TESTIMONY of JOHN RATIGAN

Immigration Consultant

Paul, Weiss, Rifkind, Wharton & Garrison

Washington, D.C.

House Subcommittee on Immigration and Claims

May 5, 1999

Good morning, Mr. Chairman, Mrs. Jackson Lee, members of the subcommittee. Thank you for the opportunity to testify today. My experience in immigration includes 25 years as a State Department Foreign Service Officer, specializing in immigration and visa matters. During that time, I served as the Consul General or supervisory consular and visa officer in Singapore; Cairo, Egypt; Toronto, Canada; and Seoul, Korea. I also served 2-1/2 years on detail from the State Department to the Senate Immigration Subcommittee, where I served as Counsel, most recently in 1995-96. I retired from the State Department in 1997, and have worked since then as an immigration consultant to the law firm of Paul, Weiss, Rifkind, Wharton & Garrison. The views I will express today are entirely my own, and do not reflect the views of my firm or any of its clients.

A. Background

We have seen in the past decade, beginning with the 1990 Immigration Act, a considerable expansion in the importation of foreign workers. The 1990 Act redefined and put a numerical limit on H-1B workers, liberalized the L provisions somewhat and added the new visa categories of O, P, Q and R.

American employers can now choose from at least eight different categories of legal nonimmigrant alien workers: E, J, H, L, O, P, Q and R visa-holders. The "H" category actually comprises several different visa categories. In addition, holders of "F" student visas can be granted employment authorization for up to one year of practical training, and holders of "M" vocational training visas up to six months of such training.

This expansion has for the most part gone quite well. Unanticipated demand, however, has left the one numerically limited category, H-1B, currently oversubscribed. Because of the powerful magnet of the US job market, there are some areas of fraud and perhaps more areas of varying degrees of abuse.

B. Areas of fraud and abuse in H-1B and L visas.

The best known sources of "employment" visas are the H-1B and L visas. This subcommittee is quite familiar with the debate over H-1B visas. L visas, by which overseas employees of multi-national firms come to the U.S. for up to 7 years to gain experience in the U.S. office, fulfill a very useful function for both U.S. and foreign corporations. They have enjoyed a highly positive and well deserved reputation for many years.

Both visa categories have experienced fraud, however, simply because, for those in the business of moving aliens to the United States, H and L are prime "people movers". Both categories have been misused, for example, by Chinese alien smugglers and Russian organized crime figures.

1. Collapsible corporations.

In China, the method of operation has remained fairly constant for more than a decade. Small, essentially sham companies are set up, in the US and in China or the targeted foreign country. The US and foreign corporations which facilitate these transactions are usually nothing more than a P.O. box, an abandoned building or a fictitious address and a single telephone number, often shared by dozens or even hundreds of these collapsible corporations. An H or L visa petition is filed by the US company requesting that a visa be granted to the foreigner who is to be smuggled. The petition is routinely approved, and the alien gets his visa from the local US embassy or consulate.

A similar system of small, shell corporations was and apparently continues to be used in Russia as well. Because many of the Russian underworld figures had ties to major business corporations, it was also possible to use those corporations and their U.S. and Canadian "subsidiaries" as the source of petitions and visas for some Russians.

2. Manipulable criteria.

The press commonly refers to holders of H-1B visas as "high tech workers," but in fact many of them are relatively low-tech workers. That is because the rather broadly written and flexible criteria for qualification make the H-1B visa a vehicle to bring to the U.S. almost anyone with a college degree, often in entry- or low-level jobs. An au pair care giver with a college degree, for example, may become an H-1B "household manager." A degree-holder in physical education can be brought to the United States -- often by a relative -- as a tennis coach or a soccer coach.

3. Staffing "job shops."

In recent years, we have seen the growth in the U.S. of "job shops" or "job contractors," who import foreign workers in large numbers and then sell their services as temporary workers to other corporations, either as replacements for existing workers or as a means of outsourcing of work previously done internally. Anecdotal evidence is that these contractors utilize up large quantities of H-1B visas, and are thus major contributors to the overcrowding in the H-1B category.

Because job contractors tend to be larger business enterprises, they commonly have offices in both the United States and the country that is the source of their labor supply. In that way, the local office can hire the alien in the foreign country, and employ him or her there, and then move the alien to the US by either the H-1B or L-1 route when the circumstances require it. If the H-1B category is unavailable, L-1 may become the preferred status, since it carries no numerical limit and provides for multi-person admissions through the "blanket L" visa procedure.

C. Possible Solutions.

1. Establish qualifying levels for Corporations utilizing "L" visas.

Congress intended L visas to be a training vehicle for large multi-national corporations, and to a very large extent that is exactly what they are. The great majority of L visas are bona fide. Virtually all of the fraud and abuse in this category takes place at the very lowest end of the corporate spectrum, i.e., with corporations of virtually no assets and minimal ongoing business activities.

Rather than trying to investigate and detect the present fraud on a case-by-case basis, which is extremely labor intensive and often not feasible, it would seem prudent to establish in the law some minimum level of "substantiality" before a corporation would be authorized to utilize L-1 Intracompany Transferee visas.

The level would not need to be particularly high, simply enough to require a showing of a reasonably substantial level of business activity, to eliminate usage by either collapsible sham corporations or small enterprises which have no need of L-1 personnel. I have not tried to research or develop a particular measure of baseline business activity, but it should not be difficult to settle on a revenue level, or some other indicator of substantiality, that would effectively include virtually all the bona fide L-1 users that would need inclusion, while screening out the marginal or sham entities that are the source of abuse.

2. Adjudication of H-1B visas needs to focus on the core definition of the H-1B "specialty occupation."

In the H-1B category, the problem is more one of misuse and insufficiently specific standards than outright fraud. The rather loose standards for qualification as an H-1B have resulted in apparent overcrowding in this category, even when the numerical limitation has been nearly doubled in the past year.

If we want to make H-1B a source for truly high-tech workers, as I think we do, and at the same time relieve the overcrowding in this category, we should try to avoid having so many of the available numbers sopped up by persons with a college degree and a bit of artful packaging. We need to return to the core definition of the H-1B "speciality occupation" in section 214(i) and give it a sharper, more tightly-connected focus, so that adjudicators will have a clear picture of the eligibility boundary lines for this category. Specifically, we should require that:

• the applicant have a college degree;

• the degree must be in the field in which he will be employed in the U.S.;

• the occupational field must be one in which a bachelor's degree is required for entry and which requires application of a body of highly specialized knowledge (and I think adjudicators particularly need guidance in this latter area: it is simply too broadly defined and open to varying interpretations).

In addition, policy-makers need to address such questions as, 1) to what degree should we allow H-1B visas to be used for entry-level positions, and 2) do we want to put any limits on their use by job contractors.

3. To relieve overcrowding in the H-1B category, further review of the standards may be necessary.

Our goal should be to upgrade the current skill level in the H-1B category. To do that, policy makers should insist that, if we are to accord the alien such a high priority over U.S. workers as H-1B permits, the alien possess a bachelor's degree in the field he will be working in, and not a high school or a 2-year vocational degree and several years of experience.

Specifically, to relieve the current overcrowding, Congress should examine whether section 214(i)(2)(C), permitting equivalents to the H-1B educational requirements, does not significantly undermine the core definition of "specialty occupation." I believe that allowing educational equivalents contributes to the lowering of the skill level in H-1B and its use for relatively low-level positions.

Some may well object that removing the equivalency language would bar entry to various great talents who do not have a degree in their field. I would note, however, that such non-degree persons would not be lost to us, but would simply be asked to qualify for "O" rather than H-1B visas, which the highly talented workers would be quite likely to do. Alternatively, those without college degrees in the field could be required to show some of the indicia of outstanding accomplishment current required for "O" visas. This is therefore not such a dramatic proposal as it might at first appear, and in my view, given the desirability of both upgrading the skill level and relieving the overcrowding in the category, a policy option definitely worth considering.

Before concluding, I would like to comment briefly on J visas.

D. "J" Cultural Exchange Visas.

During the past decade, since the passage of the 1990 Immigration Act, the "J" cultural exchange visa has become a growing source of imported workers. Whether it is Australian ski instructors, Irish bartenders or specialty chefs, the J cultural exchange visa provides opportunities for foreign workers that were unavailable ten years ago. Since the J visa operates without a formal petition process, and is administered by the United States Information Agency rather than INS or the Department of Labor, it in many ways operates off the radar screen of traditional immigration oversight.

My sense is that the J visa program may once again need regulatory attention. After a major study of the program by the GAO in the early 1990's, USIA undertook to scrutinize and re-evaluate each individual program sponsor in the mid-1990's. The number of program sponsors has now grown to more than 1200. These sponsors operate the cultural exchange programs and are responsible for the issuance of the form IAP-66 which authorizes visa issuance. USIA, which has historically shown more interest in the cultural elements of the program, will soon turn over responsibility for the J program to the State Department.

That transition would seem an appropriate point for a thorough re-evaluation of current practices. The goal should be to ensure that the integrity of the IAP-66 issuance process has not been compromised, and to determine whether certain elements of the cultural exchange program have become de facto temporary worker programs. Congress may also wish to play a part, both in exercising oversight over this program, and perhaps in seeking to harmonize it with existing temporary worker programs already in the law.