Huashan Zhang v. U.S. Citizenship & Immigration Servs. (344 F. Supp. 3d 32, 2018)

Emmet G. Sullivan, United States District Judge

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 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' cross-motion 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.

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 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 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:

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. 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.

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; 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 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 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 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 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; 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' 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' interpretation -that third-party 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 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. Id. at 37-38.

USCIS responds that its decision to deny plaintiffs' petitions was "reasonable." Defs.' MSJ & Opp'n, ECF No. 22 at 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.

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 make the decision it did.' " Id. (quoting Occidental Eng'g Co. v. INS , 753 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. 2011) (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, 129 S.Ct. 1800, 173 L.Ed.2d 738 (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, 103 S.Ct. 2856, 77 L.Ed.2d 443 (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, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994) (citations omitted). However, such deference "is warranted only when the language of the regulation is ambiguous." Christensen v. Harris County , 529 U.S. 576, 588, 120 S.Ct. 1655, 146 L.Ed.2d 621 (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, 114 S.Ct. 2381 (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, 108 S.Ct. 1306, 99 L.Ed.2d 515 (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, 117 S.Ct. 905, 137 L.Ed.2d 79 (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 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 .

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 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 natural meaning." Smith v. United States , 508 U.S. 223, 228, 113 S.Ct. 2050, 124 L.Ed.2d 138 (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, 113 S.Ct. 2050 (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 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).

The "words of statutes or regulations must be given their 'ordinary, contemporary common meaning.' " FTC v. Tarriff , 584 F.3d 1088, 1090 (D.C. Cir. 2009) (quoting Williams v. Taylor , 529 U.S. 420, 431, 120 S.Ct. 1479, 146 L.Ed.2d 435 (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, 117 S.Ct. 905 ; 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, 120 S.Ct. 1655 ("But Auer deference is warranted only when the language of the regulation is ambiguous."); Thomas Jefferson Univ. , 512 U.S. at 512, 114 S.Ct. 2381 ("[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, 116 S.Ct. 1396, 134 L.Ed.2d 593 (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, 120 S.Ct. 1655 ; 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-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 lawfully-acquired 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") ).

In so doing, USCIS impermissibly creates "de facto another regulation." Christensen , 529 U.S. at 588, 120 S.Ct. 1655. 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, 120 S.Ct. 1655 ) ). 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. 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 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.

(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, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994) (citing Smith , 508 U.S. at 228, 113 S.Ct. 2050 ). To that end, "indebtedness" means "the quality, state, or condition of owing money." Indebtedness , Black's Law Dictionary (10th ed. 2014).

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 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 lawfully-acquired cash it can readily deploy, no security interest is necessary.

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/2013/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 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 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 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 lawfully-acquired 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 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 "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.

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, 132 S.Ct. 476, 181 L.Ed.2d 449 (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, 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. & 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.

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, 113 S.Ct. 2050, 124 L.Ed.2d 138 (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. Sea-Land Servs., Inc. , 566 U.S. 93, 101, 132 S.Ct. 1350, 182 L.Ed.2d 341 (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 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 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 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 twenty-four 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 "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 promulga