Cyrus Mehta

The Sweet Smell of Success: H-1B Visas for Entrepreneurs

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By Gary Endelman and Cyrus D. Mehta

The title of this blog may seem odd as the H-1B visa is usually associated with an employee who earns a regular wage at the prevailing rate. Yet, entrepreneurs may benefit from the H-1B. Since the USCIS recently set up an Entrepreneur Pathways Portal inviting entrepreneurs to use existing nonimmigrant visas, including the H-1B visa, an analysis on how the H-1B visa can be legitimately exploited by entrepreneurs is worthy of further  exploration.

At the outset, it is worth noting that law is neither applied nor interpreted in a vacuum but is suffused with the attitudes and assumptions of the adjudicator. The same is true here. What does the USCIS want to achieve through its new embrace of foreign entrepreneurs? What is its end goal? Does it accept the legitimacy of the H-1B and does it believe that its proper application or deployment will be in the national interest? Unless we know these things first, no formula or set of legal guidelines can result in a proper, informed decision.  In the end, unless and until the moral and ethical legitimacy of employment based immigration is both embraced and appreciated, there will not be the intellectual flexibility necessary to help entrepreneurs reach their dreams.

Last week’s blog summarized the nonimmigrant options for entrepreneurs suggested in Entrepreneur Pathways, and it also speculated whether this new welcoming embrace of foreign entrepreneurs may possibly change the “Culture of No” within USCIS, whose officials generally places a small business under a fraud profile. A startup may be even more rudimentary than an established small business and thus more susceptible to being viewed as a fraudulent artifice. Startups may not yet be generating a revenue stream as they are developing new technologies that may lead to products and services later on. Many have received financing through venture capital, angel investors or through “Series A and B” rounds of shares. Startups may also operate in more informal spaces, such as the residences of the founders (with regular meetings at Starbucks) instead of a commercial premise. Some are also operating in “stealth mode” so as not to attract the attention of competitors and may not display the usual bells and whistles such as a website or other marketing material. Startups may also not have payroll records since founders may be compensated in stock options. Still, such startups are legitimate companies that should be able to support H-1B, L, O or other visa statuses. While, in the past, USCIS has often been accused by critics of harboring a systemic bias against small business, Entrepreneur Pathways holds out the promise of a new and more welcoming attitude. The degree to which this flexibility will operate in practice will depend, in large measure, on the extent to which emerging companies and inventive business strategists press their case for immigration benefits.

Regarding the H-1B visa, it is true that 8 CFR § 214.2(h)(4)(ii) requires the existence of an employer-employee relationship, which includes the employer’s ability to “hire, pay, fire, supervise, or otherwise control the work of such employee.” Can the startup owner be able to sponsor himself or herself on an H-1B through the startup? The USCIS portal is surprisingly receptive, but still limited by the rigid methodology and narrow assumptions of the Neufeld Memo that elevates the right of control over all the other factors set forth in the regulation, such as the right to hire, pay, fire or supervise the employee. Still, the USCIS suggests that a startup may be able to demonstrate this if the ownership and control of the company are different. This can be shown through a “board of directors, preferred shareholders, investors, or other factors that the organization has the right to control the terms and conditions of the beneficiary’s employment (such as the right to hire, fire, pay, supervise or otherwise control the terms and conditions of employment).” Some of the suggested evidence could include a term sheet, capitalization table, stock purchase agreement, investor rights agreement, voting agreement or organization documents and operating agreements. Not only can observance of corporate formalities serve legitimate business interests and avoid the “piercing of the corporate veil”, by providing the patina of control over individual initiative they may also serve to convey immigration benefits.

The ethos of any new business idea is change, an unwillingness to sacrifice creativity and growth on the alter of certainty.  It is the preference for certainty, however, most notably reflected in the Neufeld Memo that  may make it difficult for the 100% owner of a startup to successfully obtain an H-1B visa. If the beneficiary has not only conceptualized the business, but also invested only her own capital, it will be difficult for her to have a board of directors that can have the ability to discipline or fire her. Indeed, noted attorney David Ware asks a good question: “What entrepreneur in his or her right mind is going to invest blood, sweat and tears, not to mention money, in an entity holding this power?”  If we expect the entrepreneur to take a chance, must not the USCIS itself accept some measure of risk?  Concern over fraud, while totally legitimate, must be balanced against no less compelling concerns for allowing the honest expression of commercial imagination.

Although Mr. Ware’s point is well taken, we caution against being completely dismissive of the USCIS effort to welcome entrepreneurs, especially the H-1B visa, which one can have more access to over other visas such as the O-1, E-2 or L-1A. The agile practitioner should invoke old decisions that recognize the separate existence of the corporate entity. It is well established that a corporation is a separate and distinct legal entity from its owners and stockholders. See Matter of M, 8 I&N Dec. 24, 50 (BIA 1958, AG 1958); Matter of Aphrodite Investments Limited, 17 I&N Dec. 530 (Comm.1980); and Matter of Tessel, 17 I&N Dec. 631 (Act. Assoc. Comm. 1980).  As such, a corporation, even if it is owned and operated by a single person, may hire that person, and the parties will be in an employer-employee relationship. This point needs to be brought out when advancing an H-1B for an entrepreneur. Still, we acknowledge that the H-1B petition may have more success when there is another investor or shareholder, and the beneficiary is not the sole owner of the entity. That person may be able to exercise control over the H-1B beneficiary, even if he or she has a minority interest. It may not be necessary to show that the other individual or entity has the power to discipline the beneficiary, but only that this person can exercise negative control over the beneficiary’s decisions. There is nothing preventing the other individual from being a family member, and the shareholder or director also need not be residing in the US.

There are other difficulties for an H-1B entrepreneur that may be beyond the USCIS’s control. Every H-1B petition must be accompanied by a certified Labor Condition Application from the DOL. Under an LCA, the employer attests that it must pay the beneficiary the higher of the prevailing or actual wage, and must also do so on a regular prorated basis. In a startup, there may be no revenue stream to pay the entrepreneur initially. Thus, unless the startup is sufficiently capitalized through venture capital or other forms of financing that can ensure a steady stream of income to the H-1B beneficiary at the required wage, the petitioning entity may be in violation of the DOL rules if it cannot guarantee a regular prevailing wage.

Also, a DOL rule at 20 CFR § 655.731(c)(9)(iii)(C) states that any attorney fees paid by the H-1B beneficiary will be viewed as a lowering of the required wage that the employer is required to pay the beneficiary. There is also a prohibition of the employee paying the training fee of $750 or $1,500. In the case of a startup, where the H-1B beneficiary has invested his own money into the enterprise, the fact that the petitioning entity makes these payments ought not to be viewed as a violation of the DOL rules regarding impermissible payments. Since it is the entity that is making these payments, which is considered separate from the beneficiary, and which also controls the beneficiary, it should not be viewed as impermissible. Otherwise, there is no way that the USCIS can promote the H-1B to entrepreneurs.

Even if an H-1B founder of a company successfully establishes that the entity can control her employment through a board of directors or through preferred shareholders, the USCIS could likely challenge whether a position in a startup, where the beneficiary may be wearing many hats, can support a specialized position. The H-1B visa law requires the petitioner to demonstrate that a bachelor’s degree in a specialized field is the minimum qualification for entry into that occupation. Also, positions in innovative startups may not necessarily fit under the occupations listed in the Department of Labor’s Occupational Outlook Handbookbut may yet require at least a bachelor’s degree. It is hoped that USCIS examiners are trained to be receptive to other evidence to demonstrate that the position requires a bachelor’s degree. Furthermore, an MBA degree should be considered a specialized degree in itself since many MBA programs at top business schools focus on entrepreneurship and other fields, such as technology or web analytics, which equip one to be a successful entrepreneur. The very notion of specialized occupations has and will continue to change as the pervasive impact of technology in the Internet Age makes itself felt at all levels of economic activity.

While there are insurmountable hurdles for H-1B entrepreneurs, it is hoped that the USCIS will make every effort for the program to work for them. The H-1B is the most accessible visa to a foreign student as the E-2 visa only applies to nationals of limited countriesthat have a treaty with the US, and none of the BRIC countries have such treaties. Very few entrepreneurs can qualify as extraordinary under the O-1 and the L-1A visa would only apply to an individual who has been employed overseas for one year in the past three years in an entity that has a parent, subsidiary, affiliate or branch in the US. It also raises a larger question: How can we use US immigration policy not merely to preserve the status quo but actually create wealth and jobs? For it to work successful, USCIS officials have to examine and approve cases consistent with this objective. The problem goes beyond the “Culture of No.” The USCIS should think of immigration in a strategic sense as a mechanism to create wealth and expand the economy. Presently, USCIS thinks in static terms so naturally the focus is on protecting what now is and judging people not by their potential but by their documented accomplishments. USCIS, on the other hand, should think like an entrepreneur so as to avoid a dissonance or disconnect between the regulators and those whom they regulate. The USCIS Entrepreneur in Residence program, from which the Entrepreneur Pathways portal has ensued, appears to be a step in the right direction. Only time will tell whether it will truly serve the needs of entrepreneurs. The willingness of the entrepreneur to take risks must be matched in full measure by an immigration system that also embraces the value of innovation. As T.S Elliot famously reminded us: “Only those who risk going too far can possibly find out how far it is possible to go.”

Cyrus Mehta

New Portal Welcomes Entrepreneurs to the USA: But Will this Change the Culture of “No” at USCIS

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Consistent with its earlier policy of welcoming entrepreneurs, the USCIS launched a new portal called Entrepreneur Pathways providing resources on how foreign entrepreneurs can use existing visas to launch their innovative startups in the US.  The portal is quite good, and it is hoped that USCIS officials retreat from their culture of “No” and process cases in the spirit of this new guidance.

At the outset, we clearly need Congress to create a Startup Visa rather than entrepreneurs using existing visas that were not designed for them, but those legislative proposals are still floundering. One version of a Startup Visa would require the entrepreneur to invest a minimum of $100,000 in order to get a two year green card. To keep the green card past two years, the founder would need to create five jobs and either raises at least $500,000 in additional funding or $500,000 in revenues. Even if Congress enacted a Startup Visa, these requirements could be rather burdensome for a nimble entrepreneur who could still launch a successful business without an initial $100,000 investment.

There are enough opportunities under our existing immigration law for entrepreneurs who may not need to make such a high investment in their startup. The existing visa system if interpreted broadly, together with the Startup Visa, would provide a welcoming environment for job creating foreign entrepreneurs in the US. The new portal shows the way on how entrepreneurs can use the existing immigration system to set up ventures in the US and possibly even flourish. While these ideas have been used by creative immigration attorneys on behalf of their clients from time immemorial, it is good to know that the portal validates them, largely based on the input that the USCIS received from real entrepreneurs through its Entrepreneur in Residence initiative. Most important, the EIR has endeavored to train USCIS officers about the unique aspects of a startup business. It is hoped that USCIS officers, after receiving such training, will change their mindset and be willing to distinguishing a legitimate startup from a fraudulent artifice.

For instance, startups may not yet be generating a revenue stream as they are developing new technologies that may lead to products and services later on. Many have received financing through venture capital, angel investors or through “Series A and B” rounds of shares. Startups may also operate in more informal spaces, such as the residences of the founders (with regular meetings at Starbucks) instead of a commercial premise. Some are also operating in “stealth mode” so as not to attract the attention of competitors and may not display the usual bells and whistles such as a website or other marketing material. Startups may also not have payroll records since founders may be compensated in stock options. Still, such startups are legitimate companies that should be able to support H-1B, L, O or other visa statuses.

The portal suggests that if a foreign student has a “Facebook” type of idea, he or she can start a business while in F-1 Optional Practical Training provided the business is directly related to the student’s major area of study. After completing F-1 OPT, this student can potentially switch to H-1B visa status (provided there are H-1B visa numbers at that time). Regarding the startup owner being able to sponsor himself or herself on an H-1B, the USCIS is surprisingly receptive, but still obsessed with the Neufeld Memo that there must be a valid employer-employee relationship and that the entity has a right to control the employment. Still, the USCIS suggests that a startup may be able to demonstrate this if the ownership and control of the company are different. This can be shown through a board of directors, preferred shareholders, investors, or other factors that the organization has the right to control the terms and conditions of the beneficiary’s employment (such as the right to hire, fire, pay, supervise or otherwise control the terms and conditions of employment). Some of the suggested evidence could include a term sheet, capitalization table, stock purchase agreement, investor rights agreement, voting agreement or organization documents and operating agreements.

Even with intra-company transferee L-1 visas for executives and managers, the portal recognizes that an entrepreneur may establish a “new office” L-1 (which could be a subsidiary, parent, affiliate or branch of the foreign company) with a validity period of one year, which allows a ramp up period where the entrepreneur can be involved in “hands on” tasks instead of function as an executive or manager. After the one year ramp up, the organization must be able to support the entrepreneur in a true managerial or executive capacity. The portal also refreshingly suggests that entrepreneurs who can demonstrate extraordinary ability in their field of endeavor can take advantage of the O-1 visa, and can set up a company who can sponsor them. Interestingly, there is no mention of the control test for the O-1 visa like for the H-1B visa. Finally, the portal also provides guidance for nationals of certain countries that have a treaty with the US, which facilitates the E-2 investor visa.

All this looks good on paper (rather online!), and it remains to be seen whether USCIS officers will faithfully interpret this guidance. Even if an H-1B founder of a company successfully establishes that the entity can control her employment through a board of directors or through preferred shareholders, the USCIS could likely challenge whether a position in a startup, where the beneficiary may be wearing many hats, can support a specialized position. The H-1B visa law requires the petitioner to demonstrate that a bachelor’s degree in a specialized field is the minimum qualification for entry into that occupation. Also, positions in innovative startups may not necessarily fit under the occupations listed in the Department of Labor’s Occupational Outlook Handbook but may yet require at least a bachelor’s degree. It is hoped that USCIS examiners are trained to be receptive to other evidence to demonstrate that the position requires a bachelor’s degree. Furthermore, an MBA degree should be considered a specialized degree in itself since many MBA programs at top business schools focus on entrepreneurship and other fields, such as technology or web analytics, which equip one to be a successful entrepreneur.

In the end, the success of the Entrepreneur in Residence initiative largely depends on whether the USCIS has been able to alter the mindset of its officials who are in the habit of saying “No.”

Cyrus Mehta

US MISSION IN INDIA EXPANDS INTERVIEW WAIVER PROGRAM: DOES THIS BODE WELL FOR H-1B AND L VISA APPLICANTS?

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The U.S. Mission in India has announced expansion of the Interview Waiver Program (IWP), launched in March 2012, which allows qualified individuals to apply for additional classes of visas without being interviewed in person by a U.S. consular officer. The U.S. embassy in New Delhi expects this expansion to affect thousands of visa applicants in India.
Under the current IWP, Indian visa applicants who are renewing visas that are still valid or expired within the past 48 months may submit their applications for consideration for streamlined processing, including waiver of a personal interview, within the following visa categories:
  • Business/Tourism (B-1 and/or B-2)
  • Dependent (J-2, H-4, L-2)
  • Transit (C) and/or Crew Member (D) – including C-1/D
  • Children applying before their seventh birthday traveling on any visa class
  • Applicants applying on or after their 80th birthday traveling on any visa class
Under the expanded IWP, the following Indian applicants may also be considered for streamlined processing:
  • Children applying before their 14th birthday traveling on any visa class
  • Students returning to attend the same school and same program
  • Temporary workers on H-1B visas
  • Temporary workers on individual L-1A or individual L-1B visas
The renewal application must be within the same classification as the previous visa. If the previous visa is annotated with “clearance received,” however, that applicant is not eligible for a waiver of a personal interview.
Not all applications will be accepted for streamlined processing. As always, consular officers may interview any visa applicant in any category. Applicants who are renewing their visas may still need an appointment for biometrics (fingerprint and photograph) collection. All applicants must submit all required fees and the DS-160 application form.
It remains to be seen whether the expanded IWP will improve the processing of H-1B and L visa applications. For over two years, US Consulates in India have routinely held up the processing of H and L visa renewal applications. Many of these applications are re-adjudicated even after the H-1B or L visa petition has been approved by the USCIS, and that too after the petitioner overcame objections by responding in detail to a Request for Evidence (RFE) or a Notice of Intent to Deny (NOID).  The visa applicant is often requested to provide further proof of the bona fides of the job opportunity or the petitioning company. This is done mainly for visa applicants who are employees of IT consulting companies. Even if the visa applicant is able to overcome any suspicions about the employer or the bona fides of the job opportunity at the US consulate, it could take several months before the visa is re-issued and this delay could cause extreme hardship to the applicant, including the loss of the job. As a result, many beneficiaries of H-1B and L petitions have not traveled outside the US, even for a vacation, out of an abundance of caution. First time H-1B and L visa applicants may still be subjected to a vigorous re-adjudication of their petitions, but it is hoped that the expansion of the IWP to H-1B and L applicants will eliminate further delays caused due to re-adjudications. If every H-1B or L renewal applicant is subjected to the same vigorous scrutiny as before then it would defeat the objective of the expansion of the IWP.
Still, applicants for renewals of their H-1B and L visas should not take for granted that they will be accepted for streamlined processing under the expanded IWP, especially if there have been changes to the terms of the employment. For example, if the H-1B petition was approved based on the beneficiary working at a client site in Philadelphia, and the client site has now been changed to San Francisco, the US Consulates in India do not take too kindly to this change after the approval of the petition. The US consul may want to see an amendment to the H-1B petition reflecting the new job site. Otherwise, there is a likelihood that the consul could recommend to the USCIS that the petition be revoked, leading to even further delays. Although petitioners may appropriately rely on USCIS guidance that an amended petition is not required if the job site changes, so long as a Labor Condition Application (LCA) is certified for the new site prior to the employee’s move there, US consuls in India may not honor this guidance.  It is therefore recommended that a petitioner continue to amend the H-1B petition if there is a change in the job site after the approval of the petition.
The U.S. embassy in New Delhi said that this is “one of many steps the Department of State is taking to meet increased visa demand in India.” The embassy explained that in 2011, consular officers in India processed nearly 700,000 nonimmigrant visa applications, an increase of more than 11 percent over the previous year. Currently, applicants generally wait fewer than 10 days for visa interview appointments and spend less than one hour at U.S. consular facilities in India. In September 2012, the U.S. Diplomatic Mission to India implemented a new visa processing system throughout India that further standardizes procedures and simplifies fee payment and appointment scheduling through a new website at http://www.ustraveldocs.com/in. For more details about procedures for submitting a renewal application, see http://www.ustraveldocs.com/in/in-niv-visarenew.asp
Cyrus Mehta

WHERE DO WE GO FROM HERE: THE NEW FACE OF COMPREHENSIVE IMMIGRATION REFORM

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By Gary Endelman and Cyrus D. Mehta

It may have taken the Bolsheviks 10 days to shake the world but the presidential election last week did it in one. The political calculus on comprehensive immigration reform changed utterly and likely forever.

Hispanic voters accounted for 10% of voters on November 6th, reaching double-digits for the first time, and President Obama won them by a 71-28% margin. The number of registered Latinos soared by 26% in the past 4 years to an astonishing 12.2 million. The Hispanic rejection of Governor Romney contrasts sharply with the 44% of the Hispanic vote won by former President Bush in 2004. The latter pushed for CIR in 2007 and remains the only President ever to make a televised speech on immigration from the Oval Office. Moreover, the last time that CIR passed the US Senate in 2006, 23 of the 62 Aye Votes, came from Republicans, including one from then Senate Majority Leader Bill Frist of Tennessee.

Nor have Hispanics always been in love with President Obama under whose administration deportations reached record levels. Despite his 2008 promise to move on CIR, the President had done precious little until this summer, something he had to admit under tough questioning at a forum sponsored by the Spanish-language Univision network. Then came the President’s Deferred Action for Childhood Arrivals (DACA) initiative and the momentum for change took off. On the day after the election, an ABC News/Washington Post poll revealed a majority of all Americans (57%) backed a pathway for citizenship to bring the undocumented in from the shadows; among Hispanics the notion was even more popular (82%). Fox News commentator Sean Hannity proclaimed that his position on CIR had “evolved”;Arizona Governor Jan Brewer who rode to re-election on her state’s nativist immigration law now thought that CIR was “fine and dandy”; libertarian Senator Rand Paul announced an intent to make CIR a key plank in his run-up for 2016 and old-time immigration stalwarts like John McCain and Lindsey Graham who had seemingly found their old views radioactive in recent years now rediscovered them, eager to join in bipartisan CIR discussions with their Democratic colleagues.

In his first news conference after his reelection on November 14, 2012, President Obama expressed confidence that he could pass an immigration reform bill early in his second term. He said that we should “seize the moment” buoyed by the strong endorsement he received from Latino voters favoring him over Mitt Romney.

Here is a transcript of the section of the news conference dealing with immigration:

Q: And also, what lessons, if any, did Democrats learn from this last election and the Latino vote?

OBAMA: Well, I think what was incredibly encouraging was to see a significant increase in Latino turnout. This is the fastest-growing group in the country and, you know, historically what you’ve seen is Latino vote — vote at lower rates than the broader population. And that’s beginning to change.

You’re starting to see a sense of empowerment and civic participation that I think is going to be powerful and good for the country. And it is why I’m very confident that we can get immigration reform done. Before the election, I had given a couple of interviews where I predicted that Latino vote was going to be strong and that that would cause some reflection on the part of Republicans about their position on immigration reform. I think we’re starting to see that already.

I think that’s a positive sign. This has not historically been a partisan issue. We’ve had President Bush and John McCain and others who have supported comprehensive immigration reform in the past. So, we need to seize the moment.

And my expectation is that we get a bill introduced and we begin the process in Congress very soon after my inauguration.

OBAMA: And, in fact, some conversations I think are already beginning to take place among senators and congressmen and my staff about what would this look like. And when I say comprehensive immigration reform, it’s very similar to the outlines of previous immigration reform. I think it should include a continuation of the strong border security measures that we’ve taken. Because we have to secure our border. I think it should contain serious penalties for companies that are purposely hiring undocumented workers and — and taking advantage of them.

And I do think that there should be a pathway for legal status for those who are living in this country, are not engaged in criminal activity, are here to –simply to work. I’ve — it’s important for them to pay back taxes. It’s important for them to learn English. It’s important for them to potentially pay a fine, but to give them the avenue whereby they can resolve their legal status here in this country, I think is very important. Obviously making sure that we put into law what — the first step that we’ve taken administratively dealing with the DREAM Act kids is very important as well.

The one thing that I’m — I’m very clear about is that young people who are brought here through no fault of their own, who have gone to school here, pledged allegiance to our flag, want to serve in our military, want to go to school and contribute to our society, that they shouldn’t be under the cloud of deportation. That we should give them every opportunity to earn their citizenship. And so, you know there are other components to it, obviously. The business community continues to be concerned about getting enough high-skilled workers.

And I am a believer that if you’ve got a PhD in physics, or computer science who wants to stay here, and start a business here, we shouldn’t make it harder for them to stay here, we should try to encourage him to contribute to this society. I think that the agricultural sector, obviously has very specific concerns about making sure that they’ve got a workforce that helps deliver food to our table. So there’re gonna be a bunch of components to it, but I think whatever process we have needs to make sure border security’s strong, needs to deal with employers effectively, needs to provide a pathway for the undocumented here, needs to deal with the DREAM Act kids.

 

While it is remarkable that the strong Latino support has changed the dynamic on immigration reform, let us not forget that comprehensive immigration reform should also encompass all others who have been mired under a broken immigration system. President Obama did make reference to “[t]he business community continues to be concerned about getting enough high-skilled workers,” but he said it more as an afterthought. We completely and wholeheartedly support a pathway to legalization and citizenship for the millions of undocumented immigrants who have otherwise led productive lives in the US and benefit the country in more ways than one. Immigration reform should not be viewed as only a Latino issue, it is an American issue. The view that reform is a Latino issue is not surprising due to two reasons. First, most Americans continue to think that immigration benefits the immigrants not themselves. Second, because of that, business immigration is not deemed to have the ethical legitimacy the same way that family migration has. For that to change, for sweeping CIR to become reality, all of us must realize that immigration is not a problem to be controlled but an asset to be maximized.

Immigration reform will surely benefit immigrants, but in turn, will also benefits America. It will create a stimulus for the economy and make employers more competitive. We therefore hope that immigration reform will ameliorate the plight of beneficiaries of approved I-140 petitions who are stuck in the endless employment-based third (EB-3) backlogs. These are people whose employers have obtained labor certifications years ago, and who are in the pipe line for a green card, but for the oversubscription in the preference category. Indeed, the wait for an India EB-3 whose labor certification is filed today is anticipated to be 70 years. This is dysfunction at its worst. The wish list for reform is endless and that is because the system is so broken. We clearly need to expand family-based visa numbers too, and it is clearly inhuman to tolerate spouses of permanent residents to be waiting for 3 years before they can get green cards. We should bring back more due process as well as give more discretion to the USCIS or the Immigration Judge to decide whether an immigrant convicted of a crime should stay or be deported. The 3 and 10 year bars have had the perverse effect of creating a larger undocumented population in the US. Because of these bars, many are caught in a federal Catch-22. They are unable to apply for green cards in the US, but if they return to their home country to process for a visa at a US consulate they will be barred for 10 years. Ironically, sluggish economic growth has done what ever-stricter border enforcement could not. Illegal immigration has consistently receded in recent years, spiking in 2000 under President Clinton but down by a third by the time that President Obama took office. Between 2005-2010, the Pew Hispanic Center estimates that as many Mexicans departed these shores as arrived. Today, net migration from Mexico is non-existent.

We focus here in this blog on the need to also reform our employment-based immigration system. Future blogs will focus on other reform proposals. Any CIR proposal needs to contemplate an expansion of the number of green cards under the employment-based preferences so that an employer is able to obtain the services of a foreign national more quickly after the US labor market has been tested through the labor certification process. We also need more temporary work visas. The current 65,000 H-1B cap, along with the additional 20,000 H-1Bs reserved for graduates with advanced degrees from US universities does not meet the demands of US employers. Moreover, we eed to provide an incentive for foreign students whom we educate, especially in STEM (Science, Technology, Engineering and Math) fields, to not leave and compete with the US from their home countries. Studies have shown that the US is losing in the competition for global talent, and any reform proposal needs to stop this bleeding. There should also be better oversight over officers who are bent on denying temporary work visas because they have self-appointed themselves guardians of the economy or because they do not like a certain business model, such as India-based IT consulting, which is what the Neufeld memo sought to do. Officers must faithfully apply the law as intended by Congress. Finally, we also need to have a visa that will encourage entrepreneurs and startups in the US.

In addition to broadly reforming the employment-based immigration system, here are some additional pointers that can greatly improve the system we have presently. Even if there is reform of the employment-based immigration system, backlogs could still build up again the coming years. When the numbers in the employment and family-based system were last increased under the Immigration Act of 1990, who would have envisaged that the EB-3 for India would be a 70 year wait! As part of CIR, INA §203(d) should be modified to specify that family members should not be counted separate and apart from the principal alien to stop double or additional counting. Such double counting undermines the principle of family unity which is at the core of our immigration values. Also, when the Child Status Protection Act (CSPA) was enacted, the kind of visa retrogression we have today did not exist. Congress never anticipated systemic visa backlogs particularly affecting EB3 and EB2 for India and China. That is why they wrote the age formula the way they did. Not until the priority date is current can the pendency of the I-140 be subtracted from the chronological age to give you the CSPA age. In any CIR proposal this should be changed so that you only look to the age of the child when the I-140 is approved. That would make the CSPA relevant to backlogged categories, which is not now the case. We also propose that INA § 245(a)(3) be modified to allow the filing of an adjustment of status application without regard to the priority date. This could be possible for both FB and EB beneficiaries who have an approved an I-130 or I-140 petition. Such adjustment of status applications will be provisionally submitted with final approval subject, as under current law, to the immediate availability of an immigrant visa number.

With regard to H-1B visas, the truth is that a cap on H-1Bs is a cap on the US economy and should be removed. Since many Indian and Chinese students start work in the United States as temporary H-1B workers, we propose the creation of a streamlined or Blanket H-1B application process for large H-1B employers similar to the Blanket L system under which work visa applications can be presented directly to US Consulates abroad, thus bypassing the need for individual H applications with the USCIS. Allow large H-1B employers to enter into centralized application arrangements with US Consulates in connection with the Blanket H-1B similar to what the USCIS now offers many corporate employers so that economies of speed, efficiency, and informed adjudication can be achieved on a consistent basis. It would also be a good idea to remove the six-year maximum imposed by the Immigration Act of 1990 and transform the H-1B visa into what it really is, namely a “pre-immigrant” instead of a “non-immigrant” visa that it is not now and never has been. Also, end the ban on spousal employment for H-4s that cruelly and unnecessarily puts the promising careers of countless professional spouses into the deep freeze. There should be a broader more accessible visa, unlike the very limited H-2B visa we have today, for essential factory, hotel, restaurant, construction and farm workers. That will be the only way to ensure that the undocumented population does not build up again.

If the labor certification procedure will still exist in a CIR proposal, the notion of minimal qualifications that is required when an employer files a labor certification is wholly artificial and does not exist in the real world. Although the points system was suggested in earlier CIR proposals in 2006 and 2007, a points-based system may not effectively match the skills of potential immigrants with prospective employers. Those who wish to be productively self-employed as entrepreneurs can avail of a specific startup visa. CIR is a good opportunity to broaden the application of the equally qualified standard from academic to all PERM labor certification cases. We also suggest removing the need for print advertisements in all PERM cases since many employers, especially in IT, advertise only on the Internet; allowing use of experience with the same employer, and eliminating the need for a fixed job description that can never change no matter how long a wait till the green card. Keeping a PERM application so static will be totally unrealistic for EB backlogs if they again begin to accumulate.

The shocks waves of November 6th are only a harbinger of things to come. A new study by the Pew Hispanic center predicts that, within 20 years, 40 million Hispanics will be eligible to vote as compared to 23,7 million today. Hispanics are younger and have a higher birth rate than other groups. If the rate of Hispanic political participation reaches the level of Whites and African-Americans, we could experience a doubling of Hispanic voters by 2032. Hispanic voters will constitute fully 40% of the growth in the American electorate between now and 2030. If the rate of Hispanic naturalization rises, this would be even more powerful since 5. 4 million permanent residents of Hispanic heritage did not vote. Nativists should also take note of the fact that about 800,000 Latinos turn 18 each year. Furthermore, it was not just the strong Latino turn out in favor of Obama. Even Asian Americans, who make up 3% of the electorate, overwhelmingly supported Obama.

The graying of America may be the most serious domestic problem of the next quarter-century. As the massive baby boomer generation slouches towards retirement, an aging population needs the fountain of youth. Immigration may be the magic elixir. The US Census Bureau estimates that the number of elderly people over age 65 could rise from 34.6 million today to 82 million by the year 2050. This trend will be most evident between 2011 and 2030 when those baby boomers born from the late 1940’s to the early 1960’s hit retirement age. Census experts predict that the numberof senior citizens over this period will soar from 13% to 20% of the population. During the same time, the number of foreign-born people living in the United States should dramatically increase, both in absolute terms and as a percentage of the general population. Their number should grow from 26 million today to 53.8 million by the year 2050, an increase from 10 to 13% of the population. If these census statistics are correct, continued high levels of immigration will be necessary to provide a large enough workforce to support a rapidly aging America. The Census Bureau predicts the immigrants will become a majority in Texas within the next 14 years; five states will have a majority of non-White residents by 2025 and, in the course of the next half-century, Latinos may comprise about 25% of the entire US population. That’s a lot of folks and they will no longer be concentrated in a select number of states, such as California, New York, Texas, or Florida, but will be distributed throughout the nation. They will be the deciding votes in elections on all levels and their voice will be a strong and powerful one in setting the political agenda. In 1998, the National Immigration Forum joined with the Cato Institute to publish a study by Stephen Moore on the fiscal impact of immigration. What he found was startling and directly relevant to the problem so much on the mind of Chairman Greenspan. Most immigrants arrive in the United States in the floodtide of their working years; more than 70% of them are over age 18 when they get here. Stephen Moore estimated that there were roughly 17.5 million immigrants now in America whose education was paid for by their home countries, not US taxpayers. He concluded that this represented an infusion of unearned human capital worth some $43 trillion into the US economy. At a time when fewer and fewer wage earners will have to be paying for growing retirement benefits enjoyed by more and more elderly, it is worth remembering that immigration is one of the main forces keeping the Social Security Trust Fund afloat. In 2007, for example, the Social SecurityTrust Fund realized a net benefit of $120-240 billion from undocumented workers in the shadow economy representing 5.4%-10.7% of the Fund’s total assets of $2.24 trillion. Immigration is an essential strategy that responsible policy makers must use in a robust way to solve the systemic problem of financing Social Security

For all these reasons, there is no alternative to sweeping comprehensive immigration reform. We are all in this together. The American poet James Russell Lowell famously wrote that “once to every man and nation comes the moment to decide.” This is our moment. The time to act is now.

Cyrus Mehta

Obama Wins and so Does Immigration Reform

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By Gary Endelman and Cyrus D. Mehta

Since President Obama’s decisive re-election victory, there has been a growing realization, mainly among Republicans, that the party will continue to be decimated in future elections if it does not take action on reforming the broken immigration system. It is clear that Romney’s comments on self-deportation, along with his embrace of Kris Kobach, the architect of the anti-immigrant laws of states like Arizona and Alabama, hurt him terribly among Hispanic voters in his quest for the White House. Recently, House majority leader John Boehner has pledged to work with the President and the Senate, which is controlled by the Democrats, to reach a deal on immigration. This would have been unthinkable before the election results on Tuesday, November 6 and is like music to the ears of immigration advocates who have been complaining for years about the need to fix the immigration system.

This bonhomie among GOP leaders and pundits for positive immigration reform may be short lived. Rancor may soon set in, as it is already happening, with regards to preventing the “fiscal cliff.” The country is still divided evenly, and a foreign newspaper, the Times of India, after the 2012 elections, astutely called us “The Divided States of America.” We still ardently hope that Congress can bring about comprehensive immigration reform (CIR), which would include an expansion of green card categories and temporary visas, along with the legalization of the 12 million or so undocumented people living here and contributing to the US. In order to prevent a buildup of the undocumented population in the future, reform must also allow for visas that would facilitate future flows of legal workers.

While all this is achievable, and a deal can be struck, it could also come apart if the bottled up enmity between the two parties flares up again. Notwithstanding the likes of Sean Hannity moving over to the side of CIR, there is bound to be rebellion in the rank and file of the Republican party, which considers CIR anathema. In his stirring victory speech Obama said, “We believe in a generous America, in a compassionate America, in a tolerant America, open to the dreams of an immigrant’s daughter who studies in our schools and pledges to our flag.”But Obama still has the ability to deliver his promise to the Hispanics, Asian Americans and others who voted him in and routed Romney in the event that Congress enters into another stalemate. He has a powerful card up his sleeve, and this is his ability to provide relief through administrative action.

Administrative action is not a perfect alternative, as the President does not have the power to give green cards without Congressional authorization. But he does have the power to defer the deportation of large groups of undocumented immigrants, as he did through the Deferred Action for Childhood Arrivals (DACA) program, which we have shown can withstand judicial scrutiny. He can expand DACA to a broader group of undocumented immigrants who have lived in the US for say 5 years, and have not been convicted of a felony or three misdemeanors. As we have shown in our prior blog, Issues Ripe for Rulemaking: Some Modest Proposals, there is no prohibition anywhere that would bar USCIS from allowing the beneficiary of an approved I-140 or I-130 petition to apply for an employment authorization document (EAD) and advance parole. No action by Congress would be required. This could be done purely by act of regulation or even through a policy memo. For those who want a statutory basis, the USCIS can rely on its parole authority under INA 212(d)(5) to grant such interim benefits for “urgent humanitarian reasons” or “significant public benefit.” This we have explained previously in Comprehensive Immigration Reform Through Executive Fiat.

Knowing the power of the President to take action on his own, Congress will want to remain relevant and protect its institutional prerogative by enacting legislation so as to avoid creating the opportunity for the exercise of presidential initiative.  That is why Obama might want to enlarge DACA to other groups, not as an alternative to CIR but to make it more likely. If he announces broader initiatives, he can use them as a bargaining chip to withdraw if and when Congress acts. The President remains the First Officer of our Government and, as the Republicans are beginning to realize, the political saliency of the immigration issue can no longer be denied or deferred. By keeping the pressure on through the sustained but disciplined assertion of executive initiative, the President makes it more likely, not less, that CIR will make the bumpy transition from rhetoric to reality.

Cyrus Mehta

Issues Ripe for Rulemaking: Some Modest Proposals

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By Gary Endelman and Cyrus D. Mehta

Immigration lawyers are used to interpreting complex immigration statutes in the absence of regulations. Indeed, there has evolved a “common law” within immigration practice based on governmental guidance memos and even letters written by government officials in response to an attorney’s query. Immigration lawyers often refer to a letter of Efren Hernandez or Jacqueline Bednarz from more than a decade ago as if they have the halo of an authoritative and binding decision. The problem is that unless the government actually promulgates a regulation under the Administrative Procedure Act, such memos and letters are hardly binding. Still, stakeholders, including the government agencies, have conveniently created an illusion that they are binding, and readily cite to them, even when they are not.  From an immigration attorney’s point of view, the stakes are too high for challenging their authority. It is strategically prudent to demonstrate how their client qualifies under such informal agency guidance, and seek a quick approval, rather than challenge their validity in long drawn litigation.

Agency interpretations advanced in “opinion letters” neither justify nor enjoy Chevron-style deference. Christensen v. Harris County, 529 U.S. 576, 587 (2000) (contrasting interpretations in opinion letters with those “arrived at after…a formal adjudication or notice-and-comment rulemaking.”). Instead, “interpretations contained in less reliable formats such as opinion letter are ‘entitled to respect’ under Skidmore v. Swift., 323 U.S. 134, 140 (1944), but only if they have the ‘power to persuade.’” Christensen, 529 US at 587; see also Catskill Devel, LLC. V. Park Place Enter. Corp., 547 F.3d 115, 127 (2d Cir. 2008) (under Skidmore, agency viewpoint articulated in an opinion letter was “entitled to deference only to the extent that it ha(d) the power to persuade” the court).

Much of our legal reasoning rests upon a very uncertain foundation. One is reminded, for example, that all of the American Competitiveness in the 21st Century Act (AC 21) interpretations upon which we routinely rely are not the product of APA rulemaking but of agency memoranda or opinion letters. To the extent that these may benefit us or our clients, let us remember that they are not endowed with Chevron-style deference and can be ignored or overturned by subsequent court rulings.  We have seen this in the context of AC 21 adjustment of status portability. In a 2009 decision styledHerrera vv USCIS, No. 08-55493, 2009 U.S.App. LEXISs 14592 (2009), the Ninth Circuit held that the revocation of an I-140 petition under INA 204(j) without bothering to acknowledge or distinguish the facts of the case  sub judice  from the 2005 Aytes Memo on AC 21, which states that a withdrawal of an I-140 petition after 180 days did not undermine portability.See Cyrus D. Mehta, Ninth Circuit In Herrera v. USCIS Rules that Revocation of I-140 Petition Trumps Portability, https://blog.cyrusmehta.com/Print_Prev.aspx?Subldx=ocrus200979113434.

Several years ago, stunned lawyers learned to their utter dismay that even opinions of the legacy INS General Counsel could not be counted on. Matter of Izumi, A 76 426 873 (decided by Associate Commissioner, Examinations, July 13, 1998). The absence of  guidance is the lawyer’s worst nightmare. Without knowing how the game is played, the lawyer does not know when to advance or when to retreat. He or she is prone to putting in too much or not enough, placing undue emphasis on what is secondary and glossing over that which is truly essential. Some cases take an excessive amount of time to prepare while others are filed prematurely. Law becomes a high stakes poker game, justice by ambush. The USCIS adjudicator also is at sea. Uncertain what standards to employ, frustrated by a nagging suspicion that overly clever attempts by an unscrupulous bar will win benefits for clients who do not deserve them, the line analyst looks in vain for guidance that does not come. The process becomes complex, complicated and expensive. Conflict replaces cooperation leading to litigation and micromanagement. There seems no exit. When nothing is sure, almost anything can happen.  In the absence of borders, can order survive?

At the recently concluded CIS Second Annual Conference in Washington DC on October 18, 2012, Cyrus D. Mehta addressed key issues ripe for rulemaking involving unlawful presence, American Competitiveness in the 21st Century Act (known as “AC 21”), EB-5, Child Status Protection Act and more. A power point presentation, which is part of the conference record, lays out some areas that are in need of rule making as well as some areas that do not need new rulemaking. Of course, this presentation does not claim to cover every issue, but selects a narrow slice of issues, which can greatly benefit from rulemaking.  The need for rulemaking, in the opinion of the authors, can be broken into several components, as follows:

First, some areas are ripe for rulemaking especially when the law has been interpreted in a consistent and reasonable manner over several years through policy guidance memos.  Although there may be no compelling need for a rule, a rule affirming a guidance memo would create consistency and would guide all the agencies administering immigration law. One area that would benefit from such rulemaking is unlawful presence that triggers inadmissibility under INA 212(a)(9)(b)(B). There already exists a weighty USCIS May 6, 2009 Interoffice Memo providing guidance on unlawful presence, which has generally been accepted by the government and stake holders. Still, a   rule on unlawful presence  affirming this memo would bind CBP, where some offices have taken inconsistent position on Canadian overstays not being treated as if they are in duration of status (like students in D/S) and thus not accruing unlawful presence and triggering the 3 or 10 year bars. Such a rule could also potentially help to clarify the conundrum between maintenance of status and period of stay authorized by the attorney general (POSABAG)., as discussed in  this previous blog,  Cyrus D. Mehta, Victory in El Badrawi: Narrowing The Disconnect Between Status and Work Authorization, https://blog.cyrusmehta.com/2011/04/victory-in-el-badrawi-v-usa-narrowing.html. It is incongruous to allow ICE to attempt to remove one from the US while that person has filed a timely application with USCIS to extend nonimmigrant status or is in the process of adjusting status to permanent residence.  The promulgation of a rule may also avoid differences in interpretations by US consulates, such as minors accruing unlawful presence for purposes of INA 212(a)(9)(C) bar when  minors do not accrue unlawful presence for purposes of the 3 and 10 year years under 212(a)(9)(B)(iii)(I).  Finally, such a  rule should affirm informal USCIS Chief Counsel Divine letter, July 14, 2006, holding that time spent for purposes of 3 or 10 year bars can be spent in the US, and not necessarily outside the US, See Cyrus D. Mehta,  Can One Spend The 3-And 10-Year Bars In The US? https://blog.cyrusmehta.com/News.aspx?SubIdx=ocyrus2008982149&Month=&From=Menu&Page=30&Year=All.

Second, some areas simply cry out for a rule because the absence of which renders the statute inoperable. A regulation long overdue   will assist a group of EB-5 investor applicants who have filed removal of their conditional resident applications more than a decade earlier. The 21st Century Department of Justice Appropriations Authorization Act, H.R. 2215; PL 107-273 – which affect investors who filed I-526 applications between January 1, 1995 and August 31, 1999 and I-829 applications before November 2,2002 –  can only take effect upon the promulgation of a regulation.  Their I-829 applications still remain pending in 2012 due tot the absence of a  regulation. Even in the absence of such a long overdue regulation, EB-5s should at least be found eligible for naturalization as they have been conditional residents for over a decade.

Third, we can and should advocate for new or modified regulations, where there has been harshness and the impact to those seeking immigration benefits that may not necessarily reflect the plain meaning of the statute. Such regulations may also be in the spirit of the Obama administration’s policies concerning prosecutorial discretion. We make a few selected proposals that can greatly improve both efficiency and fairness:

  • Foreign equivalent degree determinations have caused hardship to employment-based beneficiaries of I-140 petitions, especially as they are inconsistent with the way H-1B foreign equivalent degrees are determined, and after the DOL has approved labor certification based on the employer’s good faith recruitment. The USCIS insists on a single source 4 year degree under an I-140 petition, and if the EB beneficiary has a degree  based on a three year foreign degree and post graduate diploma, it will not accept that as the equivalent of a US  4 year bachelor’s degree even if it was determined to be so for the H-1B visa. SeeCyrus D. Mehta, EDGE Says Indian 2-Year Master’s Degree Following A 4-Year Bachelor’s Is Not Equivalent To A US Master’s Degree, https://blog.cyrusmehta.com/2012/01/edge-says-indian-4-year-bachelors.html. Many EB beneficiaries who would otherwise be able to qualify under the EB-2 have to qualify under the EB-3. If the equivalency is not properly defined on the PERM labor certification, the I-140 gets denied. We recommend that the current definition of “foreign equivalent degree” under 8 CFR 204.5(k)(2) and 204.5(l)(2) be modified to parallel the H-1B definition of equivalent degree under 8 CFR 214.2(h)(4)(iii)(D).
  • With respect to the Child Status Protection Act (CSPA),  we propose the issuance of a regulation overruling Matter of Wang, 25 I&N Dec.28 (BIA 2009), now that two circuit courts, Khalid v.Holder,  655  F.3d  363 (5th Cir. 2011)  and  De Osorio v.Mayorkas, __ F.3d __(9th Cir. 2012)  have rejected it.  Aged out children who cannot get CSPA protection should have the former priority date convert to a new F2B petition filed by the LPR parent under INA 203(h)(3).  Such  a policy is consistent with prosecutorial discretionary polices of Obama administration, including deferred action for childhood arrivals. See Cyrus D. Mehta, Reinterpreting The Automatic Conversion Provision Of The CSPA To Help DREAM Kids, https://blog.cyrusmehta.com/2011/09/reinterpreting-automatic-conversion.html.
  • Given that the endless waits in the China and India EB-2 India, and that the  EB-3 wait is long as 60 years, we propose an amendment to 8 C.F.R. § 245(g)(1), See Gary Endelman and Cyrus D. Mehta, Re-Defining “Immediately Available” To Allow Early Filing Of An Adjustment Of Status Application, https://blog.cyrusmehta.com/2010_03_01_archive.html, shown here in bold italics, that would expand the definition of visa availability and allow an I-485 application to be filed prior to the priority date becoming current under the Visa bulletin:
    An alien is ineligible for the benefits of section 245 of the Act unless an immigrant visa is immediately available to him or her at the time the application is filed. If the applicant is a preference alien, the current Department of State Bureau of Consular Affairs Visa Bulletin will be consulted to determine whether an immigrant visa is immediately available. An immigrant visa is considered available for accepting and processing the application Form I-485 [if] the preference category applicant has a priority date on the waiting list which is earlier than the date shown in the Bulletin (or the Bulletin shows that numbers for visa applicants in his or her category are current) (“current priority date”). An immigrant visa is also considered available for provisional submission of the application Form I-485 based on a provisional priority date without reference to current priority date. No provisional submission can be undertaken absent prior approval of the visa petition and only if visas in the preference category have not been exhausted in the fiscal year. Final adjudication only occurs when there is a current priority date.An immigrant visa is also considered immediately available if the applicant establishes eligibility for the benefits of Public Law 101-238. Information concerning the immediate availability of an immigrant visa may be obtained at any Service office.  
  • While INA 245 conditions adjustment of status on having a current priority date and meeting various conditions, there is no prohibition anywhere that would bar USCIS from allowing the beneficiary of an approved I-140 or I-130 petition to apply for an employment authorization document (EAD) and advance parole. No action by Congress would be required. This could be done purely by act of regulation. For those who want a statutory basis, the USCIS can rely on its parole authority under INA 212(d)(5) to grant such interim benefits for “urgent humanitarian reasons” or “significant public benefit.” See Gary Endelman and Cyrus D. Mehta, Comprehensive Immigration Reform Through Executive Fiat, https://blog.cyrusmehta.com/2010/04/comprehensive-immigration-reform.html.  
  • Section 106(a) of AC 21 allows an H-1B visa holder on whose behalf a labor certification has been filed 365 days prior to the maximum time limit to obtain an H-1B extension beyond the six years. AC 21 Section 106(a) ought to also allow the spouse of an H-1B who is also in H-1B status to be able to go beyond the six year maximum without having his or her own labor certification. This used to be allowed but the Aytes Memo on AC 21 seems to suggest that only dependent H-4 spouses would get tthe benefit of such an extension. Now, both spouses need to have labor certifications filed on their behalf to obtain the benefit of AC 21 Section 106(a).  The statue itself has more flexibility and speaks of “any application for labor certification…in a case in which the certification is required or used by the alien to obtain status under section 203(b) of such Act.” (emphasis added). Under this interpretation, the H-1B husband who does not have his own labor certification can still use his H-1B wife’s labor certification on a derivative basis to file for adjustment of status. This interpretation can be implemented by the USCIS through a regulation and such remediation would be faithful to the generous spirit of AC 21. It would help to soften the hardship caused by chronic visa backlogs with respect to China and India as well as worldwide EB-3. The current interpretation placed upon AC 21 Section 106(a) is contrary to the intent of Congress. It is not enough to say that the H-1B spouse for whom a labor certification has not been filed can change to non-working H-4 status. Given the backlogs facing India and China, not to mention worldwide EB-3, it is simply realistic and punitive to deprive degreed professionals of the ability to work for years at a time but force them to remain to preserve their eligibility for adjustment of status. All this can be done with the stroke of a pen. See Gary Endelman and Cyrus D. Mehta: Two H-1B Spouses And One Labor Certification: Both Spouses Should Be Able To Seek 7th Year H-1B Extensions Under AC 21, https://blog.cyrusmehta.com/2010/03/two-h-1b-spouses-and-one-labor.html. Of course, the issue of the spouse of an H-1B being limited for 6 years, who is also in H-1B status, can be obviated if USCIS goes ahead with its proposed regulation to allow H-4 spouses to work, but it has been allowed to languish and USCIS seems content to allow it to die. This proposed regulation also appears to limit the group of H-4 spouses who can potentially work, and we refer readers to our blog that advocates that H-4 spouses and children be granted employment authorization in the same way as L-2 or E spouses from the very moment an H-1B is admitted into the US. See Gary Endelman and Cyrus D. Mehta: Working: H-4 Spouses Get To Take A Leap Forward, But Is It A Giant One, https://blog.cyrusmehta.com/2012/02/working-h-4-spouses-get-to-take-step.html. 
  • There is nothing in the INA, which suggests that derivative family members be counted in addition to the principal applicant under the employment-based and family-based preference. This has been carefully outlined in our article, Gary Endelman and Cyrus D. Mehta, Why We Can’t Wait: How President Obama Can Erase Immigration Backlogs With A Stroke Of A Pen, http://www.ilw.com/articles/2012,0201-endelman.shtm.  INA 203(d) only states that “[a] spouse or child….be entitled to the same status and the same order of consideration …if accompanying or following to join, the spouse or parent.” Hence, there is ambiguity in the plain language of INA 203(d) to allow a rule that will not count all family members in addition to the principal applicant. Thus, a principal applicant with four derivative family members (spouse + 3 children) should only take one visa number and not 4 visa numbers from the preference categories. This will greatly assist in reducing the endless backlogs in the FB and EB preferences, which were not intended by Congress when it last increased visa numbers through IMMACT90.  There is no regulation in 8 CFR instructing what INA 203(d) is supposed to be doing. We do not claim that derivative beneficiaries are exempt from numerical limits. They are subject to numerical limitations in the sense that the principal alien is subject by virtue of being subsumed within the numerical limits that applies to this principal aline. There is a difference between not being counted at all, for which we do not contend, and being counted as an integral family unit as opposed to individuals. We seek not an exemption from numerical limits but rather a different way of counting such limits. 

Finally, there are legal issues, where regulations have already been promulgated, that do not require modification through a new rule just because of a new sentiment. For example, since the economic downturn, there has been a tendency on the part of immigration officials to become self appointed guardians of our economy, and with misguided zeal, they endeavor to protect jobs of American workers by reinterpreting the law. The definition of the employer-employee relationship for H-1B purposes is quite clear under 8 CFR 214.2(h)(4)(ii), and attempts to modify it through the Neufeld Memo are  simply not necessary, See Cyrus D. Mehta, Halcyon Days In H-1B Visa Processing,  https://blog.cyrusmehta.com/2010/02/halcyon-days-in-h-1b-visa-processing.html.  The Neufeld Memo too has been treated as interpretive guidance and not binding in Broadgate v. USCIS, http://law.justia.com/cases/federal/district-courts/district-of-columbia/dcdce/1:2010cv00941/142518/15.  We propose that the Neufeld Memo be withdrawn. Similarly, the L-1B specialized knowledge definition under 8 CFR 214.2(l)(1)(ii)(D) reflects the intent of  the Immigration Act of 1990 (IMMACT90), and there is no need to muddy the waters by restricting the definition by resurrecting administrative decisions prior to IMMACT90 when the specialized knowledge definition was more restrictive, and included proprietary knowledge, which was eliminated after 1990.

What is blindingly transparent is that what we have now simply has broken down. Years pass after Congress enacts major immigration legislation and, time after time, implementing regulations are nowhere to be found. Is there anyone who knows anything about immigration practice who would not acknowledge a real and present need for rules that are clear, specific and accurate?  While the broad outlines of immigration policy are set by Congress what this policy means each day in real life is most often a matter of what the implementing regulations say. The job of Congress is to articulate a long- range vision while that of the Executive is to make short-term, tactical adjustments.

How the agency puts the law into practice often has more to do with its ultimate impact, of lack of one, than the black letter law itself. The gap between what Congress intended and what the regulation mandates can often be the distance between rhetoric and reality. The proposals we advance reflect our core belief that the American economy would benefit from a more cooperative relationship between regulators and those they regulate.  We urge that traditional notice and comment rulemaking be informed by a creative exchange about possible solutions to ultimate problems. Our hope is that the rulemaking process itself facilitates mutual education on the proposed rule’s practical effect so that honest strategies can emerge capable of resolving fundamental differences.

Those who believe as we do that immigration is good for America have their principles right. Our challenge as a nation is to translate these principles into practice. This is why we write. We do not expect that this will be easy but we ask our readers who shrink from the task to remember the story of the rebellious prince who ran away from the palace of his father the King. “Come back” said the King through his most trusted messenger, only to be told “I cannot.” Back came the royal reply: “Go as far as you can, and I will come to you the rest of the way.”
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Cyrus Mehta

YES HE CAN: A REPLY TO PROFESSORS DELAHUNTY AND YOO

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By Gary Endelman and Cyrus Mehta

 Article II, Sec. 3 of the Constitution provides that the President “shall take Care that the laws be faithfully executed.”   That being so, can President Obama grant deferred action for childhood arrivals (DACA) whose presence here represents a violation of US law? Professors Robert Delahunty and John Yoo offer a scholarly and resounding “ No” to this question in their paper, The Obama Administration, the DREAM Act and the Take Care Clause(hereinafter cited as Delahanty & Yoo).  They argue that the President must enforce the removal provisions of the Immigration and Nationality Act. Absent either express or implied authority to the contrary, the Obama Administration has violated its constitutional duty.  No presidential prerogative exists that would sustain such non-enforcement nor has the President put forward a cogent excuse that would make his DACA decision constitutionally permissible.  Professors Delahunty and Yoo offer up George Washington’s famous reminder in his Proclamation of September 15, 1702 that “it is the particular duty of the Executive ‘to take care that the laws be faithfully executed.” Such a serious charge requires an answer. That is why we write.

We agree with Professors Delahunty and Yoo that President Obama must enforce all provisions of the INA, including the removal sections contained in Section 235.  We do not agree, however, that DHS Secretary Napolitano’s June 15, 2012 memorandum, or ICE Director John Morton’s June 17, 2011 directive on prosecutorial discretion, instructed or encouraged ICE officers to violate federal law.  At current levels of funding, it is manifestly impossible for ICE to deport most undocumented persons in the United States.  Even at the historically high levels of removal under President Obama, some 400,000 per year, this amounts to only 3-4% of the total illegal population. Delahanty & Yoo n.21.   That is precisely why the Obama Administration has focused its removal efforts on “identifying and removing criminal aliens, those who pose a threat to public safety and national security, repeat immigration law offenders and other individuals prioritized for removal.” Delahanty & Yoo n. 22,  citingLetter from Janet Napolitano, Secretary, Department of Homeland Security, to Senator Richard Dubin (D-Ill.)(Aug. 18, 2011). Far from refusing to enforce the law, President Obama is actually seeking to honor his constitutional obligation by creating a scheme that removes some while deferring the removal of others without granting anyone legal status, something only Congress can do.

Professors Delahanty and Yoo’s characterization of DACA relief as detached, even radical, suffers from a lack of an informed appreciation of the extent to which it has deep roots in existing immigration law. The truth is that deferred action is neither recent nor revolutionary. Widows of US citizens have been granted this benefit. Battered immigrants have sought and obtained refuge there.  Never has the size of a vulnerable population been a valid reason to say no. The extension of DACA relief is less a leap into the unknown arising out of a wild, lawless ideology divorced from a proper respect for the Take Care Clause than a sober reaffirmation of an existing tool for remediation in prior emergencies. Professor Delahanty and Yoo conveniently omits any mention of INA Section 103(a)(1), which charges the DHS Secretary with the administration and enforcement of the INA. This implies that the DHS can decide when to and when not to remove an alien. They also fail to consider INA Section 274A(h)(3)(B) which excludes from the definition of “unauthorized alien” any alien “authorized to be so employed …by the Attorney General.” After all, 8 CFR 274a.12(c)(14), which grants employment authorization to one who has received deferred action, has been around for several decades. The only new thing about DACA is that the Secretary Napolitano’s guidance memorandum articulates limiting criteria without endowing deferred action grantees with any legal status, something reserved solely for the Congress. In fact, the Congress has also recognized “deferred action” in Section 202(c)(2) (B)(viii) of the REAL ID Act as a status sufficiently durable to allow the extension of driving license privileges.

Courts are loath to review any non-enforcement decisions taken by federal authorities. See,e.g., Lincoln v. Vigil, 508 U.S. 182, 191-92 (1993); Massachusetts v. EPA, 127 S. Ct. 138, 1459 (2007).  It is up to DHS, rather than to any individual, to decide when, or whether, to initiate any enforcement campaign. Heckler v. Chaney,  470 US 821, 835 (1985). During the last Supreme Court term, Arizona v. United States, 132 S.Ct. 2492, 2499 (2012)  articulated the true reason why: “(a) principal feature of the removal system is the broad discretion exercised by immigration officials…Federal officials, as an initial matter, must decide whether it makes sense to pursue removal at all…”

Professors Delahanty and Yoo do not feel constrained by the wide deference that has traditionally characterized judicial responses to executive interpretation of the INA. Under the oft-quoted Chevron doctrine that the Supreme Court announced in Chevron USA, Inc. v. Natural Resources Defense Council, Inc., 467 US 837(1984), federal courts will pay deference to the regulatory interpretation of the agency charged with executing the laws of the United States when there is ambiguity in the statute. The courts will intrude only when the agency’s interpretation is manifestly irrational or clearly erroneous. Similarly,  the Supreme Court in Nat’l Cable & Telecomm. Ass’n v. Brand X Internet Servs., 545 US 967 ( 2005),while affirming Chevron, held that, if there is an ambiguous statute requiring agency deference under Chevron, the agency’s understanding will also trump a judicial exegesis of the same statute.  Surely the “body of experience” and the “informed judgment” that DHS brings to INA § 103 provide its interpretations with “ the power to persuade.”  Skidmore v. Swift& Co., 323 US 134,140(1944). As Justice Elena Kagan famously noted when she served as the Dean of the Harvard Law School, the increasingly vigorous resort to federal regulation as a tool for policy transformation  by all Presidents since Ronald Reagan has made “ the regulatory activities of the executive branch agencies more and more an extension of the President’s own policy and political agenda.” Elena Kagan, Presidential Administration, 114 Harv.L.Rev. 2245, 2246  (2001).Indeed, the very notion of Chevron-deference is “premised on the theory that a statute’s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gap.” FDA v Brown & Williamson Tobacco Corp., 529 US 120, 159 ( 2000).  That is precisely what the President and DHS have done with respect to their power to enforce the immigration laws.

This is precisely why 100 law professors argued that the President had the discretionary authority to extend such relief, which Professors Delahunty and Yoo have acknowledged in their paper:

Through no statutes or regulations delineate deferred action in specific terms, the U.S. Supreme Court has made clear that decisions to initiate or terminate enforcement proceedings fall squarely within the authority of the Executive. In the immigration context, the Executive Branch has exercised its general enforcement authority to grant deferred action since at least 1971

            Delahanty & Yoo n. 38.

It is also worth mentioning that while there is no express Congressional authorization for the Obama Administration to implement such measures, the President may act within a “twilight zone” in which he may have concurrent authority with Congress. See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635 (1952) (Jackson, J., concurring). Unlike Youngstown Sheet and Tube Co. v. Sawyer, where the Supreme Court held that the President could not seize a steel mill to resolve a labor dispute without Congressional authorization, the Administration under through the Morton Memo and DACA is well acting within Congressional authorization. We agree with Professors Delahunty and Yoo when they cite Youngstown Sheet, Delahunty & Yoo n 185. as a rejection of the idea that the President has “prerogative” power, but the President has not used any “prerogative power” with respect to DACA relief; he has indeed acted pursuant to Congressional authorization. In his famous concurring opinion, Justice Jackson reminded us that, however meritorious, separation of powers itself was not without limit: “While the Constitution diffuses power the better to secure liberty, it also contemplates that practice will integrate the dispersed powers into a workable government. It enjoins upon its branches separateness but interdependence, autonomy but reciprocity.” Id. at 635.  Professors Delahanty and Yoo look in vain for explicit authority in the INA that supports DACA relief, and delve into instances when Presidents have been able to use “prerogative” power, which they argue cannot be applied in the context of DACA. They can stop searching:

Congress …may not have expressly delegated authority to…fill a particular gap. Yet,it can still be apparent from the agency’s generally conferred authority that Congress will expect the agency to speak with the force of law when it addresses ambiguity in the statute…even one about which Congress did not actually have an intent as to a particular result.   United States v. Mead, 533 U.S. 218, 229 (2001)

Even if arguendo discretion is too weak a foundation for DACA relief, the equitable merits of such remedial action should be strong enough to withstand constitutional scrutiny.  Indeed, as the Supreme Court’s  Arizona opinion recognized,  it is frequently the case that “ Discretion in the enforcement of immigration law embraces immediate human concerns.” Delahanty & Yoo, n. 222.  That is why Section 240A of the INA endows the Attorney General with discretion to cancel removal.  Contrary to what Professors Delahanty and Yoo argue, the exercise of executive compassion in the Dream Act context is not a constitutionally prohibited expression of misplaced sentiment floating without anchor in a sea of ambiguity but a natural out-growrth of prior initiatives when dealing with deferred action. Such initiative is entirely consistent with the Take Care Clause while scrupulously respectful of Congressional prerogatives to make new law. While Professors Delahanty and Yoo argue that equity in individual cases may be justified as an exception to the President’s duty under the Take Care Clause, they claim that the  DACA program is not a judgment in equity but more as a statement of law. We disagree. The President has made clear under DACA that each case merits an exercise of individual discretion. Each application has to be supported by voluminous evidence of not just an applicant’s eligibility, but also evidence as to why the applicant merits an exercise of favorable discretion.  Professors Delahanty and Yoo claim that equity divorced from reliance on another statute or treaty must be opposed as a breach of the President’s sworn oath. No such worry here need trouble them for the Administration not only acts in reliance on its well-settled authority under the INA but precisely and primarily to infuse such authority with relevance made ever more insistent by the lack of Congressional action.

Notwithstanding our rebuttal, the deep scholarship and sincere reservations voiced by Professors Delahanty and Yoo must not be cavalierly ignored nor summarily dismissed. Indeed, they are a powerful justification of the need for comprehensive immigration reform. Only Congress can solve this problem, even though we have shown that the President did have authority to roll out DACA.  The nation waits.

Cora-Ann Pestaina

PERM Audits Request Sworn Declarations Regarding Improper Payments

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Recently, the Department of Labor’s (DOL) Office of Foreign Labor Certification (OFLC) published its factsheet with statistics on the PERM program for FY2012 covering the period from October 2011 to September 16, 2012. Of the 67,400 PERM applications received during that period, 45% were audited for review. While audit notifications discussing the employer’s use of an employee referral program, roving employees, or bearing requests for the resumes of all applicants are so frequently issued that they have almost become par for the course, the newest audit request came as quite the surprise. The latest audits now request declarations from the employer and the foreign worker, each signed under penalty of perjury, stating whether the employer received payments of any kind by the foreign worker or a third party for any activity related to obtaining permanent labor certification. Specifically, the audit request states:

Please provide declarations from the employer and the foreign worker, each signed by the respective individual under penalty of perjury, stating whether the employer received payments of any kind by the foreign worker or a third party for any activity related to obtaining permanent labor certification, including payment of the employer’s attorney’s fees, whether as an incentive or inducement to filing, or as a reimbursement for costs incurred in preparing or filing a permanent labor certification application. Such payments include but are not limited to legal fees; administrative fees; advertising costs and/or any other costs or fees related to the filing of the application; wage concessions, such as deductions from wages, salary, or benefits; kickbacks, bribes or tributes; in-kind payments; free labor; and/or any other form of payment for services essential to the labor certification process.  Note that any payment of fees by the foreign worker or third party for the benefit of the employer constitutes a “receipt of payment” by the employer, despite the fact that such payments may have been made directly to a party other than the employer – e.g., the employer’s attorney, Department of State, etc.

If any such payments were made, please provide a list outlining the payment amount, who made the payment, to whom payment was made, dates, and the purpose of the payment.

If payments were received from a third party to whose benefit work to be performed in connection with the job opportunity would accrue, please provide documentation explaining both the business relationship between the employer and the third party and the benefit of the work performed, or to be performed, in accordance with the Department’s regulations at 20 CFR § 656.12(c).

If payments were made to the employer by the foreign worker as a result of an agreement/contract entered into prior to July 16, 2007, please provide documentation evidencing both that an agreement existed and that it was entered into prior to July 16, 2007. Examples include the contract, the agreement or a declaration signed by both the employer and the foreign worker under penalty of perjury, in the case of oral agreements.

The issue of payments for activity related to obtaining permanent labor certification first came up when the DOL published its final rule to “enhance program integrity and reduce the incentives and opportunities for fraud and abuse related to the permanent employment of aliens in the United States” which took effect on July 16, 2007. See 72 Fed. Reg. 27,903-27,947 (May 17, 2007). The rule revised the regulations found at 20 CFR §656 and implemented substantial changes to the labor certification process, including prohibition on the sale, barter, or purchase of labor certification applications and a requirement that employers pay all attorney’s fees and costs associated with labor certification. The rule also made unenforceable any employer agreements requiring employees who leave within a certain time period to pay reimbursement costs associated with the labor certification. In passing this rule, the DOL rationalized that a prohibition against the transfer of labor certification costs from sponsoring employers to foreign national beneficiaries keeps legitimate business costs with the employer, minimizes improper financial involvement by aliens in the labor certification process, and strengthens the enforceability of the bona fide job opportunity requirement. All reasoned opposition to the rule prior to its promulgation fell on deaf ears.

On July 16, 2007, the DOL also issued a FAQ to clarify certain aspects of the rule. The FAQ explained that pursuant to §656.12(b), an employer may not seek or receive payment of any kind for any activity (including recruitment activity and the use of legal services) related to obtaining permanent labor certification, except from a party with a legitimate, pre-existing business relationship with the employer, and when the work to be performed by the foreign national beneficiary will benefit that party. The preamble to the rule provided the example of physicians who frequently have split appointments between a Veterans Affairs Medical Center (VAMC) and an affiliated institution of higher education. In these cases, although there is one “employer of record” who files the labor certification application, the university, as a legitimate third party, could reimburse the VAMC for costs associated with the labor certification.“Payment” includes, but is not limited to, monetary payments; deductions from wages or benefits; kickbacks, bribes, or tributes; goods, services, or other “in kind” payments; and free labor.  This includes the prohibition against the alien paying the employer’s attorneys’ fees in connection with the labor certification application.

The FAQ clarified that an employer, or attorney representing an employer, who entered into a contract where payments from the foreign national are either owned after July 16, 2007 or owed prior to July 16, 2007 but not paid until after that date, have the right to seek the payment provided the payment obligation accrued prior to July 16, 2007. The employer must answer YES to Question I.e.23 on the ETA Form 9089 which asks, “Has the employer received payment of any kind for the submission of this application?” Then, the employer must explain and provide supporting details in I.e.23-A which states, “If Yes, describe details of the payment including the amount, date and purpose of the payment.”

The FAQ also explained another exception to the rule which provides that “attorneys may represent aliens in their own interests in the review of a labor certification (but not in the preparation, filing and obtaining of a labor certification, unless such representation is paid for by the employer), and may be paid by the alien for that activity.” The rule also did not prohibit the alien from paying fees associated with the subsequent visa petition (Form I-140) and the adjustment of status application (Form I-485).

Pursuant to §656.20(a), an audit letter may be issued by the DOL if a labor certification is randomly selected for quality control purposes, or if, after reviewing the application, the certifying officer finds more information is needed before a determination can be made. Neither of these reasons justifies this new request for declarations. Questions I.e.23 and I.e.23-A on the ETA Form 9089 already address the issue. In response to an audit, the employer must submit a copy of the submitted ETA Form 9089 with original signatures in Section L (Alien Declaration),  Section M (Declaration of Preparer (if applicable)), and Section N (Employer Declaration) to affirm that the information listed is true and accurate. As clearly stated on the ETA Form 9089, each declaration must be signed under penalty of perjury.  In light of this, it is not clear why additional sworn declarations are now being requested. In any event, it is important to respond truthfully.

If the employer did not receive payments from the foreign national or a third party, the employer may submit a signed and notarized statement as follows:

[Employer name] did not receive payment of any kind from the [foreign national] or from a third party for any activity related to obtaining permanent labor certification. 

[Employer name] did not receive payment for the legal fees; administrative fees; advertising costs and/or any other costs or fees related to the filing of the labor certification application; wage concessions, such as deductions from wages, salary, or benefits; kickbacks, bribes or tributes; in-kind payments; free labor; and/or any other form of payment for services essential to the labor certification process. 
I swear under penalty of perjury that the foregoing is true and correct.

The foreign national may submit a signed and notarized statement as follows:

I did not pay [Employer name] any fees in relation to the filing of a labor certification application on my behalf.  

[Employer name] did not receive payment from me for the legal fees, administrative fees, advertising costs and/or any other costs or fees related to the filing of the application. Also, [Employer name] did not ask me for any wage concessions, such as deductions from wages, salary, or benefits; kickbacks, bribes or tributes; in-kind payments; free labor; and/or any other form of payment for services essential to the labor certification process. 
I swear under penalty of perjury that the foregoing is true and correct.

Only time will tell whether this new request will become another audit standard. It is essential that practitioners inform new clients and remind existing clients of the rule regarding payment of fees in connection with a labor certification. It is understandable why an employer would want to seek some type of protection, e.g. through employer agreements for reimbursements, against spending thousands of dollars to sponsor a foreign national only to have him leave the moment he obtains permanent residence. But employers must also be informed that the DOL, under §656.31(a), may deny any labor certification if the certifying officer finds the application contains false statements, is fraudulent or otherwise submitted in violation of the DOL’s regulations. Under §656.31(b) the DOL may, if it learns that an employer, attorney or agent is involved in possible fraud or willful misrepresentation, refer the matter to the Department of Homeland Security or other appropriate governmental authority and suspend processing of any labor certification involving the employer, attorney or agent until completion of any investigation. Under §656.31(f) the DOL may debar an employer for up to three years upon a determination that the employer has participated in or facilitated “the sale, barter or purchase of permanent labor applications or certifications, or any other action prohibited under §656.12” or “the willful provision or willful assistance in the provision of false or inaccurate information in applying for permanent labor certification” or “a pattern or practice of failure to comply with the terms of the Form ETA 9089.” Finally, the DOL could, under §656.32, take steps to revoke an approved labor certification if it is later found that the certification was not justified.  It is obvious that the issue of improper payments is one that must always be taken very seriously.

Cyrus Mehta

Why the Average Traveler Can’t Be Expected to Recognize a Crime Involving Moral Turpitude

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By Myriam Jaidi

In a fascinating recent decision (courtesy of attorney Stephen Heller), the Office of Administrative Appeals determined that a visa waiver applicant is not expected to know the meaning of a “crime involving moral turpitude” (“CIMT”), with the welcome recognition that “the term ‘moral turpitude’ is not in common usage and it is unlikely that the average person is aware of its meaning and application in U.S. immigration law.” Amen to that. The case involved an individual who had initially been denied a waiver of inadmissibility for “willfully misrepresenting” on his Form I-94W (the Nonimmigrant Visa Waiver Arrival/Departure Record, which requested biographic information and answers to a series of unfortunate questions) that he had not been convicted of a CIMT. Although the AAO determined that the individual had in fact been convicted of a CIMT, it also found that he could not be expected to know that and should therefore not be found inadmissible for not stating it on the form.

Since 2008, instead of having to complete a Form I-94W, travelers from Visa Waiver countries to the United States must answer the same set of bizarre questions to obtain permission to travel to the United States via the Electronic System for Travel Authorization (“ESTA”). In his New York Times Op-Ed piece “How Not to Attract Tourists”, writer and airline pilot Mark Vanhoenacker perfectly captures the absurdity of many of the questions on the form quipping, “Naturally, no one with anything to hide will answer honestly.” I would add that with regard to the question “have you ever been arrested or convicted for an offense or crime involving moral turpitude . . . ” it is nearly impossible for the average person to answer at all.

Courts have long recognized that a CIMT is a “nebulous concept” and the determination of whether a crime is a CIMT depends on the judge, the wording of the particular statute at issue , and whether the judge applies the “categorical approach” (which requires consideration of the minimal conduct implicated by a penal law)or “modified categorical approach” (where the categorical approach does not yield an answer because a criminal statute includes offenses that fall outside the generic criminal category, this approach allows consideration of the record of conviction for clarification), among other things.

Take drug possession for example (though note that an arrest or conviction involving drugs will cause you a whole host of problems with trying to gain permission to enter or to remain in the United States outside the CIMT context, see here for an explanation). In its response to the question “How do I correct a mistake on my ESTA application”, ESTA includes “possession of narcotics” in its parenthetical summarizing CIMTs: “If you discover that you are not eligible to come to the U.S. under the visa waiver program because of a CIMT (such as fraud, or possession of narcotics) . . .” As an aside it is funny that the sentence starts with “if you discover” — how one is supposed to make such a discovery is not clear, especially given the extraordinary complexity of CIMTs and the disagreement among Circuit Courts with regard to how to determine whether something is a CIMT. Anyway, back to drug possession. The Board of Immigration Appeals has found that simple drug possession is not a CIMT, see, e.g., Matter of Abreu-Semino, 12 I & N Dec 775 (BIA 1968) – so tossing that general “possession of narcotics” in the parenthetical is inaccurate. On the other hand, drug possession with intent to sell or trafficking in narcotics has been found to be a CIMT. Another example of a CIMT given on the ESTA website is theft – but as noted in a previous blog by Cyrus Mehta, theft is not always a CIMT either!

Mr. Vanhoenacker’s assessment of the “uninviting” nature of the ESTA website rings true, especially with respect to individuals trying to get a sense of what a CIMT might be so that they can try to answer the question if they have been arrested or convicted of something (two other kettles of fish there on those two legal terms – “arrested” and “convicted”.). To be fair, ESTA’s website offers a help page providing guidance on various topics. Given there are 773 results accessible from the page, anyone trying to understand what a crime involving moral turpitude might be should search “CIMT” in the search box at the top of the page. This yields a much more manageable 4 results (though misses a fifth result and perhaps other questions where addressing CIMTs), but each result provides a slightly different summary of a CIMT, as noted above, and directs the reader to two different sections of the Foreign Affairs Manual(“FAM”) – the 8 pages of related statutory provisions in 9 FAM 40.21(a), rather than the apparently promised “list of crimes of moral turpitude”, and the other the 26 pages of 9 FAM 40.21(a) Notes providing further legal background on CIMTs, but researcher beware – the FAM is not precise with regard to CIMTs either, though it does provide a lot of information. It is unreasonable to expect the average person in a foreign country to analyze that information under the applicable United States law (9 FAM 40.21(a) N2.1 states “The presence of moral turpitude in a statutory offense is determined according to United States law”) and formulate an answer.

Obviously, the questions are there for various reasons including security, but including unanswerable questions like the one regarding CIMTs (not to mention the other absurd questions) in an automated questionnaire does not promote the security goal, as Mr. Vanhoenacker so aptly demonstrates. Any error could result in an unfair denial and significant inconvenience to a would-be traveler. If someone answers incorrectly by mistake and gets denied, his or her options are to email Customs and Border Protection, seek redress from the Department of Homeland Security’s Travel Redress Inquiry Program (DHS/TRIP), or to apply for a visa at a U.S. consulate. None of these options are likely to allow a traveler with ticket in hand to take her trip as planned.

If inquiries regarding criminal background must be included in the ESTA system, a better model might be to include a more simple question like this one from the Form N-400, Application for Naturalization: “Have you ever been convicted of a crime or offense,” include a drop down box to allow an explanation, and have applications ticked “yes” automatically sent to CBP for quick review without requiring the person to email or seek redress. This may make the system a touch more inviting and comprehensible.

Cyrus Mehta

THE TAXMAN COMETH: WHEN TAKING A FOREIGN EARNED INCOME EXCLUSION ON YOUR TAX RETURN CAN HURT YOUR ABILITY TO NATURALIZE

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By Gary Endelman and Cyrus D. Mehta

Maintaining continuity of residence is paramount if one wants to naturalize and become a US citizen. For an in depth discussion, we refer you to our  prior blog Naturalization In A Flat World and Gary Endelman’s recent article, The Enigma of Disruption: What Continuity of Residence In Naturalization Really Means, 17 Bender’s Immigration Bulletin 1437, August 1, 2012. Even though a naturalization applicant meets all the eligibility criteria, an examiner can still deny an application for failure to maintain the continuous residence requirement. Tax issues can further trip up the applicant, especially when one is trying to shield foreign earned income from US taxation, which this blog will focus on.

But before we do so, we provide the basic eligibility criteria for naturalization.

An applicant must meet certain threshold eligibility criteria in order to become a US citizen. Pursuant to § 316(a) of the Immigration & Naturalization Act (INA), the applicant must establish that immediately preceding the filing of the application, he or she has resided continuously within the US for at least five years after being lawfully admitted for permanent residence. If the applicant has been in marital union with a US citizen spouse for three years, the continuous residence requirement is three years instead of five years. Moreover, under INA § 316(a), the applicant must also establish that he or she has been physically present in the US for periods totaling at least half of that time and has resided within the State or district of the Service where the applicant filed the application for at least three months.

Furthermore, INA § 316(a)(2) also requires the applicant to establish that he or she has resided continuously within the US from the date of the application up to the time of citizenship. INA § 316(a)(3) requires the applicant to establish, inter alia, that he or she is still a person of good moral character during the relevant 5 or 3-year period.

INA § 316(b) states that an absence from the US of more than six months but less than one year during the 5-year period immediately preceding the filing of the application may break the continuity of such residence. INA § 316(b) notes that should such a presumption arise, it may be rebutted if the applicant can establish that he or she in fact did not abandon his or her residence during such period.

What precisely is continuous residence?  INA § 101(a)(33) defines residence as follows: “The term ‘residence’ means the place of general abode; the place of general abode of a person means his principal, actual dwelling place in fact, without regard to intent.”  But that only tells us what residence means, not continuous residence. The regulation, on the other hand, at 8 C.F.R. §316.5(c)(1)(i) tells us what is not continuous residence. It says that an absence of between six months and one year shall disrupt the continuity of residence unless the applicant can establish otherwise to the satisfaction of the Service. Thus, unless the applicant was outside the US for six months or more but less than a year, he or she should argue that there was no disruption of continuous residence. Yet the authors have known of naturalization examiners improperly clubbing two back to back lengthy trips although each one was less than 180 days.

If an applicant is out of the US for more than 180 days but less than one year, it will cause a disruption of continuity of residence but there is still hope. 8 C.F.R. § 316.5(c)(1)(i) provides examples of the types of documentation which may establish that the applicant did not disrupt the continuity of his or her residence. Specifically, the regulation provides the following examples that an applicant can submit to rebut an allegation of disruption of continuity of residence:

(A) The applicant did not terminate his or her employment in the US;

(B) The applicant’s immediate family remained in the US;

(C) The applicant retained full access to his or her US abode; or

(D) The applicant did not obtain employment while abroad.

While one is already treading on thin ice while trying to demonstrate continuous residence, shielding foreign-earned income from US taxation can create yet another chink in one’s armor when trying to rebut an allegation of disruption of continuity of residence. Many accountants may not know this, but tread with caution if you wish to naturalize and are planning to shield foreign earned income from US taxation that can protect you up to $92,900.

There are two different ways in which one can file for earned foreign income exclusion through filing IRS Form 2555. One way is by claiming to be a bona fide resident of a foreign country for an entire tax year or by declaring physical presence there for a minimum of 330 days over 12 consecutive months. The filing of Form 2555 may be viewed as further evidence of failing to satisfy the continuous residence for naturalization. One potential point for advocacy is that the filing of an IRS 2555 based on spending 330 days outside the US is more benign than claiming you were a bona fide resident of a foreign country.  The former is a mechanical application of the earned income exclusion, and if the applicant can independently establish eligibility for naturalization despite being out for 330 days, we do not see why an IRS 2555 filed on the 330 days exemption should adversely impact the applicant.   Even the USCIS Adjudicator Field Manual in Chapter 74 clearly makes a distinction between the bona fide resident exemption and the physical presence exemption, and supports our argument.

Of course, the cautious immigration lawyer may suggest to the client to simply pay foreign tax and deduct rather than protect one’s foreign income up to $92,900.    This may work where you need to pay a foreign tax that is comparable to the US tax rate, but in some countries like Hong Kong or Dubai, the tax rate is much lower or next to nothing. Or you can be working for a UN or international organization where you are totally exempt from taxes. Under such circumstances, the $92,900 deduction would benefit the applicant and may outweigh the marginal risk in the event of an abandonment claim or naturalization denial.

But this may not be the end of the argument in favor of shielding foreign earned income based on the 330 days out of the US exemption. Look at “Home on the Range: Establishing Continuous Residence and Physical Presence for Naturalization Purposes” by Julie G. Muniz and Lyndsey Yoshino,   Immigration Practice Pointers 2012-2013 Ed. (AILA) where they point out that one of the requirements for IRS 2555 is to have a tax home in a foreign country.  This is in addition to meeting either bona fide residence test or physical presence test. This is what Muniz and Yoshino say:

“Even if an LPR can meet the physical presence test… the “tax home” requirement could be fatal to continuous residence. If an LPR has a tax home in the United States, she is precluded from claiming the foreign earned income credit. However, if she claims the credit, she is implicitly indicating that she has interrupted her continuous residence, as it could appear inconsistent to both allege a foreign tax home and claim continuity of residence.”

Under IRS definitions, your tax home is generally your regular place of business or post of duty, regardless of where you maintain your family home. Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. If your abode is in the US, then it is not possible to claim a tax home overseas.

Although the Muniz & Yoshino article makes a good point about cautioning against claiming a tax home overseas, it can be argued that maintaining a “tax home” in a foreign country ought not to be conflated each time with the  establishment of  a bona fide residence in that country. If that is the case, any tax home in a foreign country, as the AILA article claims, is inconsistent with maintaining continuous residence in the US. For instance, even if one is out for more than 180 days but less than one year, due to a work assignment overseas, the applicant would have in any event broken continuity of residence regardless of the overseas tax home, but can still rebut the presumption under 8 CFR §316.5(c)(1)(i)(A)–(D). The tax home overseas should not in itself be an aggravating factor. What indeed could be more perilous is when one takes a foreign earned income exclusion based on foreign residence rather than physical presence, as also indicated in the Adjudicator’s Field Manual at 74 (g)(9)(B):

If the legal permanent resident declared himself or herself to be a bona fide resident of a foreign country on IRS Form 2555, that means the alien declared to the IRS that he or she went abroad for an indefinite or extended period. He or she intended to establish permanent quarters outside of the United States and he or she openly declared residence in a foreign country. [See IRS Publication 54, Chapter 4.] The applicant applying for naturalization after openly declaring residence in a foreign country on an official United States Government form will most likely be unable to fulfill the residence requirement for naturalization (see 8 CFR 316(c)(2)).

If the legal permanent resident declared himself or herself to be physically present in a foreign country on IRS Form 2555, it only means that the applicant met the IRS’s physical presence test to have a proportion of his or her income excluded form United States taxes. The applicant has not declared residence in a foreign country. [See IRS Publication 54, Chapter 4.] Eligibility for naturalization purposes may be affected if the applicant fails to establish that he or she meets the physical presence requirements or fails to establish that the absence of more than six months but less than one a year did not result in abandonment of LPR status. If the applicant applying for naturalization has sufficient physical presence in the United States for naturalization purposes or can establish that his or her LPR status was not abandoned, then the applicant can still be eligible for naturalization (see Part 3 of the Form N-400).

Think of IRS 2555 as a warning sign whose presence on your tax return will trigger a red flag when applying for naturalization during the period when the applicant needs to maintain continuous residence. This does not mean that it will always be fatal if one tries to shield foreign income from US taxation. Any tax election should only be made by permanent resident aliens after consultation with competent immigration counsel.  All those who hold “green card” status should make certain that they understand what their tax obligations are and should refer to the IRS publication concerning the tax treatment for US citizens and resident aliens abroad. Always look for the presence of those factors with the potential to demonstrate that the applicant has never disrupted continuous residence.  Our blog points out how you can defend yourself if you have based the Form 2555 filing on physical presence overseas rather than a foreign residence. Do not be discouraged if you find this hard to understand. So did Albert Einstein who famously remarked that “This is too difficult for a mathematician. It takes a philosopher.”