[Federal Register Volume 62, Number 177 (Friday, September 12, 1997)]
[Rules and Regulations]
[Pages 48138-48149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22314]
[[Page 48137]]
_______________________________________________________________________
Part II
Department of Justice
Immigration and Naturalization Service
8 CFR Part 214
Department of State
Bureau of Consular Affairs
22 CFR Part 41
_______________________________________________________________________
Nonimmigrant Classes; Treaty Aliens; E Classification; Visas;
Documentation of Nonimmigrants Under the Immigration and Nationality
Act, as Amended; Business and Media Visas; Treaty Trader and Treaty
Investors; Final Rules
Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 /
Rules and Regulations
[[Page 48138]]
DEPARTMENT OF JUSTICE
Immigration and Naturalization Service
8 CFR Part 214
[INS 1427-93]
RIN 1115-AC51
Nonimmigrant Classes; Treaty Aliens; E Classification
AGENCY: Immigration and Naturalization Service, Justice.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule amends the Immigration and Naturalization Service
(``the Service'') regulations by codifying existing policy guidelines
related to the ``E'' nonimmigrant treaty trader and treaty investor
visa classification. This rule closely tracks a rule being published
simultaneously by the Department of State (``State'') and is intended
to ensure consistent adjudication of applications for ``E''
nonimmigrant visa classification by the Service and State. It also
furthers Congress' intent to facilitate trade and investment between
the United States and countries with whom the United States has
treaties and agreements.
DATES: This final rule is effective November 12, 1997.
FOR FURTHER INFORMATION CONTACT:
Katharine Auchincloss-Lorr, Senior Adjudications Officer, Immigration
and Naturalization Service, 425 I Street, NW, Room 7215, Washington, DC
20536, telephone (202) 514-5014.
SUPPLEMENTARY INFORMATION:
Background.
The Service and State share responsibility for implementing section
101(a)(15(E) of the Act. That section of the Act provides authority for
the ``E'' nonimmigrant treaty trader and treaty investor visa
classification. On August 30, 1991, the Service published a proposed
rule and request for comments (due October 15, 1991) by parties
interested in this subject in the Federal Register. See 56 FR 42952-57.
On September 3, 1991, State published a proposed rule and request for
comments (due November 4, 1991) on the same subject matter. State is
publishing its final rule on ``E'' nonimmigrant visa classification, 22
CFR 41.51, simultaneously with this rule.
In response to the proposed rule, the Service received and reviewed
15 detailed comments, many covering extremely varied issues. In
addition, the Service reviewed 11 comments to State's proposed rule,
some identical or similar to those it received. Many of these
commenters noted that discrepancies in language between the two
proposed rules might lead to inconsistent adjudication and deviation
from established law and policy. These comments are well-taken. The
final rules of the Service and State have been drafted to be as uniform
in form and substance as possible.
In this regard, both agencies have harmonized their information and
documentation requirements for determining eligibility for E
nonimmigrant visa classification. The Service will in the future issue
a revised Form I-129, which will incorporate State's Form, the E Visa
Supplemental application Form, OF-156E, for determining eligibility for
E nonimmigrnat visa classification. Until that action occurs, this rule
implements use of the existing Form I-129 with E Supplement by
nonimmigrants seeking to change to or extend E classification in the
United States.
General Changes From the Proposed Rule
The Service has revised the format of its proposed rule to conform
with State's final rule. In addition, in response to comments, the
Service has modified the substance and language of its proposed rule
where appropriate. Substantive differences between the Service's
proposed rule and this final rule are explained in the discussion of
the comments.
Jurisdictional Issues
Some commenters argued that differences in Service and State
regulatory language and terminology could lead to substantial
discrepancies in interpretation and inconsistent adjudication, thereby
inhibiting trade and investment in contravention of the United States'
treaty obligations. These commenters urged the Service to defer to
State on treaty alien issues, noting that eligibility for E
nonimmigrant visa classification is based on treaties negotiated by
State, raising foreign policy concerns more appropriately addressed by
that agency. On the other hand, some commenters encouraged State
consular officers to facilitate the international travel and entry of E
nonimmigrnat visa holders by accepting automatically a Service-approved
change of status to E classification.
Under section 104 of the Act, State has exclusive jurisdiction over
visa issuance and, therefore, is not bound by Service determinations of
eligibility for E nonimmigrant classification. As State noted in its
proposed rule, it may not, under this provision, automatically approve
an application for an E nonimmigrant visa based on the Service's
approval of an application for change of nonimmigrant status to, or an
extension of stay in, E nonimmigrnat classification. Rather, State must
examine anew the alien's eligibility for E nonimmigrnat visa
classification, in accordance with current law and procedure, which is
applicable to other nonimmigrnat classifications, as well. For example,
an alien admitted into the United States in B-2 (visitor) status, who
subsequently applies for and is granted a change of nonimmigrant status
to F-1 (student) status, cannot depart and seek reentry as an F-1
unless a United States consular officer has determined the alien's
eligibility for an F-1 visa.
Conversely, under section 103 of the Act, the service has exclusive
jurisdiction to adjudicate applications for admission to this country,
as well as applications for change of nonimmigrant status to, or
extensions of stay in, E nonimmigrant classification. In this regard,
it should be noted that, unlike other employment-driven
classifications, E nonimmigrant visa classification is not conferred by
means of a petition, but instead by an application. Upon receipt of
such applications, the Service is required to recheck independently an
E nonimmigrnat visa-holder's qualifications for admission into the E
nonimmigrant visa classification. Moreover, consistent with section 103
of the Act, the Service may, but is not required to, consult with State
in adjudicating applications for E nonimmigrnat classification made
following entry to the United States.
Some commenters also inferred from the language of section
101(a)(45) of the Act, which delegates to State responsibility for
establishing what constitutes a ``substantial'' amount of trade or
capital, that congress intended to recognize State's ``primary''
jurisdiction over E nonimmigrant visa status eligibility. As previously
indicated, the Service does not share such a view of the Act. Section
101(a)(45) of the Act reflects congress' understanding that, because of
State's central role in negotiating, executing, and interpreting
Bilateral Investment Treaties, it is the appropriate agency for
interpreting this statutory term. Section 101(a)(45) is not intended,
however, to limit the Service's authority under section 103 of the Act
to adjudicate and determine requests for E nonimmigrant classification
in cases within its jurisdiction.
[[Page 48139]]
Table Comparing the Service's and State's Final E Rules
The following table provides a comparison of State's and the
Service's final E nonimmigrant treaty trader and investor visa
classification rules. An asterisk next to a State heading indicates
that it is different from the Service's heading. State's headings that
treat the same matter as those of the Service are marked ``SAME.'' An
asterisk next to a Service heading indicates there is no parallel State
heading.
------------------------------------------------------------------------
Service rule-- 8 CFR 214.2(e) State rule-- 22 CFR 41.51
------------------------------------------------------------------------
(1) Treaty trader (TT)..................... (a) SAME
(2) Treaty investor (TI)................... (b) SAME
(3) Employee of TT or TI................... (c) SAME
(4) Spouse/Children of TT and TI........... (d) SAME
(5) Nonimmigrant intent.................... (e) Representative of
Foreign Information Media
*
(6) Treaty country (TC).................... (f) SAME
(7) Nationality of the TC.................. (g) SAME
(8) Terms and conditions of E status *..... (h) Trade *
(9) Trade--definitions..................... (i) Item of Trade *
(10) Substantial trade..................... (j) SAME
(11) Principal trade....................... (k) SAME
(12) Investment............................ (l) SAME
(13) Bona fide enterprise.................. (m) SAME
(14) Substantial amount of capital......... (n) SAME
(15) Marginal enterprise................... (o) SAME
(16) Solely to direct and develop.......... (p) SAME
(17) Executive or supervisory character.... (q) SAME
(18) Special qualifications................ (r) SAME
(19) Period of admission *................. ...........................
(20) Extensions of stay *.................. ...........................
(21) Change of status *.................... ...........................
(22) Denial of treaty trade or investor ...........................
status to citizens of Canada or Mexico in
the case of certain labor disputes *.
------------------------------------------------------------------------
Definitions
Unlike the proposed rule, this final rule does not contain a
separate paragraph on definitions. Instead, terms are defined
throughout the regulations.
Treaty Trader and Treaty Investor, 8 CFR 214.2(e) (1) and (2)
(Corresponds With 22 CFR 41.51 (a) and (b))
The proposed rule's definition of ``primary treaty alien'' at
Sec. 214.2(e)(2)(i), has now been broken into separate definitions of
``treaty trader'' and ``treaty investor'' in this final rule at
Sec. 214.2(e) (1) and (2). In response to commenters' concerns, the
term ``primary,'' used in the proposed rule, has been replaced in the
final rule by the term ``principal'' for purposes of clarifying the
treaty alien's relationship to his or her spouse or children.
In determining whether an applicant is a treaty trader, commenters
urged the Service to consider conditions in the treaty alien's home
country which affect the alien's ability to carry on trade in
accordance with State's proposed rule. The final rule incorporates this
consideration as a factor in determining what constitutes substantial
trade, although obviously at some point country conditions, in and of
themselves, can become restrictive to trade that treaty eligibility
must be denied. The portion of this paragraph concerning consideration
of country conditions is adopted from State's definition of treaty
trader at 22 CFR 41.51(a)(1).
Employee of Treaty Trader and Treaty Investor, 8 CFR 214.2(e)(3)
(Corresponds With 22 CFR 41.51(c))
The terms ``manager'' and ``managerial'' used in the proposed rule
at 8 CFR 214.2(e) (2)(ii) and (6)(ii) are replaced in the final rule by
``supervisor'' and ``supervisory'' in response to comments indicating
confusion with the term ``managerial'' as it is used in the context of
section 101(a)(15)(L) of the Act.
Although the term ``treaty company'' was defined in the proposed
rule to describe entities capable of employing an alien in E-1 or E-2
nonimmigrant visa status, State's regulation contains no such
definition. In the interests of clarity, this final rule adopts State's
use of the term ``organization,'' as well as the statutory word
``enterprise,'' to refer to such entities. This change reflects the
fact that such an organization or enterprise derives the ability to
employ aliens in E nonimmigrant visa classification directly and
exclusively from its treaty trader or treaty investor owner.
Because employees derive E nonimmigrant visa status solely by
virtue of their employment for an E-1 or E-2 nonimmigrant visa
employer, or for an organization or enterprise qualified by reason of
its ownership, it is the Service's position that an employee cannot be
classified under section 101(a)(15)(E) of the Act if the employer is
lawfully classified under another nonimmigrant status at the time E
nonimmigrant visa classification is requested. For this reason, as
provided in the proposed regulation, a permanent resident may not be
the employer of a treaty alien, and the treaty alien status of an
employee terminates when the E nonimmigrant visa employer becomes a
permanent resident. It follows that the Service cannot adopt one
commenter's suggestion that individual owners of an enterprise should
be able to change to another nonimmigrant category without jeopardizing
the employee's eligibility for E treaty status.
Spouse and Children of Treaty Trader and Treaty Investor, 8 CFR
214.2(e)(4) (Corresponds With 22 CFR 41.51(d))
The definition of spouse and dependent children, in the proposed
rule at Sec. 214.2(e)(2)(iii), is now contained in this final rule at
Sec. 214.2(e)(4). Nonimmigrant Intent, 8 CFR 214.2(e)(5)
Note: This does not corresponds with 22 CFR 41.51(3),
Representatives of Foreign Information Media
The concept of dual intent found in the proposed rule at Sec.
214.2(e)(10) (i)
[[Page 48140]]
and (ii) has been moved to Sec. 214.2(e)(5) and retitled ``Nonimmigrant
intent.'' This provision reflects the agencies' understanding that,
under section 101(a)(15) of the Act, aliens in E nonimmigrant visa
classification need not maintain a foreign residence but must indicate
a clear intent to depart upon termination of status.
Although not specifically part of this final rule, the Service
shares State's position that representatives of foreign information
media should be considered for classification as nonimmigrants under
the provisions of section 101(a)(15)(I) of the Act before consideration
will be given to classifying such persons as nonimmigrants under the
provisions of section 101(a)(15)(E) of the Act. See 22 CFR 41.51(e).
Treaty Country, 8 CFR 214.2(e)(6) (Corresponds With 22 CFR 41.51(f))
The definition in the proposed rule at Sec. 214.2(e)(1) has been
moved to this paragraph.
Treaty Country Nationality, 8 CFR 214.2(e)(7) (Corresponds With 22 CFR
41.51(g))
The Service's final rule incorporates the substance of its proposed
rule. The proposed rule at 8 CFR 214.2(e)(6)(i), in turn, was based on
State's Notes to its Foreign Affairs Manual (FAM) at 9 FAM 41.51. Some
commenters urged the Service to consider the following major departures
from existing policy. As discussed below, the Service is unable to
adopt these suggestions.
One commenter indicated that the definition of corporate
nationality contained in the proposed rule was both unworkable and in
conflict with the law. The commenter argued that, by basing corporate
nationality on whether nationals of a particular country own 50 percent
of a corporation's shares, the proposed definition failed to account
for difficulties in proving foreign corporate ownership which arise due
to corporate ownership of shares, transfer of shares, and corporate
shareholder lists of identity which do not always disclose
shareholder's nationality. The commenter argued that requiring full
search and disclosure would encourage dishonesty regarding the true
owners of a company. Other commenters expressed their belief that a
corporation's nationality should be determined by location of
incorporation. In support of this argument, they cited certain
International Court of Justice rulings, in which large multi-national
corporations unable to trace nationality were permitted to look to
their country of incorporation to determine nationality. They expressed
the opinion that a definition based on control and ownership rather
than location of incorporation could discriminate against corporations
of treaty countries controlled by nationals of a third country. For
these reasons, the commenters argued that a test focusing on the
corporation's location would provide a more simple and enforceable
guideline.
It is the Service's position that, in the great majority of cases,
nationality based on ownership is the only appropriate way to determine
the nationality of an organization or enterprise. Section 101(a)(15)(E)
of the Act focuses on the efforts of individual nonimmigrants, as
opposed to organizations, to further treaty-sanctioned activity.
Consequently, simple registration in a jurisdiction to engage in
business activities, rather than stock ownership, is normally not an
acceptable standard for determining corporate nationality. Similarly,
the country of incorporation is, in most cases, irrelevant for purposes
of determining corporate nationality. On the other hand, because
ownership, and not corporate location, is critical, the Service agrees
with commenters who argued that domestically incorporated, but foreign-
owned, corporations can be deemed eligible for E nonimmigrant visa
classification. Accordingly, the reference to ``foreign'' corporations
in the proposed rule has been removed.
The Service recognizes a limited exception to the nationality-by-
ownership rule in the case of large, multi-national corporations that
are unable to determine ownership by stock ownership. See current 9 FAM
22 CFR 41.51, N3.2. Under this exception, corporations whose stock is
sold exclusively in the country of incorporation may be presumed to
have the nationality of the location of the exchange. Because the
burden, in all cases, remains on the applicant to demonstrate an
enterprise's treaty nationality, this presumption must be supported by
the best evidence available. In determining corporate nationality, the
Service will consider all the circumstances in each case.
Several commenters recommended an expanded definition of
``nationality'' so that individual owners or shareholders in immigrant
status, or in a nonimmigrant visa classification other than E, could be
counted toward meeting the 50 percent nationality requirement set forth
in 8 CFR 214.2(e)(3)(ii). The Service cannot adopt this suggestion. As
noted earlier, nonimmigrant employees in E classification in an
organization or enterprise derive their status directly from the
employing E nonimmigrant's ownership and treaty-based nationality. Such
classification, therefore, cannot be afforded to these employees if
less than 50 percent of the owners are persons who are in E
nonimmigrant visa classification if in the United States (or, if not in
the United States, would be classifiable as E treaty traders and
investors).
Terms and Conditions of E Treaty Status, 8 CFR 214.2(e)(8) (There is no
Corresponding State Rule)
The Service and State will determine the terms and conditions of E
treaty status, including any employment activity, at the time
classification under section 101(a)(15)(E) of the Act is granted. For
this reason, this paragraph incorporates proposed 8 CFR 214.2(e)(13).
Among other issues, procedures and responsibilities related to
transfers of employees among subsidiaries have been clarified in the
paragraph of the final rule. While the final rule allows an employee in
E nonimmigrant visa classification, under certain circumstances, to
move among subsidiaries, the rule does not relieve the employer from
compliance with all relevant regulations. Thus, in the case of such a
transfer, the alien's employer is responsible for compliance with the
employment eligibility verification requirements specified at 8 CFR
part 274a.
It has long been the policy of the Service that a treaty trader or
treaty investor, under certain circumstances, may engage in compensable
activities which are incidental to the terms and conditions of the
alien's E nonimmigrant visa classification. Acceptable incidental
activities are those which are reasonably related to and a necessary
outgrowth of the treaty employment forming the basis of the alien's E
nonimmigrant visa classification. For example, it would be reasonable
to expect that, during an emergency, a manager might be required to
perform temporarily the duties of those persons he or she supervises as
an incident to his or her managerial functions. To facilitate a
determination of what constitutes incidental activity, State has agreed
to request that consular officers overseas annotate E visas in a manner
sufficient to inform the Service and the alien of the terms and
limitations of the authorized employment activity.
An E nonimmigrant who wishes to change the terms of his or her E
status, for example, to change employers or work on terms substantively
different than those for which he or she was accorded entry, must
obtain prior
[[Page 48141]]
Service approval by filing Form I-129 with the E Supplement in
accordance with the instructions on, or attached to, that form. In the
alternative, an E nonimmigrant may obtain a new E visa from State
reflecting the new employment. Where the alien obtains Service approval
of the change in status, the treaty alien must obtain a new E visa from
State reflecting this change in order to return from travel abroad. The
only exceptions to this new visa requirement are where the alien is
applying for readmission to engage in the new treaty activity after an
absence not exceeding 30 days solely in contiguous territory, pursuant
to 22 CFR 41.112(d), or where an alien seeking admission presents a
Form I-797, Approval Notice, indicating prior Service approval of the
change in E treaty employment, together with his or her E visa.
Prior Service approval is not required if there is no fundamental
change that affects the underlying terms of the treaty status forming
the basis of initial E nonimmigrant visa classification. A non-
substantive change may occur when there is a mere change in name of the
treaty company, where one treaty national owner is replaced by another,
or in some mergers and acquisitions where there is no effect on the
alien's employment or relationship to the approved treaty activity.
What constitutes a non-substantive change necessarily will depend on
the specific facts of each case. To facilitate admission after such a
non-substantive change, the Service has provided the options set forth
at 8 CFR 214.2(e)(8)(iv). To determine if the change is non-
substantive, the Service has provided its customers with a process for
seeking advice at 8 CFR 214.2(e)(8)(v). Accordingly, an alien may file
with the Service Center Form I-129, with fee, and a complete
description of the change, to request a new Form I-797, Approval
Notice, reflecting the non-substantive change, or appropriate advice.
As noted previously, the Service plans to publish a revised Form I-
129, with the E Visa Supplemental Application Form. Until the revised
Form I-129 is approved by the Office of Management and Budget in
accordance with the Paperwork Reduction Act, and issued, applicants
will continue to use the existing Form I-129 and E Supplement. The
revised form will provide for the derivative spouse and minor children
of the trader and investor and eliminate the need for separate requests
when the trader or investor seeks to change the terms and conditions of
classification, extend status in, or change to E nonimmigrant
classification. The option of filing the Form I-539, with a copy of the
principal E visa-holder's Form I-94, will remain available, if the
family member will be seeking an extension of status at a time other
than the principal E nonimmigrant.
Trade--Definitions, 8 CFR 214.2(e)(9) (Corresponds With 22 CFR 41.51
(h) and (i))
The final rule modifies the proposed definition of trade by
eliminating the separate definitions of ``goods'' and ``services'' and
includes them as ``items of trade.'' This modification is not intended
to be substantive in nature, but is meant to bring the regulation into
conformity with that of State. The Service intends that the term
``service'' continue to be interpreted in an expansive fashion. In
addition, in response to the concerns of commenters, the final rules of
both the Service and State incorporate language recognizing trade where
binding contracts ``call for the immediate exchange of items of
trade.'' In response to comments that the definition of ``trade''
failed to include ``news gathering,'' an activity not precluded under
section 101(a)(15)(E) of the Act but inadvertently omitted from the
proposed rule, the Service has included this activity in the final
regulation. As discussed earlier, representatives of foreign
information media should first, however, be considered for
classification pursuant to section 101(a)(15)(I) of the Act before
consideration is given to possible classification under section
101(a)(15)(E) of the Act.
Substantial Trade, 8 CFR 214.2(e)(10) (Corresponds With 22 CFR
41.51(j))
Section 101(a)(15)(E) of the Act requires that, in order to qualify
for E-1 nonimmigrant visa classification, the underlying business must
be engaged in ``substantial trade.'' Several commenters felt strongly
that the proposed requirement of continued and frequent business
transactions, including business commitments scheduled for a future
time, was too restrictive and inconsistent with Congressional intent
and current guidelines. Section 101(a)(45) of the Act requires the
Service to defer to State's definition of substantial trade.
Accordingly, the Service incorporates in full State's position, as set
forth in its final rule and the preamble thereto, with respect to what
constitutes substantial trade for purposes of the E nonimmigrant visa
classification.
It bears emphasizing that E nonimmigrant visa classification cannot
be granted on the basis of a single transaction, even if that
transaction is of considerable value. Trade between partners foresees
long-term benefits and dedicated, ongoing activity, and is contrary to
the notion of a single transaction (however protracted or complex) and
the expiration of commercial activity.
In accordance with current practice, substantial trade may be
demonstrated by evidence from many sources including, but not limited
to, bills of lading, customs receipts, letters of credit, insurance
papers documenting commodities imported, purchase orders, carrier
inventories, trade brochures, and sales contracts, insurance papers
documenting commodities imported, purchase orders, carrier inventories,
trade brochures, and sales contracts.
Principal Trade, 8 CFR 214.2(e)(11) (Corresponds With 22 CFR 41.51(k))
With respect to what, for purposes of section 101(a)(15)(E) of the
Act, constitutes trade ``principally between the United States and the
foreign state'' of which the treaty trader is a national, several
commenters urged the Service to adopt State's proposed phraseology
``that over 50% of the volume of international trade of the trader must
be conducted between the United States and the treaty country of the
treaty trader's nationality.'' (Emphasis added). See proposed rule
Sec. 41.51(k), 56 FR 43569 (September 3, 1991). The Service has adopted
this language at 8 CFR 214.2(e)(11). Thus, for purposes of the
principal trade requirement, the Service will look only at the volume
of the enterprise's international, as opposed to total, trade.
Investment, 8 CFR 214.2(e)(12) (Corresponds With 22 CFR 41.51(l))
Investments are for-profit commercial efforts to generate funds.
This final regulation is consistent with the proposed rule and State's
regulation. On the question of risk, commenters questioned the
requirement that funds dedicated for the investment business be
irrevocably committed. They suggested that, by failing to protect the
investor in the event a visa was not issued, the regulation discouraged
alien investors unwilling to take such risk. investment was irrevocable
upon visa issuance. The final rule, like State's, explicitly permits
the use of mechanisms such as escrow to protect the investor if a visa
is not issued. In addition, the Service will apply FAM guidelines for
E-2 nonimmigrant visa classification when enterprises are still in the
pre-operational activity stage.
[[Page 48142]]
It is clear that investment funds may not have been obtained,
either directly or indirectly, from activities which are, under United
States law, criminal in nature. A clear example of this would be funds
obtained either directly through the trafficking of narcotics, or
through the laundering or funds received through the sale of such
controlled substance. On the other hand, it must be emphasized that
this rule is not meant to penalize certain activities which would be
recognized as lawful in the United States, but are deemed by a foreign
jurisdiction to be criminal in nature. For example, a foreign
jurisdiction may deem it to be illegal to transfer currency abroad,
while the same activity might be deemed to be perfectly legal in the
United States. Depending on the specific facts of such a case, an
examiner may be required to apply United States standards, and not
those of the foreign jurisdiction. In short, a determination of whether
funds were obtained by criminal means must always be made on a case-by-
case basis.
A number of commenters expressed the belief that the proposed
regulation's failure to count towards the ``substantial investment''
requirement loans that are secured with the assets of the investment
enterprise is inconsistent with modern financing practices. Commenters
stated that such loans should be counted toward the ``substantial
investment'' requirement if there is ultimate recourse to the investor
in the event of failure, and recommended that the final rule contain
the following language: ``Loans secured exclusively by the assets of
the investment enterprise itself, without ultimate recourse to the
investor, may not be counted toward the actual amount of capital
invested.''
The final rule reflects the positions of the Service and State that
assets of the treaty enterprise may not be used as collateral to secure
loans and, therefore, does not contain this suggested language. The
purpose of the risk provision is to place the risk of the investment
exclusively on the shoulders of the investor. Such risk would be
diluted if the assets of the business itself could be used as
collateral, since an investor lacking adequate capital to fully repay a
debt could simply ``walk away'' from a failure. The final rule,
therefore, adopts State's proposed definition of ``investment'' and
provides that only investments funded by capital for which the investor
is personally liable may be counted as investment funds. Loans secured
by the assets of the investment enterprise, such as mortgage debt or
commercial loans, may not be used to meet the investment requirement.
On the other hand, acceptable investment funds include such personal
assets as a second mortgage on a home, unsecured or unencumbered loans
or assets, and loans on the alien's personal signature.
State and the Service will determine the value of the investment
capital by the same means. The FAM notes continue to provide guidance
in this regard. See current 9 FAM N7.2-1 and N7.2-2. Accordingly, such
value may include payments in the form of leases or rents for property
or equipment in an amount limited to the funds devoted to that item in
any 1 month. Such value may also include payments for the purchase of
equipment and inventory on hand, provided that the alien can
demonstrate that the goods or equipment are being, or will be, put to
use in the investment enterprise and are for commercial, not personal,
use.
Bona Fide Enterprise, 8 CFR 214.2(e)(13) (Corresponds With 22 CFR
41.51(m))
Under this final rule, to be deemed a ``bona fide enterprise,'' the
enterprise may not be a paper organization or an idle, speculative
investment held for potential appreciation in value, such as
undeveloped land for stocks. Neither can the investment be in a
nonprofit enterprise or constitute merely an intent to invest at a
future time.
Some commenters argued that the effect of proposed 8 CFR
214.2(e)(5)(i)(A) was to improperly deem research facilities, market
research facilities and non-profit organization to be idle and
speculative investments. The commenters argued that such facilities are
viable, active, profitable, and growing, albeit at a slower pace than
other industries. They further argued that many multi-million-dollar
research laboratories add to marketing and product knowledge and
indirectly generate goods and services. The commenters concluded that
Congress intended to bring such research, which is vital to larger
enterprises, within the scope of the statute.
The Service recognizes the legitimacy of these arguments in the
final regulation as they relate to for-profit market and research
facilities. However, nonprofit institutions, such as colleges and
associations, are, and have been, historically ineligible for E
nonimmigrant visa status. The Service does not question the value of
such nonprofit institutions but, because the focus of the E
nonimmigrant visa classification is on commercial, for-profit
institutions that trade or invest, nonprofit institutions are not
included.
Substantial Amount of Capital, 8 CFR 214.2(e)(14) (Corresponds With 22
CFR 41.51(n))
Twelve commenters raised objections to the proportionality scale
set forth in the proposed rule. They were concerned that use of a
``bright line test etched in stone'' would preclude a case-by-case
analysis of whether the business was properly capitalized at a level of
funds appropriate for the particular industry and type of enterprise.
They further argued for elimination of the proportionality scale with
respect to small investors since, under the scale, very profitable
small businesses, particularly those where the investment was below
$500,000, might fail to meet the high minimum-investment requirements,
thereby rendering previously qualified investors ineligible for E
nonimmigrant visa classification.
Some of these commenters further noted that, under the proposed
rule, some joint ventures and large scale investors would not qualify
under the requirement that the investment be at least 75 percent of a
business valued at under $500,000. They urged the Service to consider
expanding eligibility for E nonimmigrant visa status to large companies
involved in sizeable joint ventures and major investments in United
States business operations
As previously noted, in enacting section 101(a)(45) of the Act,
Congress assigned State responsibility for determining, after
consultation with the Service and other appropriate agencies, what
constitutes ``substantial'' investment for purposes of E nonimmigrant
visa classification. For this reason, the Service is bound by State's
interpretation of ``substantiality'' as set forth in its final rule and
the preamble thereto. Consistent with section 101(a)(45) of the Act,
the Service, therefore adopts the guidelines set forth by State in its
preamble to its final regulation. The Service wishes to emphasize that,
under this interpretation, no minimum dollar figures can or should be
established for meeting the substantiality requirement. Instead, the
regulation requires a flexible, case-by-case assessment and provides a
very straightforward 3-part test for determining substantiality.
One commenter commended the Service for exempting large
corporations from the application of the ``inverted sliding scale,''
which is simply another way of describing the proportionality test that
was described in the proposed rule at 8 CFR 214.2(e)(5)(iii). However,
large corporations are not exempt from that analysis. Under such a
determination, the percentage of an
[[Page 48143]]
investment (in relation to total cost) necessary to meet the
substantiality requirement decreases gradually as the cost of start-up
or operating the business increases, to a point where the sheer
magnitude of an investment is considered substantial. Multi-million-
dollar investments by large corporations, therefore, would usually be
substantial even where the dollar amount invested is a relatively small
percentage of the total cost of starting up or developing the
enterprise.
In determining whether an investment is substantial, the Service
may consider all financial and other documents of the sort presented to
investors, banks, lenders, or financial analysts to assess an
investment. In weighing the probative value of such documents, the
Service will consider size and commercial value of the business and the
circumstances of each case. For instance, the originator of a document
may be relevant to an evaluation of the sufficiency of the proof. An
audit conducted by a relative may be of less value than one conducted
by a recognized, independent accounting firm and/or may need to be
scrutinized for accuracy and to determine if generally accepted
accounting principles were utilized.
Marginal Enterprise, 8 CFR 214.2(e)(15) (Corresponds With 22 CFR
41.51(o))
A number of commenters criticized the marginality test historically
used by State and the Service because it inhibits small business
investors, whose investments are the most likely to have been made
solely to provide a living, from investing in this country. The
commenters reasoned that, as a result of this policy, the nonimmigrant
investor visa classification has effectively been limited to wealthy
aliens with other major sources of income and foreign business
interests.
The purpose of the marginality requirement is to weed out
commercial enterprises, regardless of size, which will fail to become
viable, that is to grow and become profitable. Of relevance to this
question is the enterprise's prior commercial track record. Investors
who allow an investment to subside into marginality have not maintained
a fundamental condition of the investor's E-2 nonimmigrant visa
classification. The final rule provides adjudicatory guidelines for
evaluating what is a marginal enterprise. The determination of whether
an investment is marginal depends, in all cases, on the specific
circumstances and facts involved.
The proposed rule provided that ``a business may generate a minimal
income and still meet the marginality test if it offers employment
opportunities for United States workers and if the investor is not and
will not be primarily self-employed as a skilled or unskilled worker.''
See proposed rule at 8 CFR 214.2(e)(5). One commenter argued that the
question of whether an investor is or is not primarily employed as a
skilled or unskilled laborer bears no relationship to the question of
an enterprise's marginality. Instead, the marginality question, it was
argued, relates merely to whether the investment has an impact on
potential job-creation or the economy as a whole. The Service agrees
with this comment. Accordingly, the final rule deletes references to
skilled and unskilled labor, and provides that the capacity of an
enterprise to make a significant economic contribution is an
appropriate consideration in a marginality determination.
Both State's and the Service's proposed regulations were criticized
for defining as marginal those enterprises which lack the capacity ``to
generate more than enough income to provide a minimal living for the
alien and family,'' since such enterprises may employ American workers
and may involve a significant investment of capital. Although this
definition is retained, the final rule precludes a finding of
marginality where an enterprise demonstrates a present or future
capacity to make a significant economic contribution, such as providing
substantial employment.
Consistent with Congress' focus on the commercial nature of the
investment, the final rule requires that an applicant demonstrate that
an investment will generate a positive income within a reasonable
period of time. The burden is on the alien to demonstrate the
enterprise's capacity to become a viable commercial entity by
presenting a business plan showing that the business will provide more
than a subsistence living for the investor, within 5 years from the
onset date of normal business activities. This business plan will
assist the Service in determining whether the alien's intention in
making the investment is to establish a viable enterprise
The 5-year business plan enables the Service to gauge progress
toward tangible goals after the enterprise is in place. It recognizes
the business reality that often, in situations involving start-up,
change of ownership/management, or acquisitions, businesses may show
little actual initial profit, but with proper planning, development,
and direction, the business should generate more than enough income to
provide a minimal living for the investor and his or her family. The
Service must continue to assess whether the investor's enterprise is
marginal at every E adjudication, even after the initial 5-year period
is completed.
Solely to Develop and Direct, 8 CFR 214.2(e)(16) (Corresponds With 22
CFR 41.51(p))
Two commenters preferred State's language that an alien can meet
the ``develop and direct'' requirement of section 101(a)(15)(E) of the
Act by: (a) Controlling the enterprise through ownership of at least 50
percent, rather than more than 50 percent, of the business; (b)
possessing operational control through a managerial position or other
corporate device, or; (c) being in a position to control the enterprise
by other means. The final rule adopts this reasonable interpretation.
Some commenters stated that demanding a demonstration of actual
control would undermine United States treaty obligations to further
trade and investment by imposing the ``unworkable'' requirement that
the applicant present copies of stock certificates, rather than
permitting him or her to submit for review corporate records and stock
ledgers. These commenters argued that an investor who operates that
company alone and does all ``routine work'' without other employees
should be recognized for purposes of meeting the control requirement,
and that the form of the business organization should not be
determinative.
The requirement that an investor's entry be ``solely to develop and
direct the operations of an enterprise'' is statutory and cannot be
waived. Accordingly, the final rule permits an alien to demonstrate
that he or she (or his or her employer, in the case of an essential
employee) controls or will control the enterprise within a reasonable
period of time. In cases where the individual is in the process of
investing, at the time the investment attaches (e.g., the investment
funds are released from escrow) the individual must be in control of
the investment. In the final rule, the Service defines control broadly
to include operational control, ownership, management responsibility,
or use of other corporate devices for controlling the enterprise. The
Service recognizes that what constitutes control may vary depending on
factors such as the structure of the enterprise involved.
Given the control requirement, the Service cannot adopt the
suggestion that E nonimmigrant visa classification be accorded
automatically to large
[[Page 48144]]
companies involved in joint ventures since, often, no company
``controls'' the venture. E nonimmigrant visa classification for joint-
venture participants is inappropriate unless the applicant can
demonstrate operational control. Such operational control may be
demonstrated through ``negative control.'' See current 9 FAM 41.51,
N11.1. In all cases, the Service will adjudicate applications involving
joint ventures in a manner consistent with State.
Finally, it should be noted that, because of the requirement that a
treaty investor be entering ``solely to develop and direct'' the
operations of an enterprise, an alien who is seeking admission in order
to engage primarily in skilled or unskilled labor will be ineligible
for E nonimmigrant visa classification. Such an investor may, however,
perform ``hands on'' duties, provided they are purely incidental to his
or her developing and directing the operations of the enterprise.
Executive and Supervisory Character, 8 CFR 214.2(e)(17) (Corresponds
With 22 CFR 41.51(q)
With the exception of the change noted in the discussion of final 8
CFR 214.2(e)(3), there were no other comments on, or substantive
changes, to this paragraph.
Special Qualifications, 8 CFR 214.2(e)(18) (Corresponds With 22 CFR
41.51(r)
Thirteen commenters expressed an array of opinions on the proposed
requirements for establishing an employee's essentiality for purposes
of E nonimmigrant visa classification. Some commenters stated that
requiring specialized knowledge, unique skills, and a high level of
expertise or proprietary knowledge of the business operations was
overly stringent and included outmoded or discredited concepts. These
commenters noted that the term ``unique,'' previously used with respect
to the L nonimmigrant visa classification, was subsequently rejected by
both Congress and the Service.
It should be emphasized that there is no relationship between the E
and L nonimmigrant visa classifications. For this reason, the statutory
term ``specialized knowledge,'' found at section 101(a)(15)(L) of the
Act, is inappropriate in describing whether an alien employee is
``essential'' for purposes of E nonimmigrant visa classification.
Although section 101(a)(15)(E) of the Act is silent on whether
employees may be admitted in E nonimmigrant visa classification, the
Service has historically deemed appropriate the admission of non-
executive or supervisory employees having special qualifications which
make their skills essential, i.e., indispensable to the success of the
investment. The overriding consideration in the context of E
nonimmigrant visa classification is an employee's essentiality to the
enterprise.
The final rule does not require an essential employee's skills to
be ``unique'' or ``one of a kind.'' The possession of unique skills,
however, can usually be considered essential and, therefore, can be a
positive factor in determining whether the applicant is essential for
purposes of section 101(a)(15)(E) of the Act.
Some commenters expressed the opinion that the proposed
essentiality requirement would hinder the ability of international
companies to transfer personnel to critical projects in the United
States. These commenters argued that knowledge of foreign language,
culture, and country conditions should be considered in determining an
alien's essentiality. They also argued that requiring prior employment
or experience with the company abroad (i.e., ``transferred from an
overseas office'') violated treaty obligations which require only that
the employee be essential.
The Service adopts in full State's criteria, as set forth in its
final rule and the preamble thereto, for determining whether an
applicant is ``essential.'' There is no bright-line test for
determining whether an alien is essential to an enterprise. What
constitutes essentiality must be determined on the basis of the
particular facts of each case. Accordingly, skills such as knowledge of
a foreign language and culture, knowledge of conditions in the foreign
country that are unique to his or her nationality, and previous
employment with the enterprise in question, must be analyzed for their
essentiality to the investment enterprise and would not, by themselves,
meet the essential skills requirement.
Much comment was received regarding the requirement in the proposed
rule that a treaty trader or investor seeking an essential employee
demonstrate that qualified United States workers are unavailable to do
the job. Some commenters urged that the Service require treaty traders
or investors to provide statements from relevant public or private
sources or otherwise adopt a process of assessing United States worker
availability and obtaining input from labor organizations. Such public
or private sources may include, among others, chambers of commerce,
labor organizations, industry trade sources, or state employment
agencies.
Other commenters opposed requiring such a labor market test,
arguing that such a requirement was outside the scope of section
101(a)(15)E) of the Act, inconsistent with prior policy, and contrary
to United States treaty obligations. The commenters also argued that a
labor market test would have no application to cases where treaty
aliens create jobs. These commenters expressed concern that, in actual
practice, the Service would condition a finding of essentiality on the
existence of a labor shortage and/or an employer's commitment to train
United States workers to fill the position. These commenters noted that
the employing enterprise is in a better position than the Government to
determine the essentiality of particular employees.
The Service agrees that a labor shortage clearance requirement
would be tantamount to a labor certification process and there is no
legal authority for such a change. The final rule adopts a more
flexible process by requiring the adjudicator to consider whether the
needed skills are ``commonplace'' or readily available. This
requirement does not constitute a veiled labor certification test.
Rather, consideration of whether United States workers are available to
perform the duties in question is relevant to determining how essential
or indispensable the employee is to the enterprise. Although not
required, documentation from outside sources may prove helpful in
establishing the alien's essentiality.
As State has noted in its final rule at 22 CFR 41.51(r)(2), a skill
that is unique or essential at one point may become commonplace at a
later date. Consequently, while an applicant may be able to demonstrate
in a particular instance that his or her skills are essential for an
unspecified period of time, the alien is required to demonstrate his or
her essentiality in any subsequent application for E nonimmigrant visa
classification.
The proposed rule required that businesses develop training and
education programs for United States workers in areas where such United
States workers lack the requisite skill to fill the position offered.
The proposed rule further provided that businesses must, in the
alternative, demonstrate that the transfer of such skills is not
feasible. These proposals were the subject of 11 comments. Some
commenters suggested that such training regulations departed from prior
law and were beyond the scope of the Service's statutory authority. The
[[Page 48145]]
commenters also argued the proposed training requirement was
economically irresponsible, since many businesses can more easily and
cost effectively transfer an employee possessing such skills from
abroad. In addition, they noted that training would not be feasible if
a skill was needed only temporarily and the need for the skill
disappeared prior to completion of United States worker training. Some
commenters suggested that training requirements should be applied only
to companies which repeatedly request foreign technicians and, that
even in such cases, the absence of a training program should merely be
looked at as a negative, but not a determinative, factor in considering
future applications.
The Service has decided not to impose a training requirement for E
nomimmigrant visa classification exept in cases where the purpose of
the E nonimmigrant visa employee's entry is to train United States
workers. The question of the trainability of Untied States workers,
however, goes directly to whether the alien employee is essential to
the enterprise. If the skills are readily transferable to Untied States
workers, it is reasonable to conclude that the enterprise could use a
United States worker instead of the alien and skill function without
significant disruption.
It is the position of the Service that an alien's possession of
otherwise easily transferable skills typically can be deemed essential
only in certain cases involving a start-up or a new enterprise, or an
established enterprise which is undergoing expansion. An adjudicating
officer, therefore, may request traders or investors employing
essential start-up employees to set up a reasonable time frame within
which the enterprise must replace such alien workers with locally hired
United States employees. In this way, the Service can be assured that
the employer will not artificially prolong the essentiality of
employees by failing to plan for their replacement by locally hired
United States employes. The above procedure remains consistent with
current policy, as expressed in State's FAM notes.
The Service will monitor industry changes as necessary to determine
essentiality and ensure that employees have the skills essential to the
efficient operation of their ongoing investment enterprises. State and
the Service will continue to work together to ensure that applications
within given industries receive similar treatment.
Period of Admission, Extensions of Stay, Change of Status, 8 CFR
214.2(e) (19), (20), and (21) (There Are No Corresponding State
Regulations)
The final rule incorporates numerous changes from the proposed
regulation with regard to period of admission, extensions of stay, and
change of status.
The final regulation creates a 2-year period for an initial
admission and an unlimited number of 2-year extensions of status in E
nonimmigrant visa classification. This change is intended to alleviate
the confusion due to the different periods of time authorized for
initial admissions and extensions under the previous policy.
Procedures for requesting extensions of stay are clarified at 8 CFR
214.2(e)(20). The revised Form I-129, when published, will simplify the
procedures for requesting extensions of stay and, in this way, will
assist traders and investors in the United States.
The paragraph on change of status at 8 CFR 214.2(e)(21) is
consistent with the proposed rule.
Denial of Treaty Trader or Investor Status to Citizens of Canada or
Mexico in the Case of Certain Labor Disputes, 8 CFR 214.2(e)(22) (There
is no Corresponding State Regulation)
This paragraph has been added to clarify that the strike provisions
of the North American Free Trade Agreement (``NAFTA'') are applicable
to citizens of Canada and Mexico who seek nonimmigrant treaty trader or
treaty investor visa status. Since these work stoppage and labor
dispute provisions have the effect of law, see NAFTA Implementation
Act, Pub. L. 103-182, December 8, 1993, there is no need for pre-
publication notice and comment. However, the presence of these
provisions in this regulation promotes awareness of their applicability
to NAFTA visa holders in E nonimmigrant visa classification.
The Regulatory Flexibility Act
The Commissioner of the Immigration and Naturalization Service has
reviewed this regulation in accordance with the Regulatory Flexibility
Act (5 U.S.C. 605(b)) and, by approving it, certifies that this rule
will not have a significant economic impact on a substantial number of
small entities for the following reasons: This rule amends Service
regulations by codifying existing policy guidelines related to the
``E'' nonimmigrant treaty trader and treaty investor visa
classification. The economic impact of this rule, and its affect on
small entities, will not be significantly different from that of the
current regulation. This rule clarifies existing policy guidelines and
ensures consistency with the similar rule of the Department of State,
and will not, by itself, significantly increase or decrease the number
of aliens in this classification, or their economic impact on the
United States.
Executive Order 12866
This rule is considered by the Department of Justice, Immigration
and Naturalization Service, to be a ``significant regulatory action''
under Executive Order 12866, section 3(f), Regulatory Planning and
Review. accordingly, this regulation has been reviewed by the Office of
Management and Budget.
Executive Order 12612
The regulation herein will not have substantial direct effects on
the States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 12612, it is determined that this rule does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment.
Executive Order 12988
This final rule meets the applicable standards set forth in
sections 3(a) and 3(b)(2) of Executive Order 12988, ``Civil Justice
Reform''.
Unfunded Mandates Reform Act of 1995
This rule will not result in the expenditure by State, local and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year, and it will not significantly or
uniquely affect small governments. Therefore, no actions were deemed
necessary under the provisions of the Unfunded Mandates Reform Act of
1995.
Small Business Regulatory Fairness Act of 1996
This rule is not a major rule as defined by section 804 of the
Small Business Regulatory Enforcement Act of 1996. This rule will not
result in an annual effect on the economy of $100 million or more. In
addition, this rule will not result in a major increase in costs or
prices or in significant adverse effects on competition, employment,
investment, productivity, or innovation. This rule will not have
significant adverse effects on the ability of United States-based
companies to compete with foreign-based companies in domestic
[[Page 48146]]
and export markets. Moreover, this rule allows citizens of countries
with which the United States has treaties and agreements (such as
NAFTA) to enter this country in E classification to engage in trade and
investment. Such treaties and agreements permit the smooth and
efficient entry of traders and investors, in accordance with reasonable
standards provided by the Service and the Department of State as set
forth in this regulation, so that United States citizens are accorded
reciprocal rights to trade and invest in the country of the treaty or
agreement partner.
Paperwork Reduction Act
This final rule does not impose any new reporting or recordkeeping
requirements. The information collection requirements contained in this
rule have been cleared by the Office of Management and Budget under the
provisions of the Paperwork Reduction Act. Clearance numbers for these
collections are contained in 8 CFR 299.5, Display of control numbers.
List of Subjects in 8 CFR Part 214
Administrative practice and procedure, Aliens, Authority delegation
(Government agencies), Employment.
Accordingly, part 214 of chapter I of title 8 of the Code of
Federal Regulations is amended as follows.
PART 214--NONIMMIGRANT CLASSES
1. The authority citation for part 214 continues to read as
follows:
Authority: 8 U.S.C. 1101, 1103, 1182, 1184, 1186a, 1187, 1221,
1281, 1282; 8 CFR part 2.
2. Section 214.2 is amended by revising paragraph (e) to read as
follows:
Sec. 214.2 Special requirements for admission, extension, and
maintenance of status.
* * * * *
(e) Treaty traders and investors--(1) Treaty trader. An alien, if
otherwise admissible, may be classified as a nonimmigrant treaty trader
(E-1) under the provisions of section 101(a)(15)(E)(i) of the Act if
the alien:
(i) Will be in the United States solely to carry on trade of a
substantial nature, which is international in scope, either on the
alien's behalf or as an employee of a foreign person or organization
engaged in trade principally between the United States and the treaty
country of which the alien is a national, taking into consideration any
conditions in the country of which the alien is a national which may
affect the alien's ability to carry on such substantial trade; and
(ii) Intends to depart the United States upon the expiration or
termination of treaty trader (E-1) status.
(2) Treaty investor. An alien, if otherwise admissible, may be
classified as a nonimmigrant treaty investor (E-2) under the provision
of section 101(a)(15)(E)(ii) of the Act if the alien:
(i) Has invested or is actively in the process of investing a
substantial amount of capital in a bona fide enterprise in the United
States, as distinct from a relatively small amount of capital in a
marginal enterprise solely for the purpose of earning a living;
(ii) Is seeking entry solely to develop and direct the enterprise;
and
(iii) Intends to depart the United States upon the expiration or
termination of treaty investor (E-2) status.
(3) Employee of treaty trader or treaty investor. An alien employee
of a treaty trader, if otherwise admissible, may be classified as E-1,
and an alien employee of a treaty investor, if otherwise admissible,
may be classified as E-2 if the employee is in or is coming to the
United States to engage in duties of an executive or supervisory
character, or, if employed in a lesser capacity, the employee has
special qualifications that make the alien's services essential to the
efficient operation of the enterprise. The employee must have the same
nationality as the principal alien employer. In addition, the employee
must intend to depart the United States upon the expiration or
termination of E-1 or E-2 status. The principal alien employer must be:
(i) A person in the United States having the nationality of the
treaty country and maintaining nonimmigrant treaty trader or treaty
investor status or, if not in the United States, would be classifiable
as a treaty trader or treaty investor; or
(ii) An enterprise or organization at least 50 percent owned by
persons in the United States having the nationality of the treaty
country and maintaining nonimmigrant treaty trader or treaty investor
status or who, if not in the United States, would be classifiable as
treaty traders or treaty investors.
(4) Spouse and children of treaty trader or treaty investor. The
spouse and child of a treaty trader or treaty investor accompanying or
following to join the principal alien, if otherwise admissible, may
receive the same classification as the principal alien. The nationality
of a spouse or child of a treaty trader or treaty investor is not
material to the classification of the spouse or child under the
provisions of section 101(a)(15)(e) of the Act.
(5) Nonimmigrant intent. An alien classified under section
101(a)(15)(E) of the Act shall maintain an intention to depart the
United States upon the expiration or termination of E-1 or E-2 status.
However, an application for initial admission, change of status, or
extension of stay in E classification may not be denied solely on the
basis of an approved request for permanent labor certification or a
filed or approved immigrant visa preference petition.
(6) Treaty country. A treaty country is, for purposes of this
section, a foreign state with which a qualifying Treaty of Friendship,
Commerce, or Navigation or its equivalent exists with the United
States. A treaty country includes a foreign state that is accorded
treaty visa privileges under section 101(a)(15)(E) of the Act by
specific legislation.
(7) Treaty country nationality. The nationality of an individual
treaty trader or treaty investor is determined by the authorities of
the foreign state of which the alien is a national. In the case of an
enterprise or organization, ownership must be traced as best as is
practicable to the individuals who are ultimately its owners.
8. Terms and conditions of E treaty status--(i) Limitations on
employment. The Service determines the terms and conditions of E treaty
status at the time of admission or approval of a request to change
nonimmigrant status to E classification. A treaty trader, treaty
investor, or treaty employee may engage only in employment which is
consistent with the terms and conditions of his or her status and the
activity forming the basis for the E treaty status.
(ii) Subsidiary employment. Treaty employees may perform work for
the parent treaty organization or enterprise, or any subsidiary of the
parent organization or enterprise. Performing work for subsidiaries of
a common parent enterprise or organization will not be deemed to
constitute a substantive change in the terms and conditions of the
underlying E treaty employment if, at the time the E treaty status was
determined, the applicant presented evidence establishing:
(A) The enterprise or organization, and any subsidiaries thereof,
where the work will be performed; the requisite parent-subsidiary
relationship; and that the subsidiary independently qualifies as a
treaty organization or enterprise under this paragraph;
(B) In the case of an employee of a treaty trader or treaty
investor, the work to be performed requires executive, supervisory, or
essential skills; and
(C) The work is consistent with the terms and conditions of the
activity forming the basis of the classification.
[[Page 48147]]
(iii) Substantive changes. Prior Service approval must be obtained
where there will be a substantive change in the terms or conditions of
E status. In such cases, a treaty alien must file a new application on
Form I-129 and E supplement, in accordance with the instructions on
that form, requesting extension of stay in the United States. In
support of an alien's Form I-129 application, the treaty alien must
submit evidence of continued eligibility for E classification in the
new capacity. Alternatively, the alien must obtain from a consular
officer a visa reflecting the new terms and conditions and subsequently
apply for admission at a port-of-entry. The Service will deem there to
have been a substantive change necessitating the filing of a new Form
I-129 application in cases where there has been a fundamental change in
the employing entity's basic characteristics, such as a merger,
acquisition, or sale of the division where the alien is employed.
(iv) Non-substantive changes. Prior approval is not required, and
there is no need to file a new Form I-129, if there is no substantive,
or fundamental, change in the terms or conditions of the alien's
employment which would affect the alien's eligibility for E
classification. Further, prior approval is not required if corporate
changes occur which do not affect the previously approved employment
relationship, or are otherwise non-substantive. To facilitate
admission, the alien may:
(A) Present a letter from the treaty-qualifying company through
which the alien attained E classification explaining the nature of the
change;
(B) Request a new Form I-797, Approval Notice, reflecting the non-
substantive change by filing with the appropriate Service Center Form
I-129, with fee, and a complete description of the change, or;
(C) Apply directly to State for a new E visa reflecting the change.
An alien who does not elect one of the three options contained in
paragraph (e)(8)(iv) (A) through (C) of this section, is not precluded
from demonstrating to the satisfaction of the immigration officer at
the port-of-entry in some other manner, his or her admissibility under
section 101(a)(15)(E) of the Act.
(v) Advice. To ascertain whether a change is substantive, an alien
may file with the Service Center Form I-129, with fee, and a complete
description of the change, to request appropriate advice. In cases
involving multiple employees, an alien may request that a Service
Center determine if a merger or other corporate restructuring requires
the filing of separate applications by filing a single Form I-129, with
fee, and attaching a list of the related receipt numbers for the
employees involved and an explanation of the change or changes. Where
employees are located within multiple jurisdictions, such a request for
advice must be filed with the Service Center in Lincoln, Nebraska.
(vi) Approval. If an application to change the terms and conditions
of E status or employment is approved, the Service shall notify the
applicant on Form I-797. An extension of stay in nonimmigrant E
classification may be granted for the validity of the approved
application. The alien is not authorized to begin the new employment
until the application is approved. Employment is authorized only for
the period of time the alien remains in the United States. If the alien
subsequently departs from the United States, readmission in E
classification may be authorized where the alien presents his or her
unexpired E visa together with the Form I-797, Approval Notice,
indicating Service approval of a change of employer or of a change in
the substantive terms or conditions of treaty status or employment in E
classification, or, in accordance with 22 CFR 41.112(d), where the
alien is applying for readmission after an absence not exceeding 30
days solely in contiguous territory.
(vii) An unauthorized change of employment to a new employer will
constitute a failure to maintain status within the meaning of section
237(a)(1)(C)(i) of the Act. In all cases where the treaty employee will
be providing services to a subsidiary under this paragraph, the
subsidiary is required to comply with the terms of 8 CFR part 274a.
(9) Trade--definitions. For purposes of this paragraph: Items of
trade include but are not limited to goods, services, international
banking, insurance, monies, transportation, communications, data
processing, advertising, accounting, design and engineering, management
consulting, tourism, technology and its transfer, and some news-
gathering activities. For purposes of this paragraph, goods are
tangible commodities or merchandise having extrinsic value. Further, as
used in this paragraph, services are legitimate economic activities
which provide other than tangible goods.
Trade is the existing international exchange of items of trade for
consideration between the United States and the treaty country.
Existing trade includes successfully negotiated contracts binding upon
the parties which call for the immediate exchange of items of trade.
Domestic trade or the development of domestic markets without
international exchange does not constitute trade for purposes of
section 101(a)(15)(E) of the Act. This exchange must be traceable and
identifiable. Title to the trade item must pass from one treaty party
to the other.
(10) Substantial trade. Substantial trade is an amount of trade
sufficient to ensure a continuous flow of international trade items
between the United States and the treaty country. This continuous flow
contemplates numerous transactions over time. Treaty trader status may
not be established or maintained on the basis of a single transaction,
regardless of how protracted or monetarily valuable the transaction.
Although the monetary value of the trade item being exchanged is a
relevant consideration, greater weight will be given to more numerous
exchanges of larger value. There is no minimum requirement with respect
to the monetary value or volume of each individual transaction. In the
case of smaller businesses, an income derived from the value of
numerous transactions which is sufficient to support the treaty trader
and his or her family constitutes a favorable factor in assessing the
existence of substantial trade.
(11) Principal trade. Principal trade between the United States and
the treaty country exists when over 50 percent of the volume of
international trade of the treaty trader is conducted between the
United States and the treaty country of the treaty trader's
nationality.
(12) Investment. An investment is the treaty investor's placing of
capital, including funds and other assets (which have not been
obtained, directly or indirectly, through criminal activity), at risk
in the commercial sense with the objective of generating a profit. The
treaty investor must be in possession of and have control over the
capital invested or being invested. The capital must be subject to
partial or total loss if investment fortunes reverse. Such investment
capital must be the investor's unsecured personal business capital or
capital secured by personal assets. Capital in the process of being
invested or that has been invested must be irrevocably committed to the
enterprise. The alien has the burden of establishing such irrevocable
commitment. The alien may use any legal mechanism available, such as
the placement of invested funds in escrow pending admission in, or
approval of, E classification, that would not only irrevocably commit
funds to the enterprise, but might also extend personal liability
protection to the treaty investor in the event the application for E
classification is denied.
[[Page 48148]]
(13) Bona fide enterprise. The enterprise must be a real, active,
and operating commercial or entrepreneurial undertaking which produces
services or goods for profit. The enterprise must meet applicable legal
requirements for doing business in the particular jurisdiction in the
United States.
(14) Substantial amount of capital. A substantial amount of capital
constitutes an amount which is:
(i) Substantial in relationship to the total cost of either
purchasing an established enterprise or creating the type of enterprise
under consideration;
(ii) Sufficient to ensure the treaty investor's financial
commitment to the successful operation of the enterprise; and
(iii) Of a magnitude to support the likelihood that the treaty
investor will successfully develop and direct the enterprise.
Generally, the lower the cost of the enterprise, the higher,
proportionately, the investment must be to be considered a substantial
amount of capital.
(15) Marginal enterprise. For purposes of this section, an
enterprise may not be marginal. A marginal enterprise is an enterprise
that does not have the present or future capacity to generate more than
enough income to provide a minimal living for the treaty investor and
his or her family. An enterprise that does not have the capacity to
generate such income, but that has a present or future capacity to make
a significant economic contribution is not a marginal enterprise. The
projected future income-generating capacity should generally be
realizable within 5 years from the date the alien commences the normal
business activity of the enterprise.
(16) Solely to develop and direct. An alien seeking classification
as a treaty investor (or, in the case of an employee of a treaty
investor, the owner of the treaty enterprise) must demonstrate that he
or she does or will develop and direct the investment enterprise. Such
an applicant must establish that he or she controls the enterprise by
demonstrating ownership of at least 50 percent of the enterprise, by
possessing operational control through a managerial position or other
corporate device, or by other means.
(17) Executive and supervisory character. The applicant's position
must be principally and primarily, as opposed to incidentally or
collaterally, executive or supervisory in nature. Executive and
supervisory duties are those which provide the employee ultimate
control and responsibility for the enterprise's overall operation or a
major component thereof. In determining whether the applicant has
established possession of the requisite control and responsibility, a
Service officer shall consider, where applicable:
(i) That an executive position is one which provides the employee
with great authority to determine the policy of, and the direction for,
the enterprise;
(ii) That a position primarily of supervisory character provides
the employee supervisory responsibility for a significant proportion of
an enterprise's operations and does not generally involve the direct
supervision of low-level employees, and;
(iii) Whether the applicant possesses executive and supervisory
skills and experience; a salary and position title commensurate with
executive or supervisory employment; recognition or indicia of the
position as one of authority and responsibility in the overall
organizational structure; responsibility for making discretionary
decisions, setting policies, directing and managing business
operations, supervising other professional and supervisory personnel;
and that, if the position requires some routine work usually performed
by a staff employee, such functions may only be of an incidental
nature.
(18) Special qualifications. Special qualifications are those
skills and/or aptitudes that an employee in a lesser capacity brings to
a position or role that are essential to the successful or efficient
operation of the treaty enterprise. In determining whether the skills
possessed by the alien are essential to the operation of the employing
treaty enterprise, a Service officer must consider, where applicable:
(i) The degree of proven expertise of the alien in the area of
operations involved; whether others possess the applicant's specific
skill or aptitude; the length of the applicant's experience and/or
training with the treaty enterprise; the period of training or other
experience necessary to perform effectively the projected duties; the
relationship of the skill or knowledge to the enterprise's specific
processes or applications, and the salary the special qualifications
can command; that knowledge of a foreign language and culture does not,
by itself, meet the special qualifications requirement, and;
(ii) Whether the skills and qualifications are readily available in
the United States. In all cases, in determining whether the applicant
possesses special qualifications which are essential to the treaty
enterprise, a Service officer must take into account all the particular
facts presented. A skill that is essential at one point in time may
become commonplace at a later date. Skills that are needed to start up
an enterprise may no longer be essential after initial operations are
complete and running smoothly. Some skills are essential only in the
short-term for the training of locally hired employees. Under certain
circumstances, an applicant may be able to establish his or her
essentiality to the treaty enterprise for a longer period of time, such
as, in connection with activities in the areas of product improvement,
quality control, or the provision of a service not yet generally
available in the United States. Where the treaty enterprise's need for
the applicant's special qualifications, and therefore, the applicant's
essentiality, is time-limited, Service officers may request that the
applicant provide evidence of the period for which skills will be
needed and a reasonable projected date for completion of start-up or
replacement of the essential skilled workers.
(19) Period of admission. Periods of admission are as follows:
(i) A treaty trader or treaty investor may be admitted for an
initial period of not more than 2 years.
(ii) The spouse and minor children accompanying or following to
join a treaty trader or treaty investor shall be admitted for the
period during which the principal alien is in valid treaty trader or
investor status. The temporary departure from the United States of the
principal trader or investor shall not affect the derivative status of
the dependent spouse and minor unmarried children, provided the
familial relationship continues to exist and the principal remains
eligible for admission as an E nonimmigrant to perform the activity.
(iii) Unless otherwise provided for in this chapter, an alien shall
not be admitted in E classification for a period of time extending more
than 6 months beyond the expiration date of the alien's passport.
(20) Extensions of stay. Requests for extensions of stay may be
granted in increments of not more than 2 years. A treaty trader or
treaty investor in valid E status may apply for an extension of stay by
filing an application for extension of stay on Form I-129 and E
Supplement, with required accompanying documents, in accordance with
Sec. 214.1 and the instructions on that form.
(i) For purposes of eligibility for an extension of stay, the alien
must prove that he or she:
(A) Has at all times maintained the terms and conditions of his or
her E nonimmigrant classification;
(B) Was physically present in the United States at the time of
filing the application for extension of stay; and
[[Page 48149]]
(C) Has not abandoned his or her extension request.
(ii) With limited exceptions, it is presumed that employees of
treaty enterprises with special qualifications who are responsible for
start-up operations should be able to complete their objectives within
2 years. Absent special circumstances, therefore, such employees will
not be eligible to obtain an extension of stay.
(iii) Subject to paragraph (e)(5) of this section and the
presumption noted in paragraph (e)(22)(ii) of this section, there is no
specified number of extensions of stay that a treaty trader or treaty
investor may be granted.
(21) Change of nonimigrant status. (i) An alien in another valid
nonimmigrant status may apply for change of status to E classification
by filing an application for change of status on Form I-129 and E
Supplement, with required accompanying documents establishing
eligibility for a change of status and E classification, in accordance
with 8 CFR part 248 and the instructions on Form I-129 and E
Supplement.
(ii) The spouse or minor children of an applicant seeking a change
of status to that of treaty trader or treaty investor alien shall file
concurrent applications for change of status to derivative treaty
classification on the appropriate Service form. Applications for
derivative treaty status shall:
(A) Be approved only if the principal treaty alien is granted
treaty alien status and continues to maintain that status;
(B) Be approved for the period of admission authorized in paragraph
(e)(20) of this section.
(22) Denial of treaty trader or treaty investor status to citizens
of Canada or Mexico in the case of certain labor disputes. (i) A
citizen of Canada or Mexico may be denied E treaty trader or treaty
investor status as described in section 101(a)(15)(E) of the Act and
section B of Annex 1603 of the NAFTA if:
(A) The Secretary of Labor certifies to, or otherwise informs, the
Commissioner that a strike or other labor dispute involving a work
stoppage of workers is in progress at the place where the alien is or
intends to be employed; and
(B) Temporary entry of that alien may adversely affect either:
(1) The settlement of any labor dispute that is in progress at the
place or intended place of employment, or
(2) The employment of any person who is involved in such dispute.
(ii) If the alien has already commenced employment in the United
States and is participating in a strike or other labor dispute
involving a work stoppage of workers, whether or not such strike or
other labor dispute has been certified by the Department of Labor, the
alien shall not be deemed to be failing to maintain his or her status
solely on account of past, present, or future participation in a strike
or other labor dispute involving a work stoppage of workers, but is
subject to the following terms and conditions:
(A) The alien shall remain subject to all applicable provisions of
the Act and regulations applicable to all other E nomimmigrants; and
(B) The status and authorized period of stay of such an alien is
not modified or extended in any way by virtue of his or her
participation in a strike or other labor dispute involving a work
stoppage of workers.
(iii) Although participation by an E nonimmigrant alien in a strike
or other labor dispute involving a work stoppage of workers will not
constitute a ground for deportation, any alien who violates his or her
status or who remains in the United States after his or her authorized
period of stay has expired will be subject to deportation.
* * * * *
Dated: March 17, 1997.
Doris Meissner,
Commissioner, Immigration and Naturalization Service.
[FR Doc. 97-22314 Filed 9-11-97; 8:45 am]
BILLING CODE 4410-10-M
