Interim Decision #3111 

MATTER OF WALSH and POLLARD 

In Exclusion Proceedings 

A-26491503 

A-26491504 

Decided by Board February 26, 1988 

(1) A foreign corporation must have invested or be actively in the process of investing a 

substantial amount of capital in order to qualify as a treaty investor under section 

101(a)(15)(E) of the Immigration and Nationality Act, 8 U.S.C. § I101(a)(15)(E) 

(1.982). 

(2) Under the treaty investor criteria, no particular dollar amount is required for an 

investment to be deemed substantial; however, the investment must be in a bona fide 

business and, in the case of a new business, the investment must not be in a marginal 

enterprise solely for earning a living but must be of an amount normally considered 

necessary to establish a viable enterprise of the nature contemplated 

(3) The applicants, who are employed as automotive design engineers by a foreign 

corporation, do not have supervisory or managerial duties; however, they are highly 

trained, specially qualified, and essential to the corporation's efficient operation and 

thus qualify for an "E-2" visa classification even though they are not engaged in 

developing and directing the qualifying investment. 

EXCLUDABLE: Act of 1952—Sec. 212(a)(20) [8 U.S.C. § 1182(a)(20)]—No valid 

immigrant visa (both applicants) 

ON BEHALF OF APPLICANTS: 

H. Ronald Klasko, Esquire 

Abrahams & Loewenstein 

Fourteenth Floor 

United Engineers Building 

30 South 17th Street 

Philadelphia, Pennsylvania 19103-4096 

ON BEHALF OF SERVICE: 

David M. Dixon 

Appellate Counsel 

Michael K. Adams 

District Counsel 

BY: Milhollan, Chairman; Dunn; Morris, and Vacca, Board Members 

On March 2, 1987, the Chief Immigration Judge found the 

applicants admissible as treaty investor employees under section 

101(a)(15)(E)(ii) of the Immigration and Nationality Act, 8 U.S.C. 

§ 1101 (a)(15)(E)(ii) (1982). He ordered that the exclusion proceedings 

be terminated and that the applicants be admitted pursuant to their 

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Interim Decision #3111 

"E-2" visas. The Imm' gration and Naturalization Service has appealed 

from that decision. The appeal will be dismissed. 

The applicants are natives and citizens of Great Britain, ages 59 and 

25 years old, who are automotive design engineers. They attempted to 

enter the United States as nonimmigrants on September 18, 1985, by 

presenting "E-2" visas. They are employees of IAD Modern Design, 

Ltd. ("IAD, Ltd."), a British-owned corporation, which is the treaty 

investor in this case. ,They arc coming to the United States pursuant 

to a contract between IAD, Ltd. and General Motors ("GM") to 

provide experienced automotive design engineers to GM for the 

purpose of redesigning GM's line of cars in a smaller, more European 

fashion. The less experienced man is a transmission designer with a 

Higher National Certificate, indicating extensive post -secondary education, and with special training in computer-aided design. The more 

senior man is also to be employed in the United States as a 

transmission designer. He has approximately 30 years of varied 

automotive design experience and a Higher National Certificate. It 

was stipulated that there are not sufficient numbers of United States 

automotive design engineers to fill the present needs of the automotive 

industry. IAD, Ltd. expects in the future to bring as many as 300 

designers and other related workers to the United States to meet the 

demands of United States automotive manufacturers. 

Under the present Arrangement these two designers would report to 

a GM subsidiary, Hyt ra-rnatic, to work on projects as assigned. They 

would be paid an hourly wage and a daily living allowance plus 

bonuses by IAD, Ltd GM reimburses IAD, Ltd. for the applicants' 

services by purchase order at a higher hourly rate than the applicants 

receive from their employer. The applicants do not receive any fringe 

benefits from GM but remain employees of IAD, Ltd. 2The applicants 

in question began wcrk for IAD, Ltd. just before being sent to the 

United States. A representative from TAD, Ltd testified that the 

applicants would be offered other work with IAD, Ltd. upon their 

return to England. 

In order to facilitE to and expand contract relationships between 

IAD, Ltd. and American automobile manufacturers, the British 

1 The parent corporation of IAD Modern Design, Ltd. is IAD (UK) Ltd., formerly 

Tigergraph, Ltd. The paten. company is a substantial business specializing in automotive design with branches or affiliates in several countries. 

2 1n similar cases involving a request for permission to bring alien workers to the 

United States to work for United States firms pursuant to a contract between an 

American firm and the the petitioning firm, it has bccn held that the foreign workers ale 

employees of the pctitionirg firm Sussex Engineering, Ltd. v. Montgomery, 825 F.2d 

1084 (6th Cir. 1987); Matte, of Artee Corporation, 18 18eN Dec. 366 (Comm. 1982) (both 

involving denials of "H-2' visa petitions). 

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Inte im Decision #3111 

cor oration formed a Michigan corporation, IAD Modern Design, Inc. 

("Ii 13, Corp."), which is a wholly owned subsidiary. The corporation 

als( assists the British workers in their relocation and business 

rely ionships with GM. This corporation was established by renting 

offi -es, purchasing office furniture, and hiring two United States 

citi en employees. This corporation has a bank account of approxima $15,000. Expansion is expected as business increases. 

- he Chief Immigration Judge found that the British company 

gut ified as a treaty investor based on the investment in IAD, Corp. 

He -urther found that the applicants were highly skilled individuals in 

a r sponsible position, whose skills were necessary to the IAD, Ltd. 

inv stment in the United States. He concluded that they were essential 

to t ie IAD, Ltd. investment because American design engineers were 

not available to be hired to enable IAD, Ltd. to fulfill its contract with 

GIv . He therefore granted them admission. 

- he Service contends that the British company has not made a 

sub ,tantial investment in the United States as required by section 

101 ;a)(15)(E) of the Act. It also states that the applicants are not 

ent tied to enter the United States as employees of the treaty investor 

bec use they are not coming to develop and direct the investment of 

the treaty investor. The Service argues that it is its policy to require 

em loyees of treaty traders to meet the "develop and direct" test. 

he Service also objects to the failure of the Chief Immigration 

Juc 3e to sequester Michael Hyatt and Ralph Miller, witnesses in this 

prc seeding; to his requirement that the Service go forward with the 

evi ence upon the presentation of applicants' prima fade case; to his 

reli nee upon sections from the Immigration and Naturalization 

Ser rice Immigrant Inspector's Handbook not admitted into evidence; 

to be issuance of subpoenas to the Service; and to the adverse 

inf rences drawn from the Service's failure to produce the subpoenaed 

ma erial. 

.t oral argument the Service argued that the Chief Immigration 

Juc ge incorrectly placed the burden of proof on the Service and that he 

err d in granting entry because the applicants are not coming solely to 

der tllop and direct the treaty investor's investment in the United 

Sta es. The Service contended that the issuance of a visa by the 

De )artment of State ("DOS") is not important, that the burden to 

she w admissibility is on the applicants and that the DOS regulations 

car aot override the statute. The Service also argued that the applicants 

arc not skilled in marketing or employment services, the purposes of 

IA1), Inc., the United States corporation. The benefit to the United 

Stc es corporation from their employment is too indirect to qualify the 

api licants for "E-2" visas under the statute. In addition, the investme it is not substantial and the subpoenas were not directed to 

62 
Interim Decision #3111 

relevant and material evidence. The applicants countered that they 

qualify for "E-2" visas under the relevant DOS regulations as 

supported by the responses to the interrogatories by the State 

Department Visa Office and by Board precedent. The Service policy to 

the contrary was not a written policy and was not communicated to 

Service personnel. In addition, the applicants work for the largest 

United Kingdom automotive design company, not an employment 

agency. The applicants also maintained that the investor meets the 

proportionality and viability tests, which is what is required for 

substantiality of the investment. 

In regard to the procedural objections, the decision to sequester 

witnesses is within the discretion of the immigration judge. See 

generally Breneman v. Kennecott Corp., 799 F.2d 470 (9th Cir. 1986); 

McKee v. McDonnell Douglas Technical Services Co., Inc., 700 F.2d 

260 (5th Cir. 1983); see also Morvant v. Construction Aggregates Corp., 

570 F.2d 626 (6th Cir. 1978). The Service has not shown any abuse of 

discretion or any prejudice which resulted from failure to sequester the 

witnesses_ gee United States v_ West, 607 Fid 300 (9th (Ir. 1979) per 

curiam). On the issue of burden of proof, we agree with the Chief 

Immigration Judge that once an alien has presented a prima facie case 

of admissibility, the Service has the burden of presenting some 

evidence which would support a contrary finding. The Chief Immigration Judge found that the Service met its burden of going forward with 

the evidence and correctly placed the ultimate burden of proof on the 

applicants for admission. In his decision, the Chief Immigration Judge 

took administrative notice of the Immigrant Inspector's Handbook, 

which is not in the record. However, the Service has not shown the 

substantial prejudice required to invalidate the Chief Immigration 

Judge's decision. United States v. Pierce Auto Freight Lines, 327 U.S. 

515, 530 (1946); McLeod v. INS, 802 F.2d 89 (3d Cir. 1986). The issue 

of the propriety of the subpoenas is not before us as the Chief 

immigration Judge did not draw any adverse inference from the 

Service's failure to produce the requested materials. 

The burden is on the applicants to show that they are admissible to 

the United States. Section 291 of the Act, 8 U.S.C. § 1361 (1982). 

There are two main issues in this case: whether the British company 

qualifies as a treaty investor by reason of its investment in IAD, Corp. 

and whether the applicants qualify for "E-2" visas as employees of a 

treaty investor. The statutory section in question is section 

101(a)(15)(E)(ii) of the Act. The Act provides that a treaty investor is 

an alien entitled to enter the United States under and in pursuance of the provisions 

of a treaty of commerce and navigation between the United States and the foreign 

state of which he is a national, ... solely to develop and direct the operations of an 

63 
Interim Decision #3111 

enterprise in which he has invested, or of an enterprise in which he is actively in the 

process of investing, a substantial amount of capital. 

Section 101(a)(15)(E)(ii) of the Act. 

It is the responsibility of the DOS to accept applications for treaty 

investor status and to issue the visa to the treaty investor or to its 

qualified employees. Section 221(a)(2) of the Act, 8 U.S.C. 

§ 1201(a)(2) (1982); 2 C. Gordon & H. Rosenfield, Immigration Law 

and Procedure § 10.13(2)(F)(3) at 10-166 (rev. ed. 1988). It is the 

responsibility of the Service to determine admissibility of an alien who 

applies for admission at the border. Sections 103(a), 221(h) of the Act, 

8 U.S.C. §§ 1103(a), 1201(h) (1982); 8 C.F.R. §§ 214.1(a), 235.1(d)(1) 

(1988). 

Nothing in Title 8 of the regulations or the Immigration and 

Naturalization Service Operations Instructions ("0.I.") relates to the 

issue of "substantiality" of the investment. Since "substantial" is not 

defined in the statute, reference must be made to the DOS regulations 

for clarification. The definition in those regulations of investing a 

"substantial amount of capital" is "investing capital in a bona fide 

enterprise" as contrasted with "investment of a small amount of 

capital in a marginal enterprise solely for the purpose of earning a 

living." 22 C.F.R. § 41.41(a) (1987) (recodified at 22 C.F.R. 

§ 41.51(b)(1) (1988)). The DOS Foreign Affairs Manual ("FAM") 

notes to 22 C.F.R. § 41.41 (the State Department regulations and 

instructions relating to treaty investor visas) amplify the concept of a 

"bona fide enterprise" by requiring "a real and active commercial or 

entrepreneurial undertaking, producing some service or commodity. It 

cannot be a paper organization or an idle speculative investment held 

for potential appreciation in value...." Vol. 9, Foreign Affairs 

Manual, Part II, 22 C.F.R. § 41.51 note 5.2 (hereinafter cited as 

FAM). In regard to the concept of investment, the FAM provides: 

No minimum investment amount is required for E-2 status; however, the investment 

must be substantial. Using a "proportionality test," the consular officer should weigh 

the amount invested against either 1) the total value of the particular enterprise in 

question, or 2) the amount normally considered necessary to establish a viable 

enterprise of the nature contemplated. The alien need only satisfy the requirement of 

"substantiality" in one of the above ways, not both. 

Id. at note 5.3-1. 

The concept of "substantially" is further amplified as follows: 

ETihe amount normally considered necessary to establish a viable enterprise is less 

susceptible to precise calculation_ Here, the consular officer must draw on personal 

knowledge of the U.S. business scene to judge whether the amount the alien proposes 

to invest is reasonable for that type of business.... 

Id. at note 5.3-2. 

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Interim Decision #3I I I 

In small to medium-sized businesses, the term "substantial" necessarily connotes an 

investment of more than half the value of the enterprise, or an amount normally 

considered necessary to establish an enterprise.... 

Id. at note 5.3-3. 

A Service memorandum in the record from the Assistant Commissioner, Adjudications, dated June 14, 1985, to the regional and district 

office cites this DOS interpretation with approval. However, in this 

case the Sei-vice argues that if only a minimum amount is invested, it 

would not qualify the alien for treaty investor status. 

In regard to the second issue, the relevant Immigration and 

Naturalization Service regulation, 8 C.F.R. § 214.2(e) (1988), deals 

with length of stay and change of employer but does not define the 

term treaty investor. Certain language in the Operations Instructions 

apparently relates to employees of both treaty traders and treaty 

investors. It requires that the applicant's duties must be either 

"executive, managerial, or supervisory in nature"; or, if not, the 

applicant must "have special qualifications necessary for the firm's 

efficient operation." O.I. 214.2(e) (emphasis added). The O.I. indicates that in matters concerning treaty aliens, the inspector should 

consult the notes to 22 C.F.R. §§ 41.40 and 41.41 in the FAM. Id. The 

same language requiring consultation of the State Department regulations is contained in Operations Instructions 248.6, relating to change 

of status to treaty trader or investor. 

The previous DOS regulation, 22 C.F.R. § 41.41(a) (1987), provided that a treaty investor must establish to the satisfaction of the 

consular officer that he qualifies under section 101(a)(15)(E)(ii) of the 

Act, that he intends to depart upon termination of his status, and, if he 

is an employee of a treaty investor, that he is employed in a responsible 

capacity. The regulations regarding visas have been revised and 

reorganized. See 52 Fed. Reg. 42,590 (1987). The regulations regarding 

treaty traders/investors are now recodified at 22 C.F.R. § 41.51 

(1988). The language regarding "responsible capacity," has been 

eliminated in favor of the requirement that the alien have "special 

qualifications." 52 Fed. Reg. 42,605 (1987). Presently, 22 C_F_R_ 

§ 41.51(c) ( 1988) provides: 

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 or will be engaged in duties of 

an executive or supervisory character, or, if employed in a minor 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 investor if in the United States; or 

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Interim Decision #3111 

(2) An organization at least 50 percent owned by persons having the nationality of 

the treaty country who are maintaining nonimmigrant treaty trader or investor status 

if residing in the United States. (Emphasis added.) 

The FAM requires that the applicant, if an employee of a treaty 

investor, "individually qualitjy] as a manager or a highly trained and 

specially qualified employee." FAM at § 41.51 note 2.3(e). It further 

provides: 

The E classification is intended for specialists essential to the firm's U.S. operations, 

not for ordinary skilled workers. The burden of proof to establish that the applicant 

has special qualifications essential to the effectiveness of the firm's U.S. operations is 

on the company and the applicant. The consular officer should consider such factors 

as: the degree of proven expertise of the alien in the area of specialization, the 

uniqueness of the specific skills, the length of experience and training with the firm, 

the period of training needed to perform the contemplated duties, and the salary the 

special expertise can command. Id at note 3.4-3(a). The consular officer is also 

advised to consider American labor market conditions in assessing whether 

competent United States workers are available to provide the skills needed by the 

treaty firm. Id. at note 3.4-3(e). 

The Service Deputy Assistant Commissioner, Adjudications, testified at the hearing that it was the policy of the Service to require that 

the employee of a treaty investor be coming to directly or indirectly 

develop and direct the treaty investor's investment in the United 

States. Prior cases have held that to be eligible for treaty investor 

status under section 101(a)(15)(E)(ii) of the Act an alien must enter the 

United States solely to develop or direct the operations of the 

enterprise in which he has invested or is investing. Matter of Kung, 17 

I&N Dec. 260 (Comm. 1978) (change of nonimmigrant status); Matter 

of Lee, 15 I&N Dec. 187 (R.C. 1975); see also Choi v. INS, 798 F.2d 

1189 (8th Cir. 1986) (denial of application for extension of nonimmigrant status remanded). Although different results have been reached 

in different cases, in the past the test for an employee of a treaty 

investor has been whether the alien is employed by a qualifying 

investor of the same nationality in a "responsible capacity." Matter of 

Nago, 16 I&N Dec. 446 (BIA 1978); Matter of Udagawa, 14 I&N Dec. 

578 (ETA 1974); Matter of Tamura, 10 I&N Dec. 717 (R.C. 1964); 

Matter of Kobayashi and Doi, 10 I&N Dec. 425 (D.D., R.C., Dep. 

Assoc. Comm. 1963) (change of status denied). Although the "responsible capacity" language has been eliminated from the regulations as 

republished in favor of the term "has special qualifications that make 

the services rendered essential," the introduction to the republication 

indicates that no substantive changes are included in the republication. 

52 Fed. Reg. 42,590 (1987). In addition, the new language of the 

regulation reproduces precisely the language used in the previous 22 

C.F.R. § 41.40 (1987) (relating to employees of treaty traders). 

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Interim Decision #3111 

Therefore, the language used will be taken as equivalent to the prior 

language. 

We find that the statute itself does not explain the term "substantial" and it does not address the requirements to be met by employees 

of treaty investor companies or corporations. The DOS has drafted the 

regulations which must be applied in this case. Under its regulations, 

the DOS issued the visas at issue. The replies to the interrogatories 

propounded by the DOS Visa Office indicate that the officials of that 

office find no error in the issuance of the "E-2" visas. As a general 

matter, great deference should be accorded to an agency's construction 

of a statute which it administers and the agency's interpretation of 

regulations it has drafted. United States v. Larionoff, 431 U.S. 864 

(1977) (interpretation of own regulations accorded deference); Morton 

v. Ruiz, 415 U.S. 199 (1974); Griggs v. Duke Power Co., 401 U.S. 424 

(1971); Skidmore v. Swift & Co., 323 U.S. 134 (1944) (statutory 

interpretation accorded deference). The Service contends that a 

minimum dollar amount is required to meet the substantiality test and 

that employees of the treaty trader must be coming to directly or 

indirectly develop and direct the treaty trader's investment in the 

United States. In opposition to the DOS interpretation, the Service has 

placed only an unpublished "policy," one aspect of which recently has 

been publicly contradicted by the official of the Service responsible for 

these policy issues.3The Service's requirement of a minimal investment, likewise, is not published or reflected in any written material. 

We cannot give weight to these alleged policies of the Service in the 

face of the DOS regulations and the Service's history of acquiescence 

with them. See 01 214.2(e), 248.6. If the Service disagrees with the 

regulations of the DOS, it should take advantage of existing mechanisms of inter-agency consultation to convince the DOS to change its 

regulations.4 See sections 104(e), 105 of the Act, 8 U.S.C. §§ 1104(e), 

1105 (1982). 

In applying the DOS guidelines and regulations to the present case, 

we note that the employing company must first qualify as a treaty 

investor. In order to qualify as a treaty investor the company must 

have invested, or be actively in the process of investing, a substantial 

amount of capital. When Congress enacted the Immigration and 

Nationality Act of 1952, it enlarged the "E" visa class to include the 

3Mr. Richard Norton, the Service Associate Commissioner for Examinations, stated 

in response to a question posed at a public conference that the Service agrees with the 

DOS that an employee of a treaty investor was not required to be in the United States to 

develop and direct the treaty investor's investment in the United States. 

4The witness from the Service Central Office, the Deputy Assistant Commissioner, 

Adjudications, testified that the present DOS regulations were developed in close 

consultation with Service over a period of time. 

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Interim Decision #31I1 

"E-2" category. The only discussion of the substantiality issue was that 

the investment must be in "a real operating enterprise and not a 

fictitious paper operation." H.R. Rep. No. 1365, 82d Cons., 2d Sess., 

reprinted in 1952 U.S.C.C.A.N. 1653, 1697. The DOS regulations 

require a bona fide enterprise. The legislative history and the DOS 

regulations both fail to impose a dollar amount requirement for 

"substantiality" and adopt a definition that envisions a bona fide, 

viable business. 

Since the present case involves an investment in a new business in 

the United States, the "amount normally considered necessary to 

establish a viable enterprise of the nature contemplated" test is 

applicable. FAM at § 41.51 'note 5.3-1. In this case, the investment 

required to establish a viable and profitable business is not large. The 

evidence indicates the amount thus far actually invested and in the 

process of being invested is sufficient to accomplish its purpose. The 

business is in operation and is engaged in business activity on behalf of 

its parent company. Thus, the business created is a viable one. We find 

the present investment is sufficient to establish a profitable and viable 

business in the United States. As all of this amount has been provided 

by the treaty investor, the proportionality test is met. 

Finally, the DOS regulation requires that the investment not be "in 

a marginal enterprise solely for the purpose of earning a living." 22 

C.F.R. § 41.41(a) (1987) (currently 22 C.F.R. § 41.51(b)(1) (1988)). 

The gloss on this language in the FAM is that laan applicant is not 

entitled to E-2 classification if the investment, even if substantial, will 

return only enough income to provide a living for the applicant and 

family." FAM at § 41.51 note 5.4. The note goes. on to provide 

examples of ways to determine marginality, any of which are sufficient 

proof of meeting this requirement. The testimony indicates that, based 

on its like experience in other countries, the investor in this case 

reasonably expects substantial revenues from its investment far above 

a living wage. Moreover, it was established by testimony of the chief 

economist in the Michigan Department of Commerce that the 

investment is expected to expand job opportunities in the State of 

Michigan. 

The next issue is whether the applicants fit within the category of 

employees of a treaty investor company qualified to come to the 

United States with an "E-2" visa. Nothing in the Service regulations 

relates to this issue. The only language in O.I. 214.2(e) relating to an 

employee of a treaty investor is that the applicant must have "special 

qualifications necessary for the firm's efficient operation." The 

applicable law, as found in 22 C.F.R. § 41.41(a)(3) (1987), formerly 

required that the alien be employed by a treaty investor in a 

responsible capacity. See supra p. 7. The regulations presently state 

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Interim Decision #3111 

that an applicant must have special qualifications that make his 

services essential to the efficient operation of the enterprise. 22 C.F.R. 

§ 41.51 (1988). 

The standards for managerial personnel and for highly trained and 

specially qualified ("essential") personnel are basically the same for 

"E-1" and "E-2" visas. FAM at § 41.51 note 3.4-3(b). As noted above, 

the FAM note 3.4-3(a) lists factors to be considered in determining 

whether an alien possesses "specific qualifications" that are "essential" to the firm's United States operations such as: the degree of 

proven expertise, uniqueness of the specific skills, length of experience 

with the firm, the period of training, and the salary. There was 

considerable testimony at the hearing as to the skill and importance of 

the job performed by an automotive design engineer, as well as 

evidence regarding the high qualifications of the applicants. It was 

shown that even if one has an engineering degree, approximately 10 

years are required to train an automotive design engineer. The one 

applicant has 30 years of experience. The computer skills of the 

younger applicant are unique. We agree with the Chief Immigration 

Judge that each of the applicants is to be employed in a highly creative 

job involving independent judgment and is thus occupying a very 

responsible position. They have special qualifications. Their employment is also essential to the treaty investor, as it could otherwise not 

meet its contract obligations. 

As the applicants meet the requirements of the applicable regulations promulgated and interpreted by the DOS, they should be 

admitted. 

Accordingly, they will be admitted. 

ORDER: The applicants are ordered admitted to the United 

States as nonimmigrant treaty investors. 

Board member Michael J. Heilman has abstained from consideration of this case. 

69