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19 March 2010
The survival of the US IT consulting industry relies on the ability of its workers, both US and foreign born, to travel freely across national borders in order to deliver skilled services to clients around the world. Emerging protectionist measures against multinational IT companies, and the intimidation and harassment of multinational managers and specialty workers at US ports of entry, are threatening the viability of this industry in the United States.
Recent events have sent a shockwave of fear through the industry. A US Citizenship and Immigration Services (USCIS) policy memo of January 8 2010 alarmed many Indian nationals working on H-1B and L-1 visas for IT companies. Their fears appear to have been well founded. Within 72 hours, Customs and Border Protection (CBP) officers at Newark Airport port of entry detained and interrogated a number of lawfully employed IT consultants arriving on a flight from India, citing the memo. Some of these consultants had their visas cancelled; many were forced to withdraw their applications for admission; and some were summarily removed, barred from re-entry for at least five years.
The memo to USCIS service centre directors was written by Donald Neufeld, associate director of service centre operations.(1) The memo outlines guidance to USCIS officers at service centres and signals a renewed focus for the agency's efforts to curtail outsourcing and close so-called 'job shops'.
The resulting incident at Newark Airport signals a new policy of screening all arriving work visa holders for compliance with the Neufeld directives and selecting a number for intensive secondary inspection with harsh penalties without appeal for any found - in the opinion of CBP inspectors - to have engaged in authorization employment at client sites.
The CBP appears to have misconstrued the memo to bar categorically the entry of H-1B non-immigrants who indicate that they performed work at third-party client sites if this does not appear on the Form I-129 petition. That position is unfounded in law. Work at third-party sites not listed on Forms I-129 remains a lawful H-1B activity consistent with existing regulations in force. CBP officers not trained in the complexities of case law and regulatory interpretation have now assumed powers to readjudicate approved employment petitions and to cancel visas that have already been screened by a US consul. Arriving passengers have no opportunity to obtain counsel, and there is no appeal of a CBP expedited removal order. The Tech Serve Alliance is concerned that this new process affords inadequate due process safeguards, and that its members have been aggrieved by CBP actions and policies that are inconsistent with domestic law as well as international trade law.
The alliance strongly urges the Department of Homeland Security to take immediate corrective action to halt improper removal orders at ports of entry, which also unduly interfere with international trade in services. Until this problem has been corrected, arriving H-1B and L-1 visa holders found to be inadmissible for 'soft' inadmissibility grounds should be granted deferred inspection for a determination by a USCIS district director or other USCIS office better equipped to investigate and deal with complex legal issues.
The secretary should immediately halt these abusive practices against arriving H-1B visa holders and take the longer-term corrective step of issuing binding instructions to the CBP and other implementing departments regarding the application of proper screening procedures for arriving international business passengers.
On January 11 2010, three days after the issue of the Neufeld memo, passengers disembarking from Continental Airlines Flight 49 from Mumbai, India received an extraordinary reception from the CBP. Even before the passengers had reached primary inspection at Newark International Airport, a supervising inspector and a squad of CBP officers had selected a number of passengers holding H-1B and L-1 employment visas for secondary inspection.
These work visa holders were all Indian nationals and all held lawfully issued visas. Nonetheless, they were subjected to extended interrogation about the details of their intended non-immigrant employment in the United States, as well as their past employment activities. The focus of questioning was assignments to third-party client sites and a probe into the business activities of H-1B employers. Those detained were subjected to a battery of questions from the CBP inspector about:
According to the reports,(2) some individuals were subjected to expedited removal under Section 235 and visa cancellation.
According to one account:
"Some were luckier and escaped the [expedited removal] order, but still had to withdraw their applications for admission to the U.S. Nevertheless, they were all coerced into making statements under threat of being detained. CBP officials also made remarks as to why the H-1B workers, singled out for deportation, earned more than U.S. workers and should not be paid so much."(3)
Those summarily removed under Section 235 face an automatic five-year bar to re-entry. No specific national security or law enforcement alert prompted this sort of extreme treatment of passengers arriving on this flight. The only distinguishing factor was that this was a flight from Mumbai, a centre of the Indian computer consulting industry.
It appears that the CBP has taken the Neufeld memo as carte blanche to interrogate and exclude any arriving H-1B visa holder about off-site assignments, and the CBP believes that it is fully qualified to make determinations about which off-site assignments are unlawful. In making these decisions, the CBP treats employment at any site other than that indicated on the Form I-129 as presumptive fraud. This is a misapplication of the USCIS policy memo and a misunderstanding of the law.
The alliance has several concerns about this. First, the memo was addressed to USCIS service centre examiners, not CBP officers in the field. The CBP does not consider USCIS directives to be binding, yet it has adopted this policy as if it were its own to interpret as it sees fit. Furthermore, the CBP has misconstrued the meaning of the directive and misapplies the substance of its instructions. Significantly, the Neufeld memo identifies a number of categories of outsourcing application that USCIS will approve and a list of documents that are already required from employers at USCIS service centres. It also describes several scenarios involving the types of case that service centre examiners should not approve, and provides what the agency now claims to be a legal rationale for how such decisions are to be made. However, the memo restates existing policy and there is little or nothing new in its contents to justify a substantial change in procedures by either USCIS or the CBP.
Second, any interpretation of the Neufeld memo as a bar to employment at sites not listed in the petition Form I-129/LCA is contrary to the law. Short-term or itinerate assignments at client sites without filing an amended Form I-129 petition or new ETA Form 9035 labour condition attestation are permitted by the regulations for varying periods. The details of permitted off-site employment for H-1B are complicated and an accurate forensic reconstruction of past employment history is extremely difficult, if not impossible, to carry out fairly and accurately in airport secondary inspection. The applicable law and regulations likely will not be adequately understood by airport inspectors to make a well-founded determination of fraud based on the Neufeld memo directives. As discussed below, the Neufeld memo is itself is based on a faulty interpretation of law and has been improperly promulgated as a policy document.
While the memo is little more than a restatement of existing de facto USCIS policy regarding a requirement to document H-1B and L-1 employer 'control' (itself a doctrine of dubious validity), the memo has been treated by the CBP as a licence to interrogate and remove Indian IT workers. This merely reinforces the already widespread perception within the industry of an increasingly aggressive policy that is distant from the letter of underlying statute and divorced from the intent of Congress. This perception of a policy of unduly burdensome regulation and discriminatory enforcement, begun during the Bush administration, is pushing India-based consulting firms out of the US market.
The industry is aggrieved that the Department of Homeland Security is again permitting increased latitude to USCIS examiners, Fraud Detection and National Security auditors and now CBP officers to intimidate and discriminate against Indian technology workers. The memo itself derisively refers to IT consulting companies that outsource workers to client sites to work on client projects as 'job shops',(4) the elimination of which is the stated target of the Neufeld memo(5) and also appears to be the primary target of this new CBP offensive.
The Neufeld memo is not a binding or authoritative policy document. In fact, the CBP appears to have commenced some of these practices previous to its issuance. Since the end of 2009, reports of the CBP questioning H-1B visa holders regarding job duties and the validity of their employment have circulated among American Immigration Lawyers Association members, as have reports of detention and summary removals at airports. However, until the meeting with the association liaison committee in early February 2010, the CBP refused to comment publicly on these activities.
This follows a long series of enforcement measures that have disproportionately targeted Indian firms and nationals working inside the United States. The operations and characteristics of these consulting firms, which are predominantly based in India and employ Indian software engineers and developers, have already been tagged with the label 'articulable fraud'.(6) This is a term employed by a division of USCIS, Fraud Detection and National Security, which since 2006 has scanned all non-immigrant petitions for outsourcing and more recently has begun following up with worksite audits using private investigation contractors. Behind all this is the presumption that H-1B outsourcing is fraud. Fraud Detection and National Security uses a H-1B referral sheet list that lists 21 indicators of articulable fraud (for further details please see "Details emerge about H-1B worksite audits"). These fraud criteria are excessively wide and focus first and foremost on newer, smaller consulting companies that have third-party service contracts, a copy of which USCIS now expressly demands on filing as a Neufeld memo requirement under the rubric of assuring that the work of the H-1B is always under the control of the petitioner.
The CBP has redefined its mission at the port of entry to support that mission. According to the American Immigration Lawyers Association, this is in effect a new policy that has been implemented as a pilot programme at the Newark Airport port of entry. According to the association:
"After inquiring with CBP headquarters about these alleged incidents, the [AILA] CBP Liaison Committee was advised that many of the cases involved in the allegations involved companies currently under investigation by U.S. Immigration and Customs Enforcement (ICE) and/or U.S. Citizenship and Immigration Services (USCIS) for ongoing fraud."
The association was provided with additional news regarding a new policy instituted at Newark Airport dealing with random checks of returning H-1B, L-1 and other employment-based visa holders. Based on the initial check, if the person's admissibility is questionable, he or she will be sent to secondary inspection for further review; if questions still surround the person's admissibility, he or she may be asked to withdraw his or her application for admission to the United States or be subject to expedited removal.
In addition to heightened documentary demands, the Neufeld memo instructs USCIS examiners as to how they should deal with the issue of employer control over the work of H-1B beneficiaries assigned at client sites. While these issues are not new, the memo clearly signals that USCIS will require all applicants to address and document issues related to employee control at the time of filing and renewal of petitions. However, the particular documentary requirements are virtually all based in pre-existing service centre requirements and are not new in themselves. Thus, the CBP should assume that these issues have already been adequately addressed in any petition submitted in recent years. CBP officers may review, but are not supposed to readjudicate, approved petitions. Nonetheless, the CBP is now in the adjudications business.
Issues related to control of employment are outside the expertise of the CBP and involve highly technical interpretations of regulation and case law in adjudications - not something that can be done effectively and fairly at the port of entry. The CBP is attempting to second-guess legal decisions that have already been made during adjudications by more highly trained examiners at USCIS service centres. The Department of Homeland Security controls both these components of the legacy Immigration and Naturalization Service; thus, the department must impose a rational policy establishing proper roles and jurisdiction when there is a potential conflict in function and decision-making authority, as there is here.
The Continental Flight 49 incident was not just the result of the spontaneous actions of an overzealous CBP supervisor who misread a USCIS policy directive. Instead, procedures at Newark Airpot are part of a new CBP initiative – coordinated with other agencies within the Department of Homeland Security, particularly Fraud Detection and National Security – adding yet another layer of what appears to be intrusive surveillance, heavy-handed interrogation and targeted enforcement against H-1B companies and workers. While the CBP claims that there is no profiling and that these are just random inspections of "individuals selected for additional review", the incident and the statements made by the CBP thereafter show that the Newark Airport programme actually involves a coordinated, inter-agency taskforce employing the CBP, Immigration and Customs Enforcement, Fraud Detection and National Security and the Department of Labour inspector general's Office of Investigations.
While the Department of Homeland Security may bring whatever resources are at its disposal to bear in investigating suspected criminal benefits fraud, the 'dragnet' approach of rounding up and interrogating all bearers of business visas arriving from India goes beyond normal, acceptable law enforcement practices. In effect, this programme:
The mistreatment of business visa holders is not defensible as good public policy and it damages the international relations of the United States with an important trade partner.
Furthermore, the policy that the CBP is attempting to implement (ie, the curtailment of outsourcing and the closure of job shops for H-1B employers) is not founded in US law. In 2004 Congress passed a measure that severely restricts outsourcing of L-1B workers. However, no such statutory restrictions were included in the law for H-1B. Title IV of the Consolidated Appropriations Act for FY2005 incorporated many provisions of the L-1 and H-1B Reform Act of 2004 as part of the omnibus spending bill passed in the last hours of the session. The amendment was adopted in the wake of a report released by the Department of Homeland Security inspector general(7) which focused on antecdotal allegations that L-1 is afflicted with fraud. It echoed complaints from USCIS examiners frustrated that they lacked the legal means to deny the petitions filed by Indian-based outsourcing companies to place workers at US client sites, which they characterized as an abuse without citing any statutory basis for that allegation.(8)
Notably, the Consolidated Appropriations Act for FY2005 outlawed the outsourcing of L-1B workers, but did not apply the same provision in the draft bill to H-1B.(9)
These new policies also raise serious questions about due process for those individuals and employers affected by them. CBP officers are not adequately trained to make determinations about complex issues of eligibility for benefits, history of worksite assignments and the types of off-site activity that comply with the regulations. There is no mechanism to appeal Section 235 expedited removal decisions, a draconian action that should not be applied in any but the most clear-cut cases of benefit fraud, document fraud or ineligibility for admission due to history of criminal conviction or other serious issues (eg, espionage or terrorism). Section 235 removal should never be applied in cases that involve relatively complex interpretative legal issues that are not well established in law. Decisions on such issues are matters of policy and legal interpretations that should be deferred to other offices within the Department of Homeland Security, such as the USCIS district director or central office adjudications that have the legal expertise to deal effectively and fairly with them.
Furthermore, the Department of Homeland Security should be on notice that the Neufeld memo which the CBP is struggling to understand and enforce enshrines de facto agency policies and binding norms that were promulgated without the notice and comment provisions of the Administrative Procedures Act, and which do not have force of law and would not be entitled to Chevron-level deference upon judicial review.
Finally, the Newark Airport programme and the Neufeld memo communicate that USCIS will also more strictly enforce rules that govern foreign investors, particularly a doctrinal bar against the self-employment of foreign investors except those from countries with which the United States has concluded E-1/E-2 treaty. The United States does not have such a treaty of trade or commerce with India; Indian nationals must thus enter in other categories such as L-1 to manage businesses operated inside the United States.
The Newark Airport programme is yet another strong indicator that the United States is withdrawing from its obligations under the World Trade Organization General Agreement on Trade in Services and its specific agreement to remove obstacles to the entry of natural persons to work as L-1 intracompany transferees, along with a specified number of admissions of H-1B specialty workers. The emerging policy appears to contravene those treaty obligations. The new CBP practice of interrogating H-1B and L-1 entrants is a procedurally deficient duplication of a task that is better done by adjudicators at USCIS service centres, and such cases should be deferred to the USCIS district director and central office.
Finally, in effect, the policy disproportionately affects and interferes with international trade in services and foreign investments made by Indian nationals. It specifically discriminates against companies determined to operate outside the traditional bricks and mortar business model and employer-employee relationship. In effect, this is a form of national treatment that has no place under World Trade Organization trade law and appears to be in violation of the General Agreement on Trade in Services. This barrier to trade and commerce is unacceptable to the alliance and its members, which are adversely affected or aggrieved by the policy.
(1) See Donald Neufeld, associate director, service centre operations, DHS, USCIS, HQ 70/6.2.8, AD10.24, Memorandum for Service Centre Directors, "Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements", Additions to Officer's Field Manual (AFM) Chapter 31.3(g)(15)(AFM Update AD 10-24) (January 8 2010), at www.aila.org/content/default.aspx?docid=30956.
(9) Among the H-1B restriction bills defeated in the 108th Congress, HR 2688, Amendment to Immigration and Nationality Act, a bill introduced on July 9 2003 to repeal H1-B visas and related authorities. Several 2003-4 bills (S 2094, HR 3820, HR 3888, HR 3911) would have banned companies that engage in certain offshoring activities from receiving some federal assistance or federal and state contracts. Yet another bill that year, HR 2849, a companion bill to Grassley-Durbin, was intended to impose a labour market test on H-1B and L-1 visas. A Senate bill, S 31, which was introduced but failed to pass in the 110th Congress, would have, among other things, banned H-1B outsourcing across state lines and permitted USCIS to initiate and lodge a non-compliance complaint with the Department of Labour.
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