Material Changes May Require Reevaluation But Not Mandatory Denial


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1. Material Changes May Require Reevaluation BUT Not Mandatory Denial By Joseph P. Whalen 1 (December 29, 2012)As USCIS more successfully refines and clarifies its own as…
  • 1. Material Changes May Require Reevaluation BUT Not Mandatory Denial By Joseph P. Whalen 1 (December 29, 2012)As USCIS more successfully refines and clarifies its own as well as EB-5stakeholders’ understanding of the Tenant-Occupancy Methodology asevidenced by the Guidance Memo dated December 20, 2012, but released viae-mail on December 28, 2012, perhaps we should next shift our focus toanother matter. How about we take a closer look at the infamous and dreaded“material change”? In the EB-5 context, an earlier concept from Matter ofKatigbak was overzealously adopted in Matter of Izummi, infra. While thereare certain concise issues to which it applies, it has grown beyond itsappropriate application. This concept needs to be revisited in a new Precedentor through APA2 notice-and-comment rulemaking. If not, the Federal Courtsmay impose impractical changes upon USCIS. It is for that reason and thosethat follow that USCIS, the Regional Center industry, and the EB-5stakeholder community would be best served by USCIS being proactive on thisissue.Matter of Izummi, 22 I&N Dec. 169 (AAO 1998) holds, in pertinent part, (3) A petitioner may not make material changes to his petition in an effort to make a deficient petition conform to Service requirements.That same decision goes on to further explain the underlying requirement,thus: “A petitioner must establish eligibility at the time of filing; a petition cannot be approved at a future date after the petitioner becomes eligible under a new set of facts. See Matter of Katigbak, 14 I&N Dec. 45, 49 (Comm. 1971), Therefore, a petitioner may not make material changes to a petition that has already been filed in an effort to make an apparently deficient petition conform to Service requirements.” [emphasis added]Matter of Katigbak, 14 I&N Dec. 45 (Reg. Comm., 1971), held: To be eligible for preference classification under 203(a) (3) of the Immigration and Nationality Act, as amended, the beneficiary must be a qualified member of the professions at the time of the filing of the visa petition. Education or experience acquired subsequent to the filing date of such visa petition may not be considered in support thereof since to do so would result in according the beneficiary a priority date for visa issuance at a time when not qualified for the preference status sought. [emphases added]1 Contact me at: or call (716) 604-42332 Administrative Procedures Act (portions of 5 USC). Page 1 of 3
  • 2. I have advocated for change in the application of these principles. In thepreference visa petition context, regardless of whether it is a family-based oran employment-based visa petition, certain changes MUST be prohibited, butnot everything. The fifth preference, employment-based preference visapetition is truly in a class by itself. In the I-526 self-petition of an entrepreneuror investor, the alien is NOT seeking an opportunity to come to the U.S. towork. Instead, this alien is seeking an opportunity to come to the U.S. to createemployment opportunities for U.S. workers. All that the statute3 demands ofthe alien entrepreneur or investor at the I-526 petition stage is to havesufficient lawful funds and pledge to or go ahead and make an attempt tocreate a minimum of ten (10) full-time permanent jobs for U.S. workers. Theimplementing regulations further clarify that the alien entrepreneurs orinvestors must either show evidence that they have already created the jobsor present a plan to create them. This makes sense.Alternatively, within the Regional Center context only, §610(c) of Pub. L. 102-395 (Appropriations Act of 1993), as amended all the way through 112-176(signed into law on Sept. 28, 2012) [8 USC § 1153 Note] allows the EB-5 self-petitioning alien to comply with the job creation requirement by putting forth“reasonable methodologies” that demonstrate what additional “indirect jobs”the EB-5 “project” or “investment vehicle” will also create and count them too.It has become the industry standard that if one is submitting a Business Plan(BP) in support of an I-526 visa petition (or a Dummy I-526 as an I-924Amendment Application) then that BP must be complaint with the agency’sPrecedent Decision, Matter of Ho, 22 I&N Dec. 206 (AAO 1998). Such BPwould then become a foundational document and supplied to an economistwho will use the information in that BP to formulate an Economic Analysis(EA) to predict the final job count for the proposed project/investment as wellas other “positive economic effects” regionally and/or nationally.It has also become the industry standard that the economist will utilize anInput-Output (I-O) Econometric Model to produce the EA. Among the modelsmost prevalently utilized are: IMPLAN, RIMS II, the Washington State I-Omodel, REMI, and REDYN (pretty much in that order). USCIS does notdictate which model to use in any particular project. USCIS will criticallyexamine whatever is offered as supporting documentation. If the evidence isconvincing, the investor and/or the Regional Center will be given a chance toimplement their plans. Success or failure will be up to the investor and/orRegional Center through the implementation of the plan as presented or as itmight evolve along the way. Changes to the plan may demand thepresentation of a revised BP and another EA at the last stage of the EB-53 INA § 203(b)(5) [8 USC § 1153(b)(5)] Page 2 of 3
  • 3. process when an I-829 is filed to request that conditions be lifted from theinvestor’s status. A new BP and EA might be more easily understood as a“hindsight report” of what was actually accomplished.It must be remembered that a Regional Center will have previously submittedan I-924 Application in order to gain Regional Center Designation. It was inthat much earlier I-924 process that the Regional Center defined its ownoperational parameters or the “scope of the Regional Center”. In order for theRegional Center-affiliated EB-5 investor to benefit from the “indirect jobs”,the project/investment vehicle cannot stray outside the previously USCISvetted and approved “scope of the Regional Center”. If the project/investmentvehicle were to stray outside the approved “scope” then only EB-5 direct jobswould count. This is because the affiliation would be lost and the EB-5investor would revert to the same legal position as a “stand-alone” EB-5entrepreneur/investor. This means that only the “EB-5 direct jobs” which areon-the-books employees of a business in which the EB-5entrepreneur/investor has an equity interest or ownership stake (including asa limited partner) can be counted to fulfill the statutory employment creationrequirement.It is at this point that one must revisit the approved “scope of the RegionalCenter”. Precisely which “kinds of commercial enterprises” did that RegionalCenter previously present as those which it would seek to “create”, “support”,and/or otherwise “facilitate” in their “establishment”, “survival”, and/or“growth”? What mechanisms were previously presented and approvedconcerning the “manner in which the funds would be applied” to theprojects/investment vehicles that the Regional Center previously stated in itsearlier application or any subsequent amendment to the “scope”? The answerthe immediately preceding question is where we would find the money-to-jobsnexus which was previously found to be sufficient for EB-5 purposes. Exactlywhat “reasonable methodologies” were previously presented and foundacceptable by USCIS? Taking these factors as the bare minimum of factors toconsider in the analysis: how does the BP as implemented, stack up to thepreviously approved “scope”? In the “hindsight report”, are previouslyapproved “reasonable methodologies” utilized in the new job creationanalysis? In sum, does the actual project as implemented withstand the“within the scope analysis” necessitated by a material change or multiplematerial changes from what was previously presented and approved? A varietyof hyper-technical matters were previously presented and settled, some maypermissibly change to a degree but others may not. These are case-specific,fact-specific, and highly individualized determinations.That’s my two-cents, for now. Page 3 of 3
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