By Tony Weigel and Sonal Verma, AILA Media Committee
The 2006 Pixar movie Cars tells the tale of a fictional city, Radiator Springs, a once thriving oasis of commerce located along historic Route 66. As time passed, the then new, nearby Interstate highway diverted both people and business. In spite of the city’s best efforts, the prospects of survival and future growth seemed dim. However, in the end, a successful outsider was permitted to make the city home and brought with him economic investment and rejuvenation.
There are plenty of real communities in the U.S. like Radiator Springs that could benefit from outside investment. The recent news of initiatives by the U.S. Citizenship and Immigration Service (USCIS) to spur investment and job growth shows some promise, but unfortunately, the agency has failed to address one of the core visa programs in dire need of attention – the L-1 intra-company transferee visa for managers, executives, and specialized-knowledge workers of international companies.
Many international companies have utilized the E-2, treaty-investor visa program to facilitate investment in the U.S. and temporarily employ foreign executives, managers, and essential employees. The E-2 visa option is open to citizens of 80 of the world’s approximately 196 countries. It is not available to individuals from countries like China, Brazil, South Africa, New Zealand, Saudi Arabia, Venezuela or Russia, 5 of which are among the U.S.’s top 25 trade partners. Companies excluded from the E-2 program typically must look to the L-1 program to facilitate U.S. investment.
For decades, international companies of all sizes have utilized the L-1 program to establish and grow operations in the U.S. These investments have created job opportunities for U.S. workers across the country. In the last few years, the USCIS has adopted restrictive practices that have made it more difficult for foreign companies to operate here. There is significant uncertainty in obtaining grants and extensions of L-1 visas. For some, the risk of securing L-1 visas is greater than succeeding in the marketplace.
The starting line for many international companies is the “new office” L-1A visa application on behalf of one of its foreign managers or executives. This process requires evidence of a U.S. business location, a business plan detailing financing and staffing goals, and information about the international organization. If approved, the U.S. operation has one year to show significant growth. This is essentially a race to outperform its industry peers in spite of any factors beyond the U.S. operation’s control – no small feat.
Small to medium-sized businesses face two significant hurdles when seeking to extend an L-1A visa holder’s stay at the one-year mark. It can be difficult to prove that a transferred executive or manager is performing the right kind of job duties at this stage. The USCIS directs its examiners to focus on the “primary” job duties of the manager or executive, but the mere mention of any non-managerial duties can block an L-1A approval. Additionally, the USCIS focuses heavily on staffing levels to determine whether “enough” growth has occurred. Many of these businesses face onerous, “kitchen sink” requests for more evidence and notices of intent to deny in response to extension requests. At this point, it can be incredibly difficult to obtain an approval of the transferred manager or executive’s visa. Denied visa applications, in turn, can result in the international company’s withdrawal from the U.S. and lost opportunities for additional investment and future job growth. The USCIS could avoid these outcomes. For example, it could choose to exercise its discretion and permit extension requests in one-year increments to give these operations more time to develop and grow, especially in light of our struggling economy.
Denials of initial “new office” L-1A petitions, or their extensions, are bad business, but denials of L-1A visa extensions three years after an approval are even more troubling. Based upon the USCIS’s current practices, a significant number of L-1A visa extension requests have been denied because of redeterminations and reversals of prior approvals classifying a person as an L-1A manager or executive. The USCIS keeps moving the finishing line. It is hard to imagine a national policy of encouraging foreign companies to invest in the U.S. – permitting transferred management to oversee the investment of years of effort and capital – then erecting an arbitrary barrier to continued operations in the U.S. Yet this barrier exists. The result has been layoffs of U.S. workers at all levels of jobs, as these companies subsequently withdraw from our communities.
The USCIS’s predecessor, the INS, acknowledged concerns that small businesses could be negatively impacted by overly-restrictive interpretations of the regulations. In its February 26, 1987 comments, the INS agreed “that a strict and literal reading of these [L-1A] definitions could make a number of legitimate managers and executives not qualify for L classification.” The INS further clarified the intent of its regulations by stating: “It is clear that a large organization is not required for the manager or executive to qualify for L classification. The Service supports international business and legitimate foreign investment in the United States. It is Service policy to encourage creation of jobs for United States workers …” The USCIS should keep these comments in mind when considering initial grants and extensions of L-1A status.
International companies also face another crippling challenge to growth in the U.S. – the USCIS’s radical redefinition of the concept of “specialized knowledge.” The law provides for transfers of certain employees in the L-1B visa category, but fewer and fewer applicants can make the grade. In prior years, international companies could readily transfer employees with specialized knowledge of a company’s product, services, equipment, or research; their application in foreign markets; or an advanced knowledge of the company’s processes and procedures. These potential L-1B employees can be key to the success of the U.S. operation and the creation of other job opportunities for U.S. workers.
However, in recent years, the USCIS has adopted an overly-restrictive definition of “specialized knowledge” that is counter to its explicit instructions to examiners that “there is no test of the U.S. labor market in determining whether an alien possesses specialized knowledge.” International companies must now show that the knowledge in question is not available in the general marketplace, sometimes in response to nine-page requests for more evidence. The USCIS has created a burdensome, restrictive labor market test that is reducing growth opportunities in the U.S. and accompanying job growth for domestic workers. After years of flexibility in the L-1B category, the USCIS’s position has effectively become that hardly anyone qualifies for an L-1B visa.
After an L-1 visa petition is denied, there is no realistic option for appeal. The USCIS routinely denies requests for reconsideration of denials and forwards appeal requests to the Administrative Appeals Office (AAO), which has become a virtual dead end. The AAO’s processing time for the appeal of an L-1 denial has grown from 6 months to 23 months in the last two years! For many foreign companies, these decisions will come much too late in the game. Something is seriously wrong with a system that creates so many barriers to investment and job creation, together with an administrative office, the AAO, that in no way delivers on its mission statement to “provide timely, consistent, and accurate resolution of appeals.”
Opportunities for the USCIS to spur investment and sustain and create jobs are arriving every day at USCIS Service Centers. A number of these opportunities are parked at dead ends in the AAO’s ever-growing queue of L-1 appeals. The USCIS should reemphasize the intent of the L-1 program in keeping with its historical functionality. Fair and prompt action on these petitions could immediately help U.S. workers. The USCIS holds the keys in-hand, but they must choose to use them.
Are we open for business, or not?