"Material change" is a phrase that strikes terror into the heart of any EB-5 stakeholder.
It's what happens when USCIS decides an EB-5 regional center has strayed from its approved business plan. In cases of material change, USCIS can deny the investor removal of conditions ? a situation that could render futile an EB-5 visa investor's multi-year journey toward permanent residency.
Ever since December 2009's "Neufeld memo," a document that defines USCIS' strict consideration of material change issues, numerous attorneys and other EB-5 stakeholders have criticized the agency's insistence that approved business plans be followed without any deviation. After all, they argue, business plans must constantly change to account for the unexpected.
Now critics of material change have a new ally, albeit a somewhat unlikely one.
In a recent ILW article about USCIS policy, former USCIS adjudicator Joseph Whalen argues, among other things, the following:
In all business, not merely EB-5, plans are made but are subject to change along the way. The artificial and arbitrary prohibition against substantive material change has grown beyond its limited usefulness and become onerous. The concept of material change and the prohibition against it as well as its application need further clarification and refinement.
Whalen is essentially echoing the sentiments of many EB-5 practitioners when he says such policy has "become onerous." Under current adjudication practices, an immigrant investor can create the necessary number of jobs and still be unable to receive his or her EB-5 green card if something happened that wasn't in the initial business plan.
A little history
Whalen acknowledges that the emphasis on material change was initially deemed "necessary in order to combat scam artists and fraudsters seeking to buy a green card with lousy investment schemes."
As he explains it, the material change concept was at first applied to an investor's "financial arrangements" at the time of I-526 filing and not to the status of the approved business plan at the I-829 stage. It simply "spread" to the job creation side of the equation as the adjudication process evolved.
"The [material change] precautions have gone too far," Whalen declares, stating that they "may inappropriately block investors even (at least in theory) when they achieve the desired results of full investment and enough jobs."
And that's exactly what EB-5 visa attorneys and regional center operators fear.
And the future?
And inclusion of contingency plans that would put USCIS "on notice" in the event of a necessary change could, according to Whalen, keep prohibited material changes at bay.
That being said, Whalen also believes it's time for USCIS to reconsider material change. With so many EB-5 visa program reforms happening at once ? direct email communication, the decision board, premium processing ? why not fix some of the other issues that investors and their attorneys believe make it unnecessarily difficult to participate in the program?
As Whalen observes, EB-5 stakeholders "want clear and consistent answers. They crave certainty. They desire reasonable reliance and have sought assurance of deference on settled points."
Is that really too much to ask for?
NOTE: On November 7, two small modifications were made to the above text. Joseph Whalen was not, as originally reported, an EB-5 "visa" adjudicator specifically, but a former INS (and later USCIS) adjudicator. The article was also changed to clarify that the original application of material change at the I-526 stage was not Whalen's "belief," per se, but that the concept can be traced to the changes made after an I-526 plan was approved, although the consequences of material change are seen at the I-829 stage.