On Dec 13 2017 by Andrew J. Zeltner

Court Decision Provides New Hope For International Entrepreneurs Seeking To Utilize the “Start-Up” Visa

A recent federal court decision brings good news to international entrepreneurs hoping to utilize the “Start-up Visa.”

Officially known as the International Entrepreneurial Rule, the IER provides an important additional path for international entrepreneurs to obtain work authorization in the U.S.   

The IER was originally introduced in the waning days of the Obama Administration. The rule was specifically crafted to provide an additional work authorization option for immigrant entrepreneurs working at startup companies. Under the IER, immigrant entrepreneurs would have been eligible to apply for work authorization if they have established a business in the U.S. and could demonstrate substantial potential for rapid business growth and job creation. 

The IER was set to take effect on July 17, 2017. However, on July 11, the Department of Homeland Security issued a new rule delaying implementation of the program until March 14, 2018, and also indicated that they would likely rescind the rule in its entirety. This prompted the National Venture Capital Association to file a lawsuit claiming that the Trump Administration decision to delay the rule was unlawful under the provisions of the Administrative Procedures Act, which, they contended, would have required DHS to provide notice and solicit public comments, as typically required by the APA.  

In National Venture Capital Association v. Duke, the Court was faced with the question of whether DHS could bypass traditional notice and comment rulemaking to delay the implementation of the start-up visa. In a clear rebuke to the Administration’s position, the Court granted the Plaintiffs’ summary judgement motion and held that DHS did not have “good cause” to dispense with the APA’s notice and comment requirements.  Judge James Boasberg (U.S. District Court for the District of Columbia), colorfully noted that “elections have consequences. But when it comes to federal agencies, the Administrative Procedure Act shapes the contours of those consequences.” Indeed, the Court’s ruling reiterated the relatively high bar for invocation of the “good cause” exception and held that the government’s last-minute attempt to delay implementation of the rule (mere days before the rule was scheduled to take effect), negated any legitimate governmental claim of good cause. 

To recap, the key eligibility requirements outlined in the IER are as follows:

  • Must have established a U.S. start-up business within five years before the application for parole;
  • Must hold an ownership interest of at least 10 percent;
  • Must play an active role in the operations of the business, and cannot merely be an investor;
  • The start-up must have received a capital investment of at least $250,000 from qualified U.S. investors or at least $100,000 in grants or awards from qualifying U.S. federal, state or local government entities;
  • A qualified investor must have invested a total of at least $600,000 in start-ups over the last five years and at least two of the start-ups must have created at least five qualified jobs OR generated at least $500,000 in revenue with average annualized growth of at least 20% and;
  • Applicants who can only partially meet the funding requirements can attempt to provide additional compelling evidence of the start-up’s substantial potential for rapid growth.

An additional 30-month extension is available if the entrepreneur meets the following requirements:

  • The business continues to operate;
  • The entrepreneur retains at least a five percent ownership interest and continues to play a central role in the business;
  • The start-up has received at least $500,000 in qualifying investments, government grants or awards, or a combination thereof; and
  • The business has created at least five qualifying jobs; OR
  • Generated at least $500,000 of U.S. revenue and averaged 20 percent annual growth during the initial parole period.

Applicants who only partially satisfy the extension criteria may also potentially meet the standard by providing other reliable and compelling evidence.  Such applicants would need to demonstrate how the start-up would provide a significant public benefit through the potential for rapid business growth and job creation.  

At this time, it is unclear if DHS will appeal the Court’s ruling. Moreover, a draft order to rescind the rule (and fully comply with the notice and comment provisions of the APA) is currently being reviewed by the Trump Administration and is expected to be published in the Federal Register in the coming weeks. In the interim, USCIS must begin to accept international entrepreneur applications, however, USCIS has yet to issue an official application form. This decision is clearly promising and may become an additional viable option for international entrepreneurs to remain in the U.S.

The creativity of immigrant entrepreneurs who choose to build and grow their businesses in the United States is invaluable to our economy. Many of the most well-known and highly regarded start-up companies in the United States have at least one immigrant founder, and include Google, Facebook, Intel, LinkedIn, Zipcar and Tesla Motors, to name a few. These companies have been engines for job creation and have made invaluable contributions to our economy. DHS should be encouraged to promote a regulatory environment that allows such companies to flourish and create economic activity and U.S. jobs. As the global economy grows increasingly competitive, it is essential that our nation enacts growth oriented policies that foster economic development and allows us to benefit from the contributions of these talented entrepreneurs.  

The material contained in this article does not constitute direct legal advice and is for informational purposes only.  An attorney-client relationship is not presumed or intended by receipt or review of this presentation.  The information provided should never replace informed counsel when specific immigration-related guidance is needed.

Reprinted with permission from the December 13, 2017 edition of the The Legal Intelligencer© 2017 ALM Media Properties, LLC. All rights reserved. 
Further duplication without permission is prohibited. ALMReprints.com  877-257-3382  reprints@alm.com.