By Marta Lillo
Invest in the USA (IIUSA) has sued the U.S. Citizenship and Immigration Services (USCIS), arguing the agency violated federal law when it announced a Policy Manual guidance on October 2023 about the 2-year sustainment period for EB-5 investors who filed Form I-526 either on or after Mar. 15, 2022.
The organization filed the lawsuit on Mar. 29 in the U.S. District Court for the District of Columbia.
“The new policy upended decades of industry practice by cutting the required period of time an EB-5 immigrant investor’s capital must be invested—commonly referred to as the “sustainment period”—to only two years,” said the IIUSA in a public statement explaining the legal motion.
They are requesting that the USCIS repeals the existing sustainment period regulation under federal law 8 C.F.R. § 216.6(c)(1)(iii), claiming this rule “was promulgated unlawfully and must be set aside, IIUSA does not wish to see the previous policy reinstated.”
They also demand that the immigration agency comply with the EB-5 Reform and Integrity Act of 2022 (RIA) and issue a formal regulation to establish a 5-year sustainment period. “IIUSA believes five years is objectively reasonable, consistent with precedent, and responsive to key reliance interests shared by all EB-5 investors and stakeholders: the urgent need for a sensible, transparent sustainment period.”
Under federal rules, the USCIS has up to 90 days to reply to a complaint.
USCIS calculation of EB-5 2-year sustainment period
In the October 2023 policy update, the USCIS specified that the starting date for the 2-year period under section 203/b)(5)(A)(i) of the INA for EB-5 investors was the “date the investment was contributed to the new commercial enterprise [NCE] and placed at risk in accordance with applicable requirements, including being made available to the job-creating entity. If invested more than two years before filing the I-526 or I-526E petition, the investment should generally still be maintained at the time the I-526 or I-526E is properly filed so we can appropriately evaluate eligibility.”
This 2-year holding period “misrepresents Congressional intent. We have seen what happens when there is an incentive to game the system, which the [RIA] is specifically designed to prevent. This new interpretation flies in the face of that Congressional intent,” wrote IIUSA Executive Director Aaron Graut on their website.
EB-5 reactions to IIUSA lawsuit against USCIS
In a statement, the American Immigrant Investor Alliance (AIIA) cautions that if this lawsuit is successful, the 2-year rule would be suspended, and investors could wait much longer to get their EB-5 capital repaid.
“This suit attempts to reverse the work we did with the CIS Ombudsman’s office in October 2023 to encourage USCIS to clarify the sustainment period rules […] If the judge rules against USCIS, it would be potentially problematic for post-RIA investors, especially those that have already invested in shorter term projects or are from countries that could face a backlog in their visa category. USCIS could likely be forced to suspend the two-year sustainment policy and we could revert back to a world where vicious cycles of endless reinvestment are once again the norm,” AIIA said in their blog.
Meanwhile, Rupy Cheema from EB5 Energy, also rejected the purpose of the lawuit. In an email statement, she explained that the “push for a 5-year investment requirement contradicts the principle of flexibility that is central to the EB-5 program’s appeal, highlighting a disconnect between IIUSA’s actions and its professed goals of transparency, fairness, and investor protection. This discrepancy underscores the need for a more inclusive and representative dialogue within the EB-5 community, ensuring that policy advocacy truly reflects and supports the best interests of all investors.”
Marko Issever, chief executive officer, America EB5 Visa, LLC, also questions the legal motion. “It is puzzling why IIUSA had to sue USCIS for showing flexibility by revising the definition of the sustainment period as it applies to the minimum capital repayment period. USCIS stated in their guidance that investors can receive their capital back if the job-creating enterprise (JCE) has two years or more use of the capital and creates at least the required ten full-time jobs.”
The EB-5 broker-dealer explains that the USCIS policy update in October “does not mean that the investors receive their capital back in such a short period. The repayment of capital must still comply with the terms and conditions of the private placement memorandum.”
Regarding the 5-year sustainment period IIUSA advocates, Issever adds: “What IIUSA has proposed to become the minimum investment period, five years, was the practice in the EB-5 marketplace arrived through healthy competition for the investor funds. As we have seen from the reaction of investor advocate groups such as AIIA, the decision made by a prominent advocate group within the EB-5 industry unnecessarily raises doubts regarding where their loyalty lies among investors. As was in the previous lawsuits against USCIS, the industry and investor interests were always aligned on a unified front.”
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