EB-5 beneficiaries against the annual caps. Plaintiffs further contend that State's counting policy violates the INA and that State's cut-off dates constitute final agency action that is arbitrary and capricious under the Administrative Procedure Act (“APA”). Pls. Mot. at 11. Plaintiffs ask the court to issue an injunction “barring Defendants from counting visas issued to spouses and children of investors against the annual EB-5 visa allotment” and “to order the Department to make immediately available all visa numbers which should have been assigned to EB-5 investors but were not because of the Department's unlawful Counting Policy.” Id. at 2. Plaintiffs assert that this injunctive relief is necessary to prevent irreparable harm, particularly with respect to Plaintiffs Feng Wang, Hongmei Xiao, and Jianhong Yang, “whose children will ‘age out' of eligibility” imminently “absent relief from this [c]ourt.” Id.


         A preliminary injunction is an “extraordinary and drastic remedy” that is “never awarded as of right.” Munaf v. Geren, 553 U.S. 674, 689-90 (2008) (internal citations and quotation marks omitted). A preliminary injunction “should not be granted unless the movant, by a clear showing, carries the burden of persuasion.” Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (internal citations and quotation marks omitted) (emphasis in original).

         To prevail on a motion for a preliminary injunction, the movant must show that: “he is likely to succeed on the merits, . . . he is likely to suffer irreparable harm in the absence of preliminary relief, . . . the balance of equities tips in his favor, and . . . an injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). Typically, these factors have “been evaluated on a ‘sliding scale.'” Davis v. Pension Ben. Guar. Corp., 571 F.3d 1288, 1291 (D.C. Cir. 2009) (quoting Davenport v. Int'l Bhd. of Teamsters, 166 F.3d 356, 361 (D.C. Cir. 1999)). “If the movant makes an unusually strong showing on one of the factors, then it does not necessarily have to make as strong a showing on another factor.” Id. at 1291-92. “However, the continued viability of the sliding scale approach is uncertain ‘as the Supreme Court and the D.C. Circuit have strongly suggested, without holding, that a likelihood of success on the merits is an independent, free-standing requirement for a preliminary injunction.'” In re Navy Chaplaincy, 928 F.Supp.2d 26, 32 (D.D.C. 2013) (quoting Stand Up for California! v. U.S. Dep't of the Interior, 919 F.Supp.2d 51, 61 (D.D.C. 2013)); see also Sherley v. Sebelius, 644 F.3d 388, 393 (D.C. Cir. 2011) (“[W]e read Winter at least to suggest if not to hold ‘that a likelihood of success is an independent, free-standing requirement for a preliminary injunction.'”) (quoting Davis, 571 F.3d at 1296) (concurring opinion)); Aracely R. v. Nielsen, 319 F.Supp.3d 110, 125 (D.D.C. 2018) (“Of these factors, likelihood of success on the merits and irreparable harm are particularly crucial.”) (citation omitted).[2]

         Moreover, “the standard for obtaining an injunction is significantly heightened when a plaintiff requests affirmative injunctive relief.” Tex. Children's Hosp. v. Burwell, 76 F.Supp.3d 224, 247 (D.D.C. 2014) (citing Bradshaw v. Veneman, 338 F.Supp.2d 139, 144 (D.D.C. 2004)). In such cases, the court must “exercise extreme caution.” Aracely R., 319 F.Supp.3d at 126 (D.D.C. 2018). “The power to issue a preliminary injunction, especially a mandatory one, should be sparingly exercised.” Dorfmann v. Boozer, 414 F.2d 1168, 1173 (D.C. Cir. 1969) (internal citations and quotation marks omitted).

         III. ...

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