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Doe v. United States Citizenship & Immigration Services

United States District Court, District of Columbia

October 11, 2019

JOHN DOE, et al., Plaintiffs,
v.
UNITED STATES CITIZENSHIP & IMMIGRATION SERVICES, et al., Defendants.

          MEMORANDUM OPINION

          COLLEEN KOLLAR-KOTELLY, UNITED STATES DISTRICT JUDGE.

         Plaintiffs in this lawsuit are foreign individuals seeking conditional permanent residence in the United States via the EB-5 Immigrant Investor Program. The United States Citizenship & Immigration Services (“USCIS”) denied Plaintiffs' visa petitions under that program. Pursuant to the Administrative Procedure Act (“APA”), Plaintiffs challenge that denial as arbitrary and capricious, unsupported by substantial evidence, beyond the scope of USCIS's statutory authority, in violation of congressional intent, and contrary to their Constitutional rights. Presently before the Court are Plaintiffs' [144] Motion for Summary Judgment and USCIS's [146] Cross-Motion for Summary Judgment.

         Upon consideration of the pleadings, [1] the relevant legal authorities, and the record as a whole, the Court DENIES Plaintiffs' Motion and GRANTS USCIS's Cross-Motion. USCIS denied Plaintiffs' visa petitions because Plaintiffs failed to establish that it was more likely than not that the Job Creating Entities which would receive Plaintiffs' investments were principally doing business in a Targeted Employment Area. Additionally and independently, USCIS denied Plaintiffs' visa petitions because Plaintiffs failed to establish that it was more likely than not that their investments would create full time positions for at least ten qualifying employees.[2] The Court concludes that the denial on either ground was reasonable and not arbitrary and capricious, not unsupported by substantial evidence, not beyond the scope of USCIS's statutory authority, not in violation of congressional intent, and not contrary to Plaintiffs' Constitutional rights.

         I. BACKGROUND

         A. Statutory and Regulatory Background

         The EB-5 Program was created by Congress as part of the Immigration Act of 1990. See Immigration Act of 1990, Pub. L. No. 101-649, 104 Stat 4978. The program is codified at 8 U.S.C. § 1153(b)(5). Pursuant to the EB-5 Program, “[v]isas shall be made available . . . to qualified immigrants seeking to enter the United States for the purpose of engaging in a new commercial enterprise (including a limited partnership) (i) in which such alien has invested . . . or, is actively in the process of investing, capital in an amount not less than the amount specified in subparagraph (C), and (ii) which will benefit the United States economy and create full-time employment for not fewer than 10 United States citizens or aliens lawfully admitted for permanent residence or other immigrants lawfully authorized to be employed in the United In an exercise of its discretion, the Court finds that holding oral argument in this action would not be of assistance in rendering a decision. See LCvR 7(f). States (other than the immigrant and the immigrant's spouse, sons, or daughters).” 8 U.S.C. § 1153(b)(5)(A). Subparagraph (C) sets the amount of capital that must be invested in order to participate in the program at $1, 000, 000. Id. § 1153(b)(5)(C)(i). However, the statute also provides that the Attorney General may reduce the required amount of investment for investments made in “targeted employment areas” (“TEAs”), which are defined as “a rural area or an area which has experienced high unemployment (of at least 150 percent of the national average rate).” Id. § 1153(b)(5)(C)(ii), § 1153(b)(5)(B)(ii). By regulation, that reduced amount has been set at $500, 000. 8 C.F.R. § 204.6(f)(2).

         The Immigration and Naturalization Service-an agency that no longer exists under that name-published regulations regarding the EB-5 Program in 1991. These regulations set forth the requirements for classifying an alien under the EB-5 Program, including, preliminarily, the filing of a Form I-526 Immigrant Petition by Alien Entrepreneur, which “must be accompanied by evidence that the alien has invested or is actively in the process of investing lawfully obtained capital in a new commercial enterprise in the United States which will create full-time positions for not fewer than 10 qualifying employees.” Id. § 204.6(a), (j). An immigrant investor must “establish that he or she is eligible for the requested benefit at the time of filing the benefit request and must continue to be eligible through adjudication.” 8 C.F.R. § 103.2(b)(1).

         B. Factual Background

         1. The Investment

         Plaintiffs in this case are foreign individuals who filed Form I-526 petitions with USCIS on November 15, 2012 seeking permanent residence in the United States under the EB-5 Program. Each of the Plaintiffs filed their petitions based on the same investment: a $500, 000 contribution to an Idaho Limited Partnership entitled Quartzburg Gold, LP (“Quartzburg Gold”). See AR 33-55. The Plaintiff-investors were to serve as the limited partners in Quartzburg Gold, and an entity entitled ISR Capital, LLC, an Idaho Limited Liability Company, was to serve as its general partner. See generally AR 200-227 (Quartzburg Gold, LP Limited Partnership Agreement) (“LPA”).[3]

         Quartzburg Gold's business plan was presented to Plaintiffs in a Confidential Private Offering Memorandum (“PPM”). AR 68-114.[4] In sum, the PPM stated that Quartzburg Gold intended to aggregate Plaintiffs' $500, 000 contributions and use them to finance several gold mining projects. AR 72. This financing would take the form of a loan of the aggregate amount of the Plaintiffs' capital contributions to an entity entitled Idaho State Gold Company, LLC (“ISGC”). Id. ISGC would in turn loan or invest the money it borrowed from Quartzburg Gold into several “Mining Companies” that would then pursue the gold mining projects. Id. The PPM explained how Quartzburg Gold would select the mining locations:

Projects to be funded by ISGC with proceeds of the ISGC Loan will be identified by ISGC and approved by the General Partner. ISGC has identified, and the General Partner has approved, three initial Projects [Yellowjacket, Belshazzar, and Thunder Mountain]. In addition, a fourth initial Project, Monarch Mountain, has been identified by ISGC but not yet approved by either ISGC or the General Partner pending satisfactory completion of due diligence. … To the extent that for any reason the full amount of the ISGC Loan is not required for the development of the initial Projects, the Partnership intends to invest in one or more other comparable projects to be identified by ISGC and to be subjected to similar due diligence review and evaluation. … As of the date of this Agreement ISGC has not committed to, and the General Partner has not approved any of such additional projects.

AR 72-74. The PPM went on to explain that even for the four initially identified mining locations, “[a]dditional drilling and other exploration work will be required on all four Initial Projects to confirm the available resources, and required permits will need to be applied for and obtained prior to mining production.” AR 74. Additionally, if due diligence or other information indicates that development of the project is not warranted, “ISGC would intend to halt any further funding of that Project and re-deploy any remaining funds for the Project to an ‘Additional Project.'” Id. However, again, ISGC had not committed to, and the General Partner, had not approved any of the additional projects. Id.

         2. USCIS's Preliminary Responses to Plaintiffs' Petitions

         Before beginning to issue the initial set of denials of Plaintiffs' visa petitions, which are not the subject of this Memorandum Opinion, USCIS sent Plaintiffs several preliminary communications notifying them of its intent to deny Plaintiffs' petitions and requesting additional evidence to address several perceived deficiencies therein. First, most of the Plaintiffs received from USCIS a “Notice of Intent to Deny” their Petitions (“NOID”). AR 327-36. In the NOID, USCIS took the position that the Plaintiffs had not provided sufficient evidence of the following in support of their petitions: (1) that the job creating entities (“JCEs”) associated with the investment were located in a TEA, (2) that the minimum investment amount had been met, (3) that the capital invested was actually at risk, and (4) that the investment would create at least 10 full time positions for qualifying employees. Id.

         Plaintiffs, through their shared representatives, each subsequently provided additional materials in response to the NOID. USCIS responded to those additional materials by issuing two Requests for Evidence (“RFEs”), in which USCIS requested additional evidence regarding such issues as whether the investment would create the required amount of employment and whether Plaintiffs' capital would genuinely be placed at risk. See AR 633-38; AR 656-67. Again, Plaintiffs submitted additional materials responding to the issues raised in the RFEs. With small differences not relevant to this Memorandum Opinion, this process was substantially the same for all Plaintiffs.

         3. USCIS's Initial Denials of Plaintiffs' Petitions

         After this initial round of notices and requests, USCIS began issuing denials to Plaintiffs' petitions on a rolling basis. Despite the fact that all of Plaintiffs' petitions were-at least for the purposes of this Memorandum Opinion-functionally equivalent, USCIS issued three different denial notices, each citing a different set of reasons for denying the petitions.

         a. The First Denial

         Although recognizing that other concerns had been raised during the NOID and RFE process, the first denial received by a number of the Plaintiffs stated that Plaintiffs had not established their eligibility for the EB-5 Program for a single reason-the capital Plaintiffs intended to contribute would not be “at risk” due to a call option which was originally present in the LPA. AR 26-32.

         b. The Second Denial

         USCIS had not issued the First Denial to all Plaintiffs by the time this lawsuit was filed. After the suit was filed, USCIS began issuing those Plaintiffs who had not yet received a final decision on their petitions a new and different denial notice. AR 902-918. The Second Denial similarly-although with different reasoning-cited the failure of the Plaintiffs to place their capital at risk due to the call option and also added three additional reasons for denying the petition that were not present in the First Denial. In addition to the call option, the Second Denial stated that the Plaintiffs had not demonstrated that the JCEs associated with the investment were located in a TEA; had not shown that the full amount of capital would be made available to the business most closely responsible for creating the required employment; and had not demonstrated that the investment would create full time employment for at least ten qualifying employees. With the exception of the call option, none of these reasons for the Second Denial appeared in the First Denial.

         c. The Third Denial

         Finally, a single Plaintiff received a slightly different denial than any other. This unique Third Denial included several reasons for denial that were present in the Second Denial, including that the Plaintiff had not demonstrated that the full amount of capital had been made available to the business most closely responsible for job creation, but omitted all other reasons. AR 1305-13.

         4. The Court's March 10, 2017 Memorandum Opinion and Order

         The parties filed Cross-Motions for Summary Judgment on March 11, 2016 and April 15, 2016 pertaining to whether or not USCIS's first set of denials of Plaintiffs' visa petitions were arbitrary and capricious, not supported by substantial evidence, and beyond the scope of USCIS's statutory authority. See ECF Nos. 60, 67. Ultimately, the Court granted in part and denied in part Plaintiffs' Motion and denied USCIS's Cross-Motion. ECF Nos. 103, 104. The Court concluded that USCIS's First Denial, given to a portion of petitioners, was arbitrary and capricious and counter to the evidence before USCIS. March 10, 2017 Memorandum Opinion, ECF No. 104, 2. Specifically, the Court granted in part Plaintiffs' Motion and found that the presence of a call option did not prevent Plaintiffs' capital from being at risk. Id. at 14. The Court further concluded that USCIS acted arbitrarily and capriciously by issuing different denials to different petitioners even though the petitions and supporting documents were functionally equivalent. Id. However, the Court denied Plaintiffs' Motion to the extent it requested that the visa petitions be granted. Id. at 2. Instead, the Court remanded the case to USCIS for further consideration of Plaintiffs' visa petitions. Id. The Court expressly stated that “[o]n remand, the USCIS shall be free to exercise its discretion to reopen the administrative record, to engage in additional fact-finding, to supplement its explanation, and to reach the same or a different ultimate conclusion.” Id. at 20.

         5. USCIS's 2018 Denial of Plaintiffs' Visa Petitions

         Pursuant to the Court's instructions, in September of 2017, USCIS issued Motions to Reopen (“MTRs”) to all investors who had not withdrawn their investments, including Plaintiffs and non-Plaintiffs. AR 919-938. In the MTR, USCIS notified petitioners that, upon an initial review of the record, petitioners had failed to establish eligibility for EB-5 visas on multiple bases, including that petitioners had failed to establish that the JCEs were principally doing business in a TEA, that petitioners' capital was at risk, that petitioners' capital was made available to the businesses most closely responsible for job creation, and that petitioners' investment would result in full-time jobs for at least ten qualifying employees. Id.

         Plaintiffs responded to the MTRs and filed additional documentation in an attempt to overcome the perceived shortcomings in their visa petitions. AR 939-1054. However, on April 3, 2018, USCIS issued the denial at issue in this Memorandum Opinion. USCIS denied Plaintiffs' visa petitions on three independent grounds. Based on the evidence submitted and the facts that existed at the time that Plaintiffs' filed their visa petitions, USCIS concluded that Plaintiffs failed to establish that (1) the JCEs were principally doing business in a TEA, (2) Plaintiffs' investments would result in the creation of full time jobs for at least 10 qualifying employees, and (3) the required minimum amount of capital would be made fully available to the businesses most closely responsible for job creation.AR 1055-75.

         Following the 2018 denial of their visa petitions, Plaintiffs filed a Fourth Amended Complaint. ECF No. 138. And, on March 7, 2019 and April 24, 2019, the parties again filed Cross-Motions for Summary Judgment. ...


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