48138 Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations

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.
Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations 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 § 214.2(e)(2)(i),

has now been broken into separate

definitions of ‘‘treaty trader’’ and ‘‘treaty

investor’’ in this final rule at § 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 § 214.2(e)(2)(iii), is now

contained in this final rule at

§ 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 § 214.2(e)(10) (i)
48140 Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations

and (ii) has been moved to § 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

§ 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-byownership 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
Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations 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 nonsubstantive, 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 nonsubstantive 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 § 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.
48142 Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations

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, forprofit 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
Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations 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-milliondollar 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 startup, 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
48144 Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations

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 nonexecutive 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
Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations 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
48146 Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations

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:

§ 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.
Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations 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 treatyqualifying 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 nonsubstantive 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.
48148 Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations

(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 incomegenerating 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 § 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
Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Rules and Regulations 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

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.

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