Wang v. U.S. Citizenship & Immigration Servs.

Decision Date31 January 2019
Docket NumberCase No. 1:16-cv-01963 (TNM)
Citation366 F.Supp.3d 118
Parties SIQING WANG, Plaintiff, v. UNITED STATES CITIZENSHIP AND IMMIGRATION SERVICES, et al., Defendants.
CourtU.S. District Court — District of Columbia

Edward F. Ramos, Pro Hac Vice, Ira Jay Kurzban, Pro Hac Vice, Kurzban, Kurzban, Weinger, Tetzeli, & Pratt, P.A., Miami, FL, for Plaintiff.

Glenn M. Girdharry, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

TREVOR N. McFADDEN, U.S.D.J.

Plaintiff Siqing Wang invested $ 500,000 in a U.S. business to qualify for an investor visa, but the United States Citizenship and Immigration Services ("USCIS") declared her ineligible. The central issue was—and is still—whether proceeds from a loan are either "cash" or "indebtedness" under the regulation. Both USCIS and Ms. Wang filed motions for summary judgment. After a motions hearing, the Court finds that USCIS's interpretation of its own regulation is plainly erroneous because it conflicts with the language of the regulation and is unsupported by the regulation's history and USCIS's own precedent. So the Plaintiff's motion will be granted in part, and the Defendants' motion will be denied.

I. BACKGROUND

Ms. Wang is a Chinese graduate student who wishes to become a permanent resident of the United States. CAR 207. She invested $ 500,000 in a U.S. business because she believed that this investment would make her eligible for permanent residency under 8 U.S.C. § 1153(b)(5). See CAR 4-7. The $ 500,000 came from proceeds of a loan secured by property that Ms. Wang alleges that she owned jointly with her father. CAR 375-79, 395-411. Ms. Wang then invested $ 500,000 in a commercial enterprise designed to finance the renovation of the Jung Hotel, a historical hotel in New Orleans, Louisiana. CAR 562, 574.

Next, Ms. Wang filed an I-526 visa petition. CAR 4-6. In October 2015, USCIS approved the petition, concluding that she satisfied the requirements for an EB–5 immigrant investor visa. CAR 1257. But two months later, USCIS issued her a Notice of Intent to Revoke. CAR 1258-62. Upon further review, USCIS classified Ms. Wang's EB–5 investment as "indebtedness" and determined that Ms. Wang failed "to establish that she has an ownership interest in the asset used to secure the loan that is equal to the minimum capital investment of $ 500,000." CAR 1262. So it suggested that she had not invested enough capital to satisfy Section 1153(b)(5). Id.

Responding to the Notice, Ms. Wang clarified that her father had given her his share of the loan proceeds. CAR 1264-65. Ms. Wang argued that because her interest in the property used to secure the loan was worth more than her own half of the loan proceeds, it was "sufficient to secure her share" of the loan. CAR 1265. USCIS was unconvinced. CAR 1283-88. Again, USCIS categorized Ms. Wang's $ 500,000 as indebtedness under 8 C.F.R. § 204.6(e) because the money was from a loan. CAR 1287. And USCIS explained that it could not consider Ms. Wang's father's signed statement—explaining that he had given Ms. Wang his share of the loan proceeds—because it would amount to a material change in the evidence. Id. Ms. Wang filed an administrative motion to reopen or reconsider, and USCIS denied it. CAR 1349-55.

Ms. Wang then filed this suit, challenging both the denial of her visa petition and the denial of her motion to reconsider or reopen. Wang v. USCIS , 306 F.Supp.3d 1, 2 (D.D.C. 2018). Defendants USCIS; Jeh Johnson, then-Secretary of the Department of Homeland Security; Leon Rodriguez, then-Director of USCIS; and Julia Harrison, Acting Chief of the Immigrant Investor Program, filed a joint motion to dismiss for lack of subject matter of jurisdiction and for failure to state a claim. Id. The Court determined that it had jurisdiction to review the agency's decision because it was characterized as a denial—not a revocation—and thus subject to judicial review despite 8 U.S.C. § 1252(a)(2)(B)(ii). Id. at 6. But the Court did grant the Defendants' motion in part insofar as Ms. Wang was challenging the denial of her motion to reconsider or reopen because she had failed to state such a claim. Id. at 8-9.

II. LEGAL STANDARDS

Summary judgment is usually only appropriate if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. Pro. 56. But when a court is reviewing an administrative agency's decision, the standard set out in Federal Civil Procedure Rule 56 does not apply. Richards v. I.N.S. , 554 F.2d 1173, 1177 (D.C. Cir. 1977). Instead, as both parties acknowledge, courts review an agency's decision under the deferential standard provided in the Administrative Procedure Act. See Ramaprakash v. Fed. Aviation Admin. , 346 F.3d 1121, 1124 (D.C. Cir. 2003). Courts set aside agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A).

"Although the scope of review under this standard is narrow, courts must consider ‘whether the agency acted within the scope of its legal authority, whether the agency has explained its decision, whether the facts on which the agency purports to have relied have some basis in the record, and whether the agency considered the relevant factors.’ " Chang v. USCIS , 289 F.Supp.3d 177, 182 (D.D.C. 2018) (quoting Fund for Animals v. Babbitt , 903 F.Supp. 96, 105 (D.D.C. 1995) ).

III. ANALYSIS

To qualify for an immigrant visa under the EB–5 Program, an applicant must invest a qualifying amount of "capital" in a new U.S. business. See 8 U.S.C. § 1153(b)(5).1 Ordinarily, an EB–5 visa applicant must invest $ 1 million, id. § 1153(b)(5)(C)(i), but only $ 500,000 is required if the investment is "in a targeted employment area," id. § 1153(b)(5)(C)(ii) ; 8 C.F.R. § 204.6(f)(2). Here, both parties agree that Ms. Wang's investment was in a targeted employment area. The statute does not define "capital," but the regulation does. 8 C.F.R. 204.6(e) provides that

Capital means cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness.

8 C.F.R. 204.6(e).2 So capital in the form of indebtedness is subject to a collateralization requirement. Id. The regulation also makes clear that assets acquired unlawfully do not qualify as "capital." Id.

A. The Agency's Action was Arbitrary and Capricious

According to USCIS, its longstanding interpretation of the regulatory definition of "capital" dictates that loan proceeds are "indebtedness" and not "cash." Defs.' Mem. at 13, ECF No. 26-1.3 USCIS insists that loan proceeds—as "indebtedness"—only qualify as capital if the petitioner meets the collateralization requirement. Id. Namely, the "indebtedness" must be secured by collateral owned by the petitioner, and the petitioner must be "personally and primarily liable" for the "indebtedness." Id. As USCIS sees it, Ms. Wang fails the collateralization requirement because she does not "personally and primarily" own the property used to secure the loan.

In defending its action, USCIS repeatedly invokes a claim to deference. See, e.g. , Def.'s Mem. at 2 ("USCIS's interpretation of its regulation is ... entitled to high deference."); Def.'s Reply at 9, ECF No. 30 ("The agency's choice among permissible constructions, therefore, is entitled to deference."). But to what should the Court to defer? At the motions hearing, USCIS implied that the Court should defer to remarks made during USCIS's April 22, 2015 telephonic meeting with EB–5 stakeholders. Transcript of Motions Hearing ("Tr.") at 4. Then USCIS clarified and urged the Court to defer to its precedential decision, Matter of Soffici , 22 I. & N. Dec. 158 (BIA 1998). Id. at 5. But as USCIS conceded, "Soffici is not directly on point." Id. at 8. In that case, the petitioner claimed that the loan that his new commercial enterprise obtained directly from a bank qualified as his own investment of capital. Soffici , 22 I. & N. Dec. at 162. The agency held that the commercial enterprise's loan was not "an investment of the petitioner's personal capital." Id. (emphasis in original). USCIS argues that Soffici controls because Ms. Wang's father, a third-party like the commercial enterprise in that case, obtained the loan at issue.

Not so. First, Soffici says nothing about how loan proceeds should be classified: either as "indebtedness" or "cash." And unlike the petitioner in Soffici , Ms. Wang is not indebted to the new commercial enterprise but to a third-party lender. In Soffici , the commercial enterprise itself bore the risk of loss, but here, the enterprise received only cash and no risk of loss. Soffici does not dictate—or even support—USCIS's action here.4

Likewise, the Court rejects USCIS's invitation to defer to USCIS's decision denying Ms. Wang's petition. The decision does not "reflect the agency's fair and considered judgment on the matter." Christopher v. SmithKline Beecham Corp. , 567 U.S. 142, 155, 132 S.Ct. 2156, 183 L.Ed.2d 153 (2012) (cleaned up). Nowhere in its decision does USCIS seriously grapple with Ms. Wang's argument that her investment was "cash," not "indebtedness." And as USCIS reminds the Court in re-urging the revocation issue, USCIS itself has been far from consistent in characterizing its own action.

So what is left? Only USCIS's briefing. Courts defer to an agency's interpretation of its own ambiguous regulation, even when only advanced in a legal brief.5 See Chase Bank USA v. McCoy , 562 U.S. 195, 210, 131 S.Ct. 871, 178 L.Ed.2d 716 (2011). But "this general rule does not apply in all cases." Christopher , 567 U.S. at 154, 132 S.Ct. 2156. Deference is unwarranted when an agency's interpretation is merely a "convenient litigation position" or a...

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