It is unlikely that a business plan will experience no changes throughout the life of an EB-5 project. The longer a project is, the more time the business plan has to change. Business plan changes are likely in most EB-5 projects and can dramatically change an investor’s situation. Chinese EB-5 investors are particularly vulnerable to business plan changes because the long backlogs force them to stay in projects longer.
Some EB-5 business plan changes have little effect on investors, requiring nothing more than a notification, but others can impact investors’ ability to have their petition approved and gain a green card. Certain changes may result in the revocation of a project’s exemplar status or may cause an investor’s I-526 petition to be denied. Some may require EB-5 investors to file an additional I-526, which necessitates additional time, effort, and expenses.
U.S. securities laws dictate that certain changes—namely, material changes—require investor notification. In these cases, investors have the right to consider the change and pull out of their investment contract, if they wish.
Not all material changes require investor notification. The material change must be defined as such in the relevant securities law. If a change is defined as a material change according to immigration law but not securities law, the project is not required to notify investors.
Projects should inform United States Citizenship and Immigration Services (USCIS) of any material changes and sometimes even nonmaterial changes. Timely notifications to USCIS can allow adjudicators to properly reach a conclusion about the approval or denial of an EB-5 investor’s I-526 or I-829 petition. It is unnecessary (not to mention infeasible) to inform USCIS of every change an EB-5 project’s business plan, but if USCIS does not have access to accurate information when adjudicating a petition, the investor risks denial.
There is no one single solution that works for all EB-5 projects. Given the dramatically different natures of projects, different changes may qualify as a necessary change to notify USCIS about. Whenever there is a change to the business plan, the project developer, the regional center, and relevant immigration attorneys should convene to determine whether it is worthy of a USCIS notification. The determining factor should be the risk to EB-5 investors and their immigration success.
Revocation of Exemplar Status
A more dramatic effect of EB-5 business plan changes is the revocation of an EB-5 project’s exemplar status. Projects with exemplar status facilitate the I-526 process for EB-5 investors, making the petition easier to prepare, expediting the time needed for adjudication, and increasing an investor’s chances of success. However, any change can result in an EB-5 project’s exemplar status being revoked at USCIS’s discretion. Even if the change does not result in the denial of investors’ I-526 or I-829 petitions, it may delay processing times because the petitions will no longer receive deference.
The Denial of Previously Approvable Petitions
Most concerning for EB-5 investors are changes that render their petitions unapprovable. One such change is cuts in the amount of spending, which may result in fewer EB-5 eligible jobs being created. If the number of EB-5 jobs created becomes insufficient to support the number of EB-5 investors in the project, some or all of the investors may have their petitions denied. Any petition deemed to be compliant with EB-5 program requirements will be rejected, regardless of the circumstances.
The Resubmission of Petitions
If a change is considered a “material change” by USCIS, investors will have to resubmit their petition or risk denial. Generally, USCIS considers a change “material” if it changes the status of a petition—approvable or unapprovable. While resubmitting an I-526 or I-829 petition can potentially save an investor from rejection, in filing a new petition, they forfeit their priority date, which can result in significant immigration delays.
Sometimes, even if a change to an approvable petition does not render it unapprovable, USCIS may still consider it “material.” In these cases, EB-5 investors are still required to submit new I-526 petitions in accordance with the change. Furthermore, changes are less significant when investors are in the second stage of the EB-5 program—the I-829 petition. Investors who have already been issued a green card are likely to continue successfully with their I-829 petition despite changes to their project’s business plan, as long as the investors themselves still meet the EB-5 program’s requirements.