WALSH AND POLLARD

Interim Decision #3111




                MATTER OF WALSH and POLLARD

                            In Exclusion Proceedings

                                      A-26491503
                                      A-26491504

                    Decided by Board February 26, 1988

(1) A foreign corporation must have invested or be actively in the process of investing a
  substantial amount of capital in order to qualify as a treaty investor under section
  101(a)(15)(E) of the Immigration and Nationality Act, 8 U.S.C. § I101(a)(15)(E)
  (1.982).
(2) Under the treaty investor criteria, no particular dollar amount is required for an
  investment to be deemed substantial; however, the investment must be in a bona fide
  business and, in the case of a new business, the investment must not be in a marginal
  enterprise solely for earning a living but must be of an amount normally considered
  necessary to establish a viable enterprise of the nature contemplated
(3) The applicants, who are employed as automotive design engineers by a foreign
  corporation, do not have supervisory or managerial duties; however, they are highly
  trained, specially qualified, and essential to the corporation's efficient operation and
  thus qualify for an "E-2" visa classification even though they are not engaged in
  developing and directing the qualifying investment.

EXCLUDABLE: Act of 1952—Sec. 212(a)(20) [

8 U.S.C. § 1182

(a)(20)]—No valid
                         immigrant visa (both applicants)
ON BEHALF OF APPLICANTS:                               ON BEHALF OF SERVICE:
  H. Ronald Klasko, Esquire                              David M. Dixon
  Abrahams & Loewenstein                                 Appellate Counsel
  Fourteenth Floor
  United Engineers Building                              Michael K. Adams
  30 South 17th Street                                   District Counsel
  Philadelphia, Pennsylvania 19103 - 4096


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



   On March 2, 1987, the Chief Immigration Judge found the
applicants admissible as treaty investor employees under section
101(a)(15)(E)(ii) of the Immigration and Nationality Act, 

8 U.S.C. § 1101

 (a)(15)(E)(ii) (1982). He ordered that the exclusion proceedings
be terminated and that the applicants be admitted pursuant to their

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                                                              Interim Decision #3111

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


from that decision. The appeal will be dismissed.
  The applicants are natives and citizens of Great Britain, ages 59 and
25 years old, who are automotive design engineers. They attempted to
enter the United States as nonimmigrants on September 18, 1985, by
presenting "E-2" visas. They are employees of IAD Modern Design,
Ltd. ("IAD, Ltd."), a British-owned corporation, which is the treaty
investor in this case. , They arc coming to the United States pursuant
to a contract between IAD, Ltd. and General Motors ("GM") to
provide experienced automotive design engineers to GM for the
purpose of redesigning GM's line of cars in a smaller, more European
fashion. The less experienced man is a transmission designer with a
Higher National Certificate, indicating extensive post secondary edu- -


cation, and with special training in computer-aided design. The more
senior man is also to be employed in the United States as a
transmission designer. He has approximately 30 years of varied
automotive design experience and a Higher National Certificate. It
was stipulated that there are not sufficient numbers of United States
automotive design engineers to fill the present needs of the automotive
industry. IAD, Ltd. expects in the future to bring as many as 300
designers and other related workers to the United States to meet the
demands of United States automotive manufacturers.
  Under the present Arrangement these two designers would report to
a GM subsidiary, Hyt ra-rnatic, to work on projects as assigned. They
would be paid an hourly wage and a daily living allowance plus
bonuses by IAD, Ltd GM reimburses IAD, Ltd. for the applicants'
services by purchase order at a higher hourly rate than the applicants
receive from their employer. The applicants do not receive any fringe
benefits from GM but remain employees of IAD, Ltd. 2 The applicants
in question began wcrk for IAD, Ltd. just before being sent to the
United States. A representative from TAD, Ltd testified that the
applicants would be offered other work with IAD, Ltd. upon their
return to England.
   In order to facilitE to and expand contract relationships between
IAD, Ltd. and American automobile manufacturers, the British
   1 The parent corporation of IAD Modern Design, Ltd. is IAD (UK) Ltd., formerly
Tigergraph, Ltd. The paten. company is a substantial business specializing in automo-
tive design with branches or affiliates in several countries.
  2 1n similar cases involving a request for permission to bring alien workers to the
United States to work for United States firms pursuant to a contract between an
American firm and the the petitioning firm, it has bccn held that the foreign workers ale
employees of the pctitionirg firm Sussex Engineering, Ltd. v. Montgomery, 

825 F.2d 1084

 (6th Cir. 1987); Matte, of Artee Corporation, 18 18eN Dec. 366 (Comm. 1982) (both
involving denials of "H-2' visa petitions).

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Inte im Decision #3111

cor oration formed a Michigan corporation, IAD Modern Design, Inc.
("Ii 13, Corp."), which is a wholly owned subsidiary. The corporation
als( assists the British workers in their relocation and business
rely ionships with GM. This corporation was established by renting
offi -es, purchasing office furniture, and hiring two United States
citi en employees. This corporation has a bank account of approxi-
ma $15,000. Expansion is expected as business increases.
  - he Chief Immigration Judge found that the British company
gut ified as a treaty investor based on the investment in IAD, Corp.
He -urther found that the applicants were highly skilled individuals in
a r sponsible position, whose skills were necessary to the IAD, Ltd.
inv stment in the United States. He concluded that they were essential
to t ie IAD, Ltd. investment because American design engineers were
not available to be hired to enable IAD, Ltd. to fulfill its contract with
GIv . He therefore granted them admission.
   - he Service contends that the British company has not made a
sub ,tantial investment in the United States as required by section
101 ;a)(15)(E) of the Act. It also states that the applicants are not
ent tied to enter the United States as employees of the treaty investor
bec use they are not coming to develop and direct the investment of
the treaty investor. The Service argues that it is its policy to require
em loyees of treaty traders to meet the "develop and direct" test.
    he Service also objects to the failure of the Chief Immigration
Juc 3e to sequester Michael Hyatt and Ralph Miller, witnesses in this
prc seeding; to his requirement that the Service go forward with the
evi ence upon the presentation of applicants' prima fade case; to his
reli nee upon sections from the Immigration and Naturalization
Ser rice Immigrant Inspector's Handbook not admitted into evidence;
to be issuance of subpoenas to the Service; and to the adverse
inf rences drawn from the Service's failure to produce the subpoenaed
ma erial.
    .t oral argument the Service argued that the Chief Immigration
Juc ge incorrectly placed the burden of proof on the Service and that he
err d in granting entry because the applicants are not coming solely to
der tllop and direct the treaty investor's investment in the United
Sta es. The Service contended that the issuance of a visa by the
De )artment of State ("DOS") is not important, that the burden to
she w admissibility is on the applicants and that the DOS regulations
car aot override the statute. The Service also argued that the applicants
arc not skilled in marketing or employment services, the purposes of
IA1), Inc., the United States corporation. The benefit to the United
Stc es corporation from their employment is too indirect to qualify the
api licants for "E-2" visas under the statute. In addition, the invest-
me it is not substantial and the subpoenas were not directed to
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                                                            Interim Decision #3111

relevant and material evidence. The applicants countered that they
qualify for "E-2" visas under the relevant DOS regulations as
supported by the responses to the interrogatories by the State
Department Visa Office and by Board precedent. The Service policy to
the contrary was not a written policy and was not communicated to
Service personnel. In addition, the applicants work for the largest
United Kingdom automotive design company, not an employment
agency. The applicants also maintained that the investor meets the
proportionality and viability tests, which is what is required for
substantiality of the investment.
   In regard to the procedural objections, the decision to sequester
witnesses is within the discretion of the immigration judge. See
generally Breneman v. Kennecott Corp., 

799 F.2d 470

 (9th Cir. 1986);
McKee v. McDonnell Douglas Technical Services Co., Inc., 

700 F.2d 260

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

570 F.2d 626

 (6th Cir. 1978). The Service has not shown any abuse of
discretion or any prejudice which resulted from failure to sequester the
witnesses_ gee United States v_ West, 607 Fid 300 (9th (Ir. 1979) per
curiam). On the issue of burden of proof, we agree with the Chief
Immigration Judge that once an alien has presented a prima facie case
of admissibility, the Service has the burden of presenting some
evidence which would support a contrary finding. The Chief Immigra-
tion Judge found that the Service met its burden of going forward with
the evidence and correctly placed the ultimate burden of proof on the
applicants for admission. In his decision, the Chief Immigration Judge
took administrative notice of the Immigrant Inspector's Handbook,
which is not in the record. However, the Service has not shown the
substantial prejudice required to invalidate the Chief Immigration
Judge's decision. United States v. Pierce Auto Freight Lines, 

327 U.S. 515, 530

 (1946); McLeod v. INS, 

802 F.2d 89

 (3d Cir. 1986). The issue
of the propriety of the subpoenas is not before us as the Chief
immigration Judge did not draw any adverse inference from the
Service's failure to produce the requested materials.
   The burden is on the applicants to show that they are admissible to
the United States. Section 291 of the Act, 

8 U.S.C. § 1361

 (1982).
There are two main issues in this case: whether the British company
qualifies as a treaty investor by reason of its investment in IAD, Corp.
and whether the applicants qualify for "E-2" visas as employees of a
treaty investor. The statutory section in question is section
101(a)(15)(E)(ii) of the Act. The Act provides that a treaty investor is

  an alien entitled to enter the United States under and in pursuance of the provisions
  of a treaty of commerce and navigation between the United States and the foreign
  state of which he is a national, ... solely to develop and direct the operations of an

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Interim Decision #3111

  enterprise in which he has invested, or of an enterprise in which he is actively in the
  process of investing, a substantial amount of capital.

Section 101(a)(15)(E)(ii) of the Act.
   It is the responsibility of the DOS to accept applications for treaty
investor status and to issue the visa to the treaty investor or to its
qualified employees. Section 221(a)(2) of the Act, 

8 U.S.C. § 1201

(a)(2) (1982); 2 C. Gordon & H. Rosenfield, Immigration Law
and Procedure § 10.13(2)(F)(3) at 10-166 (rev. ed. 1988). It is the
responsibility of the Service to determine admissibility of an alien who
applies for admission at the border. Sections 103(a), 221(h) of the Act,

8 U.S.C. §§ 1103

(a), 1201(h) (1982); 

8 C.F.R. §§ 214.1

(a), 235.1(d)(1)
(1988).
   Nothing in Title 8 of the regulations or the Immigration and
Naturalization Service Operations Instructions ("0.I.") relates to the
issue of "substantiality" of the investment. Since "substantial" is not
defined in the statute, reference must be made to the DOS regulations
for clarification. The definition in those regulations of investing a
"substantial amount of capital" is "investing capital in a bona fide
enterprise" as contrasted with "investment of a small amount of
capital in a marginal enterprise solely for the purpose of earning a
living." 

22 C.F.R. § 41.41

(a) (1987) (recodified at 

22 C.F.R. § 41.51

(b)(1) (1988)). The DOS Foreign Affairs Manual ("FAM")
notes to 

22 C.F.R. § 41.41

 (the State Department regulations and
instructions relating to treaty investor visas) amplify the concept of a
"bona fide enterprise" by requiring "a real and active commercial or
entrepreneurial undertaking, producing some service or commodity. It
cannot be a paper organization or an idle speculative investment held
for potential appreciation in value...." Vol. 9, Foreign Affairs
Manual, Part II, 

22 C.F.R. § 41.51

 note 5.2 (hereinafter cited as
FAM). In regard to the concept of investment, the FAM provides:
  No minimum investment amount is required for E-2 status; however, the investment
  must be substantial. Using a "proportionality test," the consular officer should weigh
  the amount invested against either 1) the total value of the particular enterprise in
  question, or 2) the amount normally considered necessary to establish a viable
  enterprise of the nature contemplated. The alien need only satisfy the requirement of
  "substantiality" in one of the above ways, not both.

Id. at note 5

.3-1.
   The concept of "substantially" is further amplified as follows:
  ETihe amount normally considered necessary to establish a viable enterprise is less
  susceptible to precise calculation_ Here, the consular officer must draw on personal
  knowledge of the U.S. business scene to judge whether the amount the alien proposes
  to invest is reasonable for that type of business....

Id. at note 5

.3-2.

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                                                             Interim Decision #3I I I

   In small to medium-sized businesses, the term "substantial" necessarily connotes an
   investment of more than half the value of the enterprise, or an amount normally
   considered necessary to establish an enterprise....

Id. at note 5

.3-3.
    A Service memorandum in the record from the Assistant Commis-
sioner, Adjudications, dated June 14, 1985, to the regional and district
office cites this DOS interpretation with approval. However, in this
case the Sei-vice argues that if only a minimum amount is invested, it
would not qualify the alien for treaty investor status.
    In regard to the second issue, the relevant Immigration and
Naturalization Service regulation, 

8 C.F.R. § 214.2

(e) (1988), deals
with length of stay and change of employer but does not define the
term treaty investor. Certain language in the Operations Instructions
apparently relates to employees of both treaty traders and treaty
investors. It requires that the applicant's duties must be either
"executive, managerial, or supervisory in nature"; or, if not, the
applicant must "have special qualifications necessary for the firm's
efficient operation." O.I. 214.2(e) (emphasis added). The O.I. indi-
cates that in matters concerning treaty aliens, the inspector should
consult the notes to 

22 C.F.R. §§ 41.40

 and 41.41 in the FAM. 

Id.

 The
same language requiring consultation of the State Department regula-
tions is contained in Operations Instructions 248.6, relating to change
of status to treaty trader or investor.
   The previous DOS regulation, 

22 C.F.R. § 41.41

(a) (1987), provid-
ed that a treaty investor must establish to the satisfaction of the
consular officer that he qualifies under section 101(a)(15)(E)(ii) of the
Act, that he intends to depart upon termination of his status, and, if he
is an employee of a treaty investor, that he is employed in a responsible
capacity. The regulations regarding visas have been revised and
reorganized. See 

52 Fed. Reg. 42,590

 (1987). The regulations regarding
treaty traders/investors are now recodified at 

22 C.F.R. § 41.51

(1988). The language regarding "responsible capacity," has been
eliminated in favor of the requirement that the alien have "special
qualifications." 

52 Fed. Reg. 42,605

 (1987). Presently, 22 C_F_R_
§ 41.51(c) ( 1988) provides:

  An alien employee of a treaty trader may be classified E-1 and an alien employee of a
  treaty investor may be classified E-2 if the employee is or will be engaged in duties of
  an executive or supervisory character, or, if employed in a minor capacity, the
  employee has special qualifications that make the services to be rendered essential to
  the efficient operation of the enterprise. The employer must be:

     (1) A person having the nationality of the treaty country, who is maintaining the
  status of treaty trader or investor if in the United States; or

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Interim Decision #3111

      (2) An organization at least 50 percent owned by persons having the nationality of
  the treaty country who are maintaining nonimmigrant treaty trader or investor status
  if residing in the United States. (Emphasis added.)

  The FAM requires that the applicant, if an employee of a treaty
investor, "individually qualitjy] as a manager or a highly trained and
specially qualified employee." FAM at § 41.51 note 2.3(e). It further
provides:
  The E classification is intended for specialists essential to the firm's U.S. operations,
  not for ordinary skilled workers. The burden of proof to establish that the applicant
  has special qualifications essential to the effectiveness of the firm's U.S. operations is
  on the company and the applicant. The consular officer should consider such factors
  as: the degree of proven expertise of the alien in the area of specialization, the
  uniqueness of the specific skills, the length of experience and training with the firm,
  the period of training needed to perform the contemplated duties, and the salary the
  special expertise can command. Id at note 3.4-3(a). The consular officer is also
  advised to consider American labor market conditions in assessing whether
  competent United States workers are available to provide the skills needed by the
  treaty firm. Id. at note 3.4-3(e).
   The Service Deputy Assistant Commissioner, Adjudications, testi-
fied at the hearing that it was the policy of the Service to require that
the employee of a treaty investor be coming to directly or indirectly
develop and direct the treaty investor's investment in the United
States. Prior cases have held that to be eligible for treaty investor
status under section 101(a)(15)(E)(ii) of the Act an alien must enter the
United States solely to develop or direct the operations of the
enterprise in which he has invested or is investing. Matter of Kung, 

17 I&N Dec. 260

 (Comm. 1978) (change of nonimmigrant status); Matter
of Lee, 

15 I&N Dec. 187

 (R.C. 1975); see also Choi v. INS, 

798 F.2d 1189

 (8th Cir. 1986) (denial of application for extension of nonimmi-
grant status remanded). Although different results have been reached
in different cases, in the past the test for an employee of a treaty
investor has been whether the alien is employed by a qualifying
investor of the same nationality in a "responsible capacity." Matter of
Nago, 

16 I&N Dec. 446

 (BIA 1978); Matter of Udagawa, 

14 I&N Dec. 578

 (ETA 1974); Matter of Tamura, 

10 I&N Dec. 717

 (R.C. 1964);
Matter of Kobayashi and Doi, 

10 I&N Dec. 425

 (D.D., R.C., Dep.
Assoc. Comm. 1963) (change of status denied). Although the "respon-
sible capacity" language has been eliminated from the regulations as
republished in favor of the term "has special qualifications that make
the services rendered essential," the introduction to the republication
indicates that no substantive changes are included in the republication.

52 Fed. Reg. 42,590

 (1987). In addition, the new language of the
regulation reproduces precisely the language used in the previous 

22 C.F.R. § 41.40

 (1987) (relating to employees of treaty traders).

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                                                             Interim Decision #3111

Therefore, the language used will be taken as equivalent to the prior
language.
   We find that the statute itself does not explain the term "substan-
tial" and it does not address the requirements to be met by employees
of treaty investor companies or corporations. The DOS has drafted the
regulations which must be applied in this case. Under its regulations,
the DOS issued the visas at issue. The replies to the interrogatories
propounded by the DOS Visa Office indicate that the officials of that
office find no error in the issuance of the "E-2" visas. As a general
matter, great deference should be accorded to an agency's construction
of a statute which it administers and the agency's interpretation of
regulations it has drafted. United States v. Larionoff, 

431 U.S. 864

(1977) (interpretation of own regulations accorded deference); Morton
v. Ruiz, 

415 U.S. 199

 (1974); Griggs v. Duke Power Co., 

401 U.S. 424

(1971); Skidmore v. Swift & Co., 

323 U.S. 134

 (1944) (statutory
interpretation accorded deference). The Service contends that a
minimum dollar amount is required to meet the substantiality test and
that employees of the treaty trader must be coming to directly or
indirectly develop and direct the treaty trader's investment in the
United States. In opposition to the DOS interpretation, the Service has
placed only an unpublished "policy," one aspect of which recently has
been publicly contradicted by the official of the Service responsible for
these policy issues.3 The Service's requirement of a minimal invest-
ment, likewise, is not published or reflected in any written material.
We cannot give weight to these alleged policies of the Service in the
face of the DOS regulations and the Service's history of acquiescence
with them. See 01 214.2(e), 248.6. If the Service disagrees with the
regulations of the DOS, it should take advantage of existing mecha-
nisms of inter-agency consultation to convince the DOS to change its
regulations.4 See sections 104(e), 105 of the Act, 

8 U.S.C. §§ 1104

(e),
1105 (1982).
   In applying the DOS guidelines and regulations to the present case,
we note that the employing company must first qualify as a treaty
investor. In order to qualify as a treaty investor the company must
have invested, or be actively in the process of investing, a substantial
amount of capital. When Congress enacted the Immigration and
Nationality Act of 1952, it enlarged the "E" visa class to include the
  3 Mr. Richard Norton, the Service Associate Commissioner for Examinations, stated
in response to a question posed at a public conference that the Service agrees with the
DOS that an employee of a treaty investor was not required to be in the United States to
develop and direct the treaty investor's investment in the United States.
  4 The witness from the Service Central Office, the Deputy Assistant Commissioner,
Adjudications, testified that the present DOS regulations were developed in close
consultation with Service over a period of time.

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Interim Decision #31I1

"E-2" category. The only discussion of the substantiality issue was that
the investment must be in "a real operating enterprise and not a
fictitious paper operation." H.R. Rep. No. 1365, 82d Cons., 2d Sess.,
reprinted in 1952 U.S.C.C.A.N. 1653, 1697. The DOS regulations
require a bona fide enterprise. The legislative history and the DOS
regulations both fail to impose a dollar amount requirement for
"substantiality" and adopt a definition that envisions a bona fide,
viable business.
   Since the present case involves an investment in a new business in
the United States, the "amount normally considered necessary to
establish a viable enterprise of the nature contemplated" test is
applicable. FAM at § 41.51 'note 5.3-1. In this case, the investment
required to establish a viable and profitable business is not large. The
evidence indicates the amount thus far actually invested and in the
process of being invested is sufficient to accomplish its purpose. The
business is in operation and is engaged in business activity on behalf of
its parent company. Thus, the business created is a viable one. We find
the present investment is sufficient to establish a profitable and viable
business in the United States. As all of this amount has been provided
by the treaty investor, the proportionality test is met.
   Finally, the DOS regulation requires that the investment not be "in
a marginal enterprise solely for the purpose of earning a living." 

22 C.F.R. § 41.41

(a) (1987) (currently 

22 C.F.R. § 41.51

(b)(1) (1988)).
The gloss on this language in the FAM is that laan applicant is not
entitled to E-2 classification if the investment, even if substantial, will
return only enough income to provide a living for the applicant and
family." FAM at § 41.51 note 5.4. The note goes. on to provide
examples of ways to determine marginality, any of which are sufficient
proof of meeting this requirement. The testimony indicates that, based
on its like experience in other countries, the investor in this case
reasonably expects substantial revenues from its investment far above
a living wage. Moreover, it was established by testimony of the chief
economist in the Michigan Department of Commerce that the
investment is expected to expand job opportunities in the State of
Michigan.
  The next issue is whether the applicants fit within the category of
employees of a treaty investor company qualified to come to the
United States with an "E-2" visa. Nothing in the Service regulations
relates to this issue. The only language in O.I. 214.2(e) relating to an
employee of a treaty investor is that the applicant must have "special
qualifications necessary for the firm's efficient operation." The
applicable law, as found in 

22 C.F.R. § 41.41

(a)(3) (1987), formerly
required that the alien be employed by a treaty investor in a
responsible capacity. See supra p. 7. The regulations presently state
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                                                  Interim Decision #3111


that an applicant must have special qualifications that make his
services essential to the efficient operation of the enterprise. 

22 C.F.R. § 41.51

 (1988).
   The standards for managerial personnel and for highly trained and
specially qualified ("essential") personnel are basically the same for
"E-1" and "E-2" visas. FAM at § 41.51 note 3.4-3(b). As noted above,
the FAM note 3.4-3(a) lists factors to be considered in determining
whether an alien possesses "specific qualifications" that are "essen-
tial" to the firm's United States operations such as: the degree of
proven expertise, uniqueness of the specific skills, length of experience
with the firm, the period of training, and the salary. There was
considerable testimony at the hearing as to the skill and importance of
the job performed by an automotive design engineer, as well as
evidence regarding the high qualifications of the applicants. It was
shown that even if one has an engineering degree, approximately 10
years are required to train an automotive design engineer. The one
applicant has 30 years of experience. The computer skills of the
younger applicant are unique. We agree with the Chief Immigration
Judge that each of the applicants is to be employed in a highly creative
job involving independent judgment and is thus occupying a very
responsible position. They have special qualifications. Their employ-
ment is also essential to the treaty investor, as it could otherwise not
meet its contract obligations.
   As the applicants meet the requirements of the applicable regula-
tions promulgated and interpreted by the DOS, they should be
admitted.
   Accordingly, they will be admitted.
   ORDER:        The applicants are ordered admitted to the United
States as nonimmigrant treaty investors.
   Board member Michael J. Heilman has abstained from consider-
ation of this case.




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