EB-5 Adjustment of Status Policy: Impact of New USCIS Memo

A new policy memo signals that USCIS is going to treat EB-5 Adjustment of Status applications with heightened scrutiny, potentially forcing applicants to return to their countries of origin despite one of the RIA’s key benefits.

What Changed: The New USCIS Adjustment of Status Policy

One of the most welcome changes of the EB-5 Reform and Integrity Act of 2022 (RIA) was the concurrent filing of Adjustment of Status (AOS) petitions with the investor’s initial I-526E petition. With this provision, those already in the country on H-1B work visas, F-1 student visas, and other nonimmigrant visas could remain in the country while pursuing an EB-5 immigrant visa. However, a new policy memo from U.S. Citizenship and Immigration Services (USCIS) has caused concern among the EB-5 community that Adjustment of Status is about to become more difficult for EB-5 petitioners.

USCIS Memo Details on Adjustment of Status Requirements

A press release announcing the policy memo, titled, “U.S. Citizenship and Immigration Services Will Grant ‘Adjustment of Status’ Only in Extraordinary Circumstances,” states that “aliens seeking adjustment of status must do so through consular processing via the Department of State outside of the country.”

This statement should be enough to worry those pursuing EB-5 while on nonimmigrant visas, as one of the main benefits of concurrent filing was the ability to continue to live and work in the U.S. while one’s I-526/I-526E application was still pending. According to the press release, these applicants would instead be expected to leave the country before applying.

“We’re returning to the original intent of the law to ensure aliens navigate our nation’s immigration system properly. From now on, an alien who is in the U.S. temporarily and wants a Green Card must return to their home country to apply, except in extraordinary circumstances,” says USCIS Spokesman Zach Kahler in the press release. “Nonimmigrants, like students, temporary workers, or people on tourist visas, come to the U.S. for a short time and for a specific purpose. Our system is designed for them to leave when their visit is over. Their visit should not function as the first step in the Green Card process.”

The question of intent has long been a consideration by USCIS officers when adjudicating petitions. EB-5 applicants have always had to be careful when attempting to adjust their status because if it is determined that they misled immigration authorities when applying for their initial nonimmigrant visas, their petitions could be denied, and they would find themselves facing removal proceedings.

The policy memo, PM-602-0199, “reminds officers and the public that adjustment of status under section 245 of the Immigration and Nationality Act (INA) is a matter of discretion and administrative grace, not designed to supersede the regular consular processing of immigrant visas.”

The terms “discretion” and “administrative grace” appear 40 and 12 times in the memo, respectively, so the agency clearly views these as important elements of its adjudication policy. It’s likely that the agency hopes that an emphasis on its officers’ latitude in adjudication decisions will prevent accusations of unequal application.

“It has been long established that not every alien who meets all other eligibility criteria for adjustment of status will be granted adjustment,” says the memo. “U.S. Citizenship and Immigration Services (USCIS) reaffirms this consistent and longstanding approach.”

We know that not everyone who files an I-485 application will be successful. But if this has been a consistent policy, what is the need for the memo? In theory, the memo indicates that nothing will change, as the agency does not admit to having done things any other way in the past.

One of the strangest statements is that “While such aliens may be otherwise eligible for adjustment of status, their contravention of this expectation and attempt to avoid the ordinary consular immigrant visa process” is, according to the memo, “usually accompanied by their violation of our immigration laws.”

In a footnote, it continues:

“Such aliens generally apply for adjustment of status after the expiration of their period of admission or parole, or after violating the terms and conditions of their admission or parole through unlawful employment or other activities inconsistent with the purpose of their admission or parole.”

While this may be true in some circumstances, it may actually support an interpretation that this memo should not materially affect rule-abiding applicants. No one pursuing permanent residency in the United States is likely to be successful if they’ve previously violated the terms of another visa. H-1B holders who’ve been laid off from a job, for example, are keenly aware that they have a limited period of time in which to file an I-485 before removal proceedings would begin. Filing within this period would mean they did not overstay their previous visas, and therefore the filing of the I-485 petition would be necessary and proper. Assuming that petitioners have “usually” violated laws is concerning, because treating all applicants as rule-breakers could cause unnecessary suffering for those legally pursuing EB-5 while in the United States.

Implications for EB-5 Investors Pursuing Adjustment of Status

The worst-case scenario would be that USCIS uses this memo to deny any and all AOS applications from EB-5 applicants currently living in the U.S., forcing them to return to their countries of origin.

“The implications are serious,” says EB-5 expert Suzanne Lazicki, who called the memo “a devastating new step.” However, as Brown University points out, “the memo does not contain any new regulatory restrictions preventing eligible individuals in the U.S. from pursuing permanent residence through adjustment of status.” Since no new rules have been created, it’s entirely possible that, at least for law-abiding applicants pursuing EB-5, little will change.

Following the initial reactions to the memo, Kahler offered additional statements to clarify that “people who present applications that provide an economic benefit or otherwise are in the national interest will likely be able to continue on their current path.”

Foreign nationals pursuing EB-5 invest a significant amount of money, $800,000 or $1,050,000 each, into projects that create jobs for American workers and generate economic activity in areas that need it. This is a perfect recipe for both economic benefit and the national interest, and thus worthy of utilizing the adjustment of status mechanism. That said, will all EB-5 petitions be granted this exception, or only some? It’s impossible to know yet if the standard will be applied equally.

“The memo signals that USCIS intends to apply heightened discretionary scrutiny in cases where an applicant’s conduct appears inconsistent with the purpose of their temporary admission, parole, or nonimmigrant status,” says WR Immigration, stressing that “USCIS officers retain broad discretion in adjudicating adjustment applications and may deny cases even where the applicant otherwise meets the technical eligibility requirements.”

We come back to this issue of discretion. “Officers are reminded that they are to consider all relevant factors and information in the totality of the circumstances in exercising that discretion,” says the memo. These factors can include everything from “violations of our immigration laws” to “the applicant’s moral character.” While the latter is certainly open to wide interpretation, wouldn’t violations of immigration laws fall under the normal review of a petition? With such an emphasis on discretion, officers may ultimately approve AOS petitions from those in the country just as often as they did before.

“Applying for adjustment of status is not inconsistent with simultaneously maintaining nonimmigrant status in a category with dual intent,” says the memo. This means those currently on H-1B visas could be okay. However, it also says, “maintaining lawful status in a dual intent nonimmigrant category is not sufficient, on its own, to warrant a favorable exercise of discretion.”

If, as the press release states, “Officers are directed to consider all relevant factors and information on a case-by-case basis when determining whether an alien warrants this extraordinary form of relief,” there is a high likelihood of widely different interpretations depending on who is adjudicating any particular petition. At the same time, it could lead to a situation where all AOS applications from current nonimmigrant visa holders are denied. As many have pointed out, that would be met swiftly with legal challenges.

“This looks so egregious that it will surely be challenged,” says Lazicki, a sentiment echoed by WR Immigration, who says, “We expect that litigation will ensue because adjustment of status is specifically included in the Immigration and Nationality Act as an alternate to Consular Processing at a Consulate or Embassy abroad.”

“It is likely this new policy will be challenged in court, but until it is either stayed or overturned, adjustment applicants should plan accordingly and discuss the risks of applying with a competent immigration attorney,” says Baker Donelson, advising new applicants to include as much evidence as possible with their petitions, and suggesting “applicants with pending adjustment applications should seek to ‘interfile’ supplementary evidence of positive discretionary factors.”

It’s unlikely that someone could provide too much evidence, so any supporting documentation that proves the petitioner’s initial intent in applying for their non-immigrant visa and their compliance with immigration laws could be helpful.

For the EB-5 industry, this memo stands in opposition to the RIA’s stated intent to permit concurrent filing, as one of the main benefits of the provision was the ability of applicants to continue living and working in the U.S. while transitioning from a non-immigrant to an immigrant visa.

“Congress enacted specific provisions governing adjustment eligibility for certain EB-5 investors, including INA §§ 245(n) and 245(k), which many EB-5 petitioners have relied upon in pursuing adjustment of status in the United States. Those provisions reflect Congress’s recognition that adjustment of status serves an important role in facilitating investment and economic activity,” says industry trade organization Invest In the USA (IIUSA). “To the extent the new guidance results in substantially more restrictive adjudications, questions may arise regarding whether implementation of the memorandum is fully consistent with the broader statutory framework Congress established.”

Adjustment of Status vs. Consular Processing:

Looking Ahead: EB-5 and Congressional Reauthorization

Regardless of what short-term effect this memo has on the industry, the Regional Center Program is still slated to sunset on September 30th, 2027. As we fight for permanent reauthorization, it’s important for Congressional leaders to understand how the RIA has benefited EB-5 and the country as a whole. That way, EB-5 and the Regional Center Program can continue to improve underserved communities, create new jobs for U.S. taxpayers, and give deserving applicants a path to permanent residency.

How the RIA improved EB-5