[HOT] Recent articles analyzing "material change" -- and our brief comments

Two interesting articles by a former INS Adjudicator (who had been involved in the EB-5 Program) on an EB-5 issue which has been garnering a lot of attention lately.

http://www.ilw.com/articles/2011,0301-whalen.shtm -- I agree wholeheartedly that USCIS sometimes misapplies the Katigbak decisions to various types of cases, including I-829 cases. Therefore, I have no comment other than to say I agree with what I believe the article is saying.

http://www.ilw.com/articles/2011,0321-whalen.shtm -- As far as we are aware, many EB-5 attorneys do not agree that the 9th Circuit Chang case provides a definitive precedent on the "material change" issue; and we do not understand why USCiS is so heavily relying on the Chang case. Could it be that this dicta language in the Chang case is the only language in the entire EB-5 law that remotely supports its position? The dicta language cited stating that I-526 petition and I-829 should not be "decoupled" was used by the 9th Circuit Court to actually prohibit USCIS from changing the EB-5 rules AFTER I-526 petition approval and denying I-829. Moreover, this language was a dicta, not a holding, although I do agree an argument could be made along the line that Mr. Whalen is making. I do not feel, however, such argument is supported by the EB-5 law, in that the primary source of EB-5 statutes and regulations governing I-829 adjudication do not prohibit such "material change" after I-526 approval. I believe the confusion arises mainly because the EB-5 law prohibits substantial change to NCE, not job-creating entity; and the "decoupling" language in the 9th Circuit Chang case should be read within this context.

There is no reason or basis why such change to the job-creating entity should be deemed to a "material change" prohibited by the EB-5 law. To me, the very name calling some change a "material change" inaccurately brands such change as appearing to be prohibited by EB-5 statutes and/or regulations. In fact, as long as Izumii AAO decision allowing a New Commercial Enterprise entity to make commercial loan(s) to job-creating entities is a precedent decision, you have to focus on the change experienced by the New Commercial Enterprise entity, not the associated job-creating entity. In other words, I-829 statutes, regulations and the Izumii decision do not, I repeat do not, prohibit any change in the associated job-creating entity. In some sense, Izumii placed USCIS in the corner from which it wants to escape using a dicta from the 9th Circuit Chang case.

Again, the 9th Circuit Chang's "decoupling" language properly stands for the proposition that there cannot be a substantial change to the NCE -- nothing more or nothing less; and therefore, the Chang case is at best "neutral" on the issue of whether a JCE can be changed after I-526 approval. If the NCE engages in making a commercial loan per Izumii, then what is so terrible about making a loan to another job-creating entity? The NCE continues to remain the same and unchanged.

In essence, my position is: 1) the very statutes and regulations governing I-829 adjudication do not prohibit a change in the job-creating entity where the new commercial enterprise entity is allowed to make commercial loan(s) per Izumii precedent decision; 2) the underlying policy of the EB-5 Program should promote the job-creation whether there has been an underlying change in the job-creating entity; and 3) USCIS never made it clear previously that the change in the job-creating entity was prohibited, so that it would be disingenuous to say that so and so was USCIS' policy on this matter; and in fact, there was no I-526 amendment procedure in the past.

For said author, the ultimate issue is not whether USCIS is right or wrong on this issue. It's whether USCIS is being fair. No one, including USCIS, were clear on this issue, and even now, important issues concerning EB-5 law are being decided. Therefore, unless USCIS made it clear that the EB-5 law was clear on this point at the time said actions took place, it does not seem "fair" to said author for USCIS to penalize investors.

In conclusion, I do understand the rationale behind Mr. Whalen's 2nd article, but I believe an equally strong argument could be made based on the PRIMARY source of relatively clear statutes and regulations governing I-829 adjudication. Forget the "dicta" language of the 9th Circuit Chang case and examine the very statutes and regulations governing I-829 adjudication. Shouldn't we do that first, before we discuss what the Chang case appears to say?