[Federal Register Volume 62, Number 177 (Friday, September 12, 1997)]
[Rules and Regulations]
[Pages 48149-48155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24260]
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DEPARTMENT OF STATE
Bureau of Consular Affairs
22 CFR Part 41
[Public Notice 2594]
Visas: Documentation of Nonimmigrants Under the Immigration and
Nationality Act, as Amended; Business and Media Visas; Treaty Trader
and Treaty Investors
AGENCY: Bureau of Consular Affairs, State Department.
ACTION: Final rule.
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SUMMARY: This rule amends the nonimmigrant visa regulations, by adding
a definition of the term ``substantial'' to section 41.51 in order to
implement the provisions of section 204(c) of Pub. L. 101-649. This
rule adds a new section 101(a)(45) to the Immigration and Nationality
Act (INA) for purposes of defining this term as used in section
101(a)(15)(E) of the INA. Furthermore, this rule incorporates into
regulation the underlying principles of the treaty trader/treaty
investor visa classification which have been published in the form of
interpretive note material in Volume 9 of the State Department's
Foreign Affairs Manual.
EFFECTIVE DATE: November 12, 1997.
FOR FURTHER INFORMATION CONTACT:
Stephen K. Fischel, Director, Legislation, Regulations and Advisory
Assistance, 202-663-1184.
SUPPLEMENTARY INFORMATION: Public Notice 1468 at 56 FR 43565, September
3, 1991, proposed adding regulations to title 22, part 41, Code of the
Federal Regulations. The proposed regulations were required to
implement the provisions of section 204(c) of the Immigration Act of
1990, Pub. L. 104-649 which requires the Secretary of State to
promulgate a regulatory definition of the term ``substantial'' after
consultation with the appropriate agencies of the United States
Government. The proposal was discussed in detail in Notice 1468, as
were the Department's reasons for the regulations. The Department
received 14 timely comments in responds to the Notice of Proposed
Rulemaking.
Analysis of Comments
General Comment
The Department's proposed rule and the Immigration and
Naturalization Service's proposed rule on the treaty visa
classification were published within a few days of each other. Although
the rules were intended to be identical in substance, each agency
selected different language to articulate its rules. This difference in
language led readers to reach the unintended conclusion that the rules
were substantively different if not at odds with each other in a few
critical ways.
Many commenters expressed their concern about the apparent
differences in two ways. First, commenters requested that the agencies
work together to publish rules that were clearly identical in
substance. The agencies certainly recognize the need for one set of
principles to administer the law and have worked together to achieve
that goal. Furthermore, commenters suggested that, since the Department
of State has the greatest amount of experience in administering treaty
trader/investors visa rules, and since INS has been deferring to the
Department of State's regulations and interpretations, the INS should
continue to defer to the Department and to apply the Department's
regulations. Such deference, it was suggested, could involve the
specific reference, in the Immigration and Naturalization Service
(Service) regulations, to the Department of State's regulations, or the
publication of the Department's entire treaty visa
[[Page 48150]]
regulations in Title 8 of Code of Federal Regulations.
The two agencies agree in principle with these objectives. Although
the Department and the Service are each publishing their own
regulations, they are intended to be substantively the same. To further
uniform application of these rules, the Service will be expressly
authorized by the INS Operations Instructions to consult with the
Advisory Opinions Division of the Visa Office of the Department of
State on treaty visa issues.
The Advisory Opinions Division renders opinions on legal issues
relating to visa law on behalf of the Visa Office to United States
consular officers serving at United States embassies and consulates
abroad. Opinions rendered by this division on questions of law, as
opposed to the application of the law to the facts of a particular
case, are generally binding on consular officers. (See 22 CFR
41.121(d)). A significant distinction is made between this current
departmental practice and the projected consultation process with the
Service. Guidance offered at the request of the Service will be purely
advisory in nature and will not be binding on the Service in any way.
The Service will continue to posses exclusive authority and
responsibility for the adjudication of treaty visa cases submitted to
them in accordance with applicable law and procedure.
This consultation process will merely constitute a means of sharing
the Department's knowledge gained from the experience of adjudicating
treaty visa cases for many years. The INS will possess the option of
drawing upon such expertise, but will be under no obligation to consult
with the Visa Office. The exercise of this option is left to the
discretion of that agency.
One commenter had expressed the hope that not only the Service and
the Department would promulgate the same regulations but that consular
officers abroad would automatically accept a Service's change of status
determination in an ``E'' visa case rather than subject the alien to
readjudication of the visa application.
Consular officers posses exclusive authority to issue and refuse
visas (INA 104). Not only must they determine an alien's eligibility
under INA 212(a) but, in the case of all nonimmigrant visa
classifications, they must assess whether the alien has met all the
requirements of that particular nonimmigrant visa classification. Even
in petition-based nonimmigrant visa classifications the consular
officer retains the authority, and the responsibility, to review the
petition to make sure the alien is appropriately and properly
classified; this is not just because mistakes may happen, but because
the consular officer may have access to information not available to
the INS officer. If the review results in a finding that the officer
knows or reasonably believes that the alien is not entitled to the
given classification, the petition is returned pursuant to regulation
to the appropriate office of the Immigration and Naturalization Service
for appropriate action.
As treaty visa cases involve no INS approved petitions, the
consular officer has the responsibility to adjudicate all aspects of
the visa application. Under this regulation and these administrative
procedures, the consular officer will continue to have that
responsibility. It is anticipated, however, that in view of the newly
adopted procedures more uniform application of these visa regulations
will be achieved, thus reducing the possibility of disparate results.
Several commenters expressed disappointment that the Department
proposed regulations on treaty visas without even mentioning the Board
of Immigration Appeals decision in the Matters of Walsh and Pollard,
Int. Dec. #3111 (BIA 1988). Since this case was not cited in the
preamble to the proposed rule, some commenters inferred that the
Department did not agree with the holding of the decision.
The Department finds this decision to be useful on at least two
points. First, the Board followed the Department's interpretation that
substantial investment is determined by application of the
proportionality test, not by application of a set minimum dollar
figure. Secondly, the Board agreed that the concept of ``develop and
direct'' applies to the ``principal'' treaty investor, not to each
employee of the treaty investor.
This decision unquestionably contributes significantly to the body
of administrative case law on treaty visas, but it does have a
shortcoming. The decision has been read to imply that the treaty
investor visa classification is appropriate for the creation of certain
``job shop'' arrangements. The principles upon which the decision is
founded to do support that inference. These regulations, likewise, do
not endorse that inference.
As clear recognition of the significance of this case, special
treatment is accorded this decision in the interpretive note material
in the Foreign Affairs Manual. It should be noted, however, that the
``job shop'' inference is also accorded appropriate discussion.
Employee of Treaty Trader or Treaty Investor
The Department received one comment on the long-standing regulation
at section 41.51(c), which requires the employer to hold treaty visa
status or, if not in the United States, to be so classifiable. The
commenter prefers removing the requirement that the employer hold
treaty visa status and instead allowing the employer to be lawfully
classified under any other nonimmigrant status. The purpose of this
commenter's suggestion is to allow employees to qualify for treaty
visas regardless of the nonimmigrant classification of the employer.
Although the Department recognizes the practicality of such a
suggestion, we believe that the current regulation is to proper
interpretation of the law. The statutory section addresses the
conditions whereby the ``principal'' treaty traders and treaty
investors may qualify for an E visa. No mention is made of employees.
Employee status is the logical creation of regulation. Persons in that
status derive that status directly and exclusively from ``principal''
treaty traders or treaty investors. Without a qualifying relationship
to a principal which has been accorded treaty trader or treaty investor
status, the alien cannot likewise be accorded treaty visa status. This
derivative relationship is analogous to other relationships more
explicitly defined in the Act such as the relationship of spouse and
children to a principal accorded lawful immigration status under the
INA. One can not derive status from a person who does not possess such
status.
Nationality
One commenter expressed the hope that an easier method could be
found to ``register'' large enterprises to qualify for ``E'' visa
status. This issue is similar to that raised by two other commenters
who expressed strenuous dissatisfaction with the proposed rules for
determining the nationality of an incorporated entity. The problem
arises in cases involving corporations that sell stocks on exchanges in
more than one country.
The standard of practicability was adopted in recognition of this
problem. This standard contemplates the applicant submitting the best
evidence available and the consular officer reaching a reasonable
decision considering the particular circumstances in each case. This is
not intended to be an onerous paper production exercise.
The statute speaks of granting special treatment for ``nationals''
of treaty
[[Page 48151]]
partners. Nationality of enterprises based on ownership captures the
essence of the statue and the bilateral relationship. Although
registration of businesses in a jurisdiction to engage in business
activities in that jurisdiction has been accorded recognition for
national treatment in other contexts by other laws and some courts,
mere registration has not been and is not accepted as the proper
standard for determining nationality under INA 101(a)(15)(E).
This issue was addressed in Matter of N---S---, 7 I&N Dec. 426
(1957). Recognizing the Congress' review of this longstanding rule
during the formulation of the Immigration and Nationality Act during
the early 1950's, the decision states at Dec. 428 that, ``there being
no substantial change in language between the present statute and
regulations as compared with the preceding statute and regulations on
the same subject, the rulings and principles previously enunciated and
which are presumed to have been known to the Congress must be deemed to
be presently applicable.'' For similar reasons, we believe that the
regulations as proposed are consistent with Congressional intent.
Trade
Three commenters suggested that the Department incorporate the
concept of ``business commitments'' in its definition of existing
international trade. The proposed rule reiterated the statutorily
mandated principle that the trade for treaty trader purposes must be in
existence in order to qualify for such status. The Department agrees,
however, that the concept of ``business commitments'' as described in
Matter of Seto, 11 I&N Dec. 290 (1965), should be included within the
definition of trade. Drawing from a Supreme Court decision and a Court
of Appeals decision, this decision holds that ``existing trade includes
successfully negotiated contracts which call'' for the exchange of
goods within the meaning of INA 101(a)(15)(E)(i). But on the other
hand, the decision states that transactions which are in the state of
negotiation do not by themselves constitute trade for this purpose.
The Department not only agrees with this principle, but it has been
incorporated into the regulation. Additionally, the appropriate
guidance will be provided in the Foreign Affairs Manual.
Substantial trade
An identical comment was submitted in two letters concerning the
definition of trade. The specific language of the proposed rule
expressly prohibits a single transaction from qualifying as substantial
trade. The underlying principle of substantial trade is that a
continuing flow or exchange of trade items exist. The commenters
expressed fear that this definitional language would be interpreted to
exclude the circumstance of a single large transaction exchanged
annually or periodically over extended periods of time.
The language of the regulation incorporated the essence of the
language which has been used in the interpretive notes in the FAM. The
wording was specifically selected to avoid the establishment of any
specific time limitations. The thrust of the definition is to
disqualify a ``one shot'' deal but to consider all other continuing
exchanges of value. Determinations have been and will continue to be
made upon case by case analysis. It appears that the meaning of this
definition is exactly the meaning sought by the commenters. To further
clarify the regulations, the Department has amended the language
accordingly.
A commenter expressed disappointment that the Department did not
incorporate into the regulations a certain note in the FAM describing
substantial trade. That note states that for smaller businesses income
derived from international trade which is sufficient to support the
treaty trader and his or her family should be considered to be a
favorable factor when assessing the substantiality of trade in a
particular case. The Department adheres to this concept. The regulation
has been amended to include this concept.
Treaty investment
Investment capital
Risk
Several commenters agreed with our statement in the preamble of the
proposed regulation that the rule regarding risk did not square with
business reality. A couple of commenters did offer the suggestion of
amending the rule by use of the following language: ``loans secured
exclusively by the assets of the investment enterprise itself, without
ultimate recourse to the treaty investor, may not be counted toward the
actual amount of capital investment''.
The purpose of the risk provision is to place the risk of the
investment totally and exclusively on the shoulders of the treaty
investor. As this suggested language would dilute the element of risk
by including the possibility of using the business as collateral, the
Department will retain the language as proposed. In addressing the
issue of ``irrevocable commitment'', several commenters suggested that
language be added to the regulations that would formally recognize the
use of mechanisms such as escrow to protect the treaty investor if a
visa were not issued in a certain case. Such mechanisms have long been
recognized as proper safeguards by the Department. The Department's
opinion has been published broadly, including in the Interrogatories in
Matters of Walsh and Pollard which have been disseminated widely not
only in the private sector but also within the Foreign Service as
instructional material. The regulations have been amended to
accommodate this request.
Substantial capital
One commenter expressed dislike for the proportionality test but
failed to offer any suggestions for an alternative test. The commenter
questioned why the proportionality test was selected in light of the
Congressional mandate to define ``substantial'' investment, why a
minimum investment amount was even considered in light of the Matters
of Walsh and Pollard, Int. Dec. #3111 (BIA 1988), why no economic
studies were undertaken in this exercise, and why the Immigration and
Naturalization Service proposed a different formula when the Secretary
of State was given authority to promulgate the regulatory definition.
The supplemental information portion of the proposed rule explained
the entire exercise undertaken to reach a definition, as required by
the statute. Comprehensive letters were prepared explaining the purpose
and requirements of the treaty visa classification and soliciting
comments and suggestions from each agency. The agencies, Department of
Commerce, Labor, the Treasury, and the Small Business Administration,
the U.S. Trade Representative, and, of course, the Immigration and
Naturalization Service, each responded. All but one felt competent to
provide constructive input into the analysis. The agencies
overwhelmingly favored continued use of the proportionality test. The
general conclusion was that this test appears to have worked
successfully in the past and that no superior test could be devised
which would capture the essence of this requirement.
The fact that Congress required that the definition be codified in
regulatory form does not necessarily suggest, as stated by this
commenter, that Congress was dissatisfied with the current test.
Legislative history of this provision and predecessor versions in
earlier bills
[[Page 48152]]
suggest that Congress sought primarily the establishment of a test to
be applied uniformly by both agencies. Secondarily, the Congress
accorded the Secretary of State the responsibility of preparing such
regulations in light of the extensive experience in adjudicating treaty
visa applications as well as the obvious jurisdictional tie to the
treaty function.
The Congress did require the Secretary of State to consult ``with
appropriate agencies of Government''. This requirement was carried out
as described above and in the preamble of the proposed regulation. A
great cross section of agencies was selected as indeed no independent
economic study was either required by Congress or undertaken by the
Department of State. It was anticipated that the agencies that monitor
the pulse of the economy would provide relevant input into the
formulation of the test. None of these agencies nor any of the others
perceived the necessity to undertake an economic study. Based upon such
responses from interested agencies, the Department was satisfied that
sufficient avenues had been explored.
The establishment of a minimum amount of investment had to be
considered during this review, as the Department bore the
responsibility of considering all viable alternatives. A set minimum
dollar figure is always the first test offered as an alternative to the
proportionality test. While such a test has certain administrative
advantages, the agencies overwhelmingly rejected it in favor of the
proportionality test.
Lastly, the commenter suggested that INS' proposed regulations
differed from the Department's on this issue of substantial investment.
That issue has been rendered moot by the Service's decision to
promulgate regulations consistent with the Department's regulations.
Three other commenters discussed the proportionality test. Two
commenters expressed concern over the application of the ``inverted
sliding scale'' thinking that it differs from the proportionality test
now in use. The term ``inverted sliding scale'' is merely a descriptive
characterization of the proportionality test. No substantive change is
intended by the use of this term. The test is intended to apply as it
has in the past.
Concern was expressed over the use of presumptions and that there
were only three such benchmarks. It was feared that these percentages
would be used in those designated ranges as bright line tests and not
as guidelines as intended. In view of the lower cost needed to
establish certain types of businesses, the commenters felt a need for a
designation for a $100,000 investment or even lower. Several commenters
felt that the third benchmark of 30% was too high for exceptionally
large investment figures. It was opined that the sheer magnitude of
such investments should be considered to be substantial regardless of
the percentage.
In an attempt to avoid the use of the presumptive percentages as
bright line tests, the three presumptive benchmarks have been removed.
The regulation merely defines the test, whereas in the FAM note
material examples will be provided. Any examples given are not intended
to be binding but are intended to demonstrate to adjudicating officers
and the public the general range of the proportionality test. The fear
that the percentages used in such examples will be applied by
adjudicators as bright line tests cannot be totally abated; however,
through instructional material in the FAM, advisory opinions, and other
relevant material, the adjudicating officers will be instructed to use
these figures as flexible guidelines on a case by case basis.
The commenter also suggested that some of the descriptive language
used in the FAM note material and/or language used in the supplemental
information of the proposed rule should be incorporated into
regulation. Although some of this descriptive language has been
incorporated into regulation, the general definitional language has
been somewhat rewritten to more prominently feature the underlying
ingredients of ``substantial amount of capital''.
The language describing the application of the proportionality test
has been altered for clarity. Although the preamble of the proposed
regulation stated that the figure representing the actual cost of
establishing a business must be used in arriving at the investment
percentage, the proposed rule has been interpreted to permit the use of
a figure of an amount of investment needed to establish a business of
that nature, regardless of what the enterprise in question might cost.
The regulation is amended to more accurately reflect the explanation in
the preamble.
Marginality
The comments save one were generally favorable of the Department's
treatment of marginality. The single negative comment essentially
stated that the proposed language would bar viable enterprises from
qualifying for treaty visa status thus shutting off the infusion of
foreign investment. The commentary wrongly imparted this intent to the
Department.
The Department has no desire to bar viable enterprises, but as the
supplemental information provided with the proposed rule clearly lays
out, the Department does have as one of its objectives to weed out
those enterprises that are indeed nonviable. Recognizing that no rule
is perfect, the Department attempted to craft the regulation to achieve
its objective. Unfortunately, that commenter offered no alternative to
the proposal.
The other comments, however, suggested that the rule be clarified
so that the capacity to generate income be cast not only in the present
tense but also in the future. Although the proposed rule was intended
to address this very concern, more specific language has been added. By
including the language of ``present and future'' to the capacity to
generate income and to the capacity to make an economic contribution,
the question now arises as to when in the future must such capacity be
realized. Is it realistic to allow an treaty investor to realize this
capacity 20 years in the future? We think not. A reasonable standard
should be established.
When establishing entitlement to treaty investor classification the
alien bears the burden of satisfying the consular officer that the
enterprise is a viable commercial entity with the requisite income
generating capacity. To demonstrate that capacity, a business plan of
some sort is often presented. This plan projects the amount of income
contemplated considering the expenses of establishing and/or using the
enterprise and factoring in the marketability of the service or
commodity to be provided or sold. The Department accepts the reality
that many start-up businesses will not generate any profits initially.
It is, also, the Department's understanding that a five year term is
considered a standard period of time to gauge profitability of such a
business. The Department finds it reasonable that from the date the
principal treaty investor commences operation of normal business
activities that the business is projected to be generating the
requisite income or making the requisite economic contribution within a
five year period. For further clarity, economic contribution replaces
economic impact to signify that a positive economic impact is
contemplated.
Develop and direct
One of the four comments received on this issue referred to the
typographical error in the September 3, 1991 printing
[[Page 48153]]
of the proposed rule. The word ``marginal'' was intended to read as
``managerial'' and has been corrected.
A favorable comment was received which applauded the ability to
meet the develop and direct requirement not just by ownership but by
managerial or other corporate or structural means.
Another comment focused on the fact that the Department's proposed
regulations required that the treaty investor be in a position to
develop and direct rather than ``solely'' develop and direct the
enterprise in which the alien had invested. The distinction made by the
commenter lies in the possibility of being in a position to control
without exercising such control.
The language used by the Department derives from Matter of Lee, 15
I&N Dec. 187 at 189 (1975). This decision cites the statutory language
and then provides its interpretation. ``Section 101(a)(15(E)(ii) of the
Act requires the treaty investor to be coming solely to develop and
direct the operations of the enterprise in which substantial investment
has been or is in the process of being made. In order for a treaty
investor to develop and direct the operations of an enterprise, it must
be shown he has a controlling interest; otherwise other individuals who
do have the controlling interest are in a position to dictate how the
enterprises is to be developed and directed.''
The observation made by the commenter was presented in the form of
a question. The query focuses on whether the statutory language
requires an alien personally to develop and direct an enterprise or
whether the alien must be in a position to develop and direct an
enterprise. In the latter case, the alien may not personally develop or
direct the enterprise but may afford a third party the opportunity to
do so. Although the Department has consistently interpreted the
proposed regulation to mean that the treaty investor must demonstrate
that his or her purpose of entry is to develop and direct the
enterprise, the language has been amended to comport more directly with
the statute and to remove any hint of ambiguity.
The last commenter made two suggestions. The first was to have the
Department accord ``E'' visa status to large companies involved in
joint ventures. In the opinion of the commenter no company ``controls''
the sizable joint venture, the develop and direct requirement should,
therefore, be waived. As the develop and direct requirement is
statutory and the law contains no authority for it to be waived, the
Department cannot accede to this suggestion. (This does not mean,
however, that this develop and direct requirement cannot be met by
other means, such as through the concept of ``negative control''.)
The same result attaches to the second suggestion. The commenter
proposed that treaty investors with investments of a minimum of
$10,000,000 be exempt from the develop and direct requirement if the
treaty investor otherwise met the ``E'' visa requirements. Although the
Department understands the motivation behind this suggestion as well,
the statute does not provide the authority to waive the requirement.
Employee: Executive or Supervisor
The Department received several comments on this proposed
regulatory provision. As all the comments were favorable and no changes
were recommended, the regulation stands as proposed.
Essential employee
The proposed language drew quite a few comments addressing
different aspects of the proposal. The first comment took issue with
the concept that the employer must demonstrate that replacement by a
U.S. worker is not feasible or that the employer is making reasonable
and good faith efforts to train U.S. workers. The commenter questioned
the advisability and the legality of trying to modify our treaty
obligations by administrative regulations. In light of the change we
are making to this regulation the comment is rendered moot. On the
other hand, the statute, regulations, and the treaty contain nothing
that would prohibit the imposition of such regulatory requirements.
Three commenters objected to the requirement in proposed
Sec. 41.51(r)(2) that the alien must in each case affirmatively
establish that the alien's eventual replacement by a U.S. worker is not
feasible or that the employer is making reasonable and good faith
efforts to recruit and/or train U.S. workers to perform the
responsibilities of the alien's prospective position. Two commenters
made reference to the interpretive note material in the FAM at 22 CFR
41.51 N4-3 and found these notes to be instructive. They suggested that
perhaps this requirement should be imposed only on those aliens
claiming to posses essential skills who will engage in activities which
may involve manual duties as explained in Sec. 41.51 N.4-3(b). This
requirement should not be imposed across the board. These comments
continued by recommending that the regulatory language be altered to
expressly provide that aliens with special skills that have not become
commonplace might remain in the United States indefinitely, and any
training/recruitment/feasibility requirement should be expressly
limited to the exceptions listed in the FAM notes.
The Department accepts and recognizes these suggestions as valid
and having merit. The intent of the proposed regulation was to put the
applicant and the applicant's employer on notice that indeed not all
positions that require specialized skills might be considered
``essential'' on a continuing basis. It was thought that, through the
usual application process of assessing ``essentiality'', this
requirement of feasibility/training would be met. Certainly, aliens
with skills unique to them or at least not commonplace in the United
States would by the very nature of the activity establish ipso facto
that such skills would be essential on a continuing basis and that
training, etc. would not be feasible. The Department agrees that the
proposed language appears more burdensome than intended.
Consequently, the Department has changed section 41.51(r)(2) to
better capture the essence of the concept that the establishment of
``essentiality'' is an ongoing process. A key to this adjudication
exercise is the determination of whether the specialized skills are
commonplace in the United States. Certainly, some such skills will be
found not to be commonplace on a continuing basis and other skills will
be found to become commonplace at some point in time. When that point
in time is reached, the alien may not qualify as an essential employee.
The employer will than have to fill the position by other means.
In order to reflect more clearly this principle, the regulation has
been amended to remove all references to affirmative responsibilities
requiring a feasibility assessment or training requirements. The
guidance in the FM note material cited above has been incorporated into
the regulation. The operation of this regulation will follow the stated
objective which comports with the two commenters' suggestions.
A commenter objected to the use of the term ``unique'' skills as a
means to determine essential skills. The commenter stated that this was
too high a standard to impose on aliens to qualify as an essential
employee. Furthermore, while it is no longer used for L-1 adjudication,
it should not be used in this context.
The characterization of a skill as ``unique'' has a long
association with the E visa classification. This is descriptive of a
skill which clearly is
[[Page 48154]]
one-of-a-kind and is, thus, not commonplace. It does not and never has
been intended to constitute a minimum standard for meeting the
requirement of essential skills. To the contrary, skills of unique
character would so greatly exceed any minimum standard of
``essentiality'' that persons blessed with unique skills coming to fill
positions requiring such unique skills would in the overwhelming number
of cases be considered to be ``essential''. As ``unique'' continues to
be a useful descriptive term in the adjudication process, the
regulations and interpretive guidance in the FAM will continue to use
it.
Final Rule
This final rule of Sec. 41.51 would: provide a general definition
of treaty trader (paragraph (a)); provide a definition of treaty
investor (paragraph (b)); define an alien employee (paragraph (c));
extend treaty classification to the spouse and children of the
principal alien (paragraph (d)); and authorize ``E'' status to certain
foreign information media (paragraph (e)). The remaining paragraphs
constitute definitional provisions.
This rule is not expected to have a significant impact on a
substantial number of small entities under the criteria of the
Regulatory Flexibility Act. The information collection contained in
this rule has been submitted to the Office of Management and Budget in
compliance with provisions of the Paperwork Reduction Act of 1980. This
rule has been reviewed as required by E.O. 12778 and certified to be in
compliance therewith, and reviewed in light of E.O. 12866 and found to
be consistent therewith.
List of Subjects in 22 CFR Part 41
Aliens, Treaty Trader or Investor.
In view of the legislative mandate of Pub. L. 101-649, Part 41 to
Title 22 would be amended as follows:
PART 41--[AMENDED]
1. The authority citation for Part 41 is revised to read:
Authority: INA 104, 66 Stat. 174, 8 U.S.C. 1104; sec. 109(b)(1),
91 Stat. 847; sec. 204, 104 Stat. 5019, 8 U.S.C. 1101 note.
2. Part 41, Subpart F--Business and Media Visas, is amended by
revising section 41.51 to read as follows:
Sec. 41.51 Treaty trader or treaty investor.
(a) Treaty trader. An alien is classifiable as a nonimmigrant
treaty trader (E-1) if the consular officer is satisfied that the alien
qualifies under the provisions of INA 101(a)(15)(E)(i) and that the
alien:
(1) 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 foreign
state of which the alien is a national, (consideration being given to
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
(2) Intends to depart from the United States upon the termination
of E-1 status.
(b) Treaty investor. An alien is classifiable as a nonimmigrant
treaty investor (E-2) if the consular officer is satisfied that the
alien qualifies under the provisions of INA 101(a)(15)(E)(ii) and that
the alien:
(1) Has invested or is actively in the process of investing a
substantial amount of capital in 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; and
(2) Is seeking entry solely to develop and direct the enterprise;
and
(3) Intends to depart from the United States upon the termination
of E-2 status.
(c) Employee of treaty trader or treaty investor. An alien employee
of a treaty trader may be classified E-1 and an alien employee of a
treaty investor may be classified 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 services to be
rendered essential to the efficient operation of the enterprise. The
employer must be:
(1) A person having the nationality of the treaty country, who is
maintaining the status of treaty trader or treaty investor if in the
United States or if not in the United States would be classifiable as a
treaty trader or treaty investor; or
(2) An organization at least 50% owned by persons having the
nationality of the treaty country who are maintaining nonimmigrant
treaty trader or treaty investor status if residing in the United
States or if not residing in the United States who would be
classifiable as treaty traders or treaty investors.
(d) Spouse and children of treaty trader or treaty investor. The
spouse and children of a treaty trader or treaty investor accompanying
or following to join the principal alien are entitled to 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 INA
101(a)(15)(E).
(e) Representative of foreign information media. Representatives of
foreign information media shall first be considered for possible
classification as nonimmigrants under the provisions of INA
101(a)(15)(I), before consideration is given to their possible
classification as nonimmigrants under the provisions of INA
101(a)(15)(E) and of this section.
(f) Treaty country. A treaty country is for purposes of this
section a foreign state with which a qualifying Treaty of Friendship,
Commerce, and Navigation or its equivalent exists with the United
States. A treaty country includes a foreign state that is accorded
treaty visa privileges under INA 101(a)(15)(E) by specific legislation
(other than the INA).
(g) Nationality of the treaty country. The nationality of an
individual treaty trader or treaty investor is determined by the
authorities of the foreign state of which the alien claims nationality.
In the case of an organization, ownership must be traced as best as is
practicable to the individuals who ultimately own the organization.
(h) Trade. The term ``trade'' as used in this section means 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. This exchange
must be traceable and identifiable. Title to the trade item must pass
from one treaty party to the other.
(i) Item of trade. Items which qualify for trade within these
provisions include but are not limited to goods, services, technology,
monies, international banking, insurance, transportation, tourism,
communications, and some news gathering activities.
(j) Substantial trade. Substantial trade for the purposes of this
section entails the quantum of trade sufficient to ensure a continuous
flow of trade items between the United States and the treaty country.
This continuous flow contemplates numerous exchanges over time rather
than a single transaction, regardless of the monetary value. Although
the monetary value of the trade item being exchanged is a relevant
consideration, greater weight is given to more numerous exchanges of
larger value. In the case of smaller businesses, an income derived from
the value of numerous transactions which is
[[Page 48155]]
sufficient to support the treaty trader and his or her family
constitutes a favorable factor in assessing the existence of
substantial trade.
(k) Principal trade. Trade shall be considered to be principal
trade between the United States and the treaty country when over 50% 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.
(l) Investment. Investment means the treaty investor's placing of
capital, including funds and other assets, 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 given
to the particular circumstances of each case. The alien may use any
legal mechanism available, such as by placing invested funds in escrow
pending visa issuance, that would not only irrevocably commit funds to
the enterprise but that might also extend some personal liability
protection to the treaty investor.
(m) Bona fide enterprise. The enterprise must be a real and active
commercial or entrepreneurial undertaking, producing some service or
commodity for profit and must meet applicable legal requirements for
doing business in the particular jurisdiction in the United States.
(n) Substantial amount of capital. A substantial amount of capital
constitutes that amount that is:
(1)(i) Substantial in the proportional sense, i.e., 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.
(2) Whether an amount of capital is substantial in the
proportionality sense is understood in terms of an inverted sliding
scale; i.e., the lower the total cost of the enterprise, the higher,
proportionately, the investment must be to meet these criteria.
(o) Marginal enterprise. 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 capacity should generally be realizable within five
years from the date the alien commences normal business activity of the
enterprise.
(p) Solely to develop and direct. The business or individual treaty
investor does or will develop and direct the enterprise by controlling
the enterprise through ownership of at least 50% of the business, by
possessing operational control through a managerial position or other
corporate device, or by other means.
(q) Executive or supervisory character. The executive or
supervisory element of the employee's position must be a principal and
primary function of the position and not an incidental or collateral
function. Executive and/or supervisory duties grant the employee
ultimate control and responsibility for the enterprise's overall
operation or a major component thereof.
(1) An executive position provides the employee great authority to
determine policy of and direction for the enterprise.
(2) A position primarily of supervisory character grants 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.
(r) 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 enterprise.
(1) The essential nature of the alien's skills to the employing
firm is determined by assessing the degree of proven expertise of the
alien in the area of operations involved, the uniqueness of the
specific skill or aptitude, the length of experience and/or training
with the firm, the period of training or other experience necessary to
perform effectively the projected duties, and the salary the special
qualifications can command. The question of special skills and
qualifications must be determined by assessing the circumstances on a
case-by-case basis.
(2) Whether the special qualifications are essential will be
assessed in light of all circumstances at the time of each visa
application on a case-by-case basis. A skill that is unique at one
point may become commonplace at a later date. Skills required to start
up an enterprise may no longer be essential after initial operations
are complete and are running smoothly. Some skills are essential only
in the short-term for the training of locally-hired employees. Long-
term essentiality might, however, be established in connection with
continuous activities in such areas as product improvement, quality
control, or the provision of a service not generally available in the
United States.
(s) Labor disputes. Citizens of Canada or Mexico shall not be
entitled to classification under this section if the Attorney General
and the Secretary of Labor have certified that:
(1) There is in progress a strike or lockout in the course of a
labor dispute in the occupational classification at the place or
intended place of employment; and
(2) The alien has failed to establish that the aliens entry will
not affect adversely the settlement of the strike or lockout or the
employment of any person who is involved in the strike or lockout.
Dated: May 13, 1994.
Editorial note: This document was received in the Office of the
Federal Register on September 9, 1997.
Mary A. Ryan,
Assistant Secretary for Consular Affairs.
[FR Doc. 97-24260 Filed 9-11-97; 8:45 am]
BILLING CODE 4710-06-M