[Federal Register Volume 85, Number 204 (Wednesday, October 21, 2020)]
[Proposed Rules]
[Pages 66878-66888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21975]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 85, No. 204 / Wednesday, October 21, 2020 / 
Proposed Rules  

[[Page 66878]]



DEPARTMENT OF STATE

22 CFR Part 41

[Public Notice 11221]
RIN 1400-AE95


Visas: Temporary Visitors for Business or Pleasure

AGENCY: Department of State.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of State (``Department'') proposes to amend its 
regulation governing nonimmigrant visas for temporary visitors for 
business, the B-1 nonimmigrant visa classification, by removing two 
sentences defining the term ``business'' that are outdated due to 
changes in the INA since 1952, from when the two sentences originate. 
With removal of these sentences, the Department would no longer 
authorize issuance of B-1 visas for certain aliens classifiable as H-1B 
or H-3 nonimmigrants, commonly referred to as the ``B-1 in lieu of H'' 
policy, unless the alien independently qualifies for a B-1 visa for a 
reason other than the B-1 in lieu of H policy.

DATES: Written comments must be received on or before December 21, 
2020.

ADDRESSES: You may submit comments, identified by RIN 1400-AE95, by 
either of the following methods:
     Internet (preferred): At www.regulations.gov, you can 
search for the document using [Docket Number DOS-2020-0041] or using 
the proposed rule RIN 1400-AE95.
     Email: Megan Herndon, Senior Regulatory Coordinator, 
Office of Visa Services, Bureau of Consular Affairs, U.S. Department of 
State, [email protected].

FOR FURTHER INFORMATION CONTACT: Megan Herndon, Senior Regulatory 
Coordinator, Office of Visa Services, Bureau of Consular Affairs, 
Department of State, 600 19th St. NW, Washington, DC 20006, (202) 485-
7586.

Public Participation

    All interested parties are invited to participate in this 
rulemaking by submitting written views and comments on all aspects of 
this proposed rule. Comments must be submitted in English or an English 
translation must be provided. Comments that will provide the most 
assistance to the Department of State in implementing this change will 
reference a specific portion of the proposed rule, explain the reason 
for any recommended change, and include information that supports the 
recommended change.
    Instructions: If you submit a comment, you must include the agency 
name and RIN 1400-AE95 for this rulemaking in the title or body of the 
comment. Regardless of the method used for submitting comments or 
material, all submissions will be posted, without change, to the 
Federal eRulemaking Portal at http://www.regulations.gov, and will 
include any personal information you provide. Therefore, because all 
submissions will be public, you may wish to consider limiting the 
amount of personal information that you provide in any voluntary public 
comment submission. The Department of State may withhold from public 
viewing information provided in comments that it determines may 
infringe privacy rights of an individual or is offensive. For 
additional information, please read the Privacy Act notice available in 
the footer at http://www.regulations.gov.

SUPPLEMENTARY INFORMATION:

I. What changes to 22 CFR 41.31 does the Department propose?

    The Department proposes to eliminate two sentences from its 
regulation governing nonimmigrant visitors for business, 22 CFR 
41.31(b)(1). The current regulation, in the paragraph defining 
``business,'' includes the statement, ``An alien seeking to enter as a 
nonimmigrant for employment or labor pursuant to a contract or other 
prearrangement is required to qualify under the provisions of 22 CFR 
41.53,'' which is the regulation governing H nonimmigrant temporary 
workers or trainees. The Department proposes to remove this language, 
as explained below, because, as the regulation states explicitly, 
``business,'' as used in section 101(a)(15)(B) of the Immigration and 
Nationality Act (``INA''), 8 U.S.C. 1101(a)(15)(B) ``does not include 
local employment or labor for hire,'' so the referenced statement is 
confusing and potentially misleading. For the same reasons, the 
Department also proposes to eliminate from the current regulation the 
statement, ``An alien of distinguished merit and ability seeking to 
enter the United States temporarily with the idea of performing 
temporary services of an exceptional nature requiring such merit and 
ability, but having no contract or other pre-arranged employment, may 
be classified as a nonimmigrant temporary visitor for business.''

II. Why is the Department proposing this rule?

A. Statutory Framework

    The Department's proposal conforms the regulation with changes in 
the Immigration Act of 1990 (``IMMACT 90''),\1\ the Miscellaneous and 
Technical Immigration and Naturalization Amendments of 1991 
(``MATINA''),\2\ and the American Competitiveness and Workforce 
Improvement Act of 1998 (``ACWIA'').\3\ The two sentences the 
Department proposes to eliminate from 22 CFR 41.31 date back to 1952, 
prior to enactment of these laws. See 22 CFR 41.40 (1952) (added by 17 
FR 11574, Dec. 19, 1952). They no longer reflect the statutory 
framework governing nonimmigrants.
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    \1\ Public Law 101-649, 104 Stat. 4978 (1990).
    \2\ Public Law 102-232, 105 Stat. 1733 (1991).
    \3\ Omnibus Consolidated and Emergency Supplemental 
Appropriations Act, 1999, Public Law 105-277, div. C. tit. IV, 112 
Stat. 2681-642 (1998).
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    The primary statute governing the requirements for B visa 
classification is the Immigration and Nationality Act (``INA'') of 
1952, as amended.\4\ The Department's proposal takes into account the 
amendments to the INA effected by IMMACT 90, MATINA, and the ACWIA.
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    \4\ Reference to the ``1952 INA'' or ``1952 Act'' refers to the 
original Immigration and Nationality Act of 1952, Public Law 82-414, 
66 Stat. 163 (June 27, 1952).
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    The statutory language authorizing the issuance of visas to 
temporary visitors for business (B-1 nonimmigrants) or pleasure (B-2 
nonimmigrants) has remained unchanged since the 1952 Act. The B visa 
classification applies to temporary visitors for business or for 
pleasure and excludes individuals coming for the

[[Page 66879]]

purpose of study or of performing skilled or unskilled labor or as a 
representative of foreign press, radio, film, or other foreign 
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information media coming to engage in such vocation.

See INA section 101(a)(15)(B), 8 U.S.C. 1101(a)(15)(B).

    Under the 1952 Act, the H nonimmigrant classification pertained to 
individuals of distinguished merit and ability and who is coming 
temporarily to the United States to perform temporary services of an 
exceptional nature requiring such merit and ability; coming temporarily 
to the United States to perform other temporary services or labor, if 
unemployed persons capable of performing such service or labor cannot 
be found in the United States; or (iii) who is coming temporarily to 
the United States as an industrial trainee.

See INA section 101(a)(15)(H), 8 U.S.C. 1101(a)(15)(H) (1952).

    IMMACT 90, as amended by the MATINA, created new nonimmigrant 
classifications, including two nonimmigrant classifications for certain 
aliens with extraordinary ability in the sciences, arts, business, or 
athletics and certain artists and entertainers, the O and P 
classifications.\5\ Many such aliens were previously classified as H-1 
nonimmigrants, corresponding to INA section 101(a)(15)(H)(i), 8 U.S.C. 
1101(a)(15)(H)(i) (1952). Since INA section 101(a)(15)(H), 8 U.S.C. 
1101(a)(15)(H) was not originally designed to address these classes of 
activities, Congress determined that they should be separated from that 
classification and treated independently.\6\ Most professional athletes 
and entertainers coming to the United States to work in their 
professions fall within the scope of these O and P classes under 
current law. All aliens applying for an O or P nonimmigrant visa as a 
principal alien require a petition approved by DHS prior to applying 
for a visa.
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    \5\ Nonimmigrant visas in the O classification are for certain 
aliens with extraordinary ability in sciences, arts, education, 
business or athletics, or a demonstrated record of achievement in 
the motion picture or television industry, as well as certain 
support staff and dependents. See IMMACT 90 section 207(a), INA 
section 101(a)(15)(O), 8 U.S.C. 1101(a)(15)(O) and 22 CFR 41.55. See 
also 8 CFR 214.2(o). Nonimmigrant visas in the P classification are 
for certain types of artists and entertainers, as well as certain 
support staff and dependents. See INA section 101(a)(15)(P), 8 
U.S.C. 1101(a)(15)(P) and 22 CFR 41.56. See also 8 CFR 214.2(p).
    \6\ See 136 Cong. Rec. H13203-01 (1990).
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    In addition to creating the O and P nonimmigrant classifications, 
IMMACT 90 and the MATINA amended the INA with regard to the H-1 
classification for certain temporary workers by, in relevant part: (1) 
Restricting H-1B classification to nonimmigrants coming temporarily to 
perform services in a specialty occupation (as defined in INA section 
214(i)(1), 8 U.S.C. 1184(i)(1)), or as a fashion model of distinguished 
merit and ability; \7\ (2) adding the requirement of a labor condition 
application filed with respect to the nonimmigrant by the intending 
employer under INA section 212(n)(1), 8 U.S.C. 1182(n)(1), with the 
Secretary of Labor; \8\ and (3) limiting the number of aliens who may 
be issued H-1B visas or otherwise provided H-1B nonimmigrant status 
during any fiscal year.\9\
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    \7\ IMMACT 90, Sec. 205(c)(1).
    \8\ IMMACT 90, Sec. 205(c)(1), (3). Prior to IMMACT 90, there 
was no prevailing wage requirement or other U.S. labor force 
protections concerning H-1B workers. Note that the H-1B category 
resulted from the split of the H-1 category into the H-1A (now 
defunct) and H-1B categories through amendments to the INA by the 
Immigration Nursing Relief Act of 1989, Public Law 101-238, 103 
Stat. 2099 (1989).
    \9\ IMMACT 90, Sec. 205(a).
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    The ACWIA, enacted in 1998, further amended the INA with respect to 
H-1 classification by, in relevant part: (1) Temporarily increasing 
numerical limits of H-1 visas; \10\ (2) imposing new restrictions and 
requirements on H-1-dependent employers; \11\ (3) instituting a new 
regime of penalties for petitioners whose attestations include 
misrepresentations; \12\ (4) establishing a process to review 
complaints regarding failures to offer job opportunities to U.S. 
workers; \13\ and (5) imposing a $500 fee for certain H-1B 
petitioners.\14\
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    \10\ ACWIA, Sec. 411.
    \11\ ACWIA, Sec. 412.
    \12\ ACWIA, Sec. 413a.
    \13\ ACWIA, Sec. 413b.
    \14\ ACWIA, Sec. 414.
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    Congress imposed an additional $2,000 fee in 2010 for certain H-1B 
petitioners through Public Law 111-230, section 402(b), 124 Stat. 2487 
(2010). This fee authorization expired on September 30, 2015, and 
Congress subsequently reauthorized and increased it to $4,000 with the 
Consolidated Appropriations Act, 2016, Public Law 114-113, section 411, 
129 Stat. 3006. This fee remains in effect until Sept. 30, 2025.

B. Policy

    The proposed rule would increase clarity and transparency by 
removing confusing and outdated language about the scope of activity in 
the United States that is permissible on a B-1 visa. An example of the 
confusion--here to a qui tam relator--caused by this outdated language 
arose recently in United States ex rel. Krawitt v. Infosys Technologies 
Limited, Incorporated, 372 F.Supp. 3d 1078, 1086 (N.D. Cal 2019), in 
which the District Court found a fraud complaint misinterpreted the 
first sentence the Department proposes to remove related to labor 
pursuant to a contract or other prearrangement.\15\ The court's 
interpretation properly highlighted that this sentence is in fact 
meaningless, although it is unclear whether the Court understood why 
this was the case. Reporting from posts abroad indicates confusion 
among aliens, attorneys, consular officers, and DHS officials at Ports 
of Entry about the application of these outdated sentences, 
specifically as they apply to the B-1 in lieu of H policy, described 
below in section (II)(D)(ii). Thus, the Department proposes removing 
the confusing and outdated sentences from the regulation.
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    \15\ Krawitt, the qui tam relator, argued that one of the 
sentences in 22 CFR 41.31 the Department proposes to remove (``An 
alien seeking to enter as a nonimmigrant for employment or labor 
pursuant to a contract or other prearrangement is required to 
qualify under the provisions of Sec.  41.53'') prohibited two 
Infosys employees from providing training to Apple employees in the 
United States in B-1 status pursuant to a contract between the two 
companies. The court responded that ``Numerous authoritative sources 
contradict Krawitt's reading of the regulation,'' but did not offer 
an alternative reading of the confusing sentence, apparently giving 
the sentence no meaning at all.
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    Removing these two sentences, and thus removing any question about 
whether the referenced employment or labor might be permissible B-1 
activity, not only conforms the regulation to the applicable statutory 
framework, but also furthers the goals of Executive Order (``E.O.'') 
13788, Buy American and Hire American. See 82 FR 18837 (April 21, 
2017). That E.O. articulates the executive branch policy to 
``rigorously enforce and administer'' the laws governing entry of 
nonimmigrant workers into the United States ``[i]n order to create 
higher wages and employment rates for workers in the United States, and 
to protect their economic interests.'' Id. sec. 2(b). It directs 
federal agencies, including the Department, to protect U.S. workers by 
proposing new rules and issuing new guidance to prevent fraud and abuse 
in nonimmigrant visa programs. Id. sec. 5. The Department believes that 
eliminating any perceived gray area of acceptable local employment or 
labor for skilled foreign workers for the purpose of B-1 nonimmigrant 
visa issuance will better protect U.S. workers' economic interests and 
strengthen the integrity of the B-1 nonimmigrant visa classification
    With greater clarity regarding the Department's policy and 
interpretation of the law concerning the availability of

[[Page 66880]]

a B-1 nonimmigrant visa for an alien seeking to engage in local 
employment or labor, employers will be on notice that they must pay 
prevailing wages for such labor performed in the United States, either 
by hiring a U.S. worker or by following the procedures established by 
Congress for the importation of a skilled worker in an appropriate visa 
category. The Department believes this will lead to an increase in 
wages for U.S. workers, because U.S. entities that previously may have 
paid less than the prevailing wage for services in a specialty 
occupation performed by foreign nationals who traveled to the United 
States on a B-1 nonimmigrant visa issued on the basis of the outdated 
regulatory language or under the B-1 in lieu of H policy (discussed in 
(II)(B)(2), below) will be compelled to align their business practices 
with the current statutory scheme and the policy expressed in this 
proposal.

C. Proposed Elimination of Statement That an Alien Seeking To Enter for 
Employment or Labor Pursuant to a Contract or Other Prearrangement Is 
Required To Qualify Under the Provisions of 22 CFR 41.53

    Performance of skilled or unskilled labor is statutorily 
impermissible in the B nonimmigrant visa classification. INA section 
101(a)(15)(B), 8 U.S.C 1101(a)(15)(B). The term ``labor'' is not 
defined in the INA or implementing regulations,\16\ for the purpose of 
the B nonimmigrant classification. The statement in the Department's 
regulation that an alien seeking to enter for employment or labor 
pursuant to a contract or other prearrangement is required to qualify 
under the provisions of 22 CFR 41.53 (relating to H visas), fails to 
account for the other visa categories that permit the performance of 
labor in the United States (including, but not limited to the D, E, I, 
L, O, P, Q, and R classifications). Additionally, the requirement is 
under-inclusive, because INA section 101(a)(15)(B), 8 U.S.C. 
1101(a)(15)(B), prohibits skilled or unskilled labor in the B 
nonimmigrant visa classification categorically, whether or not pursuant 
to a contract or other prearrangement. Because skilled and unskilled 
labor on a B visa are already generally prohibited by statute, the 
Department believes the referenced statement is confusing and 
misleading and therefore proposes to remove the sentence from the 
regulation.
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    \16\ The INA, including INA section 212(a)(5)(A)(i), 8 U.S.C. 
1182(a)(15)(A)(i) (labor certification requirement for certain 
immigrants), and implementing regulations, such DOL regulations as 
20 CFR 655.5 (defining agricultural labor) use the term labor 
without defining it.
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D. Proposed Elimination of Statement Regarding Alien of Distinguished 
Merit and Ability

1. Proposal as it Relates to Aliens of Extraordinary Ability in the 
Sciences, Arts, Education, Business, or Athletics; and Athletes, 
Entertainers, and Artists Seeking Nonimmigrant Visas Relative to Their 
Professions
    The Department proposes to eliminate the provision in 22 CFR 41.31 
that currently provides that ``[a]n alien of distinguished merit and 
ability seeking to enter the United States temporarily with the idea of 
performing temporary services of an exceptional nature requiring such 
merit and ability, but having no contract or other prearranged 
employment, may be classified as a nonimmigrant temporary visitor for 
business.'' This language has remained unchanged since 1952. See 22 CFR 
41.40(b) (1952) added by 17 FR 11475 (Dec. 19, 1952)). Notwithstanding 
this regulatory language, the Department has long interpreted 
``business'' activities permissible in the B-1 classification to 
exclude the activities of members of the entertainment profession 
seeking to perform services within the scope of their profession. For 
example, an acclaimed singer and accompanying musicians seeking to 
enter the United States to perform a concert in a stadium in the United 
States would be required to obtain O or P visas, after filing a 
petition with U.S. Citizenship and Immigration Services (USCIS), and 
would not be eligible for a B-1 visa for this purpose, as the existing 
regulation suggests.
    The Department's interpretation of ``business,'' with respect to 
entertainers, dates back to the 1960s or 1970s, well before enactment 
of IMMACT 90, but the oldest published guidance currently available to 
the Department is from August 30, 1987, stating ``[o]rdinarily, a 
member of an entertainment occupation who seeks to enter the United 
States temporarily to perform services, whether or not the services 
will involve public appearance and regardless of the amount or source 
of compensation, will be accorded the appropriate H-1 classification.'' 
\17\ Because this guidance was promulgated prior to the enactment of 
IMMACT 90, H-1 was the appropriate classification for aliens performing 
such services. Under IMMACT 90's targeted standards and procedures for 
professional entertainers, such performers would fall in the O and P 
categories. Notably, the 1987 guidance, which steers members of the 
entertainment profession away from B visas, is consistent with current 
FAM guidance; \18\ the proposal serves to bring the regulation in line 
with the Department's long-standing policy. Therefore, with respect to 
entertainers of distinguished merit and ability who seek to perform in 
the United States, the Department does not expect that removing this 
language from the B nonimmigrant visa regulation will have any impact 
on visa issuance, because the statement does not align with current 
practice.\19\
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    \17\ 9 FAM 41.31, Notes, N7.1 (TL:VISA-2, August 30, 1987). In 
the intervening decades, this guidance has become more nuanced to 
reflect certain situations where services in an entertainment 
profession are consistent with B-1 visa classification, as described 
in the following paragraphs and associated footnotes.
    \18\ 9 FAM 402.2-5(G) states that, with limited exception not 
affected by this proposal, ``B visa status is not appropriate for a 
member of the entertainment profession (professional entertainer) 
who seeks to enter the United States temporarily to perform 
services. Instead, performers should be accorded another appropriate 
visa classification, which in most cases will be P, regardless of 
the amount or source of compensation, whether the services will 
involve public appearance(s), or whether the performance is for 
charity or a U.S. based ethnic society.'' This proposal would not 
affect existing Department guidance on the situations in which 
professional entertainers and artists may be classified B-1, such as 
participants in cultural programs performing before a nonpaying 
audience and being paid by the sending government. See 9 FAM 402.2-
5(G)(1)-(5).
    \19\ This proposal would not affect Department guidance to 
consular officers with regard to amateur athletes and entertainers. 
Under 9 FAM 402.2-4(A)(7), a person who is an amateur in an 
entertainment or athletic activity is, by definition, not a member 
of any of the profession associated with that activity. An amateur 
is someone who normally performs without remuneration (other than an 
allotment for expenses). A performer who is normally compensated for 
performing cannot qualify for a B-2 visa based the provisions of 9 
FAM 402.2-4(A)(7) even if the performer does not make a living at 
performing, or agrees to perform in the United States without 
compensation. Thus, an amateur (or group of amateurs) who will not 
be paid for performances and will perform in a social and/or 
charitable context or as a competitor in a talent show, contest, 
athletic event, or other similar activity is eligible for B-2 
classification, even if the incidental expenses associated with the 
visit are reimbursed.
    This proposal would not change this understanding.
    In proposing to remove this provision from the regulation, the 
Department recognizes that aliens of ``distinguished merit and 
ability'' in areas other than athletics, entertainment, and art may 
also be impacted. To the extent the proposal to eliminate this 
section overlaps with the proposal to eliminate the B-1 in lieu of H 
policy, see the discussion immediately below.
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    While there is limited case law directly interpreting ``business'' 
as related to athletes, entertainers, and artists seeking to perform 
services within the scope of their professions,\20\

[[Page 66881]]

the Department's interpretation is consistent with case law 
interpreting ``business'' more generally. The Board of Immigration 
Appeals has repeatedly held that ``business,'' as used in INA section 
101(a)(15)(B), 8 U.S.C. 1101(a)(15)(B), does not include ordinary labor 
for hire or local employment of a continuing nature, the extension of 
professional practice to the United States, or the regular performance 
of services in the United States not performed as an incident to any 
international commercial activity. See, e.g., Matter of Neill, 15 I. & 
N. Dec. 331, 334 (BIA 1975) (extending professional engineering 
practice to the United States was not permissible for the B 
nonimmigrant classification); Matter of G--, 6 I. & N. Dec. 255, 258 
(BIA 1954) (holding that employment of a continuing nature as a 
receiving clerk and truck loader in the United States was not 
permissible B-1 activity even when the alien maintained a residence in 
Canada which he had no intent of abandoning and was paid entirely by 
the Canadian company); compare Matter of Duckett, 19 I. & N. Dec. 493, 
498 (BIA 1987) (holding professional services regularly performed in 
the United States permissible B-1 activity because the function was a 
necessary incident to international trade).
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    \20\ The Board of Immigration Appeals held that a professional 
dancer was not eligible to enter the United States to fulfill a 6 
month dancing contract as a temporary visitor for business in In the 
Matter of M--, 2 I. & N. Dec. 240 (BIA 1945), but the reasoning 
leading to that conclusion is opaque.
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    The Department's existing guidance to consular officers provides 
some scenarios in which professional athletes, artists, and 
entertainers may qualify for B-1 visas for the purpose of performing 
services within the scope of their professions. These examples extend 
the reasoning of administrative decisions interpreting the scope of 
permissible B-1 activity to situations consular officers may encounter 
and do not rely on the regulatory language the Department proposes to 
remove; thus, these purposes of travel would not be affected by this 
proposal. For example, 9 FAM 402.2-5(C)(4) paragraph b explains that 
athletes or team members who seek to enter the United States as members 
of a foreign-based team in order to compete with another sports team 
are eligible for B-1 visas, provided that the foreign athlete and the 
foreign sports team have their principal place of business or activity 
in a foreign country and the income of the foreign-based team and the 
salary of its players are principally accrued in a foreign country. The 
referenced FAM guidance is consistent with Matter of Hira, 11 I&N 824 
(BIA 1965; A.G. 1966), which identifies relevant factors for B-1 
classification as, among others, the principal foreign place of 
business and the principal location of accrual of profits abroad.\21\ A 
separate FAM provision, which is also not affected by this proposal, 
specifies that a professional entertainer may be classified B-1 if the 
entertainer (1) is coming to the United States to participate only in a 
cultural program sponsored by the sending country; (2) will be 
performing before a nonpaying audience; and (3) all expenses, including 
per diem, will be paid by the member's government. 9 FAM 402.2(G)(1). 
These criteria also align with the Attorney General's interpretation in 
Matter of Hira.
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    \21\ 9 FAM 402.2-5(A) paragraph b explains the facts of Matter 
of Hira and its relevance to consular officers' determination of 
appropriate B-1 activity. It explains that in some situations, it 
can be difficult to distinguish between appropriate B-1 business 
activities, and activities that constitute skilled or unskilled 
labor in the United States that are not appropriate on B status. 
Hira involved a tailor measuring customers in the United States for 
suits to be manufactured and shipped from outside the United States. 
The decision stated that this was an appropriate B-1 activity, 
because the principal place of business and the actual place of 
accrual of profits, if any, was in the foreign country.
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    The Department's proposal seeks to bring the regulations into 
conformity with Department practice with respect to athletes, 
entertainers, and artists by removing the one sentence of regulatory 
language that has been superseded by Congress through the passage of 
IMMACT 90. Therefore, the Department does not expect that removing this 
language from the regulation will impact visa issuance with respect to 
athletes, entertainers, and artists of distinguished merit and ability 
who seek to compete or perform in the United States.
2. Proposal as It Relates to B-1 in Lieu of H Nonimmigrant Visas
    Following elimination of the two outdated and misleading sentences 
from the regulation, there will be less confusion about whether the 
Department might permit B visa issuance for aliens seeking to engage in 
local employment, including labor appropriately classified as H-1B or 
H-3 activities. Employers, foreign workers, immigration attorneys, or 
others may have erroneously believed that such activity has been 
permissible for B-1 nonimmigrant visa issuance, in some cases, under a 
visa policy referred to as the B-1 in lieu of H policy. Agency guidance 
to consular officers on this policy, currently in 9 FAM 402.2-5(F),\22\ 
will be withdrawn if the rule is finalized. Like the confusing and 
outdated regulatory language described above, the Department also seeks 
to terminate the B-1 in lieu of H policy, for reasons of law and 
policy. Eliminating the regulatory language described above and 
eliminating the FAM guidance supporting the B-1 in lieu of H policy 
will make clear that foreign workers seeking to engage in local 
employment or labor for hire must follow the procedural requirements 
enacted by Congress to protect U.S. workers. Temporary visits for 
business activities that are consistent with Matter of Hira will still 
be permissible purposes for B-1 visa issuance under this proposal. 
Aliens seeking to engage in such business activities will qualify for 
B-1 visa classification if their purpose of travel is consistent with 
the B-1 visa classification, irrespective of whether the applicant 
might qualify for an H visa. The Department believes this clarification 
will strengthen the integrity of the B-1 program and better align its 
regulation and guidance for consular officers with the statutory 
framework, administrative case law, and visa policy.
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    \22\ See 9 FAM 402.2, available at https://fam.state.gov/FAM/09FAM/09FAM040202.html (last accessed October 14, 2020).
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    Under INA section 101(a)(15)(B), 8 U.S.C. 1101(a)(15)(B), aliens 
coming to the United States to perform skilled or unskilled labor are 
not eligible for B-1 nonimmigrant classification. The Senate Report 
accompanying the Immigration and Nationality Act of 1952 (S. Rept. No. 
1515), p. 525, cited Karnuth v. United States, 279 U.S. 231 (1929), to 
indicate that ``visitor for business'' does not include a visitor 
coming to perform labor for hire, especially given the congressional 
intent of the 1924 Act ``to protect American labor against the influx 
of foreign labor.'' Id. at 243-44. In addition to carrying over that 
principle from the Immigration Act of 1924, Congress in the 1952 Act 
added a new nonimmigrant visa classification, the H classification, 
designed for temporary foreign workers to meet the needs of employers 
in the United States. See INA section 101(a)(15)(H), 8 U.S.C. 
1101(a)(15)(H). As noted above, in 1952, the H nonimmigrant 
classification was divided between ``aliens of distinguished merit and 
ability'' coming temporarily to the United States to ``perform 
temporary services of an exceptional nature requiring such merit and 
ability'' (H-1); other skilled or unskilled aliens to perform other 
temporary services or labor, if unemployed persons capable of 
performing such service or labor cannot be found in the United States 
(H-2); and trainees (H-3). All three H nonimmigrant sub-categories 
required a petition approved by the former Immigration and 
Naturalization Service (INS) to establish eligibility for the

[[Page 66882]]

classification, and a labor market test was required for the H-2 
nonimmigrant classification. The B-1 in lieu of H policy arose in the 
context of this framework in the 1960s.
    The B-1 in lieu of H policy was adopted jointly by the INS and the 
Department's Visa Office in the 1960s. See The Proposed Restriction of 
the ``B-1 in Lieu of H-1'' Concept, Bernsen, 70 No. 35 Interpreter 
Releases 1189, Sept. 13, 1993. The purpose was to reduce unnecessary 
paperwork and facilitate international travel by eliminating the 
requirement for filing H-1 and H-3 petitions for cases within the 
purview of the concept, so that the alien could apply for a visa 
without any intervening INS action, in a one-step procedure.\23\ Id.
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    \23\ In a version of the FAM available from March 31, 1980, 9 
FAM 41.25, note 4.2(c) provided that ``[a]n alien already employed 
abroad coming to undertake training who would be classifiable H-3 
but who will continue to receive a salary from the foreign employer 
and will receive no salary or other remuneration from a U.S. source 
other than an expense allowance or other reimbursement for expenses 
incidental to his temporary stay'' is classifiable B-1. The H-3 
petition process had been criticized for being too slow. See 
Nonimmigrant Business Visas and Adjustment of Status; Hearing before 
the Subcommittee on Immigration and Refugee Policy, Senate Judiciary 
Committee; Serial No. J-97-86, December 11, 1981; Preference System; 
Hearing before the Subcommittee on Immigration and Refugee Policy, 
Senate Judiciary Committee; Serial No. J-97-83, November 23, 1981. 
By March 31, 1980, Department guidance referenced B in lieu of H-3.
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a. B-1 in Lieu of H-1B
    In proposing elimination of B-1 in lieu of H, which is related to 
the two sentences proposed for elimination, the Department finds that 
visa policy has lagged behind changes to the INA since the policy was 
first adopted. The Department's past failure to align its regulations 
with the statutory framework has created confusion about the limits of 
permissible activity on a B visa. Section 205 of IMMACT 90 amended the 
H-1B nonimmigrant classification in a number of respects. Among other 
amendments, it (1) imposed a numerical limitation on this 
classification for the first time; (2) modified the standard generally 
applicable to aliens seeking admission under the classification from 
``distinguished merit and ability'' to ``specialty occupation'' as 
defined in INA section 214(i)(1); and (3) instituted a labor condition 
application requirement. See INA section 214(g)(1)(A) and section 
212(n), 8 U.S.C. 1184(g)(1)(A) and 1182(n). The amendments made by 
section 205 expressed Congress' intent to limit availability of the H-
1B visa classification in certain respects. MATINA further amended the 
H-1B category to include certain fashion models, placed conditions on 
eligibility for doctors, and narrowed the attestation requirements for 
labor condition applications.
    While IMMACT 90 did not alter the language of INA section 
101(a)(15)(B), 8 U.S.C. 1101(a)(15)(B), the changes to the H-1B 
classification and the legislative history indicate that Congress 
intended the B-1 classification to be applied narrowly after enactment. 
The Senate report describes the reasoning as follows: ``For example, 
the committee has taken note of, and relied upon, the reasoning of 
Bricklayers and Allied Craftsmen v. Meese, 616 F. Supp. 1387 (N.D. Cal. 
1985), with regard to the proper scope of the B temporary visa category 
. . . the committee's action in expanding immigration rests on this 
understanding of the narrow scope of the B temporary visa category, and 
consequently, the narrow scope of any implementing operations, 
instructions, or regulations.'' \24\
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    \24\ Immigration Act of 1989; S. Rept. 101-55 on S. 358, June 
19, 1989 Congressional Reports: Doc. No. 15- June 19. 1989, page 20. 
In the Bricklayers case, the Court struck down an INS operating 
instruction allowing admission as a business visitor of an alien 
coming to install, service, or repair commercial or industrial 
equipment sold by a foreign vendor to a U.S. purchaser, holding that 
the instruction was contrary to the plain language of the INA. The 
Ninth Circuit granted a joint motion to limit the injunction only to 
aliens coming to perform building or construction work of the kind 
performed by members of the plaintiff union, after which the parties 
agreed to dismiss the case. The validity of the U.S. government's 
interpretation of INA section 101(a)(15)(B) as extending to other 
types of skilled labor was never addressed.
---------------------------------------------------------------------------

    After the passage of IMMACT 90, the Department and the INS began to 
question the appropriateness of continuing the B-1 in lieu of H policy. 
See 91 STATE 312100, reproduced in 68 No. 37 Interpreter Releases 1263, 
Sept. 30, 1991. The Department proposed to eliminate the B-1 in lieu of 
H policy in an NPRM published in the summer of 1993. 58 FR 40024-30 
(July 26, 1993). INS also published an NPRM proposing the elimination 
of the B-1 in lieu of H policy in the autumn of 1993. 58 FR 58982-88 
(Nov. 5, 1993). Neither agency finalized its rule, although interagency 
discussions continued. See 12 STATE 101466, reproduced at 89 No. 42 
Interpreter Releases 2013 (Oct. 29, 2012) (``The B-1 in lieu of H-1B 
and H-3 guidance in 9 FAM 41.31 N11 is under review in an interagency 
process, but remains in effect until further notice.'')
    While the Department endeavored to interpret its B-1 in lieu of H 
policy in a manner consistent with the statutory framework, including 
by limiting the policy to apply only to those cases that most clearly 
met the definition of ``business'' set forth in Matter of Hira and 
subsequent Board of Immigration Appeals cases, the resulting changes to 
the policy's parameters were not well publicized and the relevant 
regulations were never updated. Additionally, with the development of 
new technology since the introduction of the B-1 in lieu of H policy in 
the 1960s, including increased standardization of electronic salary 
deposits through direct deposit, the policy has become more subject to 
exploitation. For example, a company can more easily ``pay salaries'' 
from abroad that circumvent the local wage and hour laws where actual 
labor is performed when contracting local labor for hire in the United 
States, which would have been impermissible during the early days of 
the B-1 in lieu of H policy due to restrictions on place of salary 
payment. As a result of the confusing regulatory language, changes in 
immigration laws over the years, and technological advancements, the 
Department believes some stakeholders may have come to believe the B-1 
in lieu of H policy permits issuance of B-1 visas for broad categories 
of skilled labor, notwithstanding the greater specificity in labor and 
employment-related visa classifications under the INA, as amended by 
IMMACT 90. In light of E.O. 13788, as well as the numerical 
restrictions in the H-1B category, requirements of the labor condition 
application, and revised definition of the H-1B category contained in 
IMMACT 90, the Department is compelled to eliminate the B-1 in lieu of 
H policy and end the confusion that has surrounded it.
    Efforts to limit the application of the B-1 in lieu of H policy 
have had unintended consequences, and the continuation of the policy 
would not align with Administration policy. The requirements of the B-1 
in lieu of H policy outlined in 9 FAM 402.2-5(F), derived from the 
reasoning in Matter of Hira, focus on the physical location of the 
employer's office and the source of the worker's remuneration for 
services performed in the United States both being abroad. The Board of 
Immigration Appeals identified these factors, among others, as 
dispositive of whether the work in question was impermissible local 
employment or permissible business that is a necessary incident to 
international trade or commerce. The focus on these factors alone might 
lead to an incorrect conclusion that skilled labor is permissible in 
the B-1 classification, if these factors are met. To the contrary, the 
Department does not believe that a strategically structured contract 
between a U.S.

[[Page 66883]]

business and a foreign employer can provide an acceptable basis for 
foreign workers to seek B-1 visas to perform skilled labor in the 
United States. Such an interpretation would undermine the interests of 
U.S. workers, the intent of Congress, and the goals of E.O. 13788. For 
these reasons and the reasons stated above, the Department seeks to end 
this longstanding policy, remove the regulatory sentences supporting 
it, and eliminate guidance to consular officers reflecting the policy.
    One example that may illuminate the implications of retaining the 
B-1 in lieu of H policy could be a U.S. architecture firm seeking 
protection from rising labor costs in the United States. The firm might 
believe it could lay off its U.S. architects and contract for the same 
professional architectural services to be provided by a foreign 
architecture firm. If the foreign firm sought H-1B visas for its 
architects, it would be required to pay the prevailing wage for 
architects in the area of intended employment in the United States, 
presumably the same wage the U.S. architects had been paid, and meet 
the other requirements enacted by Congress to protect U.S. workers. But 
under the B-1 in lieu of H policy, the foreign architects could 
ostensibly seek B-1 visas and travel to the United States to fill a 
temporary need for architecture services, so long as they retained a 
residence in the foreign country and continued to receive a salary, 
perhaps significantly lower than what is customary for U.S. architects, 
dispersed abroad by the foreign firm (or under the auspices of a 
foreign parent or subsidiary). Under the Department's guidance as 
expressed in 9 FAM 402.2-5(F), visas could be issued for multiple 
architects planning temporary work in the United States, in certain 
situations; however, a foreign employer may succeed in undermining U.S. 
immigration law and policy by rotating architects between the United 
States and the foreign country to effectively fill the position of one 
U.S. architect at a significantly lower cost. If the architects who 
intended to perform skilled labor were ``of distinguished merit and 
ability . . . seeking to perform [temporary architectural services] of 
an exceptional nature requiring such merit and ability,'' one might 
argue the current regulatory language suggests this type of labor is a 
permissible basis for B-1 nonimmigrant visa issuance. As this potential 
outcome is harmful to U.S. workers and contrary to administration 
policy as expressed in E.O. 13788, and as expressed in longstanding FAM 
guidance to consular officers, the Department seeks to eliminate 
guidance that could be misunderstood to imply that such an arrangement 
might be permissible.
    If finalized, this proposal will eliminate any misconception that 
the B-1 in lieu of H policy provides an alternative avenue for aliens 
to enter the United States to perform skilled labor that allows, and 
potentially even encourages, aliens and their employers to circumvent 
the restrictions and requirements relating to the H nonimmigrant 
classification established by Congress to protect U.S. workers.\25\ The 
proposed changes and the resulting transparency would reduce the impact 
of foreign labor on the U.S. workforce of aliens performing activities 
in a specialty occupation without the procedural protections attendant 
to the H-1B classification. Specifically, these procedural protections 
include the numerical cap on the H-1B category in INA section 
214(g)(1), 8 U.S.C. 1184(g)(1), which limits the number of foreign 
workers permitted to compete with U.S. workers. There are no such 
limits on the number of workers who may qualify for a B-1 visa under 
the B-1 in lieu of H-1B policy. Similarly, the labor condition 
application requirement added to INA section 212(n), 8 U.S.C. 1182(n), 
by IMMACT 90 requires employers to make attestations regarding the 
wages and working conditions of H-1B nonimmigrants and to provide 
notification to U.S. workers to mitigate the potential adverse effects 
of importing foreign labor through the H-1B program. In contrast, the 
application process for a B-1 visa does not include similar procedural 
requirements to protect U.S. workers. Further, while Congress required 
H-1B employers to pay significant fees to fund assistance to the U.S. 
workforce as well as prevention and detection of fraud related to 
skilled labor, employers are not required to pay comparable fees to 
employ skilled workers under the B-1 in lieu of H policy. See INA 
sections 214(c)(9), (12), and 286(s), (v), 8 U.S.C. 1184(c)(9), (12), 
and 1356(s), (v). To the extent the current regulatory language 
suggests that U.S. employers may seek foreign workers in the B-1 
classification to perform local employment or labor, absent the 
procedural protections for U.S. workers Congress enacted, this practice 
affords lesser protections than Congress intended for U.S. workers 
filling and seeking similar position. The Department proposes 
eliminating the B-1 in lieu of H policy for these reasons, for greater 
consistency with U.S. law and congressional intent, and in furtherance 
of the policy expressed in E.O. 13788, all of which aim to protect U.S. 
workers' economic interests.
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    \25\ The legal proceedings against Indian information technology 
company Infosys Limited provides one public example outside the 
context of the B-1 in lieu of H policy of the strong financial 
incentives for aliens and their employers to misuse the B-1 visa to 
circumvent the requirements of the H nonimmigrant classification. On 
December 17, 2019, the California Attorney General announced an 
$800,000 settlement against Infosys Limited to resolve allegations 
that approximately 500 Infosys employees worked in California on 
Infosys-sponsored B-1 visas rather than H-1B visas. According to the 
Attorney General's statement, the misclassification resulted in 
Infosys avoiding California payroll taxes and paying workers lower 
wages. See https://oag.ca.gov/news/press-releases/attorney-general-becerra-announces-800000-settlement-against-infosys (Last accessed 
December 26, 2019). The New York Attorney General announced a $1 
million settlement with Infosys Corporation in June 2017 based on 
similar claims. See https://ag.ny.gov/press-release/2017/ag-schneiderman-announces-settlement-infosys-failing-follow-us-visa-requirements (Last accessed December 26, 2019).
---------------------------------------------------------------------------

    To the extent any U.S. entities may claim its business model relied 
on the B-1 in lieu of H policy to pay foreign skilled workers at rates 
below prevailing wages, the Department would note that consular 
officers are the sole arbiters of visa eligibility and no one may 
justifiably assume that a visa will be issued to a particular alien or 
for a particular purpose, prior to adjudication. Any such businesses 
could face costs, potentially significant costs, in conforming their 
hiring practices to the statutory scheme without the benefit of the B-1 
in lieu of H policy. To mitigate harm that might follow immediate 
implementation, B-1 visas that are valid when this proposal is enacted 
will not be revoked on the basis of this policy change, and employers 
will be able to continue to benefit from the services of skilled 
workers appropriately issued B-1 visas under the guidance at 9 FAM 
402.2-5(F) in place at the time of visa issuance, subject to the 
independent reviews by DHS at ports of entry. The Department hereby 
notifies U.S. businesses that following the effective date of a final 
rule, they no longer will be able to reference the B in lieu of H 
policy to defend obtaining services in a specialty occupation from 
workers being paid at a rate below prevailing wage. The Department has 
determined that policy must be eliminated to better protect U.S. 
workers' economic interests and strengthen the integrity of the B-1 
visa program, in addition to conforming to current statutory 
requirements.
    Setting aside legal considerations, the Department believes that 
the proposal is justified as a matter of policy, notwithstanding any 
possible reliance by U.S. entities and other costs to businesses of 
aligning the hiring of skilled foreign workers to the requirements of 
the INA, or alternatively of hiring U.S. workers, because of the

[[Page 66884]]

benefits that this proposed rule provides U.S. workers, which could be 
substantial. In calculating these benefits, the Department assumes that 
the wages paid to workers in the United States in B-1 status would 
generally be the minimum legally permissible, or the minimum wage in 
the work location. Similarly, due to lack of more specific data, the 
Department assumes the salary paid either to H-1B workers or to U.S. 
workers in specialty occupations generally would be the prevailing wage 
calculated by the Department of Labor.\26\ The gap between this wage 
and the local minimum wage could be significant; for example, an 
employer in Silicon Valley could legally pay a computer network 
architect in B-1 status the minimum wage of $15 per hour, whereas the 
same employer would be required to pay a computer network architect in 
H-1B status the prevailing wage of at least $40.88 per hour. 
Presumably, the same employer would need to offer wages at least as 
high as the prevailing wage in order to secure the services of a 
qualified U.S. worker. The gap is even larger in Austin, Texas where 
the minimum wage is $7.50 per hour and the prevailing wage for a 
computer network architect is at least $37.15 per hour.\27\ In enacting 
IMMACT 90 and requiring employers to pay the prevailing wage for 
skilled foreign workers, Congress determined that the gains of this 
policy to U.S. workers, who would see greater employment opportunities 
and higher wages without the downward pressure from underpaid foreign 
workers, outweighed the associated costs to U.S. employers. The 
Department proposes to remove the outdated regulatory language 
supporting the B-1 in lieu of H policy that erodes the protections for 
U.S. workers Congress sought to enact.
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    \26\ For H-1B workers, the prevailing wage calculated by DOL is 
the minimum legally permissible wage. INA section 
212(n)(1)(A)(i)(II). The Department of Labor's website explains that 
the prevailing wage rate is the average wage paid to similarly 
employed workers in a specific occupation in the area of intended 
employment. See https://flag.dol.gov/programs/prevailingwages, last 
accessed January 22, 2020. This is the best available measure of the 
salary costs to employers of hiring a U.S. worker.
    \27\ https://www.minimum-wage.org/, last accessed November 4, 
2019; https://flcdatacenter.com, last accessed November 4, 2019. 
Note that the prevailing wage cited is for workers in a specialty 
occupation with the lowest level of experience; employers are 
required to pay experienced H-1B workers a higher prevailing wage.
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b. B-1 in Lieu of H-3
    Likewise, and also taking into account E.O. 13788, the Department 
proposes to eliminate the B-1 in lieu of H-3 policy.\28\ In addition to 
limiting the H-1B program, IMMACT 90 limited the H-3 program to exclude 
training programs ``intended primarily to provide productive 
employment.'' The H-3 petition process for trainees requires an 
immigration officer to evaluate whether a training program complies 
with this limitation and with applicable regulations, which limit the 
total time of a training program to two years and contains explicit 
protections for U.S. workers. Among other requirements, petitioners 
must explain why the training is required, demonstrate that the 
training is not available in the beneficiary's country, indicate how 
the training will benefit the beneficiary in pursuing a career abroad, 
identify the source of any remuneration the trainee will receive, and 
describe any benefit the petitioner will obtain by providing the 
training. See 8 CFR 214.2(h)(7).
---------------------------------------------------------------------------

    \28\ The B-1 in lieu of H policy, as it relates to H-3s, has 
historically applied to only H-3 trainees, therefore the discussion 
of H-3 is specific to this type of H-3 nonimmigrant.
---------------------------------------------------------------------------

    As explained in the final rule establishing H-3 regulatory 
requirements, 55 FR 2602, 2618 (Jan. 26, 1990), ``[t]oo often, 
petitioners who cannot obtain H-1 or H-2B classification for workers 
will submit petitions for such workers under the H-3 classification 
with the intention of employing them under the guise of a training 
program.'' The aforementioned final rule was written before the 
enactment of IMMACT 90, which further restricted the H-3 classification 
to training programs that are ``not designed primarily to provide 
productive employment.'' IMMACT 90 section 205(d). While the regulatory 
requirements and statutory limitations discussed above prevented some 
of this abuse in the H-3 category, some employers misused the B-1 in 
lieu H policy to bypass the important protections built into the H-3 
classification and described above. The Department's proposal ending 
the use of B-1 visas for these training programs in the future, even 
for trainings of a short duration, will assist in preventing abuse of 
the U.S. immigration system and protecting U.S. workers' economic 
interests.
    For these reasons, the Department proposes to eliminate the 
referenced specific language from 22 CFR 41.31(b)(1), the outdated 
regulatory language that supported the B-1 in lieu of H-3 policy, and 
the related guidance at 9 FAM 402.2-5(F).

III. Regulatory Findings and Impact Statements

A. Administrative Procedure Act

    The Department is providing 60 days for public comment on this 
proposed rule's elimination of two sentences in the regulation and the 
B in lieu of H policy.

B. Regulatory Flexibility Act/Executive Order 13272 (Small Business)

    This proposed rule only regulates the category of individuals who 
qualify for B nonimmigrant visas. Businesses have no petition component 
for B visas and are outside the zone of interest of this rulemaking 
because the RFA deals with direct economic impacts on a substantial 
number of small entities. Therefore, a regulatory flexibility analysis 
is not required.

C. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (``UMRA'') is intended, 
among other things, to curb the practice of imposing unfunded Federal 
mandates on State, local, and tribal governments. Title II of the UMRA 
requires each Federal agency to prepare a written statement assessing 
the effects of any Federal mandate in a proposed or final agency rule 
that may result in a $100 million or more expenditure (adjusted 
annually for inflation) in any one year by State, local, and tribal 
governments, in the aggregate, or by the private sector.
    This proposed rule does not exceed the $100 million expenditure in 
any one year when adjusted for inflation ($163 million in 2018 
dollars), and this rulemaking does not contain such mandates. The 
requirements of Title II of the Act, therefore, do not apply, and the 
Department has not prepared a statement under the Act.

D. Executive Orders 12866 (Regulatory Planning and Review) and 13563 
(Improving Regulation and Regulatory Review)

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). The 
Department has reviewed this proposal to ensure consistency with those 
requirements. The Department has not identified any available 
regulatory alternative to this proposal that would meet the 
Department's policy of rigorously interpreting the relevant

[[Page 66885]]

provisions of the INA, including provisions governing entry into the 
United States of workers from abroad.
    This proposed rule would not directly regulate U.S. entities but 
may have indirect fiscal effects on those entities that use the 
services of foreign workers in specialty occupations in the United 
States in B-1 classification. Aliens issued visas based on the B-1 in 
lieu of H policy must be paid by a foreign source and are thus 
generally employed by a foreign company.\29\ However, the purpose of 
the travel is often to provide services in a specialty occupation for 
one or more U.S.-based clients. Generally, those U.S. entities might 
incur some additional costs if they instead seek U.S. workers to 
provide those services or, alternatively, seek H-1B or other 
classification for those foreign workers.
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    \29\ The Department's guidance on the B-1 in lieu of H policy at 
9 FAM 402.2-5(F) prohibits B-1 visa issuance if the applicant will 
receive any salary or other remuneration from a U.S. source other 
than an expense allowance or other reimbursement for expenses 
incidental to the alien's temporary stay. For purposes of this 
Section, it is essential that the remuneration or source of income 
for services performed in the United States continue to be provided 
by the business entity located abroad.
---------------------------------------------------------------------------

    The Department estimates that this proposal will affect no more 
than 6,000 to 8,000 aliens per year, specifically aliens intending to 
provide services in a specialty occupation in the United States. Since 
February 22, 2017, the FAM has required consular officers to use a 
specific annotation on the face of any visa issued on the basis of the 
B-1 in lieu of H-1 or B-1 in lieu of H-3 policy. See 9 FAM 402.2-5(F). 
The Department searched annotations for Fiscal Years 2015 through 2019 
using the currently required annotations and variations of B-1 in lieu 
of H and found the following numbers of annotated visas reflecting B-1 
in lieu of H-1 or H-3: FY 2015: 6,323; FY 2016: 5,739; FY 2017: 6,287; 
FY 2018: 6,681; FY 2019: 7,940. Because the annotation has been 
required since February 2017, data collected on or after that date is 
more reliable than data for earlier periods. It is likely that data for 
earlier periods understated the number of visas issued on the basis of 
these policies, so we estimate annual visa issuance under the B-1 in 
lieu of H policy in some years could have been as high as 8,000. For 
purposes of providing baseline information about potential costs 
associated with this proposal, the Department therefore uses the upper 
estimate of 8,000. This is likely an overestimate because some aliens 
who received a B-1 visa under the B-1 in lieu of H policy would still 
qualify for B-1 visas. However, the assessment of their qualification 
for the B-1 visa classification would not take into consideration 
whether they would qualify for an H visa, but rather whether the B-1 
visa classification is appropriate for other reasons, like adherence to 
the Hira standards.
    The Department estimates that up to 28 percent of the approximately 
8,000 annual B-1 visa issuances under the B-1 in lieu of H policy were 
to aliens who applied for a visa to perform services in a specialty 
occupation for a small entity in the United States. This estimate is 
based on the Department's analysis of a sample of 375 of the visa 
applications that resulted in visa issuance under the B-1 in lieu of H 
policy.\30\ To determine whether the alien intended to perform services 
for a small U.S. entity, the Department analyzed the ``U.S. Point of 
Contact'' field on submitted DS-160 applications, the most relevant 
available information. The Department does not collect data on the 
legal name of the entity in the United States using the services to be 
provided by an alien applying for a B-1 visa.\31\ This analysis showed 
that a maximum of 106 aliens, or 28.27% of the sample, listed a U.S. 
Point of Contact that was a small entity, as defined by the Small 
Business Administration. This includes 50 applications listing a U.S. 
Point of Contact about which the Department was unable to find 
sufficient information to determine whether the enterprise is small; in 
order to capture the maximum possible impact on small entities, the 
Department considered all 50 entities with insufficient information to 
be small entities.
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    \30\ From the 14,621 total visa applications approved under the 
B-1 in lieu of H policy in fiscal years 2018 and 2019 combined, the 
Department randomly selected 375. That sample size was selected 
after the Department computed that a sample size of 374 would 
provide a 95% confidence level with 5% error.
    \31\ As noted above, under the Department's guidance at 9 FAM 
402.2-5(F), aliens issued visas based on the B-1 in lieu of H policy 
must be paid by a foreign source and are thus generally employed by 
a foreign company. Thus, while the DS-160 application contains a 
field for ``Present Employer or School Name,'' this field is not 
useful for determining the U.S. entity that will use the alien's 
services in the United States, which could be, for example, a 
parent, subsidiary, client, supplier, or business partner of the 
foreign employer.
---------------------------------------------------------------------------

    The Department assumed that the up to 8,000 aliens benefitting from 
the B-1 in lieu of H policy provided services to a maximum of 8,000 
distinct U.S. entities, though the exact number of distinct entities 
potentially indirectly affected by this proposal is unknown due to 
limited data availability, and because some aliens previously issued a 
B-1 visa under the B-1 in lieu of H policy may continue to qualify for 
the B-1 visa classification after termination of the policy. Based on 
the analysis described above, the Department estimates that a maximum 
of 2,262 (28.27% of 8,000) distinct small entities could be indirectly 
affected by this proposal.
    U.S. entities seeking services in a specialty occupation will no 
longer be able to acquire those services from aliens in the United 
States in B-1 classification pursuant to the B-1 in lieu of H policy. 
Some, but not all, of those services could be performed by individuals 
in B-1 status, even after termination of the B-1 in lieu of H policy. 
Otherwise, U.S. entities could hire U.S. workers. Or, if relevant 
labor-related conditions were met, such entities could seek qualified 
foreign workers in H-1B status to perform the needed services.
    In light of the uncertainty and lengthy wait time to secure H-1B 
status for a foreign worker, the Department assesses that an H-1B is 
not likely to be a viable option for many U.S. entities seeking an 
alien to perform services in a specialty occupation that were 
previously performed by an alien in B-1 status. Rather, the Department 
assesses that U.S. entities indirectly affected by this proposal will 
likely hire U.S. workers to perform required services in a specialty 
occupation previously provided by aliens in B-1 classification. For 
those H-1B petitions that are selected, approval is not guaranteed. For 
example, approval would require that the U.S. entity have the employer-
employee relationship with the alien that is required for H-1B 
status.\32\ Even those entities whose petitions are selected in the 
lottery and approved face a timeline much longer than the timeline for 
securing a B-1 visa under the B-1 in lieu of H policy. To begin, the 
employer must wait until the start of the next fiscal year for the 
employee to start work and, if the early April deadline for entering 
the lottery has already passed, the employee's start date will be 
delayed at least until the start of the following fiscal year. If a 
particular petition is not selected in the lottery, the employer must 
wait at least another year for the employee to start work.
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    \32\ 8 CFR 214.2(h)(4)(ii). In contrast, under the Department's 
guidance at under the Department's guidance at 9 FAM 402.2-5(F), 
aliens issued visas based on the B-1 in lieu of H policy must be 
paid by a foreign source and are thus generally employed by a 
foreign company.
---------------------------------------------------------------------------

    Due to the labor-related requirements, uncertainty of selection 
under the numerical cap on the H-1B classification, the long timeline 
for H-1B adjudication, and the significant

[[Page 66886]]

paperwork and costs required to petition for the H-1B classification, 
the Department anticipates that the H-1B classification will not be a 
viable alternative for many U.S. entities that are currently able to 
obtain the services of skilled workers under the B-1 in lieu of H 
policy. Notwithstanding, the Department seeks to provide for 
informational purposes baseline data about the potential costs, to 
aliens and/or U.S. entities using the services of such aliens, of 
seeking H-1B visas.
    The Department recognizes that the costs associated with the H-1B 
visa are higher than those associated with a B-1 visa. See Chart 1 
below for a comparison of common costs. The Department notes the 
various costs associated with the H-1B and B-1 visas may be paid by 
different parties and thus are not directly comparable; for example, 
the costs associated with the nonimmigrant visa application listed in 
the first two rows of the chart may be paid by the alien, a foreign 
employer (in the case of a B visa application), or a U.S. employer (in 
the case of an H-1B visa application).

                                 Chart 1
------------------------------------------------------------------------
                                                       Cost required for
                                   Cost required for    B (or ``No'' if
            Cost type                    H-1B          not required for
                                                              B)
------------------------------------------------------------------------
Nonimmigrant visa application     $190..............  $160.
 processing fee (non-refundable).
Estimated cost of time required   $51.11............  $51.11.
 to complete nonimmigrant visa
 application \33\.
Filing an I-129, Petition for     $460 *............  No.
 Nonimmigrant Worker.
The American Competitive and      $1500 (for certain  No.
 Workforce Improvement Act fee     petitioners with
 (authorized under Sec. 414(c),    more than 25
 Division C, of Pub. L. 105-277    employees).
 for certain H-1B petitioners).   $750 (for certain
                                   petitioners with
                                   25 or fewer
                                   employees) *.
Fraud Prevention and Detection    $500 *............  No.
 Fee (authorized under Sec.
 426(a), Division J, of Pub. L.
 108-447 for employers seeking
 initial H-1B nonimmigrant
 status for a foreign worker).
Fee under Public Law 114-113      $4,000 *..........  No.
 (temporarily authorized until
 September 30, 2025 under Sec.
 411(b) of Pub. L. 114-113 for H-
 1B petitioners that employ 50
 or more employees in the United
 States if more than 50 percent
 of these employees are in H-1B,
 L-1A or L-1B nonimmigrant
 status).
Estimated cost associated with    $239.80 *.........  No.
 completing Form I-129 \34\.
Estimated cost of time required   $220.89 *.........  No.
 to complete H-1B petition.
Visa reciprocity fees charged by  Depending on        Depending on
 the Department of State           nationality of      nationality of
 (authorized under INA Sec.        applicant.          applicant.
 281, 8 U.S.C. 1351).
Minimum Total Costs.............  $2,411.80-$9,311.8  $211.11.
                                   0.
------------------------------------------------------------------------
An asterisk (*) indicates that the cost is generally paid by a U.S.
  entity (the H-1B petitioner), which is not regulated by this proposal,
  but which the Department includes for informational purposes.

    The Department estimates the average time needed to complete and 
submit a DS-160, Online Application for Nonimmigrant Visa, is the same 
for B and H nonimmigrant visa applicants, and therefore there is no 
additional time burden to visa applicants under this proposal.\35\ The 
Department estimates that the average additional time U.S. petitioners 
expend on the H-1 visa process, as compared to what foreign employers 
spend on the B-1 visa process, is 6.384 hours. This is based on an 
estimate that completing the I-129, Petition for Nonimmigrant Worker 
and associated supplements related to the H classification (according 
to the DHS supporting statement for the form) would take approximately 
5.384 hours and one hour for the Department of Labor's Labor 
Certification Application, Form 9035/9035E.\36\ Based on the weighted 
average hourly rate used by DHS of $34.84, the average cost of the time 
required to complete an H-1B petition is $220.89. No petition is 
required for B visas. Additionally, according to the Small Business 
Administration, over 90 percent of H-1B applicants utilize attorneys at 
fees of $5000-$10,000. (See email on file with Visa Office.)
---------------------------------------------------------------------------

    \33\ See OMB Control Number 1405-0182, available at https://www.reginfo.gov/public/do/PRAMain.
    \34\ In its Supporting Statement for I-129, Petition for 
Nonimmigrant Worker, OMB Control No. 1615-0009, USCIS included the 
following paragraph about the costs of completing Form I-129: 
``USCIS estimates that costs for form preparation, legal services, 
translations, required consultations, document search and 
generation, and postage to mail the completed package will vary 
widely. USCIS estimates that petitioners will pay an average of 
$239.80 per response.''
    \35\ See OMB Control Number 1405-0182, available at https://www.reginfo.gov/public/do/PRAMain.
    \36\ See OMB Control Number 1615-0009 (Petition for Nonimmigrant 
Worker); OMB Control Number 1205-0332 (Labor Certification 
Application), available at https://www.reginfo.gov/public/do/PRAMain.
---------------------------------------------------------------------------

    As discussed above, Congress created certain requirements in the H-
1B program to protect the economic interests of U.S. workers by 
ensuring that wages and working conditions of H-1B workers are at least 
as desirable as those for comparable U.S. workers. By eliminating the 
``B-1 in lieu of H'' policy and requiring employers to use the H-1B 
process to obtain skilled foreign workers,\37\ this regulation will 
impose upon those employers the costs of adhering to those protections, 
or alternatively of hiring U.S. workers. The cost associated with 
hiring a U.S. worker include paying the employee the

[[Page 66887]]

prevailing wage and providing other common benefits such as health 
insurance, worker's compensation, and unemployment insurance. The 
difference between the costs incurred by employers paying the minimum 
wage to nonimmigrant workers in B-1 classification and the costs 
incurred under this proposal vary significantly depending on the 
proposed work location. Returning to the two examples detailed in 
section (II)(D)(2)(a) above, and applying the wage rate benefit 
multiplier of 1.46 to account for benefits provided, the increased cost 
of securing the services of U.S. worker as a computer network architect 
would be approximately $37.78 per hour in Silicon Valley and 
approximately $42.39 per hour in Austin, Texas. If all U.S. entities 
affected by this proposal seek a U.S. worker to provide services as an 
entry level computer network architect in Silicon Valley, the total 
additional annual cost of this proposal to U.S. employers would be 
approximately $604,480,000.\38\ If all U.S. entities seek such a worker 
in Austin, the total additional annual cost of this proposal to U.S. 
employers would rise to $678,240,000.\39\
---------------------------------------------------------------------------

    \37\ The Department recognizes that some U.S. entities seeking 
services from aliens in the United States in B-1 status under the B-
1 in lieu of H policy may alternatively seek visa classifications 
other than B or H, depending on the circumstances of the proposed 
employment in the United States. Most employment-based nonimmigrant 
visa classifications have narrow eligibility requirements likely 
inapplicable to most aliens performing services in B-1 visa 
classification. For example, it is possible some aliens who qualify 
for B visas under the B-1 in lieu of H policy may qualify for L 
nonimmigrant visas. An alien applying for a L nonimmigrant visa 
would need to establish, among other eligibility requirements, that 
he or she has, within three years preceding the time of his or her 
application for admission into the United States, been employed 
abroad continuously for one year by a firm, corporation, or other 
legal entity or parent, branch, affiliate, or subsidiary thereof, 
and seeks to enter the United States temporarily in order to render 
services to a branch of the same employer or a parent, affiliate, or 
subsidiary thereof, in a capacity that is managerial, executive, or 
involves specialized knowledge. See INA section 101(a)(15)(L), 8 
U.S.C. 1101(a)(15)(L); 22 CFR 21.54. L nonimmigrant visas also 
require petitions, and fees and costs that exceed the costs 
associated with B nonimmigrant visas.
    \38\ This is calculated from $37.78 per hour in Silicon Valley, 
California (includes 1.46 wage multiplier) x 2,000 hours per year x 
8,000 workers.
    \39\ This is calculated from $42.39 per hour in Austin, Texas 
(includes 1.46 wage multiplier) x 2,000 hours per year x 8,000 
workers.
---------------------------------------------------------------------------

    If all U.S. entities affected by this proposal do not seek another 
worker but rather suffer lost productivity comparable to the wages that 
would have been paid to a worker in B-1 status making the federal 
minimum wage of $7.25 per hour, the total additional annual cost of 
this proposal would be $116,000,000.\40\ This analysis assumes that 
every worker admitted in B-1 status pursuant to a visa issued under the 
B-1 in lieu of H policy was admitted for one year, the maximum period 
permitted under 8 CFR 214.2(b)(1), and worked a normal U.S. work 
schedule of 40 hours per week for 50 weeks during that time. Anecdotal 
evidence indicates that the total hours worked by aliens admitted in 
this category is likely much less, but the Department does not have 
reliable data on typical admission periods or work weeks for aliens 
admitted in this category and includes the maximum possible cost for 
full transparency in keeping with the purpose of E.O. 12866. The 
Department invites comment on this analysis and the underlying 
assumptions.
---------------------------------------------------------------------------

    \40\ This is calculated from $7.25 per hour (federal minimum 
wage) x 2,000 hours per year x 8,000 workers.
---------------------------------------------------------------------------

    The Department recognizes that employers may have to offer higher 
wages, greater benefits, or improved working conditions in order to 
find U.S. workers to complete the work previously done by aliens 
benefitting from the B-1 in lieu of H policy. Finally, some employers 
may forgo services in a specialty occupation that were previously 
provided by aliens in B-1 status, and may suffer lost productivity and 
profits as a result. However, the Department believes the benefits of 
this proposal outweigh those costs. To the extent U.S. entities may 
face increased costs, including those related to H-1B or other visa 
classification requirements, hiring U.S. workers, or forgone labor, the 
associated costs protect the economic interests of workers in the 
United States.\41\
---------------------------------------------------------------------------

    \41\ This proposal advances the policy of the executive branch 
to ``buy American and hire American.'' See Section 2 of E.O. 13788, 
82 FR 18837 (Buy American and Hire American). Section 3 of E.O. 
13788 states the policy of the executive branch to rigorously 
enforce and administer the laws governing entry into the United 
States of workers from abroad in order to create higher wages and 
employment rates for workers in the United States, and to protect 
their economic interests. Id. One potential benefit of this rule 
could be the creation of higher wages and employment rates for 
workers in the United States because employers that previously 
engaged the services of aliens admitted under the B-1 classification 
who are not subject to the wage and working conditions requirements 
and other protections under the H-1B classification may seek 
employees in the H-1B classification who are subject to those 
requirements, or may hire U.S. workers. Id. As described above, 
Congress required the current costs of seeking workers in the H-1B 
classification with the enactment of IMMACT 90, MATINA, and ACWIA.
---------------------------------------------------------------------------

    The Department has also considered this proposed rule in light of 
Executive Order 13563 and affirms that this regulation is consistent 
with the guidance therein.

E. Executive Orders 12372 and 13132 (Federalism)

    This regulation will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or the distribution of power and responsibilities among the 
various levels of government. This proposed rule does not alter the 
standards and procedures for the Department's consideration of requests 
for waiver recommendations for waiver requests made by a State 
Department of Public Health, or its equivalent. Nor will the rule have 
federalism implications warranting the application of Executive Orders 
12372 and 13132.

F. Executive Order 12988 (Civil Justice Reform)

    The Department has reviewed the regulation in light of sections 
3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, 
minimize litigation, establish clear legal standards, and reduce 
burden.

G. Executive Order 13175 (Consultation and Coordination With Indian 
Tribal Governments)

    The Department has determined that this rulemaking will not have 
tribal implications, will not impose substantial direct compliance 
costs on Indian tribal governments, and will not pre-empt tribal law. 
Accordingly, the requirements of Executive Order 13175 do not apply to 
this rulemaking.

H. Paperwork Reduction Act

    This proposed rule does not impose any new information collection 
requirements under the provisions of the Paperwork Reduction Act, 44 
U.S.C. chapter 35. The Department does not anticipate that there would 
be an increase in paperwork if this proposal is finalized. The 
Department acknowledges that, as discussed above in Section II(d)(2), 
one of the reasons behind the creation of the B-1 in lieu of H policy 
in the 1960's was to reduce unnecessary paperwork. However, because of 
the changes to the statute since the 1960s, an alien can no longer 
qualify for an H-1 visa on the basis of ``distinguished merit and 
ability,'' and the Department no longer considers the paperwork 
required for an alien to perform temporary labor in the United States 
under the current statutory scheme unnecessary in any circumstances. 
Given the numerical cap on H-1B visas, the Department does not 
anticipate an increase in respondents using existing approved 
information collections. It is possible that this regulation would 
shift application burden to the H-1B lottery and application process, 
but the Department notes that it is too speculative at this point to 
pursue amendments to any information collections under the Paperwork 
Reduction Act. Similarly, to the extent employers are likely to hire 
U.S. workers to replace some B-1 in lieu of H workers, the Department 
does not anticipate that would require any new information collections.

List of Subjects in 22 CFR Part 41

    Administrative practice and procedure, Aliens, Cultural exchange 
programs, Employment, Foreign officials, Foreign relations, Students, 
Visas.

Text of the Proposed Rule

    Accordingly, for the reasons stated in the preamble, the Department 
proposes to amend 22 CFR part 41 as follows:

[[Page 66888]]

PART 41--VISAS: DOCUMENTATION OF NONIMMIGRANTS UNDER THE 
IMMIGRATION AND NATIONALITY ACT, AS AMENDED

0
1. The authority citation for part 41 continues to read as follows:

    Authority: 8 U.S.C. 1101; 1102; 1104; 1182; 1184; 1185 note 
(section 7209 of Pub. L. 108-458, as amended by section 546 of Pub. 
L. 109-295); 1323; 1361; 2651a.

0
2. Revise Sec.  41.31(b)(1) to read as follows:


Sec.  41.31  Temporary visitors for business or pleasure.

* * * * *
    (b) * * *
    (1) The term ``business,'' as used in INA 101(a)(15)(B), refers to 
conventions, conferences, consultations and other legitimate activities 
of a commercial or professional nature. It does not include local 
employment or labor for hire. For the purposes of this section building 
or construction work, whether on-site or in plant, shall be deemed to 
constitute purely local employment or labor for hire; provided that the 
supervision or training of others engaged in building or construction 
work (but not the actual performance of any such building or 
construction work) shall not be deemed to constitute purely local 
employment or labor for hire if the alien is otherwise qualified as a 
B-1 nonimmigrant.
* * * * *

Carl C. Risch,
Assistant Secretary, Consular Affairs, Department of State.
[FR Doc. 2020-21975 Filed 10-20-20; 8:45 am]
BILLING CODE 4710-06-P