USCIS Policy Memo Signals Major Shift in Adjustment of Status Processing

U.S. Citizenship and Immigration Services (USCIS) on May 21, 2026, issued Policy Memorandum PM-602-0199. The memorandum reiterates that adjustment of status (AOS) under Immigration and Nationality Act Section 245, the process allowing certain foreign nationals to apply for permanent residence from within the U.S., is discretionary in nature and not guaranteed, even where statutory eligibility is met. The guidance also underscores that AOS is a form of administrative relief that requires a favorable exercise of judgment by the adjudicating officer.

The policy signals a shift toward more rigorous review of AOS applications. USCIS officers are instructed to undertake a more detailed discretionary analysis and to evaluate whether, in a given case, it is appropriate to grant permanent residence through adjustment in the U.S. or whether the individual should instead complete immigrant visa processing through a U.S. consulate abroad.

Importantly, the memorandum does not change the legal requirements for eligibility or eliminate the ability to file for AOS. Rather, it reframes how applications may be assessed, placing greater weight on discretionary considerations and overall applicant equities. Notably, USCIS characterizes this guidance as a restatement of existing legal authority rather than a new policy, a framing that may be relevant to potential legal challenges.

What the Memo Says

• AOS Is a Privilege, Not a Right: Approval is not automatic, even when all statutory criteria are satisfied. Applicants must demonstrate that their cases warrant a favorable exercise of discretion based on the totality of the circumstances, including both positive and negative factors.
• Consular Processing May Be More Strongly Emphasized: The guidance emphasizes that USCIS may more closely examine whether adjustment in the U.S. is appropriate in light of the applicant's immigration history and circumstances. Though consular processing has always been an alternative route, officers are now directed to consider more explicitly whether that option is more suitable in a given case.
• Dual-Intent Visa Holders (H-1B, L-1) Are Not Exempt: For individuals in H-1B and L-1 status, the ability to pursue permanent residence without violating nonimmigrant intent remains intact. However, maintaining lawful status in a dual-intent category does not, by itself, ensure a favorable discretionary outcome.

Moreover, officers must weigh adverse and positive factors. The memo directs officers to evaluate the totality of the circumstances, including:

• violations of immigration laws or status conditions
• fraud or false statements in interactions with any government agency
• conduct that is inconsistent with the purpose of the applicant's nonimmigrant status or parole
• failure to depart as expected, particularly where there was an intent to remain permanently

These considerations must be balanced against favorable factors, such as long-term residence, family ties in the U.S., a record of compliance with immigration laws, evidence of good moral character, and contributions to the community or economy. Where an application is denied, USCIS is expected to articulate the reasons supporting the decision.

Who Is Most Affected

Although the policy applies broadly, certain categories of applicants may face increased discretionary risk:

• Non-Dual-Intent Visa Holders (F-1, TN, E-3, J-1, O-1). These individuals entered the U.S. for a temporary purpose and do not have a statutory provision allowing them to pursue permanent residence at the same time. The memo's focus on departing once the purpose of admission is completed is particularly relevant to this group.
• Applicants with Status Violations. Individuals with overstays, unauthorized employment or other compliance issues may face greater risk of denial.
• Parole-Based Applicants. The memo notes that individuals admitted on parole are expected to leave once the purpose of parole has been fulfilled.
• H-1B and L-1 Visa Holders. Though these applicants may be in a stronger position due to dual intent, approval is not guaranteed.

What We Still Do Not Know

The memo leaves several important questions unanswered, including when, if at all, USCIS may stop accepting AOS applications filed within the U.S., how pending AOS applications will be handled, whether certain categories of applicants may face broader restrictions, what level of positive factors will be sufficient to secure approval and whether the policy will affect the availability of concurrent filing of I-140 and I-485 applications or the issuance of employment authorization documents (EADs) and advance parole while AOS applications remain pending.

USCIS has indicated that it plans to issue additional guidance for specific groups in the future, and legal challenges to the memo are anticipated, potentially on grounds that USCIS has imposed new substantive standards without notice-and-comment rulemaking under the Administrative Procedure Act.

What Employers Should Do Now

This development has implications for employer-sponsored green card strategies, particularly at the final stage of the process. Employers should consider the following steps:

• Review Your Current Green Card Pipeline by Visa Category. Identify employees approaching or currently in the adjustment stage and evaluate potential discretionary risk factors, including status history and any prior compliance issues.
• Consider Strategic Visa Category Changes. For individuals in non-dual intent categories, evaluate whether transitioning to a dual-intent classification prior to filing may provide greater flexibility.
• Continue Program Electronic Review Management (PERM) and I-140 Filings. Labor certification and I-140 immigrant petitions are not affected by this policy change and should continue to move forward to preserve priority dates.
• Evaluate Consular Processing as an Alternative. In some situations, completing the immigrant visa process abroad may offer a more predictable path, though this must be weighed against timing, travel and operational considerations.
• Prepare for Increased Requests for Evidence and Notices of Intent to Deny. Employers and applicants should expect closer review, including the possibility of additional evidence requests and more detailed examination of the applicant's history.
• Proactively Document Positive Equities. For employees in the green card pipeline, begin assembling evidence of favorable discretionary factors such as long-term U.S. residence, tax compliance, community involvement, U.S. citizen or permanent resident family members, and the employer's reliance on the individual's continued presence well in advance of filing.
• Communicate with Affected Employees. Consider proactive outreach to sponsored employees to explain the policy landscape, manage expectations regarding processing timelines and outcomes, and identify any individual circumstances that may warrant additional attention or strategy adjustment.

Bottom Line

Though the legal framework governing AOS has not changed, the policy signals a meaningful shift in how discretion may be exercised. Adjudications are likely to become more individualized, with outcomes depending heavily on the specific facts of each case. The practical effect may be longer processing times, higher denial rates and increased use of Requests for Evidence as a gatekeeping mechanism.

AOS remains a viable option for eligible applicants. However, both employers and foreign nationals should be prepared for a more demanding review process and take steps to strengthen the overall presentation of each case.

Holland & Knight will continue to monitor developments and provide updates as additional guidance and adjudication trends emerge. Please contact the authors or another member of our Immigration, Nationality and Consular Team to discuss the implications of this policy for your organization or individual cases.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.