After Loper Bright, AOS Memo Faces ITServe-Style Reckoning

The U.S. Citizenship and Immigration Services memorandum recasting adjustment of status as a matter of “administrative grace” is, on the strict statutory question, weaker than its press-release rollout suggested.

The memorandum, PM-602-0199, does not change INA § 245, the statutory grant of adjustment-of-status authority Congress committed to the agency. It does not promulgate a regulation. It does not go through notice and comment. It is a policy memorandum that directs adjudicators to apply a tighter discretionary lens than the agency has historically used.

The first is the Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo, which overruled the Chevron doctrine of agency deference. Under Chevron, courts reviewing an agency’s interpretation of an ambiguous statute had to start from the assumption that the agency was right and work backward from there. Under Loper Bright, that thumb on the scale is gone. Courts must, in Chief Justice Roberts’s words, “exercise their independent judgment in deciding whether an agency has acted within its statutory authority.”

For PM-602-0199, that shift compresses the deference an agency would have received for the proposition that “adjustment is extraordinary” is a permissible reading of a statute that — text-first — makes adjustment broadly available to qualifying applicants without using the word “extraordinary” anywhere in its language. A reviewing court no longer starts the analysis in the agency’s corner. It starts in the middle, asks what the statute actually authorizes, and tests the memo’s discretionary posture against that.

The second authority is ITServe Alliance, Inc. v. Cissna, 443 F. Supp. 3d 14 (D.D.C. 2020), the H-1B short-validity case decided five years ago in the District of D.C. There, USCIS had not changed the H-1B statute or regulations. It had instead, through internal guidance, begun issuing H-1B approvals limited to the dates of specific client engagements at third-party worksites — and then, when those engagements expired, denying extensions for failure to maintain status. Practitioners watching the denial rate climb sued. The court held that the agency could not, by adjudicating its way to a new substantive standard, accomplish what its rules had not been amended to require.

In both ITServe and the current moment, Congress wrote the underlying statute. In both, the regulations implementing it were not amended. In both, the agency used internal guidance to change practice — and the change in practice, not the change in text, was what the litigation reached. The ITServe court did not hold that USCIS lacked discretion. It held that the agency had used discretion to do something its own rules did not permit, and that the mismatch between the rules and the practice was actionable under the Administrative Procedure Act.

The legal lane against PM-602-0199 runs through the same theory. The Administrative Procedure Act authorizes courts to “hold unlawful and set aside agency action” found to be arbitrary, capricious, or otherwise not in accordance with law, and to vacate agency rules made without observance of procedure required by law. The same § 706 authority that the Rhode Island district court exercised on June 5 in Dorcas International Institute of Rhode Island v. USCIS, vacating four USCIS country-based adjudication-pause directives nationwide, remains available against PM-602-0199 once a denial under the new framework produces a concrete plaintiff with standing to sue.

Until USCIS denies a discretionary adjustment under the new posture, the memo is not enforceable against any specific applicant in a way that ripens for review. Until the agency issues a written decision tied to the memo’s “extraordinary” framing, there is no record artifact that a court can vacate. The bar’s expectation is that those denials will arrive — that the volume of borderline I-485 cases moving through the discretionary lane is large enough that some subset will receive negative decisions citing the memo’s factors, and that those decisions will be sued.

Three features of the post-Loper Bright litigation environment shape how that attack is likely to be framed:

• Independent judgment on statutory meaning. A court reviewing a denial under PM-602-0199 will not assume the agency’s reading of INA § 245 is correct. It will start by reading the statute and asking whether anything in the text supports treating adjustment as “extraordinary” relief. The text does not use that word.
• APA procedure for substantive changes. Where the agency has used a memo to accomplish what looks like a substantive change in adjudicative standards, courts have increasingly been willing — both before and after Loper Bright — to find that procedural shortcut impermissible. That is what ITServe held and what the Rhode Island Dorcas ruling reinforced earlier this month.
• Vacatur as the remedy. Where APA § 706 violations are found, vacatur of the offending rule or policy is the default remedy, and its scope is generally nationwide on the face of the order. The post-CASA argument about the geographic limits of vacatur is still being litigated but has not displaced § 706’s textual grant.

The memorandum’s defenders will argue that adjustment of status is discretionary on the face of the statute — § 245(a) provides that the status of an alien “may be adjusted by the Attorney General, in his discretion” — and that an agency exercising statutory discretion under a new written framework is doing what the statute already authorized. That argument is not frivolous. Courts have long held that agencies have wide latitude in how they exercise statutorily granted discretion, and the text of § 245(a) does commit that discretion to USCIS.

The counter-argument the bar will press is narrower: discretion is not the same as the power to nullify the statutory benefit Congress made available. An agency using discretionary authority to recharacterize a benefit available to half a million applicants in a typical year as “extraordinary” — without amending the rule, without notice and comment, and without articulating the standards by which “extraordinary” will be measured — has crossed the line from exercising discretion to remaking the statute by memo. Whether the courts agree will turn on which side of that line a denied applicant’s specific facts fall on, and on which district receives the first cases.

Whether adjustment has changed forever, as Sam argues, is disputed even between the attorneys quoted here. What is not disputed is that the memo, as a piece of agency action, sits exposed in a way it would not have been a decade ago. Chevron is gone. ITServe remains good law. A district court has, in the past month, vacated four other USCIS adjudication directives nationwide. The memo has, for now, the benefit of the agency’s unilateral choice to apply it. Whether it has the benefit of a court’s affirmance will depend on which denial arrives first and where it is challenged.