Second Joint Status Report in Sustainment Litigation

George Orwell defined an important political skill called doublethink: “To know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which cancelled out, knowing them to be contradictory and believing in both of them…” This skill is adaptive in many situations these days, including for the EB-5 sustainment litigation IIUSA vs. DHS et al. (previously discussed here).

The second Joint Status Report in the sustainment litigation has now been released. In JSR2, IIUSA asks the Court for a ruling that would apparently revert to the legacy sustainment period tied to an investor’s conditional residency. IIUSA has shared JSR2 in a blog post that states: “Once again, IIUSA reaffirmed that we do not support reverting to a sustainment period tied to an investor’s conditional residency.”

Let’s take a look at JSR2, starting with the first paragraph:

The parties continued to discuss a potential resolution of this matter but have been unable to reach agreement. Plaintiff respectfully requests that the Court resolve the pending motions before it; Defendants respectfully request that the Court hold the case in abeyance while Defendants engage in rulemaking that will resolve this litigation within the estimated timeframe as described below.

Here USCIS (Defendant) is requesting what IIUSA (Plaintiff) had offered in the first JSR – to hold the lawsuit in abeyance pending rulemaking. Abeyance could be an effective strategy to avoid falling back on legacy CPR sustainment period, because abeyance would close the gap between ruling (which could simply void the post-RIA change, if the Court rules as IIUSA had suggested) and rulemaking (which could define a modified new sustainment rule). When IIUSA first offered abeyance in JSR1, I had thought that that IIUSA truly wanted to avoid near-term reversion to the legacy sustainment policy.

But in JSR2, IIUSA declines to accept litigation abeyance because rulemaking can take a long time. USCIS was able to offer a start date for the rulemaking process (November 2025), but not a completion date. IIUSA explains that they do not want the lawsuit to be held in abeyance until rulemaking because that would mean “no change in the status quo between now and then” and thus “no relief in connection with bringing this lawsuit.” Apparently, Plaintiff is primarily fighting for a profitable change to the status quo EB-5 sustainment requirement. Plaintiff does not want to have to wait for a change for as long as it could take to make via the proper notice-and-comment rulemaking process that it had claimed to be fighting for.

IIUSA rests its case by asking the Court to “resolve the pending motions before it.” I assume that means asking the Court to sign off on IIUSA’s [Proposed] Order on Summary Judgment, whose content is simply to order “that USCIS’s action changing the investment sustainment period for EB-5 immigrant investors is vacated, held unlawful, and set aside.” I further reason that the single action of vacating a change puts us back to the sustainment period that existed before the change.

On the other hand, the USCIS side of JSR2 does argue against reverting to legacy sustainment period. First, because stakeholders would predictably react to the unfairness. As USCIS contends:

Applying regulatory requirements based on the pre-amendment version of the INA to investors who filed petitions for classification after the enactment of RIA and amendment of the INA would result in such investors also having investment sustainment periods with unknown future end dates based on uncontrollable variability in visa availability despite the plain language of the post-amendment version of the INA, and would expose Defendants to significant risk of litigation from such investors with potentially contrary judicial rulings.

Secondly, there is some “fact of the matter” here. RIA did make statutory changes, however one interprets the language. The USCIS portion of the JSR concludes:

4. In the event the Court does not hold this case in abeyance, Defendants are amenable to revising the existing website guidance to restate the statutory changes and amendments to the INA made by the RIA. This would also resolve Plaintiff’s claims to the extent that anything in the existing guidance goes beyond a mere restatement of applicable statutory provisions.

How can regional centers and investors deal with the uncertainty created by litigation challenges to USCIS guidance? I wish I knew. It’s so material for deal-planning, structuring, marketing, management, and investing to have a ballpark idea of how long EB-5 funds need to stay invested. I don’t know when and how this open question will be resolved. I sincerely regret the reputational damage that this lawsuit has caused for IIUSA, which occupies such an important place in the industry and needs a strong, respected, and unifying voice. And I’m ashamed of the regional centers who chose not to sue in their own names or own their support for this shameful and compromising if very profitable effort, but using IIUSA as a mask to push it forward.

Joint Status Report in sustainment lawsuit

7/30 UPDATE: See Good news (CIS Ombudsman, Sustainment litigation, good faith investor litigation, FOIA on Security Checks)

— ORIGINAL POST —

I am happy to see that the February 27 Joint Status Report in the IIUSA sustainment lawsuit addresses the issues that I raised last month. The JSR did not conclude with agreement — IIUSA and USCIS now have a March 21 deadline to try again. But IIUSA took care in its side of the February 27 JSR to speak to industry concerns.

To address concerns about rulemaking delay and negative effects on the market, IIUSA proposes holding the sustainment lawsuit in abeyance pending USCIS rulemaking. If it were practically possible, this could allow jumping straight from the current USCIS interpretation to a new sustainment rule – leaving no gap to be stuck with the legacy sustainment regulation. IIUSA suggests that post-RIA investors prior to the settlement could “receive the benefit” of USCIS policy at the time, while investors after the settlement would be subject to the concurrently-finalized new regulation. “While IIUSA does not believe that this [the current USCIS] policy is lawful because of the way in which it was adopted, IIUSA has no interest in disrupting the interests of investors who relied in good faith on the USCIS policy.”

In its side of the JSR, USCIS did not comment on its ability to give investors benefit from pre-existing policy if the court ultimately chooses, as IIUSA had requested, to vacate and hold that policy unlawful. USCIS did respond to concerns about rulemaking timing, stating that “USCIS considers this matter to be a regulatory priority at this time and does not anticipate rule promulgation to take several years.” New regulations to fully implement RIA are in progress, but USCIS was unable to promise IIUSA a specific “limited timeframe” for completion. “In light of the recent change in administration, USCIS requires additional time for its new leadership to review the proposed regulations, familiarize themselves with this litigation, and assess the appropriate next steps for the regulatory process.” To put it mildly.

What are we trying to accomplish? IIUSA states in the JSR that “IIUSA ultimately wishes for a sustainment rule that would mirror the intent of Congress, as clearly articulated expressed by the co-sponsors of the RIA in their letter to USCIS Chief Emmel dated February 2, 2024.” The IIUSA statement refers to a letter by Representatives Greg Stanton and Brian Fitzpatrick – who claim in their letter to be “lead authors” of RIA. As it happened, Senators Grassley and Leahy were RIA’s lead authors while Stanton and Fitzpatrick co-sponsored a companion bill mirroring the Grassley/Leahy bill in the House. But in any case, IIUSA filed the 2024 Stanton/Fitzpatrick letter with the Court, and this letter calls for “a fair and reasonable investment holding period, a minimum of at least five years, for all EB-5 investments made at any time after March 15, 2022, when RIA became law.”

How likely is new USCIS rulemaking to land on the five-year minimum sustainment rule that is IIUSA’s “ultimate wish”? Such a rule could be nice for good projects, but could USCIS make it? How could USCIS require a fixed minimum investment period greater than USCIS’s minimum period of oversight over the EB-5 process? As designed by Congress, the minimum EB-5 process is less than three years from inception to filing of the last petition. RIA defined processing time goals of less than a year for I-526E, I-526E approval is followed by a visa with two-year conditions, and I-829 is filed in the final three months of conditional residence. How could USCIS require or enforce five-year minimum holding periods if USCIS may get its last review of an EB-5 case in as little as three years from the time of investment? As EB-5 users, we have to count on the realistic likelihood of processing delay and visa delay extending the immigration process far beyond that base three years for many investors. But how could USCIS formulate a policy predicated on the assumption that USCIS will never reach processing time goals, and that Department of State will not have or be able to issue timely visas.

The goal of sustainment litigation is worth rethinking. I concluded my last post on the lawsuit by fearing that the only possible win could be for anyone “looking forward to cashing in on visa backlogs and slow USCIS rulemaking to help keep that money beyond expected timelines.” But IIUSA protests in the February 27 JSR that it seeks no such win. In case of slow USCIS rulemaking: “IIUSA would receive no relief—nothing at all—in connection with bringing this lawsuit.” On that basis, if USCIS proves unable to offer a limited rulemaking timeline, then IIUSA should naturally want drop the lawsuit. IIUSA could still celebrate a win in having brought USCIS to public commitment in the February 27 JSR to — at least — prioritize new EB-5 regulations, subject to administration approval.