U.S. Immigration Fund-Ny, LLC v. Pekoske ( 2022 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
U.S. IMMIGRATION FUND-NY LLC, et al.,
Plaintiffs
v.
Civil Action No. 21-0358 (CKK)
ALEJANDRO MAYORKAS, in his official
capacity as Secretary of Homeland Security,
et al.,
Defendants.
MEMORANDUM OPINION
(March 10, 2022)
This Administrative Procedure Act (“APA”) case centers on Defendant U.S. Citizenship
and Immigration Services’ (“USCIS”) 2020 update to USCIS’ 2013 “Policy Manual” that
promulgated an additional adjudication requirement for EB-5 visa applications (“2020 Update”).
Plaintiffs, corporate entities that operate as “economic regional centers” (“Regional Center”) or
“New Commercial Enterprises” (“NCE”) into which EB-5 applicants may invest, argue that the
Court should set aside this 2020 Update as arbitrary or capricious because, in Plaintiffs’ view, it
is a legislative rule that did not go through notice-and-comment rulemaking. Defendants
maintain that the 2020 Update was a mere interpretive rule not subject to notice-and-comment
rulemaking. Additionally, Defendants argue that the Court lacks subject matter jurisdiction on
ripeness and mootness grounds. Because USCIS continues to apply the 2020 Update to at least
one stage of the EB-5 process, and upon consideration of the pleadings, 1 the relevant legal
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This Memorandum Opinion focuses on the following documents:
• Plaintiffs’ Complaint, ECF No. 1 (“Compl.”);
• Defendants’ Memorandum of Points and Authorities in Support of Defendants’ Motion to
Dismiss, ECF No. 17-1 (“MTD”);
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authorities, and the entire record, the Court shall DENY Defendants’ [22] Motion to Dismiss
Based on Changed Circumstances. As Plaintiffs’ claims are not yet ripe, however, the Court
shall GRANT Defendants’ [17] Motion to Dismiss.
I. BACKGROUND
The EB-5 visa program was created as part of the Immigration Act of 1990 “to
incentivize employment creation in the United States.” Dep’t of Homeland Sec., EB-5
Immigrant Investor Regional Center Program, 82 Fed. Reg. 3211, 3212 (July 24, 2019). Under
the Immigration Act of 1990, to receive an EB-5 visa, a noncitizen (1) must make or have made
a minimum investment in a New Commercial Enterprise (“NCE”) that satisfies certain statutory
and regulatory conditions and (2) establish that the NCE directly created full-time employment
for no fewer than ten employees lawfully working in the United States. Id. The EB-5 program is
unique among visa programs in that it provides a direct path to lawful permanent residency
(“LPR”) for foreign investors who invest $1.8 million (or $900,000 in a high unemployment or
rural area) in a NCE. Order at 2, Civitas Mass. Regional Ctr. v. Mayorkas, 21-cv-10344-LTS
(D. Mass. Jan. 19, 2022) (slip op.) (“Civitas”).
In its first two years of the program’s existence, an EB-5 applicant was required to show
investment into a particular NCE and that the investor would be engaged in the management of
the NCE. See USCIS, Policy Manual, Part G, Ch. 4 available at https://www.uscis.gov/policy-
• Defendants’ Memorandum of Points and Authorities in Support of Defendants’ Motion to
Dismiss Based on Changed Circumstances, ECF No. 22-1 (“Supp. MTD”);
• Plaintiffs’ Response in Opposition to Defendants’ Motions to Dismiss, ECF No. 23
(“Opp.”); and
• Defendants’ Combined Reply to Plaintiffs’ Single Brief in Opposition to Defendants’
Two Separate Motions to Dismiss, ECF No. 24 (“Repl.”).
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).
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manual/volume-6-part-g-chapter-4 (last accessed Mar. 7, 2022 9:44 AM) (“Policy Manual”); 8
U.S.C. §§ 1153(b)(5)(A)-(D). In 1992, however, Congress established a Regional Center Pilot
Program (“Program”), permitting EB-5 applicants to invest funds in registered “regional centers”
without having to show management of the NCE or direct creation of at least ten jobs. Rather,
the regional centers, created “for the promotion of economic growth, including increased export
sales, improved regional productivity, job creation, or increased domestic capital investment” in
particular geographic areas, could deploy investor capital as they saw fit, and investors could
qualify for an EB-5 visa so long as the regional center created ten jobs as a result of the
investor’s deployed capital. See Departments of State, Justice, and Commerce, the Judiciary and
Related Agencies Appropriations Act of 1992, Pub. L. No. 102-395, § 610(a) (Oct. 6, 1992)
(codified at 8 U.S.C. §1153); Bromfman v. USCIS, 2021 WL 5014436 at *1 (D.D.C. Oct. 28,
2021) (BAH) (citing 8 C.F.R. § 204.6(m)).
To qualify for an EB-5 visa, a “regional center” investor must first file a Form I-526,
Immigrant Petition by Alien Entrepreneur, demonstrating that the requisite level of capital has
been deployed through the Regional Center and that the investment will create at least ten direct
or indirect full-time jobs. Policy Manual, Part G, Ch. 4. Upon approval of the I-526, the
investor becomes eligible to receive an EB-5 visa. See id. After favorable adjudication, and if
the investor wants to pursue LPR status, the investor must file a Form I-495, Application to
Register Permanent Residence or Adjust Status, if within the United States, or Form DS-260,
Application for Immigrant Visa and Alien Registration, if outside of the United States. USCIS,
EB-5 Investors available at https://www.uscis.gov/working-in-the-united-states/permanent-
workers/employment-based-immigration-fifth-preference-eb-5/eb-5-investors. If approved, the
investor obtains conditional LPR status for two years. Policy Manual, Part G, Ch. 4. Finally, 90
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days before the expiration of the conditional status, the investor must file a Form I-829, Petition
by Investor to Remove Conditions on Permanent Resident Status. At all stages, the investor
must show that they have kept their investment “at-risk,” i.e., deployed in some NCE. Policy
Manual, Part G, Ch. 2.
A substantial amount of time may pass, however, between the submission of any Form
and its approval. The complaint alleges that more than a decade may elapse between the
submission of an I-526 petition and its approval. Compl. at ¶ 125. Because there may be
another delay between the submission of an I-829 and the provision of LPR status, Plaintiffs
assert that a EB-5 investor could “have to place his or her funds at risk for as long as 20 years.”
Id. at ¶ 137 (emphasis omitted). In part to address these concerns, USCIS adopted a policy of
“redeployment,” permitting an applicant’s capital invested in one New Commercial Enterprise to
be “redeployed” to another New Commercial Enterprise to maintain eligibility. Civitas at 4. As
Plaintiffs note, “redeployment” is found neither in the statute––now defunct––nor applicable
regulations. Compl. at ¶ 140. Plaintiffs do not challenge the redeployment policy, however, but
the 2020 Update now requiring that “[re]deployment must occur within the regional center’s
geographic area.” Compl. at ¶ 87.
Since its inception, the Program had been repeatedly reauthorized by statute. Bromfman,
2021 WL 5014436 at *2. The Program expired on June 30, 2021, id., and has not, to date, been
reauthorized. Defendants argue that the program’s lapse moots the case. In the alternative,
Defendants argue that Plaintiffs (1) have yet to suffer a constitutionally cognizable injury and (2)
do not state a claim under the APA.
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II. LEGAL STANDARD
A. Motion to Dismiss for Lack of Jurisdiction
Federal courts are “courts of limited jurisdiction” and can adjudicate only those cases
entrusted to them by the Constitution or an Act of Congress. Kokkonen v. Guardian Life Ins. Co.
of Am., 511 U.S. 375, 377 (1994). As such, a court must dismiss a case pursuant to
Federal Rule 12(b)(1) when it lacks subject matter jurisdiction. Bagherian v. Pompeo, 442 F.
Supp. 3d 87, 91 (D.D.C. 2020). The Court begins with the presumption that it does not have
subject matter jurisdiction over a case. Kokkonen, 511 U.S. at 377.
On a Rule 12(b)(1) motion, the plaintiff “bears the burden of establishing jurisdiction by
a preponderance of the evidence.” Bagherian, 442 F. Supp. 3d at 91–92 (D.D.C. 2020); see
also Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). In determining whether there is
jurisdiction, the court may “‘consider the complaint supplemented by undisputed facts evidenced
in the record, or the complaint supplemented by undisputed facts plus the court’s resolution of
disputed facts.’” Coal. For Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir.
2003) (citations omitted) (quoting Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir.
1992). Courts must accept as true all factual allegations in the complaint and construe the
complaint liberally, granting the plaintiff the benefit of all inferences that can be drawn from the
facts alleged. See Settles v. U.S. Parole Comm’n, 429 F.3d 1098, 1106 (D.C. Cir. 2005); Koutny
v. Martin, 530 F. Supp. 2d 84, 87 (D.D.C. 2007).
However, “the factual allegations in the complaint “will bear closer scrutiny in resolving
a 12(b)(1) motion than in resolving a 12(b)(6) motion for failure to state a claim.” Grand Lodge
of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13–14 (D.D.C. 2001). A court need
not accept as true “‘a legal conclusion couched as a factual allegation’” or an inference
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“‘unsupported by the facts set out in the complaint.’” Trudeau v. Fed. Trade Comm’n, 456 F.3d
178, 193 (D.C. Cir. 2006) (internal quotation marks omitted) (quoting Papasan v. Allain, 478
U.S. 265, 286 (1986)).
B. Motion to Dismiss for Failure to State a Claim
Pursuant to Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a
complaint on the grounds that it “fail[s] to state a claim upon which relief can be granted.” Fed.
R. Civ. P. 12(b)(6). The Federal Rules of Civil Procedure require that a complaint contain “‘a
short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to
‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47
(1957)). “[A] complaint [does not] suffice if it tenders ‘naked assertion[s]’ devoid of ‘further
factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S.
at 557). Rather, a complaint must contain sufficient factual allegations that, if true, “state a
claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. In
evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court must construe
the complaint in the light most favorable to the plaintiff and accept as true all reasonable factual
inferences drawn from well-pleaded factual allegations. See In re United Mine Workers of Am.
Employee Benefit Plans Litig., 854 F. Supp. 914, 915 (D.D.C. 1994).
III. DISCUSSION
A. Mootness
Article III of the U.S. Constitution limits judicial power to actual, ongoing cases or
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controversies. See DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 351 (2006). When there is no
longer a live controversy between the parties to which the court can grant relief, the matter
becomes moot and, thereby, nonjusticiable. See McBryde v. Comm. to Review, 264 F.3d 52, 55
(D.C. Cir. 2001). The mootness doctrine dictates that a controversy must remain live throughout
the entire course of litigation for it to remain justiciable. See Arizonans for Official English v.
Arizona, 520 U.S. 43, 67 (1997).
Defendants argue that the case is moot because “there is no longer statutory authority to
issue Regional Center EB-5 visas[ and] the Court cannot redress Plaintiff’s [sic] alleged injury.”
Supp. MTD at 5. Defendants mischaracterize the alleged injury, however, and the gravamen of
the complaint. The issue here is not whether USCIS can issue new EB-5 visas, i.e., adjudicate
Form I-526 petitions, but rather whether prior compliance with the 2020 Update affects the
ongoing adjudication of Form I-829 petitions. See Civitas at 6. USCIS continues to adjudicate
the latter, USCIS, EB-5 Investor Program, https://www.uscis.gov/working-in-the-united-
states/permanent-workers/eb-5-immigrant-investor-program, and Plaintiffs allege that
noncompliance with the 2020 Update may cause the denial of a swath of Form I-829 petitions,
pecuniary losses, and Plaintiffs’ own termination from the Program, Compl. at ¶ 160. Because
there remains a live controversy related to the 2020 Update, the Court concludes that this case is
not moot.
B. Ripeness
To satisfy the Article III case or controversy requirement, a case must be “ripe” and
cannot rely on “contingent future events that may not occur as anticipated, or indeed may not
occur at all.” Texas v. United States, 523 U.S. 296, 300 (1998). The court lacks subject matter
jurisdiction if a plaintiff's claims are not yet ripe for review. Am. Petrol. Inst. v. EPA, 683 F.3d
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382, 286 (D.C. Cir. 2012). “Ripeness is a justiciability doctrine designed ‘to prevent the courts,
through avoidance of premature adjudication, from entangling themselves in abstract
disagreements over administrative policies, and also to protect the agencies from judicial
interference until an administrative decision has been formalized and its effects felt in a concrete
way by the parties.’” Nat’l Park Hospitality Ass’n v. Dep’t of Interior, 538 U.S. 803, 807-08
(2003) (quoting Abbott Labs v. Gardner, 387 U.S. 136, 148-49 (1967)). Whether an action is
ripe turns on “the fitness of the issues for judicial decision and the hardship to the parties of
withholding judicial review.” Abbott Labs, 387 U.S. at 349 (new labeling rule posed substantial
hardship to pharmaceutical company where company had previously printed up a store of labels
complying with prior rule and new rule required new labels or risk of enforcement proceeding).
This inquiry “seeks to distinguish between a tentative agency position from the situation where
‘the agency views its deliberative process as sufficiently final to demand compliance with the
announced position.’” Her Majesty the Queen in Right of Ontario v. EPA, 912 F.2d 1525, 1531
(D.C. Cir. 1990) (quoting Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 436 (D.C. Cir. 1986)).
1. Fitness
Even if the key issue in a case is “‘a purely legal one,’ it is not ‘fit’ for judicial review if
‘further factual development would ‘significantly advance [the Court’s[ ability to deal with the
legal issues presented.’” Friends of Animals v. U.S. Bureau of Land Mgmt., 514 F. Supp. 3d 290,
301 (D.D.C. 2021) (PLF) (brackets original) (quoting Nat’l Park Hospitality Ass’n, 538 U.S. at
812. This is such a case.
To determine the ultimate merits of the case, the Court would have to assess whether the
“agency action [] sets forth legally binding requirements for a private party to obtain a permit or
license.” Id. at 251. The Court would consider three factors to answer this question: (1) “the
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actual legal effect (or lack thereof) of the agency action in question,” (2) “the agency’s
characterization of the guidance,” and (3) “whether the agency has applied the guidance as if it
were binding on regulated parties.” Id.
As to the first factor, the text itself is fairly ambiguous. Plaintiff points to the mandatory
nature of the Policy Manual in which the 2020 Update appears. It reads:
The USCIS Policy Manual is the agency’s centralized online repository of USCIS’
immigration policies. . . . The Policy Manual contains the official policies of USCIS and
assists immigration officers in rendering decisions. The Policy Manual is to be followed
by all USCIS officers in the performance of their duties but it does not remove their
discretion in making adjudicatory decisions.
USCIS, Policy Manual available at https://www.uscis.gov/policy-manual. Plaintiffs focus on the
fact that the Policy Manual “is to be followed by all USCIS in the performance of their duties.”
Defendants, on the other hand, seem to argue that the 2020 Update is nonbinding because it does
not “remove the[] discretion” of the immigration officers who adjudicate I-829 petitions. It
cannot be said that the Policy Manual, and the key provision here, only “presents [USCIS’]
position on what the law is” because it sets a condition for the approval of an I-829 petition. See
Valero Energy Corp. v. EPA, 927 F.3d 532, 563 (D.C. Cir. 2019) (EPA document that “expressly
disclaims any legal effect” is not a legislative rule). At the same time, if the Policy Manual in its
entirety is discretionary, it must not create rules that apply in all cases. Without a lengthier
record explaining the context and meaning of this term in the Policy Manual and its relationship
to the 2020 Update itself, the Court at present stage cannot definitively answer this first factor.
So too with the second factor, “the agency’s characterization of the guidance.” Although
the Policy Manual has a general statement characterizing the extent to which it is binding, the
record does not identify any instance where USCIS characterized the 2020 Update itself.
Similarly, as Defendants emphasize, USCIS has yet to apply the 2020 Update to any party in an
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adjudication or other agency action. Because further factual development is necessary to answer
this legal question, this case is not yet fit for judicial resolution.
2. Hardship
As for hardship, where a proposed agency policy is not yet clear and where “the agency
[has not had] a chance to apply its regulations in a concrete factual situation,” an APA case is
likely not yet ripe. Truckers United for Safety v. Fed. Highway Admin., 139 F.3d 934, 938 (D.C.
Cir. 1998). This is so because “the substance of the regulatory guidance,” even if ostensibly
final, may never be applied at all. See id. Here, Plaintiffs have not identified a single case of the
2020 Update ever being applied to any investor applicant now more than a year-and-a-half after
its adoption. Moreover, if USCIS officers have discretion in applying certain Policy Manual
requirements, it is entirely possible that a USCIS officer will never apply the 2020 Update on
geographic redeployment.
Plaintiffs’ fear that they will be “possibl[y] terminat[ed] from the [P]rogram as a result of
non-compliance with” the 2020 Update also rings hollow. Compl. at ¶ 56. As an initial matter,
the Program lacks statutory authorization and there is, for standing purposes, insufficient
indication that the Program will be reauthorized. See Bromfman, 2021 WL 5014436 at *3. Even
if the Program were reauthorized, it is not at all clear to the Court that the regulatory regime
permits USCIS to terminate a regional center purely on the basis of redeployment to another
geographic region. The applicable regulation states that USCIS “will issue a notice of intent to
terminate” a regional center if “[a] regional center fails to submit” the required paperwork and
pay associated fees or if “USCIS determines that the regional center no longer serves the purpose
of promoting economic growth.” 8 C.F.R. § 204.6(m)(6). The provision is silent on geographic
delineation. Finally, fears of investor complaints or lawsuits associated with a risky investment
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strategy do not automatically conjure standing, particularly where, as discussed in Part I above,
Plaintiffs are tied to a geographic area by statute. See State Farm Mut. Auto. Ins. V. Dole, 802
F.3d 474, 480 (D.C. Cir. 1986) (“a party’s allegation of hardship will be found wanting if there
are too many ‘ifs’ in the asserted causal chain linking the agency’s action to the alleged
hardship”). Accordingly, the Court concludes that Plaintiffs’ fears of adverse agency action
predicated on the 2020 Update are too remote to provide Article III jurisdiction.
Lacking jurisdiction over the case, the Court need not continue to Defendants’ final
argument, that Plaintiffs’ claims fail as a matter of law.
IV. CONCLUSION
For the foregoing reasons, the Court shall DENY Defendants’ [22] Motion to Dismiss
Based on Changed Circumstances, GRANT Defendants’ [17] Motion to Dismiss, and DISMISS
Plaintiffs’ [1] Complaint. An appropriate Order accompanies this Memorandum Opinion.
Dated: March 10, 2022
/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge
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