Washington, D.C., February 3, 2025: The sustainment period required for an EB-5 investment refers to the period of time during which the investor’s minimum capital contribution is required to remain invested in the company that is the target for investment (called “new commercial enterprise,” in EB-5 parlance). Investors naturally have a preference for a short sustainment period. EB-5 Regional Centers, however, typically earn attractive revenues from the interest accruing on capital invested in new commercial enterprises deployed to job creating projects. Regional Centers therefore generally welcome a longer sustainment period.
A. Three Versions of the Sustainment Period
USCIS, as the regulator of the EB-5 Program, has offered the public three versions of the sustainment period during the past 25 years. Starting in the 1990s, the sustainment period started from the date of the investor’s capital investment in the new commercial enterprise and ran until the approval of the investor’s I-829 petition to remove conditions.
That approached changed in July 2017. USCIS issued a policy memo that shortened the sustainment period by making it from the date of the investor’s investment in the new commercial enterprise until the end of the investor’s 2-year period of conditional permanent residence. That USCIS policy coincides the 1994 regulation at 8 CFR Section 216.6(c)(1)(iii), and still applies today to EB-5 investors who invested before enactment of the EB-5 Reform and Integrity (“RIA”) on March 15, 2022.
The 2022 RIA changed the sustainment period by providing that an investor’s capital “is expected to remain invested for not less than 2 years.” (Now codified in Section 203(b)(5)(A)(i) of the Immigration and Nationality Act). Quite clearly, the RIA created a new rule that provides for a sustainment period of at least 2 years for post-RIA visa petitions.
In response to the RIA, USCIS issued an interpretation of the RIA’s 2-year sustainment period by publishing Frequently Asked Questions (“FAQs”) on its website in October 2023. Those FAQs interpreted the RIA’s sustainment period as running for 2 years from the date in which all of the investor’s capital was invested by the new commercial enterprise in an at-risk job-creating capital investment project. The FAQs certainly followed the core 2-year investment cycle created by the RIA, and added features intended to operationalize the rule in practice.
Yet, publishing the FAQs had two sizable legal drawbacks. The most blatant problem was that the FAQs purported to create new rules, but did so without following well-known mandatory administrative procedures for adopting federal regulations (which require USCIS to published proposed rules, grant the public a period to submit comments, and then eventually publish a final rule). Equally problematic was that the RIA required USCIS to issue new regulations for the EB-5 Program, and USCIS notoriously failed to publish and adopt such regulations. So, the core regulations still applicable to the EB-5 Program are still the same regulations from 1994, which quite clearly state that the sustainment period coincides with an investor’s 2-year period of conditional permanent residence (see 8 CFR Section 216.6(1)(C)(iii): “the [investor] sustained the actions … of this section throughout the period of the alien’s residence in the United States.”).
B. IIUSA Sustainment Lawsuit
Faced with this situation, on March 29, 2024, the IIUSA Regional Center industry group filed a lawsuit against the USCIS seeking to declare the FAQs to be void because USCIS failed to follow its own rule-making procedures. (Coincidentally, a successful lawsuit would also recover a longer sustainment period that supports Regional Centers’ revenue streams).
On January 28, 2025, the federal court judge overseeing the IIUSA lawsuit did not mince words: USCIS was on weak legal ground. In an open court hearing, the judge gave clear indications that the FAQs from October 2023 had the effect of new regulations and should have been implemented through mandatory administrative procedures. The judge asked the parties to reach settlement on the matter before a court order was issued. We are now awaiting news within the next 30 days during which the parties are required to confer and then report back to the judge on their negotiations.
C. What Happens Next?
The next 30 days will determine the fate of the IIUSA Sustainment Lawsuit. Given the judge’s stark assessment of the shaky position of USCIS, the most likely outcome appears to be a temporary settlement that rolls back the USCIS interpretation of the RIA’s 2-year sustainment rule.
That potential settlement, however, may not be the last word on the matter of the sustainment period. USCIS can always properly adopt new regulations that implement the RIA’s 2-year sustainment period. And, it is worth reiterating the RIA’s 2-year sustainment rule makes no linkage between the investor’s sustainment period and their 2-year period of conditional permanent residence.
In the interim, before such rules are adopted, EB-5 investors are likely to continue to see that capital investment projects are guided by market conditions. That means that Regional Centers will continue to embrace the trend for investment cycles of approximately five to six years (for example, many Regional Centers offer a minimum term of 3 years, plus two to three 1-year extensions).
What is transparently evident from the current state of play of USCIS rules and policies on the sustainment period is that proper USCIS regulation would definitely bring more certainty to the issue for both EB-5 investors and Regional Centers.