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

637 F.Supp.3d 822

Nguyen Chan NGUYEN, et al., Plaintiffs, v. UNITED STATES CITIZENSHIP AND IMMIGRATION SERVICES, et al., Defendants.

Case No. 2:21-cv-01893-FLA (PLAx)

United States District Court, C.D. California

Signed October 27, 2022

Jonathan David Weiss, Law Offices of Hwang and Weiss, Pasadena, CA, for Plaintiffs.

Joshua Samuel Press, Office of Immigration Litigation, District Court Section, Washington, DC, for Defendants.

ORDER DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND GRANTING SUMMARY JUDGMENT IN FAVOROF DEFENDANTS [DKT. 18]

FERNANDO L. AENLLE-ROCHA, United States District Judge

RULING

Before the court is Plaintiffs Nguyen Chan Nguyen, Chau Van Toan Nguyen, Hung Quac Le, and Tung Xuan Phan's (collectively, "Plaintiffs") Motion for Summary Judgment ("Motion"). Dkt. 18 ("Mot."). Defendants United States Citizenship and Immigration Services ("USCIS" or the "Agency"), Tracy Renaud, Donna P. Campagnolo, and Todd P. Young (collectively, "Defendants") oppose the Motion and request the court grant summary judgment in Defendants' favor instead. Dkt. 21.

On September 13, 2021, the court found this matter appropriate for resolution without oral argument and vacated the hearing set for September 17, 2021. Dkt. 33; see Fed. R. Civ. P. 78(b); Local Rule 7-15. For the reasons stated herein, the court DENIES Plaintiffs' Motion and GRANTS summary judgment in favor of Defendants.

BACKGROUND

Plaintiffs filed this action on March 1, 2021. Dkt. 1 ("Compl."). Plaintiff Nguyen Chan Nguyen ("Nguyen")¹ is a foreign-national seeking an immigrant visa through the employment-based, fifth preference ("EB-5") immigrant-investor visa program ("EB-5 Program"). Dkt. 35 (Certified Administrative Record, "CAR") at 309. As part of the investment process, in early 2018, Nguyen hired the Harvey Law Group ("HLG") to assist him with his EB-5 Petition. Dkt. 18-1 ("Mot. Br.") at 4; CAR 196. To facilitate the currency swap, Nguyen deposited 12,893,695,415 Vietnamese Dong (VND) with the Vietnam office of HLG on March 9, 2018. Id. at 159, 241, 245-46. Nguyen's currency swap partner, Rainbow Shuzhuang Industrial Limited ("Rainbow"), then released $552,920.08 United States Dollars (USD) to HLG's offices in Hong Kong. Id. at 156-160, 251 & 255-58. HLG released the Vietnamese currency to Rainbow's representative in Vietnam and transferred the U.S. currency to Nguyen's investment project in the United States. Id. at 160, 251, 260-62, 264.

On March 23, 2018, Nguyen submitted Form I-526 Immigrant Petition for Alien Entrepreneur ("EB-5 Petition") and accompanying evidence asserting that he invested $500,000 into Lighthouse Point Project, LP, the new commercial enterprise ("NCE"). Id. at 280-93. On November 14, 2019, Defendant USCIS issued a Request for Evidence ("RFE") asking for further clarification regarding the lawful source of the investment funds, particularly the funds HLG obtained from Rainbow to facilitate the transaction. Id. at 266-73. Nguyen responded to the RFE on February 18, 2020. Id. at 152. After reviewing the additional evidence in Nguyen's response, USCIS issued a Notice of Intent to Deny ("NOID") on June 1, 2020. Id. at 137. The NOID noted Nguyen's funds never left Vietnam, the funds (in USD) that entered into the United States were from HLG, and that there was nothing in the record to show the funds that were actually invested were derived from a lawful source. Id. at 144. Nguyen responded to the NOID on September 4, 2020. Id. at 28. On February 3, 2021, USCIS denied Nguyen's EB-5 Petition ("NOD"). Id. at 2-13.

Plaintiffs appeal the NOD on the grounds that USCIS violated the Administrative Procedures Act ("APA"), 5 U.S.C. § 551 et seq., and present the following issues:

1. Whether USCIS acted ultra vires in promulgating a regulation defining the term "capital" as excluding unlawfully-sourced assets and putting the burden of proof of lawfulness on petitioners;

2. Whether USCIS' current interpretation of the "lawful source" requirement for invested funds constitutes a new rule requiring notice and comment before it can be applied to Plaintiffs;

3. Whether Plaintiffs have a reliance interest on USCIS' prior interpretation of the "lawful source" requirement;

4. Whether it is arbitrary and capricious for USCIS to require intermediaries for a "currency swap" to be properly licensed under foreign law while not requiring the same when an applicant transfers investment funds from his or her home country to the United States through multiple "friends and family" in his or her home country, given that both methods are used by petitioners to bypass foreign currency export controls;

5. Whether USCIS' denial of Plaintiffs' EB-5 Petitions was arbitrary and capricious and contrary to the applicable regulations; and

6. Whether USCIS' denial of Plaintiffs' EB-5 Petitions was arbitrary and capricious because the Agency failed to give reasoned consideration to probative or potentially dispositive evidence.

Compl.; Dkt. 18-1 ("Mot. Br.") 1-2, 7-8.

DISCUSSION

I. Standard of Review

Under the APA, "the underlying agency action may be set aside only if [it was] 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.' " Kazarian v. U.S. Citizenship & Immigr. Servs., 596 F.3d 1115, 1118 (9th Cir. 2010) (quoting 5 U.S.C. § 706(2)(A)). An agency's action is "an abuse of discretion . . . if there is no evidence to support the decision or if the decision was based on an improper understanding of the law." Id. (internal quotation marks and citation omitted). An agency's decision is arbitrary and capricious if "the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Beno v. Shalala, 30 F.3d 1057, 1073 (9th Cir. 1994) (quoting Motor Vehicle Mfr. Ass'n v. State Farm Ins., 463 U.S. 29, 44, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)).

II. Analysis

"The immigrant investor program, or EB-5 program, established by the Immigration and Nationality Act ('INA'), allows aliens to receive permanent resident status upon the investment of a specified amount of capital and the creation of at least ten full-time jobs in the United States." Spencer Enters., Inc. v. United States, 345 F.3d 683, 686 (9th Cir. 2003) (citing 8 U.S.C. § 1153(b)(5) ("Section 1153(b)(5)")). As part of the application process for an EB-5 visa, an investor must submit documentation "that the investment is made from the alien's own lawfully acquired funds." Id. (citing 8 C.F.R. § 204.6(j) ("Section 204.6(j)")). "As interpreted by USCIS, EB-5 investors cannot satisfy the requirements of 8 C.F.R. § 204.6(j)(3) without sufficiently documenting the source and path of their investment funds." Zhang v. Nielsen, Case No. 2:18-cv-09799-JFW (JPRx), 2019 WL 5303276, at *7 (C.D. Cal. Oct. 17, 2019) (citations omitted). "Thus, EB-5 investors must present documentary evidence of the lawful source of the funds they invest, as well as evidentiary support for the assertion that the funds are their own." Id. (citations omitted).

A. Whether USCIS Acted Ultra Vires in Promulgating a Regulation Restricting the Term "Capital" to Assets or Money from Lawful Sources

Plaintiffs contend USCIS cannot require immigrant investors to submit evidence relating to the lawfulness of their source or path of investment funds, because the regulations that authorize this inquiry conflict with the unambiguous language of the agency's enabling statute. Mot. Br. 19. According to Plaintiffs, Section 1153(b)(5) only requires an applicant to invest "capital," and USCIS acted ultra vires by restricting the definition of "capital" to assets or money from lawful sources in Section 204.6(e) and (j)(3), and placing the burden of proving lawfulness on petitioners. Mot. Br. 19.

In considering the validity of a regulation, the court applies the two-step analysis articulated by Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984):

First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.

In conducting this inquiry, the court employs "traditional tools of statutory interpretation" and must construe a statute "in accordance with its ordinary and natural meaning." S.F. Herring Ass'n v. U.S. Dep't of Interior, 33 F.4th 1146, 1152 (9th Cir. 2022).

1. Chevron Step 1

On the first step of the Chevron analysis, the court finds Congress has not directly spoken to the precise question at issue. Section 1153(b)(5)(A)(i) states "[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 . . . (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 . . . ." Neither Section 1153(b)(5) nor the INA, in general, define the term "capital." The court, therefore, looks to the ordinary meaning of the term. See Chevron, 467 U.S. at 860, 104 S.Ct. 2778. Black's Law Dictionary defines "capital" as "[m]oney or assets invested, or available for investment, in a business." Capital,...