DHS Proposes to Remove International Entrepeneur Rule

The Department of Homeland Security (DHS) is proposing to block foreign entrepreneurs from coming to the U.S. on parole status to create start-up businesses.  On May 29, 2018, DHS published a formal proposal to cancel the International Entrepreneur Rule (IE rule) created in 2017. 

The IE rule was originally formulated during the Obama administration. Its purpose is to encourage international entrepreneurs to start their businesses in the United States. It confers a temporary parole period of 2.5 years during which foreign investors may create and operate start-up businesses in the U.S.  The period can be extended for another 2.5 years if certain conditions are met. The purpose of the IE rule is to provide an opportunity for these new businesses to grow so that they may provide benefits to the public. 

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Now, the DHS is proposing to completely remove the IE rule. It cites reasons of lacking protection for domestic shareholders and too broad an interpretation of "parole". In its proposal to scrape the IE rule, DHS also cites other other visa categories under which international entrepreneurs may apply to bring their start-up to America. 

E-2, EB-2 and EB-5 visas are possible alternatives to the IE rule but are not framed as favorably for entrepreneurs. Each of these visas have specific requirements.  The E-2 visa is only available if a trading treaty exists between the U.S. and the foreigner's nation. The EB-2 immigrant visa has strict eligibility requirements based on education, skills, and achievement.  Further, the EB-2 immigrant visa requires sponsorship by a U.S. employer unless a "national interest waver" is obtained. The adjudication standards for such a waiver are quite high. The other issue with EB-2 is that there is a huge backlog of applicants from certain countries. Larger countries with many applicants like China and India are subject to long waiting times. Entrepreneurs taking this route would therefore face much larger competition and longer waiting times.

The employment-based fifth preference visa is actually intended for entrepreneurs, granting them and their families permanent residence if certain requirements are met.  The EB-5 requirements are investing in domestic business and creating jobs for American workers. The main difference between EB-5 and the IE rule is that the former requires the foreigner to put up with a large sum of investment capital while the latter may receive investment capital form U.S. investors. The EB-5 visa application process is also long and complicated.

The public has 30 days to provide comments to the proposal.  DHS has received thus far 13 IE applications and has not yet approved any application.  These applications may be rejected or denied on the effective date of the new rule or may be granted an opportunity to establish that the applicants are eligible for parole under the traditional parole rule, i.e., for urgent humanitarian reasons or significant public benefits.