International Entrepreneur Rule Gets a Second Chance

(Read more about International Entrepreneur Rule in the earlier article here)

On December 1, 2017, in National Venture Capital Association v. Duke the United States District Court of the District of Columbia ruled the United States Citizenship and Immigration Services (USCIS) violated the Administration Procedure Act’s (APA) notice and comment rulemaking requirements when it decided to delay the international entrepreneurial rule (IER) without giving the public adequate notice or time to comment on its decision to delay the rule.

On January 17, 2017, three days before the end of the Obama administration, the Department of Homeland Security (DHS) published the final IER rule to allow foreign nationals who meet certain entrepreneurial standards to apply for parole, which is temporary admission into the United States to grow new companies. The rule was to set to go into effect on July 17, 2017, 180 days following its publication.

A Change In Administrations

On January 25, 2017, President Trump issued an executive order that required all agencies to reexamine its parole admission policy and ensure it was not being abused. On July 11, 2017, six months after the President’s executive order and six days before the IER became effective, the USCIS announced it would be delaying the IER until March 14, 2018 to review its compliance with the President’s executive order. The USCIS did not engage in the rulemaking process when it delayed the IER.

International Entrepreneur Rule Overview

Prior to the IER, the Secretary of Homeland Security had the authority to grant parole admission into the United States on a case-by-case basis if a foreign national had been subject to a national disaster or the foreign national could provide sufficient evidence that his or her admission into the United States would provide a significant public benefit. However, Congress had never defined a “significant public benefit” and the IER established what criteria the USCIS should use in determining if an entrepreneur would be considered a “significant public benefit.”

Then, according to the National Venture Capital Association decision, meeting the requirements did not automatically grant admission to an applicant; but rather, streamlined the agency’s [DHS] treatment of entrepreneurs. In forming the IER, the DHS had initially undergone the notice and comment proceedings under the APA, made significant changes, and delayed the final implementation of the rule until July 17, 2017, to ensure the USCIS had adequate time to allocate the resources necessary to implement the new rule without sacrificing any of its current services.

However, under President Trump’s executive order IER did not go into effect on July 17, 2017, and a lawsuit followed.

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International Entrepreneur Rule

The following information has been further updated due to subsequent legal developments. Please also review the updated article Investor Entrepreneur Rule Gets a Second Chance.

The Entrepreneur Rule that was set to go into effect on July 17, 2017, has been delayed until March 18, 2018, to allow the Department of Homeland Security (DHS) an opportunity to review the rule in light of President Trump’s Executive Order 13767, “Border Security and Immigration Enforcement Improvements.” 

President Trump’s Executive Order 13767 requires federal agencies to review any procedures for granting parole and change any procedure that proposes a threat to the United States’ security. In consideration, the DHS is taking comments from the public in consideration of whether the rule should be finalized.

Unfortunately, there is a possibility that the Entrepreneur Rule never goes into effect and because the DHS decides the rule proposes an unlawful security risk in light of Trump’s executive order.  

On July 17, 2017, the international entrepreneur rule will take effect, which permits the Secretary of Homeland Security to grant parole admission on a case-by-case basis to immigrant entrepreneurs who will increase job growth and provide a significant public benefit to the United States. The goal of the international entrepreneur rule is to allow The Department of Homeland Security (DHS) to improve start-up success by increasing and enhancing entrepreneurship, innovation, and job creation.

For a start-up to qualify it must have been founded in the last five years, must have been founded in the United States, and must demonstrate a substantial potential for growth. In addition, only three immigrant entrepreneurs may receive parole admission per company. Applicants are only eligible if their company meets the above criteria. While each applicant is reviewed on a case-by-case basis, the international entrepreneur rule established general criteria for the DHS to consider.

General Criteria

The applicant entrepreneur must demonstrate that he/she has significant ownership of the company, at least 10%, possesses critical operational knowledge that would assist growth in the United States, and the company has received a large financial investment. To demonstrate financial liquidity the applicant’s start-up have received investments of $250,000 or more from U.S. investors or have received $100,000 or more in government grants.

If an applicant does not meet one of the above requirements, he/she may still be considered for parole admission if the entrepreneur can demonstrate his/her company will offer a significant public benefit. For example, the start-up will create jobs in the United States.

The DHS reviews all parole admission in the totality of the circumstances – in light of all the applicant’s information is there reasonable certainty the applicant will provide the United States with a significant public benefit. Included in the totality of circumstances are general immigration requirements, i.e. background check, possessing good moral character, passing medical examination.

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