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RETROACTIVE IMMIGRANT INVESTOR LAW IS
HIGHLY IMPROBABLE and PROBABLY UNLAWFUL
By Joseph P. Whalen (Friday, De...
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“The FTC also argues that this case involves a cease and desist order that
applies prospectively only. While ...
Page 3 of 10
The five considerations stated above are very useful ones but Montgomery
Ward was neither the first nor the l...
Page 4 of 10
Elkhorn Mining Co., 428 U.S. 1, 17, 96 S.Ct. 2882, 2893, 49 L.Ed.2d 752
(1976).
These provisions demonstrate ...
Page 5 of 10
to identify past wrongdoers and to fashion remedies that will create the
conditions that presumably would hav...
Page 6 of 10
informed and guided by considerations of fair notice, reasonable reliance,
and settled expectations. Landgraf...
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California (2001)3, affirmed by the 9th Circuit in (2003)4, which includes the
following analysis.
Applying §...
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phraseology in an otherwise good and sound decision. Spencer is not the only
decision that relates directly t...
Page 9 of 10
Full-time employment means employment of a qualifying employee
by the new commercial enterprise in a position...
Page 10 of 10
(iii) Immigrant Investor Pilot Program. To show that the new
commercial enterprise located within a regional...
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RETROACTIVE IMMIGRANT INVESTOR LAW IS HIGHLY IMPROBABLE and PROBABLY UNLAWFUL

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RETROACTIVE IMMIGRANT INVESTOR LAW IS HIGHLY IMPROBABLE and PROBABLY UNLAWFUL

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RETROACTIVE IMMIGRANT INVESTOR LAW IS HIGHLY IMPROBABLE and PROBABLY UNLAWFUL

  1. 1. Page 1 of 10 RETROACTIVE IMMIGRANT INVESTOR LAW IS HIGHLY IMPROBABLE and PROBABLY UNLAWFUL By Joseph P. Whalen (Friday, December 4, 2015) I have noticed a growing chorus of alarmists publishing articles and blogs warning about potential, probable, or impending harmful, negative, retroactive: (1.) increases to the minimum investment amounts required for EB-5 purposes; and (2.) changes to the requirements for targeted employment area (TEA) designation. It is obvious to me that these fears arise from some harsh language in various bills recently floated around Capitol Hill. If such changes are made as part of an extension bill or preferably a bill to make the EB-5 Regional Center Program a permanent part of the Immigration and Nationality Act (INA), they are much less likely to be retroactive than some folks might believe. In my opinion, it is merely grandstanding and political rhetoric. I say this because there have been less drastic bills floating around much longer and these have gained much more consensus over a much longer period of time. In the current mad rush atmosphere, it has been easy for some less vested members to try to steal some of the EB-5 spotlight as they embark on their campaign trails. Do not be fooled! From a legal perspective, I do not believe that such draconian measures would survive a court challenge. Previously, the judiciary refused to allow the four EB-5 AAO Precedent Decisions of 1998, to be applied retroactively. Why would anyone believe that any court would allow Congress to do this? Besides the mere issue of fairness, retroactive application is against Circuit Court and Supreme Court Precedent, and a little thing called the Constitution. Retroactivity was notably addressed in Montgomery Ward & Co., Inc. v. FTC, 691 F. 2d 1322, 1333 (9th Cir. 1982) [Montgomery Ward], thusly:
  2. 2. Page 2 of 10 “The FTC also argues that this case involves a cease and desist order that applies prospectively only. While we agree that a cease and desist order leads only to future sanctions, we also note that those sanctions would not be possible except for Wards's conduct prior to the Commission's explanation of ready access in its order. If the FTC had utilized its rule- making proceedings to define ready access, this retroactivity problem would not exist. [19] We must therefore examine the retroactive effect of the order relating to the placement of the binders. In balancing a regulated party's interest in being able to rely on the terms of a rule as it is written, against an agency's interest in retroactive application of an adjudicatory decision, a good framework for analysis is set forth in Retail, Wholesale and Department Store Union v. NLRB, 466 F.2d 380, 390-93 (D.C.Cir.1972). [20] Among the considerations that enter into a resolution of the problem are: (1) whether the particular case is one of first impression, (2) whether the new rule represents an abrupt departure from well-established practice or merely attempts to fill a void in an unsettled area of law, (3) the extent to which the party against whom the new rule is applied relied on the former rule, (4) the degree of the burden which a retroactive order imposes on a party, and (5) the statutory interest in applying a new rule despite the reliance of a party on the old standard. Id. at 390.” Montgomery Ward1 at 1333. [Slight reformatting for clarity.] Footnotes from original: 19 In Litton we noted that a cease and desist order is enforceable in the district court. 676 F.2d at 371. In an enforcement action, the court may assess up to $10,000 in fines for each violation. 15 U.S.C. Sec. 45(l) (made applicable by 15 U.S.C. Sec. 2310(b), which makes a violation of the Act a violation of 15 U.S.C. Sec. 45(a)(1)) 20 The Retail Union test has been used in McDonald v. Watt, 653 F.2d 1035, 1043- 46 (5th Cir.1981); E.L. Wiegand Division v. NLRB, 650 F.2d 463, 471 & n. 5 (3d Cir.1981), cert. denied, --- U.S. ----, 102 S.Ct. 1429, 71 L.Ed.2d 649 (1982); Standard Oil Co. v. Department of Energy, 596 F.2d 1029, 1063-64 (Temp.Emer.Ct.App.1978); Lodges 743 and 1746 v. United Aircraft Corp., 534 F.2d 422, 452-54 (2d Cir.1975), cert. denied, 429 U.S. 825, 97 S.Ct. 79, 50 L.Ed.2d 87 (1976). 1 https://law.resource.org/pub/us/case/reporter/F2/691/691.F2d.1322.81-7421.html
  3. 3. Page 3 of 10 The five considerations stated above are very useful ones but Montgomery Ward was neither the first nor the last major case of interest on this subject matter. For instance, Landgraf v. USI Film Products, 511 U. S. 244 (1994),2 is very enlightening. Landgraf tells us about the general legal principles from our Constitution which favor prospective application of laws; the impropriety of singling out disfavored persons for unfair treatment, such as punishing past conduct; especially when those individuals have vested property rights and; when such retroactive application impairs the Obligation of Contracts. “… [T]he presumption against retroactive legislation is deeply rooted in our jurisprudence, and embodies a legal doctrine centuries older than our Republic. 17 Elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly; settled expectations should not be lightly disrupted. 18 For that reason, the "principle that the legal effect of conduct should ordinarily be assessed under the law that existed when the conduct took place has timeless and universal appeal." Kaiser, 494 U.S., at 855, 110 S. Ct., at 1586 (SCALIA, J., concurring). In a free, dynamic society, creativity in both commercial and artistic endeavors is fostered by a rule of law that gives people confidence about the legal consequences of their actions. It is therefore not surprising that the anti-retroactivity principle finds expression in several provisions of our Constitution. The Ex Post Facto Clause flatly prohibits retroactive application of penal legislation. 19 Article I, § 10, cl. 1 prohibits States from passing another type of retroactive legislation, laws "impairing the Obligation of Contracts." The Fifth Amendment's Takings Clause prevents the Legislature (and other government actors) from depriving private persons of vested property rights except for a "public use" and upon payment of "just compensation." The prohibitions on "Bills of Attainder" in Art. I, §§ 9-10, prohibit legislatures from singling out disfavored persons and meting out summary punishment for past conduct. See, e.g., United States v. Brown, 381 U.S. 437, 456-462, 85 S. Ct. 1707, 1719-1722, 14 L. Ed. 2d 484 (1965). The Due Process Clause also protects the interests in fair notice and repose that may be compromised by retroactive legislation; a justification sufficient to validate a statute's prospective application under the Clause "may not suffice" to warrant its retroactive application. Usery v. Turner 2 https://supreme.justia.com/cases/federal/us/511/244/case.pdf
  4. 4. Page 4 of 10 Elkhorn Mining Co., 428 U.S. 1, 17, 96 S.Ct. 2882, 2893, 49 L.Ed.2d 752 (1976). These provisions demonstrate that retroactive statutes raise particular concerns. The Legislature's unmatched powers allow it to sweep away settled expectations suddenly and without individualized consideration. Its responsivity to political pressures poses a risk that it may be tempted to use retroactive legislation as a means of retribution against unpopular groups or individuals. As Justice Marshall observed in his opinion for the Court in Weaver v. Graham, 450 U.S. 24, 101 S. Ct. 960, 67 L. Ed. 2d 17 (1981), the Ex Post Facto Clause not only ensures that individuals have "fair warning" about the effect of criminal statutes, but also "restricts governmental power by restraining arbitrary and potentially vindictive legislation." Id., at 28-29, 101 S. Ct., at 963-964 (citations omitted).20 “ Id. at 265-266. Footnotes from original: 17 See Kaiser Aluminum & Chemical Corp. v. Bonjorno, 494 U.S. 827, 842-844, 855-856, 110 S.Ct. 1570, 1579-1581, 1586-1587, 108 L.Ed.2d 842 (1990) (SCALIA, J., concurring). See also, e.g., Dash v. Van Kleeck, 7 Johns. *477, *503 (N.Y.1811) ("It is a principle of the English common law, as ancient as the law itself, that a statute, even of its omnipotent parliament, is not to have a retrospective effect") (Kent, C.J.); Smead, The Rule Against Retroactive Legislation: A Basic Principle of Jurisprudence, 20 Minn.L.Rev. 775 (1936). 18 See General Motors Corp. v. Romein, 503 U.S. ----, ----, 112 S.Ct. 1105, 1112, 117 L.Ed.2d 328 (1992) ("Retroactive legislation presents problems of unfairness that are more serious than those posed by prospective legislation, because it can deprive citizens of legitimate expectations and upset settled transactions"); Munzer, A Theory of Retroactive Legislation, 61 Texas L.Rev. 425, 471 (1982) ("The rule of law . . . is a defeasible entitlement of persons to have their behavior governed by rules publicly fixed in advance"). See also L. Fuller, The Morality of Law 51-62 (1964) (hereinafter Fuller). 19 Article I contains two Ex Post Facto Clauses, one directed to Congress (§ 9, cl. 3), the other to the States (§ 10, cl. 1). We have construed the Clauses as applicable only to penal legislation. See Calder v. Bull, 3 Dall. 386, 390-391, 1 L.Ed. 648 (1798) (opinion of Chase, J.). 20 See Richmond v. J. A. Croson Co., 488 U.S. 469, 513-514, 109 S.Ct. 706, 732, 102 L.Ed.2d 854 (1989) ("Legislatures are primarily policymaking bodies that promulgate rules to govern future conduct. The constitutional prohibitions against the enactment of ex post facto laws and bills of attainder reflect a valid concern about the use of the political process to punish or characterize past conduct of private citizens. It is the judicial system, rather than the legislative process, that is best equipped
  5. 5. Page 5 of 10 to identify past wrongdoers and to fashion remedies that will create the conditions that presumably would have existed had no wrong been committed") (STEVENS, J., concurring in part and concurring in judgment); James v. United States, 366 U.S. 213, 247, n. 3, 81 S.Ct. 1052, 1052, n. 3, 6 L.Ed.2d 246 (1961) (retroactive punitive measures may reflect "a purpose not to prevent dangerous conduct generally but to impose by legislation a penalty against specific persons or classes of persons"). James Madison argued that retroactive legislation also offered special opportunities for the powerful to obtain special and improper legislative benefits. According to Madison, "[b]ills of attainder, ex post facto laws, and laws impairing the obligation of contracts" were "contrary to the first principles of the social compact, and to every principle of sound legislation," in part because such measures invited the "influential" to "speculat[e] on public measures," to the detriment of the "more industrious and less informed part of the community." The Federalist No. 44, p. 301 (J. Cooke ed. 1961). See Hochman, The Supreme Court and the Constitutionality of Retroactive Legislation, 73 Harv.L.Rev. 692, 693 (1960) (a retroactive statute "may be passed with an exact knowledge of who will benefit from it").” Specifically in the immigration context, we have certain useful guidance from INS v. St. Cyr 533 U.S. 289 (2001), which, per the syllabus, held, in pertinent part: 1. Courts have jurisdiction under 28 U. S. C. § 2241 to decide the legal issue raised by St. Cyr’s habeas petition. Pp. 298–314. ***** 2. Section 212(c) relief remains available for aliens, like St. Cyr, whose convictions were obtained through plea agreements and who, notwithstanding those convictions, would have been eligible for § 212(c) relief at the time of their plea under the law then in effect. Pp. 314–326. (a) A statute’s language must require that it be applied retroactively. Bowen v. Georgetown Univ. Hospital, 488 U. S. 204, 208. The first step in the impermissible-retroactive-effect determination is to ascertain whether Congress has directed with the requisite clarity that the law be applied retrospectively. Martin v. Hadix, 527 U. S. 343, 352. Such clarity is not shown by the comprehensiveness of IIRIRA’s revision of federal immigration law, see Landgraf v. USI Film Products, 511 U. S. 244, 260– 261, by the promulgation of IIRIRA’s effective date, see id., at 257, or by IIRIRA § 309(c)(1)’s “saving provision.” Pp. 314–320. (b) The second step is to determine whether IIRIRA attaches new legal consequences to events completed before its enactment, a judgment
  6. 6. Page 6 of 10 informed and guided by considerations of fair notice, reasonable reliance, and settled expectations. Landgraf, 511 U. S., at 270. IIRIRA’s elimination of § 212(c) relief for people who entered into plea agreements expecting that they would be eligible for such relief clearly attaches a new disability to past transactions or considerations. Plea agreements involve a quid pro quo between a criminal defendant and the government, and there is little doubt that alien defendants considering whether to enter into such agreements are acutely aware of their convictions’ immigration consequences. The potential for unfairness to people like St. Cyr is significant and manifest. Now that prosecutors have received the benefit of plea agreements, facilitated by the aliens’ belief in their continued eligibility for § 212(c) relief, it would be contrary to considerations of fair notice, reasonable reliance, and settled expectations to hold that IIRIRA deprives them of any possibility of such relief. The INS’ argument that application of deportation law can never have retroactive effect because deportation proceedings are inherently prospective is not particularly helpful in undertaking Landgraf’s analysis, and the fact that deportation is not punishment for past crimes does not mean that the Court cannot consider an alien’s reasonable reliance on the continued availability of discretionary relief from deportation when deciding the retroactive effect of eliminating such relief. That § 212(c) relief is discretionary does not affect the propriety of this Court’s conclusion, for there is a clear difference between facing possible deportation and facing certain deportation. Pp. 320–326. While § 212(c) relief is discretionary, I do not believe that a fact-based determination as to meeting statutorily and regulatorily defined eligibility requirements based upon the evidence submitted could be so characterized. The “EB-5 investors” and their Regional Center, U.S. business, and individual “partners” all have reasonable expectations when they enter into multi-million dollar deals. To allow Congress to pull the rug out from underneath them is un- American behavior contrary to long held practices; and to principles in our Constitution and the common-law. We are fortunate that the question of impermissible retroactivity has already been expressly addressed within the EB-5 context. We can at the very least seek guidance from the Spencer Enterprises, Inc. case from the E.D
  7. 7. Page 7 of 10 California (2001)3, affirmed by the 9th Circuit in (2003)4, which includes the following analysis. Applying § 1252(a)(2)(B)(ii) here, we find that the authority to issue a visa under the immigrant investor program is not specified by any statute to be discretionary. Instead, the authority comes directly from § 1153(b)(5), which both mandates issuance of such visas, see 8 U.S.C. § 1153(b)(5)(A) (“Visas shall be made available to qualified immigrants seeking to enter the United States for the purpose of engaging in a new commercial enterprise․” (emphasis added)), and sets out a series of standards for eligibility that the visa petitioner must meet. Although, like the statute in Matsuk, § 1154(b) does allow the Attorney General to “determine” the petitioner's eligibility, the determination here is clearly guided by the eligibility requirements set out in § 1153(b)(5), whereas the discretionary determination in Matsuk is unguided. Moreover, as noted above, § 1154(b) directs that the Attorney General “shall ․ approve the petition” of any visa petitioner who is determined to be eligible. This language is very distinct from the discretionary language in the asylum context, which allows the Attorney General to deny asylum even to those applicants who meet the statutory eligibility requirements.4 We conclude that § 1252(a)(2)(B)(ii) does not preclude judicial review of the decision whether to issue a visa pursuant to § 1153(b)(5).” Footnote from original: 4. The dissent argues that 8 U.S.C. § 1155, allowing visa petitions to be revoked for “good and sufficient cause,” indicates that visa decisions are wholly discretionary. But the decision at issue here is not a revocation under § 1155, and in any case we have previously interpreted the words “good and sufficient cause” to require INS to produce “substantial evidence supporting its determination” that a petition should be revoked. Tongatapu Woodcraft Hawaii, Ltd. v. Feldman, 736 F. 2d 1305, 1309 (9th Cir. 1984).5 Thus the text of § 1155 no more specifies visa decisions to be in the unfettered discretion of the Attorney General than does the text of §§ 1153(b)(5) and 1154(b).” While I must argue that the 9th Circuit erred in stating that the statute “mandates issuance of [EB-5] visas” when all that is actually required is the preliminary step of approving the visa petition. This can be chalked up to clumsy 3 https://www.courtlistener.com/opinion/2396866/spencer-enterprises-inc-v-united-states/? 4 http://caselaw.findlaw.com/us-9th-circuit/1330636.html 5 https://law.resource.org/pub/us/case/reporter/F2/736/736.F2d.1305.83-1826.html
  8. 8. Page 8 of 10 phraseology in an otherwise good and sound decision. Spencer is not the only decision that relates directly to EB-5, but I will only cite to this one court case for the sake of brevity. Those who have read my prior articles will already know that brevity is not my strongest skill when I write about EB-5. Rather than try to defeat the fearmongering by building a huge legal defense against imaginary draconian retroactive worst case scenarios, I’d like to examine some of the actual language in the bipartisan, bicameral compromise bill. This bill, “S.__ MDM15J00 [Discussion Draft] S.L.C.”6 found, here, includes some provisions which are much more investor-friendly than earlier versions. For example, an earlier version contained an unusable provision relating to a limit on the percentage of indirect jobs that could be used by Regional Center affiliated EB-5 investors, that limit was, and remains, 90%. In other words, they could count nine (9) indirect jobs towards their minimum of ten (10). The earlier version did not redefine what would satisfy the single remaining job. Current EB-5 law defines a “direct” job as, in short, an on-the-books, lawfully authorized U.S. worker, with certain exclusions. E-Verify is a smart move for EB-5 employers, but is not a legal requirement under current law. 8 C.F.R. § 204.6 Petitions for employment creation aliens.7 * * * * * (e) Definitions. As used in this section: * * * * * Employee means an individual who provides services or labor for the new commercial enterprise and who receives wages or other remuneration directly from the new commercial enterprise. In the case of the Immigrant Investor Pilot Program, “employee” also means an individual who provides services or labor in a job which has been created indirectly through investment in the new commercial enterprise. This definition shall not include independent contractors. 6 http://www.leahy.senate.gov/imo/media/doc/MDM15J00.pdf 7 http://www.ecfr.gov/cgi-bin/text- idx?SID=6bc4a7f7941f10957548561605d6a2fb&mc=true&node=pt8.1.204&rgn=div5#se8.1.204_16
  9. 9. Page 9 of 10 Full-time employment means employment of a qualifying employee by the new commercial enterprise in a position that requires a minimum of 35 working hours per week. In the case of the Immigrant Investor Pilot Program, “full-time employment” also means employment of a qualifying employee in a position that has been created indirectly through revenues generated from increased exports resulting from the Pilot Program that requires a minimum of 35 working hours per week. A job-sharing arrangement whereby two or more qualifying employees share a full-time position shall count as full-time employment provided the hourly requirement per week is met. This definition shall not include combinations of part-time positions even if, when combined, such positions meet the hourly requirement per week. * * * * * Qualifying employee means a United States citizen, a lawfully admitted permanent resident, or other immigrant lawfully authorized to be employed in the United States including, but not limited to, a conditional resident, a temporary resident, an asylee, a refugee, or an alien remaining in the United States under suspension of deportation. This definition does not include the alien entrepreneur, the alien entrepreneur's spouse, sons, or daughters, or any nonimmigrant alien. * * * * * (j) Initial evidence to accompany petition. * * * * * (4) Job creation— (i) General. To show that a new commercial enterprise will create not fewer than ten (10) full-time positions for qualifying employees, the petition must be accompanied by: (A) Documentation consisting of photocopies of relevant tax records, Form I-9, or other similar documents for ten (10) qualifying employees, if such employees have already been hired following the establishment of the new commercial enterprise; or (B) A copy of a comprehensive business plan showing that, due to the nature and projected size of the new commercial enterprise, the need for not fewer than ten (10) qualifying employees will result, including approximate dates, within the next two years, and when such employees will be hired. * * * * *
  10. 10. Page 10 of 10 (iii) Immigrant Investor Pilot Program. To show that the new commercial enterprise located within a regional center approved for participation in the Immigrant Investor Pilot Program meets the statutory employment creation requirement, the petition must be accompanied by evidence that the investment will create full-time positions for not fewer than 10 persons either directly or indirectly through revenues generated from increased exports resulting from the Pilot Program. Such evidence may be demonstrated by reasonable methodologies including those set forth in paragraph (m)(3) of this section. Panic was starting to set in when the earlier version of a reform bill did nothing to offset the definition of a direct employee. In the later petition filed as the aliens’ two-year anniversary approaches the distinction remains the same. The bottom line is that since most Regional Center job creation is “indirect” to the aliens, the earlier bill essentially made nearly ALL current Regional Center affiliated investors ineligible to remove the conditions from their status! The more recent bill has now recognized the distinction and conformed the 10% direct jobs requirement to mirror to the economic models’ use of the term “direct” jobs. Specifically, the newer version of the bill includes: “…An employee of the new commercial enterprise or job-creating entity may be considered to hold a job that has been directly created.” We can all breathe easier now! Other questions are also being answered in a useful manner. The inclusion of tenants’ jobs is affirmatively accepted while relocated jobs are affirmatively prohibited. As I previously advocated, facilitation by the investors through the creation or remodeling of specific commercial space, gives the investor the right to count the new employees that work in that space. “… the Secretary may include jobs estimated to be created under a methodology whereby jobs are attributable to prospective tenants occupying commercial real estate created or improved by capital investments, but only if the number of such jobs estimated to be created has been determined by an economically and statistically valid methodology and such jobs are not existing jobs that have been relocated.” The current bill is 100 pages long, I have not digested it all yet. If another article is warranted, I will write one. That my two-cents, for now.

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