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Issue Preclusion potential as to the Tenant Occupancy Methodology in EB-5

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Issue Preclusion potential as to the Tenant Occupancy Methodology in EB-5

  1. 1. Issue Preclusion Potential as to the Tenant-Occupancy Methodology in EB-5 By Joseph P. Whalen (March 11, 2012)There are a few recent cases that offer some potentially useful guidance on the issueof “issue preclusion”. The first case is from the Ninth Circuit Court of Appeals and itspecifically deals with a Petition for Review arising from Removal Proceedings. It isimportant to keep in mind that the Removal Context is markedly different from theBenefits Request Context within immigration law. If it weren’t markedly different innature then why would the Attorney General have separated the BIA from INS andconsolidated the benefits appeals Decisions from the various Commissioners’ andDirectors’ 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 burdenshifting to occur. While initially, the burden of proof is squarely on the Governmentto show that the named respondent is 1.) an alien, and 2.) removable; the respondentmay choose to fight out these issues first, or simply admit them, and in either case, ifand when the Government meets its initial burden, the alien will usually apply forsome form of relief from removal. Certain issues, absent a material change, a changein the controlling law, or discovery of earlier fraud or deception, become affirmativelysettled at some point. While a difference of opinion is normal and natural, very oftensuch differences are irrational, and sometimes degrade into a futile effort to rehashsettled matters in order to delay the actual removal. Recalling that the first casepresented is from the Removal Context, it quite conveniently spells out the four basicconditions required in order to invoke collateral estoppel, which should apply toeither 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.2d1 See: http://www.ca9.uscourts.gov/datastore/opinions/2012/03/06/09-73683.pdfPotential Issue Preclusion for EB-5 Cases Involving Tenant-Occupancy Methodology Page 1
  2. 2. 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).”An EB-5 Regional Center Proposal demands a large quantity of information and ahigh level of detail. The exacting standards employed lead to a very solid settlementof many hypertechnical matters and issues. Once a methodology has been deemedreasonable; has been accepted by USCIS; and EB-5 aliens have invested millions ofdollars into a large project; USCIS cannot conscionably disallow the predictedindirect job creation of a successfully accomplished, previously approved plan whenadjudicating the requests for removal of conditions on status. AAO has alreadyblocked CSC on this basis in the same way that the Ninth Circuit blocked INS fromreneging on such a “contract-like” agreement.Of particular interest in the following case excerpt is the Seventh Circuit’s statementthat they were “.... unable to affirm the AAO’s conclusion[s] .... because .... AAO’sdecisions lack[ed] individualized analysis and.... [did].... not identify particulardeficiencies in the substantial evidence submitted ...” Additionally, the Court foundthat AAO impermissibly applied statutory changes retroactively and contrary to theterms of a settlement agreement. This last point is quite important in the EB-5Regional Center investment context especially, in light of another case of particularimportance, namely; Chang v. United States of America, 327 F. 3d 911 (9th Cir.2003)3 which involved an attempt by INS to retroactively apply its newerinterpretations as stated in the 1998 AAO EB-5 Precedents in a manner that undercut2 See: http://www.justice.gov/eoir/vll/intdec/vol19/2963.pdfFedorenko v. United States, 449 US 490 - 1981 – U.S. Supreme CourtUnited States v. Fedorenko, 597 F. 2d 946 - 1979 – Fifth Circuit Court of AppealsUnited States v. Fedorenko, 455 F. Supp. 893 - 1978 – U.S. District Court, Southern District of Florida3 See: http://law.justia.com/cases/federal/appellate-courts/F3/327/911/625674/ and the associated follow upchallenge Spencer Enterprises Inc v. United States, No. 01-16391.(9th Cir, 9/17/03) affirming District Court andclarifying 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-2001Potential Issue Preclusion for EB-5 Cases Involving Tenant-Occupancy Methodology Page 2
  3. 3. the reasonable reliance that a group of EB-5 aliens had to that point. Of course, inorder to reasonably rely on its plan, the investors have to succeed with it. In theabsence of the successful culmination of a particular plan, the actual results are whatmatter in determining whether or not, conditions will be lifted.The following case also describes a jurisdictional mess where the old and newerstatutes involved collided in such a way that the Court asked the two differentAdministrative Agencies to sort of “get together and fix this mess so that this caselands back in this Court”. They did as asked but it just goes to the heart of anothermatter that has plagued immigration proceedings in the absence of a long overduerulemaking by 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 towork out. Improvements are needed not just between Departments but alsoindividually within themselves. Better coordination of efforts through improvedcooperation and communication seems to be growing steadily amongst the variousintradepartmental components or “sister agencies” within each Department withshared or cross-jurisdictional authority.Siddiqui v. Holder, Nos. 09-3912, 10-1282 & 10-3221 (7th Circuit, January 12,2012)4 held: “....... 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 had4 See: http://www.slideshare.net/BigJoe5/siddiqui-v-holder-et-al-7th-cir-11212-remandPotential Issue Preclusion for EB-5 Cases Involving Tenant-Occupancy Methodology Page 3
  4. 4. 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 Decision5 pertaining to a South Dakotafailed Dairy Farm Regional Center affiliated I-829 case provides some analysisinvoking the reasoning of the Ninth Circuit in the Chang case as to the inability ofUSCIS to go back and re-adjudicate an I-526 at the I-829 stage. In essence, AAOesstopped 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 directors 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 denied because the farm failed in its plan.5 See: http://www.uscis.gov/err/B7%20-%20Form%20I-526%20and%20I-829/Decisions_Issued_in_2011/Apr142011_01B7203.pdfPotential Issue Preclusion for EB-5 Cases Involving Tenant-Occupancy Methodology Page 4

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