Huashan Zhang v. USCIS
978 F.3d 1314
| D.C. Cir. | 2020Background
- The EB-5 program grants immigrant visas to foreigners who "invest" a statutory minimum amount of "capital" in a new U.S. commercial enterprise that creates at least ten jobs. Implementing regulations (promulgated 1991) defined "capital" to include "cash ... and indebtedness secured by assets owned by the alien entrepreneur."
- In an April 22, 2015 USCIS Immigrant Investor Program Office (IPO) conference call, a deputy chief announced that cash from loans counts as "indebtedness," not "cash," and thus qualifies only if the debt is secured by the investor's assets.
- Plaintiffs Masayuki Hagiwara and Huashan Zhang each borrowed $500,000 from corporations they controlled, invested the proceeds in EB-5 enterprises, filed Form I-526 petitions, and had those petitions denied under the IPO collateralization position.
- Plaintiffs sued, alleging the 2015 announcement misinterpreted the regulation, was applied retroactively, violated the INA, and constituted a legislative rule promulgated without notice-and-comment; they sought class certification for similarly-situated petitioners.
- The district court granted summary judgment for the plaintiffs, holding the 2015 interpretation plainly erroneous and unlawfully promulgated, certified a Rule 23(b)(2) class of petitioners denied solely under the collateralization test, vacated denials, and remanded to USCIS.
- The D.C. Circuit affirmed: it held loan proceeds constitute "cash" (not "indebtedness") under 8 C.F.R. § 204.6(e) and found no reversible error in the district court's class-certification decision regarding time-barred claimants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether proceeds of a loan count as "cash" or "indebtedness" under 8 C.F.R. § 204.6(e) | Loan proceeds are money transferred to the enterprise and thus qualify as "cash" (a form of capital). | Loan proceeds should be treated as "indebtedness" subject to the regulation's collateralization requirement. | Loan proceeds qualify as "cash." "Indebtedness" means the promissory obligation itself, not the cash proceeds. |
| Whether the April 2015 IPO remarks constituted a valid reinterpretation or an unlawfully promulgated legislative rule | The 2015 announcement unlawfully changed agency policy and was applied retroactively to pending petitions. | The remarks were a permissible agency interpretation and consistent with prior positions. | Court did not need to decide label (final/interpretive); in any event, the 2015 position is inconsistent with the regulation and has no legal effect. |
| Whether the certified class improperly includes time-barred claimants | Class seeks relief for petitioners denied solely under the 2015 collateralization test; claims are tied to 2015 conduct. | Certification is overbroad and may sweep in petition denials older than the six-year statute of limitations. | Certification did not improperly include time-barred claims; district court tailored the class to denials "solely" based on the 2015 position and treated limitations question appropriately. |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984) (agency interpretations of ambiguous statutes receive deference under a two-step framework)
- Kisor v. Wilkie, 139 S. Ct. 2400 (2019) (limits on deference to agency interpretive rules)
- TRW Inc. v. Andrews, 534 U.S. 19 (2001) (contextual reading: ancillary provisions do not alter fundamental regulatory details)
- Whitman v. American Trucking Ass'ns, 531 U.S. 457 (2001) (courts must respect clear statutory text and not defer to agency on unambiguous matters)
- Burgess v. United States, 553 U.S. 124 (2008) (statutory definitions control meaning of statutory words)
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (requirements for Rule 23(b)(2) class certification and "indivisible" relief)
- Mercy Hosp., Inc. v. Azar, 891 F.3d 1062 (D.C. Cir. 2018) (courts cannot override clear regulatory text based on agency policy preferences)
- Nat'l Ass'n of Home Builders v. U.S. Army Corps of Eng'rs, 417 F.3d 1272 (D.C. Cir. 2005) (administrative-record review and arbitrary-and-capricious standard for agency action)