Recent Changes Department of States’ Foreign Affairs Manual for E-2 Visas

The E-2 visa is an ideal visa for qualifying foreign nationals who wish to move to the United States to run a startup or business they purchased. The E-2 visa requires that the investor spend a significant amount of funds to either start or purchase a business that has the capacity to hire US workers (for an explanation of the E-2 visa requirements, please click here). Those interested in applying for E-2 status may do so by either applying for a change of status with USCIS while in the United States or applying for an E-2 visa at a U.S. consulate or embassy abroad. While each approach has its benefits (you can find a discussion on where to apply for an E-2 visa here), applying for the E-2 visa at a consulate is often preferable as it grants a visa stamp that permits the investor to travel.

When applying for an E-2 visa at a consulate, the reviewing officer will rely on the policy guidance issued by the Department of State in its Foreign Affairs Manual (the “FAM”). The FAM is the comprehensive manual for the Department’s organization structure, policies, and procedures that govern the operations of the State Department, including the adjudication and issuance of immigrant and nonimmigrant visas. The State Department updates the content of the FAM to accommodate new interpretations or changes in a law or to include new functions or executive orders from the President. The amendments to the FAM are often minor changes to the wording of the guidance, but sometimes the amendments can have significant implications on how a reviewing officer adjudicates a visa application. On April 6, 2018, the State Department amended its guidance relating to E-2 visas. This blog posts summarizes the changes made to the FAM and discusses the potential implications to future E-2 applications.

General Comments

When examining the amendments to 9 FAM 402.9 (the section that provides guidance for E-2 visa applications), it is evident that many of the changes were focused on simplifying the language to make the commentary easier to understand. However, a number of the changes to the FAM may cause officers to more closely scrutinize certain aspects of an E-2 application. These changes are discussed in more detail below.

9 FAM 402.9-4(c) The Question of Immigrant Intent

The E-2 visa (like all nonimmigrant visas) require that the applicant demonstrate that they intend to depart the United States when their E-2 status expires. The Department of State amended the language of this section to state that “An applicant who is the beneficiary of an immigrant visa petition will need to satisfy you that his/her intent is to depart the United States at the end of his/her authorized stay, and not stay in the United States to adjust status or otherwise remain in the United States.” While the language above is similar to the previous guidance on the topic of immigrant intent, it is modified to require an inquiry into the applicant’s intent rather than taking the more measured approach that an inquiry could be warranted under the facts of a particular case. As a practical matter, applicants who have outstanding immigrant petitions, have lived in the U.S. for extended periods of time, or have other indicators of immigrant intent can expect increased scrutiny when applying for an E-2 visa. Providing evidence of ties to their home country (i.e. family ties, evidence of substantial property or assets in the home country) could help demonstrate your nonimmigrant intent.

9 FAM 402.9-6(B): Source of Funds & investor Commitment

Perhaps some of the most extensive rewrites of the FAM’s E-2 section can be found in 9 FAM 402.9-6(B). This section provides guidance on the applicant’s E-2 investment, such as where the funds can derive, the concept of investment, and the requirement that the funds be irrevocably committed. (for more information on the E-2 investment, please click here.)

While most of the revisions are focused with clarifying the language of the guidance, there is a notable exception that could have a substantial impact on E-2 applications in the future. In the previous version of the FAM, the guidance stated that “a reasonable amount of cash, held in a business bank account or similar fund to be used for routine business operations, may be counted as investment funds.” This language was removed from the FAM. As a practical matter, it is possible that reviewing officers will interpret the FAM’s current guidance to require that 100% of the investment funds be spent to qualify for the visa, discrediting any portion of the investment that is held as capital in a business bank account. Thus, applicants should strive to spend as much of their investment capital as they can to establish their E-2 business, as their working capital investment may no longer be counted toward the E-2 visa.

 9 FAM 402.9-6 (D): The Substantial Investment

The Department of State also amended 9 FAM 402.9-6 (D), the section that provides guidance on what constitutes a significant investment. While much of the revisions were aimed on simplifying the language of the previously convoluted proportionality test (for more information on proportionality, please click here.

A few notable additions to this section include their clarifications surrounding what is a substantial investment. The FAM now clearly states that there is “no set dollar figure” that “constitutes a minimum amount of investment to be considered ‘substantial’ for E-2 visa purposes.” Instead, the FAM provides the following guidance to valuing an E-2 business:

The value (cost) of the business is clearly dependent on the nature of the enterprise.  Any manufacturing business, such as an automobile manufacturer, might easily cost many millions of dollars to either purchase or establish and operate the business.  At the extreme opposite pole, the cost to purchase an ongoing commercial enterprise or to establish a service business, such as a consulting firm, may be relatively low.  As long as all the other requirements for E-2 status are met (see 9 FAM 402.9-6), the cost of the business per se is not independently relevant or determinative of qualification for E-2 status.

These revisions help clarify the key factor that substantiality is tied to the type of business the investor has started or purchased. The changes in this regard are positive in that they all seem to follow the premise outlined at the beginning of the Interpretations of “Substantial” section of the FAM that starts with “No set dollar figure constitutes a minimum amount of investment to be considered “substantial” for E-2 visa purposes.”  While this was always something that was understood, the explicit wording in the FAM is something that can be cited to.  The FAM also now provides an example of a “small investment,” stating that “investments constituting 100 percent of the total cost would normally qualify for a business requiring a startup cost of $100,000.” Using this language as guidance, applicants should aim on spending close to $100,000 as their E-2 investment, if not more.  The positive element of this is the explicit mention of $100,000 as some Consulates in the past have thought that investment amounts should exceed $200,000 or more.

Another notable revision provided clarification on what documents to request when examining the investor’s commitment to the E-2 enterprise. The FAM now states that “such evidence may include letters from chambers of commerce or statistics from trade associations.”  While a letter from the chamber of commerce or statistics from trade associations could be relevant in assessing an investor’s commitment to his business, we believe  more pertinent evidence would be a CPA letter or letter from another expert that verifies that the applicant has spent all that is needed to start the business.   If applicants can get good letters from their local Chamber of Commerce or Trade associations that support the case, these should also be obtained.

9 FAM 402.9-7 (C) Essential Employees

The last section that received significant revisions is 9 FAM 402.9-7(c), the section that provides guidance on essential employees. The revisions centered around providing a more comprehensive list of factors to consider when determining the specialized nature of the position and whether the applicant possesses the specialized skills. The updated criteria are as follows:

(a)  The experience and training necessary to achieve such skill(s)

(b)  The uniqueness of such skills;

(c)  The availability of U.S. workers with such skills;

(d)  The salary such special expertise can command;

(e)  The degree of proven expertise of the alien in the area of specialization; and

(f)   The function of the job to which the alien is destined.

The FAM also clarifies that ordinarily skilled workers can qualify as essential employees, and this almost always involves workers needed for start-up or training purposes. A new business or an established business expanding into a new field in the United States might need employees who are ordinarily skilled workers for a short period of time.  Such employees derive their essentiality from their familiarity with the overseas operations rather than the nature of their skills. However, the FAM also clarifies that previous employment for the E-Visa firm in itself is not a requirement for the issuance of an essential employee visa. Lastly the FAM clarifies that when assessing the duration of essentiality for E-2 employees, the officer should consider the time needed to onboard and train US employees to perform the contemplated duties.

Previous Amendments to the FAM

The FAM’s recent amendments are preceded by other changes to the manual since the current administration took office. The FAM now contains the following preamble in 9 FAM 402.9-2(b), which was added shortly after President Trump signed Executive Order 13788:

“On April 18, 2017, the President signed the Executive Order on Buy American Hire American (E.O. 13788), intended to “create higher wages and employment rates for workers in the United States, and to protect their economic interests.”  The goal of E.O. 13788 is to protect the interests of United States workers in the administration of our immigration system, including through the prevention of fraud or abuse.  You must also remember that the basis of this classification lies in treaties which were entered into, at least in part, to enhance or facilitate economic and commercial interaction between the United States and the treaty country.  It is with this spirit in mind that cases under INA 101(a)(15)(E) should be adjudicated.”

Based on a plain reading of the language of 9 FAM 402.9-2(b), E visa applicants can expect a more protectionist approach by consular officers reviewing their applications. E-2 employee visas may face increased scrutiny, and applicants should strive to include evidence of a bona fide attempt to hire U.S. employees. Furthermore, E-2 applicants should focus on making their investments in the United States, as consular officers may scrutinize the investment to determine if it benefited the U.S. economy.

As always, it is important to work with a qualified immigration attorney to achieve the best result in your E-2 application.