By Michael A. Harris
A new USCIS policy memorandum may signal one of the most important shifts in adjustment of status practice in years.
The memo, dated May 21, 2026, says adjustment of status is “a matter of discretion and administrative grace” and an “extraordinary relief” that permits applicants to avoid the ordinary consular immigrant visa process. The USCIS news release went further, stating that nonimmigrants in the United States who want green cards generally “must return to their home country to apply, except in extraordinary circumstances.”
But is that what Congress wrote into the Immigration and Nationality Act? Did Congress intend adjustment of status to be rare? Or did Congress create a lawful in-country green card process, then define when it is available, when it is barred, and when certain violations may be forgiven?
Those questions matter for EB-5 investors.
For many investors already in the United States, the ability to file Form I-485 has become a key part of EB-5 planning. Adjustment of status can allow eligible investors to remain in the United States, seek work authorization, apply for advance parole, and avoid the uncertainty of consular processing. The new memo does not eliminate that option. But it may make USCIS officers more skeptical of it.
What is an adjustment of status?
Adjustment of status is the process that allows a person already in the United States to become a lawful permanent resident without leaving for an immigrant visa interview abroad.
The basic authority is INA §245(a). It allows USCIS to adjust the status of an eligible applicant who was inspected and admitted or paroled, is eligible for an immigrant visa, has a visa immediately available, and is admissible to the United States.
This is not a loophole. It is a statute.
Congress has repeatedly amended and refined the adjustment process. It has created bars, exceptions, special rules, and forgiveness provisions. For employment-based applicants, including many EB-5 investors, one of the most important is INA §245(k).
What is USCIS changing?
USCIS is not changing the text of INA §245(a). Only Congress can do that.
Instead, USCIS is changing the way it wants officers to exercise discretion.
The memo tells officers to remember that adjustment is discretionary, that consular processing is the ordinary immigrant visa path, and that AOS should not be treated as a substitute for consular processing.
The memo directs officers to consider the applicant’s full immigration history, including compliance with prior status, parole, and admissions; misrepresentations; fraud; unauthorized employment; and conduct inconsistent with prior statements to immigration officials.
That raises an immediate question: Will USCIS deny the adjustment because of real negative facts, such as fraud or unlawful employment? Or will USCIS treat the very decision to file an I-485 in the United States as a negative factor?
The first approach is ordinary discretion. The second approach would be a much more aggressive policy shift.
Why this matters for EB-5 investors?
EB-5 investors often enter or remain in the United States in temporary classifications before becoming permanent residents. Some are in H-1B or L-1 status. Others may be in F-1, E-2, O-1, B-1/B-2, or another nonimmigrant category.
For investors in H-1B or L-1 status, the analysis should often be stronger because those categories recognize dual intent. The Sourcebook explains that dual intent is recognized for H-1B, L, O, P, and E classifications, and that H-1B and L applicants may pursue permanent residence without that fact alone defeating the temporary classification.
But what about an investor in F-1 status? What about someone who entered on a B-2, later decided to invest, and then filed an EB-5 case? What if an individual were paroled into the United States? What if the applicant had a short period of unauthorized employment? What if the investor has a pending I-485 and has already been waiting for months or years?
These are the questions that the new memo may bring to the forefront in I-485 adjudications.
The 245(k) problem for USCIS
INA §245(k) is one of the most important statutory answers to the new USCIS position.
Section 245(k) allows many employment-based adjustment applicants, including EB-5 investors, to remain eligible for AOS despite limited immigration violations, if the aggregate period of unauthorized employment, failure to maintain lawful status, or other status violation since the last lawful admission does not exceed 180 days.
Why does that matter?
Because §245(k) shows that Congress expected employment-based applicants to adjust status in the United States, Congress did not simply say: “Go abroad and consular process.” Instead, Congress created a specific rule allowing certain employment-based applicants to adjust status even after limited-status violations.
That is difficult to square with any broad USCIS view that adjustment should be reserved only for extraordinary cases.
USCIS may still argue that §245(k) only preserves eligibility, not entitlement. That is true. Adjustment remains discretionary. But discretion should not become a substitute for a new statutory bar.
AOS has a history
Adjustment of status has been part of the immigration system for decades. It was designed to allow eligible applicants already in the United States to become permanent residents without the delay, cost, and disruption of consular processing.
Over time, Congress has restricted AOS in some ways and expanded it in others. INA §245(c) bars many applicants who worked without authorization, failed to maintain status, or violated the terms of admission. But Congress also created exceptions. Immediate relatives are treated differently. Employment-based applicants may benefit from §245(k). Other categories have their own special adjustment rules.
That structure matters. It shows Congress knew how to limit adjustment. It also shows Congress chose not to require consular processing in every case.
So the legal question becomes: Can USCIS use discretion to accomplish what Congress did not enact?
The government’s strongest argument
USCIS does have a serious argument. INA §245(a) uses discretionary language. It says the status of an eligible applicant “may” be adjusted. Courts and the BIA have repeatedly described adjustment as discretionary relief and, in some cases, as a matter of administrative grace. USCIS relies heavily on that language and history in the memo.
The memo also says officers must consider the totality of the circumstances and provide written reasons when denying an adjustment at their discretion. That case-by-case language is important. It is likely meant to defend the memo from claims that USCIS has created a binding new rule.
The strongest challenge
The strongest challenge is that USCIS may be trying to convert discretion into a presumption against adjustment. There is a difference between saying: “Adjustment is discretionary, and we will consider all positive and negative factors.”
And saying: “Applicants in the United States should generally leave and the consular process unless they show extraordinary circumstances.” The first statement fits within traditional discretionary adjudication. The second sounds like a new eligibility rule. That distinction may become central in litigation. If USCIS officers begin denying I-485 applications primarily because consular processing was available, applicants may argue that the agency acted contrary to INA §245, adopted a new legislative rule without notice and comment, and failed to consider reliance interests of people who filed under the prior framework.
The USCIS news release may create additional problems for the agency. The memo is written in more careful legal terms. The news release says temporary nonimmigrants who want green cards “must return” abroad except in extraordinary circumstances. That wording sounds much more categorical.
What should EB-5 investors expect?
EB-5 investors should expect I-485 filings to become more evidence-driven. A strong adjustment filing may now need to document more than EB-5 eligibility and admissibility. It may need to explain why the applicant merits adjustment as a matter of discretion.
Relevant facts may include lawful admission, maintenance of status, compliance with visa terms, clean immigration history, lack of fraud or misrepresentation, tax compliance, lawful source and path of investment funds, job creation, business activity, family ties, community ties, education of children in the United States, hardship from consular processing, and the investor’s overall contribution to the United States.
Investors relying on §245(k) should carefully calculate any unauthorized employment or status violation periods. Investors in non-dual-intent classifications should pay close attention to timing, travel, visa applications, admissions, and statements made to consular or border officers.
Does this end the EB-5 adjustment of status?
No.
The memo does not repeal INA §245(a). It does not repeal concurrent filing. It does not repeal §245(k). It does not say EB-5 investors are categorically barred from adjustment.
But it does signal a new policy direction. USCIS wants officers to view adjustment as extraordinary and to treat consular processing as the ordinary route. For EB-5 investors, that may mean more scrutiny, more discretionary denials, and more litigation over the limits of agency authority.
Bottom line
The central question is simple: Is adjustment of status a statutory pathway Congress made available to eligible applicants in the United States, or is it an extraordinary exception that should be granted only rarely?
The answer matters deeply for EB-5 investors.
Congress created the adjustment of status. Congress created an employment-based adjustment. Congress created §245(k), which expressly allows many employment-based applicants to adjust status despite limited-status problems.
USCIS can require applicants to merit a favorable exercise of discretion. But USCIS may face serious legal challenges if it uses discretion to make an adjustment unavailable in ordinary cases where Congress allowed it.
For now, EB-5 investors should treat the I-485 as more than a procedural filing. It is a discretionary application, and under this new memo, the discretionary record may matter more than ever.
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