Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Startups Sue Trump Administration Over Delay of International Entrepreneur Rule
Author: Scarinci Hollenbeck, LLC
Date: October 20, 2017
Key Contacts
Back
Several Startup Companies Are Suing The Trump Administration Over Its Decision To Delay The Obama-era International Entrepreneur Rule
The National Venture Capital Association, along with several startup companies, is suing the Trump Administration over its decision to delay the Obama-era International Entrepreneur Rule. The immigration regulation, which would allow immigrant start-up founders to enter the country for up to five years under certain conditions, was slated to take effect in July. While the Department of Homeland Security (DHS) delayed the rule until March 14, 2018, the plaintiffs allege that its ultimate goal is to rescind the rule.
International Entrepreneur Rule
The International Entrepreneur Rule is based on the Immigration and Nationality Act (INA), which grants the Secretary of Homeland Security discretionary authority to grant individuals temporary permission to be in the United States (also known as “parole”) on a case-by-case basis, for urgent humanitarian reasons or significant public benefit. The rule would have established general criteria for the use of parole with respect to entrepreneurs of start-up businesses whose entry into the United States would provide a significant public benefit through “the substantial and demonstrated the potential for rapid growth and job creation.”
Under the proposed “International Entrepreneur Rule,” DHS may parole, on a case-by-case basis, eligible entrepreneurs of start-up enterprises:
- Who have a significant ownership interest in the startup (at least 15 percent) and have an active and central role to its operations;
- Whose startup was formed in the United States within the past three years; and
- Whose startup has substantial and demonstrated the potential for rapid business growth and job creation, as evidenced by:
- Receiving significant investment of capital (at least $345,000) from certain qualified U.S. investors with established records of successful investments;
- Receiving significant awards or grants (at least $100,000) from certain federal, state or local government entities; or
- 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.
Under the proposed rule, foreign entrepreneurs would be granted an initial stay of up to two years to oversee and grow their startup entity. An extension of up to three additional years would be available if the entrepreneur and the startup entity continue to provide a significant public benefit as evidenced by substantial increases in capital investment, revenue, or job creation.
In support of the International Entrepreneur Rule, the plaintiffs highlight that the U.S. economy has long thrived on the contributions of immigrant entrepreneurs. In 2016, 44 of the 87 start-ups in the United States valued at $1 billion or more were created by immigrants, according to a National Foundation for American Policy study.
“It is impossible to overstate the benefits that immigrant entrepreneurs and companies have provided to the American economy and the nation as a whole, and the concomitant importance of ensuring that immigrant entrepreneurs can come to the United States to continue to grow their businesses,” the complaint states.
Plaintiffs Allege Immigration Rule Delay Is “Unlawful”
The plaintiffs maintain that the Department of Homeland’s decision to delay the rule violated the Administrative Procedures Act because the agency failed to gather public comments prior to doing so. In its public notice, DHS stated: “Given that DHS will be proposing to rescind the [international entrepreneur] final rule, and may ultimately eliminate the program, the expenditure of these resources is unlikely to ever be recouped from filing fees under the new program.”
The plaintiffs argue that the refusal to accept public comments was not in the public interest and functioned as a “de facto repeal” of the immigration rule. “In light of the manifest importance of public participation in agency decision-making, courts have repeatedly explained that advance notice-and-comment is the default; the ‘good cause’ exception to notice-and-comment rulemaking must be narrowly construed and invoked only in extraordinary circumstances,” according to the complaint. “None of the rationales proffered by defendants constitute good cause.”
We will be closely tracking the lawsuit, as well as the DHS’s planned efforts to rescind the International Entrepreneur Rule. Please check back for updates.
Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Jeffrey Cassin, at 201-806-3364.
- Practices: Corporate Transactions & Business
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Author: Scarinci Hollenbeck, LLC
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
Author: Dan Brecher
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
Author: Ronald S. Bienstock
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Startups Sue Trump Administration Over Delay of International Entrepreneur Rule
Author: Scarinci Hollenbeck, LLC
Several Startup Companies Are Suing The Trump Administration Over Its Decision To Delay The Obama-era International Entrepreneur Rule
The National Venture Capital Association, along with several startup companies, is suing the Trump Administration over its decision to delay the Obama-era International Entrepreneur Rule. The immigration regulation, which would allow immigrant start-up founders to enter the country for up to five years under certain conditions, was slated to take effect in July. While the Department of Homeland Security (DHS) delayed the rule until March 14, 2018, the plaintiffs allege that its ultimate goal is to rescind the rule.
International Entrepreneur Rule
The International Entrepreneur Rule is based on the Immigration and Nationality Act (INA), which grants the Secretary of Homeland Security discretionary authority to grant individuals temporary permission to be in the United States (also known as “parole”) on a case-by-case basis, for urgent humanitarian reasons or significant public benefit. The rule would have established general criteria for the use of parole with respect to entrepreneurs of start-up businesses whose entry into the United States would provide a significant public benefit through “the substantial and demonstrated the potential for rapid growth and job creation.”
Under the proposed “International Entrepreneur Rule,” DHS may parole, on a case-by-case basis, eligible entrepreneurs of start-up enterprises:
- Who have a significant ownership interest in the startup (at least 15 percent) and have an active and central role to its operations;
- Whose startup was formed in the United States within the past three years; and
- Whose startup has substantial and demonstrated the potential for rapid business growth and job creation, as evidenced by:
- Receiving significant investment of capital (at least $345,000) from certain qualified U.S. investors with established records of successful investments;
- Receiving significant awards or grants (at least $100,000) from certain federal, state or local government entities; or
- 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.
Under the proposed rule, foreign entrepreneurs would be granted an initial stay of up to two years to oversee and grow their startup entity. An extension of up to three additional years would be available if the entrepreneur and the startup entity continue to provide a significant public benefit as evidenced by substantial increases in capital investment, revenue, or job creation.
In support of the International Entrepreneur Rule, the plaintiffs highlight that the U.S. economy has long thrived on the contributions of immigrant entrepreneurs. In 2016, 44 of the 87 start-ups in the United States valued at $1 billion or more were created by immigrants, according to a National Foundation for American Policy study.
“It is impossible to overstate the benefits that immigrant entrepreneurs and companies have provided to the American economy and the nation as a whole, and the concomitant importance of ensuring that immigrant entrepreneurs can come to the United States to continue to grow their businesses,” the complaint states.
Plaintiffs Allege Immigration Rule Delay Is “Unlawful”
The plaintiffs maintain that the Department of Homeland’s decision to delay the rule violated the Administrative Procedures Act because the agency failed to gather public comments prior to doing so. In its public notice, DHS stated: “Given that DHS will be proposing to rescind the [international entrepreneur] final rule, and may ultimately eliminate the program, the expenditure of these resources is unlikely to ever be recouped from filing fees under the new program.”
The plaintiffs argue that the refusal to accept public comments was not in the public interest and functioned as a “de facto repeal” of the immigration rule. “In light of the manifest importance of public participation in agency decision-making, courts have repeatedly explained that advance notice-and-comment is the default; the ‘good cause’ exception to notice-and-comment rulemaking must be narrowly construed and invoked only in extraordinary circumstances,” according to the complaint. “None of the rationales proffered by defendants constitute good cause.”
We will be closely tracking the lawsuit, as well as the DHS’s planned efforts to rescind the International Entrepreneur Rule. Please check back for updates.
Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Jeffrey Cassin, at 201-806-3364.