1 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

______________________________ 

 ) 

HUASHAN ZHANG, et al., ) 

 ) 

 Plaintiffs, ) 

 ) 

v. ) Case No. 15-cv-995 (EGS) 

 ) 

UNITED STATES CITIZENSHIP AND ) 

IMMIGRATION SERVICES, et al., ) 

 ) 

 Defendants. ) 

______________________________) 

MEMORANDUM OPINION 

I. Introduction 

Almost thirty years ago, Congress established the EB-5 Visa 

Program (“the Program”) to stimulate the economy and create jobs 

through foreign capital investment. Under the Program, “alien 

investors” may become eligible to immigrate to the United States 

in return for investing certain qualifying amounts of capital in 

a commercial enterprise in the United States. Plaintiffs in this 

case are individual alien investors whose EB-5 visa petitions 

were denied by the agency that oversees the Program: the United 

States Citizenship and Immigration Services (“USCIS”). 

Plaintiffs allege that their petitions were denied based on 

USCIS’ flawed interpretation of its own regulation. As such, 

they challenge USCIS’ decisions to deny their petitions as 

arbitrary and capricious in violation of the Administrative 
2 

Procedure Act (“APA”), 5 U.S.C. § 706, and the Immigration and 

Nationality Act (“INA”), 8 U.S.C. § 1153(b)(5). Plaintiffs also 

claim that USCIS exceeded its statutory authority under the INA 

by denying their petitions and impermissibly applying its 

interpretation retroactively. Finally, plaintiffs claim that 

USCIS engaged in improper rulemaking without notice and comment, 

also in violation of the APA. 

Pending before the Court are: (1) plaintiffs’ motion for 

summary judgment; (2) USCIS’ cross-motion for summary judgment; 

(3) plaintiffs’ motion to certify class; and (4) plaintiffs’ 

motion to amend the complaint. Upon consideration of the 

motions, the responses and replies thereto, the relevant case 

law, and the entire record herein, the Court GRANTS IN PART 

plaintiffs’ motion for summary judgment, DENIES USCIS’ crossmotion for summary judgment, GRANTS plaintiffs’ motion to 

certify class (albeit with a modified class definition), and 

DENIES AS MOOT plaintiffs’ motion to amend the complaint. Rather 

than approve plaintiffs’ petitions, however, the Court instead 

VACATES USCIS’ denials of the class members’ petitions and 

REMANDS the denials to USCIS for reconsideration consistent with 

this Memorandum Opinion. 
3 

II. Background 

A. Statutory and Regulatory Background 

The INA authorizes the United States to issue visas to 

certain qualified immigrants. See Pub. L. No. 101-649 § 121(a) 

(codified as 8 U.S.C. § 1153(b)(5)(1990)). In 1990, Congress 

created the EB-5 Visa Program as one of five categories of 

employment-based immigration preferences to “create new 

employment for U.S. workers and to infuse new capital into the 

country.” S. Rep. No. 101-55, at 21 (1989). To be eligible for 

an EB-5 visa, an alien must “invest[]” a certain amount of 

“capital” in a “commercial enterprise” to “benefit the United 

States economy and create full-time employment for not fewer 

than [ten] United States citizens or aliens lawfully admitted . 

. . .” 8 U.S.C. § 1153(b)(5)(A). An alien investor must 

generally invest $1,000,000 of “capital” into a new commercial 

enterprise, but in economically depressed areas, or “targeted 

employment areas,” the required amount of capital may be reduced 

to $500,000. Id. § 1153(b)(5)(C); 8 C.F.R. §204.6(f)(regulating 

the “required amounts of capital”). 

In 1991, the Immigration and Naturalization Service 

(“INS”)—USCIS’ predecessor agency—promulgated regulations to 

implement the EB-5 Program. See 8 C.F.R. § 204.6 (1991). Among 

other things, the regulations set forth the criteria necessary 

to qualify for an EB-5 visa preference. See id. To apply, an 
4 

alien investor must first submit a Form I-526 immigration 

petition (“petition” or “I-526 petition”). Id. § 204.6(a). The 

petition 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 

[ten] qualifying employees.” Id. § 204.6(j). If the alien 

investor’s I-526 petition is approved, he or she may apply for a 

visa, which would allow the alien and his or her spouse and 

children to be admitted to the United States on a conditional 

basis. See 8 U.S.C. § 1202(a); 8 U.S.C. § 1186b(a)(1). If the 

alien investor fulfills the EB-5 visa requirements within two 

years, he or she may petition for permanent residence. Id. § 

1186b(c)(1), (d)(2)(A). The burden of proof to establish 

eligibility rests with the alien investor. See 8 U.S.C. § 1361. 

To further delineate the general eligibility criteria, the 

EB-5 regulations define certain key terms that are otherwise 

undefined in the INA. 8 C.F.R. § 204.6(e). For example, to 

“invest” in the new commercial enterprise and create employment, 

the alien investor must “contribute [a qualifying amount of] 

capital” to that enterprise. Id. “Capital” is defined as “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 
5 

and primarily liable and that the assets of the new commercial 

enterprise . . . are not used to secure any of the 

indebtedness.” Id. To qualify as “capital,” the invested asset 

must have been lawfully-obtained: “assets acquired, directly or 

indirectly, by unlawful means . . . shall not be considered 

capital.” Id. The regulations further clarify that a 

“contribution of capital in exchange for a note . . . 

obligation, or any other debt arrangement between the alien 

entrepreneur and the new commercial enterprise does not 

constitute a contribution of capital.” Id. 

At issue in this case is whether loan proceeds invested as 

cash constitute “cash,” as plaintiffs claim, or “indebtedness,” 

as USCIS claims. On April 22, 2015, USCIS’ Immigrant Investor 

Program Office (“IPO”) released remarks stating that invested 

loan proceeds “may qualify as capital used for EB-5 investments, 

provided that the requirements placed upon indebtedness by 8 

C.F.R. § 204.6(e) are satisfied.” See USCIS, Immigrant Investor 

Program Office, EB-5 Telephonic Stakeholder Engagement: IPO 

Deputy Chief’s Remarks (Apr. 22, 2015), available at 

https://www.uscis.gov/sites/default/files/USCIS/Outreach/PED_IPO

_Deputy_Chief_Julia_Harrisons_Remarks.pdf (hereinafter referred 

to as “2015 IPO Remarks”)(emphasis in original). The remarks 

specifically mandated: 
6 

When using loan proceeds as EB-5 capital, a 

petitioner must demonstrate first that they 

are personally and primarily liable for the 

indebtedness. That is, they must demonstrate 

that they bear primary responsibility under 

the loan documents for repaying the debt that 

is being used to satisfy the petitioner’s 

minimum required investment amount. 

In addition, the petitioner must demonstrate 

that the indebtedness is secured by assets the 

petitioner owns and that the value of such 

collateral is sufficient to secure the amount 

of indebtedness that is being used to satisfy 

the petitioner’s minimum required investment 

amount. 

Id. at 1. Plaintiffs argue that the 2015 IPO Remarks “announced 

a change in [USCIS’] longstanding adjudicatory practice 

concerning the classification of loan proceeds.” Pls.’ Mot. for 

Summ. J. (“MSJ”), ECF No. 19 at 21.1 In so doing, USCIS 

“fundamentally reworked the definition of ‘capital’” under 8 

C.F.R. § 204.6(e). Id. at 22. As such, plaintiffs challenge 

USCIS’ interpretation of the regulation and argue that cash 

obtained from third-party loans and invested in an enterprise 

qualifies as “cash” within the regulatory definition of 

“capital” rather than “indebtedness.” See generally Pls.’ MSJ, 

ECF No. 19. 

 

1 When citing electronic filings throughout this Opinion, the 

Court cites to the ECF page number, not the page number of the 

filed document. 
7 

B. Plaintiffs’ I-526 Petitions 

The individually-named plaintiffs are two alien investors 

who challenge USCIS’ decision to deny their petitions on behalf 

of a putative class of alien investors. Compl., ECF No. 1 ¶ 1; 

see Pls.’ Mot. for Class Certification (“Pls.’ Class Cert. 

Mot.”), ECF No. 10. As certified below, the plaintiffs represent 

all Form I-526 petitioners who: (1) invested cash in a new 

commercial enterprise in an amount sufficient to qualify as an 

EB-5 investor; (2) obtained some or all of the cash invested in 

the new commercial enterprise through a loan; (3) filed an I-526 

petition based on that investment;2 and (4) received or will 

receive a denial of their I-526 petition solely on the ground 

that the loan used to obtain the invested cash fails the 

collateralization test described in the USCIS 2015 IPO Remarks 

announcement. 

Named plaintiff Huashan Zhang is a citizen of the People’s 

Republic of China seeking to immigrate to the United States with 

his wife and children. Zhang Admin. R. (“Zhang A.R.”), ECF Nos. 

27-2, 27-3, 27-4. On December 23, 2013, Mr. Zhang filed an I-526 

 

2 Plaintiffs’ proposed class definition seeks to include 

petitioners who “filed an I-526 petition prior to April 22, 

2015.” Because the Court need not resolve the retroactivity 

claim, as USCIS’ interpretation is contrary to the regulation 

and violative of the APA, this date limitation serves no 

purpose. The Court has therefore modified the class definition 

accordingly. See infra Sec. III.B.7.
8 

petition claiming that he fulfilled the minimum capital 

requirement by investing $500,000 in cash in a new commercial 

enterprise in Las Vegas, Nevada. Zhang A.R., ECF No. 27-2 at 4-

26. Mr. Zhang obtained the invested $500,000 via a loan from 

Shaanxi Northwest Textile and Dyeing Company (“Shaanxi 

Northwest”). Id. at 22. Mr. Zhang owns 99 percent of Shaanxi 

Northwest. Id. The loan was secured by his undistributed profits 

held by the company, which greatly exceeded $500,000. Id. at 22-

25; Zhang A.R., ECF No. 27-3 at 4 (loan agreement between 

Shaanxi Northwest and Mr. Zhang). Shaanxi Northwest wired the 

loan proceeds to Mr. Zhang’s personal account. Zhang A.R., ECF 

No. 27-2 at 20, 25-26. Mr. Zhang then converted the loan 

proceeds into U.S. currency and wired the funds into an escrow 

account earmarked for the new commercial enterprise. Id. 

On May 28, 2015, USCIS denied Mr. Zhang’s I-526 petition, 

asserting that Mr. Zhang did not place the required amount of 

capital at risk for the purpose of generating a return on his 

investment. Zhang A.R., ECF No. 27-4 at 175-85. Interpreting the 

invested cash loan proceeds as “indebtedness,” USCIS determined 

that Mr. Zhang’s investment did not qualify as “capital” because 

the Shaanxi Northwest loan was not secured by his personal 

assets. Id. at 179-80. Instead, Mr. Zhang’s loan was secured 

solely by his undistributed profits, which belonged to Shaanxi 

Northwest until distributed. Id. Because Mr. Zhang had not met 
9 

the requirements for “indebtedness,” USCIS concluded that he 

“had not placed the required amount of capital at risk for the 

purposes of generating a return on his investment as the 

shareholder loan proceeds do not constitute qualifying capital 

pursuant to 8 C.F.R. § 204.6(e).” Id. at 180 (emphasis added). 

Second named plaintiff Mayasuki Hagiwara is a Japanese 

citizen seeking to immigrate to the United States with his wife 

though the EB-5 Program. Hagiwara Admin. R. (“Hagiwara A.R.”), 

ECF No. 27-1. On March 17, 2014, Mr. Hagiwara filed his I-526 

petition with USCIS, asserting eligibility based on his $500,000 

cash investment in a new commercial enterprise in Tonopah, 

Nevada. Id. at 4-14. Mr. Hagiwara obtained the invested $500,000 

via a personal loan from J. Kodama, Inc., a Hawaiian corporation 

of which Mr. Hagiwara is a majority shareholder. Id. at 10. The 

loan was secured by Mr. Hagiwara’s stock holdings in the 

corporation. Id. at 254. The funds were wired and “released” to 

the new commercial enterprise “for deployment” in accordance 

with its business plan. Id. at 11. 

Employing the same general reasoning as in Mr. Zhang’s 

case, USCIS denied Mr. Hagiwara’s I-526 petition on March 27, 

2015. Id. at 392-95. USCIS found that Mr. Hagiwara’s investment 

did not qualify as “capital” pursuant to 8 C.F.R. § 204.6(e) 

because he invested cash loan proceeds that were not secured by 

personal assets. Id. at 394-95. Although Mr. Hagiwara protested 
10 

that he had invested “cash” and not “indebtedness,” USCIS 

reasoned that investing loan proceeds is tantamount to investing 

indebtedness, which must be secured by the petitioner’s personal 

assets under the regulation. Id. at 395. USCIS concluded that 

the regulation “clearly precluded” characterizing “all unsecured 

third-party loans” as contributions of cash and denied his 

petition. Id. 

C. Procedural History 

Plaintiffs filed their complaint on June 23, 2015 and all 

pending motions were ripe for review by June 2016. However, the 

Court stayed the case in March 2017 when the parties indicated 

that they were amenable to settlement assistance from the 

Court’s mediation program. Mediation efforts failed, and the 

pending motions are ready for adjudication. 

III. Analysis 

Pending before the Court are: (1) plaintiffs’ motion for 

summary judgment; (2) USCIS’ cross-motion for summary judgment; 

(3) plaintiffs’ motion to certify class; and (4) plaintiffs’ 

motion to amend the complaint. The Court first considers the 

cross-motions for summary judgment. The Court analyzes two of 

plaintiffs’ four claims: (1) that USCIS’ interpretation of 8 

C.F.R. § 204.6, the EB-5 regulation, is erroneous because it 

contravenes the regulation’s plain meaning; and (2) that USCIS 

violated the APA because its interpretation is a legislative 
11 

rule promulgated without notice and comment. Because the Court 

agrees with plaintiffs on these two claims, it need not assess 

plaintiffs’ two other claims: (1) that USCIS’ application of its 

interpretation has been impermissibly applied retroactively;3 and 

(2) that USCIS’ interpretation is ultra vires and exceeds its 

statutory authority conferred by the INA. The Court then 

considers plaintiffs’ motion to certify class. Because the Court 

grants in part plaintiffs’ motion for summary judgment and 

motion to certify class, it need not consider the pending motion 

to amend the complaint. 

A. Cross-Motions for Summary Judgment 

Though each of plaintiffs’ four claims against USCIS is 

disputed, the essential issue is whether lawfully-obtained, loan 

proceeds invested in the enterprise as cash are properly 

characterized as “cash” or as “indebtedness” pursuant to 8 

C.F.R. § 204.6(e). Because the Court agrees that USCIS’ 

interpretation of its regulation is plainly erroneous, denying 

plaintiffs’ petitions pursuant to that interpretation was 

arbitrary and capricious. Moreover, the Court finds that USCIS’ 

 

3 Plaintiffs agree that the retroactivity analysis need not be 

reached if the Court finds that USCIS’ interpretation is 

arbitrary and capricious. See Pls.’ MSJ, ECF No. 19 at 51 

(“Indeed, the retroactivity analysis starts with the assumption 

that the policy or interpretation at issue is not arbitrary and 

capricious. If a rule is arbitrary and capricious, the issue of 

retroactivity is moot because the rule cannot be applied 

prospectively, much less retroactively.”). 
12 

interpretation effectively amends a regulation without notice 

and comment, violating the APA. 

1. USCIS’ Interpretation of 8 C.F.R. § 204.6(e) is Plainly 

Erroneous 

a. The Parties’ Arguments 

Plaintiffs argue that USCIS’ interpretation4—that thirdparty loan proceeds invested as cash in a commercial enterprise 

are properly characterized as “indebtedness” within the meaning 

of “capital”—is plainly erroneous. Plaintiffs contend that 

USCIS’ interpretation, as articulated in the 2015 IPO Remarks, 

“ignores the plain language, structure, history, and purpose of 

the regulation on which it purports to be based.” Pls.’ MSJ, ECF 

No. 19 at 30. They argue that the plain meaning of the word 

“cash” encompasses cash loan proceeds and the definition of 

“capital” in the regulation mandates that lawfully-obtained 

“cash” necessarily qualifies as “capital” without further 

collateral prerequisites. Id. at 31-33 (“[C]ash obtained from a 

loan is no less ‘cash’ than cash obtained from any other 

source.”). Because plaintiffs invested the requisite amount of 

 

4 Plaintiffs refer to USCIS’ interpretation of the regulation as 

the “collateralization rule.” See, e.g., Pls.’ MSJ, ECF No. 19. 

While the Court finds that USCIS’ interpretation was in fact a 

legislative rule subject to the APA’s notice and comment 

procedures, the Court will not refer to it as a “rule” and will 

instead use the term “interpretation” for consistency and 

clarity. 
13 

lawfully-obtained cash, they argue that they satisfactorily 

invested “capital.” Id. at 30-35. 

Plaintiffs also argue that cash loan proceeds cannot be 

characterized as “indebtedness,” the only form of “capital” that 

must be secured by assets owned by the alien investor. Id. at 

33-34. Because indebtedness means the “condition of being 

indebted,” plaintiffs contend that investing indebtedness is 

only “an asset of value to the new commercial enterprise” when 

“it describes an investor’s obligation to make monetary payments 

to the enterprise at a later date.” Id. at 33 (emphasis added). 

Thus, “indebtedness” is not a debt to an unrelated third-party 

lender, but rather a debt to the enterprise itself. Id. at 33-

35. Plaintiffs also argue that USCIS’ interpretation is 

inconsistent with the history and structure of the regulation 

and the INA. See id. at 36-37. Finally, plaintiffs argue that 

USCIS did not provide a rational explanation for its 

interpretation and that USCIS ignored the unfair effect of 

applying its interpretation retroactively to plaintiffs’ cases.5

Id. at 37-38. 

USCIS responds that its decision to deny plaintiffs’ 

petitions was “reasonable.” Defs.’ MSJ & Opp’n, ECF No. 22 at 

 

5 The Court need not reach these additional arguments because it 

finds that USCIS’ interpretation was contrary to the plain 

meaning of its regulation. 
14 

13. According to USCIS, its decisions were based on its 

“longstanding interpretation of its regulation” that cash loan 

proceeds invested in an enterprise are properly characterized as 

“indebtedness,” and thus must be personally collateralized to 

qualify as “capital.” Id. at 24. Therefore, to qualify, a 

petition must establish that the alien investor “secured the 

loan using assets for which they own and are personally and 

primarily liable.” Id. 

USCIS also argues that its interpretation is not erroneous 

because it “aligns with the foundational requirements that the 

alien investor must demonstrate that he is placing capital he 

owns directly at risk.” Id. at 25 (citing 8 C.F.R. § 

204.6(j)(2),(3)). According to USCIS, an alien investor must 

provide different evidence to show that his or her investment is 

“at risk” depending on the source of that investment. See id. at 

26. Because plaintiffs obtained their capital from loan 

proceeds, USCIS argues that they must provide evidence of “any 

loan . . . agreement . . . which is secured by assets of the 

petitioner” to show that the investment is at risk. Id. (quoting 

8 C.F.R. § 204.6(j)(2)(v)). USCIS further contends that if it 

simply reduced all financial arrangements to “their tangible end 

product – ‘cash,’” as plaintiffs argue, the agency would be 

unable to investigate an investor’s ownership and source of 

funds. Id. at 27. 
15 

Finally, USCIS argues that because the agency is 

interpreting its own regulation, it is entitled to “even greater 

deference than the Chevron standard,” which plaintiffs have 

failed to overcome. Id. at 24 (quoting Consarc Corp. v. U.S. 

Treas. Dep’t, 71 F.3d 909, 915 (D.C. Cir. 1995)). 

b. Standard of Review 

“Summary judgment is the proper mechanism for deciding, as 

a matter of law, whether an agency action is supported by the 

administrative record and consistent with the APA standard of 

review,” which “requires a reviewing court to ‘hold unlawful and 

set aside agency action, findings, and conclusions found to be . 

. . arbitrary, capricious, an abuse of discretion, or otherwise 

not in accordance with the law.’” UPMC v. Sebelius, 793 F. Supp. 

2d 62, 67 (D.D.C. 2011)(quoting 5 U.S.C. § 706(2)(A)). However, 

due to the limited role of a court in reviewing the 

administrative record, the typical summary judgment standards 

set forth in Federal Rule of Civil Procedure 56(c) are not 

applicable. Stuttering Found. Of Am. V. Springer, 498 F. Supp. 

2d 203, 207 (D.D.C. 2007) (internal citation omitted). Rather, 

“[u]nder the APA, it is the role of the agency to resolve 

factual issues to arrive at a decision that is supported by the 

administrative record, whereas ‘the function of the district 

court is to determine whether or not as a matter of law the 

evidence in the administrative record permitted the agency to 
16 

make the decision it did.’” Id. (quoting Occidental Eng’g Co. v. 

INS, 7523 F.2d 766, 769-70 (9th Cir. 1985)). A reviewing court 

will “hold unlawful and set aside agency action, findings, and 

conclusions found to be . . . arbitrary, capricious, an abuse of 

discretion, or otherwise not in accordance with the law.” Ludlow 

v. Mabus, 793 F. Supp. 2d 352, 354 (D.D.C. 2001) (quoting 5 

U.S.C. § 706(2)(A)); see also Tenet Healthsystems Healthcorp. v. 

Thompson, 254 F.3d 238, 243 (D.C. Cir. 2001). 

The arbitrary and capricious standard of review is 

“narrow,” and “a court is not to substitute its judgment for 

that of the agency.” F.C.C. v. Fox Television Stations, Inc., 

556 U.S. 502, 513-14 (2009)(citations and quotations omitted). 

An agency rule will be found to be 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.” Motor Vehicle Mfrs. 

Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 

29, 43 (1983). 

A reviewing court “must give substantial deference to an 

agency’s interpretation of its own regulations.” Thomas 

Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994)(citations 
17 

omitted). However, such deference “is warranted only when the 

language of the regulation is ambiguous.” Christensen v. Harris 

County, 529 U.S. 576, 588 (2000)(emphasis added). If the 

regulation is ambiguous, the agency's interpretation must be 

given “controlling weight unless it is plainly erroneous or 

inconsistent with the regulation.” Thomas Jefferson Univ., 512 

U.S. at 512 (citations and quotations omitted). However, if an 

“‘alternative reading is compelled by the regulation's plain 

language or by other indications of the Secretary's intent at 

the time of the regulation's promulgation,’” the Court need not 

defer to the agency’s interpretation. Id. (quoting Gardebring v. 

Jenkins, 485 U.S. 415, 430 (1988)). 

c. USCIS’ Interpretation is Plainly Erroneous

The Court first considers whether USCIS’ interpretation—

that loan proceeds invested as cash are properly characterized 

as indebtedness—is inconsistent with the plain meaning of the 

regulation. If the regulation is clear that cash loan proceeds 

are invested as “cash,” USCIS’ interpretation of 8 C.F.R. § 

204.6(e), as set forth in the 2015 IPO Remarks, is “plainly 

erroneous or inconsistent with the regulation” itself. Auer v. 

Robbins, 519 U.S. 452, 461 (1997). As such, USCIS’ decisions to 

deny plaintiffs’ petitions based solely on that interpretation 

would also be erroneous. See id.; see also 2015 IPO Remarks at 

1; See Zhang A.R., ECF No. 27-4 at 179-80 (“[P]etitioner has not 
18 

demonstrated that he has placed the required amount of capital 

at risk . . . as the shareholder loan proceeds do not constitute 

qualifying capital pursuant to 8 C.F.R. § 204.6(e).”); Hagiwara 

A.R., ECF No. 27-1 at 394-96 (“Petitioner has failed to 

establish by a preponderance of the evidence that his unsecured 

loan . . . meets the regulatory definition of capital.”). 

As discussed below, the Court first finds that the 

regulation is unambiguous and USCIS’ interpretation contravenes 

its plain meaning. The Court also concludes that USCIS’ 

interpretation is inconsistent with its own precedent and the 

context and history of the EB-5 Program. As such, the Court 

concludes that USCIS’ decisions to deny plaintiffs’ petitions 

were arbitrary and capricious. 

i. The EB-5 Regulation is Unambiguous 

The INA mandates that visas must be made available when an 

alien “has invested . . . capital” in a specified amount to 

“benefit the United States economy and create full-time 

employment for not fewer than [ten] United States citizens . . . 

.” 8 U.S.C. § 1153(b)(5). Congress did not define “invest” or 

“capital” in the statute. See id. In 1991, USCIS’ predecessor 

agency, the INS, published regulations defining both: 

Invest means to contribute capital.6 

 

6 The definition of “invest” further provides that “[a] 

contribution of capital in exchange for a note, bond, 
19 

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. All capital shall be valued at 

fair market value in United States dollars. 

Assets acquired, directly or indirectly, by 

unlawful means (such as criminal activities) 

shall not be considered capital for the 

purposes of section 203(b)(5) of the Act. 

8 C.F.R. § 204.6(e)(emphasis added and alphabetical order 

reversed). 

“Capital” is therefore the type of asset that is invested 

or “contributed” to the commercial enterprise for the purpose of 

creating employment. See id.; 8 U.S.C. § 1153(b)(5). To be 

considered “capital,” an invested asset must meet only two 

requirements: (1) it must be contributed in one of the six 

acceptable forms; and (2) it must be lawfully acquired. See 8 

C.F.R. § 204.6(e). The definition approves six forms of 

“capital”: “[1] cash, [2] equipment, [3] inventory, [4] other 

tangible property, [5] cash equivalents, and [6] indebtedness 

[so long as the invested indebtedness is secured by assets owned 

 

convertible debt, obligation, or any other debt arrangement 

between the alien entrepreneur and the new commercial enterprise 

does not constitute a contribution of capital for the purposes 

of this part.” 8 C.F.R. § 204.6(e). USCIS has not suggested that 

plaintiffs entered into a “debt arrangement” with the enterprise 

or that the enterprise guaranteed repayment of the invested 

capital. See generally A.R., ECF No. 27.
20 

by the investor, such that the investor is personally and 

primarily liable, and that the enterprise is not used to secure 

the debt].” Id. 

 The regulation does not define “cash” or “indebtedness” 

within the definition of “capital.” However, the text plainly 

directs the agency to view the transaction between the alien 

investor and the enterprise to identify the particular asset 

actually “contributed” to the enterprise. Id. (“invest means to 

contribute capital”); 8 U.S.C. § 1153(b)(5)(visas shall be made 

available to aliens who invest capital in an enterprise to 

benefit the economy and create employment). USCIS must therefore 

determine whether that contributed asset meets the definition of 

“capital,” i.e., whether it was: (1) contributed in an 

acceptable form; and (2) lawfully acquired. See id. In 

plaintiffs’ cases, it is undisputed that the assets actually 

contributed to the enterprises were cash loan proceeds. See 

Hagiwara A.R., ECF No. 27-1 at 394-95; Zhang A.R., ECF No. 27-4 

at 179-80. The Court must therefore determine whether the 

regulation is unambiguous as to the central question: whether 

cash loan proceeds are invested as “cash,” as plaintiffs argue, 

or as “indebtedness,” as USCIS contends. 

To resolve this question, the Court looks to the ordinary 

meaning of cash. “When a word is not defined by statute, [the 

court] normally construe[s] it in accord with its ordinary or 
21 

natural meaning.” Smith v. United States, 508 U.S. 223, 228 

(1993). The plain and ordinary meaning of “cash” compels the 

conclusion that loan proceeds invested in the form of cash must 

be characterized as “cash” within the unambiguous definition of 

“capital” set forth in the regulation. 

First, the plain and ordinary meaning of “cash” is “money 

or its equivalent” such as “currency or coins.” Cash, Black’s 

Law Dictionary (10th ed. 2014); see Smith, 508 U.S. at 228-29 

(determining the ordinary meaning an undefined statutory term by 

turning to the Black’s Law Dictionary definition). Accordingly, 

an investment was made in “cash” if the investor transferred 

“money or its equivalent” to the investee. Cash, Black’s Law 

Dictionary (10th ed. 2014). How the investor came up with the 

cash to invest—whether through a loan, a bank account, or any 

other source—does not affect whether the investment itself is 

cash. Put differently, that the cash was obtained from proceeds 

from a third-party loan does not make it anything other than 

cash. See Davis v. Connecticut Cmty. Bank, 937 F. Supp. 2d 217, 

224-25 (D. Conn. 2013) (“cash is an inherently fungible good”); 

Hoxworth v. Blinder, Robinson & Co., 903 F.2d 186, 195–96 (3d 

Cir. 1990) (“[I]f a debtor with $100,000 cash in its general 

coffers owes $10,000 to someone, there is no meaningful 

distinction among which of those dollars is actually paid to 
22 

satisfy the debt.”). Nothing in the ordinary meaning of the word 

“cash” suggests that it excludes cash proceeds from a loan. 

Cash loan proceeds, or the cash “received upon selling, 

exchanging, collecting, or otherwise disposing of collateral,” 

Proceeds, Black’s Law Dictionary (10th ed. 2014), are not 

transformed from cash into another asset when invested. Indeed, 

cash loan proceeds are commonly characterized as “cash,” 

consistent with the word’s ordinary meaning. See Pls.’ MSJ, ECF 

No. 19 at 32 n.11 (pointing to “dozens of federal judicial 

decisions . . . refer[ring] to the ‘cash’ proceeds of a loan” 

and citing Drew v. Ocwen Loan Servicing, LLC, 2015 WL 5637569, 

at *2 (M.D. Fla. Sept. 17, 2015), among other authority). 

Moreover, USCIS itself has described the assets a borrower 

receives from a loan as “cash proceeds.” See In re: Petitioner 

[Redacted], 2012 WL 8524530, at *4 (AAO Aug. 14, 2012) 

(unpub.)(analyzing an employment-based nonimmigrant visa 

petition for a religious worker).7 

The “words of statutes or regulations must be given their 

‘ordinary, contemporary common meaning.’” FTC v. Tarriff, 584 

 

7 USCIS argues that these cited cases are “inapposite because 

none of them address ‘cash’ with regards to the EB-5 program 

definition of ‘capital’ found at 8 C.F.E. § 204.6(e).” Defs.’ 

MSJ & Opp’n, ECF No. 22 at 25 n.10. The Court disagrees. As 

discussed, the definition of cash is undefined in the EB-5 

regulation and, as such, the Court must turn to the term’s 

ordinary, common meaning. Plaintiffs’ cited cases reflect the 

common meaning of the word “cash.” 
23 

F.3d 1088, 1090 (D.C. Cir. 2009) (quoting Williams v. Taylor, 

529 U.S. 420, 431 (2000))(examining the unambiguous common 

meaning of the word “shall”). Because lawfully-acquired cash 

unambiguously qualifies as “capital” under the regulation, 

USCIS’ interpretation that cash loan proceeds do not qualify as 

a “cash” investment is untenable. See Ass’n of Private Sector 

Colleges and Univs. V. Duncan, 681 F.3d 427, 450 (D.C. Cir. 

2012)(holding that an agency may not “reinterpret[] [a] 

regulation in a way the text does not support”). Therefore, its 

denials of plaintiffs’ petitions on that basis was erroneous as 

contrary to the language of the regulation. 8 C.F.R. § 

204.6(e)(“Capital means cash”). 

USCIS neither offers its own definition of “cash,” nor 

explains why cash proceeds from third-party loans are not 

invested as “cash.” See generally Defs.’ MSJ & Opp’n, ECF No. 

22; Defs.’ Reply, ECF No. 26. Instead, it emphasizes the 

deference it is purportedly owed and concludes that its 

interpretation is not clearly erroneous. See Defs.’ MSJ & Opp’n, 

ECF No. 22 at 24. Indeed, without providing any support that the 

provision is ambiguous, USCIS repeatedly asserts that the Court 

should defer to its interpretation of its own regulation because 

it is owed “an even greater degree of deference than the Chevron 

standard, and must prevail unless plainly inconsistent with the 

regulation.” Id. at 24-27 (citing Auer, 519 U.S. at 461; 
24 

Consarc, 71 F.3d at 915). However, such deference is only 

warranted if the regulation at issue is ambiguous. Christensen, 

529 U.S. at 588 (“But Auer deference is warranted only when the 

language of the regulation is ambiguous.”); Thomas Jefferson 

Univ., 512 U.S. at 512 (“[W]e must defer to the Secretary's 

interpretation unless an alternative reading is compelled by the 

regulation's plain language or by other indications of the 

Secretary's intent at the time of the regulation’s 

promulgation.”)(internal citations omitted). The Court concludes 

that the regulation’s plain meaning is clear. As such, deference 

to USCIS is unwarranted. 

Moreover, USCIS’ interpretation is not one of several 

“permissible constructions,” as it suggests. Defs.’ Reply, ECF 

No. 26 at 13 (citing Holly Farms Corp. v. NLRB, 517 U.S. 392, 

398-99 (1996) (analyzing an agency’s interpretation of an 

ambiguous statute)). Instead, USCIS is “seeking to overcome the 

regulation’s obvious meaning.” Christensen, 529 U.S. at 588; see 

also In re Sealed Case, 237 F.3d 657, 667 (D.C. Cir. 2001)(“In 

this case, the . . . regulation at issue [is] unambiguous and 

directly address[es] the issue presented in this case. The[] 

plain meaning therefore controls our decision.”). For example, 

by attempting to regulate how an alien investor acquires 

invested cash—beyond ensuring that the cash was legally acquired 

and that the cash was not derived from the enterprise itself—
25 

USCIS adds an additional requirement to the regulatory 

definition of “capital” not found within the text. See 8 C.F.R. 

§ 204.6(e). To illustrate, under USCIS’ interpretation, 

“capital” does not include lawfully-acquired cash, but lawfullyacquired cash not derived from a third-party loan. See 2015 IPO 

Remarks; see also Zhang A.R., ECF No. 27-4 at 179-80 

(determining that a lawfully-acquired, cash investment did not 

qualify as capital based on Mr. Zhang’s method of obtaining it); 

Hagiwara A.R., ECF No. 27-1 at 395-96 (same). As previously 

discussed, the regulation sets forth only two conditions for a 

cash asset to qualify as capital: (1) it was invested as cash 

and (2) it was lawfully-acquired. See 8 C.F.R. § 204.6(e). The 

fact that the regulation includes these two conditions 

necessarily implies that no other conditions are necessary for a 

cash investment to constitute capital. District of Columbia Fin. 

Responsibility & Mgmt. Auth. v. Concerned Senior Citizens of the 

Roosevelt Tenant Ass’n., Inc., 129 F. Supp. 2d 13, 16 (D.D.C. 

2000) (“One of the most firmly established canons of 

interpretation is expressio unius est exclusio alterios, that 

is, the expression of one is the exclusion of the other.”) 

(citing Marbury v. Madison, 5 U.S. (1 Cranch) 137, 2 L.Ed. 60 

(1803) (“[a]ffirmative words are often, in their operation, 

negative of other objects than those affirmed”)). 
26 

In so doing, USCIS impermissibly creates “de facto another 

regulation.” Christensen, 529 U.S. at 588. In Christensen v. 

Harris County, the Supreme Court declined to defer to the 

agency’s interpretation of its regulation in part because the 

agency sought to add an additional requirement not found within 

the regulation, contrary to the regulation’s “obvious meaning.” 

Id.; see also Appalachian Power Co. v. Envtl. Protection Agency, 

249 F.3d 1032, 1048 (D.C. Cir. 2001)(“ The Supreme Court recently 

held that we should not defer to an agency's interpretation 

imputing a limiting provision to a rule that is silent on the 

subject . . . [in] cases in which the agency’s interpretation 

postdated its adoption of the rule and was not itself subject to 

the rigors of notice and comment.”) (citing Christensen, 529 

U.S. at 588)). So here too. Had USCIS intended to further 

regulate lawfully-acquired, loan proceeds invested in the 

enterprise as “cash,” it could have explicitly done so or 

amended the regulation.8 As drafted, however, there is no textual 

basis for USCIS’ interpretation. See 8 C.F.R. § 204.6. 

USCIS also argues that its definition is compelled by other 

sections of the regulation and by its own binding precedent. As 

 

8 Indeed, USCIS has recently proposed changes to 8 C.F.R. § 204.6 

to increase the required capital contribution, in part because 

the EB-5 Program is “oversubscribed.” See Proposed Rule EB-5 

Immigrant Investor Program Modernization, 82 Fed. Red. 4738 

(Jan. 13, 2017). 
27 

will be explained in further detail below, the Court disagrees. 

See infra Secs. III.A.1.c.ii,iii. Ultimately, the Court 

concludes that the regulation is clear: an investor indeed 

invests “capital” by contributing lawfully-acquired cash loan 

proceeds to an enterprise. USCIS’ interpretation that “capital” 

does not include lawfully-acquired “cash,” but rather only 

includes lawfully-acquired cash not derived from third-party 

loans contravenes the regulation’s plain meaning. 

ii. USCIS’ Interpretation is Not Supported by the Text 

USCIS argues that its interpretation is supported by the 

regulation’s text in three ways. First, it argues that loan 

proceeds are invested as “indebtedness” pursuant to the 

regulation’s definitional section, 8 C.F.R. § 204.6(e). See 

Defs.’ MSJ & Opp’n, ECF No. 22 at 24-27. Next, it argues that 

its interpretation “aligns with the foundational requirements 

that the alien investor must demonstrate that he is placing 

capital he owns directly at risk” pursuant to 8 C.F.R. § 

204.6(j)(2). Id. at 25. Third, it argues that its interpretation 

is necessary to ensure that the alien investor derived his or 

her invested funds from a lawful source pursuant to 8 C.F.R. § 

204.6(j)(3). Id. at 25, 27. The Court will address each argument 

in turn. 
28 

(1) Cash Loan Proceeds are Not Invested as 

Indebtedness

In arguing that cash loan proceeds are invested as 

indebtedness, USCIS suggests that it must examine the manner in 

which the investor acquired the invested asset (beyond ensuring 

the asset was lawfully-acquired, which it is undisputedly 

obligated to do) pursuant to 8 C.F.R. § 204.6(j)(3). See 

generally Defs.’ MSJ & Opp’n, ECF No. 22. As discussed, USCIS 

neither offers its own interpretation of the key terms, nor 

explains why cash proceeds are invested as “indebtedness.” See 

generally id.; Defs.’ Reply, ECF No. 26. 

The regulation, 8 C.F.R. § 204.6, does not define the term 

“indebtedness.” Instead, the regulation offers it as an 

alternative asset to cash, qualifying as “capital” only if the 

invested indebtedness is secured by assets that the alien 

investor owns, such that the investor is personally and 

primarily liable for the debt. 8 C.F.R. § 204.6(e). The assets 

of the enterprise may also not be used to secure any of the 

indebtedness. Id. Because indebtedness is undefined in the 

regulation, it must be construed “in accordance with its 

ordinary or natural meaning.” FDIC v. Meyer, 510 U.S. 471, 476 

(1994) (citing Smith, 508 U.S. at 228). To that end, 

“indebtedness” means “the quality, state, or condition of owing 

money.” Indebtedness, Black’s Law Dictionary (10th ed. 2014). 
29 

Of course, an individual who takes out a loan is indebted 

in a generic sense: the borrower is indebted to the lender to 

whom he or she owes money. However, as discussed, the regulation 

requires USCIS to consider the transaction between the alien 

investor and the enterprise. In so doing, USCIS must identify 

the asset actually contributed to the enterprise. See 8 C.F.R. § 

204.6(e) (“invest means to contribute capital [to the 

enterprise]”). Here, it is clear that the alien investor is not 

contributing debt to the enterprise, but is contributing cash. 

See Zhang A.R., ECF No. 27-2 at 20, 25-26; Hagiwara A.R., ECF 

No. 27-1 at 11. The enterprise is free to deploy that invested 

cash to create jobs for Americans. Indeed, an investor can only 

contribute indebtedness if the investor’s “state of being 

indebted” is to the enterprise itself. See 8 C.F.R. § 204.6(e). 

In that sense, the indebtedness is an asset of value because the 

investor is obligated to make payments to the enterprise at a 

later date. 

This reading is confirmed by USCIS’ longstanding, binding 

precedent. While the Court will further examine the precedent, 

see infra Sec. III.A.1.c.iii, USCIS published four “precedent 

decisions,” which are binding on the agency. See Matter of Ho, 

22 I. & N. Dec. 206 (BIA 1998); Matter of Hsiung, 22 I. & N. 

Dec. 201 (BIA 1998); Matter of Izummi, 22 I. & N. Dec. 169 (BIA 

1998); Matter of Soffici, 22 I. & N. Dec. 158 (BIA 1998). In 
30 

Matter of Izummi, USCIS considered an arrangement whereby an 

investor promised to pay an enterprise in the future via a 

promissory note. USCIS confirmed that such an arrangement can 

constitutes investing “capital” pursuant to the regulation so 

long as the alien investor was personally and primarily liable 

for the indebtedness to the enterprise. See 22 I. & N. Dec. 169 

(BIA 1998)(finding that the alien investor invested indebtedness 

by promising to pay the enterprise in the future); see also 

Matter of Hsiung, 22 I. & N. Dec. 201, 201 (BIA 1998) (“A 

promissory note secured by assets owned by a petitioner can 

constitute capital under 8 C.F.R. § 204.6(e) if: the assets are 

specifically identified as securing the note; the security 

interests in the note are perfected in the jurisdiction in which 

the assets are located; and the assets are fully amenable to 

seizure by a U.S. note holder.”). Under that arrangement, the 

need for personal collateralization is entirely clear: when the 

asset actually contributed to the enterprise is merely a 

promise, the enterprise requires security. See Hsiung, 22 I. & 

N. Dec. at 202 n.1 (“merely ‘identifying’ assets as securing a 

loan, without perfecting the security interest, is not 

meaningful since the note holder cannot be assured that the 

identified assets will remain available for seizure in the event 

of default.”). As here, however, when the enterprise receives 
31 

lawfully-acquired cash it can readily deploy, no security 

interest is necessary.9 

Finally, the Court’s conclusion is also supported by a 

USCIS policy memorandum released in May 2013. See USCIS, EB-5 

Adjudications Policy (PM-602-0083)(May 30, 2013), available at 

https://www.uscis.gov/sites/default/files/USCIS/Laws/Memoranda/2

013/May/EB-5_Adjudications_PM_Approved_as_final_5-30-13.pdf. In 

clarifying the definition of capital, USCIS stated: “the 

definition of ‘capital’ is sufficiently broad that it includes 

not only such things of value as cash, equipment, and other 

tangible property, but it can also include the immigrant 

investor’s promise to pay (a promissory note).” Id. at 3. USCIS 

substitutes a “promise to pay” for the word in the regulation: 

“indebtedness.” USCIS goes on to clarify that a “promise to pay” 

may only be considered “capital” if it meets the indebtedness 

requirements: “[capital] include[s] the immigrant investor’s 

 

9 USCIS does not argue that the plaintiffs used or will use the 

enterprise’s assets as collateral for the third-party loans. See 

generally Defs.’ MSJ & Opp’n, ECF No. 22. However, assuming this 

is a concern, USCIS could easily deny a petition based on an 

investment of cash loan proceeds if the underlying loan was 

secured by the enterprise. See 8 C.F.R. § 204.6(j)(2). As 

explained more thoroughly below, USCIS must ensure that the 

capital invested was “actually committed” to the enterprise. See 

id.; infra Sec. III.A.1.c.ii.(2). If an alien investor invested 

cash in the enterprise that could be seized by a lending thirdparty, the investor has not truly “committed” the cash to the 

enterprise. This is not to say that a loan must be secured by 

the alien investor’s assets, rather that the loan must not be 

secured by the enterprise’s assets. 
32 

promise to pay (a promissory note), as long as the promise is 

secured by assets the immigrant investor owns, the immigrant 

investor is liable for the debt, and the assets of the immigrant 

investor do not for this purpose include assets of the company 

in which the immigrant is investing.” Id.

(2) The “At Risk” Provision Does Not Support 

USCIS’ Interpretation

USCIS argues that its interpretation that cash loan 

proceeds are invested as indebtedness is necessary to ensure 

that alien investors comply with the regulation’s “foundational 

requirements that the alien investor . . . is placing capital he 

owns directly at risk.” Defs.’ MSJ & Opp’n, ECF No. 22 at 25 

(citing 8 C.F.R. § 204.6(j)(2),(3)); see also 2015 IPO Remarks. 

In so arguing, however, USCIS conflates two separate regulatory 

requirements. 

In addition to establishing that the alien investor 

invested a qualifying amount of “capital” in the new commercial 

enterprise for the purpose of creating employment, the investor 

must also demonstrate that the capital was put “at risk” “for 

the purpose of generating a return on the capital.” See 8 C.F.R. 

§ 204.6(j)(2). The regulation is clear that this requirement 

ensures that the capital has actually been contributed, or 

“invest[ed],” in the enterprise. See id. Specifically, the 

provision requires that the investor show the “actual commitment 
33 

of the required amount of capital.” Id.; see also Matter of 

Izummi, 22 I. & N. Dec. 169, 170-71, 186 (BIA 1998)(finding that 

the alien investor had not placed his investment “at risk” 

because the enterprise had given him the right to sell his 

partnership interest back for the original price: “for the 

alien’s money truly to be at risk, the alien cannot enter into a 

partnership knowing that he already has a willing buyer in a 

certain number of years, nor can be assured that he will receive 

a certain price. Otherwise, the arrangement is nothing more than 

a loan [to the enterprise].”); Matter of Ho, 22 I. & N. Dec. 

206, 209-10 (BIA 1998)(finding the alien investor had not placed 

his investment at risk because he maintained control over the 

invested money); Chang v. USCIS, 289 F. Supp. 3d 177, 180, 187-

88 (D.D.C. 2018)(finding USCIS’ denial arbitrary and capricious 

because the alien investors had placed their money at risk; 

there was “no security that [the investors] would ever see 

[their] money again”); Doe v. USCIS, 239 F. Supp. 3d 297, 306 

(D.D.C. 2017)(finding USCIS’ denial arbitrary and capricious 

because the alien investors had placed their money at risk; they 

“were not guaranteed to receive any of their capital 

contributions back, let alone make any return on their 

investments”). 

The “at risk” provision lists the types of documentation 

that may establish the alien investor’s “actual commitment” of 
34 

capital. The list includes, but is not limited to, bank 

statements showing that cash has been deposited into the 

enterprise’s bank account, assets purchased by the alien 

investor for use by the enterprise, and evidence of any “loan 

agreement” or “other evidence of borrowing, which is secured by 

assets of the petitioner, other than those of the new commercial 

enterprise, for which the petitioner is personally or primarily 

liable.” Id. § 204.6(j)(2)(i-v). 

USCIS relies on these examples to argue that its 

“interpretation of its regulation is not plainly erroneous 

because the evidentiary requirements necessary to demonstrate 

owned capital is ‘at risk’ are different based on how the 

capital is obtained.” Defs.’ MSJ & Opp’n, ECF No. 22 at 26 

(citing 8 C.F.R. § 204.6(j)(2)(v)). Because plaintiffs obtained 

their capital from third-party loan proceeds, USCIS argues that 

they must provide evidence of any loan agreement which is 

secured by assets of the petitioner for which the petitioner is 

personally and primarily liable. Id. 

However, USCIS’ argument fails because it contradicts the 

definition of capital, which unambiguously includes lawfullyacquired cash, see 8 C.F.R. § 204.6(e), and “the definition of a 

term in the definitional section of a statute controls the 

construction of that term,” United States v. E-Gold, Ltd., 550 

F. Supp. 2d 82, 91 (D.D.C. 2008) (quotations and citations 
35 

omitted); see also Texas Children’s Hosp. v. Burwell, 76 F. 

Supp. 3d 224, 237 (D.D.C. 2014)(finding that the definitional 

section “controls”). Indeed, the “at risk” requirement does not 

modify the definition of “capital” in the definition subsection. 

Instead, the non-exhaustive list of satisfactory evidence is 

included to provide examples of “evidence” that an alien 

investor may use to “show actual commitment of required 

capital.” 8 C.F.R. § 204.6(j)(2). As plaintiffs’ correctly point 

out, the “at risk” requirement “says what an investor must do 

with ‘capital’ (i.e. place it ‘at risk’ for the purpose of 

generating a return)—not what ‘capital’ is,” which is the issue 

at hand here. Pls.’ Reply, ECF No. 24 at 22. 

As such, the “at risk” provision does not provide USCIS 

with a basis for its interpretation. Whether an alien investor 

obtained the lawfully-acquired cash from a third-party loan is 

irrelevant to whether that cash was actually committed to the 

enterprise for the purpose of generating a return. 

(3) USCIS Retains the Authority to Ensure That 

Invested Assets are Derived From Lawful 

Sources

USCIS also argues that classifying loan proceeds as cash 

would “effectively cut off” the agency’s ability to look into 

the petitioner’s “source of investment funds.” Defs.’ MSJ & 

Opp’n, ECF No. 22 at 27. Not so. Regardless of the form of 

capital invested, an asset will not qualify as “capital” if 
36 

“acquired, directly or indirectly, by unlawful means (such as 

criminal activities).” 8 C.F.R. § 204.6(e). In that sense, no 

asset—whether cash, indebtedness, or otherwise—will satisfy the 

definitional requirement if obtained directly or indirectly by 

unlawful means. See id. 

The Court’s decision does not impact USCIS’ ability to 

investigate whether the petitioner’s invested cash loan proceeds 

were lawfully-acquired. As USCIS articulated in its 2015 IPO 

Remarks, the agency may determine whether the loan proceeds were 

obtained unlawfully or if the cash actually invested did not 

likely come from the loan itself. See 2015 IPO Remarks at 2 

(“Where the petitioner obtains a loan from a lawful source (such 

as a reputable bank), the loan proceeds may, nevertheless, be 

unlawful if the capital was obtained by unlawful means (such as 

fraud on a loan application).”). And, notwithstanding the 

Court’s decision, the burden of proof continues to remain with 

the petitioner to establish eligibility. Matter of Brantigan, 11 

I. & N. Dec. 493, 493 (BIA 1966)(“ the burden of proof required 

of an applicant for United States citizenship never shifts”). 

Thus, an investor investing cash loan proceeds must still 

demonstrate that the proceeds were lawfully acquired. 
37 

iii. USCIS’ Interpretation is Not Supported by its 

Binding Precedent 

Looking beyond the text, USCIS argues that agency precedent 

compels its interpretation. Defs.’ MSJ & Opp’n, ECF No. 22 at 

25-26. While “[a]rbitrary agency action becomes no less so by 

simple dint of repetition,” Judulang v. Holder, 565 U.S. 42, 61 

(2011), its arguments are nonetheless unpersuasive because the 

only case it discusses as support, Matter of Soffici, is readily 

distinguishable. Moreover, the Court finds that USCIS’ binding 

precedent supports its decision. 

In Matter of Soffici, the alien investor owned the 

commercial enterprise in which he invested. 22 I. & N. Dec. 158, 

161-62 (BIA 1998). Like the plaintiffs, the investor attempted 

to invest third-party loan proceeds. See id. However, unlike the 

plaintiffs here, the investor obtained the third-party loan in 

the enterprise’s name and secured the loan with the enterprise’s 

assets. Id. at 162. In so doing, the alien investor attempted 

to, as USCIS puts it, “take credit” for the loan by arguing that 

he had invested cash into the enterprise. See id.; Defs.’ MSJ & 

Opp’n, ECF No. 22 at 25-26. USCIS denied the alien investor’s 

petition because the alien had not invested any capital at all; 

rather, he loaned the money to the enterprise, which took out 

the loan in its own name. Soffici, 22 I. & N. Dec. at 162. 

Moreover, the loan was secured by the enterprise’s assets, 
38 

meaning that the alien investor did not invest new “capital” to 

create jobs. Id. In that regard, to the extent the alien 

investor invested any capital at all, he invested indebtedness 

because the investor was indebted to the enterprise itself. See 

id. (“even if it were assumed, arguendo, that the petitioner and 

[the enterprise] were the same legal entity for purposes of this 

proceeding, indebtedness that is secured by assets of the 

enterprise is specifically precluded from the definition of 

‘capital.’”). 

By contrast, plaintiffs here seek to invest cash obtained 

from third-party loans into new commercial enterprises. See 

generally Zhang A.R., ECF No. 27-4; Hagiwara A.R., ECF No. 27-1. 

The primary difference between this case and Soffici is that 

plaintiff-investors are not indebted to the enterprise, but to 

third-party lenders. See id. Unlike Soffici, the new commercial 

enterprises here received plaintiffs’ “new” capital to create 

American jobs. See id. Unlike the enterprise in Soffici, which 

bore the risk of loss, here, the enterprises received cash and 

bear no risk of loss (as the loans were not collateralized by 

the enterprises’ assets). See id. 

Moreover, two other binding USCIS decisions support the 

Court’s conclusion that investing “indebtedness,” pursuant to 8 

C.F.R. § 204.6(e), involves promising to pay the enterprise in 

the future via a promissory note. See Matter of Izummi, 22 I. & 
39 

N. Dec. 169 (BIA 1998)(finding that the alien investor invested 

indebtedness by promising to pay the enterprise in the future); 

Matter of Hsiung, 22 I. & N. Dec. 201, 201 (BIA 1998) (“A 

promissory note secured by assets owned by a petitioner can 

constitute capital under 8 C.F.R. § 204.6(e) if: the assets are 

specifically identified as securing the note; the security 

interests in the note are perfected in the jurisdiction in which 

the assets are located; and the assets are fully amenable to 

seizure by a U.S. note holder.”). Such precedent is consistent 

with the Court’s conclusion that an investor invests 

“indebtedness” when he or she is indebted to the enterprise 

itself. The special conditions imposed only on indebtedness also 

support this conclusion; because the asset actually contributed 

to the enterprise is merely a promise, the enterprise requires 

security in the form of personal collateralization. See Hsiung, 

22 I. & N. Dec. at 202 n.1 (“[M]erely ‘identifying’ assets as 

securing a loan, without perfecting the security interest, is 

not meaningful since the note holder cannot be assured that the 

identified assets will remain available for seizure in the event 

of default.”). This security interest is necessary to guarantee 

an actual investment in exchange for a visa preference. When the 

enterprise receives cash, however, no security interest is 

necessary. 
40 

USCIS does not dispute that Matter of Hsiung provides that 

a promissory note constitutes “indebtedness,” so long as the 

note is personally collateralized. See Defs.’ Reply, ECF No. 26 

at 15-16. Instead, it contends that Matter of Hsiung does not 

limit its ability “to analyze indebtedness under any other EB-5 

loan financing arrangement when interpreting the regulatory 

definition of capital.” Id. at 15 (emphasis in original). 

However, USCIS’ argument does not acknowledge that in Matter of 

Hsiung, USCIS used the term indebtedness to refer to financial 

arrangements between the alien investor and the commercial 

enterprise. See 22 I. & N. Dec. at 201-02. Here, USCIS uses the 

term indebtedness to refer to financial arrangements between the 

alien investor and an unrelated third party, allowing USCIS to 

inquire into the source of the invested cash (beyond whether the 

cash was lawfully acquired and that the cash was not derived 

from the enterprise itself). Such an interpretation runs 

contrary to Matter of Hsiung and the plain meaning of “capital.” 

iv. The Context and History of the Regulation Further 

Undermine USCIS’ Interpretation 

“Language, of course, cannot be interpreted apart from 

context.” Smith v. United States, 508 U.S. 223, 229 (1993). 

While the plain language of the regulation controls, the 

regulatory and statutory context and the history of the EB-5 

Visa Program bolsters the Court’s conclusion. See Roberts v. 
41 

Sea-Land Servs., Inc., 566 U.S. 93, 101 (2012) (“It is a 

fundamental cannon of statutory construction that words in a 

statute must be read in their context and with a view to their 

place in the overall statutory scheme.”). 

As stated above, “indebtedness” only qualifies as “capital” 

if it is “secured by assets owned by the alien entrepreneur,” 

for which the “alien entrepreneur is personally and primarily 

liable,” and “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). The requirement that capital 

be secured by assets owned by the investor applies only to 

“indebtedness” and only serves a purpose if the alien investor 

is indebted to the enterprise. See Matter of Hsiung, 22 I. & N. 

Dec. 201, 202 n.1 (BIA 1998) (“[M]erely ‘identifying’ assets as 

securing a loan, without perfecting the security interest, is 

not meaningful since the [enterprise] cannot be assured that the 

identified assets will remain available for seizure in the event 

of default.”). These conditions ensure that the enterprise 

actually receives the investment, achieving the statutory goal 

of bringing new investments to the United States to create jobs. 

See S. Rep. No. 101-55, at 21 (1989). The interpretation serves 

no purpose when an alien investor has invested lawfully-acquired 

cash, regardless of how the investor obtained that cash, so long 

as the cash was not contributed in exchange for a debt from the 
42 

enterprise. As discussed, the enterprise is free to deploy the 

cash loan proceeds invested. 

Thus, not only is USCIS’ interpretation without a textual 

or structural basis, but it is also unmoored from the purposes 

animating the EB-5 Program itself. See 8 U.S.C. § 1153(b)(5). 

The EB-5 Program was intended to “create new employment for U.S. 

workers and to infuse new capital into the country.” S. Rep. No. 

101-55, at 21 (1989). Following the enactment of the statute, 

the INS originally proposed a definition of capital that did not 

include indebtedness. See Proposed Rule Employment-Based 

Immigrants, 56 Fed. Reg. 30703, 30713 (July 5, 1991). 

Indebtedness was added to the definition of capital when the 

agency promulgated its final rule. See Final Rule, 56 Fed. Reg. 

60897, 60902 (Nov. 29, 1991). The agency explained that it 

intended to expand the definition of capital because “Congress 

intended the definition [of capital] to be broad.” Id. Indeed, 

both parties agree that “indebtedness” was added to 8 C.F.R. § 

204.6(e) in order to expand the assets that qualify as 

“capital.” See Pls.’ MSJ, ECF No. 19 at 36-37; Defs.’ Reply, ECF 

No. 26 at 11 (“during the rulemaking process, the agency 

indicated that it made the definition of capital broad”). 

However, USCIS’ interpretation narrows the assets that qualify 

as capital. In its view, “cash” only qualifies as “capital” if 

not derived from an uncollateralized, third-party loan. This 
43 

interpretation transforms the definition of “capital” from 

“capital means cash” (among other things) to “capital means cash 

not obtained from an uncollateralized, third-party loan.” See 8 

C.F.R. § 204.6(e). 

With Congress’ intent in mind, USCIS’ interpretation is at 

odds with Congress’ broad statutory purpose because it narrows 

the definition of capital. It may well be that USCIS has other 

policy reasons for not wanting to accept lawfully-obtained cash 

investments obtained from uncollateralized, third-party loans. 

Whatever those reasons may be, USCIS’ interpretation is divorced 

from the language of its own regulation and the statutory 

purpose animating the EB-5 Program. As such, its interpretation 

is plainly erroneous, and its denials based on that 

interpretation are arbitrary and capricious. 

2. USCIS Violated the APA’s Notice and Comment Requirement 

Plaintiffs also argue that USCIS’ interpretation, as 

articulated in the 2015 IPO Remarks, violates the APA’s notice 

and comment requirement. Pls.’ MSJ, ECF No. 19 at 44-49. They 

contend that USCIS’ interpretation is a “substantive” or 

“legislative” rule necessitating notice and comment procedures 

because it “carries the force of law” and is applied “with full 

force in every case in which a petitioner uses the cash proceeds 

of a loan as EB-5 investment capital.” Id. at 45. As evidence, 

plaintiffs point to USCIS’ instructions ordering adjudicators to 
44 

deny cases in which a petitioner invested cash loan proceeds 

unless that petitioner established that he or she is personally 

liable for the loan. Id. at 46-47. 

USCIS argues that it did not violate the APA’s notice and 

comment procedures, putting forward two arguments. Defs.’ MSJ & 

Opp’n, ECF No. 22 at 30-34. First, USCIS argues that plaintiffs 

are time-barred from challenging the definition of “capital” as 

procedurally deficient because the regulation is over twentyfour years old, and the APA has a six-year statute of 

limitations. Id. at 31. Second, USCIS argues that its 

interpretation does not constitute a legislative rule requiring 

notice and comment. Instead, USCIS posits that the 

interpretation in the 2015 IPO remarks merely “clarified the 

agency’s longstanding policy on how alien investors can satisfy 

the definition of ‘capital’ . . . when investing loan proceeds.” 

Id. at 32. Because its interpretation “sensibly conforms to the 

words of a statute or existing legislative rule,” USCIS contends 

that it did not establish a legislative rule requiring notice 

and comment. Id. at 33. As such, it did not violate the APA. 

Plaintiffs respond that their claim is not time-barred 

because they do not challenge the existing regulation, as 

codified in 8 C.F.R. § 204.6(e). Pls.’ Reply, ECF No. 24 at 39. 

Instead, plaintiffs challenge USCIS interpretation as announced 

in its 2015 IPO Remarks. Because plaintiffs filed suit within a 
45 

“few months” of the 2015 IPO Remarks, plaintiffs argue that 

their claim is timely. Id. Plaintiffs also contend that USCIS’ 

interpretation is a legislative rule because it adopts a new 

position inconsistent with existing regulations. Id. at 40-41. 

a. Plaintiffs’ Claims are Not Time-Barred 

As an initial matter, the Court agrees that plaintiffs’ APA 

claims are not barred by the applicable six-year statute of 

limitations. True, the APA provides a six-year window for 

plaintiffs to challenge agency rules, see James Madison Ltd. by 

Hecht v. Ludwig, 82 F.3d 1085, 1094 (D.C. Cir. 1996) 

(recognizing the APA carries a six-year statute of limitations), 

but it is abundantly clear that plaintiffs challenge USCIS’ 

interpretation of the regulation, not the underlying regulation 

itself. See generally Pls.’ MSJ, ECF No. 19. 

Indeed, plaintiffs do “no[t] dispute that the regulation 

defining ‘capital’ was promulgated only after notice published 

in the Federal Register and an opportunity for public comment.” 

Pls.’ Reply, ECF No. 24 at 39. Instead, they challenge USCIS’ 

interpretation of that regulation as erroneous and violative of 

the APA. See generally Pls.’ MSJ, ECF No. 19. Plaintiffs sued 

USCIS on June 23, 2015, see Compl., ECF No. 1, just two months 

after USCIS announced its interpretation on April 22, 2015, see 

2015 IPO Remarks. As such, plaintiffs filed their APA claim well 

within the applicable six-year statute of limitations. 
46 

b. USCIS’ Interpretation is a Legislative Rule Subject to 

the APA’s Notice and Comment Requirement 

The APA requires federal agencies to publish “[g]eneral 

notice of proposed rulemaking” in the Federal Register, 5 U.S.C. 

§ 553(b), and “give interested persons an opportunity to 

participate in the rule making through submission of written 

data, views, or arguments,” 5 U.S.C. 553(c); Air Transp. Ass'n 

of Am., Inc. v. F.A.A., 291 F.3d 49, 55 (D.C. Cir. 2002). 

Section 553, however, exempts “interpretative rules, general 

statements of policy, or rules of agency organization, 

procedure, or practice.” 5 U.S.C. § 553(b). These exemptions are 

to be “narrowly construed and only reluctantly countenanced.” 

State of N. J., Dep't of Envtl. Prot. v. U.S. Envtl. Prot. 

Agency, 626 F.2d 1038, 1045 (D.C. Cir. 1980). If an agency does 

not follow proper rule-making procedures when required, a court 

can “hold unlawful and set aside agency action, findings, and 

conclusions found to be ... without observance of procedure 

required by law.” 5 U.S.C. § 706(2)(D). 

Determining whether a given agency action is interpretive 

or legislative is an “extraordinarily case-specific 

endeavor.” Am. Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1045 (D.C. 

Cir. 1987). Indeed, the APA does not define “interpretive rule,” 

and “its precise meaning is the source of much scholarly and 

judicial debate.” Perez v. Mortg. Bankers Ass'n, 135 S.Ct. 1199, 
47 

1204 (2015); see General Motors Corp. v. Ruckelshaus, 742 F.2d 

1561, 1565 (D.C. Cir. 1984) (en banc) (describing the 

distinction as “enshrouded in considerable smog”). “The D.C. 

Circuit, however, has recognized a four-part test for 

determining if a rule is legislative or interpretive.” Texas 

Children's Hosp. v. Azar, 315 F. Supp. 3d 322, 337 (D.D.C. 

2018)(citing Am. Mining Cong. v. Mine Safety and Health Admin., 

995 F.2d 1106, 1112 (D.C. Cir. 1993)). Whether “the purported 

interpretive rule has ‘legal effect’” is determined by: 

(1) [W]hether in the absence of the rule there 

would not be an adequate legislative basis for 

enforcement action or other agency action to 

confer benefits or ensure the performance of 

duties; (2) whether the agency has published 

the rule in the Code of Federal Regulations; 

(3) whether the agency has explicitly invoked 

its general legislative authority; and (4) 

whether the rule effectively amends a prior 

legislative rule. If the answer to any of 

these questions is affirmative, we have a 

legislative rule. 

Am. Mining Cong., 995 F.2d at 1112. The court must make this 

determination itself; it cannot accept an agency’s 

characterization of its own action: “it is well established that 

an agency may not label a substantive change to a rule an 

interpretation simply to avoid the notice and comment 

requirements.” Air Transp. Ass’n, 291 F.3d at 55 (citing 

Appalachian Power Co. v. EPA, 208 F.3d 1015, 1024 (D.C. Cir. 

2000)). 
48 

 The second and third factors are not contested here: USCIS’ 

interpretation was not published in the Federal Register and 

USCIS does not invoke its general rulemaking authority. See 

generally Pls.’ MSJ, ECF No. 19; Defs.’ MSJ & Opp’n, ECF No. 22. 

Evaluating the fourth factor, however, clearly suggests that 

USCIS’ interpretation is a legislative rule. “With respect to 

the fourth factor, ‘[t]he practical question inherent in the 

distinction between legislative and interpretive regulations is 

whether the new rule effects a substantive regulatory change to 

the statutory or regulatory regime.’” Texas Children’s Hosp., 

315 F. Supp. 3d at 337 (quoting Elec. Privacy Info. Ctr. v. U.S. 

Dep't of Homeland Sec., 653 F.3d 1, 6–7 (D.C. Cir. 2011)). As 

has been extensively discussed, supra Sec. III.A.1.c, the Court 

finds that USCIS’ interpretation was plainly erroneous because 

it contradicted the plain meaning of the EB-5 regulation. By 

requiring investors to personally collateralize loan proceeds 

invested as cash, USCIS added an additional requirement to the 

regulatory definition of “capital” not found within the text. In 

so doing, USCIS impermissibly created “de facto another 

regulation.” Christensen, 529 U.S. at 588. 

It is well-settled that a policy that adds a requirement 

not found in the relevant regulation is a substantive rule that 

is invalid unless promulgated after notice and comment. See 

Cent. Texas Tel. Co-op., Inc. v. F.C.C., 402 F.3d 205, 211 (D.C. 
49 

Cir. 2005) (“If a second rule repudiates or is irreconcilable 

with a prior legislative rule, the second rule must be an 

amendment of the first; and, of course, an amendment to a 

legislative rule must itself be legislative.”)(citations and 

quotations omitted); Air Transp. Ass’n, 291 F.3d at 56 (“As the 

United States Supreme Court has noted, APA rulemaking is 

required if an interpretation ‘adopt[s] a new position 

inconsistent with ... existing regulations.’”)(quoting Shalala 

v. Guernsey Mem'l Hosp., 514 U.S. 87, 100 (1995)); Nat'l Family 

Planning & Reprod. Health Ass'n, Inc. v. Sullivan, 979 F.2d 227, 

236 (D.C. Cir. 1992)(“[The agency] may not constructively 

rewrite the regulation, which was expressly based upon a 

specific interpretation of the statute, through internal 

memoranda or guidance directives that incorporate a totally 

different interpretation and effect a totally different 

result.”); Nebraska Dep't of Health & Human Servs. v. U.S. Dep't 

of Health & Human Servs., 340 F. Supp. 2d 1, 17 (D.D.C. 

2004)(“Changing the interpretation of a regulation requires a 

notice and comment period.”)(citing Paralyzed Veterans of 

America v. D.C. Arena, 117 F.3d 579, 586 (D.C. Cir. 1997)). As 

an example, USCIS has recently proposed increasing the required 

capital contribution to qualify for an EB-5 visa, which would 

amend a requirement found in 8 C.F.R. § 204.6. Understanding 

that such a change would require notice and comment procedures, 
50 

USCIS proposed the amendment in the Federal Register. See 

Proposed Rule EB-5 Immigrant Investor Program Modernization, 82 

Fed. Red. 4738 (Jan. 13, 2017). 

Moreover, USCIS’ interpretation creates a “binding norm 

that is finally determinative of the issues or rights to which 

it is addressed.” CropLife Am. V. EPA, 329 F.3d 876, 881 (D.C. 

Cir. 2003)(citations and quotations omitted). To illustrate, 

about a month before issuing the IPO Remarks, USCIS issued 

instructions for adjudicators regarding “capital derived from 

indebtedness.” See Hagiwara A.R., ECF No. 27-1 at 399-401; Zhang 

A.R., ECF No. 27-4 at 183-185. In the instructions, USCIS states 

that adjudicators “must” follow its interpretation by ensuring 

that the petitioner has established that he or she is personally 

and primarily liable for the loan when investing loan proceeds. 

Id. If the petitioner is unable to demonstrate eligibility under 

USCIS’ interpretation, an adjudicator “will” deny the petition. 

Id. USCIS’ instructions make clear that its interpretation 

carries the force of law: adjudicators are not free to exercise 

discretion and the interpretation is binding on all petitions. 

USCIS’ choice of words is of “great[] importance,” as the D.C. 

Circuit has “given decisive weight to the agency’s choice 

between the words ‘may’ and ‘will’” when determining whether an 

interpretation or policy is binding. Brock v. Cathedral Bluffs 

Shale Oil Co., 796 F.2d 533, 537–38 (D.C. Cir. 1986). Indeed, it 
51 

is clear that USCIS’ interpretation created a “binding norm that 

is finally determinative of the issues or rights to which it 

[was] addressed.” CropLife Am., 329 F.3d at 881; see also Am. 

Bus Ass'n v. United States, 627 F.2d 525, 529 (D.C. Cir. 1980) 

(“If it appears that a so-called policy statement is in purpose 

or likely effect one that narrowly limits administration 

discretion, it will be taken for what it is, a ... rule of 

substantive law.”)(quotations and citations omitted). As such, 

USCIS’ interpretation is a legislative, substantive rule subject 

to notice and comment procedures. See 5 U.S.C. § 553(b),(c). 

 For the reasons exhaustively discussed, the Court cannot 

agree with USCIS that its interpretation is not a legislative 

rule because it “sensibly conforms to the words of a statute or 

existing legislative rule.” Defs.’ MSJ & Opp’n, ECF No. 22 at 

33. Indeed, the Court has already found that USCIS’ 

interpretation does not conform to the text of 8 C.F.R. § 

204.6(e). Similarly, the Court does not find that USCIS’ 

interpretation is merely a clarification of its long-standing 

policy. USCIS’ interpretation may well be long-standing, but it 

is not a mere clarification of the governing regulation. The 

interpretation modifies the plain meaning of the EB-5 

regulation, effectively amending the rule. As such, it is a 

legislative rule. See Am. Mining Cong., 995 F.2d at 1109. 
52 

Because USCIS did not submit the non-exempt interpretation for 

notice and comment, USCIS violated the APA. 

3. Remand is the Proper Remedy 

Plaintiffs request that the Court approve their petitions 

outright. See Compl., ECF No. 1 at 27-28. The Court concludes 

that such a remedy is not appropriate: “[a]s the Supreme Court 

has instructed . . . where ‘the record before the agency does 

not support the agency action, . . . the proper course, except 

in rare circumstances, is to remand to the agency for additional 

investigation or explanation.’” Cty. of Los Angeles v. Shalala, 

192 F.3d 1005, 1023 (D.C. Cir. 1999) (quoting Florida Power & 

Light Co. v. Lorion, 470 U.S. 729, 744, (1985)). A reviewing 

court is “not generally empowered to conduct a de novo inquiry 

into the matter being reviewed and to reach its own conclusions 

based on such an inquiry.” Florida Power, 470 U.S. at 744. This 

is especially the case “in the field of immigration,” where 

“there may be sensitive issues lurking that are beyond the ken 

of the court.” Fox v. Clinton, 684 F.3d 67, 80 (D.C. Cir. 2012). 

Therefore, the “course of prudence” is to remand the case 

to USCIS for reconsideration of the class members’ petitions. 

Id. USCIS’ decisions to deny the class members’ petitions are 

therefore VACATED and the denials are REMANDED to USCIS for 

reconsideration consistent with this Memorandum Opinion. 
53 

B. Motion for Class Certification 

 Having determined that USCIS’ interpretation of its 

regulation is erroneous and violates the APA, the Court must now 

evaluate plaintiffs’ pending motion for class certification. 

Pls.’ Class Cert. Mot., ECF No. 10. Plaintiffs seek 

certification of the following class: 

All Form I-526 petitioners who: (1) invested 

cash in a new commercial enterprise in an 

amount sufficient to qualify as an EB-5 

investor; (2) obtained some or all of the cash 

invested in the new commercial enterprise 

through a loan; (3) filed a Form I-526 

petition prior to April 22, 2015 based on that 

investment; and (4) received or will receive 

a denial of their I-526 petition on the ground 

that the loan used to obtain the invested cash 

fails the collateralization test described in 

the announcement made by USCIS during its 

April 22, 2015 EB-5 stakeholder engagement. 

Id. at 1. Plaintiffs contend that the proposed class satisfies 

the requirements of Federal Rule of Civil Procedure 23 because 

the class members challenge the facial validity of USCIS’ 

interpretation of the EB-5 regulation. See generally id. The 

class members all sought (or are seeking) to immigrate to the 

United States via the EB-5 program but were denied (or will be 

denied) for the same reason. See id. 

USCIS opposes plaintiffs’ motion for class certification, 

arguing that the proposed class lacks commonality and typicality 

and, as such, class counsel may not fairly and adequately 

represent all class members. See Defs.’ Class Cert. Opp’n, ECF 
54 

No. 13 at 11-15. USCIS also argues that plaintiffs do not seek 

relief from an unlawful practice generally applicable to the 

entire class. See id. at 15-16. Having carefully considered the 

motions, the Court hereby GRANTS plaintiffs’ motion for class 

certification, albeit with a slightly modified class definition, 

discussed below. 

1. Standard of Review 

Class certification is governed by Federal Rule of Civil 

Procedure 23 and proponents of the class action have the burden 

of proof as to each of its requirements. See McCarthy v. 

Kleindienst, 741 F.2d 1406, 1414, 1414 n.9 (D.C. Cir. 1984). 

First, the party seeking certification must demonstrate that the 

proposed class satisfies all four of the requirements listed in 

Rule 23(a). See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 

345 (2011). Specifically, the party seeking certification must 

demonstrate that: “(1) the class is so numerous that joinder of 

all members is impracticable; (2) there are questions of law or 

fact common to the class; (3) the claims or defenses of the 

representative parties are typical of . . . the class; and (4) 

the representative parties will fairly and adequately protect 

the interests of the class.” Fed. R. Civ. P. 23(a). “Rule 23(a) 

ensures that the named plaintiffs are appropriate 

representatives of the class whose claims they wish to 

litigate.” Wal-mart, 564 U.S. at 349. Its “four requirements—
55 

numerosity, commonality, typicality, and adequate 

representation—effectively limit the class claims to those 

fairly encompassed by the named plaintiff's claims.” Id. 

(quotations and citations omitted). 

Second, plaintiffs must demonstrate that the proposed class 

satisfies at least one of the three requirements listed in Rule 

23(b). See id. at 345. Here, the plaintiffs argue the proposed 

class satisfies Rule 23(b)(2) because “the party opposing the 

class has acted or refused to act on grounds that apply 

generally to the class, so that final injunctive relief or 

corresponding declaratory relief is appropriate respecting the 

class as a whole.” Fed. R. Civ. P. 23(b)(2). In evaluating a 

class proposed under Rule 23(b)(2), the “key” inquiry is whether 

the “injunctive or declaratory remedy warranted” is of a 

“indivisible nature,” “such that [the conduct] can be enjoined 

or declared unlawful only as to all of the class members or as 

to none of them.” Wal-Mart, 564 U.S. at 360 (quotations and 

citations omitted). “In other words, Rule 23(b)(2) applies only 

when a single injunction or declaratory judgment would provide 

relief to each member of the class.” Id. 

2. The Class is Sufficiently Ascertainable 

Although Rule 23 does not “specifically require plaintiffs 

to establish that a class exists, this is a common-sense 

requirement and courts routinely require it.” Pigford v. 
56 

Glickman, 182 F.R.D. 341, 346 (D.D.C. 1998)(citing Franklin v. 

Barry, 909 F. Supp. 21, 30 (D.D.C. 1995); Lewis v. Nat'l 

Football League, 146 F.R.D. 5, 8 (D.D.C. 1992)). This “commonsense requirement” ensures that any class is “clearly defined 

[and] is designed primarily to help the trial court manage the 

class.” Id. (citing Hartman v. Duffey, 19 F.3d 1459, 1471 (D.C. 

Cir. 1994)). It is not designed to be a “particularly stringent 

test,” but “plaintiffs must at least be able to establish that 

the general outlines of the membership of the class are 

determinable at the outset of the litigation” such that “it is 

administratively feasible for the court to determine whether a 

particular individual is a member.” Id. (quotations and 

citations omitted). 

USCIS does not dispute that the plaintiffs have 

sufficiently established that a class exists or that the general 

outlines of membership are determinable. See generally Defs.’ 

Class Cert. Opp’n, ECF No. 13 at 2, 9-17 (stating that the Court 

“should deny plaintiffs’ motion for failure to identify an 

ascertainable class” but only arguing that the proposed class 

does not meet the Rule 23(a) and (b)(2) requirements). 

Regardless, the Court finds that the plaintiffs’ proposed class 

is based on objective criteria that can be easily determined. 

See Thorpe v. District of Columbia, 303 F.R.D. 120, 140 (D.D.C. 

2014)(finding that the proposed class was ascertainable because 
57 

the definitions were “fairly specific” and not “vague”). As 

such, the proposed class is ascertainable and well-defined: “by 

looking at the class definition, counsel and putative class 

members can easily ascertain whether they are members of the 

class.” Pigford, 182 F.R.D. at 346. 

Indeed, plaintiffs’ class is readily ascertainable to both 

class members and counsel. As discussed above, when USCIS denies 

an I-526 petition, it issues written notice with the agency’s 

reasons for denying the petition. See 8 C.F.R. § 204.6(k)(“the 

petitioner will be notified of the decision, and, if the 

petition is denied, of the reasons for the denial”); Hagiwara 

A.R., ECF No. 27-1 at 392-397 (Notice of Decision); Zhang A.R., 

ECF No. 27-4 at 177-181 (Notice of Decision). Therefore, to 

determine whether an individual meets the class definition, one 

need only read the Notice of Decision (or the preceding Request 

for Evidence, see e.g., Hagiwara A.R., ECF No. 27-1 at 245-250). 

If the investor filed an I-526 petition that was denied solely 

based on USCIS’ erroneous interpretation that cash loan proceeds 

are invested as indebtedness, the investor is a member of the 

class. 

3. The Class is Sufficiently Numerous 

The Court finds, and USCIS does not dispute, that “the 

class is so numerous that joinder of all members is 

impracticable.” Fed. R. Civ. P. 23(a); see generally Defs.’ 
58 

Class Cert. Opp’n, ECF No. 13. The numerosity requirement is 

determined on a case-by-case basis and “imposes no absolute 

limitations”. R.I.L-R v. Johnson, 80 F. Supp. 3d 164, 180 

(D.D.C. 2015)(citations omitted). As such, plaintiffs “need not 

prove exactly how many people fall within the class to merit 

certification.” Id. (citing Kifafi v. Hilton Hotels Retirement 

Plan, 189 F.R.D. 174, 176 (D.D.C.1999) (“So long as there is a 

reasonable basis for the estimate provided, the numerosity 

requirement can be satisfied without precise numbers.”)). 

Generally speaking, “courts have found that a proposed class 

consisting of at least forty members” satisfies Rule 23(a)’s 

numerosity requirement. Johnson v. District of Columbia, 248 

F.R.D. 46, 52 (D.D.C.2008). 

Plaintiffs have provided a reasonable basis to assume there 

are at least 134 EB-5 investors whose I-526 petitions have been 

or will be denied based on USCIS’ erroneous interpretation of 

its regulation that loan proceeds are invested as “indebtedness” 

and not “cash.” See Peter D. Joseph Decl., ECF No. 10-6 

(reporting that at least 134 investors from seven Regional 

Centers received a Request for Evidence, Notice of Intent to 

Deny, or Notice of Decision based on USCIS’ erroneous 

interpretation). As such, the Court agrees that plaintiffs have 

established the numerosity requirement. 
59 

4. There are Questions of Law Common to the Entire Class and 

Claims Typical to the Entire Class 

Plaintiffs argue that there are questions of law or fact 

common to the class and the representatives’ claims are typical 

of the class—as Rule 23(a)(2) and (3) require—because the 

plaintiffs challenge USCIS’ “uniform policy or practice,” which 

affected or will affect each member. Pls.’ Class Cert. Mot., ECF 

No. 10 at 20-23. Because the class definition requires that the 

investor’s I-526 petition has been denied (or will be denied) 

based on USCIS’ erroneous interpretation, the Court’s decision 

resolves the issue central to each class member’s claim. See id.

USCIS argues that plaintiffs have not established commonality 

and typicality because the putative class is too broadly drawn, 

“bringing within its ambit differing factual circumstances and 

differing legal claims.” Defs.’ Class Cert. Opp’n, ECF No. 13 at 

11; see id. 11-14. It contends that the proposed class includes 

“groups of aliens whose legal and factual interests differ” 

because there are “different factual basis for their claims.” 

Id. at 11. USCIS points to the “different loan agreements at 

issue in these various investment projects,” id. at 13, and 

argues that the definition impermissibly “treats[] all debt, 

regardless of structure, the same,” id. at 12. 

“The commonality and typicality requirements often overlap 

because both serve as guideposts to determine whether a class 
60 

action is practical and whether the representative plaintiffs' 

claims are sufficiently interrelated with the class claims to 

protect absent class members.” R.I.L-R v. Johnson, 80 F. Supp. 

3d 164, 181 (D.D.C. 2015)(quotations and citations omitted). 

Because USCIS’ principal challenge to class certification goes 

to both, the Court considers them together. 

To establish commonality, plaintiffs must demonstrate that 

“there are questions of law or fact common to the class.” Fed. 

R. Civ. P. 23(a)(2). To that end, class members' claims must 

depend on a “common contention [that] . . . is capable of 

classwide resolution—which means that determination of its truth 

or falsity will resolve an issue that is central to the validity 

of each one of the claims in one stroke.” Wal–Mart, 564 U.S. at 

350. In other words, the representative plaintiffs must show 

that the class members have “suffered the same injury.” Id. 

(quotations omitted). Indeed, commonality is satisfied when 

plaintiffs challenge “a uniform policy or practice that affects 

all class members.” DL v. District of Columbia, 713 F.3d 120, 

128 (D.C. Cir. 2013). To demonstrate typicality, plaintiffs must 

establish that the class representatives’ claims or defenses are 

“typical of the claims or defenses of the class.” Fed. R. Civ. 

P. 23(a)(3). “Typicality means that the representative 

plaintiffs must ‘possess the same interest and suffer the same 
61 

injury’ as the other class members.” R.I.L-R, 80 F. Supp. 3d at 

181 (quoting Falcon, 457 U.S. at 156). 

Here, it is clear that all members of the class “suffered 

the same injury” or will suffer the same injury: denial of their 

I-526 petition based on USCIS’ erroneous interpretation of 8 

C.F.R. § 204.6 that cash loan proceeds are invested as 

“indebtedness” and therefore must be personally collateralized. 

Walmart, 564 U.S. at 350. Indeed, the challenged interpretation, 

as announced in USCIS’ 2015 IPO Remarks, is a “uniform policy or 

practice . . . [that] affects all class members.” R.I.L-R, 80 F. 

Supp. 3d at 181 (quoting DL, 713 F.3d at 128). By terms of the 

approved and modified class definition, USCIS’ erroneous 

interpretation must be the sole basis for every class member’s 

existing or forthcoming I-526 petition denial. This common 

injury is “capable of classwide resolution” because the Court’s 

decision resolves “each one of the claims in one stroke”—it 

vacates and remands USCIS’ denials. Walmart, 564 U.S. at 350. 

Petition-specific factual differences among class members 

would not defeat commonality or typicality. Indeed, 

“demonstrating typicality does not mean showing that there are 

no factual variations between the claims of the plaintiffs.” 

Bynum v. District of Columbia, 214 F.R.D. 27, 35 (D.D.C. 2003). 

Here, the Court concludes that the named plaintiffs’ claims are 

“based on the same legal theory as the claims of the other class 
62 

members,” namely that USCIS’ interpretation of 8 C.F.R. § 204.6 

is erroneous and violates the APA. Id. As such, the typicality 

requirement is satisfied as “the named plaintiffs' injuries”—

petition denials based on the erroneous interpretation—“arise 

from the same course of conduct that gives rise to the other 

class members' claims.” Id. 

The Court is not persuaded by USCIS’ arguments to the 

contrary. For example, USCIS points to the “different loan 

agreements at issue” and argues that plaintiffs’ “overbroad” 

definition lacks commonality and typicality because “the 

structure of the third party loan invariably affects [USCIS’] 

determination.” Defs.’ Class Cert. Opp’n, ECF No. 13 at 12-13. 

But plaintiffs do not challenge USCIS’ interpretation as 

erroneously applied in different circumstances. Instead, 

plaintiffs’ challenge the facial validity of USCIS’ 

interpretation that cash loan proceeds are invested as 

indebtedness. See generally Pls.’ MSJ, ECF No. 19. By 

invalidating USCIS’ interpretation and vacating its denials 

based on that interpretation, the Court’s decision resolves all 

class members’ claims, as all class members received or will 

receive denials solely based on USCIS’ erroneous interpretation. 

Indeed, because USCIS’ interpretation is erroneous, the Court 

disagrees that class certification “would quickly devolve into 

hundreds of individualized inquiries about each plaintiff’s 
63 

particular circumstances,” as USCIS contends. Defs.’ Class Cert. 

Opp’n, ECF No. 13 at 13-14. 

Finally, the Court rejects USCIS’ suggestion that 

commonality and typicality cannot be satisfied because the 

proposed class is “not limited in geographic scope.” Id. at 12. 

“Nothing in Rule 23 . . . limits the geographical scope of a 

class action that is brought in conformity with that Rule.” 

Califano v. Yamasaki, 442 U.S. 682, 702 (1979). Instead, a court 

must “take care to ensure that nationwide relief is indeed 

appropriate in the case before it” to avoid “improperly 

interfer[ing] with the litigation of similar issues in other 

judicial districts.” Id. The Court has done so here. Plaintiffs 

challenge a federal agency’s interpretation of its rule 

established in the course of implementing a federal immigration 

program. Any geographic limitation of the class would be 

entirely arbitrary. See id. at 702-03 (affirming certification 

of a nationwide class challenging the administration of a 

federal program). Moreover, USCIS has not identified any ongoing 

litigation regarding the same issue in other districts. See 

generally Defs.’ Class Cert. Opp’n, ECF No. 13. As such, there 

is no reason to believe that certifying a nationwide class would 

foreclose adjudication by other courts. 
64 

5. The Representative Plaintiffs and Counsel Will Fairly and 

Adequately Protect the Interests of the Class 

Plaintiffs argue that the representative parties will 

fairly and adequately protect the interests of the class because 

there is no conflict between the named plaintiffs and the rest 

of the class and counsel is competent to represent the class. 

Pls.’ Class Cert. Mot., ECF No. 10 at 24. USCIS does not dispute 

that counsel is competent to represent the class, but instead 

argues that the class representatives cannot fairly represent 

the class because their “legal and factual circumstances . . . 

are so distinct from the proposed class.” Defs.’ Class Cert. 

Opp’n, ECF No. 13 at 14. Specifically, USCIS points to the fact 

that the named plaintiffs obtained loans from businesses they 

principally owned. Id. at 14-15.

As discussed, the class members all suffered or will suffer 

the same injury: denial of their I-526 petitions based on USCIS’ 

erroneous interpretation of its regulation. As such, the 

representative members’ interests are aligned with the rest of 

the class. The Court again rejects USCIS’ argument that 

plaintiffs have conflicting interests based on their specific 

loan arrangements because plaintiffs do not challenge any 

particular application of USCIS’ interpretation. Instead, 

plaintiffs challenge USCIS’ interpretation of its regulation 

generally. 
65 

Finally, the Court finds that class counsel is more than 

competent to represent the class. See, e.g., Kurzban Decl., ECF 

No. 10-7. Counsel has decades of experience with both 

immigration litigation and class actions. See generally id.

Based on the briefing in this case, counsel clearly devoted 

substantial time and efforts to this litigation and will 

continue to zealously represent all class members. 

6. USCIS’ Erroneous Interpretation Applies Generally

 

Plaintiffs argue that they have established that USCIS 

“acted or refused to act on grounds that apply generally to the 

class, so that final injunctive relief or corresponding 

declaratory relief is appropriate respecting the class as a 

whole” pursuant to Rule 23(b)(2). Plaintiffs contend that all of 

the class members’ I-526 petitions have been or will be denied 

for the same reason. Pls.’ Class Cert. Mot., ECF No. 10 at 24-

25. USCIS argues that plaintiffs do not seek relief from a 

generally applicable unlawful practice because USCIS’ 

interpretation of its regulation is not a “new eligibility 

rule.” Defs.’ Class Cert. Opp’n, ECF No. 13 at 15. Instead, 

USCIS contends that its interpretation is “longstanding,” and 

therefore plaintiffs “have not shown that injunctive or 

declaratory relief is appropriate.” Id. at 15-16. 

Plaintiffs’ proposed class satisfies Rule 23(b)(2) because 

USCIS’ interpretation of its regulation has been or will be 
66 

applied generally to the entire class and plaintiffs seek 

declaratory and injunctive relief that will benefit the class as 

a whole. As in R.I.L-R v. Johnson, plaintiffs’ “suit challenges 

a policy generally applicable to all class members.” 80 F. Supp. 

3d at 182. As has been discussed, “a determination of whether 

that policy is unlawful would resolve all class members’ claims 

‘in one stroke.’” Id. (quoting Wal-Mart, 564 U.S. at 350). 

USCIS’ arguments to the contrary are devoid of merit. Even 

assuming USCIS’ interpretation is “longstanding” and is not a 

“new eligibility rule,” it does not follow that certification is 

inappropriate. First, the Court has indeed determined that 

USCIS’ interpretation is a legislative rule subject to the APA’s 

notice and comment procedures, lending support to the argument 

that its interpretation is a formal “policy.” See supra Sec. 

III.A.2. Second, “courts have never required [class 

certification under 23(b)(2)] to turn on whether the party 

opposing the class has adopted . . . a formal policy. Rather, it 

is enough to show that a defendant ‘has acted in a consistent 

manner toward members of the class so that his actions may be 

viewed as part of a pattern of activity.’” Bynum, 214 F.R.D. at 

37 (quoting 7A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY 

KANE, FEDERAL PRACTICE AND PROCEDURE § 1775 (2d ed. 1986)). 

Indeed, USCIS cannot dispute that its purportedly “longstanding” 
67 

interpretation is being applied consistently and to the 

detriment of the proposed class. 

7. Court Modification of the Class Definition 

Accordingly, the Court finds that plaintiffs have 

established that a class action is appropriate pursuant to 

Federal Rule of Civil Procedure 23. As such, the Court GRANTS

plaintiffs’ motion for class certification, albeit with two 

modifications to the class definition. 

First, plaintiffs limit the proposed class to all investors 

who “filed a Form I-526 petition prior to April 22, 2015.” Pls.’ 

Class Cert. Mot., ECF No. 10 at 1. Plaintiffs propose defining 

the class in this manner so “all proposed class members would 

benefit if the Court determines that the collateralization rule 

cannot be applied retroactively (Count II).” Id. at 22. The date 

is significant because USCIS publicly announced its erroneous 

interpretation on April 22, 2015 and plaintiffs argue that USCIS 

retroactively applied its interpretation to investors who 

applied for an EB-5 visa prior to that announcement. See id. at 

12-14. However, the Court ultimately does not reach plaintiffs’ 

retroactivity claim because it concludes that USCIS’ 

interpretation is plainly erroneous and violates the APA.10

 

10 Plaintiffs agree that the retroactivity analysis need not be 

reached if the Court finds that the interpretation is arbitrary 

and capricious. See Pls.’ MSJ, ECF No. 19 at 51 (“Indeed, the 

retroactivity analysis starts with the assumption that the 
68 

Therefore, because any denial based on USCIS’ interpretation is 

erroneous, the date limitation strikes the Court as unduly 

arbitrary. 

Second, the Court amends the definition to clarify that 

only investors who received a denial of their I-526 petition 

solely based on the USCIS’ interpretation are included in the 

class. The class does not include investors who received denials 

for multiple reasons. As such, the Court certifies the following 

class: 

All Form I-526 petitioners who: (1) invested 

cash in a new commercial enterprise in an 

amount sufficient to qualify as an EB-5 

investor; (2) obtained some or all of the cash 

invested in the new commercial enterprise 

through a loan; (3) filed a Form I-526 

petition based on that investment; and (4) 

received or will receive a denial of their I526 petition solely on the ground that the 

loan used to obtain the invested cash fails 

the collateralization test described in the

USCIS 2015 IPO Remarks announcement. 

IV. Conclusion 

For the foregoing reasons, the Court GRANTS IN PART

plaintiffs’ motion for summary judgment; DENIES USCIS’ crossmotion for summary judgment; GRANTS plaintiffs’ motion to 

 

policy or interpretation at issue is not arbitrary and 

capricious. If a rule is arbitrary and capricious, the issue of 

retroactivity is moot because the rule cannot be applied 

prospectively, much less retroactively.”). Thus, plaintiffs’ 

proposed temporal limitation serves no purpose.
69 

certify class, albeit with a modified class definition; and 

DENIES AS MOOT plaintiffs’ motion to amend the complaint. USCIS’ 

decisions to deny plaintiffs’ and class members’ petitions are 

therefore VACATED and the denials are REMANDED to USCIS for 

reconsideration consistent with this Memorandum Opinion. The 

Clerk of Court is directed to close this case, with such closure 

being without prejudice to a motion to re-open following further 

USCIS proceedings. An appropriate Order accompanies this 

Memorandum Opinion. 

SO ORDERED. 

Signed: Emmet G. Sullivan 

United States District Judge 

November 30, 2018