Throughout the course of a project’s development, the business plan is likely to change. In fact, the longer the project takes to complete, the more likely changes will occur. Given current EB-5 project durations, the likelihood of changes to a project’s business plan is high, and the effects of these changes can be significant. Changes to EB-5 business plans are, perhaps, most significant for Mainland-born Chinese investors, whose project durations tend to be longer due to visa retrogression. But any project, regardless of its duration, may change—and many changes can adversely impact EB-5 investors.

The overall effect of a change to an EB-5 business plan will be determined by the nature of that change. Some changes may simply require notifications, either to EB-5 investors or to USCIS, or both. Other changes, however, may result in a project’s exemplar status being reconsidered or could result in an otherwise approvable project becoming unapprovable. And even if changes to a business plan don’t result in a petition becoming unapprovable, such changes may still require EB-5 investors to file new I-526 Petitions. We’ll explore each of these issues in more detail below.

Changes May Require Investor Notification

Depending on the nature of the change to a project’s business plan, U.S. securities laws may require that investors be notified of the change—and investors may have the right to rescind their investment contract.

The specific concern here is whether the change made to the project’s business plan is a material change as defined by the relevant securities law. If so, investors may be entitled to notification and rescission rights. Note that the definition of a material change for such purposes is determined by securities law, not immigration law. What constitutes a material change in securities law may not be a material change in immigration law.

Changes May Require USCIS Notification

Perhaps more challenging to determine is whether a change to an EB-5 project’s business plan requires USCIS notification. If the change is determined to be material, it should be disclosed to USCIS. But in some cases, nonmaterial changes that alter the details of the business plan may also need to be disclosed so the adjudicator is able to make his or her determination regarding investor petitions based on the most up-to-date set of facts.

Since most business plans are changed relatively often, it is impractical and infeasible to notify USCIS of each and every change. At the same time, not notifying USCIS when it would be necessary to do so can lead to poor outcomes for an EB-5 project. Everyone’s best interests are served when USCIS has the right information at the time a petition is adjudicated. If an investor’s petition is approved based on facts that are no longer accurate, the investor’s approval may ultimately be jeopardized.

Unfortunately, because every business plan is different—as are the changes the business plan is likely to undergo during the duration of the project—no one-size-fits-all solution can be offered. The project developer, regional center, and immigration counsel should discuss each change and determine whether it is of great enough significance to warrant sending a notification to USCIS. The key consideration is protecting all the parties involved—both from negative immigration decisions and from positive immigration decisions that are later invalidated (e.g., approved I-526 Petitions followed by denied I-829 Petitions based solely on changes to the business plan).

Changes May Result in Exemplar Projects Being Reconsidered

In addition to potentially requiring that notifications be sent to EB-5 investors and/or to USCIS, changes to a business plan may also result in a loss of the deference given to petitions based on exemplar project status. Under current USCIS policy, any change might result in USCIS reconsidering whether a project previously given exemplar status continues to comply with all applicable EB-5 regulations.

Even if a change to an EB-5 project’s business plan does not affect its viability as an approvable EB-5 project, USCIS may reevaluate the project’s exemplar status. And if USCIS chooses to reevaluate the exemplar, investor petitions will not likely receive deference, thus delaying adjudication.

Changes May Make Approvable Petitions Unapprovable

Depending on the nature of the change to a business plan, some or all investor petitions may become noncompliant with EB-5 requirements. For example, if the amount or type of spending changes, the total number of EB-5 eligible jobs may be reduced, potentially resulting in too few EB-5 jobs for the number of EB-5 investors. In such cases, some or all of the EB-5 investors may be at risk of being denied petitions by USCIS for not meeting the requirements of the EB-5 Program.

Any changes that result in the EB-5 project becoming noncompliant with EB-5 regulations or USCIS policies will result in denied petitions.

Changes to Facts May Require New Petitions

If a change to an EB-5 project’s business plan constitutes what USCIS defines as a material change, each EB-5 investor will likely be required to file a new I-526 Petition, forfeiting the investor’s current priority date and, in many cases, significantly delaying his or her immigration to the United States.

While USCIS has not clearly articulated what constitutes a material change, some changes are known to be considered “material” by USCIS. For example, if an EB-5 petition was based on a project that was not approvable at the time of filing, any change that would make that project approvable would be considered material by USCIS. Likewise, a change that would make an otherwise approvable project no longer compliant with the EB-5 Program would also be considered material.

But USCIS may determine that changes to a project’s business plan may be material even if those changes result in a project that is still compliant with EB-5 requirements and USCIS policies. In such cases, USCIS may require investors to file new I-526 Petitions even though the project was approvable when the initial I-526 Petitions were filed and continued to be approvable after the business plan changed.

However, even if a change is determined to be material by USCIS, depending on when the change occurred, a petition may still be approvable. If, for example, an investor has already obtained his or her conditional permanent resident status (Green Card), he or she will likely be able to successfully file Form I-829 despite any changes to the EB-5 project’s business plan as long as the investor continues to meet the criteria of the EB-5 Program.