EB-5 Notes – Backlog Management

EB-5 Notes – Material Change Seminar – April 17th

I’ve written extensively about the faulty legal premise girding USCIS’s material change policy.[1]  Fundamentally, those articles advance a simple point: USCIS should use authority correctly in formulating its policies.

This EB-5 Note on material change is more immediately practical. In the era of EB-5 backlogs, EB-5 projects and the USCIS material change policy are certain to collide as projects will undergo change, small and substantial, in the years between the first petition filing and the last investor’s admission in conditional residence.

So, this backdrop and the seminar (details below) are directed primarily toward regional centers and project managers. The goal to raise awareness and inform decision-making throughout the lengthening project life cycles. The seminar will also share strategic tips for reducing material change risk.

Material Change Problem Recap. 

“Material change” first appeared in the December 11, 2009 USCIS Policy Memorandum. But this concept is not rooted in the statute or regulations. In the memos and USCIS Policy Manual (“Policy Manual”), USCIS refers to two precedent decisions, Matter of Katigbak and Matter of Izummi. But neither decision supports the material change policy.

Both decisions say you can’t fix a bad case that was bad as filed with good facts that arise later. Neither decision disqualifies a case that was good when filed, and moreover remains good (i.e. meeting eligibility requirements) after the change. This is problem one with material change: it’s legally flawed as based on Katigbak and Izummi.

Problem two is that material change is undefined. Essentially, the current test is based on a Supreme Court case that says a change is material if it has a tendency to affect the adjudication decision. But this doesn’t make much sense in the EB-5 context where lots of factors interplay to establish eligibility. A change to any one element in a business plan doesn’t reliably tell you whether it would have made a difference to an examiner. The result is no one knows when a change is “material.”

Problem three is that despite this gross uncertainty, the consequences of a material change determination are unforgiving. An investor can suffer denial of a pending petition or revocation of an approved petition. They are exposed until they are admitted in conditional residency.

This brings us to problem four. With visa backlogs, not only for Chinese and Vietnamese investors, but soon expected for Indian investors and likely soon others, the wait for visa availability stretches the material change exposure period to years after the I-526 petition is approved.

Sorry to do this, but problem five is the trend is toward expanding material change. In August 2018, the Policy Manual added another categorical material change: changes to regional center affiliation.

You’re ready for the good news, right? The good news is that better solutions exist and they have been proposed to USCIS in numerous forms by the American Immigration Lawyers Association. Second, EB-5 advocates continue to reach out to USCIS on the many flaws of this policy.[2] And finally, we can take proactive steps to be informed and manage future material change risk to protect investors’ immigration.

To talk managing material change, tune into a free remote Material Change Seminar on April 17th, 2019 at 2:00 – 3:00PM Eastern/11:00AM – 12:00PM Pacific. E-mail to reserve a spot and to toss some questions in advance.

Change is inevitable; material change thankfully isn’t.

***
Carolyn Lee is Founder of Carolyn Lee PLLC and serves as the Chair of AILA’s national EB-5 Committee and Invest in the USA (IIUSA) Legislative Counsel.

[1] See Carolyn Lee, “‘Material Change’ in EB-5 Petitions: A Need to Return to the Drawing Board,” 15 Bender’s Immigr. Bull. 1501 (Nov. 1, 2010); see also Carolyn Lee, “Effect Of Material Change Doctrine In EB-5 Deference Policy,” published on AILA Agora and available online at http://agora.aila.org/product/detail/1180 (December 2012); Carolyn Lee, “Material Change:  Managing the Inevitable During EB-5 Visa Retrogression,”  Practising Law Institute (PLI, December 2014) and reprinted in the Regional Center business Journal (IIUSA, December 2014). See also AILA Comments to the Advance Notice of Proposed Rulemaking, response to item 11 at https://www.aila.org/infonet/aila-comments-on-anprm-eb-5-immigrant-investor and https://www.regulations.gov/document?D=USCIS-2016-0008-0033.

[2] For example, I respectfully pointed out the unfairness of these material change policy expansions to Ms. Sarah Kendall, IPO Chief, during the October 2018 AILA-IIUSA EB-5 Conference in Chicago. On a positive note, she indicated she would confer internally, and I believe she heard the issue.

By |2019-04-09T01:38:13+00:00April 9th, 2019|Events|

About the Author:

Carolyn Lee has vast experience in EB-5 representation and has served as industry leader and EB-5 commentator for over a decade. She is Chair of the American Immigration Lawyers Association (AILA) National EB-5 Committee. She has steered clients through the most dynamic period of growth in EB-5 program history and is an advocate for long term reauthorization and expansion of the EB-5 program.