A federal rule that would allow foreign-born entrepreneurs a new pathway to enter or remain in the United States to build their startups has been flagged for review by the Trump administration before it is scheduled to go into effect in July, prompting speculation over whether the regulation will be delayed or ultimately rejected.
The International Entrepreneur Rule was approved by the Department of Homeland Security in the final days before President Obama left the White House in January and would grant temporary stays in the U.S. to startup entrepreneurs who can prove that their company would provide a public benefit through business growth and job creation.
It is scheduled to go into effect on July 17, and DHS has estimated that nearly 3,000 entrepreneurs would be eligible each year to launch their companies under the rule.
But on May 25, the administration sent the rule to the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) for review. In response, the National Venture Capital Association’s government affairs team met with the Trump administration on June 8 to lobby for the rule to be fully implemented in July.
The team also delivered a letter signed by 78 venture capitalists, startups and government leaders nationwide detailing their support for the rule.
“Our advocacy to the Trump administration has been around the idea that this is a job-creating tool very much in line with what the president ran on: trying to spread economic prosperity,” said Jeff Farrah, vice president of government affairs at the NVCA, who participated in the meeting with Trump administration officials. He declined to say which members of the administration attended the meeting.
Although Farrah said the meeting was positive and the NVCA felt its message was heard, he said the administration gave no indication of how it might respond.
“The biggest thing at stake is the economic well-being of our country. We’re losing out on jobs when we need them, losing out on dynamism and innovation,” he added.
The rule as it currently stands would grant parole for up to 30 months, with a possible additional 30-month extension, on a case-by-case basis to foreign-born investors who meet a set of criteria. To be eligible, applicants must have created a startup within the past five years, have significant ownership interest in the business, have received either $250,000 in investments from established U.S. investors or $100,000 in government grants, or provide additional evidence that they would provide a significant public benefit to the U.S.
Advocates say the rule would help to attract top international entrepreneurs to the U.S., which lacks a startup visa program. A study by the NVCA and the National Foundation for American Policy found that one-third of U.S. venture-backed companies that went public between 2006 and 2012 had at least one immigrant founder.
In addition, more than 40 percent of Fortune 500 companies have at least one founder who either immigrated to the U.S. or was the child of immigrants, according to the New American Economy, a coalition of civic and business leaders.
During the public comment period before it was approved in January, more than half of the commenters expressed support for the rule, DHS reported.
But some opponents said there is no reason to add an additional parole process for talented entrepreneurs when other visa and residency pathways already exist. Others argued that the the government should reform existing visa programs, such as the H-1B program, before creating new pathways, and that taxpayer funds should be used on more important issues, according to DHS.
As the implementation date looms closer, the administration remains tight lipped on how it plans to settle the rule’s fate. A spokesperson for the DHS said the agency has no update on the rule while it is being reviewed, and a spokesperson for the Office of Management and Budget said the agency does not comment on rules when they are under review.
The United States Citizenship and Immigration Services and OIRA did not respond to requests for comment.
One key question that lobbyists, investors, entrepreneurs and immigration attorneys are trying to answer is why the administration sent the rule back for review in the first place.
“One of the goals of the meeting was to gather information about where this sits and what is the (administration’s) thinking on this, whether we should be reading into it or whether this is more of a perfunctory matter,” Farrah said.
It’s not unusual for new federal administrations to review or delay rules that were passed by the prior administration, but such actions usually happen in the first few weeks or months of an administration, according to Susan Dudley, director of the George Washington University Regulatory Studies Center. Dudley was also previously appointed as the administrator of OIRA, which is now reviewing the rule.
“It’s not obvious what is under review at OIRA,” she said in an email, adding that the assumption that the rule’s implementation date may be extended makes the most sense.
Although the administration can’t delay it indefinitely, there is also not a clear limit to how long the rule’s effective date can be pushed back, she said. If the administration does delay the rule indefinitely, affected parties could successfully sue the government.
But already some foreign-born entrepreneurs are scrambling to make new plans as they wait for the Trump administration to make its decision, according to Sophie Alcorn, an attorney who founded an immigration law firm in Mountain View, California, and represents many foreign-born entrepreneurs who are hoping to build their companies in the U.S.
“We were all set to start moving forward and prepare these applications, and now we have to go back to the drawing board because there’s too much uncertainty for (my clients) and their families to apply for this option right now,” she said.
Asked whether she worries whether some of her clients will give up and move to another country, Alcorn said she’s already seen it happen. “I’ve seen founders get frustrated and leave and go to Vancouver, for example,” she said.
But despite the uncertainty surrounding the rule, Alcorn said many foreign-born investors are committed to launching their companies in the Bay Area.
“At the end of the day, we have Silicon Valley, which is the heart of venture capital and has the highest concentration of talent in these fields in the world,” she said.
Action Item: The Federal Register on the International Entrepreneur Rule can be found at http://bit.ly/2cwaK6j
Photo of U.S. visa and passport on world map courtesy of belterz/iStock/Getty Images