Thoughts on USCIS’ Proposed Rule for International Entrepreneurs

On August 26, 2016, USCIS published a proposed new rule to promote international entrepreneurs to be considered for parole so that they may start to operate their businesses here in the United States. Many people who are seeking to immigrate to the U.S. through the investment channel are undoubtedly excited about this latest development. However, as is always the case when bits and pieces of information are released by USCIS, many also have questions about the proposed rule.

How is USCIS able to provide a proposed rule instead of the U.S. Congress?

Under Section 212(d)(5) of the Immigration and Nationality Act (“INA”), the Secretary of Homeland Security, who manages USCIS, has the discretionary authority to issue paroles to foreign individuals to come into the U.S. USCIS’ proposed rule to grant international entrepreneurs parole is derived from this statutory authority vested with the Secretary of Homeland Security.

What are the basic requirements for parole under the current proposed rule?  

1. Who have a significant ownership interest in the startup (at least 15 percent) and have an active and central role to its operations;
2. Whose startup was formed in the United States within the past three years; and
3. Whose startup has substantial and demonstrated potential for rapid business growth and job creation, as evidenced by:
   1. Receiving significant investment of capital (at least $345,000) from certain qualified U.S. investors with established records of successful investments;
   2. Receiving significant awards or grants (at least $100,000) from certain federal, state or local government entities; or
   3. Partially satisfying one or both of the above criteria in addition to other reliable and compelling evidence of the startup entity’s substantial potential for rapid growth and job creation.

Upon meeting the qualifications, international entrepreneurs may be granted an initial stay of up to two years to oversee and grow the startup. A subsequent request for re-parole may allow the entrepreneurs to receive three additional years of parole.

What is a Parole?

A parole is neither an immigrant visa nor a nonimmigrant visa. Rather, parole is a way for U.S. to allow someone to lawfully enter the U.S. based on a specific set of circumstances. Prior to USCIS current proposal for issuing paroles for international entrepreneurs, paroles are most commonly given to specific individuals who need to enter the U.S. for humanitarian purposes, such as to obtain medical treatment in the U.S., to visit a sick relative in the U.S, or to appear in court.

Can someone paroled into the U.S. work lawfully?

Under 8 CFR 274a.12(c)(11), individuals who are paroled into the U.S. is able to request employment authorization through the filing of a I-765 application. Once employment authorization has been granted to the individual, he may start to work.

How does someone who has applied for EB-5 take advantage of the parole?

One of the major issues confronting many EB-5 investors, particularly mainland China-born investors, is the long waiting period to obtain an EB-5 immigrant visa. For some of the EB-5 investors who independently meet the requirement for the international entrepreneur parolee (see above), being able to parole into the U.S. allow them to be able to personally advance the operations of their business.

However, most EB-5 investors will confront significant obstacles in seeking to apply for this type of parole. First, in today’s EB-5 investment market, most EB-5 investors acquire an equity ownership in a company that is often less than 15%, which is the minimum ownership interest under the proposed rule. Second, in the EB-5 context, the company in which the investor holds ownership are not necessarily the ones that are directly propelling rapid economic growth. Third, EB-5 investors rarely have active management roles in the operations of the company as many are just limited partners or members with relatively passive interest. Fourth, many of the EB-5 projects cannot demonstrate that they have received investment from qualified investors in the U.S. with a track record of successful investments in the past.

What is the process for the proposed rule to be finalized and take effect?

USCIS offers a 45 day public commenting period for the proposed rule. After the 45-day period, USCIS will review comments, make appropriate changes, and publish a final rule in the Federal Register. The Federal Register is an official journal of the federal government of the U.S. that contains government agency rules, proposed rules, and public notices. With the adoption of a final rule, USCIS will also provide a more concrete guidance on how to allow international entrepreneurs to proceed with the filing of the parole. It is expected that a final rule will be adopted by USCIS before the end of the Obama administration, possibly before the end of 2016 calendar year.