Denial rates and Requests for Evidence have plummeted over the past three years for companies transferring high-skilled employees into the United States, facilitating the completion of projects and foreign investment. Attorneys say denial rates and Requests for Evidence declined on L-1B petitions because U.S. Citizenship and Immigration Services started to apply the proper legal standard and implemented more consistent policies. Companies will wait to see if the incoming Trump administration reverses those actions and adopts more restrictive policies.
The Immigration Service’s Denial Rates Declined For L-1B Petitions
According to a National Foundation for American Policy analysis, denial rates for L-1B petitions dropped from 25.3% in FY 2021 to 10.2% in FY 2024. In earlier years, U.S. Citizenship and Immigration Services denied many L-1B petitions across different administrations. When Barack Obama was president, in FY 2016, USCIS denied 22.8% of L-1B petitions, preventing many companies from transferring employees with specialized knowledge into the United States.
Denial rates for L-1B petitions reached their height during the Trump administration: 33.7% in FY 2019 and 31.9% in FY 2020. The L-1B denial rate fell to 25.3% in FY 2021, 19% in FY 2022, 15.5% in FY 2023 and 10.2% in FY 2024.
An L-1B visa allows an employer “to transfer a professional employee with specialized knowledge relating to the organization’s interests from one of its affiliated foreign offices to one of its offices in the United States,” according to USCIS.
Under the regulations, “Specialized knowledge means either special knowledge possessed by an individual of the petitioning organization’s product, service, research, equipment, techniques, management, or other interests and its application in international markets, or an advanced level of knowledge or expertise in the organization’s processes and procedures.”
Companies obtain L-1 status for employees in two ways: 1) they received an approval with USCIS and take it to a U.S. consulate for a visa, or 2) some companies, particularly larger entities, “establish the required intracompany relationship in advance of filing individual L-1 petitions by filing a blanket petition,” notes USCIS.
Immigration authorities can admit an individual on an L-1B visa for three years and extend the status to a maximum of 5 years. Before the transfer to the United States, employees must work abroad for the company “for one continuous year within three years of his or her admission.”
The Request for Evidence rate on L-1B petitions has improved significantly for employers over the past three years. In FY 2019, 2020 and 2021, the percentage of completed cases for L-1B petitions with a Request for Evidence ranged between 55% and 58.4%. However, USCIS issued a Request for Evidence on completed L-1B cases 40.5% of the time in FY 2022, 38.2% in FY 2023 and 26.7% in FY 2024.
Why The Immigration Service’s Denial Rates Changed
Attorneys agree that several factors combined to drive down L-1B denial rates. “First, USCIS finally started applying the actual legal standard instead of imposing novel evidentiary requirements,” said Dagmar Butte of Parker Butte. She believes attorneys and companies also filed better documented cases to match the regulatory standard, which helped “wash out” marginal filings.
Vic Goel, managing partner at Goel & Anderson traces the problems with L-1B denial rates to the Matter of GST, a 2008 decision by the Administrative Appeals Office within USCIS. “Once that decision was issued, the landscape changed significantly, and high denial rates became the norm,” said Goel. “Over time, this discouraged many petitioners, particularly those in information technology consulting, from filing L-1B cases.” He thinks this “self-selecting” behavior led to a pool of better documented petitions submitted to USCIS.
One or more passages in the 2008 decision may make it ripe for a lawsuit following the Supreme Court overruling Chevron deference to federal agencies. The decision reads: “Rather, in determining what constitutes specialized knowledge, the only standards by which the AAO is bound are those set forth in the statutory definition of specialized knowledge itself, as provided at section 214(c)(2)(B) of the Act, USCIS regulations, and applicable precedent decisions. When a statute is ambiguous, Congress has left a gap for the agency to fill. See Chevron USA Inc. v. Natural Res. Def: Council, 467 U.S. 837, 843-44 (1984). This is the situation here.” (Emphasis added.)
In June 2024, the U.S. Supreme Court ruled in Loper Bright Enterprises et al. v. Raimondo: “The Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous; Chevron is overruled.”
Employers have complained over the years that many USCIS adjudicators have assumed that a company can only have a small number of employees with “special” or “advanced” knowledge of an organization’s products or services. Companies dispute that, and USCIS concedes that there may be “a significant number of employees in the U.S. organization with the same claimed specialized knowledge as that of the beneficiary.”
According to USCIS, “Determining whether a beneficiary has special knowledge requires review of the beneficiary’s knowledge of how the petitioning organization manufactures, produces, or develops its products, services, research, equipment, techniques, management, or other interests (or in brief, its products or services).”
To determine “either special or advanced knowledge,” the petitioner must demonstrate that the beneficiary’s knowledge “is not commonly held throughout the industry” but it “need not be proprietary in nature, unique, or narrowly held within the petitioning organization to be considered specialized.”
Goel believes the 2015 memorandum on L-1B visas “played a significant role in codifying tough, but workable, standards for establishing ‘specialized knowledge.’” He said that although it provided clearer definitions and guidance, it “set a high bar for evidentiary requirements, such as comparisons to peers in the industry and within the organization and solidified “the perception among petitioners that only thoroughly documented cases would succeed, further discouraging filings from many employers, particularly IT consulting firms.”
More importantly, according to Goel, “The policy guidance helped lay out the new standard—which also allowed employers to become more strategic in crafting L-1B petitions, selecting qualifying personnel, and leveraging detailed documentation to meet USCIS’s heightened evidentiary expectations.”
Still, it is unclear whether the memo and perceptions can explain all of the recent decline in L-1B denial rates, considering the rise in denial rates during the five years following the 2015 memo. The Trump administration’s interpretation of the memo and the regulation must be responsible for the denial rate rising from 22.8% in FY 2016 to 33.7% in FY 2019.
Goel believes USCIS Director Ur Jaddou reinstating a policy of granting deference to prior decisions in 2021 “provided greater consistency and predictability for extensions involving the same parties and facts” and could be a significant factor in the lower L-1B denial rates. The recent H-1B rule codifies the deference policy.
“The declining denial rates are encouraging, but it’s worth noting that the L-1B approval process remains more challenging than many other employment-based visa categories,” said Goel. “The significant disparity in denial rates between L-1B and H-1B petitions underscores the ongoing challenges surrounding the interpretation of ‘specialized knowledge.’”
The denial rate for L-1B petitions in FY 2024 was significantly higher than for H-1B petitions for initial employment: 10.2% vs. 2.5%. (H-1B petitions have an annual limit.) Employers have welcomed greater certainty in USCIS processing since a lack of predictability can be costly to businesses and create problems with projects. Companies hope the incoming Trump administration does not adopt restrictive policies on business immigration.