Pre-RIA & Post-RIA Sustainment Period
IIUSA Lawsuit
Possible Outcomes
Impact on Investors
ARCFE Stands with Investors
What can Investors Do?
PRE-RIA & POST-RIA SUSTAINMENT PERIOD
Prior to October 2023, USCIS mandated that the EB-5 investment sustainment period be a minimum of 2 years, commencing only after investors had obtained their 2-year Conditional Green Cards. This policy placed investors from countries with significant backlogs, such as India or Mainland China, at a considerable disadvantage. As a result, these investors often faced prolonged waiting periods far beyond the 2 years before becoming eligible for capital repayment. Additionally, many were compelled to undergo a “capital redeployment” process to ensure their investment remained in an “at risk” status, as required by USCIS requirements.
On October 11, 2023, USCIS issued a revised interpretation of this policy through an official announcement on its website. Under the new rule, the investment must remain invested and “at risk” for at least 2 years, provided job creation requirements have been met. While the EB-5 Reform & Integrity Act of 2022 (EB-5 RIA 2022) did not explicitly specify when the 2-year period begins, USCIS interpreted the start date as the date the requisite amount of qualifying investment is made. In other words, USCIS will use the date the full 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 (JCE). If invested more than 2 years before filing the I-526E petition, the investment should generally still be maintained at the time I-526E is properly filed.
IIUSA LAWSUIT
The new sustainment period rule sent ripples throughout the industry, marking a fundamental shift in investment timelines. In response to investor preferences for projects with shorter investment durations, market trends shifted towards offerings with timelines ranging from 2-4 years, rather than the traditional 5-7 years structure. Regional centers that fail to swiftly adapt to this evolving landscape may face significant operational and financial challenges.
On March 29th, 2024, IIUSA undertook legal action against the U.S. Citizenship & Immigration Services (USCIS) in response to the October 2023 policy change, which redefined the duration that investors’ funds are required to remain “at risk” under the EB-5 RIA 2022. Regrettably, the IIUSA Board of Directors made the significant decision to pursue legal action without seeking input from all of their members. As an active member of IIUSA since 2016, ARCFE was not notified or made aware of the IIUSA’s intention to pursue legal action prior to the decision being publicized. The IIUSA contends that the USCIS’s current interpretation of the EB-5 2-year investment period was enacted without due regard for market dynamics and the interests of EB-5 investors. To safeguard the interests of investors and uphold the integrity of the EB-5 program, IIUSA proposes a fixed minimum investment “at risk” period of 5 years (sustainment period).
On January 28, 2025, the U.S. District Court for the District of Columbia held a hearing on this matter. During the proceedings, the arguments presented by the defense counsel representing the Department of Homeland Security (DHS) failed to persuade the judge to uphold DHS’s position. The judge raised concerns regarding the rationale and procedural legitimacy of the new USCIS policy introduced on October 11, 2023. As a result, the court granted both parties a 30-day period to negotiate and required them to submit the outcome of their discussions by February 27, 2025.
POSSIBLE OUTCOMES
Scenario 1: Both parties reached a settlement and implement the 5-year investment sustainment period as proposed by IIUSA
IIUSA previously proposed the EB-5 investment sustainment period to be set at 5 years. From our perspective, compared to reverting to the pre-RIA policy, a 5-year investment period would be a more acceptable and relatively favorable outcome for both the industry and investors. Most importantly, it would eliminate the redeployment risks caused by visa backlogs, which is a critical concern for investors.
Scenario 2a: Both parties cannot reach a settlement, IIUSA wins the lawsuit
If no settlement is reached, the court may overturn the 2-year investment sustainment policy and reinstate the previous rule requiring investors to maintain their investment for at least 2 years after obtaining a Conditional Green Card. This would effectively extend the total investment duration to much longer should Mainland China or India go into retrogression in the future. Such a ruling would have adverse effects on all investors under the EB-5 RIA 2022, including those who have already made their investment and filed their petitions. This is the least desirable outcome of this lawsuit.
During this period, USCIS may also initiate new administrative rulemaking, delaying a resolution for 2-3 years or even waiting for a legislative amendment from Congress in 2027. This could result in prolonged uncertainty for investors.
Scenario 2b: Both parties cannot reach a settlement, IIUSA wins the lawsuit, DHS appeals
If the court ultimately rules in favor of IIUSA, DHS may choose to appeal the decision. This would likely prolong the case for several more years, subjecting investors to an extended period of uncertainty.
Scenario 3: Both parties cannot reach a settlement, DHS wins the lawsuit
The current legal proceedings do not appear favorable for DHS. However, if DHS can garner support from both the legal and industry sectors at this stage, there remains a possibility that the existing policy could be upheld.
IMPACT ON INVESTORS
Impact 1: Increased uncertainty regarding investment principal
If IIUSA prevails in its lawsuit, USCIS’s current interpretation of the 2-year investment sustainment period will be overturned. Consequently, the EB-5 investment timeline is likely to revert to the pre-RIA policy, requiring investors to maintain their investment for 2 years only after obtaining a Conditional Green Card.
The EB-5 investment cycle is closely linked to capital security - longer investment durations expose investors to greater risks, including market fluctuations, economic downturns, and the need for redeployment. While an extended investment cycle may benefit certain Regional Centers, it results in prolonged capital commitment and heightened uncertainty for investors. Since the implementation of the new policy, ARCFE has remained committed to structuring EB-5 projects that adhere to USCIS’s 2-year investment sustainment requirement while offering shorter investment cycles with more controlled risk.
Moreover, regardless of whether an EB-5 investment falls under a High-Unemployment Area (HUA/urban TEA) or a rural set aside category, visa backlogs have become inevitable. Given that investor funds must remain “at risk” during the sustainment period, if the lawsuit overturns the 2-year rule, investors may be forced into redeployment, potentially exceeding their risk tolerance. Therefore, this case not only impacts the short-term ability to recover invested capital but also determines whether investors can ultimately retrieve their funds successfully.
Impact 2: Impact on all investors under the new policy
If IIUSA wins the lawsuit, USCIS’s interpretation of the 2-year sustainment period will be revoked, eliminating the policy protections currently afforded to new investors - including those who have already completed their investments. As a result, investors who structured their financial plans based on a 2-year investment cycle may be forced into a significantly longer capital lock-up period, which would be highly inequitable.
Impact 3: Extended timeline due to the litigation process
Since the lawsuit remains ongoing, the future of the EB-5 policy remains uncertain. If IIUSA ultimately prevails and succeeds in reinstating the Conditional Green Card + 2 years rule, or if USCIS is compelled to amend its existing policy, future EB-5 applicants will need to adapt to longer investment lock-up periods. Investors who have already committed funds may also face policy changes, increasing immigration-related risks. Additionally, if USCIS chooses to appeal the ruling, the legal proceedings could drag on for years, leaving all EB-5 applicants in a prolonged state of uncertainty.
ARCFE STANDS WITH INVESTORS
ARCFE reaffirms its steadfast commitment to serving and prioritizing our investors and strongly opposes the overturning of the 2-year investment sustainment rule. We firmly believe that:
[1] The investment sustainment period should be clearly defined, and investors should not be forced into redeployment.
[2] EB-5 investors under the RIA who have already invested should not face extended investment timelines or increased risks due to policy changes.
[3] A stable policy environment is essential, as frequent regulatory changes undermine confidence in both the industry and investors.
If the 2-year sustainment period is revoked, EB-5 investors may be subjected to involuntary redeployment, increased uncertainty in investment timelines, and heightened risks to capital security. ARCFE opposes any policy changes that could be detrimental to investors’ interests and urges investors to actively engage in safeguarding a fair and transparent EB-5 investment environment.
WHAT CAN INVESTORS DO?
[1] Advocate for investors’ rights
Investors should actively voice their concerns and communicate their positions to USCIS, Congress, and industry organizations through various channels to ensure their interests are protected.
[2] Support AIIA in defending investors’ rights
The American Immigrant Investor Alliance (AIIA), representing the interests of EB-5 investors, has filed an amicus brief in support of DHS’s position in this lawsuit. Since AIIA’s establishment, ARCFE has been a strong supporter of its initiatives and lobbying efforts. We, along with our investors, played a significant role in supporting AIIA during the enactment of the 2022 EB-5 Reform and Integrity Act.
AIIA’s involvement requires financial support to retain legal counsel, engage lobbyists, and advance the litigation process. Therefore, we strongly encourage investors to contribute and take an active role in this case, ensuring that investors’ voices are heard throughout the legal proceedings.
AIIA Donation Portal: https://goaiia.org/take-action/
To demonstrate our commitment to protecting investors’ interests, ARCFE has donated $10,000 to AIIA and pledges to match every investor’s donation dollar to dollar. Together, we can safeguard the rights of EB-5 investors.
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This lawsuit not only impacts EB-5 investors’ rights but also shapes the future of the entire industry. As one of the most active and fast-growing Regional Centers, ARCFE stands firmly with investors in advocating for a fair and transparent EB-5 program. We will continue monitoring the case closely and provide investors with timely updates.
