DHS OIG Report on the L-1 Visa Highlights Issues and Recommends Changes to the L-1 Visa Program

The Department of Homeland Security (“DHS”) Office of Inspector General (“OIG”) has released a report on the L-1 visa program after a thorough analysis of the program, its weaknesses and opportunities for improvement.   The report makes a number of recommendations to DHS on how to strengthen the L-1 visa program by making more robust review of a number of aspects, but also, importantly, calls for a better definition and training to officers with respect to “specialized knowledge” standard, which has been one of the main issues in the L-1 program recently.

Brief Background of the L-1 Program

The L-1 visa program was institute in the 1970s and is a work-based visa which allows companies with international operations to place employees in the U.S. for a limited (5 or 7 years) term.

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.

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) or L-1B  (an alien performing services as a specialized knowledge worker).   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.

L-1 Adjudication Trends

According to USCIS, the rate of L-1 approvals have been trending down since fiscal year (FY) 2007 when the peak of 57,218 approvals was reached.   For example, in Fy2011, the approvals were only 33,301.    Out of this number, Indian nationals held the majority (26,919), followed by nationals of UK, Japan, Canada and Mexico.

The downward trend in L-1 approvals over the past several years has many causes, but from our experience, the biggest reason for the decline in the rate of L-1 approvals is the “specialized knowledge” standard which is applied to all L-1B applications.

(Not-so-Brief) Background on the “Specialized Knowledge” Issue

The L-1 visa classification was created by Congress in 1970 without providing a statutory definition of “specialized knowledge.”  The first definition was published in 1983 and in 1987, the INS revised the definition of specialized knowledge to be “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.”  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.

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.

The Immigration Act of 1990 (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 level of knowledge of processes and procedures of the company.”  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.

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.”  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. 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.

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.

Specialized Knowledge Improvements Suggested

This background is helpful to give us perspective and to highlight how difficult it is to explain, in an objective way, what “specialized knowledge” is.    The OIG, in their report, support this assertion by concluding that immigration officers do not apply the specialized knowledge definition uniformly and there is much confusion as to what the test even means.

When OIG interviewed immigration offers about this standard, among the most common terms used to described the immigration officers’ concerns were “unquantifiable”, “subjective”, very difficult to adjudicate”, “open to interpretations, unfortunately.”      According to the OIG report, immigration officers refer to specialized knowledge as “you know it when you see it.”     Obviously, this is alarming for a number of L-1 program stakeholders because the lack of objective guidance which can be followed leads to great deal of uncertainty and lack of faith in the system.

The OIG report concludes that the statutory definition of specialized knowledge is vague and unclear, leading to inconsistent decision-making and confusion among petitioners as to the actual denial reasons.     This leads to the OIG report to recommend DHS to publish new clear guidance on the specialized knowledge standard.

Additional Recommendations on the L-1 Program

In addition to the specialized knowledge issue, discussed above, the OIG report makes a number of other recommendations to improve the L-1 program.   Among these recommendations are:

• Establish a process to prevent the practice of L-1 blanket beneficiaries who are denied due to lack of specialized knowledge to petition and obtain approval/stamping under an individual L-1 petition by establishing a more uniform beneficiary tracking system;
• Provide thorough training to CBP officers who are often the first government officers to handle an L-1 petition submitted by a Canadian L-1 applicant at the port of entry;
• Establish better mechanism to track whether an L-1 petitioner is subject to the $2,250 filing fee when they employ 50 or more employees in the US and when 50 percent of their US workforce is on L-1 status;
• Strengthen the tools to review “new office” L-1 petitions to be able to adjudicate properly cases where a new office is being established in the US and to determine whether the conditions of the new office have been met for the purpose of the first (and subsequent) L-1 petition extensions – for example, OIG recommends a site visit to the new office be mandatory before the new office L-1 petitions are extended;
• Increase use of VIBE to check petitioner information and eliminate fraud and abuse and extend the use of VIBE to other agencies, including CBP;

Conclusion

The L-1 OIG report is helpful in providing a good review of what needs to be improved in the L-1 program.   We have worked with many clients over the past several years who have expressed frustration by the L-1 program and the lack of uniformity and predictability.    In its internal response to the OIG report, DHS has indicated that they are working on an memorandum to establish more clear guidance with respect to the specialized knowledge standard.    This memorandum is under internal review and we hope to see public release soon.

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