IIUSA’s ‘Sustainment Period’ Lawsuit Update: Court Report Analysis and Implications for EB-5 Investors

IIUSA’s lawsuit against USCIS regarding the ‘sustainment period’ in the EB-5 Program continues to develop, carrying key implications for investors and developers. In this article, we analyze the legal dispute, recent case updates, and possible future scenarios that will define the fate of this regulation.

The EB-5 Program has been one of the primary pathways for foreign investors seeking permanent residency in the United States by investing in job-creating projects.

However, a recent legal dispute between Invest in the USA (IIUSA) and the U.S. Citizenship and Immigration Services (USCIS) has created uncertainty over a key aspect of the program: the sustainment period.

Background on the Sustainment Period and IIUSA’s Lawsuit Against USCIS

What is the Sustainment Period in EB-5?

The sustainment period is the minimum time an EB-5 investment must remain “at risk” before the investor can recover their capital.

Historically, this period was understood to align with the investor’s two-year conditional residency, which begins once the I-526E petition is approved and the temporary Green Card is obtained.

However, in October 2023, USCIS modified this interpretation, stating that the sustainment period should be counted from the moment the investor’s funds are contributed to the new commercial enterprise and must remain at risk for at least two years before they can be refunded.

Why Did IIUSA Sue USCIS?

On March 29, 2024, IIUSA filed a lawsuit against USCIS in the U.S. District Court for the District of Columbia, arguing that the policy change:

• Violates the Administrative Procedure Act (APA) since USCIS implemented the new interpretation without following a formal rulemaking process, which requires notice and public comment.

• Creates uncertainty and affects the legal security of EB-5 investors, who based their investment decisions on the previous interpretation.

• Could impact the financing of new EB-5 projects by introducing further restrictions on investment liquidity.

Lawsuit Progress and Recent Updates

1. First Court Hearing (January 2025)

On January 28, 2025, the court held a key hearing in which Judge Ana C. Reyes expressed skepticism about the validity of USCIS’s new interpretation. The main points discussed were:

During the session, the lack of a formal rulemaking process before implementing the change was addressed, as well as the absence of clarity in USCIS’s policy regarding how the sustainment period should be applied and the negative financial impacts that this new interpretation creates for investors and regional centers.

The judge granted USCIS and IIUSA 30 days to attempt to reach an agreement before the court issues a final ruling.

2. Negotiations Between IIUSA and USCIS (February 2025)

Throughout February, USCIS and IIUSA have been negotiating to resolve the dispute. Some of the solutions under discussion include:

• Returning to the original interpretation of the sustainment period.
• Establishing a new official rule with public notice and comment.
• Extending the sustainment period to five years, as suggested by some industry stakeholders.

The goal is to avoid a court ruling that could set problematic regulatory precedents for future EB-5 program modifications.

3. Possible Court Ruling and Future Scenarios (March 2025)

If the parties fail to reach an agreement, the court could issue a ruling leading to different scenarios.

One possible outcome is a ruling in favor of IIUSA, which would reverse USCIS’s change and restore the original interpretation of the sustainment period.

On the other hand, if the decision favors USCIS, the new standard would remain in place, requiring EB-5 investments to remain at risk for at least two years from the time of disbursement.

Finally, the court could also order USCIS to follow a formal rulemaking process, which would require any changes to go through a notice and public comment process before implementation.

Implications for EB-5 Investors

For Current Investors:

• If the court rules in favor of IIUSA, they may recover their investment earlier than expected.
• If USCIS wins the case, investors must ensure their capital remains at risk for at least two years from disbursement.

For New Investors:

• The court’s decision will influence the liquidity and flexibility of future EB-5 investments.
• If the sustainment period is extended to five years, investors will need to adjust their financial strategy accordingly.

For Regional Centers and Project Developers:

• Regulatory uncertainty could impact the ability to attract new investors.
• If the court favors IIUSA, the program may gain long-term stability.

What to Expect in the Coming Weeks?

The IIUSA vs. USCIS case represents one of the most significant regulatory disputes in recent EB-5 Program history, as its outcome could greatly impact the financial and immigration planning of thousands of investors.

As the court’s deadline approaches, USCIS and IIUSA continue negotiating to find a possible resolution that avoids a final court ruling.

However, if no agreement is reached, the court will have to issue a decision, which could lead to a major change in the interpretation of the sustainment period, affecting both current investors and those planning to participate in the program in the future.

This case also highlights the need for greater clarity and stability in EB-5 Program regulations—a crucial factor in ensuring its competitiveness and long-term viability.

• A ruling in favor of IIUSA could provide relief to investors seeking certainty in capital recovery.
• A decision favoring USCIS could reinforce the new standard, requiring investment strategy adjustments.
• If the court orders a formal rulemaking process, it could open the door to new discussions on how the EB-5 sustainment period should be structured in the future.

In this uncertain regulatory landscape, it is critical for EB-5 investors to stay informed and consider all potential implications this case may have on their immigration plans and financial strategy.

Program stability, confidence in the rules, and predictability in regulation are key factors in ensuring the EB-5 Program remains an attractive option for investors worldwide.

At BAI Capital, we will continue closely monitoring this situation and providing updates to our investor community.

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