Select Webinar Highlights: Lawsuit Filed by IIUSA against USCIS and Proposed New Rule
to Extend EB-5 Investor Minimum Investment Period from Two Years to Five Years
Full Webinar: Lawsuit Filed by IIUSA against USCIS and Proposed New Rule
to Extend EB-5 Investor Minimum Investment Period from Two Years to Five Years
On March 29, 2024, Invest in the USA (IIUSA) filed a lawsuit against USCIS. IIUSA is a membership-based 501(c)(6) not-for-profit industry trade association for the EB-5 Regional Center Program primarily comprising EB-5 regional centers and EB-5 professionals. Acting under a decision made by its board of directors, IIUSA took this action without notice to its membership at large.
This lawsuit challenges a recently announced two-year sustainment period policy published by USCIS in October 2023. That new policy has redefined the sustainment period, which previously continued through the end of an EB-5 investor’s two-year period of conditional residency. In addition to the lawsuit, IIUSA has proposed a new rule that would increase the required EB-5 investment sustainment period to a fixed five-year duration.
While we agree with IIUSA that USCIS did not follow the correct procedure to define the two-year sustainment period in its October 2023 policy, we do not agree with or support the IIUSA lawsuit.
The IIUSA lawsuit and the proposed five-year sustainment period rule are creating unnecessary uncertainty for EB-5 investors. If successful, the lawsuit and proposed rule could be detrimental to both the immigration and financial outcomes for EB-5 investors who are relying on the two-year policy published by USCIS in October 2023.
EB5AN’s Position on the Required EB-5 Investor Sustainment Period
- EB5AN is a member of IIUSA but is not on any executive committee, is not active in leadership, and does not serve on the board of directors.
- EB5AN was not consulted on the IIUSA lawsuit or the proposed five-year sustainment period rule and supports neither.
- EB5AN favors certainty and clarity in any EB-5 policy. We are troubled by any actions that create uncertainty for EB-5 investors, whether intentionally or otherwise.
- USCIS’ two-year sustainment period guidance has created a new, diverse set of EB-5 project options. While we believe that most EB-5 projects will naturally extend beyond two years, some projects will be suited to shorter durations. We are vigorous advocates of a “free market” economy.
- If successful, the IIUSA lawsuit will almost certainly have a negative impact on hundreds of Indian and Chinese investors. These investors are likely already subject to a multi-year visa backlog in the urban targeted employment area (TEA) visa category.
- Since October 2023, EB5AN has worked to structure shorter-duration projects. We currently have two available best-in-class short-duration urban TEA EB-5 projects. At the same time, EB5AN understands the realities of this potential challenge and offers more traditionally structured rural TEA EB-5 projects.
As frustrating as this IIUSA lawsuit and proposed rule may be, they come as no surprise. Many other EB-5 regional center operators rely on legacy business models that include longer project durations and that depend heavily on overseas migration agents to source investors. Of course, these regional centers and migration agents want to hold on to EB-5 investor funds for as long as possible to maximize profits.
Unfortunately, we believe the IIUSA lawsuit and proposed five-year rule are shortsighted. USCIS clearly exceeded its authority by changing long-established policy through an announcement. However, initiating a lawsuit and proposing an arbitrary five-year sustainment period introduces more uncertainty. If the new two-year policy is reverted as a result of this lawsuit, hundreds of EB-5 investors will be unfairly forced to redeploy their funds for several years.
EB5AN calls on IIUSA to withdraw its lawsuit. While we appreciate advocacy efforts to ensure the integrity of the EB-5 program, we believe this current effort is misguided. The primary consequence of this lawsuit is more uncertainty for EB-5 investors, both for those who have already invested and for those who are considering an investment.
Others have provided similar thoughts on the IIUSA lawsuit and proposed new rule, including Suzanne Lazicki, one of the industry’s most respected EB-5 investor advocates. We agree with Suzanne, especially her observation that this lawsuit, if won, could “betray the 3,000+ EB-5 investors who committed to the EB-5 program” as a result of the very rules being challenged by IIUSA. As always, we hope to provide EB-5 investors with all available information so that they can develop fully informed perspectives on current EB-5 policy before they make any investment decisions.
As many EB-5 investors have noticed, EB5AN has not made any friends among the “legacy” regional center operators. Our innovative marketing, focus on investment transparency, and investor education efforts contradict many EB-5 industry norms. Many of our competitors seem comfortable keeping these norms in place, largely for their gain at the detriment of investors themselves.
For instance, when we put a spotlight on the pending Indian and Chinese investor backlog in urban TEA projects, we upset both domestic regional center operators and overseas migration agents. If you have not already done so, we suggest you read our article and watch our webinar on this topic.
We witnessed the devastating impact that the pre-RIA China retrogression had on thousands of Chinese investors who invested between 2015 and 2018. Many of our own EB-5 investors have been waiting for Green Cards for over eight years. At EB5AN, we are committed to doing what we can to prevent this same situation from happening again. We are working hard to promote transparency, to communicate realistic projections, and to take a stand by sharing this information with potential EB-5 investors. We do this even though it will cause many EB-5 investors to avoid urban TEA projects, including our own. The IIUSA lawsuit and proposed new rule have the potential for creating similar negative effects for EB-5 investors who may face the redeployment of their investment funds for many years as a direct result.
In summary, we respect IIUSA’s prior work advocating for the passage of the RIA and various other initiatives that have favored EB-5 investors. However, we cannot support the IIUSA lawsuit or a proposed five-year sustainment period rule as these create additional uncertainty for EB-5 investors while seeming to favor the interests of the “legacy” regional centers and their overseas marketing agents.
