What It Means for EB-5 Investors. USCIS just recentered the I-485 from an eligibility filing into a discretionary, equities-driven one — and EB-5 investors who entered on the wrong kind of visa are the ones most exposed.
By Matt Gordon, Esq. | E3 Legal Advisors PLLC | May 2026
On May 21, 2026, USCIS published Policy Memorandum PM-602-0199 entitled, Adjustment of Status is a Matter of Discretion and Administrative Grace, and an Extraordinary Relief that Permits Applicants to Dispense with the Ordinary Consular Visa Process
For EB-5 investors already in the United States, with current visa availability and otherwise eligible for adjustment, concurrent filing has been the prize at the end of the fight — file the I-485 alongside the I-526E, seek work and travel authorization, and wait out the green card process without leaving the country. USCIS just threw a wrench into the pot. The Policy Memorandum does not throw adjustment out of the ring, but it changes the rules of the bout, and the investors who entered on a non-immigrant visa that does not tolerate immigrant intent are the ones most likely to get hurt.
What the Memo Actually Says
The title is the thesis: “Adjustment of Status is a Matter of Discretion and Administrative Grace, and an Extraordinary Relief that Permits Applicants to Dispense with the Ordinary Consular Visa Process.” The memo reaffirms a line of authority going back decades — Matter of Blas, 15 I&N Dec. 626 (BIA 1974), reinforced by a string of Supreme Court asides including Patel v. Garland, 596 U.S. 328 (2022) — that adjustment under Section 245(a) of the INA is a matter of grace, not right. Eligibility, the memo insists, is not enough; the applicant must persuade USCIS that favorable discretion is warranted, and “the absence of adverse factors, by itself,” does not get you there.
Note what the memo does not do. It is not a regulation. It does not repeal the EB-5 concurrent-filing mechanism or instruct the lockbox to reject I-485s. That mechanism is statutory: the EB-5 Reform and Integrity Act of 2022 added Section 245(n) to the INA, which provides that when approval of the I-526E would make a visa immediately available, the investor’s adjustment application “shall be considered to be properly filed whether the application is submitted concurrently with, or subsequent to,” the petition. A policy memorandum cannot override a statute Congress wrote. What the memo does is convert the I-485 from an eligibility filing into a discretionary, equities-driven one — and it tells officers exactly which equities cut against you.
Why EB-5 Sits Squarely in the Crosshairs
Read the operative guidance closely. Officers are told to treat adjustment as extraordinary “where consular processing is available to an alien based on the immigrant category in which he or she seeks adjustment of status.” That clause is not boilerplate. EB-5 always has a consular route — the investor can process the immigrant visa at a U.S. consulate abroad. So the memo’s central question — why are you adjusting here instead of going through the regular visa process? — applies to every EB-5 adjustment by its own terms.
The memo then itemizes the adverse factors: violations of the immigration laws, conduct after admission inconsistent with the purpose of the non-immigrant status, “failure to depart as expected,” and an intent to reside permanently when the applicant “could have achieved that goal through the normal immigrant visa process.” That is a description of a particular kind of EB-5 adjuster — and it is not the H-1B engineer.
The Visitor Who Overstayed: B-1/B-2 and the Denial Trap
Start with the most common worry: the investor admitted on a B-1/B-2 visitor visa who filed the I-526E and a concurrent I-485, then watched the B-2 admission lapse while the application sat pending. The visitor visa carries no dual intent. Arriving as a tourist and then filing to stay permanently can be interpreted by USCIS as “conduct inconsistent with the purpose of admission” the memo flags. Under the new posture, that investor faces a materially higher risk of a discretionary denial — even with an approved I-526E and a spotless source-of-funds record.
Here is the part that gets misunderstood. While a properly filed, non-frivolous I-485 is pending, the applicant is generally in a period of stay authorized by DHS and does not accrue unlawful presence, even if the B-2 I-94 has expired. But that is not the same as maintaining B-2 status. (USCIS Policy Manual, Volume 7, Part B, Chapter 3). The danger arrives at denial. If the I-485 is denied and the investor holds no valid non-immigrant status, unlawful presence begins to accrue the day after the decision, the EAD and advance parole evaporate, and the investor is out of status and removable — with a real chance of a Notice to Appear under current enforcement priorities.
H-1B and L-1: Dual Intent Is Your Shield (Mostly)
Now the better-positioned investor. The memo expressly preserves dual intent: “applying for adjustment of status is not inconsistent with simultaneously maintaining nonimmigrant status in a category with dual intent.” H-1B and L-1 are the marquee dual-intent classifications. An H-1B investor who keeps the job, keeps extending the H-1B, and keeps maintaining status throughout is insulated from the trap. If the I-485 is denied, she simply remains in H-1B status — working, not accruing unlawful presence, free to consular process on her own timeline.
Two caveats keep this from being a free pass. First, the memo’s footnote 20 is pointed: maintaining lawful dual-intent status “is not sufficient, on its own, to warrant a favorable exercise of discretion.” Dual intent stops the bleeding; it does not guarantee the grant. Second, EB-5 has no PERM and no I-140, so it gives an H-1B holder nothing for AC21 extensions beyond the six-year cap. The investor who quietly let the H-1B lapse to ride the adjustment EAD has traded a shield for the visitor’s exposure — and may have no H-1B left to fall back on.
F-1 Students: No Dual Intent, and a Rule Looming
F-1 students sit in between, and uncomfortably. F-1 is not a dual-intent category; demonstrated immigrant intent can undercut both the status and any future visa application. But F-1 students are admitted for “duration of status,” and since Guilford College v. Wolf (M.D.N.C. 2020) enjoined the 2018 policy, an F-1 student does not accrue unlawful presence until an immigration judge or officer makes a formal status-violation finding. That cushions the unlawful-presence math — for now. Watch this space. DHS has proposed replacing duration of status for F, J, and I nonimmigrants with a fixed period of admission, generally tied to the program length and capped at four years, plus a departure period. If that proposal becomes final in materially similar form, F-1 students would lose some of the unlawful-presence cushion that currently exists under the D/S framework.
Can You Just Go Home and Consular Process?
Yes — usually. An approved I-526E is an approved I-526E. If the I-485 is denied as a matter of discretion (and not for fraud or on other grounds), the petition stands, and the investor can pursue the immigrant visa at a consulate abroad. And here is the key point that takes the edge off the panic: the consular immigrant visa is an eligibility-and-admissibility determination; it is not subject to the Section 245 “administrative grace” discretion this memo is tightening. The memo is, in effect, pushing investors toward exactly that door.
The catch is that the door swings on unlawful presence. The three- and ten-year bars under Section 212(a)(9)(B) of the INA are triggered only by departure. Leave with more than 180 days of accrued unlawful presence and you face a three-year bar; a year or more triggers the ten-year bar. Because the pending-I-485 period does not count, an investor who is denied and departs promptly — within 180 days — generally leaves clean and consular processes without a bar. The investor who lingers, files a motion to reopen, and lets the months run after the denial converts a survivable setback into a multi-year exile. And the waiver, Section 212(a)(9)(B)(v), requires extreme hardship to a U.S.-citizen or LPR spouse or parent — a lifeline many EB-5 investors simply do not have.
Section 245(k) helps on the front end, not this one. The RIA added EB-5 to the Section 245(k) protections, so an EB-5 investor who is present in the United States pursuant to a lawful admission on the I-485 filing date may be able to overcome certain status violations, unauthorized employment, or other violations, so long as the aggregate post-admission violations do not exceed 180 days. But 245(k) is an eligibility waiver, not a discretion fix — the same history it forgives for eligibility, the memo still lets an officer weigh against you on discretion.
The Policy Perspective
The Trump administration is doing virtually everything it can to reduce immigration. Not just illegal immigration, but all immigration. The Policy Memo is another step in a long line of actions designed to make it harder, more expensive, and less convenient for those seeking to become lawful permanent residents. The irony is that, as applied to EB-5, this throws the political bathwater out with the economic baby. Sure, the administration gets a sound bite, but EB-5 capital and the high-wage generating activities undertaken by EB-5 investors are growth drivers of the US economy. This will only serve to create a disincentive to those we should be recruiting to our society to seek to build their lives (with their wealth and skills) elsewhere.
The Bottom Line for Investors
The memo did not kill EB-5 concurrent filing, and nobody considering an EB-5 investment with concurrent adjustment of status filing or with a pending I-485 should panic-file anything. But the calculus has shifted. If you adjusted from H-1B or L-1, maintain that status — do not coast on the EAD. If you entered as a visitor, your I-485 now needs to be built as a discretionary case: a positive-equities cover letter, a clean status-and-intent chronology, documented ties, and an honest treatment of any overstay rather than a hope that no one notices. And every investor weighing adjustment against consular processing should run the unlawful-presence math before filing, not after a denial. The fight isn’t over. But adjustment is on the ropes, and the investors who prepare for a denial are the ones who will still be standing when the bell rings.
© 2026 Matthew Gordon, E3 Legal Advisors PLLC.
This blog post is for informational purposes only and does not constitute legal advice.