DHS OIG, OIG-13-107, Implementation of L-1 Visa Regulations (2013)

Department of Homeland Security �������������������������� Implementation of L-1 Visa Regulations OIG-13-107 August 2013 OFFI CE or INSPECTOR GENERAL DcpartmeJJt of Hon .. ,land Securi ty August 9, 2013 MEMORANDUM FOR: The Honora ble Alejandro M~yorKa s Dire ctor U.S. Citizen ship and Immigration Serllices Thom as S. Winkowski Deputy CommIssioner of U.s. Cmtoms an d Border Protection, Performing t he duties of the Commissioner of CBP u .s. Customs and Border Protection fA1 '-....4 Charles K. Edwards Deputy Inspector General ~~~. ~{,I,/"y"-:J ~ J" d SUBJECT: Implementation of L-1 Visa Regulations Att ached for your action is our final report, Implementotion of L-1 V,SO Regulations. We Incorporated the formal comm ents from U.S. Citizenship and Immigration Serllices and u.s. Cu;toms and Border Prot ~ ction In th e fi nal report. The rePQl't contains 10 recommendations aimed at improving the l -l IIlsa progra m. Recommendat ions 1, 2, 3, 6. 8, 9. an d 10 are d ire<ted to USCIS.

Recommendations 4, S, ,md 7 are dIrected t o CBP. Your offl("e ("oncurred with all rKOmmendatlons directed to It. RecommendatIons 7., 3, 4, 5, 8 and 9 are unresolved. B35M on Informilion prollided in your rlMPO n~ t o t he d raft report, we consider recommen dations 1, 6 and 10 resoilled and open.

Recommen dation 7 is dosed. Once your office has f ully impleme nted th e recomme ndations, please submit a forma l closeout letter to us within 30 days so t hat we may close the recommendation( s). The lener should be accompani ~ d bV ellidence of Co mpl etion of agreed-upon correct ille action s. Consist ent with our re5pon sibillty under t he Inspe ctor Generol Act, we are prolliding cop ies of our report to app ro pridte co ngressional committee> with ollersight and approprIation responsibility o ~er the Department of Homeland Security. We will post the report on our website for public dis>emination.

Please call me with any questions, or your staff may contact Deborlth Outten-Mills, Acting AssIstant Inspet:tor General for InspectIons at (202) 254-4015.

OFFICE OF INSPECTOR GENERAL

Department of Homeland Security Table of Contents Executive Summary............................................................................................................. 2 Background ......................................................................................................................... 2 Results of Review ................................................................................................................ 6 Guidance on Specialized Knowledge Would Promote Consistent L-1B Adjudications ................................................................................

6 Recommendation ................................................................................................. 10 Blanket Petitions ................................................................................................... 10 Recommendations ................................................................................................ 14 CBP Officers Need Additional Training and Guidance To Process L-1 Petitions at Designated Canadian Ports of Entry and Preclearance Stations Effectively ........

14 Recommendation.................................................................................................. 17 Procedures for the L-1 Visa Fee Collection Process Need To Be Improved ......... 17 Recommendation.................................................................................................. 18 USCIS Can Increase Efforts To Verify the Legitimacy of New Office Petitions .....

18 Recommendation.................................................................................................. 22 The Validation Instrument for Business Enterprises Can Promote Consistency Within the L-1 Visa Program ................................................................................. 23 Recommendations ................................................................................................ 24 Consistent Application of the 2004 Visa Reform Act Would Increase L-1 Visa Program Integrity ..................................................................................................

25 Recommendations ................................................................................................ 26 Management Comments and OIG Analysis .......................................................... 27 www.oig.dhs.gov OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendixes Appendix A: Objectives, Scope, and Methodology ......................................... 333 Appendix B: Management Comments to the Draft Report ............................

344 Appendix C: Regulation Definitions................................................................. 399 Appendix D: Top Ten L-1 Employers, FY 2002 – FY 2011 .................................. 42 Appendix E: H-1B and L-1B Submissions, FY 2002 – FY 2011 ........................... 43 Appendix F: Major Contributors to This Report ...............................................

44 Appendix G: Report Distribution ...................................................................... 45 Abbreviations AAO CBP CBPO CFR D&B DHS DOS FDNS FY IMMACT INS ISO OIG POE RFE USCIS VIBE VRA Administrative Appeals Office U.S. Customs and Border Protection Customs and Border Protection Officer Code of Federal Regulations Dun and Bradstreet Department of Homeland Security Department of State Fraud Detection and National Security Directorate fiscal year ImmigrationfActfoff1990f U.S. Immigration and Naturalization Service Immigration Services Officer Office of Inspector General port of entry Request for Evidence U.S. Citizenship and Immigration Services Validation Instrument for Business Enterprises L-1fVisafandfH-1BfVisafReformfActfoff2004 www.oig.dhs.gov OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Executive Summary Senator Charles Grassley requested that the Department of Homeland Security (DHS) Office of Inspector General examine the potential for fraud or abuse in the L-1 intracompany transferee visa program. The L-1 visa program facilitates the temporary transfer of foreign nationals with management, professional, and specialist skills to the United States. Through domestic and international fieldwork, we observed DHS personnel and Department of State consular officials process L-1 petitions and visas.

We also interviewed 71 managers and staff in DHS and the Department of State. Although U.S. Citizenship and Immigration Services regulations and headquarters memorandums provide guidance regarding the definition of specialized knowledge, they are insufficient to ensure consistent application of L-1 visa program requirements in processing visas and petitions. More communication between DHS and the Department of State would improve the processing of blanket petitions. We determined that program effectiveness would be improved and risks reduced with additional effort in (1) training for Customs and Border Protection Officers that will enable them to fill their L-1 gatekeeper role at the northern land border more effectively, (2) improving internal controls of the fee collection effort at the northern land border, (3) more rigorous consideration of new office petitions to reduce fraud and abuse, (4) providing an adjudicative tool that is accessible to all Federal personnel responsible for L-1 decisions, and (5) consistently applying Visa Reform Act anti-“job-shop” provisions to L-1 petitions.

These issues increase the opportunity for fraud and abuse in the L-1 visa program. We are making 10 recommendations to improve the integrity of the L-1 visa program. The Department concurred with all recommendations. www.oig.dhs.gov 1 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Background U.S. Citizenship and Immigration Services (USCIS) approves or denies applications for various immigration benefits, including petitions for temporary workers. The L-1 visa program originated with the 1970 amendments to the ImmigrationfandfNationalityfAct.1 Legal authorities that control the L-1 visa program include the following: • 1970 Amendments to the ImmigrationfandfNationalityfAct:fEstablished the L-1 visa program. • • 8fCodefoffFederalfRegulationsf(CFR)f§f214.2(l)(1)(ii)(D)(1987):ffAmended the regulatory definition of specialized knowledge first published by the U.S. Immigration and Naturalization Service (INS) in 1983. fImmigrationfActfoff1990f(IMMACT):ffProvided the first statutory definition of specialized knowledge and effectively made inapplicable the previous regulatory definition that stated the foreign national was required to possess “proprietary” knowledge in order to qualify as an L-1B nonimmigrant; increased limits on legal immigration to the United States; and revised and established new nonimmigrant admission categories.2 • 8fCFRf§f214.2(l)(1)(ii)(D)(1991):ffAmended the definition of specialized knowledge in the ImmigrationfActfoff1970. • NorthfAmericanfFreefTradefAgreementfoff1994: Allowed Canadian and Mexican citizens to temporarily enter the United States by applying for immigration benefits directly at a Class A port of entry or a U.S. preclearance/preflight station in Canada.3 • L-1fVisafandfH-1BfVisafReformfActfoff2004: Requires that any employee with specialized knowledge who will be primarily located offsite must be controlled and supervised by the petitioning company, and the placement of the foreign national will not be an arrangement to provide labor for hire, but rather will be a placement in connection with the provision of products or services for which specialized knowledge specific to the petitioning employer is necessary.4 The L-1 visa is one of many visa types that require an approved petition.

Before a foreign traveler can apply for such a visa, a multinational company (the petitioner) must submit a petition (Form I-129) to USCIS requesting that USCIS make a determination that the intending traveler (the beneficiary) fits within the L-1 visa category. USCIS examines the qualifications of both the petitioner and the beneficiary, refers to the 1 See INA § 101(a)(15)(L), 8 U.S.C. § 1101(a)(15)(L), as added by Pub.

L. No. 91-225, Sec. 1(b).

2 Pub.

L. 101-649.

3 8 CFR 214.2(b)(4). 4 See INA § 214(c)(2)(F), 8 U.S.C. § 1184(c)(2)(F), as added by Pub. L. No. 108-447, Sec 412(a). www.oig.dhs.gov 2 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security requirements imposed by the law, and either approves or denies the request. For the L-1 visa, there are restrictions as to which companies can apply for L workers and what kinds of employees might qualify.

An L-1 employee sent to work temporarily in the United States by the petitioning employer must qualify in one of two subcategories: • L-1A – an alien performing services in a managerial or executive capacity. • L-1B – an alien performing services as a specialized knowledge worker. Managers and executives need not supervise subordinates. The statutory definitions of “managerial capacity” and “executive capacity” at INA § 101(a)(44)(A) and (B), respectively, and the regulations at 8 CFR §f214.2(l)(1)(ii)(B) and (C), allow for functional management. Most L-1 petitions are adjudicated by Immigration Services Officers (ISOs) at the California and Vermont Service Centers.

After USCIS approves a petition for a beneficiary who is overseas, a Department of State (DOS) consular officer interviews the individual at a U.S. consulate or embassy. We examined some aspects of the L-1 visa program in 2006. Our report Reviewfoff VulnerabilitiesfandfPotentialfAbusesfoffthefL-1fVisafProgram (OIG-06-22, January 2006) made three recommendations to improve the program: Recommendation 1: Establish a procedure to obtain overseas verification of pending H and L petitions by Department of State officers in the related countries. Recommendation 2: Explore with ICE [U.S. Immigration and Customs Enforcement] whether ICE Visa Security Officers, experienced criminal investigators assigned abroad in compliance with Section 428(e) of the HomelandfSecurityfAct, could assist in checking the bona fides of L petitions submitted by petitioners in the countries in which the officers are assigned.

Recommendation 3: In cooperation with “L Visa Interagency Task Force,” which consists of representatives from the Departments of Homeland Security, Justice, and State, seek legislative clarification relative to: a) applying the concepts of manager and executive to L-1A visas and verifying that the beneficiary will be so used; b) the term “specialized knowledge,” as altered in the ImmigrationfActfoff 1990, and according to USCIS guidance issued in March 1994; and c) the criteria and proof required when a foreign company seeks to use an L petition to open a new office in the United States. That almost any foreign www.oig.dhs.gov 3 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security business proprietor can effectively petition himself and his family into the United States may not be in accord with congressional intent. After the release of the 2006 report, USCIS took actions sufficiently consistent with the intent of the recommendations that they were closed. The 2004 Visa Reform Act Creates Anti-“Job-Shop” Provisions In 2004, Congress passed the L-1fVisafandfH-1BfVisafReformfAct (VRA), which amended the ImmigrationfandfNationalityfAct (8 U.S.C. 1184(c)(2 and made significant changes to the L-1 visa category.5 One change was the creation of anti-“job-shop” provisions, which are commonly used to describe a firm that petitions for aliens in L-1B status to contract their services to other companies, often at wages that undercut the salaries paid to U.S. workers.6 The VRA requires that any employee with specialized knowledge who will be primarily located offsite must be controlled and supervised by the petitioning company.

Additionally, the placement of the foreign national will not be an arrangement to provide labor for hire, but rather will be a placement in connection with the provision of products or services for which specialized knowledge specific to the petitioning employer is necessary.7 An L-1B applicant must perform specialized knowledge duties related to the petitioning employer. ISOs use the Adjudicator’sfFieldfManual and the July 28, 2005, interoffice memorandum from USCIS as guidance to deny petitions based on the VRA anti-“job-shop” provisions.8 This memorandum and the above-noted Adjudicator’sfFieldfManual revisions provide guidance to USCIS officers in the field regarding amendments made by the VRA.9 Data Trends and Comparisons USCIS approvals for L-1 petitions peaked in fiscal year (FY) 2007 at 57,218. The number of approved petitions has declined each year since then, with a total of 33,301 L-1 approvals in FY 2011.10 Of this amount, India has led the world in L-1 visa approvals, with 26,919 L-1 visas issued in FY 2011. The United Kingdom, Japan, Canada, and 5 See INA § 214(c)(2)(F), 8 U.S.C. § 1184(c)(2)(F), as added by Pub.

L. No. 108-447, Sec 412(a).

6 Ibid. 7 Ibid. 8 USCIS, Adjudicator’sfFieldfManual, Chapters 32.3, 32.4(a) and 32.5. 9 Interoffice Memorandum from William R. Yates on Changes to the L Nonimmigrant Classification made by the L-1 Reform Act of 2004 to USCIS Regional Directors, District Directors, Officers-in-Charge, and Administrative Appeals Office Director (July 28, 2005).

10 U.S. Citizenship and Immigration Services, Office of Performance and Quality, Data Analysis and Reporting Branch, February 24, 2012. www.oig.dhs.gov 4 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Mexico maintain the next highest number of L-1 visa approvals, respectively, with a total of 16,823 issuances in FY 2011. Between FY 2003 and FY 2010, these five countries accounted for 75.7 percent of L-1 entries into the United States.11 Since FY 2002, the 10 companies identified in appendix D have received the most L-1 approvals from USCIS. Most of these companies petition for more L-1B specialized knowledge workers than for L-1A managers. L-1 Visas as H-1B Substitutes Some observers have expressed concern that the L-1 visa program, which has no numerical limit, may be used to avoid the more stringent H-1B program requirements.12 For example, the L-1 visa does not require the filing of a Labor Condition Application with the Department of Labor.

The dependent spouse of an L-1 employee is normally allowed to work while in the United States, whereas the dependent spouse of an H-1B employee is not.13 An H-1B worker must have a specialty occupation, while an L-1B beneficiary must only possess specialized knowledge. Some employees might properly be considered eligible for either classification based on their qualifications. However, the data we reviewed provides no conclusive evidence that the L-1 visa program is being used to avoid H-1B restrictions. Since FY 2008, the ratio of H-1B to L-1B submissions has actually increased, as shown in appendix E. More H-1B petitions were submitted per each L-1 petition in FY 2011 than in the previous six FYs.

The L-1 visa program generates various opinions from organizations. Numerous publications have discussed the costs and benefits of the H-1 and L-1 visa programs. Opponents of the L-1 visa program feel that it drives down salaries, reduces employment opportunities for domestic technology workers, and allows unscrupulous petitioners to exploit the foreign beneficiaries.14 However, proponents of the L-1 visa argue that this program allows U.S. firms to remain innovative and recruit and retain the “best and the brightest.”15 11 Ibid. 12 LfVisas:fBigfBusinessesfLoopholefforfDisplacingfAmericanfWorkers, April 2008.

13 Ibid. 14 http://dpeaflcio.org/programs-publications/issue-fact-sheets/guest-worker-visas-the-h–1b-and-L-1/ 15 Department for Professional Employees, GamingfthefSystemf2012, p. 16. www.oig.dhs.gov 5 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Results of Review Guidance on Specialized Knowledge Would Promote Consistent L-1B Adjudications We reviewed L-1 petitions ranging from the restaurant industry to the information technology field, and concluded that adjudicators reach different decisions despite similar fact patterns. Consistent adjudications are vital to stakeholder companies because USCIS decisions are key factors in a company’s decision to transfer employees to the United States. Previous Laws and Policies Governing Specialized Knowledge The L-1 visa classification was created by Congress in 1970 without providing a statutory definition of “specialized knowledge.” The U.S. Immigration and Naturalization Service (INS) published a regulatory definition for the first time in 1983.

In February 1987, the INS amended its definition of specialized knowledge as “knowledge possessed by an individual whose advanced level of expertise and proprietary knowledge of the organization's product, service, research, equipment, techniques, management, or other interests of the employer are not readily available in the United States labor market.”16 This definition required an employee to be a key person with materially different knowledge and expertise that is critical for job performance and relates exclusively to the employer’s proprietary interest.17 In 1988, INS issued a policy memorandum instituting a broader interpretation of specialized knowledge, defining it as “special knowledge possessed by an employee that is different from or surpasses the ordinary or usual knowledge of an employee in the particular field.”18 The ImmigrationfActfoff1990 (IMMACT) enacted the first statutory definition of specialized knowledge, clarifying that the beneficiary’s knowledge need not be proprietary to the petitioner or limited in the U.S. labor market. IMMACT states that an “alien is considered to be serving in a capacity involving specialized knowledge with respect to a company if the alien has a special knowledge of the company product and its application in international markets or has an advanced 16 8 CFR §f214.2(l)(1)(ii)(D)(1989). 17 Matter of Sandoz Crop Protection Corporation, 19 I&N Dec. 66 (Comm.

May 20, 1988). 18 Interoffice memorandum from Richard Norton, Associate Commissioner, U.S. Immigration and Naturalization Service to All Regional Commissioners and All Regional Service Center Directors (October 20, 1988) (on file with USCIS). www.oig.dhs.gov 6 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security level of knowledge of processes and procedures of the company.”19 Following the passage of IMMACT, Congress noted that nonimmigrant visas, such as the L-1 and H-1B, had enhanced trade and accommodated useful movement of people and products.20 As a result of IMMACT, INS promulgated the existing regulatory definition of specialized knowledge at 8 CFR § 214.2(l)(1)(ii)(D). Federal immigration officials issued several policy memorandums providing guidance on what should be considered specialized knowledge. A July 1991 INS regulation gave the interpretation of specialized knowledge that the individual must possess “special knowledge” that applies in international markets or “an advanced level of knowledge or expertise in the organization’s processes and procedures.”21 In March 1994, INS issued the memorandum “Interpretation of Specialized Knowledge,” which noted that a petitioner’s assertion that an alien’s knowledge is different does not establish that the alien possesses specialized knowledge.22 In September 2004, USCIS issued the memorandum “Interpretation of Specialized Knowledge for Chefs and Specialty Cooks seeking L-1B status.” This memorandum clarified guidance in the 1994 memorandum that chefs or specialty cooks generally are not considered to have “specialized knowledge” for L-1B purposes, even though they may have knowledge of a restaurant’s special recipe or food preparation technique.23 In 2008, the Administrative Appeals Office (AAO) issued a non-precedent decision on an appeal submitted by GSTechnical Services (GST).

In the GST decision, the AAO concluded that routine work experience and knowledge of a company’s products do not constitute specialized knowledge. ISOs Do Not Apply the Specialized Knowledge Definition Uniformly In an effort to understand how specialized knowledge is applied, we reviewed petitions at the USCIS service centers and studied more than 250 petition denials that were appealed to the AAO. When a service center denial is upheld, the AAO explains to the petitioner the deficiencies in the case. Unsuccessful petitioners, industry groups, and the immigration bar raise concerns that USCIS is denying 19 8 U.S.C. § 1184(c)(2)(B).

20 1990 U.S.C.C.A.N. 6746. 21 56 FR 31553 (1991). 22 Interoffice memorandum from James Puleo, Acting Executive Associate Commissioner, U.S. Immigration and Naturalization Services to District Directors, Officers in Charge, Service Center Directors, Director of Administrative Appeals Unit and Office of Operations (March 9, 1994) (on file with USCIS). 23 Interoffice memorandum from Fujie O. Ohata, Director, Service Center Operations, U.S. Citizenship and Immigration Services to Service Center Directors (September 9, 2004) (on file with USCIS). www.oig.dhs.gov 7 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security petitions that should be approved.

After examining the files, we conclude that the low number of successful appeals and the detailed explanation by AAO of the deficiencies in the underlying petitions indicate that service centers are not unduly restrictive. ISOs we interviewed said that specialized knowledge petitions are complicated to adjudicate because specialized knowledge has not been adequately defined. The terms they used to describe their concerns to us included the following: “open to interpretation, unfortunately” “the only place where I struggle” “unquantifiable” “subjective” ISO Concerns “constantly changing” “very difficult to adjudicate” “extremely risky” ISOs told us that when adjudicating specialized knowledge petitions, the general principle is “you know it when you see it.” The absence of a meaningful definition for specialized knowledge could undermine consistent L-1B adjudications. ISOs informed us that even after receiving specialized knowledge training, they remain unable to apply the law and policy to L-1B petitions consistently.

They described a class that they had recently taken as very generic. To increase the value of training, ISOs suggested that USCIS should use real life examples. USCIS has been developing specialized knowledge guidance to replace the outdated March 1994 memorandum. In our 2006 report ReviewfoffVulnerabilitiesfandfPotentialfAbusesfoffthefL-1fVisaf Program (OIG-06-22, January 2006), we wrote: “One Southeast Asian visa section reported officers do not have the knowledge or the guidance necessary to determine whether such work involves specialized knowledge, except in the most clear cut cases.”24 During this review, we determined that despite efforts to implement guidance that has been provided, confusion about the application of specialized knowledge still results in inconsistent adjudications.

24 ReviewfoffVulnerabilitiesfandfPotentialfAbusesfoffthefL-1fVisafProgram, OIG-06-22 (January 2006), p. 11. www.oig.dhs.gov 8 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security The Statutory Definition of Specialized Knowledge Is Vague and Unclear The L-1 definition contained in the Immigration and Nationality Act does not clearly distinguish between employees with and without specialized knowledge.25 As a result, decision making for specialized knowledge petitions is inconsistent, and unsuccessful petitioners do not understand why their petitions are denied. There is a vigorous public debate between stakeholders about what knowledge is specialized and what Congress intended when it legislated the L-1B visa. The debate has been conducted in congressional hearings, policy journals, and letters to the White House. In the legislative history to the 1970 legislation that created the L-1B visa program, Congress indicated their intent that the classification would be narrowly drawn so that the total number of L-1B beneficiaries would not be large.26 Some in the stakeholder community argue that the 1990 IMMACT intentionally broadened the 1970 constraints with a more liberal definition of specialized knowledge.

Other stakeholders, including the AAO, believe that the IMMACT changes did not alter the program’s original intent to benefit a small number of beneficiaries. We believe the AAO’s reasoning to be persuasive. The section of the IMMACT that relates to L-1B visas appears to be an effort to clarify, not broaden, the definition of specialized knowledge. A liberal definition of specialized knowledge would open the category to an unlimited number of foreign workers.

Congressional intent in 1990 notwithstanding, the need for a clear definition of specialized knowledge creates frustration for USCIS employees and confusion for the public. Because it is not clear which employees should be granted L-1B visas, and because there are no numerical limits on the number that can be approved each year, the potential number of beneficiaries is limitless. Based on our interviews, file reviews, and stakeholder opinions, we conclude that the primary challenge for the L-1B category is that the statutory language remains open to interpretation. Over the years, the former INS, and now USCIS, have made identifiable efforts to clarify this vague concept.

Adjudicators cannot consistently apply a definition that has no clear meaning. Although USCIS regulations and headquarters memorandums provide guidance regarding the 25 8 U.S.C. § 1101(a)(15)(L). 26 1970 U.S.C.C.A.N. 2751-2755. www.oig.dhs.gov 9 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security definition of specialized knowledge, they are insufficient to ensure consistent application of L-1B visa program requirements in processing petitions and visas. Visa officers abroad also need to make specialized knowledge decisions when they adjudicate visa applications.

The DOS periodically sends visa guidance to consular officers at embassies around the world. One message to the field about L-1B visas said, in part (emphasis added): “Unfortunately, the statutory language defining ‘specialized knowledge’ is not simple or clear. … [A]n alien is considered to be serving in a capacity involving specialized knowledge with respect to a company if the alien has a special knowledge of the company product and its application in international markets or has an advanced level of knowledge of processes and procedures of the company. The phrase ‘specialized knowledge’ is not otherwise defined in the law, and there have been few administrative or judicial opinions interpreting it. This statutory definition has been called tautological, in that it states an alien will serve in a capacity involving specialized knowledge if the alien has special knowledge.

As the DHS/AAO noted, ‘the definition is less than clear, since it contains undefined, relativistic terms and elements of circular reasoning.’ A decision by a District Court in Washington, D.C. was even more critical: ‘Simply put, specialized knowledge is a relative and empty idea which cannot have a plain meaning.’”27 Recommendation We recommend that USCIS: Recommendation #1: Publish new guidance to clarify the USCIS interpretation of specialized knowledge. This guidance should be sufficiently explicit to give adjudicators an improved basis for determining whether employees of a petitioning entity possess specialized knowledge. Blanket Petitions Regular visa petitions provide required information about both the petitioner and the beneficiary. For an L visa to be issued, the petitioner must be a company operating in at least two countries, one of which is the United States, and the 27 Telegram 11State002016, January 2011. www.oig.dhs.gov 10 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security beneficiary must be an employee.

This report discusses the challenge that ISOs face deciding whether the petitioning company meets the complicated definition of an L-1 entity, and the beneficiary qualifies as an executive or possesses specialized knowledge. To gain USCIS approval, an L-1 petitioner provides extensive information about corporate ownership, business activities, and the relationships among its parent, branches, subsidiaries, and affiliates. This burden is eased for companies that meet specific criteria. If a petitioner meets specific requirements for size and the number of related entities, for example, they are allowed to establish the required intracompany relationships by filing a blanket petition.28 The blanket petition allows a petitioner to seek continuing approval of itself and some or all of its parent, branches, subsidiaries, or affiliates as qualifying organizations.29 With the approved blanket petition as support, individual employees can later apply for L-1 visas.30 The petitioner can send employees to the United States repeatedly without needing to prove the petitioning company’s eligibility.

The transferring employees will report to the consular office in their home country to prove their individual eligibility for the L-1 classification as a manager, executive, or specialized knowledge worker. The approval of a blanket L petition does not guarantee that an employee will be granted an L-1 visa. However, it does provide the employer with the flexibility to transfer eligible employees to the United States quickly and with short notice without having to file an individual petition with USCIS. In most cases, once the blanket petition has been approved, the employer should complete Form I-129S, Nonimmigrant Petition Based on Blanket L Petition, and send it to the employee along with a copy of the blanket petition Approval Notice and other required evidence, so that the employee may present them to a consular officer.

Different Standards of Proof Create Inconsistencies in L-1 Adjudications The blanket petition process causes unease among both USCIS ISOs and DOS consular officers. Some ISOs are concerned that consular officers abroad might interpret specialized knowledge too loosely when considering blanket beneficiaries. Consular officers are troubled that employees who are denied L-1 visas abroad can later obtain individual petitions filed on their behalf by the same employer. We interviewed consular officers in India who expressed concerns that some of the beneficiaries of individual petitions who are approved 28 See appendix C for the definition of a blanket L-1 petition and a list of criteria required for companies to file.

29 Ibid. 30 8 CFR § 214.2(l)(4). www.oig.dhs.gov 11 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security by USCIS adjudicators would not be approved by consular officers due to their knowledge not being specialized. Consular officers use a “clearly approvable” standard to determine the qualifications for any previously unnamed beneficiary applying for an L-1 visa under an approved blanket petition. Clearly approvable means that (1) the petitioner is unambiguously an executive or manager, or possesses specialized knowledge; (2) supporting documentation establishes that all requirements are met; and (3) there are no indications of fraud.

USCIS ISOs evaluating whether the named beneficiaries of regular L-1 petitions have specialized knowledge use a preponderance of evidence standard. The preponderance of evidence standard requires only that the evidence supporting the applicant’s claim is probably true. This, USCIS explains, means that the applicant is more likely eligible than ineligible. ISOs are experts in the nuances of difficult adjudications of L-1 petitions.

They have received relevant L-1 specific training and have years of petition experience. L-1 petitions processed at the Service Centers are decided by specific teams that concentrate on this kind of petition. In contrast, consular officers move from assignment to assignment, do not usually adjudicate petitions, and have had no USCIS training. Any particular visa officer may have previously adjudicated only a few L-1 visa cases.

To have consular officers approve only cases that are clearly approvable may be a reasonable means to channel the more complicated cases back to USCIS to be decided by more experienced adjudicators. Nevertheless, the two standards create a disparity: beneficiaries whom consular officers determine to not be unambiguously approvable, but whom USCIS determines to be more likely than not approvable. When a consular officer denies a visa applicant seeking an L-1 visa under a blanket petition, the employer can submit an individual petition for the same employee. This individual petition will be adjudicated at one of the two Service Centers that process L petitions.

Some of the consular officers with whom we spoke noted that some L-1 visa applicants applying under a blanket petition are denied at post because they do not have specialized knowledge, but then reappear months later as the named beneficiaries of an individual petition approved by USCIS. The officers understood that any such occurrence might be a standard of proof issue, but that their adverse decision had been based on a face-to-face interview; USCIS did not have that opportunity. They also noted that with a second opportunity, the applicant might submit different information to USCIS. www.oig.dhs.gov 12 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security The second petition is supposed to state the reason why the named alien was denied an L-1 visa under the blanket procedure and must specify the consular office that made the determination.31 However, because the process depends on self-reporting, vulnerabilities may ensue. Although ISOs and consular officers processing L-1 petitions have different missions and guidelines, they recognize the benefit of increased communication about specialized knowledge issues.

As a solution, ISOs and consular officers suggested periodic visits by visa officers to the Vermont or California Service Centers and familiarization trips by senior USCIS adjudicators to the posts in India where most L-1 visas are adjudicated. A Best Practice: Consular Team India Consolidates Blanket L-1 Cases In December 2011, Department of State (DOS) visa posts in India centralized blanket L-1 petition processing in Chennai. Posts in India process the most L-1 visas in the world, with 37 percent of total visas worldwide in FY 2011. Almost 90 percent of these petitions were for blanket L-1 visas.

According to Consular Team India, “India is the only country in the world where companies have built a business model dependent on using blanket L-1s to send large numbers of personnel to the United States who would otherwise require H-1Bs.” Consolidation was implemented at the recommendation of the DOS Office of Inspector General, urging more supervision, consistency, and centralization of visa operations in India. Prior to consolidation, L-1 visa standards lacked uniformity. Inconsistencies among posts and the complexity of this visa category created fairness issues; petitioning companies noted different outcomes for their employees with similar circumstances. Immediately following consolidation, Chennai started to see positive results in its adjudicative process.

Consular officers in Chennai handled more cases and became more confident and expert. As a result, the number of unqualified applicants has decreased and fraud indicators have declined. Source: Department of State, Consular Affairs, BriefingfforfDHSfOIGfTeam,fApril 16, 2012. 31 Ibid. www.oig.dhs.gov 13 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security We believe that ISOs and consular officers possess mutually beneficial L-1 expertise.

Increased communication would enhance the effectiveness of the L-1 visa program. This communication might include joint training exercises or videoconference “round table” workgroups. Recommendations We recommend that USCIS: Recommendation #2: Screen L-1 beneficiaries against a list of persons previously denied visas by DOS consular officers. Recommendation #3: Develop broader working-level communications opportunities between ISOs adjudicating L petitions and DOS consular officers adjudicating L visa applications.

CBP Officers Need Additional Training and Guidance To Process L-1 Petitions at Designated Canadian Ports of Entry and Preclearance Stations Effectively We previously described the careful review that most L petitions receive at USCIS Service Centers and the scrutiny that DOS consular officers pay to L visa applicants. However, neither of these things happens when a Canadian seeks to cross the northern border as an intracompany transferee. Canadians are exempt from many nonimmigrant visa requirements and usually apply for admission to the United States at the land border without first obtaining a visa. This has several effects on the scrutiny a Canadian L applicant receives compared with all other nationalities. www.oig.dhs.gov 14 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security L-1 Petition Most Nationalities Approved or denied by a small cadre of USCIS adjudicators.

The employees do employment visa cases exclusively and have received significant training relevant to this duty. Available Tools The USCIS Adjudicator’sfFieldf Scrutiny of the Traveler Manual contains extensive information about how to process L petitions. USCIS has the ability to quickly verify the existence of the petitioning company. Unclear petitions are subject to Requests for Evidence.

L visa applicants receive an in- depth personal interview by consular staff at embassies and consulates in the traveler’s home country. If there are any deficiencies, the traveler obtains additional documentation from their employer and returns another day for further examination. All visa applicant names are checked automatically against myriad visa security databases. Canadian L Applicant The first U.S. Government official to see the petition is a Customs and Border Protection Officer (CBPO), who performs the full range of U.S. Customs and Border Protection (CBP) duties and may process only a small number of L cases in a month.

CBP does not have these tools. Processing some travelers nights and weekends, CBP often cannot even phone the company to ask questions. The traveler appears unannounced at a port of entry (POE) and is processed on the spot. The traveler’s name is checked against TECS, which has some but not all of the data available to consular officers.32 An unsuccessful traveler can, and sometimes does, “port shop” by driving to the next bridge or tunnel and trying their luck again with a different CBPO.

CBPOs assigned at POEs normally permit or deny a traveler’s admission into the United States and determine the length of stay on any particular visit.33 On the Canadian border and at preclearance facilities in Canadian airports, CBPOs also determine whether L-1 petitions are approvable and whether the traveler 32 TECS (not an acronym) is the principal system used by CBPOs at ports of entry to assist with screening and determinations regarding admissibility of arriving persons. 33 http://travel.state.gov/visa/temp/types/types_1274.html www.oig.dhs.gov 15 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security qualifies as an L-1 beneficiary.34 Most of the CBPOs we interviewed feel that an inadequate level of L-1 training hampers their effectiveness. Basic training courses for entry-level CBPOs at the Federal Law Enforcement Training Center cover inspection processes, visa classifications, and the statutory grounds for traveler inadmissibility. Basic training also introduces all other laws, rules, and regulations that CBP enforces, many of which are customs-related.

The curriculum for entry-level CBPOs does not include L-1 visa training. Upon arrival at their first POE, new officers receive on-the-job training specific to that port of entry. L-1 visa training at the POEs we visited was limited to written material saved from a previous training event and on-the-job training administered by more experienced colleagues. This type of training is beneficial, but more structured training would ensure greater consistency in assessing qualifications for L-1 visa benefits.

We heard concerns about northern border cases from the USCIS adjudicators and fraud detection specialists we interviewed. One USCIS fraud specialist said that while on detail to a northern border port of entry, he witnessed CBPOs accepting L-1 petitions that were 20 years old, missing pages containing vital information, or missing appropriate supporting documentation. Several fraud specialists we interviewed told us that they believe that there are fraud concerns with petitions processed by CBPOs. For example, an applicant whose admission is denied may withdraw their application and reapply at another POE.

Because of the inconsistency in the decision-making process, a petition that was denied at one POE may be approved at another. The majority of the USCIS adjudicators we interviewed consider L determinations to be complex, and do not consider northern border CBPOs adequately trained or resourced to make quality L decisions. Many of the CBPOs we interviewed agree with the concerns expressed by USCIS adjudicators. Some questioned the visa security implications of asking CBPOs on the northern border to make L-1 visa determinations that in all other contexts would be made by better equipped USCIS adjudicators.

To do the best job they can, they reserve L processing for their more experienced officers, but worry that L-1 visa processing diverts these experienced POE staff away from the core mission of stemming the flow of illegal drugs, terrorists, and undocumented aliens into the United States. CBPOs we interviewed provided the following suggestions for how to strengthen the northern border L-1 process: 34 The NAFTA Adjudications – Training Materials, slide 112. www.oig.dhs.gov 16 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security • Limit the number of POEs making L-1 determinations, and provide the service only Monday through Friday during normal business hours. This would allow CBP to concentrate the workload and assign it to a small number of better trained and more experienced officers who could contact petitioning companies when necessary. • Eliminate the northern POE adjudication service and require L travelers to obtain L visas from consular offices in Canada. Why, some CBPOs asked us, is CBP performing a USCIS function?

One clear congressional goal when dismantling the former INS was to separate immigration benefit and immigration enforcement operations. Congress assigned benefit determinations to USCIS and enforcement operations to CBP. • Have USCIS station trained adjudicators at each of the two or three busiest POEs to handle the L workload. To improve the accuracy of L-1 determinations at the northern border, CBP must increase the amount and quality of L-1 training given to northern border CBPOs. Recommendation We recommend that CBP: Recommendation #4: Provide thorough L-1 visa training to all CBPOs processing L-1 travelers at ports of entry or preclearance/preflight stations in Canada.

Training should include determining petitioner’s eligibility, L-1 fraud detection, correct assessment of fees, specialized knowledge, and the provisions of the Visa Reform Act. Procedures for the L-1 Visa Fee Collection Process Need To Be Improved L-1 petitioners are required to pay a $500 fraud fee when they submit a petition. They also must pay a $2,250 fee if they employ 50 or more employees in the United States with more than 50 percent of their employees in L-1A or L-1B nonimmigrant status.35 USCIS and CBP interviewees told us that CBPOs are sometimes confused about when to collect the fees and how to document the collection. In addition, there is no reliable way for the processing CBPO to know how many petitioning-company employees are in L status in the United States.

We determined that appropriate fees were not always charged, and duplicate 35 These fees are also paid by petitioners for some other categories. www.oig.dhs.gov 17 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security fees were sometimes charged when there were no receipts to prove prior payment. One USCIS manager stated that after August 2010, when the $2,250 fee was implemented, 2 months passed before CBP began collecting it.36 One ISO stated that there were meetings at the headquarters level between CBP and USCIS to explain the circumstances under which these fees should be collected. However, CBP headquarters has not issued guidance to the field regarding this issue. According to one USCIS manager, it was estimated that more than 2,000 petitioners were not charged the $2,250 fee because CBPOs could not verify whether the petitioners had 50 or more employees.

CBP’s TECS data system does not have fee collection data fields. To document a fee collection, a text note is usually placed in the general notes field in TECS indicating that the fees were paid. To improve the integrity of the fee collection process, CBP should establish clear guidelines for fee collection, develop methods to accurately record the payments of fees, and train CBPOs in the new process. Recommendation We recommend that CBP, in concert with USCIS: Recommendation #5: Establish fraud fee collection guidelines for CBPOs processing L-1 travelers.

At a minimum, procedures should prevent incorrect charges to travelers, provide an audit trail, and show CBPOs a history of the traveler’s previous fee payments.

USCIS

Can Increase Efforts To Verify the Legitimacy of New Office Petitions The L-1 visa classification allows a foreign company that does not have an affiliated U.S. office to send an executive, manager, or specialized knowledge worker to help start a new office. A new office is “an organization which has been doing business in the United States through a parent, branch, affiliate, or subsidiary for less than one year.”37 36 Pub.

L. 111-230.

37 8 CFR § 214.2(l)(1)(ii)(F). www.oig.dhs.gov 18 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Although IMMACT requires an L-1 beneficiary to be a manager, executive, or specialized knowledge worker, the head of a new office usually will neither manage employees (who have not yet been hired), oversee ongoing business activities (that have not yet commenced), nor serve as a functional manager of an ongoing business function. Instead, the beneficiary’s responsibilities may include conducting nonqualifying duties such as renting office space, buying furniture and equipment, and hiring workers. The L-1 new office regulation grants L-1 status for a 1-year period during which the beneficiary need not meet the L-1 statutory definition and manage subordinates. At the end of the 1-year period, some beneficiaries may not qualify for continuing L-1A or L-1B status if they are not by then engaging primarily in high-level work.

An L-1A petitioner must also demonstrate that a manager or executive will be needed and that the office will be doing business in the future.38 According to Chapter 32.3 of the Adjudicator’sfFieldfManual, “additional scrutiny should be given to petitions where the initial petition is granted to allow the petitioner and/or beneficiary to effectuate a tentative or prospective business plan or otherwise prospectively satisfy the requirement for the nonimmigrant classification.” However, because new office petitions include plans and projections, several ISOs explained that there is not much factual evidence in the files they adjudicate. It can only be established at the end of the year whether the beneficiary is entitled to L-1 status. Some ISOs give the new office petitioners the “benefit of the doubt,” while other ISOs deny the initial petition if they conclude that the requirements will not have been met after a year. ISOs said that USCIS generally favors approval of initial new office petitions.

If definitional requirements are not met after the 1-year period, USCIS can deny the petitioner’s request for an extension. ISOs expressed some concerns about the vulnerabilities associated with new office petitions: one told us that he believed USCIS is lenient with initial new office petitions; another said that new office petitions must have supervisory approval to deny, which diminishes an ISO’s discretion. Our file reviews showed that some new office petitions were approved even when the beneficiary did not submit sufficient evidence that the L-1 beneficiary will meet the regulatory definition after the first year. We also noted instances where petitions received an approval, even though the facts of the cases were similar to other cases that were denied.

Examples of problems we observed include the following: 38 8 CFR § 214.2(l)(3)(v)(C). www.oig.dhs.gov 19 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security • Lack of a realistic business plan or a plan that is so vague, the petitioner cannot present a viable path to meeting L-1 definitions at the end of the 1-year period; • Initial staffing structures that raise questions about the future need for an L-1A manager or executive. Common examples we reviewed included gas stations or convenience stores that list several “managers,” with few workers involved in the day-to-day functions of the business; • Managers who perform nonqualifying work as a central part of their job; and • Inconsistencies or vagueness in how the beneficiary’s managerial or executive job is described. We believe that there are program integrity risks with new office petitions and conclude that these petitions are sometimes approved erroneously. The New Office Regulation Is Inherently Susceptible to Abuse New office petitions and extensions are inherently susceptible to abuse because much of the information in the initial petition is forward-looking and speculative.

For example, some companies cannot accurately forecast exactly how the company would grow to justify an L-1A manager or executive after the 1-year period. It might also not be known at the time of filing exactly where some offices will be located or what equipment will be purchased. ISOs told us that petitioners can present speculative, even imaginary information, or simply recite regulatory definitions in order to receive a new office petition approval. Several decisions from the Administrative Appeals Office note this abuse: “the record shows that the beneficiary, two years after the granting of the petitioner’s first “new office” approval, has still been performing many of the non- managerial duties associated with the petitioner’s startup activities.” “The petitioner has not reported any income or expenses or paid any taxes since its incorporation in October 2005.” The beneficiary stated that he will form the United States company “once the L-1 is approved.” www.oig.dhs.gov 20 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security New office beneficiaries who wish to extend their stay after the 1-year period must submit a request for an extension that allows the beneficiary to remain in the United States for an additional 2 years.

The beneficiary can be approved for up to two extensions and stay for a total of 7 years. New office extensions are exempt from the USCIS policy that gives deference to prior approvals.39 However, some ISOs told us that they apply deference to new office petitions approved previously and hesitate to deny extensions, assuming that other colleagues previously examined them favorably. We learned from our file review and interviews that some understaffed, underfunded, or even inactive companies are abusing the L-1 visa program. One pattern of abuse is an L-1A manager hiring family members and appearing to manage them in order to corroborate their claim to be an L-1A manager or executive.

Several non-precedent AAO decisions confirm this: “The petitioner also claims to employ the beneficiary’s spouse as its office manager, but she has indicated on her Form I-539 application that she has not worked in the United States in L-2 status, and she has not submitted an application for employment authorization.”40 Spouses of L-1 beneficiaries have L-2 status and are authorized to seek employment in the United States. It should raise a red flag, however, when an L-1 manager includes family members among the supposed staff. Site Visits Assist Fraud Detection Efforts An ISO or DOS consular officer can request a site visit to the prospective location of the new office to determine the legitimacy of that location. The site visit is conducted through the USCIS Fraud Detection and National Security (FDNS) unit.

Sometimes, an ISO will ask a consular officer at the U.S. embassy in the foreign country to conduct a site visit to verify the legitimacy of the petitioning foreign business. Consular officers told us that because of the demands of their normal duties, it may be difficult to find time to visit businesses in locations far from the embassy or consulate. In our 2006 report, we learned that petitioners were using the new office provision to petition for themselves and family members to come to the United States. Often, when site visits were conducted, USCIS discovered that the 39 “In matters relating to an extension of nonimmigrant petition validity involving the same parties (petitioner and beneficiary) and the same underlying facts, a prior determination by an adjudicator that the alien is eligible for the particular nonimmigrant classification sought should be given deference.” See Interoffice Memorandum from William R. Yates on The Significance of a Prior CIS Approval of a Nonimmigrant Petition in the Context of a Subsequent Determination Regarding Eligibility for Extension of Petition Validity to Service Center Directors and Regional Directors (April 23, 2004).

40 EAC 06 [receipt number withheld], September 5, 2007, p. 9. www.oig.dhs.gov 21 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security business never existed or was no longer doing business in the United States. As a result, the beneficiary no longer qualified for L-1 status because there was no intracompany relationship.41 Another ploy involves a foreign sole proprietor who opens a new office in the United States, petitions for family members, and then closes the foreign business altogether. Several consular officers said most new office petitions should require a site visit, especially the ones in which applicants petition for themselves and their family. Several consular officers said they have requested FDNS site visits for new office petitions and found them effective in detecting fraud.

We reviewed one case in which USCIS personnel conducted a site visit to a U.S. company and discovered an empty office. Building management told USCIS personnel that the space had been vacant for 2 years and the rent had not been paid in a long time. Further research revealed that the petitioner had attempted to start six other businesses from the same empty office. In another case, USCIS personnel conducted a site visit to a U.S. company and discovered a leased space with a desk and chair, but no computer, telephone, fax, company signage, or employees.

After conducting a follow-up interview with the beneficiary, the beneficiary admitted that his only reason to set up business in the United States was because all of his friends have U.S. residency and he wanted to move his family to the United States.42 L-1 site visits have improved L-1 visa program integrity. A provision in the USCIS regulation to allow new office extensions beyond the 1-year period only after a successful site visit evaluation could deter future petitioners from abusing the new office regulation. Recommendation We recommend that USCIS: Recommendation #6: Make a site visit a requirement before extending 1-year new office petitions. 41 ReviewfoffVulnerabilitiesfandfPotentialfAbusesfoffthefL-1fVisafProgram, OIG-06-22 (January 2006), p. 16.

42 NIV Petition Revocation Request, EAC–10–[receipt number withheld], February 7, 2011, p. 3. www.oig.dhs.gov 22 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security The Validation Instrument for Business Enterprises Can Promote Consistency Within the L-1 Visa Program VIBE Acts as an Adjudicative Tool When a petitioner files an L-1 petition, an ISO must verify that the petitioning organization is financially viable and that a corporate relationship exists between the foreign and U.S. entities. In May 2010, USCIS launched the Validation Instrument for Business Enterprises (VIBE). It is a web-based tool that uses commercially available data to validate basic information about companies petitioning to employ alien workers. VIBE’s main goal is to equip adjudicators with information they can use to help determine petitioners’ eligibility.43 VIBE scores the petitioning organization’s operational and financial viability.

The system enables ISOs to identify any inconsistencies in the petition and rule out fraud. VIBE receives information about petitioning organizations from Dun & Bradstreet (D&B), an independent information provider. When an L-1 petition is received, the petitioner’s information is transmitted to D&B to be matched with a known commercial entity in the D&B database. When a match is detected, D&B retrieves the information and sends it back to VIBE.

VIBE compares the data against a series of specially designed algorithms to score the petition’s various elements. VIBE helps ISOs identify any problematic areas in the petition. After the VIBE check, if issues are raised, it may be necessary to send the petitioner a Request for Evidence (RFE) or give the case careful scrutiny. VIBE Accomplishes Its Mission Objectives The Service Center Operations directorate of USCIS continually makes improvements to VIBE.

For example, an ISO can enter comments into VIBE based on information received from an RFE. This enables the ISO to share with USCIS any relevant information not submitted in the original petition that may be detrimental to the application’s approval or denial. VIBE also strengthens USCIS’ ability to detect fraud in L-1 petitions. For instance, VIBE is the first USCIS system that can identify a problematic petition sent to an ISO and stop it prior to approval.

43 Validation Instrument for Business Enterprises Program, http://www.uscis.gov/vibe (accessed July 30, 2012). www.oig.dhs.gov 23 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security VIBE Is Limited to USCIS USCIS is the only Federal agency that has unlimited access to VIBE. However, DOS and CBP process L-1 petitions at U.S. embassies and consulates and Class A ports of entry and preclearance stations. Wider VIBE availability to DOS and CBP stakeholders would improve L program integrity. Several consular officers who process employment-based petitions expressed their wish to be able to access VIBE in order to confirm the bona fides of petitioners.

VIBE could provide DOS personnel with access to petitioner information crucial to processing L-1 visa applications. In turn, DOS personnel could increase and strengthen VIBE’s library of petitioners. During 2012, USCIS began to make VIBE available to a limited number of DOS consular officers, primarily in Fraud Units. CBP could also benefit from access to VIBE.

We observed a CBPO who attempted to process an employment-based petition. The officer noted discrepancies in the application and attempted to call the petitioner to verify the petitioner’s information. However, there was no response at the phone number provided. Because of inadequate information, the officer declined to process the petitioner’s application.

The applicant was denied entry and instructed to retrieve additional supporting documentation before resubmitting the application. In this instance, VIBE could have eliminated the need for the CBPO to call the petitioning organization to verify discrepancies in the application, since it provides information that establishes the viability of a petitioning organization. CBP’s ability to access VIBE would promote and strengthen L-1 visa adjudicative consistency, increase information sharing among agencies, and further USCIS’s anti-fraud mission. Recommendations We recommend that CBP: Recommendation #7: Request USCIS to provide CBPOs at the northern border ports of entry and preclearance locations with access to VIBE to assist in L-1 petition processing.

We recommend that USCIS: www.oig.dhs.gov 24 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Recommendation #8: Grant CBP access to VIBE to assist in L-1 petition processing and promote program integrity. Consistent Application of the 2004 Visa Reform Act Would Increase L-1 Visa Program Integrity ISOs Inconsistently Apply Visa Reform Act Anti-“Job-Shop” Provisions Congress added anti-“job-shop” provisions to the VRA to prevent petitioners from using L-1B applicants at third-party worksites unrelated to the petitioning company (referred to as labor for hire). These provisions protect U.S. workers by prohibiting companies from sending L-1B applicants to work for a third-party company on products widely accessible to U.S. workers. However, USCIS does not have a regulation on the VRA anti-“job-shop” provisions.

As a result, the provisions are not applied consistently. Some ISOs deny petitions when “job- shop” concerns are found in petitions; others do not. We reviewed approved cases with “job-shop” concerns—notes in the file that the beneficiary would be sent to a client’s site to perform work for a third-party client. Several non-precedent AAO decisions note this inconsistency.

In some decisions, ISOs included VRA language in denial letters. However, in other decisions, the AAO added anti-“job-shop” language because ISOs did not deny the petition for VRA reasons, even though the beneficiary would be performing work primarily for a third party. In one such example, the AAO denied an appeal based on provisions of the VRA, even though USCIS did not cite these provisions in its denial: “Beyond the decision of the director, the petition must also be denied on additional grounds that were not addressed in the certified decision. Contrary to counsel’s claims, this case does present issues under the L-1 Visa Reform Act and section 214(c)(2)(F) of the Act.”44 In other non-precedent AAO cases, ISOs incorrectly applied VRA standards in denial letters.

For example, in one decision, USCIS used incorrect VRA standards to deny an L-1B petition: “As a threshold matter, it is noted that the director’s determination that ‘it appears that the beneficiary may not be 100% supervised by the petitioner’ is an incorrect standard under the L-1 Visa Reform Act, and this determination shall be withdrawn.”45 44 WAC 07 [receipt number withheld], July 22, 2008, p. 40. 45 WAC 07 [receipt number withheld], Nov. 3, 2008, p. 7. www.oig.dhs.gov 25 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Several interviewees said that USCIS does not have sufficient policy to illustrate labor for hire examples, which in turn hampers effective use of the VRA standards. Some senior USCIS employees said that additional guidance would help implement the law.

Some ISOs said that labor-for-hire concerns have never been the basis for them to deny petitions. The ISOs added that they felt they had insufficient policy guidance and training in this area. One ISO said that he never received training on the VRA anti-“job-shop” provisions and never denies petitions on labor-for-hire issues. The L-1 visa program is susceptible to fraud and abuse when ISOs do not consistently apply anti-“job-shop” provisions to petitions that would otherwise be deniable.

The AAO recognizes this in many cases. One appeal file we reviewed was critical of the center’s approval of a case in which VRA concerns ought to have caused a denial: “Assuming arguendo that the petitioner had established that the beneficiary possesses specialized knowledge, the terms of the L-1 Visa Reform Act would still mandate the denial of this petition.”46 Current guidance in the Adjudicator’sfFieldfManualfis limited and confusing. Section 32.3 notes that if the L-1 employer typically performs specialized services and sends L-1B workers offsite, the VRA provisions may not apply. Recommendations We recommend that USCIS: Recommendation #9: Create a regulation on the Visa Reform Act anti-“job-shop” provisions that will increase consistency in decision making.

Recommendation #10: Update existing guidance on the Visa Reform Act anti-“job-shop” provisions that Immigration Service Officers can use in the interim while a regulation is created. 46 WAC 08 [receipt number withheld], Nov. 3, 2008, p. 8. www.oig.dhs.gov 26 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Management Comments and OIG Analysis We evaluated USCIS’ and CBP’s formal and technical comments and have made changes to the report where appropriate. A summary of USCIS’ and CBP’s written response to each recommendation, and our analysis, is included below.

A copy of the formal joint USCIS/CBP response, in its entirety, appears in appendix B. Of the ten recommendations, seven were directed to USCIS and three to CBP. Both components concurred with their respective recommendations, and have taken actions to address the majority of the recommendations. Their formal responses, however, noted some implementation challenges. Recommendation #1: We recommend that USCIS publish new guidance to clarify USCIS’ interpretation of specialized knowledge.

This guidance should be sufficiently explicit to give adjudicators an improved basis for determining whether employees of a petitioning entity possess specialized knowledge.

USCIS

Response: USCIS concurs with recommendation 1. USCIS has a draft policy memorandum in review for official agency clearance. The draft policy memorandum specifically addresses L-1B specialized knowledge adjudications, including the importance of the 2004 Visa Reform Act. OIG Analysis: The action USCIS proposes is responsive to the intent of this recommendation.

We anticipate closing the recommendation when we receive and have reviewed the policy memorandum clarifying the interpretation of specialized knowledge. We consider recommendation 1 Resolved and Open. Recommendation #2: We recommend that USCIS screen L-1 beneficiaries against a list of persons previously denied visas by DOS consular officers.

USCIS

Response: USCIS concurs with recommendation 2. However, USCIS notes significant implementation challenges. USCIS officials said it will be difficult to accomplish the recommendation because the computer system currently used for L visa adjudications does not allow for this type of coordination with DOS records. USCIS plans to integrate this type of screening into its L adjudicatory process once L petitions are added to the USCIS’ Electronic Immigration System, a new system capable of interfacing with DOS’ systems.

USCIS estimates that incorporating L-1 beneficiaries into the Electronic Immigration System will not occur until 2015. www.oig.dhs.gov 27 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security OIG Analysis: USCIS’ proposed actions are responsive to the intent of the recommendation. Once USCIS implements the plan described in its response, we will close the recommendation. We consider recommendation 2 Unresolved and Open. Recommendation #3: We recommend that USCIS develop broader working-level communications opportunities between ISOs adjudicating L petitions and DOS consular officers adjudicating L visa applications.

USCIS

Response: USCIS agrees that close communication with DOS is critical and welcomes the opportunity to work closely with DOS consular officers on L visa adjudications. USCIS plans to establish regular meetings with the Visa Office in the Bureau of Consular Affairs at DOS regarding L adjudication issues. USCIS met and conferred with Bureau of Consular Affairs personnel in the development of its draft L-1B policy memorandum. USCIS will work with the Bureau of Consular Affairs to arrange the most efficient means of maintaining person-to-person communications, given budget challenges and time zone differences amongst relevant personnel.

OIG Analysis: The actions proposed by USCIS are responsive to the intent of the recommendation. We cannot now determine how these plans will affect the communications between service center adjudicators and consular section visa officers. USCIS should provide documentation confirming the development of the new communication opportunities. We consider recommendation 3 Unresolved and Open.

Recommendation #4: We recommend that CBP provide thorough L-1 visa training to all CBPOs processing L-1 travelers at ports of entry or preclearance/preflight stations in Canada. Training should include determining petitioner’s eligibility, L-1 fraud detection, correct assessment of fees, specialized knowledge, and the provisions of the VisafReformfAct. CBP Response: CBP concurs with recommendation 4. CBPOs receive extensive L-1 training at the CBP Field Operations Academy and formal post-academy training.

CBP continually and periodically provides L-1 training to all CBPOs who are performing adjudicative duties at the ports of entry (POEs). On June 27, 2012, CBP provided enhanced administrative guidance to CBPOs through the release of a detailed North America Free Trade Agreement (NAFTA) Reference Guide for TN and L applicants. The guide is an enhanced operational manual designed to clarify Canadian business travelers’ entry provisions under NAFTA and achieve optimal consistency at all POEs. In July 2012, CBP created a “Business Traveler’s Corner” (BTC) webpage on CBPnetsecure www.oig.dhs.gov 28 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security under the “Officer’s Reference Tool” site where the latest memoranda and regulations pertaining to L-1 visas and business travelers are posted.

The BTC webpage is maintained and updated regularly. It is an effective source of information for CBPOs seeking information pertaining to admissibility about L-1 visas and business travelers. CBP will continue to provide the highest standard of training to the CBPOs in regards to processing L-1 applications, including, periodically reminding the CBPOs via musters and training memoranda of the proper procedures for adjudicating L-1 applications. CBP considers recommendation 4 complete and requests closure.

OIG Analysis: CBP requested that we consider closing recommendation 4. CBP makes copious information available to CBPOs who can indeed look it up, but we do not consider that to be as effective as training. To meet the intent of our recommendation, CBP needs to develop additional L training sufficient that most officers could accurately process most L travelers without needing to turn to the manuals. This training should include determining petitioner’s eligibility, L-1 fraud detection, correct assessment of fees, specialized knowledge, and the provisions of the VisafReformfAct.

We consider recommendation 4 Unresolved and Open. Recommendation #5: We recommend that CBP, in concert with USCIS, establish fraud fee collection guidelines for CBPOs processing L-1 travelers. At a minimum, procedures should prevent incorrect charges to travelers, provide an audit trail that documents the transfers of the funds, and show CBPOs a history of the traveler’s previous fee payments. CBP and USCIS Response: CBP and USCIS concur with this recommendation.

CBP and USCIS will identify the level of detail regarding fee information in USCIS systems that is available to CBPOs at the northern border. After CBP and USCIS determine information needs and identify any gaps, CBP will then, with the assistance of USCIS, develop and implement solutions that provide an appropriate level of information to CBPOs processing L-1 travelers at the northern border. Once solutions are implemented, CBP will develop an internal strategy for the implementation of fraud fee collection by the CBPOs. OIG Analysis: CBP and USCIS plans are responsive to the intent of the recommendation.

We recognize this recommendation requires a collaborative approach. CBP and USCIS should provide the status of this collaborative effort and any evidence to support their implementation of fraud fee collection guidelines. We consider recommendation 5 Unresolved and Open. www.oig.dhs.gov 29 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Recommendation #6: We recommend that USCIS make a site visit a requirement before extending 1-year new office petitions.

USCIS

Response: The USCIS Fraud Detection and National Security Directorate expects to begin conducting post-adjudication domestic L-1 compliance site visits in the First Quarter of FY2014. OIG Analysis: The USCIS plans are responsive to the intent of the recommendation. USCIS should provide documentation for this new initiative and any other evidence documenting completion of compliance site visits. We will consider this recommendation closed upon receipt of the requested documentation.

We consider recommendation 6 Resolved and Open. Recommendation #7: We recommend that CBP request USCIS to provide CBPOs at the northern border ports of entry and preclearance locations with access to VIBE to assist in L-1 petition processing. CBP Response: CBP concurs with this recommendation. On May 7, 2013, CBP requested from USCIS access to VIBE for CBPOs at the northern border POEs and pre- clearance locations.

On May 22, 2013, USCIS agreed to grant CBP access to VIBE. CBP proposes that the granting of access be phased in waves at the northern border POEs and pre-clearance locations. • Phase 1: Access will be given to CBPOs stationed at Northeastern Border POEs (to be completed by October 31, 2013); • Phase 2: Access will be given to CBPOs stationed at Northwestern Border POEs (to be completed by November 30, 2013); and • Phase 3: Access will be given to CBPOs stationed in Preclearance (to be completed by December 31, 2013). USCIS will provide VIBE training to a group of CBPOs selected by their respective field offices. These selected CBPOs will in turn provide in-house training to CBPOs granted access to VIBE.

CBP considers recommendation 7 complete and requests closure. OIG Analysis: We consider the actions CBP has taken and planned to be responsive to recommendation 7, which is Resolved and Closed. www.oig.dhs.gov 30 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Recommendation #8: We recommend that USCIS grant CBP access to VIBE to assist in L-1 petition processing and promote program integrity.

USCIS

Response: USCIS concurs with recommendation 8. USCIS agrees that granting CBP access to VIBE will assist CBP with the processing of L petitions at the border and will promote program integrity. USCIS noted that information available via VIBE to CBPOs at the border will only reflect those petitions for which USCIS generated a receipt number. USCIS will continue to review how VIBE data is entered and recorded to maximize CBP’s ability to process L-1 petitions and promote program integrity.

OIG Analysis: The USCIS plans are responsive to the intent of the recommendation. However, USCIS does not provide a plan for granting access to CBP. USCIS should provide documentation that includes an action plan and a timeline for implementing this recommendation. We will review information USCIS provides as these changes are implemented.

We consider this recommendation Unresolved and Open. Recommendation #9: We recommend that USCIS create a regulation on the VisafReformfAct anti-“job-shop” provisions that will increase consistency in decision making.

USCIS

Response: USCIS concurs with recommendation 9. USCIS agrees that it is important to have consistency and clarity in adjudications under the L-1 Visa Reform Act of 2004. The draft L-1B policy memorandum that is currently in clearance includes guidance on implementation of these provisions. USCIS is also considering rulemaking under the L-1 Visa Reform Act so that it can provide its officers, as well as its stakeholders, with enhanced clarity as to the standards that apply to L-1B petitions.

In addition, USCIS will be considering use of the Administrative Appeals Office (AAO) precedent decision process as a vehicle for enhancing guidance in this area. OIG Analysis: The USCIS plans are not responsive to the intent of the recommendation. The plans are only to consider a rulemaking, and involve various options, not a specific course of action. USCIS should provide a clear and concise plan to address the regulation on the VisafReformfAct anti-“job-shop” provisions.

We consider recommendation 9 Unresolved and Open. www.oig.dhs.gov 31 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Recommendation #10: We recommend that USCIS update existing guidance on the VisafReformfAct anti-“job- shop” provisions that Immigration Service Officers can use in the interim while a regulation is created.

USCIS

Response: USCIS concurs with recommendation 10. USCIS has included guidance on the L-1 VisafReformfAct as part of the draft L-1B specialized knowledge policy memorandum that is currently under review (see Recommendation 1). This guidance is intended to provide both ISOs and stakeholders with clear standards for the adjudication of L-1B petitions. In addition, during the development of the policy memorandum guidance, USCIS will assess the need for regulatory guidance and AAO precedent decisions.

OIG Analysis: The USCIS plans are responsive to the intent of the recommendation. USCIS should provide a copy of the memorandum as stated in Recommendation 1 and a copy of the assessment addressing the need for regulatory guidance. We consider recommendation 10 Resolved and Open. www.oig.dhs.gov 32 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix A Objectives, Scope, and Methodology The Department of Homeland Security (DHS) Office of Inspector General (OIG) was established by the HomelandfSecurityfActfoff2002 (Public Law 107-296) by amendment to the InspectorfGeneralfActfoff1978. This is one of a series of audit, inspection, and special reports prepared as part of our oversight responsibilities to promote economy, efficiency, and effectiveness within the Department.

We initiated this review at the request of U.S. Senator Charles Grassley, based on his concerns about fraud and abuse within USCIS’s L-1 intracompany transferee visa program. He also requested an update on the Office of Inspector General’s 2006 report titled ReviewfoffVulnerabilitiesfandfPotentialfAbusesfoffthefL-1fVisafProgramf(OIG-06-22,f January 2006). In addition to a review of the L-1 visa program’s policies and procedures, we conducted 71 interviews with managers and staff, within DHS and the Department of State, at two of the four service centers and consular posts in India. We also interviewed headquarters leadership in the Service Center Operations, Field Operations, and Fraud Detection and National Security directorates.

Through domestic and international fieldwork, we observed DHS personnel and consular officials as they processed L-1 petitions and discussed the challenges they face. Our file review and observations included conversations with expert Immigration Service Officers, Consular Officers, and Customs and Border Protection Officers about particular cases. We reviewed: Implementation of the specialized knowledge definition; • Data related to L-1 visa usage; • • Use of the L-1 blanket petition process; • U.S. Customs and Border Protection’s role in granting or denying admission to L-1 applicants at the Canadian land border; • Use of the L-1 visa program to establish new offices in the United States; • Use of the Validation Instrument for Business Enterprises; and • Use of the L-1fVisafandfH-1BfVisafReformfActfoff2004fto deny L-1 visa petitions for labor-for-hire issues. We conducted this review under the authority of the InspectorfGeneralfActfoff1978, as amended, and according to the Quality Standards for Inspections issued by the Council of the Inspectors General on Integrity and Efficiency. www.oig.dhs.gov 33 OIG-13-107 O FFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix B Management Comments to the Draft Report U.S. n~pa rTmellt (If Homellind SHllril)' U.s. C,tlZensh lp ~nd Immigration Services OJfiu 'if'''1!- IJirecIQr MS.ZIJO() Washington, I)(' 2(1.~2"'.2f)(1C) u.s. Citizenship and Immigration Services JUN I 4 2013 Memorandum y TO: Charles K. Edwards Deputy Inspecto r Gene: f \a A A pi( FROM: Alej andro N. Mayorka Director I V l SUBJECT: Office of Inspecror General Draft Report: Implementation of L-I Visa Regzilalions For Official Use Only - DIG Project No. J 2-016-fSP-USCIS Thank you for thc opportunity to review and comment on your draft report, implementatioff of L I Visa Regulations.

U.S. Citizenship and Immigration Services (USCrS) recognizes and appreciates the DHS Office of Inspector General' s (DIG's) time and work in planning and conducting its study to examine how users, among other agencies, implements the L-I visa regulations, includ ing the definition of specialized knowledge, the use of L-I status to open a new branch office, and the blanket petition process. As noted in the report, USClS implemented r~c()mm enda tions tn improve the L-l Visa program ha~ll on the DHS OrG's 2006 report, Review of Vulnerabilities and Potential Abuses of the L I Visa Program, OIG-06-22 (January 2006). This current report wi ll help USClS and its government colleagues at U.S. Customs and Border Protection (CBP) and the Department of State (DOS) to continue to enhance the program's overall effectiveness and integrity. USCIS and CBP have reviewed the ten recommendations conta ined in the draft report and we concur wi th the recommendations.

In fact, we already have taken steps 10 address the majority of them. The following are USClS's and CBP's responses to the recommendations contained in the draft report; we have noted implementation challenges where appropriate. Recommendation 1: USCIS publish new guidance to clarify the USCIS interpretation of specialized knowledge. This guidance should be suffic iently explic it to give adjudicators an improved basis for detennining whether employees of a petitioning entity possess specialized knowledge. www.oig.dhs.gov 34 OIG-13-107 O FFICE OF INSPECTOR GENERAL Department of Homeland Security Onice or inspecLor (Jeneral Drall Report: Implementation q(/, 1 J/isa Regulations Use On(}, - OlG J'n:rect -,-Vo.

12-U16-J,')j·'-USC1S Page 2 f.()T Omcial Response: Concur. USCIS has a draft policy mcmorandum in revi.::w for oflicial ag.::ncy ekanmce. TIle draft policy memorandum specifically addresses L-IB speeializ.::d kno\-vkdge adj udications, including the imporLance ofthe 2004 Vi~a Reform i\.d. Recommelldatio1l2: eSCIS sere.::n L-l b.::ndiciarics against a list of persons previously d.::ni.::d visas by DOS consLllar orricers. Response: Concur, but note there are signiiicnnt implementation ehnllenges.

USCIS thlly agrees with the intent of the recommendation. Ho\-vever, it will be difficult to accomplish the recommendation in the near term because the computer system currently used for T, visa adj lldicatio11s does llot allov .. r()r this type or coordinatio11 v .. iLh DOS records. '111e t)-pe or screening the OIG recommends \vould r.::quir.:: .:::\1r.::mdy time-consuming manualnam.:: eh.::cks, "\'I.'hieh have a high degree of '::lTor due to nam.:: misspellings and frequent name changes (e.g., change in marital stahl';;). lJSCTS plans to integrate the t~ype of screening included in this recommendntion into its L nrljudicatof): process once L petitions are added to the esc IS Electronic Immigration System (USCIS ELlS). a system that is capable of interia.cing with DOS systems such as th.:: COllSular Consolidated Database (CCD). Currently, tlu-ough USCIS ELlS, nonimmigmnts mny tile to ehnnge their stntus to D-l, 13-2, P-l, F-2, J-1, J-2, 1",1-1 or 1",1-2: nonimmigrants in B-1, B-2, F-l, 1.1-1 or 1.1-2 status may file to ext.::nd their stay: and F and 1\,1 nonimmigranLs may rile rOTreinstalement Or status. New immigrants mll~L also pay their USCIS Immigrant t'ees through LSCIS ELlS.

LSCIS ELlS will begin processing immigrnnt petitiom~ for nlien entrepreneurs this summer illld plnns to introduce processing of replacement Pennanent Resident Cards in the fall. rollowing its first rdea:;e in !day 2012, USCIS transiLioned the development of USCIS ELlS from a traditional \vatcrfall methodology to a more modular Agile methodology. This approach .::nabks smaller incr.::ments of capability to be rc1eas.::d on a more frequent basis than \yith traditional watelfall system development. Tn /\gile, the capahilities to be deployed are reprioritized \vith each release to maximize business vnlue and build upon prior development. Beeaus.:: a eompreh.::nsiv.:: deployment schedule is not .::stablished in advanc.::, this adds a d.::gree ofuneeliainty to the timcline for "\'I.'h.::n specific benefit types \yill be deployed in USCIS ELlS, particularly in the out yean;. llo\,,'ever, as cllrrenLly plmmed, the L adjudicaLion proce~~ \vill be incorpornted into USCIS ELlS as part ofthe employment-based nonimmigrnnt product line in fiscal year (FY) 2015. following th.:: deploym.::nt of the family-based immigrant product lines in FY2014.

RecomlUelldatio1l3: eSCIS develop broader vmrking-Ievel communications opportunities between ISOs adjudicating I. petitions and DOS consular officers adjudicating I, visa applications. Response: Concur. USCIS agrees that clos.:: cOlllmunication \yith DOS is critical and \ycleollles the opportunity to work closely with DOS consular officers on T, visa adjudications. eSCIS plan:; to e~labli~h regular meeling~ \vith the Visa Oflke in the Bureau of Con~ular Afl:lirs aL DOS regarding L adjudication issues. USCIS m.::t and conferred \",ith Bureau of Consular www.oig.dhs.gov 35 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Onice or InspecLor (Jeneral Drall Report: Implementation q(/, 1 J/isa Regulations Use On(}, - OlG J'n:rect -,-Vo.

12-U16-J,')j·'-USC1S Pagc 3 f.()T Omcial Affairs personnd in the developmcnt of its draft L-IB policy memorandum rcfer.::nccd above. CSCIS will ,,,"ork with the Bureau of Consular Affairs to atunge thc most .::fficicnt mcans of maintaining per.;on-lo-person conllllunicdions, given budget challenges and tUlle zone differences amongst relevnnt personnel. ReL"()mmendation 4: CBP provide lhorough T ,-1 visa trainil1g to all CBPOs processing T,-1 traveler.; at polis of entry or predearance/prel1ight stations in C<-lnada. Tr<-linuIg should include detemlining petitioner's eligibility, L-l fraud detection, correct assessment of fees, specinlized lu:lo\vledge, and the provisions of the Visa Refo1m Act.

Response: CIW concurs with this recommendatio1l. CI ~P()s receive extemiive I.-1 training at thc CBP Field Operations Acad.::my atId formal post-acad.::my training. CBP continually and periodically provides L-l trauling to all CBPOs who ar.:: pcrrollnulg adjudicative duties at the POTts of entry (POEs). On lun.:: 27.

2012, CBP providcd enhanced administrative guidance to CBPOs through thc rdease of a dctailcd ='fo1th A.mcrica Frce Trade Agrecmcnt (='fA.FTA) Ref.::rcnce Guidc for Th and L applic,mts. 'llle guide is ,m enlumced operational manual designed Lo clarify Canadian business travelers' entry provisions under NAfTA and nchieve optimal consistency nt all POEs. Tn July 2012, CRP created a "Business Traveler's Comer" (RTC) \ .. ehpage on CRPne1secure LInder the "Dl1icer's Reference Tool"' site where the latest memoranda and regulations pertaining to 1..- 1 visas and bw.i ness travelers are posted. '111e BTC webpage is ma intained and updated regularl y. It is an c fl'cctivc source of info nllation for CBPOs secking infonnati on pertaining 10 admissibility about 1..- J visas and busi ness travelers. CB P wi ll continue to provide the highest standard of training to the CBPOs in regards to processin g 1..- 1 applications, including, periodicaUy reminding thc CBPOs via mustcrs and training mcmoranda of the proper procedures for adjudicating 1..-1 appli cations. CEP considers recomm endation 4 complete and requests closure.

Rccommcnd .. tion 5: CB p. in concert with USCIS, establish fra ud fee collecti on guidelines for capOs processin g L-1 trave lers. At a minimum, procedures should prevent incorrect charges to tra vel ers, provide an audit trail, and show CB POs a history of the traveler's previous fee pil)1nents. Rl'sponSl': CDP and LSCIS concur with this recommendaLion. CDP and USCIS will idenLify the level of detail regarding fee information in CSCIS systems that is available to CBPOs at the nOTthem border.

After CRP and lTSCTS detennine infonnation needs and identify any gaps, CRP willlhen, \-"iLh Lhe assislance orlJSCIS, develop and implement soluti011S that provide all appropriate level of infol111ation to CDPDs processulg L-l travelers nt the northem border. Once solutions arc unpkmcnt.::d, CBP will d.::vdop an intcmal stratcgy for thc implemcntation offraud fee collection by the CBPOs. www.oig.dhs.gov 36 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Onice or InspecLOT (Jeneral Drall Report: Implementation q(/, 1 J/isa Regulations Use On(}, - OlG J'n:rect -,-Vo. 12-U16-J,')j·'-USC1S Pagc 4 f.()T Omcial Recommelldatio1l6: eSCIS mak.:: a sitc visit a requirement before ,::x1.::nding l-y.::ar nc,,,-' ottice petitions. Response: Concur.

USCIS fraud Detection and ~ational Security Directorate expects to begin conducting post-adjudication dom.::stic L-l compliancc sitc visits in thc First Quarter of FY2014. Rt'mmmt'nd:ttion 7: CDP reque~t USCIS to provide CBPOs at the northem border ports of entry and pre-clearance locations with access to VIDE to assist in L-l petition processing. Response: CBP concurs ,vith this r.::conul1endation. On lvlay 7, 2013, CBP requested from eSCIS acc.::ss to VIBE for CBPOs at thc northern border POEs and pr.::-c1carance locations.

On tl.hy 22, 20n, LlSCIS agreed to grallt CBP access to VIBE. CBP proposes thallhe granting or access he phased in v.aves allhe northem horder rOEs and pre-clearance locaLions. • Phase 1: Access ,,,ill be givcn to CBPOs stationed at Northcastcrn Border POEs (to bc compkted by Octob.::r 31 , 2013): • Phase 2: Access ,,,ill be givcn to CBPOs stationed at Northwcstcrn Border POEs (to b.:: compkted by ~ov.::mbcr 30, 2013); and • Phase 3: Access ,,,ill be givcn to CBPOs stationed in Pr.::c1caranc.:: (to b.:: completed by Dccember 31,2013). USCIS ,,,ill provide VIBE training to a group of CBPOs selected by their respective tield omces. "lhese selected CBPOs will in turn provide in-house training to C13POs granted access to V mE.

CBP consid.::rs recomm.::ndation 7 compIete and r.::quests closur.::. ReL"()mmendation 8: CSCIS granL CRr access 10 VTBE to assisL in T,-l petition processing and pro1l1ote program integrity. Response: Concur. USCIS agrecs that granting CEP acccss to VIBE will assist CBP with the processing of I. petitions at the border and will promote program integlity.

It should he noted, hm"ever, thnt infonnntion available via VIBE to CBPOs nt the border \"ill only reflect those petitions for which US CIS gencratcd a reccipt numbcr. USCIS will continuc to rcvie\v hm," VIBE data is cn1crcd and r.::cordcd to maximize CBP's ability to proc.::ss L-l pctitions and promote program integrity. Recommelldatio1l9: eSCIS crcat.:: a regulation on th.:: Visa Reform Act anti-'Job-shop" provisions thaI will ill crease consistency in decisioll-making. Response: Concur.

USCIS agrees tl1..:'lt it is important to have consistency and clarity in adjudications under the T ,-1 Visa Refonll /\ct of2004. The draft 1.-1 R policy memorandum that is currently in clearance includes guidance on implemelltation orthese provisions. LSCIS is also considering rulemnking under the L-l Visn Retonn Act so that it cnn provide its omcers, as well as its stakeholders, with enhanced darit~y as to the standards that apply to L-IB petitions. hI www.oig.dhs.gov 37 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Onice or InspecLoT (Jeneral Drall Report: Implementation q(/, 1 J/isa Regulations Use On(}, - OlG J'n:rect -,-Vo. 12-U16-J,')j·'-USC1S Page 5 f.()T Omcial addition, CSCIS ""ill be considering use of the Administrative Appeals Office (AAO) precedent decision process as a vehicle for enhancing guidance in this area.

Recommendation 10: US CIS update existing guidrulce on the Visa Refonn Act anti-')ob-shop" provisions that Immigration Service Officers can usc in the interim while a regulation is created. Rt'sponst': Concur. USClS ha::; induded guid;mce on the L-l Visa ReIoTIll Ad as part of the draft L-ID specialized knO\ .... ledge policy memorandum that is currently under review (see Recommendation 1). This guidance is intended to provide both ISOs and stakeholders with clear standards for the adjudication of T ,- 1 R petitions.

Tn addition, during the development of the policy memorandum guidam:e. LSCIS \-vill assess Lhe lleed ror regulatory guidance and AAO preccdent decisions. Again, Oil behalf oflJSCTS and eRr. thank you for the opportunity to review and comment on this draft report. Technical comments and sensitivity COllunents \ .... ere previously provided wlder scparatc covers. www.oig.dhs.gov 38 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix C Regulation Definitions DEFINITIONS RELATED TO L-1 PETITIONERS Qualifying organization: a United States or foreign firm, corporation, or other legal entity which: ( 1 ) Meets exactly one of the qualifying relationships specified in the definitions of a parent, branch, affiliate or subsidiary; ( 2 ) Is or will be doing business (engaging in international trade is not required) as an employer in the United States and in at least one other country directly or through a parent, branch, affiliate, or subsidiary for the duration of the alien's stay in the United States as an intracompany transferee; and ( 3 ) Otherwise meets the requirements of section 101(a)(15)(L) of the Act. Parent: a firm, corporation, or other legal entity which has subsidiaries.

Branch: an operating division or office of the same organization housed in a different location. Affiliate: (1) One of two subsidiaries both of which are owned and controlled by the same parent or individual, or ( 2 ) One of two legal entities owned and controlled by the same group of individuals, each individual owning and controlling approximately the same share or proportion of each entity, or ( 3 ) In the case of a partnership that is organized in the United States to provide accounting services along with managerial and/or consulting services and that markets its accounting services under an internationally recognized name under an agreement with a worldwide coordinating organization that is owned and controlled by the member accounting firms, a partnership (or similar organization) that is organized outside the United States to provide accounting services shall be considered to be an affiliate of the United States partnership if it markets its accounting services under the same internationally recognized name under the agreement with the worldwide coordinating organization of which the United States partnership is also a member. Subsidiary: a firm, corporation, or other legal entity of which a parent owns, directly or indirectly, more than half of the entity and controls the entity; or owns, directly or indirectly, half of the entity and controls the entity; or owns, directly or indirectly, 50 percent of a 50-50 joint venture and has equal control and veto power over the entity; or owns, directly or indirectly, less than half of the entity, but in fact controls the entity. www.oig.dhs.gov 39 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Doing business: the regular, systematic, and continuous provision of goods and/or services by a qualifying organization and does not include the mere presence of an agent or office of the qualifying organization in the United States and abroad. New office: an organization which has been doing business in the United States through a parent, branch, affiliate, or subsidiary for less than one year.

Blanket Petitions: (i) A petitioner which meets the following requirements may file a blanket petition seeking continuing approval of itself and some or all of its parent, branches, subsidiaries, and affiliates as qualifying organizations if: (1)The petitioner and each of those entities are engaged in commercial trade or services; (2)The petitioner has an office in the United States that has been doing business for one year or more; (3)The petitioner has three or more domestic and foreign branches, subsidiaries, or affiliates; and (4)The petitioner and the other qualifying organizations have obtained approval of petitions for at least ten “L” managers, executives, or specialized knowledge professionals during the previous 12 months; or have U.S. subsidiaries or affiliates with combined annual sales of at least $25 million; or have a United States work force of at least 1,000 employees. DEFINITIONS RELATED TO L-1 BENEFICIARIES Intracompany transferee: an alien who, within three years preceding the time of his or her application for admission into the United States, has been employed abroad continuously for one year by a firm or corporation or other legal entity or parent, branch, affiliate, or subsidiary thereof, and who seeks to enter the United States temporarily in order to render his or her services to a branch of the same employer or a parent, affiliate, or subsidiary thereof in a capacity that is managerial, executive , or involves specialized knowledge. Periods spent in the United States in lawful status for a branch of the same employer or a parent, affiliate, or subsidiary thereof and brief trips to the United States for business or pleasure shall not be interruptive of the one year of continuous employment abroad but such periods shall not be counted towards fulfillment of that requirement. Specialized knowledge: special knowledge possessed by an individual of the petitioning organization's product, service, research, equipment, techniques, management, or other interests and its application in international markets, or an advanced level of knowledge or expertise in the organization's processes and procedures. www.oig.dhs.gov 40 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Managerial capacity: an assignment within an organization in which the employee primarily: ( 1 ) Manages the organization, or a department, subdivision, function, or component of the organization; ( 2 ) Supervises and controls the work of other supervisory, professional, or managerial employees, or manages an essential function within the organization, or a department or subdivision of the organization; ( 3 ) Has the authority to hire and fire or recommend those as well as other personnel actions (such as promotion and leave authorization) if another employee or other employees are directly supervised; if no other employee is directly supervised, functions at a senior level within the organizational hierarchy or with respect to the function managed; and ( 4 ) Exercises discretion over the day-to-day operations of the activity or function for which the employee has authority.

A first-line supervisor is not considered to be acting in a managerial capacity merely by virtue of the supervisor's supervisory duties unless the employees supervised are professional. Executive capacity: an assignment within an organization in which the employee primarily: ( 1 ) Directs the management of the organization or a major component or function of the organization; ( 2 ) Establishes the goals and policies of the organization, component, or function; ( 3 ) Exercises wide latitude in discretionary decision-making; and ( 4 ) Receives only general supervision or direction from higher level executives, the board of directors, or stockholders of the organization. www.oig.dhs.gov 41 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix D Top Ten L-1 Employers, FY 2002 – FY 2011 Employer L-1A Petitions L-1B Petitions Total Tata Consultancy Services Limited Cognizant Tech Solutions US Corp 7,571 1,521 18,337 25,908 18,198 19,719 IBM India Private Limited 446 5,276 5,722 Wipro Limited 1,574 3,933 5,507 Infosys Technologies Limited Satyam Computer Services Limited HCL America Inc Schlumberger Technology Corp Price Waterhouse Coopers LLP Hewlett Packard Co 620 333 40 684 1,196 533 3,395 4,015 2,941 3,274 1,934 1,974 795 179 721 1,479 1,375 1,254 Total Submissions 55,709 70,227 Source: U.S. Citizenship and Immigration Services, Office of Performance and Quality, Data Analysis and Reporting Branch, March 8, 2012. 14,518 www.oig.dhs.gov 42 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix E H-1B and L-1B Submissions, FY 2002 – FY 2011 Fiscal Year H-1B Submissions L-1B Submissions Ratio 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 178,871 212,083 309,368 264,218 296,424 311,889 286,462 245,006 245,788 262,480 12,256 14.6 16,114 13.2 17,161 18.0 19,972 13.2 25,952 11.4 29,552 10.6 24,841 11.5 16,226 15.1 17,704 13.9 15,913 16.5 Total 2,612,589 195,691 13.4 Source: U.S. Citizenship and Immigration Services, Office of Performance and Quality, Data Analysis and Reporting Branch, February 24, 2012. www.oig.dhs.gov 43 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix F Major Contributors to This Report Douglas Ellice, Chief Inspector LaDana Crowell, Inspector Michael Brooks, Inspector Kara Lawlor, Inspector Darin Wipperman, Former Lead Inspector www.oig.dhs.gov 44 OIG-13-107 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix G Report Distribution Department of Homeland Security Secretary Deputy Secretary Chief of Staff Deputy Chief of Staff General Counsel Executive Secretary Director, GAO/OIG Liaison Office Assistant Secretary for Office of Policy Assistant Secretary for Office of Public Affairs Assistant Secretary for Office of Legislative Affairs DHS Component Liaison Acting Chief Privacy Officer Office of Management and Budget Chief, Homeland Security Branch DHS OIG Budget Examiner Congress Congressional Oversight and Appropriations Committees, as appropriate www.oig.dhs.gov 45 OIG-13-107 ADDITIONAL INFORMATION AND COPIES To obtain additional copies of this document, please call us at (202) 254-4100, fax your request to (202) 254-4305, or e-mail your request to our Office of Inspector General (OIG) Office of Public Affairs at: [email protected]. For additional information, visit our website at: www.oig.dhs.gov, or follow us on Twitter at: @dhsoig.

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