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.