Issue Preclusion As To The Tenant-Occupancy Methodology in EB-5

by Joseph P. Whalen

There are a few recent cases that offer some potentially useful guidance on the issue of "issue preclusion". The first case is from the Ninth Circuit Court of Appeals and it specifically deals with a Petition for Review arising from Removal Proceedings. It is important to keep in mind that the Removal Context is markedly different from the Benefits Request Context within immigration law. If it weren't markedly different in nature then why would the Attorney General have separated the BIA from INS and consolidated the benefits appeals Decisions from the various Commissioners' and Directors' into the newly created AAU (later renamed AAO) way back in 1983?

The burden of proof starts out on opposite sides in these contexts. Additionally, within the Removal Context, there is a potential for and high probability of, a burden shifting to occur. While initially, the burden of proof is squarely on the Government to show that the named respondent is 1.) an alien, and 2.) removable; the respondent may choose to fight out these issues first, or simply admit them, and in either case, if and when the Government meets its initial burden, the alien will usually apply for some form of relief from removal. Certain issues, absent a material change, a change in the controlling law, or discovery of earlier fraud or deception, become affirmatively settled at some point. While a difference of opinion is normal and natural, very often such differences are irrational, and may degrade into a futile effort to rehash settled matters in order to delay the actual removal. Recalling that the first case presented is from the Removal Context, it quite succinctly spells out the four basic conditions required in order to invoke collateral estoppel, which should apply to either context.

Oyeniran v. Holder, No. 09-73683(9th Cir. March 6, 2012)^[1] , explains:

"IV. Discussion

A. Collateral Estoppel Applies in Immigration Proceedings

[1] It is beyond dispute that the doctrine of collateral estoppel (or issue preclusion) applies to an administrative agency's determination of certain issues of law or fact involving the same alien in removal proceedings. Allen v. McCurry, 449 U.S. 90, 94 (1980); Ramon-Sepulveda v. INS, 824 F.2d 749, 750 (9th Cir. 1987) (per curiam) (doctrine applies even when the agency reopens a removal proceeding for new evidence); Matter of Fedorenko, 19 I. & N. Dec. 57, 57 (BIA 1984)^[2] (doctrine conclusively establishes the ultimate facts of a subsequent deportation proceeding and precludes reconsideration of issues of law resolved by the prior judgment -absent a change in the controlling law).

Collateral estoppel applies to a question, issue, or fact when four conditions are met: (1) the issue at stake was identical in both proceedings; (2) the issue was actually litigated and decided in the prior proceedings; (3) there was a full and fair opportunity to litigate the issue; and (4) the issue was necessary to decide the merits. Montana v. United States, 440 U.S. 147, 153-54 (1979); Clark v. Bear Stearns & Co., Inc., 966 F.2d 1318, 1320 (9th Cir. 1992)."

How can we make sense of, and make use of collateral estoppel for EB-5 purposes?

• Initial I-924 approval supports a general sense of reasonable reliance on using a particular financing structure as well as a job-creation prediction methodology, but only if they are applied as anticipated and kept within approved operational parameters of the Regional Center.
• Approval of an I-526 Exemplar as an I-924 Amendment locks in a particular financing structure and job-creation prediction methodology for a specific project which supports an even greater degree of reasonable reliance, and absent fraud (any criminality) or plain old failure of the project, commands deference to the earlier adjudication decision.
• Remembering that, a partial failure is also a partial success and it stands to reason that job creation may still have occurred but might not be enough to remove conditions from all of the EB-5 investors. Think of this as pro-rated deference.
• Oyeniran v. Holder, No. 09-73683(9th Cir. March 6, 2012), explains:
• Collateral estoppel applies to a question, issue, or fact when four conditions are met:

(1) the "issue[s]" at stake was [were] identical in both^[3] proceedings (Job-Creation Prediction Methodology & financing structure and money pathways as submitted up-front and on the back-end);

(2) the issue was actually "litigated and decided" in the prior proceedings (EXEMPLAR I-526 or at least the initial I-924);

(3) there was a "full and fair opportunity to litigate" the issue (RFE or NOID and response/rebuttal); and

(4) the issue was "necessary to decide the merits" (Initial I-924 and/or the Exemplar I-526 was approved for Job-Creation Prediction Methodology & financing structure and money pathways).

An EB-5 Regional Center Proposal demands a large quantity of information in the form of supporting documentation submitted as evidence with a high level of verifiable detail from reliable sources. The exacting standards employed lead to a very solid settlement of many hypertechnical matters and issues. Once the structure and methodology have been deemed reasonable; have been explicitly accepted by USCIS; and EB-5 aliens have invested millions of dollars into a large project; USCIS cannot conscionably disallow the predicted indirect job creation of a successfully accomplished, previously approved plan when adjudicating the requests for removal of conditions on status. AAO has already blocked CSC on this basis in the same way that the Ninth Circuit blocked INS from reneging on such a "contract-like" agreement.

Of particular interest (to me at any rate) in this next case excerpt is the Seventh Circuit's statement that they were ".... unable to affirm the AAO's conclusion[s] .... because .... AAO's decisions lack[ed] individualized analysis and.... [did].... not identify particular deficiencies in the substantial evidence submitted ..."

Additionally, the Court found that AAO impermissibly applied statutory changes retroactively and contrary to the terms of a settlement agreement. You'll have to read that actual case for that particular discussion. That last point is quite important in the EB-5 Regional Center investment context especially, in light of another case of particular importance, namely; Chang v. United States of America, 327 F. 3d 911 (9th Cir. 2003)^[4] which involved an attempt by INS to retroactively apply its newer interpretations as stated in the 1998 AAO EB-5 Precedents in a manner that undercut the reasonable reliance that a group of EB-5 aliens had to that point. Of course, in order to reasonably rely on its plan, the investors have to succeed with it. In the absence of the successful culmination of a particular plan, the actual results are what matter in determining whether or not, conditions will be lifted.

Siddiqui also describes a jurisdictional mess where the old and newer statutes and regulations involved collided in such a way that the Court asked the different Administrative Agencies to sort of get together and fix this mess so that this case lands back in this Court. They did as asked but it just goes to the heart of another matter that has plagued immigration proceedings in the absence of a long overdue rulemaking by USCIS, especially AAO, and better coordination between the key players in these matters.

I have noticed that the BIA and USCIS have started to work more closely of late. However, DHS and DOJ have additional communication and coordination issues to work out. Improvements are needed not just between Departments but also individually within themselves. Better coordination of efforts through improved cooperation and communication seems to be growing steadily amongst the various intradepartmental components or "sister agencies" within each Department with shared or cross-jurisdictional authority.^[5]

Siddiqui v. Holder, Nos. 09-3912, 10-1282 & 10-3221 (7th Circuit, January 12, 2012)^[6] stated:

"....... Mohsin H. Siddiqui, a native of Pakistan, appeals the denial of his legalization applications by the Administrative Appeals Office ("AAO"), the appellate body of the U.S. Citizenship and Immigration Services ("USCIS"). Siddiqui disputes the AAO's finding that he failed to prove his continuous residence in the United States and the AAO's retroactive application of the definition of "conviction," found in the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 ("IIRIRA"), Pub. L. No. 104-208, 110 Stat. 3009, to his 1991 felony.

We are unable to affirm the AAO's conclusion regarding Siddiqui's failure to establish continuous residence because the AAO's decisions lack individualized analysis and do not identify particular deficiencies in the substantial evidence submitted by Siddiqui. Further, we conclude that the AAO erred in applying IIRIRA's definition to Siddiqui's offense because Congress did not clearly express its intent to apply the definition retroactively to individuals such as Siddiqui, whose legalization applications would have been adjudicated prior to the enactment of IIRIRA if the government had not unlawfully refused in late 1980s to accept applications from applicants who had briefly left the country. We therefore vacate the removal order and remand so that the AAO can properly address the evidence in support of Siddiqui's claim of continuous residence."

In the April 14, 2011, AAO non-precedent Decision^[7] pertaining to a South Dakota failed Dairy Farm Regional Center affiliated I-829 case provides some analysis invoking the reasoning of the Ninth Circuit in the Chang case as to the inability of USCIS to go back and re-adjudicate an I-526 at the I-829 stage. In essence, AAO esstopped CSC and precluded the issue from further consideration.

""The Ninth Circuit, in Chang v. United States of America, 327 F. 3d 911 (9th Cir. 2003), held that, during the adjudication of a Form I-829, USCIS could not review whether the initial plan submitted with the Form I-526 was qualifying, only whether the alien sustained that plan. Specifically, the court stated that the Form I-526 approval may not be "decoupled from [Form] I-829 approval." Id. The court further stated that Form I-829 approval is predicted by Form I-526 approval and "successful execution of the approved plan." Id. As noted by the court in Chang, 327 F. 3d at 927, far more evidence is required in support of the Form 1-526 petition. In fact, as stated above, the regulation at 8 C.F.R. § 204.6(j)(4)(iii) expressly requires the submission of reasonable methodologies for determining indirect job creation at the Form 1-526 stage. At the Form I-829 stage, the petitioner is not required to submit such evidence, although the petitioner must use the methodologies approved at the Form I-526 stage to demonstrate that his investment has created the requisite employment.

Under the reasoning of Chang, the director erred in revisiting the appropriateness of the multiplier. The director approved the Form I-526, which disclosed that the petitioner would be using the 2.66 multiplier for the location of the dairy. The petitioner did not materially change the location of the proposed employment creation and the director does not identify information that was misrepresented or not disclosed at the Form I-526 stage that would warrant a new evaluation of the multipliers used. Thus, the petitioner should be able to rely on the 2.66 multiplier as an acceptable means of demonstrating total job creation, including indirect jobs. The AAO withdraws the director's concern that the 2.66 multiplier is not appropriate." (At p.15)

Please read and/or review these cases and those cited in them for more possibilities. The South Dakota case was ultimately dismissed by AAO because the farm failed in its execution of its plan.

²See: http://www.justice.gov/eoir/vll/intdec/vol19/2963.pdf

Fedorenko v. United States, 449 US 490 - 1981 - U.S. Supreme Court

United States v. Fedorenko, 597 F. 2d 946 - 1979 - Fifth Circuit Court of Appeals

United States v. Fedorenko, 455 F. Supp. 893 - 1978 - U.S. District Court, Southern District of Florida

³(1): Initial I-924 and/or Exemplar I-526 as an I-924 Amendment then an ACTUAL I-526 visa petition followed up with (2): the individual I-829.

⁴See: http://law.justia.com/cases/federal/appellate-courts/F3/327/911/625674/ and the associated follow up challenge Spencer Enterprises Inc v. United States, No.?01-16391.(9th Cir, 9/17/03) affirming District Court and clarifying jurisdiction, at: http://caselaw.findlaw.com/us-9th-circuit/1330636.html affirmed: Spencer et al. v. USA (E.D. Calif. 3/28/01) at: http://www.slideshare.net/BigJoe5/spencer-enterprises-eb5decision-district-court-2001

⁵These and related issues are among USCIS' 2012 Strategic Priorities, see: http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=1a23b3977ade5310VgnVCM100000082ca60aRCRD&vgnextchannel=8a2f6d26d17df110VgnVCM1000004718190aRCRD

⁶See: http://www.slideshare.net/BigJoe5/siddiqui-v-holder-et-al-7th-cir-11212-remand

⁷See: http://www.uscis.gov/err/B7%20-%20Form%20I-526%20and%20I-829/Decisions
_Issued_in_2011/Apr142011_01B7203.pdf

About The Author

Joseph P. Whalen is not an attorney. He is a former government employee who is familiar with the INA. His education is in Anthroplogy with a concentration in Archaeology and has both a BA (from SUNY Buffalo) and an MA (from San Francisco State University) in Anthroplogogy. He previously worked as an Archaeologist for the U.S. Forest Service before becoming an Adjudicator with INS which became USCIS.

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