IIUSA Sustainment Period Lawsuit: Judge Doubts Lawfulness of USCIS Guidance

A recent development in the lawsuit brought by Invest in the USA (IIUSA) against U.S. Citizenship and Immigration Services (USCIS) may impact the sustainment period of the EB-5 program. In March 2024, IIUSA sued USCIS in response to its change to the longstanding two-year sustainment period policy.

On January 28, 2025, a judge expressed doubts over whether the policy change by USCIS was lawful.

In this article, we will briefly discuss the sustainment period policy change and subsequent lawsuit. Then we will look at the recent development in this case and how it may impact EB-5 investors.

October 2023 Two-Year Sustainment Period Policy Change

In October 2023, in what was an attempt to increase clarity based on the new EB-5 Reform and Integrity Act of 2022 (RIA), USCIS updated its policy for the two-year at-risk requirement for EB-5 investments. The EB-5 program requires investors’ funds to be invested for at least two years and be subject to the risk of loss and potential for gain.

According to USCIS, the change was meant to bring the policy into alignment with the RIA. The new policy interpreted the RIA’s two-year sustainment period language to mean that the investment period begins when investor funds are invested. Prior to the RIA, this period was understood to begin when an investor received his or her conditional Green Card.

Within just a few months, the policy change was challenged in court.

The New Two-Year Sustainment Period Policy Challenged by IIUSA

In March 2024, IIUSA, a non-profit EB-5 industry trade organization, filed suit against USCIS over the two-year sustainment period policy change. IIUSA argued that the change was made improperly through policy guidance rather than through notice and comment rule making. IIUSA also argued that the policy did not take into consideration EB-5 stakeholders. The lawsuit was authorized by the Board of Directors of IIUSA, which includes board members from several EB-5 regional centers. EB5AN had no notice of the lawsuit prior to its filing and did not and does not support it whatsoever.

This new policy followed closely by a legal challenge stirred up significant confusion in the EB-5 industry.

For EB-5 investors, clarity about the EB-5 program—its rules, requirements, policies, and timelines—is foundational. Without clarity, investors lose trust in the system and may have trouble making well-informed decisions.

When the EB-5 process becomes foggy, the road for EB-5 investors becomes more challenging to navigate. We want clear skies. That is why, in light of the policy announcement and subsequent lawsuit, we have provided transparent information about the potential impacts of this policy on investors and tried to provide actionable suggestions.

A new development in this case could bring clarity, but uncertainty still remains.

Judge Expresses Skepticism about Policy Change

On January 28, 2025, a Washington, D.C., federal judge expressed skepticism over whether the 2023 policy change by USCIS was lawful. Specifically, U.S. District Judge Ana C. Reyes seemed to doubt that the USCIS policy reflected the intent of Congress in the language of the RIA.

USCIS argued that the language of the RIA clearly separated the two-year sustainment period from the period of conditional residence, which begins when an EB-5 investor obtains his or her Green Card. Judge Reyes seemed to disagree. She questioned how USCIS could argue it was following congressional intent when USCIS changed the start date of the EB-5 program’s two-year sustainment period to no longer align with the two-year conditional residency period.

USCIS indicated it is now in the process of drafting proposed regulations under the RIA, which would presumably include this new policy. But the judge seemed unlikely to let the new policy remain in place until properly adopted through the rule making process. Instead, Judge Reyes directed USCIS and IIUSA to meet within 30 days in an effort to reach a settlement. If no settlement is reached, it is likely that the court will issue a ruling, which may include an injunction.

What This Update Means for EB-5 Investors

Until Judge Reyes issues a ruling, we cannot know precisely what will happen. Unfortunately, uncertainty remains. We see a few likely scenarios:

1. IIUSA and USCIS Reach a Settlement

The court has given the two parties 30 days—until February 27, 2025—to reach a settlement. IIUSA has indicated that it hopes USCIS will cooperate toward an outcome that benefits all EB-5 stakeholders. A settlement would likely entail some degree of compromise, meaning a change in policy somewhere between the original two-year sustainment period policy and the new 2023 policy is possible.

A settlement may only be temporary, however, and might not lead to a permanent policy. Notice and comment rule making may still be needed to provide long-term clarity.

2. The Court Issues an Injunction to Set Aside the 2023 Policy

The court could issue an injunction and set aside the 2023 policy. In such an event, the policy would revert to the original policy, which treats the two-year period of conditional residence as the two-year sustainment period.

Such a ruling would provide short-term clarity but would not stop USCIS from pursuing a change to the policy through notice and comment rule making.

3. The Court Delays Issuing Any Ruling in Light of Pending Rule Making by USCIS

In light of statements by USCIS that new proposed rules are forthcoming, the court may choose not to act. Instead, the new 2023 policy could remain in effect until new rules are published. Once proposed rules are made final, they could be challenged in court, and uncertainty on this issue could persist.

What Is the Most Likely Outcome?

We cannot say anything for certain; we can only give the most up-to-date information available and our honest analysis. That said, we believe the most likely outcomes are that (1) a settlement will be reached between the parties or (2) the court will issue an injunction and set aside the 2023 policy.

The only predictable outcome is possible short-term clarity and possible long-term uncertainty. Ultimately, only clear, final rules that stand up under any legal challenges will provide long-term clarity on this issue.

If the policy does revert to the original interpretation as we expect, EB-5 investors in short-term loan projects will face increased redeployment risk. This is especially true for investors from high applicant countries (India and China) that chose categories likely to retrogress—primarily projects in urban high unemployment targeted employment areas (TEAs).

How Can EB-5 Investors Avoid Risks Related to These Shifting Policies?

Choose a Highly Qualified Regional Center

The single-most important step in avoiding EB-5 risks in general is to carefully select an experienced EB-5 regional center operator. A regional center with a proven track record of success over many years in the EB-5 industry will be able to navigate policy changes as they happen. Beyond this, an excellent regional center will not be caught off guard by changes in the EB-5 program but will have carefully structured projects to limit potential risks before they arise.

But how can you know whether an EB-5 regional center operator is worthy of your trust? Transparency is key. Any regional center that downplays changes to policies and chooses not to explain possible risks should be avoided.

At EB5AN, we believe in the principle of showing, not telling. If a regional center talks about its record but will not provide evidence to back up what it says, this is a major red flag.

For example, we recognized the possibility that the 2023 policy would be set aside and predicted this outcome in April 2024. Unlike some regional center operators who shifted their focus entirely to marketing short-duration urban projects, EB5AN structured both shorter duration urban high unemployment projects in light of the new policy and rural projects with 4+ year durations in case the policy reverted. We opted to give our investors options, including projects with lower redeployment risk.

Choose a Lower-Risk Rural Project with a 4+ Year Target Investment Term

Project selection is also very important. We believe that the safest projects with the most favorable investment timelines for most investors remain rural projects with at least four-year investment timelines. Up until the 2023 policy change, this timeline was fairly standard for EB-5 investments.

A minimum four-year investment term limits the risk that EB-5 funds will need to be redeployed into another project. The risk of redeployment is that the new project may not be the same type or quality of investment. Four years is a sufficient timeline as long as the investor is approved relatively quickly. On average, we are seeing rural Form I-526E approvals in under a year, which meets this requirement.

Rural investments help EB-5 investors avoid visa backlogs, allow them to immigrate more quickly, and minimize the length of time their funds must remain at risk. As a result, rural investments reduce redeployment risk in the event that the rules revert to the prior policy.

Let’s break that down.

First, Form I-526E applications for rural investors receive priority processing, which means they are processed before other petitions.

Once an EB-5 investor receives Form I-526E approval, he or she can apply for an EB-5 visa. Rural investors have access to the largest category of set-aside visas, which means they are less likely to face visa backlogs. The sooner an EB-5 investor obtains a visa, the sooner the two-year period of conditional residence starts.

Under the original two-year sustainment period policy, EB-5 funds must remain at risk during the conditional residence period. Once that period ends, EB-5 funds may be returned—though the actual timing of return will depend on the terms of the project.

Put simply, the two-year at-risk requirement is satisfied fastest through rural investment. At this point, this fact is undisputed.

Note that at EB5AN, we do not believe in a one-size-fits-all approach. While we are committed to providing standard-length rural projects, we do offer some projects with shorter investment durations. Such projects are a good fit for certain investors—but not all. Our priority is to give you options and all the information you need to make the choice that is right for you.

EB5AN Is Committed to Helping EB-5 Investors Make Informed Choices

At EB5AN, we believe investors are best served by having all the information they need to make informed decisions. That means sharing industry news and analysis as it becomes available in an unbiased way. As we learn more about this developing situation, we will be sure to provide updates.

If you would like to discuss this situation further or want help on your EB-5 journey, please schedule a free consultation. We look forward to hearing from you!