[author: Roy J. Barquet]
The “E-2 Treaty Investor” employment visa classification was established by Congress to promote capital inflow by foreign investors and to create additional employment opportunities for U.S. citizens. Currently, the United States has reciprocal investment treaties with 81 countries that permit foreign nationals to acquire employment-related work visas if demonstrable investments are made in the United States. In All Bright Sanitation of Colorado, Inc. v. U.S. Citizenship and Immigration Services, a federal court in Florida held that United States Citizenship and Immigration Services (USCIS) abused its discretion and acted arbitrarily and capriciously by refusing to classify capital contributions made by the owner of All Bright Sanitation of Colorado as a treaty-qualifying “investment.”
All Bright’s owner and sole shareholder invested in excess of $500 million in order to purchase an established garbage collection business, Canyon Waste & Recycling, Inc. The investment comprised gifted garbage collecting equipment, gifted cash, and two loans — one from Canyon to All Bright and another from a third-party lender to All Bright. The loan from Canyon was not backed by collateral, but the owner signed a personal guaranty for payment. All Bright’s garbage collecting equipment was pledged as collateral on the loan from the third-party lender and also was backed by a personal guaranty from the owner.
All Bright’s E-2 Treaty Investor application was denied by USCIS for a triad of unsupported rationale. First, USCIS asserted that equipment did not qualify as an investment pursuant to the regulations because the owner did not “possess” and “control” the equipment, as the equipment was transferred directly from the owner’s father to All Bright. USCIS’s rationale was that a corporation and its shareholder are two separate entities and at no time did All Bright’s sole shareholder personally have actual title and ownership. The Court disposed of this argument, as the regulations do not require title and ownership, rather just “possession” and “control.” Pursuant to the plain meaning of the words “possession” and “control,” the Court noted that the equipment was under the direct dominion of All Bright’s owner, as he held the keys to the equipment and pledged it as collateral for a corporate loan. Second, USCIS asserted the loans could not be counted as an investment because neither loan was secured by the personal assets of the owner. The Court found this statement to be entirely conclusory, as the record established that USCIS failed to take into account the personal guaranties signed by the owner. Finally, the Court quickly dismissed USCIS’s argument that the owner was acting as a “front” for his father’s investment, as gifts are permitted to be counted toward the investment as long as they originate from a legitimate source.
With an ever-increasing rate of arbitrary Requests for Evidence and denials issued by USCIS concerning employment-based visa petitions, foreign investors and employers alike can take solace in the Court’s decision.