Material Change vs. Authorized Modification-When Is Something Administratively Final? Is Time of Filing or Time of Adjudication More Crucial?
Material Change is a tricky concept no matter its context. With regard to discussions of material change in immigration proceedings, the vast majority of cases involve contested BIA dismissed appeals of Removal Orders and the impact of administratively filed Motions on the judicial Petitions for Review concurrently pending in the Circuit Courts of Appeals within the two-track path created by Congress. The AAO is not in the same situation as it does not have a dual track to deal with. When something in the immigration benefits context is not administratively final and cases are filed in District or Circuit Courts generally they get dismissed for lack of jurisdiction, except for an occasional writ of mandamus. The AAO has much less direct case-law to draw from the Circuit Courts but there is not a total void.
A major case of importance for the AAO, especially, but not exclusively, in the EB-5 context is Chang v. United States of America, 327 F. 3d 911 (9th Cir. 2003) , which states in pertinent parts:
"The precedent decisions were issued subsequent to the INS's approval of Appellants' I-526 petitions. However, the INS applied the new criteria to the Appellants' I-829 petitions. Prior to the district court hearing, it denied Appellant Yi Yuan Chiang's petition, as well as those of other similarly-situated non-plaintiffs, and placed the six other Appellants' petitions on indefinite "administrative hold." The INS argues that, based on the precedent decisions, a review of Appellants' I-829 petitions will not allow it to certify that Appellants have complied with the legal requirements of EB-5. At 6This first excerpt, above pretty much sums up the crux of the matter in that case. The Court sided with the plaintiffs and found that INS could not do what it wanted to do in those cases. The following excerpt further clarified that I-526 petition approval coupled with successful execution of the plan presented therein would be a good predictor of removal of conditions through approval of the subsequent I-829 petition. Chang turned Izummi against INS and simultaneously reinforced it. The 9th Circuit disallowed INS' desire to materially change the I-829 rules to be to an I-526 plan it reviewed and approved but locked the alien investors into their approved plans. The Chang plaintiffs however, were at the end of the process and had filed their I-829s when INS sought to make material changes to the rules. The new rules were OK for prospective application to plans not yet approved. In reality, there is perhaps 2.5 to 3.5 years between the filing of the I-526 and the filing of the I-829 petitions and some changes will happen. That is the reason why the I-829 rules have some wiggle room built-in already. Chang only basically locks the investor into an approved plan but not necessarily to the plan as initially filed. Please keep this in mind for later reference.
"c. I-829 applications need not receive ab initio review. The crux of the government's position is that the Montgomery Ward retroactivity concerns do not apply to EB-5 applications, because EB-5 requires a "fresh demonstration of compliance with statutory standards at the I-829 stage." However, if I-526 approval is decoupled from I-829 approval, then petitioners whose I-526 petitions had been approved would have no reasonable reliance that the rules set out in 8 C.F.R. § 216.6 would not change in midstream. If, on the other hand, approval of the I-526 petition was an official provisional approval of the petitioner's plan, contingent on its effectuation, then a retroactivity analysis is required." At 51.
Matter of Izummi, 22 I&N Dec. 169 (BIA 1998) held, in pertinent parts:
(3) A petitioner may not make material changes to his petition in an effort to make a deficient petition conform to Service requirements. (9) The Service does not pre-adjudicate immigrant-investor petitions; each petition must be adjudicated on its own merits.
Changing View of Material Change in the EB-5 Context
I have written before about how I disagree with the application of the "material change" prohibition within inapplicable contexts. I have to concede that it generally belongs in the preference visa petition context. In family-based I-130 petitions, the familial relationship must exist as defined in the INA at the time of filing. See Matter of Bardouille, 18 I&N Dec. 114 (BIA 1981), Matter of Atembe, 19 I&N Dec. 427 (BIA 1986); and Matter of Drigo, 18 I&N Dec. 223 (BIA 1982). The beneficiary's education, work experience, and licensure must be in place when the labor certification or I-140 petition, as applicable, is filed in order to be properly classified as of the "priority date" in the job category as defined in the INA. See Matter of Wing's Tea House, 16 I&N Dec. 158 (Reg'l. Comm'r. 1977); Matter of Katigbak, 14 I&N Dec. 45 (Reg'l. Comm'r. 1971). In addition, although the L nonimmigrant visa does not have a "priority date" at issue, it does have specific eligibility prerequisites. The L visa is for an "intra-company transferee" who was already an employee for at least one year in the previous three and who will be employed in a capacity that is managerial, or executive or involves specialized knowledge therefore they are reliant on a specific pre-existing employer-employee relationship that must have been in existence for a minimum prescribed period of time and in a certain role. See Matter of Michelin Tire Corp., 17 I&N Dec. 248 (Regl. Commr. 1978). The nonimmigrant petitions like the immigrant petitions do get adjudicated in a first-in, first-out processing queue. While there is no priority date, there are still the general requirements as to the pre-existing relationships or qualifications as defined by statute, and as clarified through implementing regulations.
I have thought some more and modified my opinion on the "material change" and "eligibility at the time of filing" issues specifically as related to stand-alone I-526 filings that include a "business plan". After careful consideration, I now believe that certain stand-alone or non-Regional Center affiliated I-526 investors should have the same kind of leeway that I advocate for an I-924 Regional Center application. This divergent treatment should not extend to Regional Center affiliated I-526 petitions because they already get it vicariously through the Regional Center.
If the stand-alone investor or non-Regional Center investor group has not yet created the required jobs upon filing, then the petitioner(s) must submit a comprehensive, detailed, and credible business plan just like an I-924 applicant. When such a plan is in its infancy or developmental stage, changes should not be precluded. This is because that stance is not helpful in fulfilling clear Congressional intent of improving the economy and creating jobs in the U.S. In addition, the I-526 plan is a preliminary step that will require effectuation and submission of further evidence as sufficient proof of full expenditure and job creation in a follow-up proceeding via an I-829. Lastly, the fifth preference employment-based visa category is quite different from the rest of the employment-based categories. I admit that I have done further research into the history of the immigrant investor visa and this has shed more light on just how different EB-5 is from the rest.
A Brief Synopsis of the History the Immigrant Investor Visa
Congress did not create the immigrant investor classification, they merely codified it and modified it twenty-four years after the fact in the Immigration Act of 1990 (IMMACT90). Previously, in 1965, Congress made a major overhaul of the Immigration and Nationality Act. That 1965 amendment did not include an immigrant investor visa category. The 1965 amendment included an undefined category of "other qualified immigrants" among the "nonquota immigrants" newly renamed "special immigrants" in INA § 101(a)(27).
Former INA §§ 203 (a)(3), (a)(6), (a)(8) [8 USC §§ 1153 (a)(3), (a)(6), (a)(8)] (1965) provided, in pertinent part:
(a) Aliens who are subject to the numerical limitations specified in section 1151(a) of this title shall be allotted visas or their conditional entry authorized, as the case may be, as follows: . . . . .
Former INA § 212(a) [8 USC § 1182(a)] (1965) provided in pertinent part:
"Except as otherwise provided in this Act, the following classes of aliens shall be ineligible to receive visas and shall be excluded from admission in the United States;....
INS Created the Immigrant Investor Classification
The "investor visa" was created originally in 1966, by INS through regulation utilizing the Attorney General's broad authority under INA § 103 [8 USC § 1103] by construing and interpreting INA § 203 [8 USC § 1153] (a)(8)'s "other qualified immigrants" who could demonstrate that they did not require a labor certification from the Secretary of Labor. It was not termed as a visa classification but rather as a "labor certification exemption". It seems that everybody needed some guidance on who the phrase "other qualified immigrants" actually applied to. Who exactly were these "other qualified immigrants" that did not need a labor certification?
These visas were allocated under INA § 203 (a)(8) but issued as a "special immigrant" class found in INA § 101(a)(27) [8 USC § 1101 (a)(27)]. The Immigration and Nationality Act Amendments of 1965 (Public Law 89-236, Sec. 8 (a)) renamed nonquota immigrants as special immigrants in INA § 101(a)(27). These special immigrants were eligible for visas and investors were among these immigrants but defined in the regulation, not the statute.
The original version of 8 CFR § 212.8 stated, in pertinent part:
(b) Aliens not required to obtain labor certifications. The following members are not considered to be within the purview of section 212(a)(14) of the Act and do not require a labor certification: ....... (4) an alien who will engage in a commercial or agricultural enterprise in which he had invested or is actively in the process of investing a substantial amount of capital. [31 FR 10021, July 23, 1966; 31 FR 10355, Aug. 22, 1966, as amended at 34 FR 5326, Mar. 18, 1969][A modified version of this extraneous regulation is still in 8 CFR.]Compare & Contrast I-924 vs. Stand-Alone I-526
Like an I-924, for a stand-alone I-526 there are no pre-existing relationships and precious few specific eligibility qualifications to be proven at this stage. A business plan which by its very nature is speculative and exists within an environment, in this case a democratic society with a capitalist free-market economy, that is at the mercy of overarching influences; some change, even of a material nature, is not unusual. The market forces at play in the business world can be heavily influenced by a wide array of unpredictable possibilities.
While I strongly advocate for extensive advance planning and accounting for numerous contingencies through the use of transparent complexity in formulating the plans presented in the EB-5 context, not all possibilities can be foreseen. Political maneuvers, important elections, a big company going belly-up--for a variety of reasons; including illegalities (Enron), or having other unforeseen calamities (BP Gulf oil-spill); wars, or man-made and natural disasters around the globe (terrorist attacks; Icelandic volcanoes; storms in: Japan, Haiti, New Orleans; or Mississippi River floods, etc...) cannot be reasonably forecast is an EB-5 business plan.
On the other hand, it is perfectly reasonable for USCIS to to expect everyone to put forth up-front certain other evidence that is complete, valid, and legal, such as: transaction documentation and lawful financial documentary evidence of source and path of project funds. There is no settled expectation that contract law or tax codes and banking regulations will change overnight. If portions or aspects of such other evidence are changed during the preliminary phase, perhaps even at the insistence of USCIS in order to make it EB-5 compliant, then it is clearly NOT feely open to undisclosed and/or unauthorized material changes thereafter. However, as for the business plan presented with a stand-alone I-526 that has not yet been effectuated or perhaps not even begun in any respect, USCIS should not treat the stand-alone investor who is presenting that plan any differently than a Regional Center sponsor who is also presenting a plan which is subject to change until such time as USCIS approves it.
Harkening back to Chang, the investors at the I-829 stage were locked into their INS approved plans. As AAO and BIA like to point out, the mere filing of an application or petition does not guarantee approval. Why should this same concept not extend to the business plan at time of submission in this preliminary stage?
I&N Precedent Decisions Of Note
Matter of Al Wazzan, 25 I&N Dec. 359 (AAO 2010) held:
(1) Although section 204(j) of the Immigration and Nationality Act, 8 U.S.C. § 1154(j) (2000), provides that an employment-based immigrant visa petition shall remain valid with respect to a new job if the beneficiary's application for adjustment of status has been filed and remained unadjudicated for 180 days, the petition must have been "valid" to begin with if it is to "remain valid with respect to a new job."
The second prong if applied to an I-526, would mean that one is entitled if they have put forth a plan and have enough lawful funds to invest. The I-526 and the plan submitted in support thereof would only be valid if approved. Approval of the I-526 is contingent on a USCIS Officer approving the plan submitted as supporting evidence. An Officer may request further evidence or issue a notice of intent to deny and may consider any evidence and/or rebuttal received in response. It is clear that a plan in support of an EB-5 investment can be filed, altered, and then approved. Only after it has been reviewed and approved will the alien be somewhat "locked-in" except as already provided for in the I-829 regulations.
(3) Congress specifically granted USCIS the sole authority to make eligibility determinations for immigrant visa petitions under section 204(b) of the Act. (4) An unadjudicated immigrant visa petition is not made "valid" merely through the act of filing the petition with USCIS or through the passage of 180 days. [Emphasis added.]
The third prong reinforces the proposition that filing alone is not enough to ensure approval.
The following is NOT the EB-5 Matter of Ho 1998 AAO Precedent Decision.
Matter of Ho, 19 I&N Dec. 582 (BIA 1988) held, in pertinent parts: [emphasis added]
(1) The petitioner bears the burden in visa petition revocation proceedings of establishing that the beneficiary qualifies for the benefit sought under the immigration laws. Matter of Cheung, 12 I&N Dec. 715 (BIA 1968), reaffirmed.
The first prong is akin to the termination of status that results when an I-829 for EB-5 conditional residents or an I-751 for marriage-based conditional residents is denied.
(2) Approval of a visa petition vests no rights in the beneficiary of the petition but is only a preliminary step in the visa or adjustment of status application process, and the beneficiary is not, by mere approval of the petition, entitled to an immigrant visa or to adjustment of status.
The second prong is applicable across the board. Merely because a "relationship" exists; or a beneficiary has the required educational or occupational experience, i.e. "qualifications"; or an investment plan is presented and accepted; and thereby one has shown prima facie evidence of eligibility for the desired visa "classification"; this does not pre-destine visa issuance to, or adjustment of status for, an alien who is inadmissible for some other reason. Nor does visa approval and subsequent visa issuance or adjustment of status guarantee the lifting of conditions on status later if conditions have not been fulfilled as required.
(3) The realization by the district director that he made an error in judgment in initially approving a visa petition may, in and of itself, be good and sufficient cause for revoking the approval, provided the district director's revised opinion is supported by the record.
The third prong is somewhat overstated for some cases especially when applied to EB-5 I-526 investor petitions revisited at the I-829 stage on certain issues. One must remember that it is not an absolute foregone conclusion that just any old error is enough to revoke an approval or terminate status. For example, an approved methodology shall not be revisited absent material misrepresentation by fraud or concealment of material fact. EB-5 is loaded with assumptions, predictions, and projections based on a wide range of variables presented and interpreted in a business plan and supported by an economic analysis based on an econometric model. Sound business judgment is always just that, a judgment. Hindsight re-assessment or re-analysis in the absence of deceit is usually held to be arbitrary, capricious, or an abuse of discretion.
In contract law, vitiating elements are generally accepted to include:
1) mistake by a party or in subject matter,
As applied to EB-5, obviously misrepresentation and illegality even when discovered long after-the-fact are pretty well settled as things that can blow up in one's face and ruin a project for everyone involved. The extent and nature of mistakes and inequality seem to still be in a state of flux within the EB-5 context. Mistakes in evaluating something that is only a judgment call to begin with, if made without deceit, bias, or criminality should not be enough for revocation in and of themselves. However, the consequences of mistakes are another matter all together. Each case must stand up on its own merits (see ninth prong of Izummi). In other words, naive, unwise, or plain old stupid mistakes alone do not seem to be enough of an epiphany to invoke the Secretary's, i.e. Director's discretionary authority to revoke under INA § 205.
(4) Doubt cast on any aspect of the petitioner's proof may lead to a reevaluation of the reliability and sufficiency of the remaining evidence offered in support of the visa petition.
The fourth prong is a generally accepted prerequisite to any re-evaluation of what was already approved at an earlier stage of the process within the EB-5 context. In EB-5, this prong of this holding heavily influences the application of the previous prong. Business decisions are loaded with discretionary decisions and judgment calls based on assumptions and "doubts" abound. If a risky business is tried and succeeds, everybody is happy but when it fails, second-guessing can overpower anyone and then the "If only..." mentality can take over. USCIS adjudicators have been urged not to turn mere doubts into suspicion in an irrational manner.
(5) Evidence serving as the basis of a notice of intention to revoke approval of a visa petition need not have been previously unavailable or undiscoverable.
The fifth prong as applied in the EB-5 context is important to an I-829 denial, which is akin to an I-526 revocation. When the evidence submitted with the Regional Center affiliated I-526 was switched or materially altered from that which had been vetted and approved with an I-924 but the deception or impermissible material change is not discovered until the I-829 stage of the process, USCIS is fully within its rights and authority to terminate status rather than lift conditions.
"Fool me once shame on you, fool me twice shame on me."
As for a stand-alone I-526, even severe and gross departures from an approved plan might or might not result in a denial of an I-829. Absent illegality, fraud, or misrepresentation; and provided that the required amount of funds has been expended and the qualifying jobs have resulted, conditions should be lifted, If not, what basis would USCIS use to refuse to lift conditions from status that would NOT be overturned as arbitrary, capricious, an abuse of discretion, and contrary to law?
(6) It is incumbent upon the petitioner to resolve any inconsistencies in the record by independent objective evidence, and attempts to explain or reconcile such inconsistencies, absent competent objective evidence pointing to where the truth, in fact, lies, will not suffice.
The sixth and last prong gets plenty of use across-the-board. As applied to an I-526 and a plan submitted in support, RFEs and NOIDs can be used to address perceived problems with the plan and thereby allow the petitioner to perfect the petition after filing. In either the I-526 or I-829 contexts, outright lousy, unsupported explanations should not be accepted.
SIDEBAR: Reading through a great many AAO decisions, I have noticed far too many unsupported assertions for my liking. It bothers me that so many people have become involved in EB-5 and persist in taking their clients down this path. I do not want to see a return to the "dark days of EB-5" when sleazy developers and assorted con artists nearly killed EB-5 and Regional Centers for good.
stand-alone I-526 investor who has not already created the required jobs at time of filing are:
1) The stand alone investor may not count any "indirect jobs" but as part of their plan could include some market research perhaps even including an economic analysis with such job projections. This does not mean the investor would even need to show it to USCIS, or that USCIS would have to consider it in evaluating the business plan. (But hey, if it supports the business plan .... Why not show it and why not check it out?).
2) The Regional Center applicant does not have to show the lawful source and path of funds for the individual investors for the Regional Center sponsored/coordinated EB-5 job creating projects supporting the I-924. However, every EB-5 investor must show the lawful funds evidence for the entire EB-5 project, including non-EB-5 investors' funds, with the individually filed I-526 petition.
3) A Regional Center affiliated project would likely have the non-EB-5 funds presented by the RC on behalf of the EB-5 investors in such a project while each individual RC-affiliated EB-5 investor will be submitting their own financial evidence with their own I-526. Any investor not qualified on this issue merely gets kicked out of the project.
That brings us to the end of the EB-5 article. The remainder is a collection of cases as eluded to in the introduction and included here for easy reference and to promote and facilitate further research on the topic of material change and how that term is defined in the Circuit Courts of Appeals.
The following excerpt is from: Finality and Reconsideration: What can courts review and when? In Immigration Litigation Bulletin, Vol. 15, No. 6, June 2011, By Terri Scadron, Assistant Director, OIL (DOJ, Office of Immigration Litigation).
".... The Third, Fifth, Ninth, and Eleventh Circuits have each held that the Board's grant of reconsideration and issuance of a new decision does not defeat finality of the original order under review, unless the Board vacates or materially changes the original order. See Espinal v. Holder , 636 F.3d 703 (5th Cir. 2011); Thomas v. Attorney General , 625 F.3d 134 (3d Cir. 2010); Plasencia-Ayala v. Mukasey, 516 F.3d 738 (9th Cir. 2008); Jaggernath v. U.S. Attorney General , 432 F.3d 1346 (11th Cir. 2005)." [Emphasis added.]
The above article was discussing certain procedural aspects of Petitions for Review of Final Orders of Removal by the Circuit Courts of Appeals.
In Thomas, the 3rd Circuit included this explanation of its rationale:
"Here, there has been a change in the circumstances that existed at the time Thomas filed his petition for review, i.e., the BIA subsequently granted his motion for reconsideration. The BIA's mere grant of a motion for reconsideration, however, does not in itself render the petition for review moot. Rather, it is the substance of the BIA's subsequent decision, upon reconsideration, that determines whether there is still a live issue for the court of appeals to resolve. For example, if the BIA's subsequent decision substantively altered the ratio decidendi in its earlier disposition and operated to vacate the BIA's earlier decision, then the petition for review of the earlier decision is without effect because there is no longer any order or decision for the court of appeals to review. On the other hand, if the BIA's subsequent decision did not materially alter the rationale of the earlier ruling, that ruling remains effective and subject to judicial review by the court of appeals."
In Espinal, the 5th Circuit adopted the position of retaining jurisdiction in the absence of the BIA making a material change or vacating the prior decision outright.
".... [U]nless the BIA's new order vacates or materially changes its original order, the reviewing court continues to have jurisdiction over the petition. See Thomas, 625 F.3d at 141 (3d Cir.); Plasencia-Ayala, 516 F.3d at 745 (9th Cir.). We adopt this case-by-case approach, and hold that this court retains jurisdiction over a petition for review so long as the BIA's grant of reconsideration does not materially change, or effectively vacate, the order under review."
The 5th Circuit explained the underlying BIA case in footnote no. 1, thus:
"The BIA held that Espinal was ineligible for cancellation of removal because he is an alien convicted of an aggravated felony. An aggravated felony includes "a drug trafficking crime," which in turn includes "any felony punishable under the Controlled Substances Act [CSA] (21 U.S.C. § 801 et seq.)." 8 U.S.C. § 1101(a)(43)(B); 18 U.S.C. § 924(c)(2). The CSA provides that a conviction for a simple possession offense after "a prior conviction for any drug . . . offense chargeable under the law of any State" has become final may be punished as a felony. 21 U.S.C. § 844(a). Since this recidivist offense requires only one prior drug conviction, the presence or absence of Espinal's 2005 conviction would not change the outcome of his petition. Although this reasoning was ultimately rejected by the Supreme Court, it was then sufficient that Espinal was convicted in 2007 for drug possession following an identical conviction in 2003. The BIA could thus abandon its reliance on the 2005 conviction without changing the substance of its decision." [Emphasis added.]
In Jaggernath (alternately spelled Jaggernauth), the soothsayers in the 11th Circuit found that they could divine the BIA's intentions and thus retain jurisdiction and authority to continue its review and incorporate the updated BIA decision.
".... [W]e conclude that we have jurisdiction to consider this appeal, as the BIA's reconsideration order does not alter the November 14, 2003 order of removal or affect its finality. Thus, the November 14, 2003 order is a "final order of removal" for jurisdictional purposes. In addition, we agree with Jaggernauth that the BIA erred in concluding that she was removable because she had been convicted of an "aggravated felony" as defined by the INA." *****
In Plasencia-Ayala , the 9th Circuit jumped on the bandwagon, stating:
"We agree with the Eleventh Circuit's conclusion. Where the BIA's decision granting a motion for reconsideration expressly affirms the BIA's prior decision and its analysis does not significantly differ, there is little reason to require "the petitioner to raise the identical issue again in a petition to review the BIA's decision on the motion to reconsider." Desta, 329 F.3d at 1184. Stone recognizes that Congress created parallel processes of administrative and judicial review of the BIA's decisions to expedite the removal process. Once a petition for review has been filed, federal court jurisdiction is divested only where the BIA subsequently vacates or materially changes the decision under review."
In footnote no. 3, the 9th Circuit included the following weasel words:
"We also note that the BIA is empowered to vacate its prior decisions, and has expressly done so on a number of occasions. See, e.g., Matter of Eslamizar, 23 I. & N. Dec. 684, 689 (BIA 2004); Matter of Ramos, 23 I. & N. Dec. 336, 347 (BIA 2002). Since the BIA has the power to vacate its decisions expressly, there is little need to adopt a rule that every grant of a motion to reconsider constitutes a de facto vacature of its prior decision."
In a review of a denial of forms I-601 and I-212 [but incorrectly filed among decisions relating to form I-612 (Waiver of two-year home residency requirement of INA § 212(e))], the AAO invoked certain reasoning from Plasencia-Ayala:
"The AAO turns first to the issue of whether the applicant is inadmissible to the United States under section 212(a)(6)(B) of the Act, which states:Any alien who without reasonable cause fails or refuses to attend or remain in attendance at a proceeding to determine the alien's inadmissibility or deportability and who seeks admission to the United States within 5 years of such alien's subsequent departure or removal is inadmissible.