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Critical differences between the E-2 and EB-5 processing

By Stephen P. Pazan

Some immigration professionals have enthusiastically recommended the non-immigrant E-2 visa as a means of obtaining residency in the United States during the processing delays associated with an I-526 petition for the EB-5 visa. As one-size-fits-all advice, this oversells the E-2, and understates the challenges posed during E-2 adjudication.

The E-2 is best suited for the investor that desires an active role managing and growing a business, and may not be helpful for the investor who just wants to cut the line. The typical Regional Center investor should be wary, and industry professionals should be careful not to dispense advice cavalierly.

REVIEW OF THE E-2 VS. EB-5 PROCESS

Requirements for the E-2 non-immigrant visa are found in the section of 9 FAM 402.9-6(A). To be eligible, an investor needs to have citizenship in a country that has the E-2 treaty with the U.S. The applicant also must have invested a substantial amount or be in the process of investing a substantial amount in a real and operating commercial enterprise and be in a position to develop and direct the enterprise. If an employee, the applicant needs to have an executive/supervisory position or possesses skills essential to the firm's operations in the United States; and the applicant must intend to leave the United States when the E-2 status ends.

Prospective migrants are often unaware that the E-2 and EB-5 are adjudicated by totally different agencies. A Department of State Consular Officer at a U.S. Consulate or Embassy adjudicates the E-2. I-526s are decided by Adjudications Officers (AO) at USCIS who work in the specialty Investor Program Office (IPO) in an office in Washington, DC. It matters.

Consular Officers are members of the “Foreign Service.” They often consider their service to be the most selective and therefore superior institution in the U.S. government. They specialize, by a function of their posting, in the country in which they serve. USCIS adjudicators are usually G-13 or G-14 level civil servants, which normally are reserved for top-level positions such as supervisors and specialists. The workforce at IPO is diverse, but the individual AO may not have any familiarity or commitment to the country of an applicant’s origin.

Regardless of bragging rights and pay scale, there are other differences in the adjudicatory contexts for E-2 and EB-5 visas that a conscientious attorney or consultant should explain to the prospective applicant.

CONSULAR PROCESSING: WHAT COULD GO WRONG DURING AN INTERVIEW?

Most visa applicants are interviewed eventually. However, when an EB-5 applicant appears for an interview overseas, the applicant already has an approved I-526. EB-5 consular processing does not normally involve a de novo review. Consular Officers defer to USCIS’s findings regarding the applicant’s right to the immigration status, and focus on identity and admissibility. While there have been some reports of Consular Officers delving into the merits of I-526s, they are generally instructed to do so only in cases of suspected fraud.

Consular Officers interview E-2 applicants regarding the substantive contents of the application. Many of the requirements listed in 9 FAM 402.9-6(A) are all up for discussion at the interview, and no amount of clever legal drafting can save a poorly prepared applicant if he or she cannot demonstrate mastery of the business plan. Because Consular Officers live and work abroad, they may have contextual knowledge unavailable to the consultant or attorney advising an applicant. They can use that to probe the motivation of the applicant, sometimes to the applicant’s peril.

The fact is, the applicant’s future can be decided during an interview in a matter of minutes, notwithstanding hours of quality legal work and business plan drafting that precedes it. Preparation for consular processing is much more important for an E-2 than an EB-5.

CONSULAR OFFICERS REVIEW THE MERITS OF E-2 IN A HURRY

The sheer volume of visa adjudication at consular posts, together with the turnover at consular posts can be problematic.

The State Department issues an alphabet soup of visas, but the big one is the B1/B2. The Department’s Visa Office reports that in fiscal year 2017, over 9,68 million visas were adjudicated. Over 7 million of them were some combination of B1, B2, or border crossing cards. Only 43,671 E-2 visas were issued worldwide – less than 0.5 percent of the total.

When I served as a U.S. Consular Officer in Bogota between 2010 to 2012, the post routinely processed 2,500 visas per day, distributed among 15-20 “line officers.” Consequently, 100-130 interviews per officer per day was the norm. The vast majority were B1/B2 visas. According to the Visa Office, not much has changed. In fiscal year 2017, some 346,775 nonimmigrant visas were issued at Bogota, of which only 524 were E-1 or E-2s and their derivatives.

Applications outside the norm are not always welcome additions to a Consular Officer’s workload. The adjudication of an E-2 visa can be a major inconvenience for a Consular Officer. It slows the B1/B2 visa train! Unlike the B1/B2, with its on-line DS-160 form, there is also a lot of paper associated with E-2s that the assembly line for high volume visa adjudication cannot easily accommodate.

On the other hand, I-526s are reviewed in an office set up to serve the I-526, I-924, and I-829. AOs deal with fewer applications, albeit much more paper. While a problematic I-526 can be considered by an AO over the course of a few days, Consular Officers are encouraged to decide cases fast, get rid of the waiting applicant, and move on to the never ending queue of prospective tourists.

Consular Officers work in an up-or-out environment. E-2 and EB-5 adjudications hurt their numbers, and are eschewed as the type of thing that USCIS does; that is, E-2s are not promotion fodder at State. Of the EB-5 or the E-2 visa, the E-2 is much more work. Therefore, whether an applicant gets due consideration may be a matter of chance, depending on the Consular Officer and his or her visa chief.

E-2 VISAS ARE DIFFICULT TO HANDICAP

One can also make generalizations based upon historical trends in I-526 adjudication by IPO. However, this can be difficult to do for E-2s due to smaller sample sizes from select posts, and because rapid turnover at consular posts can affect continuity.

There is no Department of State “Policy Manual” like the one at USCIS. As such, the Consular Officer, referring to the FAM only, has more discretion than the USCIS AO. The subjective E-2 requirements – namely substantiality and marginality – are subject to the assessment – whims - of individual Consular Officers. Conversely, a prima facie showing on an I-526 requires a Request for Evidence (RFE) as a matter of IPO policy. A Notice of Intent to Deny (NOID) or a denial at IPO requires supervisory concurrence. Additional review intuitively results in greater uniformity.

The USCIS Policy Manual has been compiled, to some extent, based on the agency’s experience with the I-526. There is no similar repository of knowledge – human or documentary - at the Department of State. Therefore, E-2 success may depend on luck – which Consular Officer you get. Perhaps a Consular Officer who has been a home owner will treat an investment of $400,000 in a single building to be renovated as insubstantial, while a Consular Officer fresh out of graduate school who has never owned property or seen $400,000 in one place might think the money is fully “at risk.”

Personal experiences are brought to the workplace even by USCIS AOs, but there are fewer institutional constraints on the Consular Officer when acting on his or her assessments. As such, predictions are harder for E-2s.

DON’T BE SO SURE THAT YOU CAN RENEW AN E-2 FOREVER

One might think E-2 visas can be renewed forever. However, Consular Officers have discretion as to duration of visa vs. reciprocity or validity period, and there are constraints related to reciprocity that must be explained to investors.

For example, a Ukrainian E-2 visa is valid for only three months, and the visa holder gets only two entries. The Ukrainian reciprocity period for a B1/B2 visa is five years, and the visa holder gets multiple entries. That means that the Ukrainian E-2 visa holder can’t leave the United States and expect to return after three months, unless he or she renews - and every renewal poses a risk of denial.

On the other hand, a Colombian gets a multiple entry E-2 visa with a five-year validity period. The majority of Colombian B1/B2 visa recipients receive a full validity 10-year visa because that is State’s internal policy. But that policy does not apply to E-2 visas. Consular Officers can and do approve visas for less than the full 5-year E-2 reciprocity period when they harbor doubts as to the commitment of the applicant or the progression of the business plan.

Practitioners should therefore not assume that their clients will always receive a full validity visa, regardless of the nationality, reciprocity must be considered, and advice should be tailored accordingly.

THE E-2 IS NOT A DUAL INTENT VISA – BEWARE §214(B)

Investors should be reminded of the dangers of denial under INA §214(b) - the provision that requires a non-immigrant visa applicant to prove to the Consular Officer that he or she is not an intending immigrant.

§214(b) has not been much of a problem for E-2 applicants, because 9 FAM 402.9-4(C) says that an “alien’s expression of an unequivocal intent to depart the United States at the end of his/her authorized stay” is enough to overcome the burden of proof. However, the FAM does not go so far as to instruct the Consular Officer to accept dual intent. In fact, 9 FAM 402.9-4(C)’s closing sentence says,

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.”

“[W]ill need to satisfy you…” is not an objective standard. As stated earlier, Consular Officers have a great deal of discretion. While there are limited rights of supervisory review, the circumstances where Consular Officers are directed to reverse their decisions are rare. In fact, the FAM is predisposed against it, and imposes administrative burdens on supervisors who might wish to do so.

If prospective EB-5 applicants are directed in increasing numbers to the E-2, it is likely that Consular Officers will notice it and become increasingly demanding. The intent to depart required for in E-2, or even a B1/B2 visa, is inconsistent with the pendency of an I-526, but the B1/B2 application is more likely to get the benefit of doubt. After all, the E2/I-526 combination is more-or-less an affirmative statement of intent to reside in the United States.

A Consular Officer’s determination as to immigrant intent is never appealable, [1] and once a §214(b) finding is lodged in the Consular Consolidated Database (CCD), it can become problematic. A §214(b) denial can result in all kinds of problems, such as rescission of dependents’ F-1 student visas or the denial of B1/B2 visas.

To conclude, migration professionals should properly advise investors regarding the challenges posed by the E-2 process. The considerations discussed here are a recommendation that the industry slow down regarding the E-2 visa. The E-2 visa is probably best for those investors that have a legitimate interest in running their own business in the US – the direct investment type investor. The typical Regional Center investor looking first for a vehicle to emigrate to the United States through a passive investment is probably not the best candidate for E-2, and practitioners should take care not to unduly encourage them. Torpor in the EB-5 world is no reason for bad E-2 advice.

Notes:

[1] See info, Challenging the Doctrine of Consular Non-Reviewability in Immigration Cases, Donald S. Dobkin, November 2009, https://law.yale.edu/system/files/area/conference/ilroundtable/ILR13_DIDonaldDobkinChallengingtheDoctrine.pdf

Stephen Pazan

Stephen Pazan

Stephen P. Pazan, esquire, is an attorney working as a consultant to Baker Tilly Capital, LLC on EB-5 source of funds and other issues. Pazan was a consular officer with the U.S. Department of State in Colombia, Kiev and Warsaw, and an EB-5 adjudicator for the USCIS before leaving government in March 2018. He is also special counsel to the New York law firm Barket Epstein Kearon Aldea & LoTurco, LLP.

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