DHS Proposes New Regulations to Allow Certain Foreign Entrepreneurs Temporary Authorization to Start or Scale Their Businesses in the U.S.

September 1, 2016

The Department of Homeland Security (“DHS”) has proposed new regulations (“Proposed Rule”) to allow qualifying foreign entrepreneurs to be granted parole (temporary permission to be in the United States) so that they may start or scale their businesses.

Current immigration law grants DHS the discretionary authority to parole individuals into the United States on a case-by-case basis for “urgent humanitarian reasons or significant public benefit.” Under the Proposed Rule, DHS would implement this discretionary authority to grant parole to qualifying foreign entrepreneurs so that they may establish and grow their startup entities in the U.S., rather than abroad. DHS believes this will significantly benefit the public by promoting U.S. entrepreneurship and investment, facilitating research and development and other forms of innovation, supporting the continued growth of the U.S. economy, and leading to job creation for U.S. workers. 

Under the Proposed Rule, DHS may grant parole to entrepreneurs of startup enterprises that meet the following criteria:

  • The startup was recently formed in the United States (generally within three years immediately preceding the filing of the application);
     

  • The entrepreneur has a substantial ownership interest (generally at least 15% or more) in the startup and has an active and central role in its operations, such that his/her knowledge, skills or experience will substantially assist the entity with the growth and success of its business; and
     

  • The startup has received substantial investment (at least $345,000 of capital) from U.S. investors with established records of successful investments or substantial (at least $100,000) awards or grants from certain Federal, State, or local government entities.
     

  • Alternatively, an applicant who only partially meets one or both of the investment/funding criteria may be considered for parole if he/she provides additional reliable and compelling evidence of the startup’s substantial potential for rapid growth and job creation. DHS is not proposing to define the specific types of evidence that may be deemed “reliable and compelling” at this time, as it seeks to retain flexibility as to the kinds of supporting evidence that may warrant an exercise of discretion in granting parole based on significant public benefit.

Qualifying entrepreneurs would be granted an initial stay of up to two years to oversee and grow the startup entity in the United States. A subsequent request for re-parole (for up to three additional years) would be considered only if the entrepreneur and the startup continue to provide a significant public benefit as evidenced by substantial increases in capital investment, revenue, job creation, or additional reliable and compelling evidence that parole would continue to provide a significant public benefit. Specifically, applicants requesting further parole must demonstrate at least $500,000 in additional qualifying funding, at least $500,000 in annual revenue with average annualized revenue growth of at least 20%, or creation of at least 10 full-time jobs for U.S. workers, during the initial parole period. No more than three entrepreneurs may receive parole with respect to any one qualifying entity.

Decisions to grant parole are discretionary, and will be made on a case-by-case basis. Under the Proposed Rule, USCIS adjudicators would be required to consider the totality of the evidence, including evidence obtained through background checks and other means, to determine whether an applicant has met the above criteria, whether the applicant’s parole would provide a significant public benefit, and whether negative factors exist that warrant denial of parole as a matter of discretion. DHS would furthermore retain the right to revoke any grant of parole at any time as a matter of discretion, or if the agency determines that parole no longer provides a significant public benefit.

The Proposed Rule will not take effect unless and until the Rule clears the administrative rule-making process, which typically takes several months. The advance version of the notice of proposed rule-making is available here. Once the notice of proposed rule-making is published in the Federal Register, the public will have 45 days from the date of publication to comment.

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