The International Entrepreneur (IE) Rule: One Step Forward, Two Steps Back

By Angelika Romero and Timothy Sheble-Hall

Last month, the Department of Homeland Security (DHS) announced it will be removing a controversial rule in business immigration law: the International Entrepreneur (IE) Rule. See DHS Proposes to Remove the International Entrepreneur Rule, U.S. Citizenship and Immigration Services (last updated May 25, 2018). The IE Rule was promulgated by the DHS under the Obama Administration to “encourage international entrepreneurs to create and develop start-up entities with high growth potential in the United States.” International Entrepreneur Rule, 82 Fed. Reg. 5238 (Jan. 17, 2017). The Obama-era DHS claimed that attracting foreign entrepreneurs would “benefit the U.S. economy through increased business activity, innovation, and dynamism.” International Entrepreneur Rule, 81 Fed. Reg. 60,130, 60,131 (proposed Aug. 31, 2016). Before this regulation, foreign entrepreneurs lacked a clear-cut avenue for entry into this country. Id. at 60,151–52, n.52 (citing Nina Roberts, For Foreign Tech Entrepreneurs, Getting a Visa to Work in the U.S. is a Struggle, The Guardian (Sept. 14, 2014)). In fact, the United States had no dedicated visa category for foreign entrepreneurs, and other visa options were frequently unavailable to them due to various employment or family-based numerical caps. Id.

What the IE Rule Does

The Rule allows foreign entrepreneurs to apply for parole, a form of temporary immigration status—not a visa—that entitles the recipient to be present in the United States without being formally admitted. Nat’l Venture Capital Ass’n v. Duke, 2017 U.S. Dist. LEXIS 197738, at *3-4 (D.D.C. Dec. 1, 2017). The Rule reserves parole for only the most qualified and talented entrepreneurs. Applicants must show that they have a substantial role and ownership stake in a company founded in the United States in the last five years. Additionally, they must either show that the company received a substantial amount of funding from U.S. investors, or present other comparable “evidence of substantial and demonstrated potential for rapid business growth and job creation.” 82 Fed. Reg. at 5273. While recipients cannot obtain lawful permanent resident status while on parole, the Rule would authorize them to work and, in some cases, bring eligible family members to the United States as well. Id. at 5240.

On July 11, 2017, six days prior to the IE Rule taking effect, the DHS issued the Delay Rule, postponing the IE Rule until March 14, 2018. 82 Fed. Reg. 31,887 (July 11, 2017). The Delay Rule was issued without meeting the Administrative Procedure Act’s requirement of offering the public advanced notice with an opportunity to comment. See 5 U.S.C. § 553 (1966). After delaying the IE Rule last year, the DHS has now moved to rescind the Rule in its entirety. See U.S. Citizenship and Immigration Services, supra. The DHS has argued that the Rule “represents an overly broad interpretation of parole authority, lacks sufficient protections for U.S. workers and investors, and is not the appropriate vehicle for attracting and retaining international entrepreneurs.” Id. The DHS concluded that the IE Final Rule created a complex and highly-structured program that was best established by the legislative process rather than relying on the Secretary’s authority to “temporarily” parole, in a categorical way, noncitizens based on “significant public benefit.” Id.

Why the IE Rule Should Stay

Skills including “entrepreneurial ambition and technical skills are increasingly seen as necessary components for a globally competitive economy.” Jonathan Shieber, Department of Homeland Security moves to finally rescind the International Entrepreneur Rule, TechCrunch (May 28, 2018). By creating obstacles for immigrant entrepreneurs to enter the country, the Trump Administration is preventing the U.S. from building the best engine for economic growth.

There is a proven track record of immigrants coming to the U.S. and creating companies that substantially contribute to the nation’s economy. A report commissioned by the Massachusetts Technology Leadership Council in 2017 revealed that more than half of the U.S. startups currently valued at $1 billion or more were founded by immigrants. Andrew Soergel, Immigration and Economics: By the Numbers, U.S. News (July 10, 2017, 12:01 AM). Additionally, the report revealed that 40 percent of Fortune 500 companies were founded by immigrants or the children of immigrants. Id. This is not the first time that a study found that immigrant entrepreneurs are a boon to the United States economy. The report cites to a study by the National Foundation for American Policy, which profiled 87 U.S. startups valued at $1 billion or more and discovered that 44 of the 87 were founded or co-founded by immigrants. Id. The profiled companies employed an average of 760 workers each. Id.

By removing the IE Rule, the DHS eliminates a clear avenue for talented and accomplished entrepreneurs to come to the United States and develop their businesses. This is a loss for the U.S. economy, U.S. workers, and talented immigrants around the world that could create thriving businesses with the right resources available.