International Entrepreneur Rule, 5238-5289 [2017-00481]
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DEPARTMENT OF HOMELAND
SECURITY
8 CFR Parts 103, 212, and 274a
[CIS No. 2572–15; DHS Docket No. USCIS–
2015–0006]
RIN 1615–AC04
International Entrepreneur Rule
U.S. Citizenship and
Immigration Services, DHS.
ACTION: Final rule.
AGENCY:
This final rule amends
Department of Homeland Security
(DHS) regulations to implement the
Secretary of Homeland Security’s
discretionary parole authority in order
to increase and enhance
entrepreneurship, innovation, and job
creation in the United States. The final
rule adds new regulatory provisions
guiding the use of parole on a case-bycase basis with respect to entrepreneurs
of start-up entities who can demonstrate
through evidence of substantial and
demonstrated potential for rapid
business growth and job creation that
they would provide a significant public
benefit to the United States. Such
potential would be indicated by, among
other things, the receipt of significant
capital investment from U.S. investors
with established records of successful
investments, or obtaining significant
awards or grants from certain Federal,
State or local government entities. If
granted, parole would provide a
temporary initial stay of up to 30
months (which may be extended by up
to an additional 30 months) to facilitate
the applicant’s ability to oversee and
grow his or her start-up entity in the
United States.
DATES: This final rule is effective July
17, 2017.
FOR FURTHER INFORMATION CONTACT:
Steven Viger, Adjudications Officer,
Office of Policy and Strategy, U.S.
Citizenship and Immigration Services,
Department of Homeland Security, 20
Massachusetts Avenue NW., Suite 1100,
Washington, DC 20529–2140;
Telephone (202) 272–1470.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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Table of Contents
I. Executive Summary
A. Purpose of the Regulatory Action
B. Legal Authority
C. Summary of the Final Rule Provisions
D. Summary of Changes From the Notice
of Proposed Rulemaking
E. Summary of Costs and Benefits
F. Effective Date
II. Background
A. Current Framework
B. Final Rule
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III. Public Comments on Proposed Rule
A. Summary of Public Comments
B. Legal Authority
C. Significant Public Benefit
D. Definitions
E. Application Requirements
F. Parole Criteria and Conditions
G. Employment Authorization
H. Comments on Parole Process
I. Appeals and Motions To Reopen
J. Termination of Parole
K. Opposition to the Overall Rule
L. Miscellaneous Comments on the Rule
M. Public Comments on Statutory and
Regulatory Requirements
IV. Statutory and Regulatory Requirements
A. Unfunded Mandates Reform Act of 1995
B. Small Business Regulatory Enforcement
Fairness Act of 1996
C. Executive Orders 12866 and 13563
1. Summary
2. Purpose of the Rule
3. Volume Estimate
4. Costs
5. Benefits
6. Alternatives Considered
D. Regulatory Flexibility Act
E. Executive Order 13132
F. Executive Order 12988
G. Paperwork Reduction Act
I. Executive Summary
A. Purpose of the Regulatory Action
Section 212(d)(5) of the Immigration
and Nationality Act (INA), 8 U.S.C.
1182(d)(5), confers upon the Secretary
of Homeland Security the discretionary
authority to parole individuals into the
United States temporarily, on a case-bycase basis, for urgent humanitarian
reasons or significant public benefit.
DHS is amending its regulations
implementing this authority to increase
and enhance entrepreneurship,
innovation, and job creation in the
United States. As described in more
detail below, the final rule would
establish general criteria for the use of
parole with respect to entrepreneurs of
start-up entities who can demonstrate
through evidence of substantial and
demonstrated potential for rapid growth
and job creation that they would
provide a significant public benefit to
the United States. In all cases, whether
to parole a particular individual under
this rule is a discretionary
determination that would be made on a
case-by-case basis.
Given the complexities involved in
adjudicating applications in this
context, DHS has decided to establish
by regulation the criteria for the case-bycase evaluation of parole applications
filed by entrepreneurs of start-up
entities. By including such criteria in
regulation, as well as establishing
application requirements that are
specifically tailored to capture the
necessary information for processing
parole requests on this basis, DHS
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expects to facilitate the use of parole in
this area.
Under this final rule, an applicant
would need to demonstrate that his or
her parole would provide a significant
public benefit because he or she is the
entrepreneur of a new start-up entity in
the United States that has significant
potential for rapid growth and job
creation. DHS believes that such
potential would be indicated by, among
other things, the receipt of (1)
significant capital investment from U.S.
investors with established records of
successful investments or (2) significant
awards or grants from certain Federal,
State, or local government entities. The
final rule also includes alternative
criteria for applicants who partially
meet the thresholds for capital
investment or government awards or
grants and can provide additional
reliable and compelling evidence of
their entities’ significant potential for
rapid growth and job creation. An
applicant must also show that he or she
has a substantial ownership interest in
such an entity, has an active and central
role in the entity’s operations, and
would substantially further the entity’s
ability to engage in research and
development or otherwise conduct and
grow its business in the United States.
The grant of parole is intended to
facilitate the applicant’s ability to
oversee and grow the start-up entity.
DHS believes that this final rule will
encourage foreign entrepreneurs to
create and develop start-up entities with
high growth potential in the United
States, which are expected to facilitate
research and development in the
country, create jobs for U.S. workers,
and otherwise benefit the U.S. economy
through increased business activity,
innovation, and dynamism. Particularly
in light of the complex considerations
involved in entrepreneur-based parole
requests, DHS also believes that this
final rule will provide a transparent
framework by which DHS will exercise
its discretion to adjudicate such
requests on a case-by-case basis under
section 212(d)(5) of the INA, 8 U.S.C.
1182(d)(5).
B. Legal Authority
The Secretary of Homeland Security’s
authority for the proposed regulatory
amendments can be found in various
provisions of the immigration laws.
Sections 103(a)(1) and (3) of the INA, 8
U.S.C. 1103(a)(1), (3), provides the
Secretary the authority to administer
and enforce the immigration and
nationality laws. Section 402(4) of the
Homeland Security Act of 2002 (HSA),
Public Law 107–296, 116 Stat. 2135, 6
U.S.C. 202(4), expressly authorizes the
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Secretary to establish rules and
regulations governing parole. Section
212(d)(5) of the INA, 8 U.S.C.
1182(d)(5), vests in the Secretary the
discretionary authority to grant parole
for urgent humanitarian reasons or
significant public benefit to applicants
for admission temporarily on a case-bycase basis.1 Section 274A(h)(3)(B) of the
INA, 8 U.S.C. 1324a(h)(3)(B), recognizes
the Secretary’s general authority to
extend employment authorization to
noncitizens in the United States. And
section 101(b)(1)(F) of the HSA, 6 U.S.C.
111(b)(1)(F), establishes as a primary
mission of DHS the duty to ‘‘ensure that
the overall economic security of the
United States is not diminished by
efforts, activities, and programs aimed at
securing the homeland.’’
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C. Summary of the Final Rule Provisions
This final rule adds a new section 8
CFR 212.19 to provide guidance with
respect to the use of parole for
entrepreneurs of start-up entities based
upon significant public benefit. An
individual seeking to operate and grow
his or her start-up entity in the United
States would generally need to
demonstrate the following to be
considered for a discretionary grant of
parole under this final rule:
1. Formation of New Start-Up Entity.
The applicant has recently formed a
new entity in the United States that has
lawfully done business since its creation
and has substantial potential for rapid
growth and job creation. An entity may
be considered recently formed if it was
created within the 5 years immediately
preceding the date of the filing of the
initial parole application. See 8 CFR
219.12(a)(2), 8 CFR 103.2(a)(7).
2. Applicant is an Entrepreneur. The
applicant is an entrepreneur of the startup entity who is well-positioned to
advance the entity’s business. An
applicant may meet this standard by
providing evidence that he or she: (1)
Possesses a significant (at least 10
percent) ownership interest in the entity
at the time of adjudication of the initial
1 In sections 402 and 451 of the HSA, Congress
transferred from the Attorney General to the
Secretary of Homeland Security the general
authority to enforce and administer the immigration
laws, including those pertaining to parole. In
accordance with section 1517 of title XV of the
HSA, any reference to the Attorney General in a
provision of the INA describing functions
transferred from the Department of Justice to DHS
‘‘shall be deemed to refer to the Secretary’’ of
Homeland Security. See 6 U.S.C. 557 (codifying the
HSA, tit. XV, section 1517). Authorities and
functions of DHS to administer and enforce the
immigration laws are appropriately delegated to
DHS employees and others in accordance with
section 102(b)(1) of the HSA, 6 U.S.C. 112(b)(1);
section 103(a) of the INA, 8 U.S.C. 1103(a); and 8
CFR 2.1.
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grant of parole; and (2) has an active and
central role in the operations and future
growth of the entity, such that his or her
knowledge, skills, or experience would
substantially assist the entity in
conducting and growing its business in
the United States. See final 8 CFR
212.19(a)(1). Such an applicant cannot
be a mere investor.
3. Significant U.S. Capital Investment
or Government Funding. The applicant
can further validate, through reliable
supporting evidence, the entity’s
substantial potential for rapid growth
and job creation. An applicant may be
able to satisfy this criterion in one of
several ways:
a. Investments from established U.S.
investors. The applicant may show that
the entity has received significant
investment of capital from certain
qualified U.S. investors with established
records of successful investments. An
applicant would generally be able to
meet this standard by demonstrating
that the start-up entity has received
investments of capital totaling $250,000
or more from established U.S. investors
(such as venture capital firms, angel
investors, or start-up accelerators) with
a history of substantial investment in
successful start-up entities.
b. Government grants. The applicant
may show that the start-up entity has
received significant awards or grants
from Federal, State or local government
entities with expertise in economic
development, research and
development, or job creation. An
applicant would generally be able to
meet this standard by demonstrating
that the start-up entity has received
monetary awards or grants totaling
$100,000 or more from government
entities that typically provide such
funding to U.S. businesses for
economic, research and development, or
job creation purposes.
c. Alternative criteria. The final rule
provides alternative criteria under
which an applicant who partially meets
one or more of the above criteria related
to capital investment or government
funding may be considered for parole
under this rule if he or she provides
additional reliable and compelling
evidence that they would provide a
significant public benefit to the United
States. Such evidence must serve as a
compelling validation of the entity’s
substantial potential for rapid growth
and job creation.
This final rule states that an applicant
who meets the above criteria (and his or
her spouse and minor, unmarried
children,2 if any) generally may be
2 The
terms ‘‘child’’ and ‘‘children’’ in this
proposed rule have the same meaning as they do
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considered under this rule for a
discretionary grant of parole lasting up
to 30 months (2.5 years) based on the
significant public benefit that would be
provided by the applicant’s (or family’s)
parole into the United States. An
applicant will be required to file a new
application specifically tailored for
entrepreneurs to demonstrate eligibility
for parole based upon significant public
benefit under this rule, along with
applicable fees. Applicants will also be
required to appear for collection of
biometric information. No more than
three entrepreneurs may receive parole
with respect to any one qualifying startup entity.
USCIS adjudicators will consider the
totality of the evidence, including
evidence obtained by USCIS through
background checks and other means, to
determine whether the applicant has
satisfied the above criteria, whether the
specific applicant’s parole would
provide a significant public benefit, and
whether negative factors exist that
warrant denial of parole as a matter of
discretion. To grant parole, adjudicators
will be required to conclude, based on
the totality of the circumstances, that
both: (1) The applicant’s parole would
provide a significant public benefit, and
(2) the applicant merits a grant of parole
as a matter of discretion.
If parole is granted, the entrepreneur
will be authorized for employment
incident to the grant of parole, but only
with respect to the entrepreneur’s startup entity. The entrepreneur’s spouse
and children, if any, will not be
authorized for employment incident to
the grant of parole, but the
entrepreneur’s spouse, if paroled into
the United States pursuant to 8 CFR
212.19, will be permitted to apply for
employment authorization consistent
with new 8 CFR 274a.12(c)(34). DHS
retains the authority to revoke any such
grant of parole at any time as a matter
of discretion or if DHS determines that
parole no longer provides a significant
public benefit, such as when the entity
has ceased operations in the United
States or DHS has reason to believe that
the approved application involves fraud
or misrepresentation. See new 8 CFR
212.19(k).
As noted, the purpose of this parole
process is to provide qualified
entrepreneurs of high-potential start-up
entities in the United States with the
improved ability to conduct research
and development and expand the
entities’ operations in the United States
so that our nation’s economy may
under section 101(b)(1) of the INA, 8 U.S.C.
1101(b)(1) (defining a child as one who is
unmarried and under twenty-one years of age).
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benefit from such development and
expansion, including through increased
capital expenditures, innovation, and
job creation. The final rule allows
individuals granted parole under this
rule to be considered for re-parole for an
additional period of up to 30 months
(2.5 years) if, and only if, they can
demonstrate that their entities have
shown signs of significant growth since
the initial grant of parole and such
entities continue to have substantial
potential for rapid growth and job
creation.
An applicant under this rule will
generally need to demonstrate the
following to be considered for a
discretionary grant of an additional
period of parole:
1. Continuation of Start-Up Entity.
The entity continues to be a start-up
entity as defined by the proposed rule.
For purposes of seeking re-parole, an
applicant may be able to meet this
standard by showing that the entity: (a)
Has been lawfully operating in the
United States during the period of
parole; and (b) continues to have
substantial potential for rapid growth
and job creation.
2. Applicant Continues to Be an
Entrepreneur. The applicant continues
to be an entrepreneur of the start-up
entity who is well-positioned to
advance the entity’s business. An
applicant may meet this standard by
providing evidence that he or she: (a)
Continues to possess a significant (at
least 5 percent) ownership interest in
the entity at the time of adjudication of
the grant of re-parole; and (b) continues
to have an active and central role in the
operations and future growth of the
entity, such that his or her knowledge,
skills, or experience would substantially
assist the entity in conducting and
continuing to grow its business in the
United States. This reduced ownership
amount takes into account the need of
some successful start-up entities to raise
additional venture capital investment by
selling ownership interest during their
initial years of operation.
3. Significant U.S. Investment/
Revenue/Job Creation. The applicant
further validates, through reliable
supporting evidence, the start-up
entity’s continued potential for rapid
growth and job creation. An applicant
may be able to satisfy this criterion in
one of several ways:
a. Additional Investments or Grants.
The applicant may show that during the
initial period of parole the start-up
entity received additional substantial
investments of capital, including
through qualified investments from U.S.
investors with established records of
successful investments; significant
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awards or grants from U.S. government
entities that regularly provide such
funding to start-up entities; or a
combination of both. An applicant
would generally be expected to
demonstrate that the entity received at
least $500,000 in additional qualifying
funding during the initial parole period.
As noted previously, any private
investment that the applicant is relying
upon as evidence that the investment
criterion has been met must be made by
qualified U.S. investors (such as venture
capital firms, angel investors, or start-up
accelerators) with a history of
substantial investment in successful
start-up entities. Government awards or
grants must be from U.S. federal, state
or local government entities with
expertise in economic development,
research and development, or job
creation.
b. Revenue generation. The applicant
may show that the start-up entity has
generated substantial and rapidly
increasing revenue in the United States
during the initial parole period. To
satisfy this criterion, an applicant will
need to demonstrate that the entity
reached at least $500,000 in annual
revenue, with average annualized
revenue growth of at least 20 percent,
during the initial parole period.
c. Job creation. The applicant may
show that the start-up entity has
demonstrated substantial job creation in
the United States during the initial
parole period. To satisfy this criterion,
an applicant will need to demonstrate
that the entity created at least 5 full-time
jobs for U.S. workers during the initial
parole period.
d. Alternative criteria. As with initial
parole, the final rule includes
alternative criteria under which an
applicant who partially meets one or
more of the above criteria related to
capital investment, revenue generation,
or job creation may be considered for reparole under this rule if he or she
provides additional reliable and
compelling evidence that his or her
parole will continue to provide a
significant public benefit. As discussed
above, such evidence must serve as a
compelling validation of the entity’s
substantial potential for rapid growth
and job creation.
As indicated above, an applicant who
generally meets the above criteria and
merits a favorable exercise of discretion
may be granted an additional 30-month
period of re-parole, for a total maximum
period of 5 years of parole under 8 CFR
212.19, to work with the same start-up
entity based on the significant public
benefit that would be served by his or
her continued parole in the United
States. No more than three
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entrepreneurs (and their spouses and
children) may receive such additional
periods of parole with respect to any
one qualifying entity.
As with initial parole applications,
USCIS adjudicators will consider the
totality of the evidence, including
evidence obtained by USCIS through
verification methods, to determine
whether the applicant has satisfied the
above criteria and whether his or her
continued parole would provide a
significant public benefit. To be reparoled, adjudicators will be required to
conclude, based on the totality of the
circumstances, both: (1) That the
applicant’s continued parole would
provide a significant public benefit, and
(2) that the applicant continues to merit
parole as a matter of discretion. If the
applicant is re-paroled, DHS retains the
authority to revoke parole at any time as
a matter of discretion or if DHS
determines that parole no longer
provides a significant public benefit,
such as when the entity has ceased
operations in the United States or DHS
believes that the application involved
fraud or made material
misrepresentations.
The entrepreneur and any dependents
granted parole under this program will
be required to depart the United States
when their parole periods have expired
or have otherwise been terminated,
unless such individuals are otherwise
eligible to lawfully remain in the United
States. At any time prior to reaching the
5-year limit for parole under this final
rule, such individuals may apply for
any immigrant or nonimmigrant
classification for which they may be
eligible (such as classification as an O–
1 nonimmigrant or as a lawful
permanent resident pursuant to an EB–
2 National Interest Waiver). Because
parole is not considered an admission to
the United States, parolees are ineligible
to adjust or change their status in the
United States under many immigrant or
nonimmigrant visa classifications. For
example, if such individuals are
approved for a nonimmigrant or
employment-based immigrant visa
classification, they would generally
need to depart the United States and
apply for a visa with the Department of
State (DOS) for admission to the United
States as a nonimmigrant or lawful
permanent resident.
Finally, DHS is making conforming
changes to the employment
authorization regulations at 8 CFR
274a.12(b) and (c), the employment
eligibility verification regulations at 8
CFR 274a.2(b), and fee regulations at 8
CFR 103.7(b)(i). The final rule amends
8 CFR 274a.12(b) by: (1) Adding
entrepreneur parolees to the classes of
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aliens authorized for employment
incident to their immigration status or
parole, and (2) providing temporary
employment authorization for those
applying for re-parole. The final rule
amends 8 CFR 274a.12(c) by extending
eligibility for employment authorization
to the spouse of an entrepreneur paroled
into the United States under 8 CFR
212.19. The final rule amends 8 CFR
274a.2(b) by designating the
entrepreneur’s foreign passport and
Arrival/Departure Record (Form I–94)
indicating entrepreneur parole as
acceptable evidence for employment
eligibility verification (Form I–9)
purposes.3 The final rule also amends 8
CFR 103.7(b)(i) by including the fee for
the new Application for Entrepreneur
Parole form.
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D. Summary of Changes From the
Notice of Proposed Rulemaking
Following careful consideration of
public comments received, including
relevant data provided by stakeholders,
DHS has made several modifications to
the regulatory text proposed in the
Notice of Proposed Rulemaking (NPRM)
published in the Federal Register on
August 31, 2016. See 81 FR 60129.
Those changes include the following:
• Minimum Investment Amount. In
the final rule, DHS is responding to
public comment by revising proposed 8
CFR 212.19(b)(2)(ii)(B)(1), a provision
that identifies the qualifying investment
amount required from one or more
qualified investors. In the NPRM, DHS
proposed a minimum investment
amount of $345,000. Based on data
provided by the public, DHS is revising
this figure to $250,000. Thus, under the
final rule, an applicant would generally
be able to meet the investment standard
by demonstrating that the start-up entity
has received investments of capital
totaling $250,000 or more from
established U.S. investors (such as
venture capital firms, angel investors, or
start-up accelerators) with a history of
substantial investment in successful
start-up entities. In addition, DHS has
increased the timeframe during which
the qualifying investments must be
received from 365 days to 18 months
immediately preceding the filing of an
application for initial parole.
• Definition of Entrepreneur:
Ownership Criteria. In the final rule,
3 Additionally, DHS is making a technical change
to this section by adding the Department of State
(DOS) Consular Report of Birth Abroad (Form FS–
240) to the regulatory text and to the ‘‘List C’’ listing
of acceptable documents for Form I–9 verification
purposes. This rule departs from the Notice of
Proposed Rulemaking by not adding ‘‘or successor
form’’ after Form FS–240. DHS determined that
inclusion of the phrase is unnecessary and may
cause confusion in the future.
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DHS is revising proposed 8 CFR
212.19(a)(1), a provision that defines the
term ‘‘entrepreneur,’’ and establishes a
minimum ownership percentage
necessary to meet the definition. In the
NPRM, DHS proposed that the
entrepreneur must have an ownership
interest of at least 15 percent for initial
parole, and 10 percent for re-parole. In
response to public comment, DHS is
modifying this requirement to allow
individuals who have an ownership
interest of at least 10 percent in the
start-up entity at the time of
adjudication of the initial grant of
parole, and at least a 5 percent
ownership interest at the time of
adjudication of a subsequent period of
re-parole, to qualify under this
definition.
• Qualified Investment Definition.
DHS is revising proposed 8 CFR
212.19(a)(4), which establishes the
definition of a qualified investment. In
the NPRM, DHS proposed that the term
‘‘qualified investment’’ means an
investment made in good faith, and that
is not an attempt to circumvent any
limitations imposed on investments
under this section, of lawfully derived
capital in a start-up entity that is a
purchase from such entity of equity or
convertible debt issued by such entity.
In response to public comment, DHS is
modifying this definition to include
other securities that are convertible into
equity issued by such an entity and that
are commonly used in financing
transactions within such entity’s
industry.
• Qualified Investor Definition. DHS
is revising proposed 8 CFR 212.19(a)(5),
which establishes the definition of a
qualified investor. In the NPRM, DHS
proposed that an individual or
organization may be considered a
qualified investor if, during the
preceding 5 years: (i) The individual or
organization made investments in startup entities in exchange for equity or
convertible debt in at least 3 separate
calendar years comprising a total within
such 5-year period of no less than
$1,000,000; and (ii) subsequent to such
investment by such individual or
organization, at least 2 such entities
each created at least 5 qualified jobs or
generated at least $500,000 in revenue
with average annualized revenue growth
of at least 20 percent. In this final rule,
the minimum investment amount has
been decreased from the originally
proposed $1,000,000 to $600,000. The
requirement that investments be made
in at least 3 separate calendar years has
also been removed from this final rule.
DHS is also making revisions to the
form of investment made by the
individual or organization consistent
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with the change to the qualified
investment definition by adding ‘‘or
other security convertible into equity
commonly used in financing
transactions within their respective
industries.’’
• Start-up Entity Definition. In the
final rule, DHS is revising the definition
of a start-up entity as proposed in 8 CFR
212.19(a)(2). In the NPRM, DHS
proposed that an entity may be
considered recently formed if it was
created within the 3 years preceding the
date of filing of the initial parole
request. In response to public comment,
DHS is modifying this provision so that
an entity may be considered recently
formed if it was created within the 5
years immediately preceding the filing
date of the initial parole request.
Additionally, for purposes of paragraphs
(a)(3) and (a)(5) of this section, which
pertain to the definitional requirements
to be a qualified investor or qualified
government award or grant,
respectively, DHS made corresponding
changes in this final rule such that an
entity may be considered recently
formed if it was created within the 5
years immediately preceding the receipt
of the relevant grant(s), award(s), or
investment(s).
• Job Creation Requirement. In the
final rule, DHS is revising proposed 8
CFR 212.19(c)(2)(ii)(B)(2), a provision
that identifies the minimum job creation
requirement under the general re-parole
criteria. In the NPRM, DHS proposed
that an entrepreneur may be eligible for
an additional period of parole by
establishing that his or her start-up
entity has created at least 10 qualified
jobs during the initial parole period. In
response to public comment, DHS is
modifying this provision so that an
entrepreneur may qualify for re-parole if
the start-up entity created at least 5
qualified jobs with the start-up entity
during the initial parole period.
• Revenue Generation. In the final
rule, DHS is clarifying proposed 8 CFR
212.19(c)(2)(ii)(B)(3), a provision that
identifies the minimum annual revenue
requirement under the general re-parole
criteria. DHS has clarified that for the
revenue to be considered for purposes of
re-parole, it must be generated in the
United States.
• Parole Validity Periods. In the final
rule, DHS is revising proposed 8 CFR
212.19(d)(2) and (3), which are
provisions that identify the length of the
initial and re-parole periods. In the
NPRM, DHS proposed (1) a potential
initial period of parole of up to 2 years
beginning on the date the request is
approved by USCIS and (2) a potential
period of re-parole of up to 3 years
beginning on the date of the expiration
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of the initial parole period. First, DHS
revised 8 CFR 212.19(d)(2) to correct
that the initial parole period would
begin running on the date the individual
is initially paroled into the United
States. Second, in response to public
comment, DHS revised 8 CFR
212.19(d)(2) and (3) to provide 2
potential parole periods of up to 30
months each, rather than an initial 2year period followed by a potential 3year period of re-parole. Specifically, 8
CFR 212.19(d)(2) now provides that an
applicant who meets the eligibility
criteria (and his or her spouse and
minor, unmarried children, if any) may
be considered under this rule for a
discretionary grant of an initial parole
period of up to 30 months (2.5 years)
based on the significant public benefit
that would be provided by the
applicant’s (or family’s) parole into the
United States. DHS also revised in this
final rule the period of re-parole in 8
CFR 212.19(d)(3) to reduce the period of
re-parole from 3 years to 30 months in
order to extend the initial parole period,
while still maintaining the overall 5year period of parole limitation.
• Material Changes. In the final rule,
DHS is revising proposed 8 CFR
212.19(a)(10), a provision that defines
material changes. The final rule adds
the following to the definition of
material changes: ‘‘a significant change
with respect to ownership and control
of the start-up entity.’’ This reflects a
change from the originally proposed
language of any significant change to the
entrepreneur’s role in or ownership and
control in the start-up entity or any
other significant change with respect to
ownership and control of the start-up
entity. Additionally, the final rule at 8
CFR 212.19(a)(1) adds language that
permits the entrepreneur during the
initial parole period to reduce his or her
ownership interest, as long as at least 5
percent ownership is maintained. This
provision was revised in response to a
number of public comments that
requested that DHS reconsider how and
when material changes should be
reported.
• Reporting of Material Changes. In
the final rule, DHS is revising proposed
8 CFR 212.19(j), a provision that
describes reporting of material changes.
DHS is revising 8 CFR 212.19(j) to allow
DHS to provide additional flexibility in
the future with respect to the manner in
which material changes are reported to
DHS. The final rule also makes
conforming changes based on changes to
the definition of entrepreneur.
• Termination of Parole. In the final
rule, DHS is revising proposed 8 CFR
212.19(k)(2), a provision that describes
automatic termination of parole. The
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final rule makes conforming revisions to
this provision based on changes to the
definition of entrepreneur and to the
material change provisions.
E. Summary of Costs and Benefits
DHS does not anticipate that this rule
will generate significant costs and
burdens to private or public entities.
Costs of the rule stem from filing fees
and opportunity costs associated with
applying for parole, and the requirement
that the entrepreneur notify DHS of any
material changes.
DHS estimates that 2,940
entrepreneurs will be eligible for parole
annually and can apply using the
Application for Entrepreneur Parole
(Form I–941). Each applicant for parole
will face a total filing cost—including
the application form fee, biometric filing
fee, travel costs, and associated
opportunity costs—of $1,591, resulting
in a total cost of $4,678,336
(undiscounted) for the first full year the
rule will take effect and any subsequent
year. Additionally, dependent family
members (spouses and children) seeking
parole with the principal applicant will
be required to file an Application for
Travel Document (Form I–131) and
submit biographical information and
biometrics. DHS estimates
approximately 3,234 dependent spouses
and children could seek parole based on
the estimate of 2,940 principal
applicants. Each spouse and child 14
years of age and older seeking parole
will face a total cost of $765 per
applicant,4 for a total aggregate cost of
$2,474,914.5 Additionally, spouses who
apply for work authorization via an
Application for Employment
Authorization (Form I–765) will incur a
total additional cost of $446 each. Based
on the same number of entrepreneurs,
the estimated 2,940 spouses 6 will incur
total costs of $1,311,830 (undiscounted).
The total cost of the rule to include
direct filing costs and monetized non4 On October 24, 2016, U.S. Citizenship and
Immigration Services published a final rule
establishing a new fee schedule for immigration
benefits and services (81 FR 73292). The new filing
fees for Form I–131 and Form I–765, $575 and $410,
respectively, will be effective on December 23,
2016. This final rule uses those new filing fees in
estimating costs to potential applicants under this
rule.
5 For parole requests for children under the age
of 14, only the filing fee will be required, as such
children do not appear for biometric collection.
Applicants under the age of 14 and over the age of
79 are not required to be fingerprinted. However,
they may still be required to attend a biometrics
appointment in order to have their photographs and
signatures captured.
6 DHS used a simple one-to-one mapping of
entrepreneurs to spouses to obtain 2,940 spouses,
the same number as entrepreneur parolees.
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filing costs is estimated to be $8,136,571
annually.
DHS anticipates that establishing a
parole process for those entrepreneurs
who stand to provide a significant
public benefit will advance the U.S.
economy by enhancing innovation,
generating capital investments, and
creating jobs. DHS does not expect
significant negative consequences or
labor market impacts from this rule;
indeed, DHS believes this rule will
encourage entrepreneurs to pursue
business opportunities in the United
States rather than abroad, which can be
expected to generate significant
scientific, research and development,
and technological impacts that could
create new products and produce
positive spillover effects to other
businesses and sectors. The impacts
stand to benefit the economy by
supporting and strengthening highgrowth, job-creating businesses in the
United States.
F. Effective Date
This final rule will be effective on
July 17, 2017, 180 days from the date of
publication in the Federal Register.
DHS has determined that this 180-day
period is necessary to provide USCIS
with a reasonable period to ensure
resources are in place to process and
adjudicate Applications for
Entrepreneur Parole filed by eligible
entrepreneurs and related applications
filed by eligible dependents under this
rule without sacrificing the quality of
customer service for all USCIS
stakeholders. USCIS believes it will thus
be able to implement this rule in a
manner that will avoid delays of
processing these and other applications.
II. Background
A. Discretionary Parole Authority
The Secretary of Homeland Security
has discretionary authority to parole
into the United States temporarily
‘‘under conditions as he may prescribe
only on a case-by-case basis for urgent
humanitarian reasons or significant
public benefit any individual applying
for admission to the United States,’’
regardless of whether the alien is
inadmissible. INA section 212(d)(5)(A),
8 U.S.C. 1182(d)(5)(A).7 The Secretary’s
parole authority is expansive. Congress
did not define the phrase ‘‘urgent
humanitarian reasons or significant
public benefit,’’ entrusting
interpretation and application of those
7 Although section 212(d)(5) continues to refer to
the Attorney General, the parole authority now
resides exclusively with the Secretary of Homeland
Security. See Matter of Arrabally, 25 I. & N. Dec.
771, 777 n.5 (BIA 2012).
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standards to the Secretary. Aside from
requiring case-by-case determinations,
Congress limited the parole authority by
restricting its use with respect to two
classes of applicants for admissions: (1)
Aliens who are refugees (unless the
Secretary determines that ‘‘compelling
reasons in the public interest with
respect to that particular alien require
that the alien be paroled . . . rather
than be admitted as a refugee’’ under
INA section 207, 8 U.S.C. 1157), see INA
section 212(d)(5)(B), 8 U.S.C.
1182(d)(5)(B); and (2) certain alien
crewmen during a labor dispute in
specified circumstances (unless the
Secretary ‘‘determines that the parole of
such alien is necessary to protect the
national security of the United States’’),
INA section 214(f)(2)(A), 8 U.S.C.
1184(f)(2)(A).
Parole decisions are discretionary
determinations and must be made on a
case-by-case basis consistent with the
INA. To exercise its parole authority,
DHS must determine that an
individual’s parole into the United
States is justified by urgent
humanitarian reasons or significant
public benefit. Even when one of those
standards would be met, DHS may
nevertheless deny parole as a matter of
discretion based on other factors.8 In
making such discretionary
determinations, USCIS considers all
relevant information, including any
criminal history or other serious adverse
factors that would weigh against a
favorable exercise of discretion.
Parole is not an admission to the
United States. See INA sections
101(a)(13)(B), 212(d)(5)(A), 8 U.S.C.
1101(a)(13)(B), 1182(d)(5)(A); see also 8
CFR 1.2 (‘‘An arriving alien remains an
arriving alien even if paroled pursuant
to section 212(d)(5) of the Act, and even
after any such parole is terminated or
revoked.’’). Parole may also be
terminated at any time in DHS’s
discretion, consistent with existing
regulations; in those cases, the
individual is ‘‘restored to the status that
he or she had at the time of parole.’’ 8
CFR 212.5(e); see also INA section
212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A).9
DHS regulations at 8 CFR 212.5
generally describe DHS’s discretionary
parole authority, including the authority
to set the terms and conditions of
parole. Some conditions are described
in the regulations, including requiring
reasonable assurances that the parolee
will appear at all hearings and will
depart from the United States when
required to do so. See 8 CFR 212.5(d).
Each of the DHS immigration
components—USCIS, U.S. Customs and
Border Protection (CBP), and U.S.
Immigration and Customs Enforcement
(ICE)—has been delegated the authority
to parole applicants for admission in
accordance with section 212(d)(5) of the
INA, 8 U.S.C. 1182(d)(5). See 8 CFR
212.5(a). The parole authority is often
utilized to permit an individual who is
outside the United States to travel to
and come into the United States without
a visa. USCIS, however, also accepts
requests for ‘‘advance parole’’ by
individuals who seek authorization to
depart the United States and return to
the country pursuant to parole in the
future. See 8 CFR 212.5(f); Application
for Travel Document (Form I–131).
Aliens who seek parole as entrepreneurs
under this rule may need to apply for
advance parole if at the time of
application they are present in the
United States after admission in, for
example, a nonimmigrant classification,
as USCIS is unable to grant parole to
aliens who are not ‘‘applicants for
admission.’’ See INA section
212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A); see
also INA section 235(a)(1), 8 U.S.C.
1225(a)(1) (describing ‘‘applicants for
admission’’). Advance authorization of
parole by USCIS does not guarantee that
the individual will be paroled by CBP
upon his or her appearance at a port of
entry.10 Rather, with a grant of advance
parole, the individual is issued a
document authorizing travel (in lieu of
a visa) indicating ‘‘that, so long as
circumstances do not meaningfully
change and the DHS does not discover
material information that was
previously unavailable, . . . DHS’s
discretion to parole him at the time of
his return to a port of entry will likely
be exercised favorably.’’ 11
Currently, upon an individual’s
arrival at a U.S. port of entry with a
parole travel document (e.g., a
Department of State (DOS) foil,
Authorization for Parole of an Alien into
the United States (Form I–512L), or an
Employment Authorization Document
(Form I–766)), a CBP officer at a port of
entry inspects the prospective parolee. If
parole is authorized, the CBP officer
issues an Arrival/Departure Record
(Form I–94) documenting the grant of
parole and the length of the parolee’s
8 The denial of parole is not subject to judicial
review. See INA section 242(a)(2)(B)(ii), 8 U.S.C.
1252(a)(2)(B)(ii); Bolante v. Keisler, 506 F.3d 618,
621 (7th Cir. 2007).
9 The grounds for termination set forth in
212.19(k) are in addition to the general grounds for
termination of parole described at 8 CFR 212.5(e).
10 See Matter of Arrabally, 25 I. & N. Dec. at 779
n.6 (citing 71 FR 27585, 27586 n.1 (May 12, 2006)
(‘‘[A] decision authorizing advance parole does not
preclude denying parole when the alien actually
arrives at a port-of-entry, should DHS determine
that parole is no longer warranted.’’)).
11 Id.
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5243
authorized parole period. See 8 CFR
235.1(h)(2). CBP retains the authority to
deny parole to a parole applicant or to
modify the length of advance parole
authorized by USCIS. See 8 CFR
212.5(c).
Because parole does not constitute an
admission, individuals may be paroled
into the United States even if they are
inadmissible under section 212(a) of the
INA, 8 U.S.C. 1182(a). Further, parole
does not provide a parolee with
nonimmigrant status or lawful
permanent resident status. Nor does it
provide the parolee with a basis for
changing status to that of a
nonimmigrant or adjusting status to that
of a lawful permanent resident, unless
the parolee is otherwise eligible.
Under current regulations, once
paroled into the United States, a parolee
is eligible to request employment
authorization from USCIS by filing a
Form I–765 application with USCIS. See
8 CFR 274a.12(c)(11). If employment
authorization is granted, USCIS issues
the parolee an employment
authorization document (EAD) with an
expiration date that is commensurate
with the period of parole on the
parolee’s Arrival/Departure Record
(Form I–94). The parolee may use this
EAD to demonstrate identity and
employment authorization to an
employer for Form I–9 verification
purposes as required by section 274A(a)
and (b) of the INA, 8 U.S.C. 1324a(a)
and (b). Under current regulations, the
parolee is not employment authorized
by virtue of being paroled, but instead
only after receiving a discretionary grant
of employment authorization from
USCIS based on the Application for
Employment Authorization.
Parole will terminate automatically
upon the expiration of the authorized
parole period or upon the departure of
the individual from the United States.
See 8 CFR 212.5(e)(1). Parole also may
be terminated on written notice when
DHS determines that the individual no
longer warrants parole or through the
service of a Notice to Appear (NTA). See
8 CFR 212.5(e)(2)(i).
B. Final Rule
Following careful consideration of
public comments received, DHS has
made several modifications to the
regulatory text proposed in the NPRM
(as described above in Section I.C.). The
rationale for the proposed rule and the
reasoning provided in the background
section of that rule remain valid with
respect to these regulatory amendments.
Section III of this final rule includes a
detailed summary and analysis of public
comments that are pertinent to the
proposed rule and DHS’s role in
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administering the International
Entrepreneur Rule. A brief summary of
comments deemed by DHS to be out of
scope or unrelated to this rulemaking,
making a detailed substantive response
unnecessary, is provided in Section
III.K. Comments may be reviewed at the
Federal Docket Management System
(FDMS) at https://www.regulations.gov,
docket number USCIS–2015–0006.
III. Public Comments on the Proposed
Rule
A. Summary of Public Comments
In response to the proposed rule, DHS
received 763 comments during the 45day public comment period. Of these,
43 comments were duplicate
submissions and approximately 242
were letters submitted through mass
mailing campaigns. As those letters
were sufficiently unique, DHS
considered all of these comment
submissions. Commenters consisted
primarily of individuals but also
included startup incubators, companies,
venture capital firms, law firms and
representatives from State and local
governments. Approximately 51 percent
of commenters expressed support for
the rule and/or offered suggestions for
improvement. Nearly 46 percent of
commenters expressed general
opposition to the rule without
suggestions for improvement. For
approximately 3 percent of the public
comments, DHS could not ascertain
whether the commenter supported or
opposed the proposed rule.
DHS has reviewed all of the public
comments received in response to the
proposed rule and addresses relevant
comments in this final rule. DHS’s
responses are grouped by subject area,
with a focus on the most common issues
and suggestions raised by commenters.
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B. Legal Authority
Comments. One commenter
supported DHS’s stated authority for
promulgating this regulation and said
that the INA grants the Secretary of
Homeland Security the authority to
establish policies governing parole and
that efforts to reduce barriers to
entrepreneurship via regulatory reform
directly addresses DHS’s mandate, ‘‘to
ensure that the overall economic
security of the United States is not
diminished by efforts, activities, and
programs aimed at securing the
homeland.’’ On the other hand, some
commenters questioned DHS’s authority
to implement this rule. A commenter
asserted that the rule created a new visa
category which is under the exclusive
purview of Congress, and therefore an
illegal extension of authority by the
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executive branch. Another commenter
indicated that the proposed rule is too
vague regarding whether ‘‘the agency
intends to grant parole to aliens already
present in the United States,’’ and
questioned whether the proposed
exercise of parole authority is supported
by legislative history, is consistent with
the INA’s overall statutory scheme, and
whether ‘‘significant public benefit
parole’’ as outlined in this rule is
‘‘arbitrary and capricious.’’
Response. DHS agrees with the
commenter that contended that the
Secretary has authority to promulgate
this rule. As noted above, DHS’s
authority to promulgate this rule arises
primarily from sections 101(b)(1)(F) and
402(4) of the HSA; sections 103(a)(1)
and (3) of the INA, 8 U.S.C. 1103(a)(1),
(3); section 212(d)(5) of the INA, 8
U.S.C. 1182(d)(5); and section
274A(h)(3)(B) of the INA, 8 U.S.C.
1324a(h)(3)(B). The Secretary retains
broad statutory authority to exercise his
discretionary parole authority based
upon ‘‘significant public benefit.’’
DHS disagrees with the comment
asserting that the proposed rule would
effectively create a new visa category,
which only Congress has the authority
to do. See INA section 101(a)(15), 8
U.S.C. 1101(a)(15) (identifying
nonimmigrant categories). Congress
expressly empowered DHS to grant
parole on a case-by-case basis, and
nothing in this rule uses that authority
to establish a new nonimmigrant
classification. Among other things,
individuals who are granted parole—
which can be terminated at any time in
the Secretary’s discretion—are not
considered to have been ‘‘admitted’’ to
the United States, see INA sections
101(a)(13)(B), 212(d)(5)(A), 8 U.S.C.
1101(a)(13)(B), 1182(d)(5)(A); and
cannot change to a nonimmigrant
category as a parolee, see INA section
248(a), 8 U.S.C. 1258(a). Nor does parole
confer lawful permanent resident status.
To adjust status to that of a lawful
permanent resident, individuals
generally must, among other things, be
admissible to the United States, have a
family or employment-based immigrant
visa immediately available to them, and
not be subject to the various bars to
adjustment of status. See INA section
245(a), (c), (k); 8 U.S.C. 1255(a), (c), (k);
8 CFR 245.1.
DHS further disagrees with the
comment that this rule is inconsistent
with the legislative history on parole.
Under current law, Congress has
expressly authorized the Secretary to
grant parole on a case-by-case basis for
urgent humanitarian reasons or
significant public benefit. The statutory
language in place today is somewhat
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more restrictive than earlier versions of
the parole authority, which did not
always require case-by-case review and
now includes additional limits on the
use of parole for refugees and certain
alien crewmen. See INA section
212(d)(5)(B), 8 U.S.C. 1182(d)(5)(B)
(refugees); INA section 214(f)(2)(A), 8
U.S.C. 1184(f)(2)(A) (alien crewmen);
Illegal Immigration Reform and
Immigrant Responsibility Act of 1996,
Public Law 104–208, div. C, sec. 602(a)–
(b), 110 Stat. 3009–689 (1996) (changing
the standard for parole). But the statute
clearly continues to authorize the
granting of parole. Across
Administrations, moreover, it has been
accepted that the Secretary can identify
classes of individuals to consider for
parole so long as each individual
decision is made on a case-by-case basis
according to the statutory criteria. See,
e.g., 8 CFR 212.5(b) (as amended in
1997); Cuban Family Reunification
Parole Program, 72 FR 65,588 (Nov. 21,
2007). This rule implements the parole
authority in that way.
In addition to the concerns described
above, one commenter argued that the
proposed rule did not clearly explain
whether ‘‘the agency intends to grant
parole to aliens already present in the
United States.’’ DHS believes it is clear
under this rule that an individual who
is present in the United States as a
nonimmigrant based on an inspection
and admission is not eligible for parole
without first departing the United States
and appearing at a U.S. port of entry to
be paroled into United States. See INA
sections 212(d)(5)(A), 235(a)(1); 8 U.S.C.
1182(d)(5)(A), 1225(a)(1). As further
discussed in section III.H. of this rule,
moreover, DHS does not contemplate
using this rule to grant requests for
parole in place for initial requests for
parole.
Comment: A commenter objected to
the extension of employment
authorization by this rule to
entrepreneur parolees for the sole
purpose of engaging in entrepreneurial
employment, stating that DHS is barred
from doing so given the comprehensive
legislative scheme for employmentbased temporary and permanent
immigration.
Response: DHS disagrees with the
commenter. Under a plain reading of
INA section 103(a), 8 U.S.C. 1103(a), the
Secretary is provided with broad
discretion to administer and enforce the
Nation’s immigration laws and broad
authority to ‘‘establish such regulations
. . . and perform such other acts as he
deems necessary for carrying out his
authority under the [INA],’’ see INA
section 103(a)(3), 8 U.S.C. 1103(a)(3).
Further, the specific definitional
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provision at section 274A(h)(3)(B) of the
INA, 8 U.S.C. 1324a(h)(3)(B), which was
raised by the commenter, presumes that
employment may be authorized by the
Secretary and not just by statute. See
Arizona Dream Act Coal. v. Brewer, 757
F.3d 1053, 1062 (9th Cir. 2014)
(‘‘Congress has given the Executive
Branch broad discretion to determine
when noncitizens may work in the
United States.’’); Perales v. Casillas, 903
F.2d 1043, 1048, 1050 (5th Cir. 1990)
(describing the authority recognized by
INA 274A(h)(3) as ‘‘permissive’’ and
largely ‘‘unfettered’’). The fact that
Congress has directed the Secretary to
authorize employment to specific
classes of foreign nationals in certain
statutory provisions does not diminish
the Secretary’s broad authority under
other statutory provisions to administer
the immigration laws, including through
the extension of employment
authorization. See generally 8 CFR
274a.12 (identifying, by regulation,
numerous ‘‘classes of aliens authorized
to accept employment’’).
C. Significant Public Benefit
Comment: One commenter stated that
the quality of the jobs created should be
a factor in determining whether the
entrepreneur’s parole will provide a
significant public benefit. The
commenter suggested formalizing some
form of priority criteria.
Response: Under this final rule,
evidence regarding job creation may be
considered in determining whether to
parole an individual into the United
States for ‘‘significant public benefit.’’
An entrepreneur may be considered for
an initial period of parole if the
entrepreneur’s start-up entity has
received a qualifying investment or
grant. Alternatively, if the entity has
received a lesser investment or grant
amount, the entrepreneur may still be
considered for parole by providing other
reliable and compelling evidence of the
start-up entity’s substantial potential for
rapid growth and job creation. Evidence
pertaining to the creation of jobs, as well
as the characteristics of the jobs created
(e.g., occupational classification and
wage level) may be considered by DHS
in determining whether the evidence,
when combined with the amount of
investment, grant or award, establishes
that the entrepreneur will provide a
significant public benefit to the United
States. As with initial parole
determinations, evidence pertaining to
the creation of jobs, as well as the
characteristics of the jobs created (e.g.,
occupational classification and wage
level) may be considered by DHS to
determine whether the entrepreneur
should be granted re-parole.
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Given the way job creation will
already be considered, DHS believes it
is unnecessary to make ‘‘job quality’’ its
own separate criterion in determining
whether to grant parole or re-parole. It
is also unclear how the commenter
believes DHS should apply any such
criterion. Under this final rule, DHS will
evaluate the totality of the
circumstances, including the evidence
about job creation, in determining
whether to parole an individual into the
United States for significant public
benefit.
D. Definitions
1. Entrepreneur—Ownership Criteria
Comments: Several commenters
expressed concern with the 15 percent
‘‘substantial ownership interest’’
requirement in the definition of
‘‘entrepreneur’’ in the proposed rule.
One such commenter said the 15
percent ‘‘substantial ownership
interest’’ requirement is only reasonable
for smaller startups and proposed that
the rule also separately include a dollar
amount to satisfy the ‘‘substantial
ownership interest’’ requirement (e.g.,
15 percent ownership interest or
ownership interest valued at $150,000
or more). Several commenters
recommended that the final rule reduce
the initial parole threshold from 15 to
10 percent and reduce the re-parole
threshold from 10 to 5 percent. Other
commenters suggested that 10 percent
ownership per individual would be a
more appropriate threshold because
some start-ups may be founded by teams
of founders that need to split equity and
requiring more than 15 percent
ownership might be too restrictive and
limit business creativity and growth.
Response: Consistent with the
commenters’ concerns and suggestions,
DHS is revising the definition of
entrepreneur in this final rule to reduce
the ownership percentage that the
individual must possess. See 8 CFR
212.19(a)(1). Based on further analysis,
DHS believes that the thresholds from
the proposed rule could have
unnecessarily impacted an
entrepreneur’s ability to dilute his or
her ownership interest to raise
additional funds and grow the start-up
entity. In this final rule, an individual
may be considered to possess a
substantial ownership interest if he or
she possesses at least a 10 percent
ownership interest in the start-up entity
at the time of adjudication of the initial
grant of parole and possesses at least a
5 percent ownership interest in the
start-up entity at the time of
adjudication of a subsequent period of
re-parole. DHS believes that the revised
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ownership percentage requirements in
this final rule adequately account for the
possibility of equity dilution, while
ensuring that the individual continues
to have a substantial ownership interest
in, and assumes more than a nominal
financial risk related to, the start-up
entity.
Given that this is a new and complex
process, DHS declines to adopt a
separate option of establishing
substantial ownership interest based on
a valuation of the entrepreneur’s
ownership interest. DHS believes that
the percentages provided within the
final rule offer clear guidance to
stakeholders and adjudicators as to what
constitutes a substantial ownership
interest regardless of the industry
involved. Reliance upon valuations of
an owner’s interest would unnecessarily
complicate the adjudicative review
process, could potentially increase fraud
and abuse, and may be burdensome for
the applicant to obtain from an
independent and reliable source. DHS,
therefore, believes that the best
indicator of an entrepreneur’s
ownership interest is the individual’s
ownership percentage since that is easy
for an applicant to establish and
provides an objective indicator for DHS
to assess. DHS has decided to take an
incremental approach and will consider
potential modifications in the future
after it has assessed the implementation
of the rule and its impact on operational
resources.
2. Other Comments on Entrepreneur
Definition
Comment: One commenter stated that,
in defining who counts as an
‘‘entrepreneur,’’ the rule should take
into account whether an individual has
been successful in the past, including by
having previously owned and
developed businesses, generated more
than a certain amount of revenue,
created more than a certain number of
jobs, or earned at least a certain amount.
Response: Under this final rule,
evidence regarding an entrepreneur’s
track record may be considered in
determining whether to parole an
individual into the United States for
‘‘significant public benefit.’’ The final
rule’s definition of entrepreneur
requires the applicant to show that he
or she both: (1) Possesses a substantial
ownership interest in the start-up entity,
and (2) has a central and active role in
the operations of that entity, such that
the alien is well-positioned, due to his
or her knowledge, skills, or experience,
to substantially assist the entity with the
growth and success of its business. See
new 8 CFR 212.19(a)(1). Some of the
factors suggested by the commenter are
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relevant evidence that the applicant can
submit to show that he or she is wellpositioned to substantially assist the
entity with the growth and success of its
business. DHS will also evaluate the
totality of the evidence to determine
whether an applicant’s presence in the
United States will provide a significant
public benefit and that he or she
otherwise merits a favorable exercise of
discretion. Given the way an
entrepreneur’s track record may already
be considered on a case-by-case basis,
DHS believes it is unnecessary to make
the specific factors identified by the
commenter their own separate criteria
in determining whether to grant parole
or re-parole.
Comment: A few commenters
recommended that DHS clarify the term
‘‘well-positioned’’ as used in the
definition of ‘‘entrepreneur.’’ See final 8
CFR 212.19(a)(1) (requiring an
international entrepreneur to prove that
he or she ‘‘is well-positioned, due to his
or her knowledge, skills, or experience,
to substantially assist the entity with the
growth and success of its business’’).
The commenters believe that the
proposed rule did not explain how an
applicant would demonstrate that he or
she is ‘‘well-positioned.’’ The
commenters recommend that the
‘‘substantial ownership interest’’ test in
the same provision should provide a
rebuttable presumption that the
entrepreneur is ‘‘well-positioned’’ and
that the ‘‘significant capital financing’’
requirements reflect the market demand
for the entrepreneur to grow the
business.
Response: DHS believes that both the
proposed rule and this final rule
sufficiently explain how an applicant
may establish that he or she is ‘‘wellpositioned’’ to grow the start-up entity.
An applicant may generally establish
that he or she is well-positioned to
advance the entity’s business by
providing evidence that he or she: (1)
Possesses a significant (at least 10
percent) ownership interest in the entity
at the time of adjudication of the initial
grant of parole, and (2) has an active and
central role in the operations and future
growth of the entity, such that his or her
knowledge, skills, or experience would
substantially assist the entity in
conducting and growing its business in
the United States. Such an applicant
cannot be a mere investor. The
applicant must be central to the entity’s
business and well-positioned to actively
assist in the growth of that business,
such that his or her presence would
help the entity create jobs, spur research
and development, or provide other
benefits to the United States. Whether
an applicant has an ‘‘active and central
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role,’’ and therefore is well-positioned
to advance the entity’s business, will be
determined based on the totality of the
evidence provided on a case-by-case
basis. Such evidence may include:
• Letters from relevant government
agencies, qualified investors, or
established business associations with
an understanding of the applicant’s
knowledge, skills or experience that
would advance the entity’s business;
• news articles or other similar
evidence indicating that the applicant
has received significant attention and
recognition;
• documentation showing that the
applicant or entity has been recently
invited to participate in, is currently
participating in, or has graduated from
one or more established and reputable
start-up accelerators;
• documentation showing that the
applicant has played an active and
central role in the success of prior startup or other relevant business entities;
• degrees or other documentation
indicating that the applicant has
knowledge, skills, or experience that
would significantly advance the entity’s
business;
• documentation pertaining to
intellectual property of the start-up
entity, such as a patent, that was
obtained by the applicant or as a result
of the applicant’s efforts and expertise;
• a position description of the
applicant’s role in the operations of the
company; and
• any other relevant, probative, and
credible evidence indicating the
applicant’s ability to advance the
entity’s business in the United States.
Particularly given the way this
evidence will be evaluated on a case-bycase basis, and the need to ensure parole
is justified by significant public benefit,
DHS declines to adopt the commenters’
suggestion of adopting a rebuttable
presumption that certain applicants
meet the ‘‘well-positioned’’
requirement. The burden of proof
remains with the applicant.
Comment: One commenter
representing a group of technology
companies recommended that DHS add
the term ‘‘intellectual property’’ as a
metric that an adjudicator would take
into consideration when determining
the ‘‘active and central role’’ that the
international entrepreneur performs in
the organization. The commenter noted
that it had several member companies
that have non-citizen inventors on a key
patent application, and have had core
intellectual property developed by noncitizens, often within the university
environment. In many of these
situations, the non-citizen inventors
were unable to obtain work
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authorization and join the emerging
startup company, resulting in loss of key
technical ability, delay, and additional
cost for the startup company to achieve
market success. The commenter believes
this rule could alleviate this investment
risk.
Response: As discussed above, an
applicant for parole under this rule may
provide any relevant, probative, and
credible evidence indicating the
applicant’s ability to advance the
entity’s business in the United States.
Such evidence includes documentation
pertaining to intellectual property of the
start-up entity, such as a patent, that
was obtained by the applicant or as a
result of the applicant’s efforts and
expertise. DHS will consider such
evidence to determine whether the
applicant performs, or will perform, an
active and central role in the start-up
entity.
Given the breadth of evidence that
can already be considered in these
determinations, DHS declines to amend
the definition of ‘‘entrepreneur’’ in 8
CFR 212.19(a)(1) to include some
consideration of ‘‘intellectual property’’
as a specific metric to determine if the
applicant will have an active and
central role in the start-up entity. DHS
believes it is appropriate to allow for
sufficient flexibility in the definition for
adjudicators to evaluate each case on its
own merits. Given the considerable
range of entrepreneurial ventures that
might form the basis for an application
for parole under this rule, DHS believes
that such flexibility is important to
ensure that cutting edge industries or
groundbreaking ventures are not
precluded from consideration simply
because of an overly rigid or narrow
definition of ‘‘entrepreneur.’’
Comment: One commenter noted that
DHS’s inclusion of criteria in section
IV.B.1. of the NPRM, ‘‘Recent Formation
of a Start-Up Entity,’’ is reminiscent of
criteria used in the O–1 nonimmigrant
classification for individuals with
extraordinary ability, except for the
focus on entrepreneurial endeavors. The
commenter especially welcomed the
final ‘‘catch-all’’ that referenced ‘‘any
other relevant, probative, and credible
evidence indicating the entity’s
potential for growth.’’ The commenter
asserted that as it pertains to
‘‘newspaper articles,’’ one of the major
difficulties of the O–1 petition process
is the lack of awareness by adjudicators
of tech-press publications, such as
Recode or TechCrunch. The commenter
explained that coverage in these
publications is very valuable to startups,
and forcing startups to garner traditional
media coverage in publications like the
Wall Street Journal or the New York
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Times is often counterproductive
towards the entrepreneur’s success.
Response: DHS agrees with the
commenter that the list of evidence
provided in the preamble to the NPRM
and this final rule provides an
illustrative, non-exhaustive list of the
types of evidence that might be
submitted by an applicant to establish
that he or she meets the definition of
entrepreneur in 8 CFR 212.19(a)(1).
Applicants may submit any relevant,
probative and credible evidence that
demonstrates the entity’s potential for
growth, including tech-press
publications.
Comment: One commenter
recommended broadening the proposed
requirement that the parolee play a
central role in operations. The
commenter noted that the DHS
November 2014 memorandum,12 which
initially directed USCIS to develop a
proposed rule under the Secretary’s
parole authority, refers to researchers,
not just managers or founders. The
commenter stated that in the technology
world, ‘‘technical founders’’ are key
employees who lead the research and
development phase, and recommended
that these technical founders be
included even if they are not managing
overall operations. To keep this
expansion targeted, the commenter
recommended requiring a technical
founder to have an advanced degree in
a STEM field from a U.S. institution of
higher education.
Response: DHS agrees that ‘‘technical
founders’’ are often key employees who
play an important role in the
development and success of a start-up
entity. DHS disagrees, however, with
the commenter’s assertion that the
definition of entrepreneur in 8 CFR
212.19(a)(1) does not sufficiently
encompass technical founders.
Technical founders can perform a
central and active role in the operations
of their start-up entity, and may be wellpositioned, due to their knowledge,
skills, or experience, to substantially
assist the entity with the growth and
success of its business. The definition of
‘‘entrepreneur’’ is not limited to those
individuals who manage the overall
operations of the start-up entity. Thus,
DHS believes it is unnecessary to
broaden the definition of
‘‘entrepreneur’’ in the way the
commenter suggests.
Comment: One commenter suggested
that the rule should provide a clear-cut
definition of a typical entrepreneur.
12 Memorandum
from Jeh Johnson, DHS
Secretary, Policies Supporting U.S. High-Skilled
Business and Workers 4 (Nov. 20, 2014), at https://
www.dhs.gov/sites/default/files/publications/14_
1120_memo_business_actions.pdf.
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This commenter asserted that the draft
rule does not adequately account for
situations where a typical entrepreneur
partially qualifies or does not qualify for
parole, but nevertheless seeks to start a
business in the United States. The
commenter stated that USCIS and the
White House should plan to have a
separate case study team to evaluate
each application.
Response: DHS believes that the rule
provides a reasonable and clear
definition of an entrepreneur. This rule
is not designed or intended to provide
parole to everyone who seeks to be an
entrepreneur, but will instead provide a
framework for case-by-case
determinations based upon specified
criteria for determining that a grant of
parole in this context provides a
significant public benefit. The
framework in this rule is consistent with
DHS’s parole authority under INA
section 212(a)(5), 8 U.S.C. 1182(a)(5),
and is based on the statutory
authorization to provide parole for
significant public benefit. Each
application for parole under this rule
will be adjudicated by an Immigration
Services Officer trained on the
requirements for significant public
benefit parole under 8 CFR 212.19. DHS
believes that a separate case-study team
could unnecessarily complicate and
delay adjudications and declines to
adopt the commenter’s suggestion.
3. Definition of Start-Up Entity—
‘‘Recently-Formed’’ and the 3-year
Limitation
Comment: Several commenters
expressed concern with the definition of
‘‘start-up entity’’ and the requirement
that an entity, in order to satisfy that
definition, must have been created
within the 3 years immediately
preceding the parole request filing date.
A few individual commenters said that
the 3-year limitation could be
inadequate in certain situations, such as
when investing in an inactive business
with other co-founders to initiate the
start-up, or when investing in highpriority areas like healthcare,
biotechnology, and clean energy that
have long gestation times. A couple of
individual commenters said that the 3year limitation may not be necessary
given the other, more stringent
requirements in the proposed rule.
Some commenters provided the
following recommendations relating to
the 3-year limitation: Eliminate the
limitation, lengthen the period to 5
years, lengthen the period to 10 years,
or include a case-by-case provision
allowing for submissions that may
satisfy the definition of ‘‘start-up
entity.’’ One commenter recommended
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that ‘‘recently formed’’ should include
entities formed within the last 10 years,
and also requested that where
applicable, DHS accept alternative
evidence to determine and establish that
the company is a ‘‘start-up’’ entity, such
as letters of attestation from investors,
industry experts within a particular
niche field, and government agencies
that speak to the average growth cycle
of a new company within a particular
area. A few commenters stated that the
3-year limitation was appropriate.
Response: In response to these
comments, DHS revised proposed 8 CFR
212.19(a)(2) and the definition of ‘‘startup entity’’ in this final rule to require
that the entity must have been formed
within the 5 years immediately
preceding the filing of the initial parole
application, rather than 3 years as
proposed. DHS believes that this
definition appropriately reflects that
some entities, particularly given the
industry in which the entity operates,
may require a longer gestation time
before receiving substantial investment,
grants, or awards. This 5-year limitation
continues to reflect the Department’s
intention for parole under this final
rule: To incentivize and support the
creation and growth of new businesses
in the United States, so that the country
may benefit from their substantial
potential for rapid growth and job
creation. DHS recognizes that the term
‘‘start-up’’ is usually used to refer to
entities in early stages of development,
including various financing rounds used
to raise capital and expand the new
business, but the term ‘‘goes beyond a
company just getting off the ground.’’ 13
Limiting the definition of ‘‘start-up’’ in
this proposed rule to entities that are
less than 5 years old at the time the
parole application is filed is a
reasonable way to help ensure that the
entrepreneur’s entity is the type of new
business likely to experience rapid
growth and job creation, while still
allowing a reasonable amount of time
for the entrepreneur to form the
business and obtain qualifying levels of
investor financing (which may occur in
several rounds) or government grants or
awards.
4. Other Comments on the Definition of
Start-up Entity
Comment: One commenter said that
formation should be defined to be either
the creation of a legal entity under
which the activities of the business
13 U.S. Small Business Administration, Startups &
High Growth Businesses, available at https://
www.sba.gov/content/startups-high-growthbusinesses (‘‘In the world of business, the word
‘startup’ goes beyond a company just getting off the
ground.’’).
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would be conducted or the effective
date of an agreement between the
entrepreneur and an existing business to
launch the business activities as a startup, branch, department, subsidiary, or
other activity of an existing business
entity. Another commenter suggested
that DHS consider restructuring (e.g.,
use successor-in-interest rules) and
other pivots (in terms of changes in the
service or product, as well as markets)
during the 3-year period immediately
preceding the filing of the parole
application and at time of application
for re-parole.
Response: DHS appreciates the
commenters’ suggestions and notes that
recent formation within the definition of
‘‘start-up entity’’ in 8 CFR 212.19(a)(2)
is already limited to the creation of the
entity within the 5 years immediately
preceding the filing date of the alien’s
initial parole request. DHS further
declines to amend 8 CFR 212.19(a)(2) to
broaden what may be considered
‘‘recently formed’’ to include the
effective date of an agreement between
the entrepreneur and an existing
business to launch new business
activities, restructurings and other
pivots. Given that this is a new and
complex process, DHS has decided to
take an incremental approach and will
consider potential modifications in the
future after it has assessed the
implementation of the rule and its
impact on operational resources.
Comment: One commenter suggested
that start-up entities under this rule
should be limited to businesses that fill
a need that is currently not being
fulfilled in the United States.
Response: One of the goals of this
final rule is to increase and enhance
entrepreneurship, innovation, and job
creation in the United States; and, under
this rule, evidence regarding the
expected contributions of a start-up
entity will be considered in determining
whether to parole an individual into the
United States. A successful start-up
entity, particularly one with highgrowth potential, will fulfill an
identified business need. For example,
the entrepreneur may be starting the
business to alter an existing industry
through innovative products or
processes, innovative and more efficient
methods of production, or cutting-edge
research and development to expand an
existing market or industry. It is also
unclear from the commenter’s
suggestion how ‘‘business need’’ would
be defined, and DHS believes that
attempting to do so in this rule could
result in an overly restrictive definition
that fails to account for future
innovation, would be unnecessarily
rigid, and would lessen the rule’s ability
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to retain and attract international
entrepreneurs who will provide a
significant public benefit to the United
States.
Comment: An individual commenter
requested that staffing companies be
included as a type of startup.
Response: In this final rule, and for
purposes of parole under this program,
DHS defines a ‘‘start-up entity’’ as a U.S.
business entity that was recently
formed, has lawfully done business
during any period of operation since its
date of formation, and has substantial
potential for rapid growth and job
creation. See 8 CFR 212.19(a)(2). The
rule requires that entities meet certain
specified criteria for obtaining parole,
but the rule does not specifically
exclude staffing companies from
participating if they otherwise meet
these criteria. DHS therefore will not
revise the definition of start-up entity in
this rule as requested by the commenter.
Comment: One commenter asserted
that the rule fails to specify how a startup entity can demonstrate that it has
‘‘lawfully done business’’ or ‘‘has
substantial potential for rapid growth
and job creation.’’ The commenter
recommended revising the definition to
more closely align with 8 CFR
214.2(l)(1)(ii)(G)(2) and (l)(1)(ii)(H) by
instead requiring evidence that the
entity is or will be engaged in the
regular, systematic, and continuous
provision of goods or services. This
commenter suggested that the
submission of expert witness testimony
by a reputable third party, such as a
recognized professor or leader in the
start-up entity’s proposed field, should
be given deference and treated under
the final rule as a rebuttable
presumption establishing that the startup ‘‘has substantial potential for rapid
growth and job creation.’’
Response: DHS declines to adopt the
commenter’s suggested changes in this
final rule. DHS believes that an
applicant can demonstrate the start-up
entity’s lawful business activities
through many different means and will
keep this requirement flexible to
account for the many differences among
start-up entities. Such evidence might
include, but is not limited to, business
permits, equipment purchased or
rented, contracts for products or
services, invoices, licensing agreements,
federal tax returns, sales tax filings, and
evidence of marketing efforts.
DHS believes that the rule provides a
clear framework for establishing that a
start-up entity has substantial potential
for rapid growth and job creation. See 8
CFR 212.19(b)(2)(ii) and (iii). An
applicant generally must satisfy the
criteria in 8 CFR 212.19(b)(2)(ii) to be
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considered for parole under this rule.
An applicant who only partially meets
one or both of the criteria in 8 CFR
212.19(b)(2)(ii) may still be eligible for
consideration for parole under this rule
if the applicant provides additional
reliable and compelling evidence that
the start-up entity has the substantial
potential for rapid growth and job
creation. DHS recognizes that the rule
does not provide specific evidence that
must be submitted in order to satisfy the
alternative criteria in 8 CFR
212.19(b)(2)(iii). DHS believes that
providing a specific set of evidence
would have the unintended effect of
narrowing a provision that was designed
to allow for the submission of any
evidence that the applicant believes
may establish the substantial potential
of his or her start-up entity, recognizing
that such evidence may vary depending
on the nature of the business and the
industry in which it operates. DHS
believes that it is important to retain
criteria that provide flexibility to the
applicant and DHS. Such flexibility is
consistent with DHS’s parole authority
and the case-by-case nature of each
parole determination as required by
statute. See INA section 212(d)(5)(A), 8
U.S.C. 1182(d)(5)(A).
DHS does not believe that the rule
should be revised to align with 8 CFR
214.2(l)(1)(ii)(G)(2) and (l)(1)(ii)(H). The
requirements set forth in 8 CFR
214.2(l)(1)(ii)(G)(2) and (l)(1)(ii)(H)
relate specifically to eligibility for
classification as an L–1 nonimmigrant
and are not necessarily relevant to the
requirements set forth in this rule,
which are specifically designed to
provide the framework by which USCIS
will determine whether to grant parole
to certain individuals for significant
public benefit. Particularly given the
way this evidence will be evaluated on
a case-by-case basis, and the need to
ensure parole is justified by significant
public benefit, DHS declines to adopt
the commenters’ suggestion of adopting
a rebuttable presumption that certain
entities have substantial potential for
rapid growth and job creation. The
burden of proof remains with the
applicant.
5. Qualified Government Award or
Grant
Comment: One commenter stated that
the rule’s grant-based criteria for
consideration focused too narrowly on
awards made by government entities
The commenter noted that
entrepreneurs seek grants from a variety
of sources and that funding from nonprofits or not-for-profit entities (such as
U.S. universities) can be significant
sources of start-up capital. The
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commenter requested that the rule be
revised to allow entrepreneurs of nonprofit start-up entities to qualify for
parole under this program based on the
receipt of charitable grants.
Response: DHS appreciates the
commenter’s suggestion, but declines to
adopt the suggestion in this final rule to
include charitable grants as a type of
qualifying grant or award under 8 CFR
212.19(a)(3). DHS believes, given the
nature of charitable grants, that they
would not present the same level of
validation regarding the entity’s highgrowth potential as would a grant or
award from a Federal, State, or local
government entity with expertise in
economic development, research and
development, or job creation. Since the
validating quality of a substantial
government grant or award is an
important factor DHS will rely upon to
determine if the entrepreneur will
provide a significant public benefit to
the United States, and since that same
validating quality does not necessarily
extend to charitable grants or awards,
DHS declines to adopt the commenter’s
suggestion. DHS notes, however, that
nothing in this final rule prohibits
entrepreneurs from accepting charitable
grants or pointing to such funding as
evidence that parole would be justified
and that they merit a favorable exercise
of discretion. Moreover, given that this
is a new and complex process, DHS has
decided to take an incremental
approach and will consider potential
modifications in the future after it has
assessed the implementation of the rule
and its impact on operational resources.
Comment: One commenter noted that
the definition of qualified government
award or grant and the phrase ‘‘federal,
state, or local government entity,’’ are
ambiguous as to whether an
entrepreneur may qualify under the rule
based on a grant by a foreign
government. According to the
commenter, the rule does not explicitly
state that the ‘‘federal, state, or local
government entity’’ needs to be
restricted to entities in the United
States. The commenter encouraged
USCIS to adopt a broad approach in
determining which kinds of grants may
qualify and to allow entrepreneurs to
qualify if their start-up entity attracts
substantial foreign government
financing. The commenter also
suggested that USCIS and CBP should
again emphasize that parole may be
discretionarily denied in cases that
could risk national security or impair
international relations.
Response: While DHS always
maintains the ability to deny parole in
its discretion, including in those cases
where there may be a national security
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or foreign relations concerns, DHS
declines to expand the definition of
qualified government grant or award to
include grants or awards from a foreign
governmental entity. To eliminate
potential confusion, DHS is revising the
definition as proposed to specifically
exclude foreign government entities.
The receipt of significant funding from
certain U.S. federal, state or local
government entities is an important
factor that DHS will weigh in
determining if the entrepreneur will
provide a significant public benefit to
the United States. DHS believes that
significant funding from certain U.S.
federal, state or local governmental
entities is a strong indicator of a startup entity’s substantial potential for
rapid growth, including through
enhancing innovation, generating
revenue, obtaining significant additional
investments of capital, and creating
jobs. Such government entities regularly
evaluate the potential of U.S.
businesses, so the choice to provide a
significant award or grant to a particular
start-up entity can be a compelling
indicator of that start-up’s substantial
potential for rapid growth and job
creation. Because these government
entities are formed to serve the U.S.
public, their choice to fund a particular
business may be more indicative than
that of a foreign government as to
whether the business’s operations
would provide a significant public
benefit in the United States. DHS
believes that the reliability and weight
of the independent assessment
performed by certain U.S. federal, state
or local governmental entities before
issuing a grant or award does not
necessarily extend to grants or awards
made by foreign governmental entities.
DHS therefore declines to adopt the
commenter’s suggestion to revise the
rule to include funding from foreign
governmental entities as one of the
criteria in 8 CFR 212.19(a)(3).
6. Qualified Investment
Comment: Some commenters
suggested that DHS define ‘‘capital’’
broadly to include cash, cash
equivalents, secured or unsecured loan
proceeds, payments for or obligations
under binding leases, the value of
goods, equipment, and intangible
property such as patent rights,
trademarks, trade secrets, and
distinctive ‘‘know how.’’
Response: DHS declines to adopt the
commenters’ suggestions. ‘‘Qualified
investment’’ as a general criterion for
parole is limited to a specific monetary
investment in the form of equity or
convertible debt, to ensure that the
investment is easily valued as well as
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significant in nature. This promotes fair
and efficient administration of the
process under this rule, while also
ensuring the integrity of that process. In
addition, equity investments and
convertible debt investments both
involve a distinctive level of expert
review, due diligence, and oversight.
For example, according to the Small
Business Administration, venture
capital firms and angel investors
typically review a business plan and
evaluate a start-up’s management team,
market, products and services, operating
history, corporate governance
documents, and financial statements
before making an equity investment.14
Such investment generally also involves
active monitoring via board
participation, strategic marketing,
governance, and capital structure.15
While non-monetary contributions
made to a start-up entity may not be
considered as a qualified investment for
purposes of the general criteria of a
parole determination under this rule,
the rule does not prohibit such
contributions and they may be
considered as evidence under the
alternative criteria at 8 CFR
212.19(b)(2)(iii) and (c)(2)(iii) to
establish that the start-up entity has, or
continues to have, substantial potential
for rapid growth and job creation.
Comment: One commenter stated that
the requirement that start-up capital
must be equity or convertible debt may
be too limiting given the venture finance
markets today. The commenter said that
other investment instruments are
commonly used by sophisticated market
participants, and that such investments
might not technically be considered
equity or convertible debt even though
they are bona fide capital investments.
The commenter recommended that the
definition be made ‘‘future-proof’’ by
creating a catch-all for other investment
instruments that are convertible,
exchangeable, or exercisable for equity
in the start-up, regardless of the name of
the investment instrument.
Response: DHS understands that the
regulatory text may not capture all
possible future investment instruments
and has amended the regulatory text to
capture other commonly used
convertible securities now and in the
future. The final rule defines ‘‘qualified
investment’’ as an investment made in
good faith, and that is not an attempt to
circumvent any limitations imposed on
investments under this section, of
lawfully derived capital in a start-up
14 Venture Capital, https://www.sba.gov/startingbusiness/finance-your-business/venture-capital/
venture-capital.
15 Id.
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entity that is a purchase from such
entity of its equity, convertible debt or
other security convertible into its equity
commonly used in financing
transactions within such entity’s
industry. DHS believes that this
definition, in practice, will apply to
other securities convertible into equity
(other than convertible debt) that are or
become commonly used within the
start-up entity’s industry, and DHS may
issue additional guidance in the future
regarding such securities as necessary.
Given that this program is new and
complex, DHS has decided to take an
incremental approach and will consider
potential modifications in the future
after it is able to assess implementation
of the rule and its impact on operational
resources.
7. Qualified Investor
Comment: Several commenters,
including associations and individual
commenters, stated that the proposed
‘‘qualified investor’’ definition is more
stringent than the ‘‘accredited investor’’
definition adopted by the Securities and
Exchange Commission (SEC). Several
commenters stated that many angel
investors, especially newer investment
firms and angels, would not be
considered ‘‘qualified investors’’ under
this rule. One of these commenters
suggested revising the definition of a
qualified investor using the guidelines
set forth by AngelList, which requires
all syndicate leads on their site to have
registered as accredited investors, to
have made at least two direct
investments in technology start-ups, and
to have attracted additional funding
beyond the syndicate lead. Some
commenters generally stated that many
potentially high-growth firms started by
international entrepreneurs will not
qualify for parole or re-parole because
the business did not receive an
investment from a qualified U.S.
investor, and encouraged the rule to be
more flexible to allow for additional
sources of capital.
Response: In response to comments
received, DHS is revising proposed 8
CFR 212.19(a)(5), which provides the
definition of a qualified investor. For
purposes of this section, such an
individual or organization may be
considered a qualified investor if,
during the preceding 5 years, the
individual or organization made
investments in start-up entities in
exchange for equity or convertible debt
or other security convertible into equity
commonly used in financing
transactions within their respective
industries comprising a total in such 5year period of no less than $600,000.
See final 8 CFR 212.19(a)(5)(i). DHS has
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removed the proposed requirement that
the total investment amount be made in
3 separate calendar years and,
consistent with its analysis of relevant
investment data, reduced the amount
from $1,000,000 to $600,000.16 DHS is
also making revisions consistent with
the change to the qualified investment
definition by adding ‘‘other securities
that are convertible into equity issued
by such an entity and that are
commonly used in financing
transactions within such entity’s
industry.’’ DHS agrees with commenters
that the qualified investor requirement
is more stringent than the SEC
‘‘accredited investor’’ definition, but
believes the additional parameters for
qualified investors under the rule are
appropriate. The ‘‘accredited investor’’
definition for SEC purposes is focused
on the investing entity’s assets or the
individual investor’s net worth or
annual income,17 not on the investor’s
16 To arrive at this level, DHS relied on the
$250,000 median seed round for active firms that
successfully exited accelerators, as is described
more fully in in the ‘‘Volume Projections’’
subsection of the ‘‘Statutory and Regulatory
Requirements’’ section of this final rule notice.
Second, DHS multiplied this figure by 2.4, which
is an estimate of the average number of investments
made over a five-year period by qualified investors.
DHS arrived at the figure for average investments
over five years using the following methodology.
DHS used the ‘‘investor graph’’ section of the Seed
DB data set to extract investment round information
for investors that have invested in various startup
accelerators’ portfolio companies. The search
engine is not set up in a manner in which random
sampling can be done, so DHS obtained data for
nine accelerators chosen from the 2016 Seed
Accelerator Rankings project (SARP), the report of
which is found at: https://seedrankings.com/pdf/
sarp_2016_accelerator_rankings.pdf. SARP ranks
accelerators via a composite scoring system based
on various metrics, including funding value
averages and exit performance, and produces a list
of the top-rated accelerators, although there is no
pre-set number of accelerators that can appear in
the ranking list each year. In the 2016 SARP report
there were twenty-three Seed Accelerators ranked
out of a total of 160 that the program tracks. DHS
was able to extract investment round data from nine
of the twenty-three SARP ranked accelerators, for a
total of about 3,600 individual investment rounds.
Next, DHS grouped these rounds for the five-year
period October 2011–November 2016 to result in
3,085 records. Next, DHS removed duplicates to
parse the list into records for unique investor
names. As a result, 1,329 unique investors
remained. Dividing the 3,085 by 1,329 investors
yields an average of 2.4, which DHS used as a
reasonable estimate of the average number of
investments that qualified investors made in a five
year period, at least for the specific accelerators
involved. DHS notes that there are several caveats
to this analysis. First, the data only includes
investments made through accelerators. If nonaccelerator investments were included, for which
DHS could not obtain data, the average would likely
be higher. Second, some rounds did not include an
amount and some investor names appeared with
variations. DHS conducted several data runs based
on different filtering techniques and generally the
range of average investments was between 2.32 and
2.5.
17 17 CFR 230.501(a).
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track record of successfully investing in
start-up entities. An investor’s
successful track record of investing in
start-up entities provides an important
measure of objective validation that
DHS will rely upon as part of evaluating
whether granting parole to a particular
individual would provide a significant
public benefit.
DHS also declines to adopt the
investor track record criteria associated
with AngelList’s requirements, as DHS
believes that the past success of
qualified investors can be demonstrated
sufficiently by utilizing the criteria set
forth in the final rule. DHS has
maintained the requirements under 8
CFR 212.19(a)(5)(ii) as evidence that the
investor has had previous successful
investments, which are similar to
certain criteria for a start-up entity to
demonstrate eligibility for re-parole
under this rule. See final 8 CFR
212.19(a)(5)(ii).
Comment: A joint submission from an
advocacy group and a non-profit
organization proposed that DHS create a
‘‘whitelist’’ of qualified investors and
modify the rule such that any start-up
receiving an investment from a
whitelisted investor proceed through an
expedited review process. The
commenter said that this would both
streamline the parole process and
diminish the burden on adjudicators to
analyze the merits of often complicated
technology companies. The commenter
said that the qualification process for
such an investor whitelist could be
significantly more robust than the rule’s
proposed definition of ‘‘qualified
investor’’ and should be updated on an
annual or biannual basis. Another joint
submission suggested the creation of a
‘‘Known Qualified Investor’’ program,
similar to the ‘‘Known Employer’’ pilot
program recently created by DHS in a
different context, to assist the overall
adjudication process.
Response: DHS appreciates the
commenters’ suggestions. The Known
Employer program referenced by the
commenter remains in a pilot stage.
DHS will assess the effectiveness of the
Known Employer program after the pilot
is complete, and then determine
whether the program should be made
permanent. If the program is successful,
DHS will assess whether it may be
expanded to other adjudication
contexts. Committing to use a similar
program in the context of this
rulemaking would thus be premature.
DHS also declines to adopt the
commenters’ suggestion to create a
‘‘whitelist of qualified investors’’ and an
expedited process for applications based
on investment from such investors at
this time. Given that this is a new and
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complex process, DHS has decided to
take an incremental approach and will
consider potential modifications in the
future after the Department has assessed
the implementation the process and its
impact on operational resources.
8. Evidence Required To Establish
Qualified Investor
Comment: Several commenters
expressed concern about the burden of
proving that investors have met the
revenue and job creation criteria in the
definition of qualified investor, which
the commenters said could prevent
investors from participating. One
commenter stated that early-stage
investors usually do not keep records of
employees or the revenues of their
portfolio companies, and that those
companies would not be inclined to
respond to paperwork requests from
their investors that do not relate to their
own success. Another commenter said
that some investors do not make their
investments known publicly and the
vast majority of investors do not make
public their returns (let alone the
number of jobs created). Another
commenter said that the rule should
only require evidence of publicly
available information, concluding that it
would be too invasive to require
disclosure of confidential employee data
or other confidential financial
information of third-party companies
that have no ties to the start-up entity
related to the parole applicant. A few
commenters requested that DHS allow
venture capitalists, accelerators, and
incubators to register so that they would
not be required to produce the evidence
of their qualifications with each parole
application.
Response: DHS does not believe that
providing evidence of revenues
generated or jobs created by entities in
which the investor previously invested
is overly burdensome or would require
the investor to publicly reveal otherwise
sensitive information. DHS believes,
given the significance of an investor’s
track record of successful investment in
start-ups to the determination of
significant public benefit, that the need
for this evidence outweighs the
potential burden on the applicant and
investor to compile and submit it.
However, as DHS continues to assess
the implementation of the process once
the rule is final, the Department will
consider potential ways to modify the
process given the kinds of issues raised
by these comments.
9. Foreign Funding/Investment
Comment: Several commenters
provided input on the proposed
requirement that ‘‘qualified investor’’
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funds must come from either U.S.
citizens, lawful permanent residents, or
entities that are majority owned and
controlled by U.S. citizens or lawful
permanent residents. Nearly all
commenters on this topic expressed
concerns about this requirement as a
major limiting factor of the rule. Some
commenters focused on the potential
economic benefits of broadening the
definition of ‘‘qualified investor’’ to
include foreign investment. These
commenters asserted that it would be
economically beneficial to allow nonU.S. investments, as there are many
experienced investors from outside the
United States that could bring direct
foreign investment into the country and
create jobs. Another commenter stated
that, by limiting qualification to
domestic investors, DHS is foregoing a
critical opportunity to attract foreign
entrepreneurs and their investments.
Response: DHS disagrees with the
assertion that this rule precludes or
otherwise discourages foreign
investment. This rule does not preclude
entrepreneurs from seeking and
obtaining investment from any number
of sources, whether that is foreign
investment, personal funds, or funds
from friends and family. This rule,
however, does limit the types of
investment that will be considered by
DHS as a qualifying investment for
purpose of determining if the
entrepreneur and his or her start-up
entity meet the requirements for
consideration for parole set out in 8 CFR
212.19. DHS believes it is important to
limit the type and source of investment
that will be considered a qualifying
investment, since the investment is
meant to serve in part as an objective
way to help ensure and validate that the
start-up entity’s activities will benefit
the United States. DHS does not believe
investments from foreign sources—
which are significantly more difficult
for DHS to evaluate for legitimacy and
screen for indicators of fraud and
abuse—would provide the same
measure of objective validation.
Comment: Multiple commenters
stated that eligibility criteria should
focus exclusively on the location of the
start-up entity and its related growth
and job creation, not on the citizenship
and residence of the investor. Some
commenters stated that excluding
foreign investors from the definition of
‘‘qualified investors’’ is unduly limiting,
because many high-potential
international entrepreneurs might not
have a pre-existing relationship with a
U.S.-based investor. Commenters state
that such entrepreneurs, especially if
living in other countries, would have
difficulty attracting investment from
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U.S. investors and becoming eligible for
parole under this rule. Another
commenter cited data concluding that
foreign entrepreneurs currently outside
of the United States are at a particular
disadvantage, as they lack access to
U.S.-based angel and venture funding.
Response: DHS agrees that the U.S.
location of the start-up entity and its
related growth and job creation should
be a critical component of eligibility
under this rule in order to help ensure
the exercise of parole is justified by
significant public benefit to the United
States. DHS believes, however, that the
‘‘qualifying investor’’ must also be a
U.S. citizen or lawful permanent
resident or an entity that is majority
owned or controlled by U.S. citizens or
lawful permanent residents. DHS can
evaluate more rapidly, precisely, and
effectively whether these investors have
an established track record of prior
investments, in part due to greater
access to relevant and reliable records.
Such investors will also be subject to
the laws of the United States, which
provides some additional assurance that
the entrepreneurs they back will
provide a significant public benefit to
the United States.
DHS is not prohibiting foreign
investors from investing in the
entrepreneur’s start-up entity, but rather
is simply limiting those investors that
can serve as ‘‘qualified investors’’ for
purposes of establishing the
entrepreneur’s eligibility for parole
under this rule. DHS anticipates that
entrepreneurs living outside the United
States will be able to demonstrate
eligibility for parole consideration
under this rule, whether based on
investment from U.S. investors, grants
or awards from certain U.S. Government
entities, or a mixture of alternative
criteria. For all the reasons above, the
definition of ‘‘qualified investor’’ will
help DHS manage an efficient process
for adjudicating requests under this rule
while appropriately screening for
potential fraud or abuse and ensuring
that each grant of parole is justified by
significant public benefit to the United
States.
Comment: Other commenters focused
on specific ways that DHS might allow
applicants to use foreign investment to
establish their eligibility for parole
consideration, including by limiting
such investment to the entrepreneur’s
country of origin, or to only those
foreign investors who do not present a
national security concern. A few
commenters asserted that DHS has the
capability to verify the bona fides of
foreign investors through, for example,
the following mechanisms: Making
inquiries through U.S. embassy officials,
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requesting resumes and the investment
history for foreign angel investors,
requesting similar documentation used
by EB–5 petitioners to establish their
lawful source of funds, and consulting
publicly available data on reputable
foreign investors with a history of
successful investments in various
countries. Some commenters provided
suggestions for alternative or revised
definitions relating to foreign investors
that could remain easily verifiable by
DHS, with the burden being on the
investor, including (1) professionally
managed funds with at least $10 million
under management and registered with
the local jurisdiction, and (2) angel
investors that have made credible
investments in U.S. companies under
the same standards as U.S. ‘‘qualified
investors.’’ Finally, an individual
commenter expressed concerns that
even investments from U.S. sources
could be suspect, and could serve as a
pass-through for ineligible investors
such as the entrepreneur’s family or
foreign nationals.
Response: While DHS understands
that international entrepreneurs can
attract legitimate investment capital
from non-U.S. sources, DHS believes—
as explained at greater length above—
that it is appropriate and important to
require that a ‘‘qualified investment’’
come from a U.S. source as one of the
general criteria to establish that the
start-up entity has the substantial
potential for rapid growth and job
creation. DHS is prepared to monitor the
bona fide nature of such U.S.-based
investments, as described in greater
detail above. Moreover, the rule neither
precludes an applicant from securing
funding from non-U.S. sources nor
precludes such funding from being
considered, non-exclusively, under the
alternative criteria at 8 CFR
212.19(b)(2)(iii) or (c)(2)(iii). Given that
this is a new and complex process, DHS
will consider potential modifications in
the future after it has assessed the
implementation of the rule and its
impact on operational resources.
10. Self-Funding/‘‘Bootstrapping’’
Comment: Several commenters argued
that entrepreneurs should be able to
demonstrate eligibility for parole under
this rule not only through funding from
U.S. investors or U.S. Government
entities, but also through self-financing
(known as ‘‘bootstrapping’’). One
commenter noted that many highly
successful start-up founders initially
grew their companies through
bootstrapping, not by raising capital
from external investors.
Response: DHS declines to expand the
definition of ‘‘qualified investment’’ to
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include self-funding by the entrepreneur
applicant. DHS believes that this
definition should include only those
investors who have a history of making
similar investments over a 5-year period
and who can demonstrate that at least
two of the entities receiving such
investments have subsequently
experienced significant growth in
revenue or job creation. See final 8 CFR
212.19(a)(5). DHS believes that the
investment of a substantial amount of
capital by qualified investors in an
entrepreneur’s start-up entity can serve
as a strong indication of the entity’s
substantial and demonstrated potential
for rapid business growth and job
creation. Self-funding, while a rational
financing strategy for many
entrepreneurs, does not provide the
same objective and external validation
that DHS requires in assessing whether
granting parole to an individual is
justified based on significant public
benefit.
11. Other Comments on Qualified
Investors
a. Crowdfunding
Comment: Several commenters stated
that the rule should allow crowdfunding
as a qualified investment. These
commenters noted that entrepreneurs
have raised over a billion dollars in
investments through various types of
crowdfunding platforms, which serve to
broaden the base of available investors
and demonstrate a venture’s potential
growth. Commenters also cited the
Jumpstart Our Business Startups Act
(JOBS Act) of 2012, which created a
national regulatory framework for
securities-based crowdfunding
platforms in particular, along with
public statements suggesting that
securities-based crowdfunding is
recognized by Congress and the
Administration as a valuable and
increasingly-used investment tool. One
commenter also stated that allowing the
use of crowdfunding platforms would
increase the pool of potential applicants
for entrepreneurial parole and could
provide a workable intermediary for
foreign investment in eligible start-up
entities. One commenter suggested
potential requirements that would
facilitate the use of crowdfunding
investment sources, such as setting a
threshold amount for eligible
crowdfunding investments and
confirming that such investments have
been deposited in the start-up entity’s
bank account after the end of the
crowdfunding campaign.
Response: DHS appreciates the
commenters’ suggestions. Investments
made in a start-up entity through an
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SEC-compliant intermediary, such as an
SEC-compliant crowdfunding platform,
will be treated no differently for
purposes of this rule than had the
investments been made directly. In
order to promote the integrity of
adjudications under this rule, DHS
declines to make changes to the
definition of ‘‘qualified investor’’ that
would effectively treat funds generated
through crowdfunding platforms as a
different class of eligible investment.
DHS notes, however, that evidence of a
successful donation-based or securitiesbased crowdfunding campaign could be
provided under the rule’s alternative
eligibility criteria.
b. Established U.S. Investors
Comment: One commenter questioned
the requirement that capital be received
‘‘from established U.S. investors (such
as venture capital firms, angel investors,
or start-up accelerators) with a history of
substantial investment in successful
start-up entities.’’ The commenter stated
that the requirement increases the
relative bargaining power of established
investors working with entrepreneurs
seeking parole under this rule, while
diminishing that of new venture capital
firms, new angel investors, and new
start-up accelerators. The commenter
stated that if it is kept in its current
form, the rule is not clear whether an
investment from a non-established
investor would jeopardize the parole
eligibility of an entrepreneur whose
start-up entity is also funded by
established investors.
Response: The definition of ‘‘qualified
investor, including the requirement that
an investor have a history of substantial
investment in successful start-up
entities, is intended to help ensure that
such investors are bona fide and not
concealing fraud or other illicit
activity—and thus protect the integrity
of the parole process under this rule.
The definition is also intended to ensure
that a qualifying investment serves as a
strong and reliable indicator of the startup entity’s substantial potential for
rapid growth and job creation, which is
relevant to assessing whether granting
parole to an entrepreneur is justified by
significant public benefit.
DHS emphasizes that the rule does
not prohibit investment from U.S.
investors who do not have an
established track record of substantial
investment in start-up entities under the
rule’s definition of ‘‘qualified investor.’’
Any investment from an investor who is
not a qualified investor, however, will
not count toward the minimum
investment criteria associated with the
initial parole period or re-parole period.
DHS will, of course, monitor all
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elements of an application for evidence
of fraud or other illegal or illicit
activities. It will also assess the totality
of the evidence in evaluating whether
granting parole to an entrepreneur is
justified by significant public benefit.
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c. Approved Regional Centers
Comment: One commenter requested
that USCIS-approved Regional Centers
(based on an approved Form I–924) be
allowed to qualify as established U.S.
investors. The commenter stated that
investment by a Regional Center in a
U.S. start-up entity would be a natural
extension of what Regional Centers
already do, since Regional Centers pool
investment for qualified EB–5 visa
projects.
Response: DHS believes it is
important to limit qualifying investors
to those who have an established record
of successful investments in start-up
entities. DHS believes that such a record
would include, during the 5-year period
immediately preceding the filing of the
parole application, one or more
investments in other start-up entities in
exchange for equity or convertible debt
comprising a total of no less than
$600,000. See final 8 CFR
212.19(a)(5)(i). DHS will require
monetary commitments, rather than
non-monetary commitments such as
credit for in-kind value (e.g., credit for
services), given the difficulty of valuing
such commitments and the potential for
fraud and abuse. The applicant would
also need to show that, subsequent to
such investment by the investor, at least
2 such entities each created at least 5
qualified jobs or achieved at least
$500,000 in revenue with average
annualized revenue growth of at least 20
percent. See final 8 CFR 212.19(a)(5)(ii).
As described in greater detail above,
these criteria are intended to ensure that
investors are bona fide and thus protect
the integrity of the parole process under
this rule. They are also intended to
ensure that a qualifying investment
serves as a strong and reliable indicator
of the start-up entity’s substantial
potential for rapid growth and job
creation, which is relevant to assessing
whether granting parole to an
entrepreneur is justified by significant
public benefit. DHS declines to adopt a
special provision for regional centers
approved to participate in the EB–5 visa
program. Although such centers are not
categorically excluded from the
definition of ‘‘qualified investor’’ under
this rule, they would need to meet all
the same criteria as any other qualified
investor.
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12. Qualified Jobs
benefit created by an entrepreneur’s
start-up entity.19
a. Qualifying Employee
Comments: Two commenters
recommended that DHS broaden the
definition of the term ‘‘qualifying
employee.’’ One commenter stated that
the term should include any individual
authorized to work in the United States,
regardless of immigration status, to
avoid creating a conflict for employers
who are prohibited from discriminating
based on an individual’s citizenship or
immigration status. Another commenter
advocated for the inclusion of
independent contractors in the
definition of qualifying employee.
Response: DHS declines to expand the
definition of qualifying employee,
which already includes a U.S. citizen, a
lawful permanent resident, or other
immigrant lawfully authorized to be
employed in the United States, who is
not an entrepreneur of the relevant startup entity or the parent, spouse, brother,
sister, son, or daughter of such an
entrepreneur. See final 8 CFR
212.12(a)(7). DHS believes that creating
jobs for these individuals is more likely
to provide a significant public benefit
given their stronger ties to the United
States. Similarly, DHS believes that
entrepreneurs and start-up entities that
create positions for employees are more
likely to provide a significant public
benefit than those who rely only on
arrangements with independent
contractors. Such arrangements would
generally have a weaker nexus to the
start-up entity, may not have been
created as a direct result of the start-up
entity’s activities, and could be more
difficult to validate. Nothing in this rule
either supersedes or conflicts with
nondiscrimination laws enacted under
the Immigration Reform and Control Act
(IRCA).18 Under existing law, it would
generally be an unfair immigrationrelated employment practice for an
entity to discriminate against someone
authorized to work in the United States
because of that person’s national origin
or, in the case of a ‘‘protected
individual,’’ citizenship status. See 8
U.S.C. 1324b(a) (generally prohibiting
such practices, subject to specific
exceptions, and defining ‘‘protected
individual’’ to include U.S. citizens,
lawful permanent residents, and certain
other immigrants). This rule does not
permit any such otherwise prohibited
practices. Instead, it uses the creation of
jobs for U.S. citizens, permanent
residents, and other authorized
immigrants as one indication of the
18 Public Law 99–603 section 102, 100 Stat. 3359
(Nov. 6, 1986); INA section 274B.
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b. Full-Time Employment
Comments: Several commenters said
that the rule should have a more flexible
definition of ‘‘full-time employment.’’
One commenter said that the definition
of the term should not require the job
to be filled for at least a year and should
include job-sharing arrangements.
Another commenter recommended that
the definition of full-time employment
include combinations of part-time
positions.
Response: DHS declines to expand the
definition of full-time employment to
include jobs filled for less than a year
by a qualifying employee, job-sharing
arrangements, and combinations of parttime jobs. DHS believes that the creation
of long-term and full-time positions is a
more reliable indicator that an
entrepreneur’s start-up entity is
continuing to yield significant public
benefit. Jobs filled for less than a year
could be temporary or seasonal, thus
limiting the duration and impact of the
benefit. Additionally, including jobsharing or combinations of part-time
positions could significantly complicate
adjudications. The final rule, moreover,
already reduces by half the threshold
number of jobs to qualify for a re-parole
period, making it all the more
reasonable to require that each of such
jobs be full-time positions as part of the
criteria for ensuring that granting parole
to an international entrepreneur is
justified by significant public benefit.20
13. Material Change
Comment: One commenter
recommended that the final rule
expressly exempt from the definition of
‘‘material change’’ transitions that are
typical within start-ups, such as a
company’s (1) pivoting its products or
services; (2) bringing on board a
significant round of funding that could
dilute the entrepreneur’s ownership
interest; (3) changing the role of a
founder to meet the needs of the
growing company; or (4) by virtue of a
foreseeable stock or asset acquisition,
executing a merger into or with a related
or unrelated entity, or some other form
of corporate restructuring. A few
19 It is important to note that job creation during
the initial period of parole is not the only way to
demonstrate the start-up entity’s continued
substantial potential for rapid growth and job
creation. See final 8 CFR 212.19(c)(2)(ii)(A),
(c)(2)(ii)(C), and (c)(2)(iii).
20 As explained earlier, job creation during the
initial period of parole is not the only way to
demonstrate the start-up entity’s continued
substantial potential for rapid growth and job
creation. See final 8 CFR 212.19(c)(2)(ii)(A),
(c)(2)(ii)(C), and (c)(2)(iii).
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commenters recommended that DHS
clarify what constitutes a ‘‘material
change’’ given the rapidly evolving
nature of start-ups.
Response: DHS appreciates the
concerns expressed by commenters
regarding the material change definition
in the NPRM. This final rule reflects
changes that help clarify what
constitutes a material change, with the
understanding that start-up entities are
likely to experience a variety of
transitions as part of their legitimate
development and growth. DHS
disagrees, however, that all of the events
listed by commenters should be
specifically exempted from the
definition of material change. Some
changes to the start-up entity can clearly
impact the determination of whether the
entrepreneur provides, or will continue
to provide, a significant public benefit
to the United States. It is essential to the
rule’s integrity that such material
changes are clearly defined and reported
to DHS. In the final rule, DHS has
outlined those changes that DHS
believes are critical to the continuing
eligibility of the entrepreneur to be
granted parole based on a significant
public benefit to the United States.
Specifically, the final rule maintains
that the following changes are material:
Any criminal charge, conviction, plea of
no contest, or other judicial
determination in a criminal case
concerning the entrepreneur or start-up
entity; any complaint, settlement,
judgment, or other judicial or
administrative determination
concerning the entrepreneur or start-up
entity in a legal or administrative
proceeding brought by a government
entity; any settlement, judgment, or
other legal determination concerning
the entrepreneur or start-up entity in a
legal proceeding brought by a private
individual or organization other than
proceedings primarily involving claims
for damages not exceeding 10 percent of
the current assets of the entrepreneur or
start-up entity; a sale or other
disposition of all or substantially all of
the start-up entity’s assets; the
liquidation, dissolution, or cessation of
operations of the start-up entity; and the
voluntary or involuntary filing of a
bankruptcy petition by or against the
start-up entity. DHS has revised the
definition of ‘‘material change’’ to
include the cessation of the
entrepreneur’s qualifying ownership
interest in the start-up entity.
DHS recognizes that not all changes to
the ownership structure of a start-up
entity constitute a change of such
significance that it would reasonably
affect the outcome of the determination
of whether the entrepreneur provides, or
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continues to provide, a significant
public benefit to the United States. DHS
has revised the final rule to limit
material change regarding ownership
changes only to ‘‘a significant change
with respect to ownership and control
of the start-up entity.’’ For example, a
significant change with respect to
ownership and control of the start-up
entity may include a transfer of equity
in the start-up entity that results in an
owner or owners not previously
identified on the Application for
Entrepreneur Parole (Form I–941)
collectively acquiring a controlling stake
in the entity. DHS recognizes that
achieving a significant round of funding
for the start-up entity during the initial
parole period may often constitute the
very qualifying investment that renders
the entrepreneur eligible for a re-parole
period under this rule’s significant
public benefit test, despite diluting the
entrepreneur’s ownership interest.
While DHS will make these
determinations on a case-by-case basis,
DHS does not anticipate that such
significant changes with respect to
ownership and control of the start-up
entity will often result in termination of
parole. A full vetting of new investors
with a significant ownership interest,
however, can provide DHS with
additional insights into the start-up
entity’s activities in the United States
and will help DHS ensure the
entrepreneur is continuing to provide a
significant public benefit to the United
States. In the future, DHS may issue
additional guidance on the scope of
such significant changes in ownership
interest if deemed necessary.
DHS believes these changes are
sufficient to clarify the definition of
‘‘material change’’ in regulation and to
provide entrepreneurs with sufficient
detail about the kinds of changes that
could impact their eligibility and must
be reported. Given that this is a new and
complex process, DHS will consider
potential modifications in the future
after it has assessed the implementation
of the rule and its impact on operational
resources.
E. Application Requirements
1. Application for Entrepreneur Parole
Comments: One commenter
supported the Application for
Entrepreneur Parole (Form I–941), and
called it ‘‘ideal’’ because without the
form applicants must attempt to list
information on existing application
forms that do not specifically relate to
entrepreneurs. Another commenter
requested that the application process
resemble the Canadian express entry
immigration system and be simplified
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so that the assistance of an attorney is
not required.
Response: DHS agrees with the
comment that the Form I–941 is
beneficial for capturing information
specific to parole requests filed under
this rule. DHS declines to model the
application process for parole under this
rule after the Canadian express entry
program as that program is a points
system designed to manage applications
for permanent residence under certain
Canadian federal economic immigration
programs.21 DHS has attempted to
develop the Form I–941 to be as simple
as possible for applicants while
capturing sufficient information to
enable adjudicators to make appropriate
case-by-case decisions under the
statutory and regulatory requirements
for parole.
2. Submissions of Documentary/
Supporting Evidence
Comment: Two commenters
expressed concern that the evidentiary
requirements were excessive and that
start-up entities operating in ‘‘stealthmode’’ would not be able to provide
letters or media articles. Both
commenters suggested that evidence of
a significant capital investment from a
qualified investor should be sufficient to
demonstrate the potential for rapid
growth and job creation.
Response: As an initial matter, DHS
recognizes there may be legitimate
reasons for operating a start-up in a
manner that does not attract significant
public attention. In part for this reason,
this final rule extends the definition of
start-up entity to include entities formed
within the 5 years immediately
preceding the filing date of the
applicant’s initial parole request. DHS
believes that start-up entities that are
seeking to operate without significant
public attention will generally have
sufficient time to emerge from that
status prior to the parole application.
DHS agrees with the commenters that
evidence of having received substantial
investment from a qualified investor
may be sufficient to establish that the
start-up entity has the potential for
rapid growth and job creation (one
factor in making parole determinations
under this rule). See 8 final CFR
212.19(b)(2)(ii)(B)(1). DHS understands
that other evidence that may be required
to establish eligibility for parole
consideration under this rule, including
whether the applicant is well-positioned
to advance the entity’s business, may
not be a matter of public record. DHS
believes, however, that even an
entrepreneur operating a company in
21 https://www.cic.gc.ca/english/express-entry/.
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‘‘stealth mode’’ should generally be able
to provide such evidence for purposes
of satisfying the requirements of this
rule. Indeed, for entrepreneurs to be
paroled under this rule, they must
persuade adjudicators, based on the
totality of the evidence, that they will
provide a significant public benefit.
3. Application Requirements of Spouses
and Minor Children
Comment: DHS received a few
comments supporting the provision in
the proposed rule allowing the spouse
and children of an entrepreneur granted
parole under this rule to also apply for
and be granted parole in the United
States in order to accompany or
ultimately join the entrepreneur. One
commenter also supported the proposal
to allow the spouse, if granted parole, to
obtain employment authorization in the
United States in order to work and help
support the entrepreneur’s family.
Response: DHS agrees with these
comments. Each spouse or child seeking
parole must independently establish
eligibility for parole based on significant
public benefit (or, alternatively, for
urgent humanitarian reasons), and that
the individual merits a favorable
exercise of discretion. In a case in which
an entrepreneur has been granted parole
based on significant public benefit
under this rule, DHS may consider
granting parole to the entrepreneur’s
spouse and children who provide a
significant public benefit by
maintaining family unity and thereby
further encouraging the entrepreneur to
operate and grow his or her business in
the United States—and to provide the
benefits of such growth to the United
States.
Under this final rule, spouses of
entrepreneur parolees who wish to
obtain employment authorization must
apply for an EAD pursuant to 8 CFR
274a.12(c)(34), consistent with current
parole policy that allows parolees to
apply for employment authorization.
DHS agrees with the commenter that
allowing spouses of entrepreneurs to
apply for work authorization may
alleviate a significant portion of the
potential economic burdens that
entrepreneurs and their families may
face, such as paying for education
expenses for their children, and to
ensure that they satisfy the condition on
their parole that they maintain
household income that is greater than
400 percent of the Federal poverty line,
as they grow and develop their start-up
entities. Moreover, extending
employment authorization to the spouse
may further incentivize an international
entrepreneur to bring a start-up entity to
the United States—along with new jobs,
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innovation, and growth—rather than
create it in another country.
4. Other Comments on Application
Requirements
Comment: One commenter asked that
DHS clarify the application procedures
for Canadians and whether they may
apply at the border or whether they
must visit a U.S. consulate prior to
requesting to be paroled at a U.S. port
of entry.
Response: Canadians and applicants
from other countries may apply for
parole under this rule while inside or
outside of the United States. If the
applicant’s parole request is approved,
the applicant would request to be
paroled by Customs and Border
Protection at a U.S. port of entry after
arriving from outside the United States.
Canadian nationals who will be
appearing at a U.S. port of entry directly
from Canada will not have to visit a U.S.
consulate prior to appearing at the port
of entry and requesting that CBP grant
parole. Canadian nationals who will not
be appearing at a U.S. port of entry
directly from Canada, and will instead
be travelling to the United States from
another country abroad to request a
grant of parole may, similar to other
applicants, have to visit a U.S. consulate
first in order to obtain travel
documentation (e.g., a boarding foil)
that allows the individual to travel to a
U.S. port of entry. In all cases, however,
the individual must have an approved
Form I–941 before the individual may
appear at the port-of-entry to request a
grant of parole.
F. Parole Criteria and Conditions
1. Minimum Investment
Comment: Numerous commenters—
including advocacy groups, law firms,
associations, and individual
commenters—argued that the proposed
rule’s minimum investment criterion for
the initial parole period would set too
high an eligibility bar for many highpotential entrepreneurs. Citing a range
of different kinds of evidence, several
commenters argued that the proposed
$345,000 threshold represented
significantly more capital than is
actually needed by most start-ups
initially and would unnecessarily
exclude from consideration some
entrepreneurs whose entities would
create significant public benefit in the
United States.
Response: In response to public
comments, DHS is reducing the
proposed minimum investment of
$345,000 to $250,000 in the final rule.
See 8 final CFR 212.19(b)(2)(ii)(B)(1).
Multiple public comments
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recommended setting the threshold at
$250,000, and DHS’s further analysis of
seed and angel investment data
indicates that this level is reasonable.
As is described more fully in the
‘‘Volume Projections’’ subsection of the
‘‘Statutory and Regulatory
Requirements’’ section of this final rule,
DHS’s analysis of investments received
by a set of new firms that graduated
from startup accelerator programs
revealed that the median seed
investment was $250,000.22 Following
the intent of this final rule to increase
and enhance entrepreneurship,
innovation, and job creation in the
United States, DHS determined that
investment amounts that entrepreneurs
would need to meet to be considered for
parole under this rule should be more
in line with typical early investment
rounds, rather than the higher
investment levels typical of later
rounds. In each individual case, DHS
must be persuaded that granting parole
would provide a significant public
benefit and that the person requesting
parole merits a favorable exercise of
discretion.
Comment: One commenter stated that
there should not be a minimum
investment amount and suggested that
the rule instead establish minimum
revenue amounts. Several other
commenters suggested that evidence of
rapid revenue growth should be a
standalone eligibility criterion for the
initial parole period under 8 CFR
212.19(b)(2)(ii).
Response: DHS disagrees with the
suggestion that there should not be a
minimum investment amount.
Establishing a minimum investment
amount based on available data
provides a clear and predictable
benchmark for how an applicant may
demonstrate that a start-up entity has
substantial potential for rapid growth
and job creation (one factor in making
parole determinations under this rule).
If international entrepreneurs are unable
to meet the threshold investment
amount but have received some
qualified investments or qualified
government awards or grants, they may
alternatively qualify for parole
consideration under this rule if they
partially meet the threshold criteria and
provide ‘‘other reliable and compelling
evidence of the start-up entity’s
substantial potential for rapid growth
and job creation.’’ See final 8 CFR
212.19(b)(2)(iii).
22 The data utilized by DHS is provided publicly
by SeedDB: https://seed-db.com/accelerators, as well
as the Angel List: https://angel.co/, and the Angel
Capital Association (ACA): https://
www.angelcapitalassociation.org/.
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DHS disagrees with the suggestion
that evidence of rapid revenue growth
or generation of a certain amount of
revenue should be a separate criterion
under 8 CFR 212.19(b)(2)(ii). In setting
threshold criteria, DHS intends to
identify reliable indicators of a start-up
entity’s substantial potential for rapid
growth and job creation and, ultimately,
of the significant public benefit that a
grant of parole would provide in an
individual case. DHS does not believe
that revenue should be the sole external
validation factor as compared to
substantial funding from qualified U.S.
investors and government entities for
initial parole applications. DHS
reiterates, however, that a start-up
entity’s revenue may be taken under
consideration, both under the
‘‘alternative criteria’’ test and as part of
the totality of evidence relevant to
whether the grant of parole in an
individual case would be justified by
significant public benefit and the person
requesting parole deserves a favorable
exercise of discretion. See 8 CFR
219.2(b)(2)(iii), 219.2(c)(2)(B)(iii).
Comment: Several individual
commenters recommended that the
investment threshold be based upon the
type of business activity.
Response: In an effort to provide a
reasonable level of simplicity and
predictability in the final rule, DHS
decided to utilize a single investment
threshold rather than several amounts
based on the type of business activity.
DHS believes that determining multiple
investment thresholds based on
business activity or industry would be
unduly complicated, making
adjudications more labor-intensive and
increasing processing times. DHS
believes that using a single investment
threshold, backed by available data, is a
reasonable approach and provides a
clearer benchmark for applicants,
investors, and adjudicators.
Comment: Some commenters
provided input on the requirement that
funding be received within the
preceding 365 days. A CEO roundtable
agreed that the $345,000 threshold was
an appropriate amount, but questioned
the 365-day requirement,
recommending that the rule be changed
to require that only 65 percent of the
investment to have occurred within the
last 365 days. A trade association and a
joint submission from a professional
association and a non-profit
organization recommended that the
investment occur within a 3-year
window. As an alternative, the trade
association stated that some of a startup entity’s capital that would otherwise
count toward the qualified investment
amount should do so even if its ultimate
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receipt by the start-up entity is
contingent upon the approval of parole.
Response: DHS is revising the
proposed requirement that the
substantial investment be received
within the 365 days immediately
preceding the filing of the application
for initial parole. The final rule
increases this period from 12 months
(365 days) to 18 months. DHS made this
change based on feedback that it often
takes longer than 12 months for a startup to secure and receive investment
funding. This revised requirement still
ensures that a qualified investor or
government entity has recently
validated (within 18 months) the startup entity’s potential for rapid growth
and job creation. With respect to the
comment suggesting that DHS accept
funding contingent upon approval of
parole toward the qualified investment
amount, DHS believes that funds
contingent on the occurrence of a future
event, such as a grant of parole to the
entrepreneur, would not satisfy the
general criteria in 8 CFR 212.19(b)(2)(ii).
DHS notes, however, that such funds
may be considered under the alternative
criteria in 8 CFR 212.19(b)(2)(iii) if the
entrepreneur partially meets one or both
of the criteria in 8 CFR
212.19(b)(2)(ii)(B), since DHS may
consider such contingent funds as other
reliable and compelling evidence of the
start-up entity’s substantial potential for
rapid growth and job creation. Given
that this process is a new and complex
one, DHS has decided to take an
incremental approach and will consider
the suggested modification in the future
after assessing the implementation of
the rule and its impact on operational
resources.
2. Minimum Government Grants or
Awards
Comment: Several commenters argued
that DHS should require less than
$100,000 to meet the eligibility criteria
based on a start-up entity’s receipt of
government grants and awards. An
individual commenter said that most
government grants were well beneath
the $100,000 minimum threshold in the
proposed rule. Another individual
commenter recommended a $50,000
government grant threshold. By
contrast, one commenter stated that the
$100,000 minimum investment for
government grants and awards is too
low to start a meaningful business and
suggested increasing the amount to
$500,000 or more. Several commenters
stated that the $100,000 grant threshold
aligns with the timing of the Federal
Small Business Innovation Research
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(SBIR) 23 and Small Business
Technology Transfer (STTR) awards and
dollar amounts.
Response: DHS declines to make the
suggested changes to the minimum
government grant or award threshold. In
light of the range of comments received
on increasing or decreasing the
minimum grant amount, DHS believes
its proposed minimum grant amount is
reasonable. Because government entities
regularly evaluate the potential of U.S.
businesses, the choice to provide a
significant award or grant to a particular
start-up entity will often be a strong
indicator of that start-up’s substantial
potential for growth and job creation.
Additionally, because government
entities are by definition formed to serve
the public, the choice by such an entity
to fund a particular business generally
indicates the government entity’s
independent assessment that the
business’s operations would provide a
significant public benefit—and can be a
strong indicator of a start-up entity’s
substantial potential for rapid growth
and job creation. The specific $100,000
minimum government funding
threshold identified in this final rule is
based in part on the fact that seed
funding awards (‘‘Phase I’’ awards) from
the Federal SBIR/STTR program are
generally below $150,000.
3. Initial Parole Alternative Criteria
Comment: Several commenters
offered suggestions for the factors to be
considered by DHS under the rule’s
alternative criteria for the initial parole
period, such as adding a metric for
number of users or customers of the
entrepreneur’s start-up entity, the startup entity’s social impact, and the startup entity’s national scope or location in
a low- or middle-class neighborhood.
Other commenters proposed the
following factors: The applicant’s
academic degree; participation in or
training from a start-up accelerator;
prior success as demonstrated by market
share from patented innovations, annual
sales volume, or job creation; and
23 The Small Business Innovation Research (SBIR)
program is coordinated by the Small Business
Administration to seed capital for start-up
businesses. It is designed to stimulate technological
innovation among small private-sector businesses,
and it is the largest source of seed capital in the
United States for technology driven start-ups,
funding between 5,000 and 7,000 projects a year.
The ‘‘first phase’’ award is an innovation grant
made for initial eligibility and corresponds to the
start-up of the commercial business and proof of
‘‘concept phase’’—the average award amounts vary
by department, but most SBIR Phase I awards are
made at or below $150,000. The Phase I awards are
geared towards financing the startup of the private
commercial entity and also the innovation and
research and development (R&D) that the enterprise
undertakes.
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demonstrated success using alternative
funding platforms.
Response: DHS agrees with these
suggestions. DHS may consider the
following additional types of evidence,
among others, as factors under the
alternative criteria for those applicants
who partially satisfy 8 CFR
212.19(b)(2)(ii):
• number of users or customers;
• revenue generated by the start-up
entity;
• social impact of the start-up entity;
• national scope of the start-up entity;
• positive effects on the start-up
entity’s locality or region;
• success using alternative funding
platforms, including crowdfunding
platforms;
• the applicant’s academic degrees;
• the applicant’s prior success in
operating start-up entities as
demonstrated by patented innovations,
annual revenue, job creation, or other
factors; and
• selection of the start-up entity to
participate in one or more established
and reputable start-up accelerators or
incubators.
With respect to start-up accelerators
and incubators, DHS expects to evaluate
them on several relevant factors,
including years in existence, graduation
rates, significant exits by portfolio startups, significant investment or
fundraising by portfolio start-ups, and
valuation of portfolio start-ups.
DHS understands that some
applicants will be able to establish that
their start-up entity is likely to grow
rapidly and create jobs based on other
factors beyond only the amount of
capital investment or government
funding received, which is why DHS
has not limited the types of evidence
that may be considered under the
alternative criteria at 8 CFR
212.19(b)(2)(iii) for those who only
partially meet the initial threshold
criteria at 8 CFR 212.19(b)(2)(ii)(B).
Comment: One commenter suggested
linking the rule’s application to
applications for other initiatives, such
as National Minority Supplier
Development Council Certification and,
when applicable, Minority Women
Based Entrepreneur Certification.
Response: DHS appreciates the
commenters’ suggestions but declines to
adopt these factors as evidence of
substantial potential for rapid business
growth or job creation. Nothing in this
rule prohibits or discourages
entrepreneurs from participating in
initiatives or certification processes
designed to help promote more diverse
and inclusive entrepreneurship. DHS
does not believe, however, that such
initiatives and certifications
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independently provide sufficient
external validation that a start-up entity
has the substantial potential for rapid
growth or job creation and meets the
‘‘significant public benefit’’ requirement
under this rule. Evidence that the startup is involved with certain initiatives in
the public interest can, however, be
considered a positive factor in
determining whether an entrepreneur
merits a grant of parole as a matter of
discretion. Given that this is a new and
complex process, DHS has decided to
take an incremental approach and will
consider potential modifications in the
future after it has assessed the
implementation of the rule and its
impact on operational resources.
Comment: One commenter said the
term ‘‘reliable and compelling
evidence’’ in proposed 8 CFR
212.19(b)(2)(iii), with respect to the
start-up entity’s substantial potential for
rapid growth and job creation, is too
vague and should be elaborated on
further in the regulatory text.
Response: DHS disagrees with the
commenter’s suggestion to elaborate
further in 8 CFR 212.19(b)(2)(iii) on the
type of evidence that may be submitted
and considered as reliable and
compelling. DHS believes that this
alternative criterion should be flexible
so as not to restrict the types of evidence
that may be submitted and relied upon
to determine if the start-up entity has
substantial potential for rapid growth
and job creation. DHS believes that such
flexibility is important given the caseby-case nature of these discretionary
parole determinations. An applicant for
parole under this rule who does not
meet the threshold capital investment or
government funding criteria in 8 CFR
212.19(b)(2)(ii)(B) may submit any
evidence that the applicant believes is
reliable and compelling to support the
claim that the applicant’s start-up entity
has substantial potential for rapid
growth and job creation. DHS, after
reviewing the application and all of the
evidence submitted in support of the
application, will make a determination
as to whether the applicant is eligible
for parole consideration under the
relevant statutory and regulatory
standards, and as to whether the person
seeking parole merits a favorable
exercise of discretion.
Comment: One commenter asserted
that securing an investment from a U.S.
investor or obtaining a U.S. government
grant or award is not a viable option for
most people.
Response: DHS believes that qualified
investments or government funding are
appropriate factors to consider when
assessing the ability of a start-up entity
to achieve rapid growth and job creation
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(one factor in making parole
determinations under this rule). DHS,
however, understands that some startup entities with the potential to yield
significant public benefit may have
legitimate economic or strategic reasons
to not pursue or accept capital
investment or government funding at
the levels set forth in 8 CFR
212.19(b)(2)(ii)(B). Therefore, DHS has
provided in the rule an alternative
criterion for further consideration of
those applications where the applicant
only partially satisfies the capital
investment or government funding
thresholds, but provides additional
reliable and compelling evidence that
establishes the substantial potential of
the start-up entity for rapid growth and
job creation.
Comment: A commenter suggested
that, instead of focusing on capital
investment and job creation criteria,
DHS should focus on whether the startup entity would be in industries in
traded sectors. The commenter
proposed that the following industries
would qualify: Manufacturing, software
publishers, Internet publishing, and
research and development services.
Response: While DHS recognizes the
benefits of increased exports to the U.S
economy, it declines to limit eligible
start-up entities to traded sectors, since
start-up entities in a much wider set of
industries can yield significant public
benefit to the United States through
rapid growth and job creation.
Comment: A commenter requested
that DHS form an advisory group of
industry experts to recommend
alternative criteria.
Response: DHS afforded an
opportunity for notice and comment on
the NPRM and expressly sought
proposals for alternative criteria from
the public. DHS does not believe that
forming a new advisory group is
necessary at this time.
Comment: One commenter suggested
that the term ‘‘rapid growth’’ should be
determined based on factors pertaining
to the start-up entity’s industry, normal
business growth in the industry,
geographic area, and the amount of
investment in the entity. The
commenter also recommended that the
term ‘‘substantial potential’’ take into
account the start-up entity’s particular
geographic area rather than a national
scale.
Response: While the industry- and
geography-specific factors suggested by
the commenter may be taken into
consideration by DHS as part of the
totality of the circumstances for a given
application, DHS believes that the
general and alternative eligibility
criteria provided in the final rule are
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sufficient to determine if a start-up
entity has the substantial potential for
rapid growth and job creation, and
provide a more predictable framework
by which these parole applications will
be adjudicated than would a more
mechanical and unduly rigid
consideration of the variables suggested
by the commenter.
4. Re-parole Criteria
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a. Minimum Investment or Grants/
Awards
Comment: Several commenters
discussed the proposed re-parole
eligibility criteria at 8 CFR
212.19(c)(2)(ii)(B)(1), namely that the
applicant’s start-up entity has received
at least $500,000 in qualifying
investments, qualified government
grants or awards, or a combination of
such funding, during the initial parole
period. Most commenters argued that
this funding level was unduly high,
especially given the duration of the
initial parole period.
Response: DHS declines to adjust the
$500,000 funding threshold. See final 8
CFR 212.19(c)(2)(ii)(B)(1). DHS believes
that $500,000 is a reasonable level for
re-parole. An industry report on startups
shows the median seed investment
round for the first half of 2016 was
$625,000, which rose from $425,000 in
2015. This figure is valuable because it
includes seed rounds for firms that
participate with accelerators and that
often start out with investment rounds
below $100,000.24 The median for angel
group seed investments is reported at
$620,000 as the annual average over
2013–2015, which rose sharply to
$850,000 in 2015 from a median of
$505,000 from the previous two years.
Venture capital round sizes are even
larger, as the 2014 median round size
for both seed and startup stage venture
rounds was $1,000,000.
DHS has also increased the length of
the initial parole period from 24 months
to 30 months. This change will allow
entrepreneurs additional time to seek
and receive qualified investments or
government funding, to meet the reparole criteria. If an entrepreneur is
unable to meet the minimum funding
24 The report on the seed median is published as
a newsletter by Crunchbase and is found at: https://
techcrunch.com/2016/09/07/crunchbase-sees-risein-average-seed-round-in-2016/. The Angel group
median round size is obtained from the Angel
Resource Institute’s annual (2015) ‘‘Halo Report,’’
found at https://angelresourceinstitute.org/reports/
halo-report-full-version-ye-2015.pdf. The venture
capital figures are obtained from the Ernst and
Young Venture Capital Insights Report (4th quarter
2014) and are found at: https://www.ey.com/
Publication/vwLUAssets/Venture_Capital_Insights_
4Q14_-_January_2015/%24FILE/ey-venture-capitalinsights-4Q14.pdf.
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criterion, moreover, he or she may still
be eligible for re-parole based on
revenue generated or jobs created. See
final 8 CFR 212.19(c)(2)(ii)(B)(2) and (3).
Under the final rule, entrepreneurs
partially meeting the threshold re-parole
criteria may alternatively qualify ‘‘by
providing other reliable and compelling
evidence of the start-up entity’s
substantial potential for rapid growth
and job creation.’’ Final 8 CFR
212.19(c)(2)(iii).
b. Minimum Annual Revenue
Comment: Several commenters
discussed the proposed re-parole
criterion at 8 CFR 212.19(c)(2)(ii)(B)(3),
which establishes an eligibility
threshold when the applicant’s start-up
entity has reached at least $500,000 in
annual revenue and averaged 20 percent
in annual revenue growth during the
initial parole period. Most commenters
suggested alternative approaches,
arguing that start-ups are often
legitimately focused on the
development of an innovative product
or service, and not on generating early
revenue. Another commenter stated that
the revenue criterion is reasonable.
Response: DHS declines to adjust
these criteria. See final 8 CFR
212.19(c)(2)(ii)(B)(1). DHS chose
$500,000 in revenue and 20 percent
annual revenue growth as threshold
criteria because, after consulting with
SBA, DHS determined these criteria: (1)
Would be reasonable as applied across
start-up entities regardless of industry or
location; and (2) would serve as strong
indications of an entity’s potential for
rapid growth and job creation (and that
such entity is not, for example, a small
business created for the sole or primary
purpose to provide income to the owner
and his or her family). As noted, DHS
has also increased the length of the
initial parole period from 24 months to
30 months. This change will allow
entrepreneurs additional time to meet
the minimum revenue threshold for reparole. If an entrepreneur is unable to
meet the minimum revenue
requirement, he or she may still be
eligible under the minimum investment
or job creation criteria. See final 8 CFR
212.19(c)(2)(ii)(B)(1) and (2). Under the
final rule, entrepreneurs partially
meeting the threshold re-parole criteria
may alternatively qualify ‘‘by providing
other reliable and compelling evidence
of the start-up entity’s substantial
potential for rapid growth and job
creation.’’ Final 8 CFR 212.19(c)(2)(iii).
Comment: An individual commenter
suggested that DHS should include in
the rule a criterion for user growth,
rather than revenue growth, as many
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start-ups focus more on growing their
number of users in their early years.
Response: DHS declines to include
user growth as a stand-alone criterion
for establishing eligibility for re-parole.
DHS, however, may consider user
growth as a factor when evaluating an
entrepreneur’s eligibility under the
alternative criteria provision. The list of
factors provided in the preamble to the
proposed rule was intended only to
illustrate the kinds of factors that DHS
may consider as reliable and compelling
evidence of the start-up entity’s
substantial potential for rapid growth
and job creation.
As noted in the NPRM, DHS is not
defining in regulation the specific types
of evidence that may be deemed
‘‘reliable and compelling’’ at this time,
because DHS seeks to retain flexibility
as to the kinds of supporting evidence
that may warrant the Secretary’s
exercise of discretion in granting parole
based on significant public benefit. DHS
believes, however, that such evidence
would need to be compelling to
demonstrate that the entrepreneur’s
presence in the United States would
provide a significant public benefit.
DHS will evaluate on a case-by-case
basis whether such evidence—in
conjunction with the entity’s substantial
funding, revenue generation, or job
creation—establishes that the
applicant’s presence in the United
States will provide a significant public
benefit during a re-parole period.
Comment: An individual commenter
suggested that the minimum annual
revenue threshold for re-parole be set as
just enough to sustain the
entrepreneur’s salary and continue
business operations.
Response: The final rule states that
the start-up entity must be of a type that
has the substantial potential to
experience rapid growth and job
creation, including through significant
levels of capital investment, government
awards or grants, revenue generation, or
job creation during the re-parole period.
These factors are intended to help DHS
identify the types of start-up entities
that are most likely to provide a
significant public benefit, while
excluding entities without such
potential—such as a business with
limited growth potential created by an
entrepreneur for the sole or primary
purpose of providing income to the
entrepreneur and his or her family.25
Because this latter type of business is
less likely to experience rapid growth
25 Erik Hurst & Benjamin Wild Pugsley, ‘‘What Do
Small Businesses Do?’’ (Aug. 2011), available at
https://www.brookings.edu/∼/media/files/programs/
es/bpea/2011_fall_bpea_papers/2011_fall_bpea_
conference_hurst.pdf.
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and job creation, DHS believes it is
unlikely that the entrepreneur of such a
business would be able to meet the
significant public benefit requirement
for a grant of parole. Establishing a
minimum annual revenue threshold for
re-parole that would, by definition,
cover only an entrepreneur’s salary and
continue business operations would not
likely help identify whether an
entrepreneur’s activity in the United
States would provide a significant
public benefit. DHS therefore declines
to adopt the commenter’s suggestion.
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c. Minimum Jobs Created
Comment: Several commenters
discussed the proposed re-parole
criterion at 8 CFR 212.19(c)(2)(ii)(B)(2),
which establishes an eligibility
threshold for applicants whose start-up
entities have created at least 10
qualified jobs within the start-up
entities during the initial parole period.
Most commenters argued that this job
creation requirement was unduly high
or that the time period for compliance
was too short.
Response: Based on comments
received, DHS has lowered the job
creation criterion for re-parole from 10
to 5 qualified jobs. See final 8 CFR
212.19(c)(2)(ii)(B)(2). DHS agrees with
commenters that requiring 10 jobs to
satisfy this criterion may be unduly high
for many start-ups, even those with
demonstrated substantial potential for
rapid growth and job creation. DHS
believes that the creation of 5 qualifying
jobs during the initial period of parole
is sufficient to determine that the startup entity continues to have substantial
potential for rapid growth and job
creation, particularly in light of the
substantial capital investment,
government funding, or other reliable
and compelling evidence that supported
the initial parole determination. In each
case, DHS must be persuaded that reparole is justified by significant public
benefit and that the person seeking reparole merits a favorable exercise of
discretion. As discussed elsewhere in
this preamble, DHS has also extended
the initial period of parole from 2 years
to 30 months, in order to allow
additional time for start-up entities to
grow, obtain additional substantial
funding, generate substantial revenue,
or create jobs. See 8 CFR
212.19(c)(2)(iii).
d. Re-Parole Alternative Criteria
Comment: One commenter suggested
that DHS should consider taxes paid by
a start-up entity as a criterion for reparole, leaving the task to DHS to define
the threshold of the amount and type of
taxes paid.
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Response: DHS declines to adopt the
commenter’s suggestion. DHS believes
that a start-up entity would have to
generate a significant level of revenue or
job creation (which are already criteria
under this rule) to meet any separate,
standalone tax-based threshold. Any
such additional criterion would
therefore be unlikely to be particularly
probative in determining whether reparole is justified by significant public
benefit or the person seeking re-parole
merits a favorable exercise of discretion.
DHS therefore declines to include the
payment of taxes as a stand-alone
eligibility criterion.
Comment: A commenter suggested
that if DHS lowers the funding and job
creation thresholds for re-parole, there
should be no need for alternative
criteria.
Response: While DHS did reduce the
job creation threshold for re-parole in
the final rule, DHS believes that
parolees should have the flexibility to
present other reliable and compelling
evidence of the start-up entity’s
substantial potential for rapid growth
and job creation. Examples of such
evidence are provided above, in the
discussion on alternative criteria for the
initial parole period. DHS believes that
it is important to retain such flexibility
in the final rule, consistent with the
case-by-case nature of these parole
determinations. DHS, therefore, has not
adopted the commenter’s suggestions.
5. Authorized Periods of Parole
Comment: Several commenters
discussed the initial 2-year parole
period at 8 CFR 212.19(d)(2). Most
commenters argued that the 2-year
period was unduly short, as start-ups
with significant potential for rapid
growth and job creation may require
more time to meet re-parole eligibility
requirements. Some commenters
suggested having a 3-year initial period
of parole and a 2-year period of reparole. Other commenters suggested a
range for initial parole from 3 to 5 years.
A number of comments discussed the
overall duration of the parole periods,
the majority of which advocated for
longer periods ranging from 6 to 10
years in total. Some of these
commenters based the need for an
extended parole period on the typical
duration of the start-up growth path
from seed funding to venture capital
financing to exit (through an initial
public offering or a merger or
acquisition).
Response: Based on the comments
received, DHS is changing the
maximum periods for initial parole and
re-parole to 30 months (2.5 years) each,
for a total maximum parole period
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5259
under this rule of up to 5 years. The
additional time for the initial parole
period will provide entrepreneurs with
more time to receive additional
qualified investments or government
funding, increase revenue, or create
qualified jobs sufficient to meet the
eligibility criteria for an additional
period of parole. While this change does
reduce the length of the re-parole
period, DHS believes that this approach
is necessary to provide additional time
during the initial period of parole while
maintaining the same maximum overall
parole period of 5 years. DHS further
believes that a 5-year total maximum
parole period is consistent with the
amount of time successful start-up
entities generally require to realize rapid
growth and job creation potential.
Moreover, an entrepreneur of a start-up
entity that is almost 5 years old when
the parole application is filed would
have the possibility to obtain up to 5
years of parole, which would allow the
entity to realize its rapid growth and job
creation potential by the time it is 10
years old—and to provide those benefits
in the United States.26 DHS retains the
discretion to provide any length of
parole to an applicant, including a
period shorter than 30 months where
appropriate. DHS also notes that
although USCIS would designate an
appropriate initial parole period upon
approval of the Application for
Entrepreneur Parole, CBP would retain
its authority to deny parole to an
applicant or to modify the length of
parole authorized by USCIS upon
issuing parole at the port of entry,
consistent with CBP’s discretion with
respect to any advance authorization of
parole by USCIS.
26 Estimates based on the Census Bureau Business
Dynamics Statistics suggest that on average 55
percent of new firms survived after 3 years, but 80
percent of the firms that survived 3 years also made
it through 5 years. Dane Stangler and Jared Konczal
‘‘Give me your entrepreneurs, your innovators:
Estimating the Employment Impact of a Startup
Visa’’, Ewing Marion Kauffman Foundation (Feb.
2013), available at https://www.kauffman.org/∼/
media/kauffman_org/
research%2Oreports%20and%20covers/2013/02/
startup_visa_impact_final.pdf; ‘‘CrunchBase
Reveals: The Average Successful Startup Raises
$41M, Exits at $242.9M,’’ Techcrunch.com (Dec. 14,
2013), available at https://techcrunch.com/2013/12/
14/crunchbase-reveals-the-average-successfulstartup-raises-41m-exits-at-242-9m/; see also
TruBridge Capitol Partners, Why the ‘Next Billion
Dollar Startup’ Is not Always the Next IPO, Forbes,
Apr. 15, 2015, available at https://www.forbes.com/
sites/truebridge/2015/04/15/why-next-billiondollar-startup-not-always-next-ipo/ (‘‘From 2001–
2004, the average age of a company at its public exit
was 5.4 years. . . . From 2009–2012, the average
age was 7.9.’’).
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6. Limitation on Number of
Entrepreneurs
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Comment: Several commenters
addressed 8 CFR 212.19(f) in the
proposed rule, which states that no
more than three entrepreneurs may be
granted parole based on the same startup entity. Most commenters on this
provision recommended that DHS
increase the number of entrepreneurs,
with suggestions to increase the
maximum number to 4 or 5. Several
other commenters, including a trade
association and a professional
association, supported the proposed
rule’s limit of 3 entrepreneurs obtaining
parole under this rule based on the same
start-up entity. An individual
commenter stated that DHS should
allow for additional entrepreneurs to
qualify for parole based on the same
start-up entity, not only at the time of
application but also at a later date,
asserting that it is very common for
technology companies to introduce
multiple co-owners over time that are
key personnel vital to the operations of
the start-up entity.
Response: DHS appreciates the
comments regarding this limitation and
recognizes that some start-ups may
initially have more than 3 founders or
owners. After reviewing all comments,
DHS declines to increase the number of
entrepreneurs permitted to request
parole related to the same start-up
entity, and will retain the current limit
of no more than 3 eligible entrepreneur
applicants per start-up entity. See final
8 CFR 212.19(f). As an initial matter,
DHS believes it would be difficult for a
larger number of entrepreneurs
associated with the same start-up entity
to each meet the eligibility criteria and
comply with the conditions on parole
while ultimately developing a
successful business in the United States.
A higher number of entrepreneurs
associated with the same start-up entity
may affect the start-up’s ability to grow
and succeed, and may even result in the
startup’s failure, thus preventing the
goals of the parole process under this
rule from being realized.27 Imposing a
limit on the number of entrepreneurs
who may be granted parole based on the
same start-up entity is thus consistent
with ensuring that each entrepreneur’s
27 Max Marmer, Bjoern Lasse Herrmann, Ertan
Dogrultan, Ron Berman, Startup Genome Report
Extra on Premature Scaling, Startup Genome
Report: Premature scaling v 1.2 (Mar. 2012 ed.)
(explaining that ‘‘hiring too many people too early’’
in a start-up’s development is one of several reasons
that most start-ups fail), available at https://
s3.amazonaws.com/startupcompass-public/
StartupGenomeReport2_Why_Startups_Fail_v2.pdf.
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parole will provide a significant public
benefit.
The limitation, moreover, will help
strengthen the integrity of the
international entrepreneur parole
process in various ways. Among other
things, limiting the number of
individuals who may be granted parole
under this rule in connection with the
same start-up entity will provide an
additional safeguard against an entity
being used as a means to fraudulently
allow individuals to come to the United
States. Such a limit diminishes, for
example, the incentive to dilute equity
in the start-up entity as a means to
apply for parole for individuals who are
not bona fide entrepreneurs. Finally,
DHS clarifies that the rule does not
require that additional entrepreneurs,
up to 3 entrepreneurs per start-up
entity, apply for parole based on the
same start-up entity at the same time.
7. Income-Related Conditions on Parole
Comment: Several commenters
discussed the proposed rule’s provision
requiring that entrepreneurs paroled
into the United States must maintain a
household income that is greater than
400 percent of the Federal poverty line
for their household size, as defined by
the Department of Health and Human
Services. Many of these commenters
discussed the financial difficulties faced
by start-ups and argued that the income
requirements were unduly high or
suggested other alternatives. The
majority of commenters on this issue
stated that entrepreneurs in start-up
endeavors typically do not take a salary
or take a minimal salary in the early
years. Several commenters
recommended lowering this income
threshold, with many suggesting
lowering it to 100 percent, while others
suggested alternatives of 125 percent,
200 percent, or 250 percent of the
Federal poverty level. An individual
commenter recommended that DHS
institute a minimum yearly income
requirement of $80,000, while another
individual commenter stated that DHS
should adopt a more nuanced approach
that takes into account factors like
standard of living, unemployment rates,
and economic growth by state. Other
commenters recommended that DHS
allow for other types of compensation,
in the form of benefits or rewards, in
addition to salary to satisfy the incomerelated conditions on parole. Another
individual commenter stated that DHS
should use the income threshold
already established by the Affidavit of
Support,28 which is set at 125 percent
28 Affidavits of Support, filed using Form I–134
or I–864, are required for certain immigrants to
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above the poverty guidelines. Lastly,
one commenter said the ‘‘significant
public benefit’’ determination should
not just be applied to entrepreneurs who
meet a particular income or wealth
criterion, but should be liberally applied
to all entrepreneurs who are seeking to
build and grow a business.
Response: DHS appreciates the
concerns raised by these commenters,
but declines to adopt the commenter’s
suggestion to eliminate or alter the
income-related condition on parole.
Establishing this income-related
condition on parole is consistent with
the Secretary’s discretionary authority
to grant parole ‘‘under conditions as he
may prescribe.’’ INA section
212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A). As
stated in the NPRM, DHS established
this income threshold to ensure that
applicants seeking parole under this
rule will have sufficient personal
economic stability to make significant
economic and related contributions to
the United States. Those policy goals
remain valid and are appropriate in
guiding the decision to retain the
requirement that the household income
of an entrepreneur requesting parole
under this rule be greater than 400
percent of the Federal poverty line.
Under this rule, DHS will take steps
to ensure that each grant of parole will
provide a positive net benefit to the
economy of the United States,
consistent with the statutory framework
authorizing parole only for significant
public benefit absent urgent
humanitarian issues. In addition to
considering all the other positive
evidence—from job creation to
investment to growth—DHS includes
the income threshold as an additional
safeguard that the entrepreneur and his
or her family will not be eligible to draw
upon Federal public benefits or
premium tax credits under the Health
Insurance Marketplace of the Affordable
Care Act. Furthermore, Secretary
Johnson indicated in his memorandum
titled ‘‘Policies Supporting U.S. HighSkilled Business and Workers’’ that
such thresholds would be created so
that individuals would not be eligible
for these public benefits or premium tax
credits in light of the purpose of the
policy.29
DHS emphasizes that the funding
amounts received by a start-up entity
from governmental sources or from
show that they have adequate means of financial
support and are not likely to rely on the U.S.
government for financial support.
29 Memorandum from Jeh Johnson, DHS
Secretary, Policies Supporting U.S. High-Skilled
Business and Workers 4 (Nov. 20, 2014), at https://
www.dhs.gov/sites/default/files/publications/14_
1120_memo_business_actions.pdf.
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sradovich on DSK3GMQ082PROD with RULES5
qualified investors in order to meet the
rule’s eligibility thresholds are distinct
from the possible sources of salary
payments to the individual
entrepreneur. Nothing in this rule
prevents a start-up entity from raising
higher funding levels than the minimum
parole eligibility thresholds, and from a
wider set of funders than those in the
rule’s definitions of qualified investors
and government entities. DHS intends
for the eligibility criteria for parole to be
useful independent validation tools for
assessing the significant growth and job
creation potential of the start-up entity.
While there is certainly validity to the
arguments made by some of the
commenters that many entrepreneurs do
not take large salaries, choosing instead
to re-invest available funds back into the
start-up entity or to take other forms of
non-cash compensation, DHS must
establish criteria that protect the overall
policy goals of this rule in accordance
with the requirements of the INA. The
income-related requirements offer a
clear and predictable mechanism for
DHS to have a strong measure of
confidence that the entrepreneur and
his or her family, while paroled into the
United States under this rule, will be
net positive contributors to the
American economy.
8. Reporting of Material Changes
Comment: Several commenters
discussed the proposed requirement
that entrepreneurs report any material
changes during a parole period to DHS
by submitting a new application for
parole. Most commenters argued that
such a requirement would be onerous
given the constantly changing nature of
start-ups. A law firm argued that
requiring entrepreneurs to report and
reapply when there are pending actions
against the start-up entity or
entrepreneur would be unfair, as both
are entitled to due process, and
suggested a reporting requirement only
if an adverse judgment were issued. An
individual commenter stressed that a
$1,200 fee to report every material
change would create a major financial
burden for entrepreneurs.
Response: DHS recognizes that the
nature of start-up entities involves
constant change. DHS also appreciates
the concerns regarding the
administrative and financial burden
placed on entrepreneurs by additional
filings. DHS believes, however, that the
revised definition of material change in
the final rule will help to clarify the
situations in which the entrepreneur
must notify the agency of material
changes, and thus limit the
administrative and financial burdens on
the entrepreneur. Specifically, DHS
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understands that start-ups may have
frequent ownership changes over the
course of successive funding rounds,
and thus has revised the definition of
‘‘material change’’ regarding ownership
changes to cover only those that are
‘‘significant’’ in nature. Clarifying the
scope of the material change definition
also limits the reporting requirement,
which should help reduce the
anticipated burden on entrepreneurs.
DHS also emphasizes that the rule
requires notification of pending actions
only in the context of a criminal case or
other action brought by a government
entity, while actions brought by private
individuals or entities are not
considered ‘‘material changes’’ until a
settlement, judgment, or other final
determination is reached. DHS does not
believe that the material change
reporting requirement under this rule
will impact an individual’s due process
or would otherwise be unfair. DHS
believes, however, that it is important
for an entrepreneur granted parole
under this rule to immediately inform
USCIS if certain actions are brought
against the entrepreneur or his or her
start-up entity.
Comment: One commenter
recommended that the process of
addressing material changes would be
improved if DHS were to implement a
policy similar to the ‘‘deference’’ policy
it applies in the EB–5 investor program.
Such a policy provides that DHS will
defer to prior determinations regarding
certain documentary evidence used to
establishing program eligibility
requirements absent fraud,
misrepresentation, a mistake of law or
fact, or a material change.
Response: As discussed above, DHS
decided to narrow and clarify the
definition of ‘‘material change’’ in order
to address commenters’ concerns about
reporting burdens. In the absence of
specific suggestions, DHS could not
ascertain from this comment what
aspect of the EB–5 deference policy
could be applied under this rule. DHS
believes it is important for this rule to
provide mechanisms, including the
requirement to report material changes,
to ensure that parole continues to be
justified by significant public benefit in
each particular case.
Comment: A joint submission from a
professional association and a nonprofit organization stated that, where a
material change filing is mandated by
the rule, the entrepreneur should only
be required to file an update with
USCIS, instead of being required to refile an entire parole or re-parole
application.
Response: As explained above, while
DHS appreciates that a new filing may
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appear burdensome to the entrepreneur,
DHS believes that a new filing is
necessary in order to re-evaluate the
entrepreneur’s eligibility when such
material changes occur. Material
changes, by their definition, may affect
the entrepreneur’s ability to
demonstrate that the start-up entity has
potential for rapid growth and job
creation, and whether the entrepreneur
will continue to provide a significant
public benefit to the United States.
Therefore, at present, the entrepreneur
must file a new application to allow
DHS the opportunity to determine the
entrepreneur’s continued eligibility for
parole. Given that this is a new and
complex process, DHS has decided to
take an incremental approach and will
consider potential modifications in the
future after it has assessed the
implementation of the rule and its
impact on operational resources.
9. Other Comments on Parole Criteria
and Conditions
Comment: Several comments
expressed concern that the rule did not
require that the entrepreneur receive
prevailing wages for their work, with
some commenters expressing concern
that the only wage requirements relate
to the Federal Poverty Level.
Response: DHS appreciates
commenters’ concerns regarding
prevailing wages. Unlike some
employment-based visa classifications,
however, the intention of this parole
process is not to address labor shortages
in the United States. Rather, it is to
encourage international entrepreneurs
to create and develop start-up entities
with high growth potential in the
United States. DHS believes that
requiring the parolee to maintain a
household income of greater than 400
percent of the Federal Poverty Level
adequately ensures that he or she will
have sufficient personal economic
stability to provide a significant public
benefit to the United States through
entrepreneurial activities.
Comment: One commenter
recommended that DHS should not
require an applicant’s start-up entity to
receive investment prior to the initial
application for parole; that DHS should
recognize cash infusions during the
growth period of a start-up entity as
eligibility criteria for re-parole; and that
at the end of the initial parole period,
if the venture is deemed successful, no
additional funding milestones should be
required for re-parole eligibility.
Response: DHS appreciates the
comment but declines to revise the rule
as suggested. DHS believes that the
alternative criteria provided in this rule
to determine if the start-up entity has
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substantial potential for rapid growth
and job creation provide sufficient
flexibility for those entrepreneurs who
may have received amounts of qualified
investments or government funding that
are less than those required to satisfy
the general criteria for parole
consideration under this rule. The
determination that the entity has
substantial potential for rapid growth
and job creation will be made based on
the evidence in the record at the time
the parole application is adjudicated,
rather than the possibility that the entity
may receive cash infusions at some
point in the future. If cash infusions
from various sources are received by the
start-up entity during the period of
initial parole, evidence of such cash
infusions may be taken into
consideration if the entrepreneur
applies for re-parole. DHS, however,
does not believe that cash infusions into
the start-up entity during the initial
parole period will independently suffice
to establish that the entity continues to
have the significant potential for rapid
growth and job creation. Infusions of
cash, as a general matter, do not have
the same validating qualities as do
evidence of additional investment from
qualifying investors, grants or awards
from qualifying government entities,
significant revenue growth, or job
creation.
Comment: One commenter asserted
that entrepreneurs who have left their
start-up entity should not have their
parole status immediately revoked. The
commenter suggested that DHS issue
guidance and options for entrepreneurs
who leave their start-up entity but have
contributed to the significant public
benefit of the United States. A similar
comment recommended that
individuals be able to remain in the
United States under parole and qualify
for re-parole if a second start-up meets
the requirements of the rule. Another
related comment argued that
entrepreneurs whose start-up entities
fail should be given a second chance, in
order to account for the dynamism and
uncertainty inherent in new businesses.
Response: DHS appreciates the
comments but declines to adopt the
commenters’ suggestions. As a matter of
statutory authority, once, in the opinion
of DHS, the purpose of parole has been
served, parole should be terminated. See
INA section 212(d)(5)(A), 8 U.S.C.
1182(d)(5)(A). DHS emphasizes that the
purpose of granting parole under this
rule is to allow an entrepreneur to grow
a start-up entity in the United States
with substantial potential for rapid
growth and job creation, by working in
an active and central role for the entity.
Accordingly, DHS will not continue
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parole for entrepreneurs who are no
longer actively working in a central role
with the start-up entity that served as
the basis for the initial parole
application. The individual’s activity
through a new start-up entity, however,
could serve as a basis for a new grant
of parole if all requirements for such
parole are met.
Comment: One commenter suggested
that DHS should utilize the same
methodology for granting parole for
entrepreneurs as defined in a proposed
nonimmigrant visa classification in a
Senate bill, S. 744, 113 Cong. section
4801(2013).
Response: DHS appreciates the
comment but declines to adopt the
commenter’s suggestion. Under this
rule, DHS has identified a process for
implementing the Secretary’s existing
statutory authority to grant parole
consistent with section 212(d)(5) of the
INA. DHS does not believe it is
advisable to import in this rule the
standards from unenacted legislation
focused on nonimmigrant visas rather
than discretionary grants of parole.
G. Employment Authorization
1. Automatic Employment
Authorization Upon Parole
Comment: One commenter suggested
that if employment authorization were
deemed incident to parole, rather than
through a follow-up application, then
the regulations governing employment
verification would need to be amended
to permit employment by the parolee
and spouse without an EAD.
Response: DHS agrees that the
employment verification provisions of
the regulations should be appropriately
revised. In this final rule, and as
proposed, DHS is revising the
employment eligibility verification
regulations by expanding the foreign
passport and Form I–94 document
combination described at 8 CFR
274a.2(b)(1)(v)(A)(5) to include Forms I–
94A containing an endorsement that an
individual is authorized to work
incident to parole. This document
combination was previously acceptable
only for certain nonimmigrants
authorized to work for a specific
employer incident to status pursuant to
8 CFR 274a.12(b), which the final rule
amends to include those paroled into
the United States as entrepreneurs
under this rule. See final 8 CFR
274a.12(b)(37).
However, in this final rule, and as
proposed, only the entrepreneur parolee
is accorded employment authorization
incident to his or her parole. See final
8 CFR 274a.12(b). Given the basis for
parole, it is essential to limit any delays
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in the entrepreneur’s own employment
authorization. Such delays could create
difficulties for the entrepreneur’s
operation of the start-up entity, as he or
she would be prohibited from working
until work authorization was approved,
and would frustrate the very purpose for
paroling the entrepreneur into the
United States. As an entrepreneur’s
spouse would not be coming for the
same kind of specific employment
purpose, DHS does not believe there is
a similar need to provide him or her
work authorization incident to parole.
Instead, this rule adds a new provision
making the spouse of an entrepreneur
parolee eligible to seek employment
authorization. See final 8 CFR
274a.12(c)(34). Based on this provision
and 8 CFR 274a.13(a), an entrepreneur’s
spouse seeking employment
authorization under this rule would
need to file an Application for
Employment Authorization (Form I–
765) with USCIS in accordance with the
relevant form instructions.
Comment: One commenter expressed
concern that the proposed employment
authorization provision is too narrow in
scope. The commenter stated that DHS
should clarify that employment with an
entity that is under common control as
the start-up entity, such as a subsidiary
or affiliate, would be permissible.
Response: Under the final rule, the
entrepreneur parolee’s employment
authorization is limited to the specific
start-up entity listed on the Application
for Entrepreneur Parole, Form I–941.
This limitation helps ensure that the
entrepreneur’s work is consistent with
the purposes for which parole was
granted, especially since parole
applications will be evaluated based in
part on the activities and performance of
that particular start-up entity. DHS
appreciates that there are certain
circumstances in which some flexibility
could further the purpose of
encouraging entrepreneurship,
innovation, economic growth, and job
creation in the United States. Given that
this is a new process however, DHS has
decided to take an incremental
approach and will consider potential
modifications in the future after
assessing the implementation of the
rule.
Comment: One commenter stated that
difficulties obtaining a work visa have
caused many entrepreneurs to move out
of the United States.
Response: DHS agrees with the
commenter’s statement. While this rule
does not address all of the difficulties
that entrepreneurs may face, or make
legislative changes that only Congress
can make, DHS believes it will
encourage international entrepreneurs
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to develop and grow their start-up
entities—and provide the benefits of
such growth—in the United States.
Entrepreneurs paroled into the United
States under this rule will be authorized
to work for the start-up entity for the
duration of the parole (and any reparole) period.
2. Spousal Employment
Comment: Several commenters,
including a business incubator, asserted
that spouses should be granted
employment authorization and argued
that spouse employment authorization
will entice more entrepreneurs to come
to the United States. Several other
commenters stated that, in order to
attract the best entrepreneurial talent,
spouses of entrepreneur parolees should
automatically receive work
authorization incident to status without
the need to apply separately.
Response: DHS agrees with
commenters that extending employment
authorization to spouses of entrepreneur
parolees is important to help attract
entrepreneurs to establish and grow
start-up entities in the United States.
For reasons provided above, however,
DHS disagrees that these spouses must
be provided with employment
authorization incident to their parole.
Instead, these spouses may seek
employment authorization under 8 CFR
274a.12(c)(34).
Comment: A few commenters stated
opposition to permitting employment
authorization for the spouses of
international entrepreneurs.
Response: DHS disagrees with the
commenters’ opposition to allowing an
entrepreneur’s spouse to apply for
employment authorization. Permitting
spouses to seek employment
authorization is an important aspect of
the rule’s intent to attract international
entrepreneurs who may provide a
significant public benefit by growing
their start-up entities in the United
States.
Comment: One commenter objected to
spousal employment authorization
unless it is restricted to the same new
high-potential start-up entity that served
as the basis for the parole.
Response: DHS disagrees with the
suggestion that spousal employment
should be authorized only for
employment with the start-up entity
that served as the basis of parole for the
entrepreneur. Nothing in this rule
prevents people married to each other
from applying for parole associated with
the same start-up entity. But DHS
believes that it is not appropriate or
necessary to limit the employment of an
entrepreneur’s spouse to that entity.
Making those spouses eligible to seek
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employment from a broader range of
employers can further the central
purpose of the rulemaking—
encouraging international entrepreneurs
to develop and grow their start-up
entities within the United States and
provide the benefits of such growth to
the United States. It may also encourage
entrepreneurs to create more jobs
outside the family through the start-up
entity, furthering the benefits provided
to others in the United States. DHS
therefore declines to revise the rule as
suggested.
H. Comments on the Parole Process
1. Ability of Individuals To Qualify for
Parole Under This Rule
Comment: Two individual
commenters asked what kind of
immigration status or visa an
international entrepreneur should
maintain in order to be eligible to apply
for parole under this rule. The
commenters expressed concern about
the types of activities that would need
to be conducted in the United States
prior to a parole application in order to
establish a business, obtain funds from
investors, and otherwise qualify for the
parole under this rule. These
commenters also expressed concern
about requiring prior investment as a
condition for parole, and that investors
would be hesitant to make such an
investment in a start-up entity if the
entrepreneur lacked an immigrant or
nonimmigrant visa. A professional
association stated that, since parole does
not constitute formal admission to the
United States, it will likely be very
difficult for international entrepreneurs
without formal immigration status to
enter into long-term contracts, raise
significant investment capital, and
employ people.
Response: This final rule aims to
encourage international entrepreneurs
to create and develop start-up entities
with high growth potential in the
United States, which are in turn
expected to facilitate research and
development in the country, create jobs
for U.S. workers, and otherwise benefit
the U.S. economy. Under this final rule,
an international entrepreneur may
request parole in accordance with the
form instructions. The final rule
provides that individuals seeking initial
parole under this program must present
themselves at a U.S. port of entry to be
paroled into the United States; there is
no requirement that an international
entrepreneur currently be in the United
States or maintain any prior
immigration status. DHS notes,
however, that under the statute
governing parole authority, individuals
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who have already been admitted to the
United States are ineligible to be
considered for parole inside the United
States because only applicants for
admission are eligible to be considered
for parole. See INA section 212(d)(5)(A),
8 U.S.C. 1182(d)(5)(A); see also INA
section 235(a)(1), 8 U.S.C. 1225(a)(1)
(describing ‘‘applicants for admission’’).
Individuals who have been admitted in
a nonimmigrant classification, and are
currently in the United States pursuant
to that admission, may not be paroled,
even if they have overstayed their
admission, unless they first depart the
United States.
DHS appreciates that international
entrepreneurs may face many challenges
in starting and growing a business in the
United States, including attracting
investment capital or government grants
or awards. DHS disagrees with the
premise, however, that qualifying
investors will be very reluctant to make
a qualifying investment in a start-up
entity that is wholly or partially owned
by an individual that will be seeking a
grant of parole under this rule. DHS
believes that there are a myriad of
factors that go into a decision to invest
significant funds in a start-up entity.
While the underlying immigration
status, or lack thereof, of the start-up
entity’s owner(s) may be a factor
presenting a degree of additional risk,
DHS believes that this rule will
effectively mitigate some of that risk by
providing a known framework under
which certain significant public benefit
parole requests will be reviewed and
adjudicated. This final rule provides
investors and entrepreneurs with greater
transparency into the evaluation process
and manner in which such requests will
be reviewed, so that those individuals
and entities can weigh the various risks
and benefits that might apply to the
particular investment decision being
considered. Given that this is a new and
complex process, DHS has decided to
take an incremental approach and will
consider potential modifications in the
future after assessing the
implementation of the rule.
2. Waiver for Entrepreneurs Presently
Failing To Maintain Status
Comment: An individual commenter
stated that international entrepreneurs
already in the United States should be
able to receive a waiver in order to
establish eligibility for parole under this
rule if they do not have a valid prior
immigration status. Another commenter
suggested that immigration status
violations, such as unauthorized
employment, should not be grounds for
denying parole under this rule and, if
parole is granted, any prior
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unauthorized employment that was
used to meet the requirements for parole
should be disregarded for purposes of
any future immigration applications.
Response: As discussed above,
eligibility for parole under INA section
212(d)(5), 8 U.S.C. 1182(d)(5), is not
wholly dependent upon an individual’s
current immigration status.
Unauthorized employment or a prior
status violation will not necessarily
preclude an individual from qualifying
for parole under this rule. However, the
fact that an entrepreneur has worked
without authorization, is out of status,
or not legally present in the United
States would be considered in
determining whether DHS should grant
parole under its discretionary authority.
All requests for a discretionary grant of
parole are adjudicated on a case-by-case
basis and ultimately determined by
evaluating all positive and negative
factors.
DHS will not adopt the commenter’s
suggestion to disregard, for purposes of
any future immigration applications,
any prior unauthorized employment
that was used to meet the requirements
for parole. DHS believes that such a
provision would require a statutory
change, as eligibility for certain benefits
is barred by statute if the applicant
previously worked without
authorization.30
3. Relationship Between Parole and
Various Nonimmigrant Visa
Classifications
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a. Pathway for Current Nonimmigrants
To Use Entrepreneur Parole
Comment: Some commenters
expressed concern that it would be
challenging for foreign students, recent
graduates of U.S. universities, and other
nonimmigrants presently in the United
States to meet this rule’s requirements
for parole consideration under the
constraints of their current visas. These
commenters said that the rule should
allow these individuals a realistic and
clear pathway to easily utilize parole,
and should clarify that potential
applicants currently in the United States
in nonimmigrant status will not be
violating their existing visa status when
taking the necessary steps to establish
eligibility for significant public benefit
parole. One commenter requested that
students in F–1 nonimmigrant status
and eligible to work on Curricular
Practical Training (CPT) or Optional
Practical Training (OPT) should become
eligible for parole under the rule if they
founded a start-up and raised $100,000
in capital.
30 See,
e.g., INA section 245(c), 8 U.S.C. 1255(c).
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Response: DHS appreciates that some
entrepreneurs who are present in the
United States and who might otherwise
qualify for parole under this program
may be unable to engage in certain
activities given the limitations placed
on their nonimmigrant status, making it
difficult, for example, for them to raise
significant capital for a start-up entity.
DHS, however, disagrees with the
commenters’ assertion that individuals
present in the United States in F–1
nonimmigrant status will be unable to
meet the requirements for parole under
this program, such as starting a business
and raising significant investment,
without violating their F–1
nonimmigrant status. For example, an
individual in F–1 status who has
obtained OPT employment
authorization may start and work for his
or her own business in the United
States. The OPT employment, and thus
the business, must relate to the F–1
nonimmigrant’s program of study and
can occur either before (pre-completion
OPT) or after the completion of a
program of study (post-completion
OPT).31 Additional requirements apply
to F–1 nonimmigrants who are
otherwise eligible for a STEM OPT
extension, such as establishing that their
STEM OPT employer will have a valid
employer-employee relationship with
the F–1 OPT nonimmigrant, but those
additional requirements do not pertain
to the initial 12-month OPT period, and
in any event do not present an absolute
bar against entrepreneurial activities.
DHS believes that it is certainly realistic
that an F–1 nonimmigrant in the United
States can start a business during his or
her OPT period, and during that time
can take steps to obtain significant
investment in the start-up entity, which
the individual may then rely upon if
applying for parole under this rule. DHS
declines to adopt the commenters’
suggestion to include in this rule a
blanket provision stating that potential
applicants currently in the United States
in nonimmigrant status will not be
violating their existing status when
taking steps to establish eligibility for
parole. Such changes would pertain to
the statutory and regulatory limitations
placed on various nonimmigrant
classifications and are outside the scope
of this rule.
DHS believes that this final rule
provides a realistic and clear option for
certain entrepreneurs to actively grow
their qualifying start-up entity in the
United States. As discussed below,
parole is not a nonimmigrant status, and
individuals present in the United States
31 https://studyinthestates.dhs.gov/trainingopportunities-in-the-united-states.
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in a nonimmigrant status will not be
able to change status or otherwise be
granted parole without first departing
the United States and appearing at a
U.S. port of entry for inspection and
parole. Under this final rule, however,
an individual present in the United
States in a nonimmigrant status may
apply for and obtain an approval of the
Application for Entrepreneur Parole
(Form I–941). Filing and obtaining
approval of a Form I–941 application
under this rule will not, by itself,
constitute a violation of the individual’s
nonimmigrant status. After approval of
the Form I–941 application, if the
individual decides to rely upon parole
to actively grow his or her business in
the United States, the individual will
need to appear at a U.S. port of entry for
a final parole determination to allow
him or her to come into the United
States as a parolee.
This final rule already provides
appropriate criteria under which all
applications will be reviewed, including
those submitted by any F–1
nonimmigrants. As indicated in this
final rule, one basis on which an
individual may be considered for parole
under this rule is if he or she has raised
at least $250,000 in investment capital
from a qualifying investor (and meets
certain other criteria). Individuals who
raise a substantial amount of capital
from a qualifying investor, but less than
$250,000, may still qualify for and be
granted parole under other criteria
identified in the rule—including the
receipt of a qualifying government grant
or award or other reliable and
compelling evidence of the start-up
entity’s substantial potential for rapid
growth and job creation.
b. Switching Between Nonimmigrant
Status and Parole
Comment: Several commenters raised
questions or provided suggestions
regarding switching from a
nonimmigrant status to parole, or from
parole to a nonimmigrant status.
Specifically, one commenter asked what
her status would be if she were in the
United States as an H–4 nonimmigrant,
authorized to work pursuant to an EAD,
but nevertheless pursued parole under
this rule. Another commenter suggested
that DHS should include a provision in
this rule that expressly allows someone
to switch from nonimmigrant status to
parole, and from parole to
nonimmigrant status, similar to DHS’s
policy to terminate and restore the H–
1B or L–1 status of certain individuals
who have temporarily departed the
United States but came back using an
advance parole document that was
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issued based on a pending Form I–485
application for adjustment of status.
Response: DHS declines to adopt a
provision in this rule allowing
individuals to change between
nonimmigrant status and parole while
in the United States. An individual who
is present in the United States as a
nonimmigrant based on an inspection
and admission is not eligible for parole
without first departing the United States
and appearing at a U.S. port of entry to
be paroled into United States. See INA
section 212(d)(5)(A), 8 U.S.C.
1182(d)(5)(A). Moreover, an individual
who has been paroled into the United
States cannot change to nonimmigrant
status without leaving the United States,
as INA section 248, 8 U.S.C. 1258, only
permits individuals who are
maintaining nonimmigrant status to
change to another nonimmigrant status.
If an individual who has been paroled
into the United States under this rule
has a petition for nonimmigrant
classification approved on his or her
behalf, he or she would have to leave
the United States and pursue consular
processing of a nonimmigrant visa
application before seeking to return to
the United States.
c. Entrepreneur Pathways and
Entrepreneur Parole
Comment: One commenter stated that
the international entrepreneur parole
rule should complement and not
supplant prior USCIS policy pertaining
to entrepreneurs, including those
reflected on the USCIS Entrepreneur
Pathways Web site.32 The commenter,
while expressing concerns with aspects
of existing policies pertaining to
entrepreneurs and this rule, suggested
that if an entrepreneur cannot qualify
for parole under this rule, USCIS should
encourage the entrepreneur to seek a
visa associated with his or her start-up
entity under the existing immigrant or
nonimmigrant visa system. Specifically,
the commenter suggested that the final
rule should expressly include an
amendment to the H–1B regulations to
allow approval of an H–1B petition
under the policies articulated on the
Entrepreneur Pathways Web site, and
that USCIS adjudicators should see an
express statement in the final rule that,
notwithstanding the existence of this
rule, the H–1B visa remains available for
working owners of start-up entities. The
commenter noted that the USCIS
Entrepreneur Pathways Web site also
provides guidance for entrepreneurs to
use other existing nonimmigrant visa
classifications (e.g., L–1, O, and E visas)
that could be more advantageous to the
32 See
https://www.uscis.gov/eir.
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entrepreneur than the parole rule, so
adjudicators should continue to approve
petitions in that spirit. The commenter
asserted that the unique requirements
under the parole rule, such as a
threshold investment amount, should
not be allowed to ‘‘bleed into and taint’’
the adjudicatory process for securing
employment-based visas traditionally
used by entrepreneurs.
Response: DHS appreciates the
commenter’s suggestions, but the
suggested changes to the H–1B
regulations are outside the scope of this
rulemaking. DHS agrees with the
commenter that parole under this
program is intended to complement,
and not supplant, other options that
may already exist for entrepreneurs
under other immigrant and
nonimmigrant visa classifications. This
rule does not alter existing rules or
policies regarding the ability of
entrepreneurs to qualify for any
immigrant or nonimmigrant status. This
rule does, however, provide an
additional avenue for entrepreneurs to
consider when exploring options that
may be available to them to grow a startup entity in the United States.
4. Travel Document Issuance
Comment: A commenter urged DHS to
grant multiple-entry parole to foreign
nationals so that they may travel
internationally and return to the United
States, as this is not explicit in the
regulation. The commenter stated that
this ability is essential to ensure that
entrepreneurs can raise additional funds
and market innovations worldwide. In
addition, this commenter stated that
some foreign nationals may begin their
businesses and seek entrepreneur parole
while in nonimmigrant status in the
United States, such as in F–1 or H–1B
nonimmigrant status (and thus seek to
depart the United States with advance
parole and then request parole from CBP
upon their return to a U.S. port of
entry). The commenter suggested that
the regulation clarify how these foreign
nationals will be able to return to the
United States.
Response: DHS notes that individuals
who have been admitted to the United
States, such as those in nonimmigrant
status, are not eligible to be granted
parole unless they first depart the
United States. DHS clarifies that any
immigration status violations by any
applicant for parole, including those
related to their entrepreneurial efforts,
will be taken into account as negative
factors in the case-by-case
determination of whether the applicant
merits an exercise of discretion to grant
parole, though they will not necessarily
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prohibit the individual from obtaining a
grant of parole under this rule.
DHS recognizes that international
travel can be essential for the success of
some start-up entities. Under existing
law, an individual’s authorized period
of parole ends each time he or she
departs the United States. See 8 CFR
212.5(e)(1)(i). DHS may, however,
authorize advance parole before
departure and can specify that such
authorization is valid for multiple uses.
An entrepreneur granted advance parole
would be able to leave the country,
present himself or herself at a port of
entry upon return, and request a
subsequent grant of parole for the
remaining period of his or her initially
granted parole period. At such time,
DHS must then inspect the individual
and determine whether or not to grant
parole into the United States.33 If the
individual is granted parole, he or she
may only be paroled for up to the time
initially granted. Any time spent outside
the United States after the parole period
is initiated will count against the total
period of parole, so that the total time
period of the parole period remains
consistent with the date of initial parole
granted by CBP.
5. Parole in Place
Comment: Several commenters
requested that DHS allow parole-inplace under this rule. Some of these
commenters stated that parole-in-place
should be added so that individuals
already in the United States in a
nonimmigrant status, such as H–1B or
F–1 nonimmigrant status, can apply for
and be granted parole under this rule
without having to depart the United
States. Several other commenters noted
that DHS has the jurisdiction to allow
parole-in-place for spouses or
dependents, as they do for military
family members, and that this could be
applied to the International
Entrepreneur Rule. Some commenters
argued that the requirement to be out of
the country to apply for parole under
this rule puts an unnecessary financial
burden on applicants who are already
residing in the United States.
Response: DHS appreciates, but
declines to adopt, the commenters’
suggestions that parole-in-place be
allowed under this rule for individuals
already in the United States in H–1B or
F–1 nonimmigrant status. Only
applicants for admission are eligible to
33 This process is not appropriately described as
‘‘multiple-entry parole.’’ Parole does not constitute
an admission to the United States, INA sections
101(a)(13)(B), 212(d)(5)(A), 8 U.S.C. 1101(a)(13)(B),
1182(d)(5)(A); and parole terminates upon the
individual’s departure from the United States, 8
CFR 212.5(e)(1)(i).
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be considered for parole, thus
precluding individuals who have
already been admitted from being
considered for parole inside the United
States. See INA section 212(d)(5)(A), 8
U.S.C. 1182(d)(5)(A); see also INA
section 235(a)(1), 8 U.S.C. 1225(a)(1)
(describing ‘‘applicants for admission’’).
Such individuals are not eligible for
parole, regardless of whether they have
overstayed their admission, unless they
first depart the United States.
6. Comments on Options After 5-Year
Total Parole Period Ends
Comment: Many commenters
provided views on the options available
to entrepreneurs who have exhausted
their up to 5 years of eligibility for
parole under this rule. Some
commenters were concerned that the
rule does not provide a direct path to
lawful permanent residence, which
could limit the investment prospects for
start-up entities. Other commenters
were concerned that including such a
path could exacerbate current
immigrant visa backlogs and thus
disadvantage those already in the queue
for immigrant visa numbers.
A number of commenters were more
broadly concerned that the overall
uncertainty inherent in parole may
discourage entrepreneurs from using
this rule to start and grow their
businesses in the United States. One
particular commenter expressed
concerns about an entrepreneur’s ability
to demonstrate nonimmigrant intent for
purposes of a visa that does not permit
dual intent. Others wanted DHS to
consider entrepreneurs who have
completed a 5-year parole period, and
whose start-ups continue to demonstrate
growth, as eligible for an EB–2
immigrant visa with a National Interest
Waiver based upon the economic
benefit to the United States. Other
commenters urged DHS to establish
prima facie eligibility for lawful
permanent residence based on 3 years of
parole under this rule. Still others
wanted assurance that an individual
who is the beneficiary of an approved
immigrant petition would keep his or
her priority date for purposes of
receiving lawful permanent residence if
he or she were granted parole under this
rule.
Response: DHS appreciates the wide
range of comments about immigration
options for entrepreneurs after the end
of their authorized period or periods of
parole under this rule. Nothing in this
rule forecloses otherwise available
options for international entrepreneurs
who are granted parole. DHS further
notes that this rule does not impact
existing rules and policies pertaining to
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retention of priority dates in the
immigrant petition context. The rule
does not, however, establish a direct
path to lawful permanent residence by
creating a new immigrant visa
classification for international
entrepreneurs, which could only be
done by Congress.
As discussed in the NPRM, the
entrepreneur and any dependents
granted parole under this program will
be required to depart the United States
when their parole periods have expired
or have otherwise been terminated,
unless such individuals are otherwise
eligible to lawfully remain in the United
States. Such individuals may apply for
any immigrant or nonimmigrant
classification for which they may be
eligible (such as classification as an O–
1 nonimmigrant or lawful permanent
residence through employer
sponsorship). Individuals who are
granted parole under this rule may
ultimately be able to qualify for an EB–
2 immigrant visa with a National
Interest Waiver. If an entrepreneur is
approved for a nonimmigrant or
employment-based immigrant visa
classification, he or she would generally
be required to depart the United States
and apply for a visa at a U.S. embassy
or consulate abroad. As noted above,
because parole is not considered an
admission to the United States, parolees
will be unable to apply to adjust or
change their status in the United States
under many immigrant or nonimmigrant
visa classifications. DHS does not
believe that merely being granted parole
under this rule would prevent an
individual from demonstrating
nonimmigrant intent for purposes of
obtaining a subsequent nonimmigrant
visa for entry into United States. DHS
believes that this rule presents sufficient
clarity and predictability for many
individuals who want to establish and
grow their businesses in the United
States, and will contribute significantly
to economic growth and job creation
here. Such positive outcomes may be
relevant in the event that entrepreneurs
granted parole under this rule later seek
to apply for an existing nonimmigrant or
immigrant visa.
I. Appeals and Motions To Reopen
Comment: Several commenters
requested that applicants be allowed to
file appeals or motions to reconsider
adverse parole decisions. A business
association requested that submissions
of motions to reopen or motions for
reconsideration result in uninterrupted
employment authorization for the
parolee.
Response: DHS appreciates but
declines to adopt these suggestions.
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DHS has concluded that granting a right
of appeal following a decision to deny
entrepreneur parole would be
inconsistent with the discretionary
nature of the adjudication and contrary
to how DHS treats other parole
decisions. The final rule also precludes
applicants from filing motions to reopen
or for reconsideration under 8 CFR
103.5(a)(1). DHS retains its authority
and discretion, however, to reopen or
reconsider a decision on its own motion
as proposed. See final 8 CFR
212.19(d)(4). Applicants may alert DHS,
through existing customer service
channels, that they believe that a
decision to deny parole was issued in
error and include factual statements and
arguments supporting such claims.
Because the determination to grant or
deny a request for parole is
discretionary, the parole process in this
final rule may not be relied upon to
create any right or benefit, substantive
or procedural, enforceable at law or by
any individual or other party in removal
proceedings, in litigation with the
United States, or in any other form or
manner. Parole determinations would
continue to be discretionary, case-bycase determinations made by DHS, and
parole may be revoked or terminated at
any time in accordance with the
termination provisions established by
this rule at 8 CFR 212.19(k). Parolees
under this final rule would assume sole
risk for any and all costs, expenses,
opportunity costs, and any other
potential liability resulting from a
revocation or termination of parole. A
grant of parole would in no way create
any reliance or due process interest in
obtaining or maintaining parole or being
able to remain in the United States to
continue to operate a start-up entity or
for other reasons.
J. Termination of Parole
1. Discretionary Authority To Revoke/
Terminate Parole
Comments: One commenter expressed
concern that the basis for terminating
parole is subjective, particularly with
respect to reporting material changes.
This commenter suggested that USCIS
should limit such reporting to adverse
judgments, since entrepreneurs and
start-up entities are entitled to due
process. Other commenters requested
that USCIS adjudicators be specifically
trained on entrepreneurship issues so
that they can make the most informed
decisions regarding parole.
Response: USCIS is committed to
providing sufficient training on
entrepreneurship issues for those
adjudicators who will be assigned to
adjudicating entrepreneur parole
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requests. DHS does not believe that
further revisions to the rule are
necessary to protect against possible
unfair or inconsistent determinations
among adjudicators. By statute, parole
decisions are discretionary and must be
made on a case-by-case basis. This rule
establishes transparent parameters for
termination of parole, including
automatic termination and termination
on notice. Automatic termination
applies at the expiration of parole, or
upon written notification to DHS from
the entrepreneur parolee that he or she
is no longer employed by the start-up
entity or no longer possesses the
required qualifying ownership stake in
the start-up entity. See final 8 CFR
212.19(k)(2). Termination on notice
with an opportunity for the
entrepreneur to respond is authorized
by 8 CFR 212.19(k)(3). These bases for
termination are tied to objective facts
regarding eligibility for parole, thereby
placing all parolees on the same footing.
The commenter expressed particular
concern regarding terminations based
on material changes. DHS believes that
this concern is sufficiently addressed by
the parameters set by this rule’s
definition of material change. Under
this rule, material change means any
change in facts that could reasonably
affect the outcome of the determination
whether the entrepreneur provides, or
continues to provide, a significant
public benefit to the United States. See
final 8 CFR 212.19(a)(10). This rule
provides further guidance by listing
several examples illustrating material
changes, including: Any criminal
charge, conviction, plea of no contest, or
other judicial determination in a
criminal case concerning the
entrepreneur or start-up entity; any
complaint, settlement, judgment, or
other judicial or administrative
determination concerning the
entrepreneur or start-up entity in a legal
or administrative proceeding brought by
a government entity; any settlement,
judgment, or other legal determination
concerning the entrepreneur or start-up
entity in a legal proceeding brought by
a private individual or organization
other than proceedings primarily
involving claims for damages not
exceeding 10 percent of the current
assets of the entrepreneur or start-up
entity; a sale or other disposition of all
or substantially all of the start-up
entity’s assets; the liquidation,
dissolution or cessation of operations of
the start-up entity; the voluntary or
involuntary filing of a bankruptcy
petition by or against the start-up entity;
a significant change with respect to
ownership and control of the start-up
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entity; and a cessation of the
entrepreneur’s qualifying ownership
interest in the start-up entity or the
entrepreneur’s central and active role in
the operations of that entity. See final 8
CFR 212.19(a)(10).
2. Notice and Decision
Comments: A couple of commenters
suggested that DHS provide notice and
opportunity to respond before
terminating parole.
Response: DHS agrees with the
commenters that providing the
entrepreneur parolee with notice and an
opportunity to respond prior to
termination is reasonable in certain
scenarios, such as when grounds for
termination require an assessment of the
underlying case by the adjudicator.
However, where no such assessment is
required, DHS believes that automatic
termination is appropriate. The NPRM
provided for termination at DHS’s
discretion, including automatic
termination in limited circumstances
and termination on notice under a range
of circumstances deemed appropriate by
DHS. This rule finalizes that proposal
without change. See final 8 CFR
212.19(k)(2) and (3). Under this rule,
therefore, DHS will generally provide
notice of termination and an
opportunity to respond where it
believes that:
(1) The facts or information contained
in the request for parole were not true
and accurate;
(2) The alien failed to timely file or
otherwise comply with the material
change reporting requirements in this
section;
(3) The entrepreneur parolee is no
longer employed in a central and active
role by the start-up entity or ceases to
possess the required ownership stake in
the start-up entity;
(4) The alien otherwise violated the
terms and conditions of parole; or
(5) Parole was erroneously granted.
Automatic termination will apply
upon the expiration of parole or if DHS
receives written notice from the parolee
informing DHS that he or she is no
longer employed by the start-up entity
or no longer possesses the required
qualifying ownership stake in the startup entity. DHS believes that these bases
for automatic termination clearly
evidence that the entrepreneur no
longer qualifies for parole under this
rule; therefore, notice and opportunity
to respond are unnecessary.
Additionally, parole of the spouse or
child of the entrepreneur will be
automatically terminated without notice
if the parole of the entrepreneur has
been terminated. This rule also finalizes
the provision indicating that the
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decision to terminate parole may not be
appealed, that USCIS will not consider
a motion to reopen or reconsider a
decision to terminate parole, and, upon
its own motion, USCIS may reopen or
reconsider a decision to terminate. See
final 8 CFR 212.19(k)(4).
3. Other Comments on Application
Adjudication and Parole Termination
Comments: Multiple commenters
suggested an expedited or premium
processing option for entrepreneur
parole applicants. Some of these
commenters suggested a maximum 30day adjudication time period.
Response: While DHS appreciates the
concern for timely adjudications, at this
time DHS declines to include premium
or expedited processing as part of the
final rule. DHS may consider the
possibility of premium processing or
expedited processing after assessing
implementation of the rule and an
average adjudication time for processing
requests for parole under this rule has
been determined.
K. Opposition to the Overall Rule
Comment: Multiple commenters
expressed overall opposition to the rule,
stating that there is no reason to add an
additional parole process for highly
trained and talented entrepreneurs
when visa and residency pathways
already exist, such as the O
nonimmigrant visa, EB–5 immigrant
visa, or EB–2 immigrant visa based on
a National Interest Waiver. Other
commenters asserted that the United
States needs to limit immigration, not
create more immigration programs.
Several individual commenters argued
that the U.S. Government should reform
other visa programs, such as the H–1B
nonimmigrant classification, and
address the current immigrant visa
backlog before creating more programs.
Several individual commenters asserted
that taxpayer money should be used on
domestic issues, such as reviving the
American economy, rebuilding
infrastructure, promoting national
security, and supporting veterans, rather
than on administering a parole process
for international entrepreneurs.
Response: DHS disagrees with the
commenters’ assertions that sufficient
avenues for international entrepreneurs
already exist. DHS believes that this
final rule will, by further implementing
authority provided by Congress, reduce
barriers standing in the way of
innovation and entrepreneurial activity
that will benefit the U.S. economy.34
34 Nina Roberts, For foreign tech entrepreneurs,
getting a visa to work in the U.S. is a struggle, The
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This final rule provides an avenue for
innovative entrepreneurs to pursue their
entrepreneurial endeavors in the United
States and contribute to the U.S.
economy. In the absence of this rule,
these innovative entrepreneurs might be
delayed or discouraged altogether in
contributing innovation, job creation,
and other benefits to the United States.
DHS also disagrees with the
commenters’ assertions that reforms
should be made to the H–1B
nonimmigrant classification and that the
immigrant visa backlog should be
addressed before this rule is finalized.
Parole is an entirely separate option
within the Secretary’s authority to allow
individuals to come to the United States
on a case-by-case basis for urgent
humanitarian reasons or significant
public benefit. While DHS appreciates
the commenters’ sentiment that changes
should be made in other contexts, the
exact changes contemplated by the
commenters are unclear, are outside the
scope of this rulemaking, or would
require congressional action.
DHS also disagrees with the assertion
that taxpayer funds will be misallocated
to process applications for parole under
this final rule. Applicants for parole
under this rule will be required to
submit a filing fee to fully cover the cost
of processing of applications.
L. Miscellaneous Comments on the Rule
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1. Additional Suggested Changes to the
Rule
Comments: A number of commenters
suggested additional changes to the final
rule that are beyond the scope of this
rulemaking. These comments proposed
changes to the regulations governing
certain nonimmigrant programs,
namely: Employment of F–1
nonimmigrant students through
Optional Practical Training (OPT);
annual H–1B numerical limitations;
‘‘period of stay’’ duration for L–1
nonimmigrants starting a new office in
the United States; and merging
significant public benefit parole with
the O–1 visa program. A commenter
suggested providing Employment
Authorization Documents or lawful
permanent resident status to individuals
who obtained their Master’s degrees in
the United States. Other commenters
Guardian, Sept. 14, 2014, available at https://
www.theguardian.com/business/2014/sep/14/
foreign-tech-entrepreneurs-visa-us-struggle; Amy
Grenier, Majority of U.S. Patents Granted to Foreign
Individuals, April 11, 2014, available at https://
immigrationimpact.com/2014/04/11/majority-of-us-patents-granted-to-foreign-individuals/ (‘‘Because
of the limitations of the H–1B visa program, and the
lack of a dedicated immigrant visa for entrepreneurs
or innovators, foreign inventors struggle with
inadequate visa options that often prevent them
from obtaining permanent residency.’’).
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suggested providing tax incentives to
established U.S. corporations that
would agree to mentor immigrant
entrepreneurs, or establishing a system
of compensation for certain senior
citizens in the United States to mentor
immigrant entrepreneurs. Other
commenters recommended balancing
parole for entrepreneurs with refugee
admissions.
Response: DHS thanks commenters
for these suggestions but declines to
make changes to the rule as these
comments are outside the scope of this
rulemaking.
Comment: A joint submission from an
advocacy group and professional
association recommended that DHS
consider parole for individuals who
work in social services fields that do not
command a high income or who might
otherwise perform work in the national
interest.
Response: This final rule is aimed at
international entrepreneurs who will
provide a significant public benefit to
the United States—which could include
entrepreneurs whose startup entities
operate in the field of social services, so
long as they meet the criteria for parole
in this final rule. Furthermore, this rule
does not limit the Secretary’s broader
authority to grant parole to other
applicants for admission on a case-bycase basis for urgent humanitarian
reasons or significant public benefit.
2. Information/Guidance
Comment: One commenter
recommended that DHS make parole
data from the program publicly
available.
Response: While DHS did not propose
to disclose parole data related to this
rule, DHS appreciates the commenter’s
suggestion, and may consider making
such data publicly available after this
rule is implemented.
Comment: Other commenters
suggested that DHS provide additional
guidance to those granted parole under
this rule and to provide resources for
small start-ups interested in applying
for the rule.
Response: DHS will evaluate whether
to provide additional guidance
following publication of this final rule
and an assessment of its
implementation.
Comment: One commenter suggested
that DHS add a provision to the rule for
retrospective review, in order to analyze
the effects of the rule’s implementation.
Response: DHS agrees with the
commenter’s suggestion that the effects
of the rule, after its implementation,
should be reviewed; however, DHS does
not believe adding a provision to the
final regulatory text requiring such
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review is necessary. DHS intends to
review all aspects of this parole rule and
process subsequent to its
implementation and consistent with the
direction of Executive Order 13563.
Given that this is a new and complex
process, DHS will consider potential
modifications in the future after
assessing the implementation of the rule
and its impact on operational resources.
Comment: One commenter said these
rules should serve as a guide, but that
companies and entrepreneurs should be
analyzed on case-by-case basis.
Response: DHS may grant parole on a
case-by-case basis under this rule if the
Department determines, based on the
totality of the evidence, that an
applicant’s presence in the United
States will provide a significant public
benefit and that he or she otherwise
merits a favorable exercise of discretion.
Comment: An individual commenter
suggested that DHS should, as part of its
assessment of parole applications under
this rule, evaluate the performance of
applicants’ prior start-ups in their home
countries.
Response: DHS agrees with the
commenter and believes that the
performance of applicants’ prior startups in their home countries is the type
of evidence already contemplated by the
final rule both under the alternative
criteria provisions and as part of the
determination as to whether an
applicant merits a favorable exercise of
discretion. The alternative criteria allow
an applicant who partially meets one or
more of the general criteria related to
capital investment or government
funding to be considered for initial
parole under this rule if he or she
provides additional reliable and
compelling evidence that his or her
parole would provide a significant
public benefit to the United States. Such
evidence would need to serve as a
compelling validation of the entity’s
substantial potential for rapid growth
and job creation. DHS is not defining
the specific types of evidence that may
be deemed ‘‘reliable and compelling’’ at
this time, as DHS seeks to retain
flexibility as to the kinds of supporting
evidence that may warrant DHS’s
exercise of discretion in granting parole
based on significant public benefit.
3. Comments Regarding the E–2
Nonimmigrant Classification
Comment: Several commenters
submitted comments regarding the E–2
nonimmigrant classification. The
majority supported the inclusion of
E–2 businesses into the parole process
under this rule. Several companies and
an individual commenter further
recommended that the rule should
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accommodate E–2 businesses already in
the United States.
Response: The final rule lays out
specific criteria for determining the kind
of start-up enterprise that has
substantial potential for job growth and
job creation, and for assessing whether
an individual entrepreneur’s parole
would be justified by significant public
benefit. DHS believes it is unnecessary
to identify these enterprises even more
specifically than in this final rule. DHS
notes that the rule does not prevent
individuals who might otherwise
qualify for an existing immigrant or
nonimmigrant classification from
applying for parole under this rule.
Comment: One commenter stated that
the proposed rule is much more
complicated than the E–2 nonimmigrant
classification, and that DHS should
incorporate elements of the E–2 program
into this rule’s parole process.
Response: DHS disagrees with the
commenter’s suggestion.35 A grant of
parole under this rule is based on a
determination that the individual will
provide a significant public benefit to
the United States. Eligibility for E–2
nonimmigrant classification is based on
different standards, and DHS believes
that applying E–2 requirements would
not suffice to meet the statutory
requirements for parole and establish
that an individual merits a favorable
exercise of discretion. DHS therefore
declines to adopt the commenter’s
suggestion.
Comment: A commenter suggested
that the proposed rule is unnecessary
since the E–2 program already supports
international entrepreneurs.
Response: DHS disagrees with the
commenter’s statement. The E–2
program allows nationals of a treaty
country (a country with which the
United States maintains a qualifying
Treaty of Friendship, Commerce and
Navigation or its equivalent) to be
admitted to the United States when
investing a substantial amount of capital
in a U.S. business. Foreign
entrepreneurs from nontreaty countries,
such as Brazil, China, India, Israel, or
Russia, are currently not eligible for an
E–2 nonimmigrant visa. Also, the E–2
category requires the entrepreneur to
invest his or her own funds, and is
therefore not applicable to
entrepreneurs relying upon funds from
investors or government entities to build
and grow their business. DHS believes
that this rule provides a viable option,
35 The E–2 nonimmigrant classification allows a
national of a treaty country (a country with which
the United States maintains a treaty of commerce
and navigation) to be admitted to the United States
when investing a substantial amount of his or her
own capital in a U.S. business.
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consistent with the Secretary’s parole
authority, to allow entrepreneurs to
build and grow their businesses in the
United States, providing significant
public benefit here.
4. Usefulness of the Rule
Comment: Multiple commenters
argued that this rule will not necessarily
help international entrepreneurs
succeed, because there are too many
restrictions in place for foreign residents
to qualify. One commenter asserted that
the rule as proposed is too complex and
its goals will be impossible to achieve.
Response: DHS disagrees with these
assertions. DHS acknowledges that this
final rule will not benefit all
international entrepreneurs seeking to
enter or remain in the United States. As
several commenters have stated, the
final rule does not and cannot create a
new visa classification specifically
designed for international
entrepreneurs, which is something that
can only be done by Congress. This final
rule, however, provides an additional
option that may be available to those
entrepreneurs who will provide a
significant public benefit to the United
States. This parole option complements,
but does not supplant, current
immigrant and nonimmigrant visa
classifications for which some
international entrepreneurs might
qualify to bring or keep their start-up
entities in the United States.
The requirements governing eligibility
for consideration for parole under this
rule establish a high evidentiary bar that
must be met in order to assist DHS in
its determination that the individual
will provide a significant public benefit
to the United States. DHS, however,
does not agree with the commenter’s
assertion that the requirements are
impossible for all entrepreneurs to meet.
Given that this is a new and complex
process, DHS will consider potential
modifications in the future after
assessing the implementation of the rule
and its impact on operational resources.
5. Include On-Campus Business
Incubators in the Rule
Comment: One commenter urged
USCIS to tie eligibility for parole to an
applicant’s participation in business
incubators and accelerators located on
U.S. university and college campuses
that allow international entrepreneurs to
grow start-up companies. The
commenter stated that these programs
meet the goal of the rule while
providing benefits on a local and
national scale. The commenter
elaborated that the proposed rule only
contemplates a traditional start-up
arrangement, which creates
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requirements based on ownership
interest, type of investor, and amount of
money invested. The commenter
asserted that international entrepreneurs
that engage with campus-based
incubators cannot meet these
requirements because the structure and
opportunities provided by a higher
education institution do not follow the
traditional models. The commenter
urged DHS to create alternative criteria
to recognize the role higher education
plays in fostering international
entrepreneurs.
Response: DHS appreciates the
comment but will not adopt changes to
the rule in response. DHS recognizes
and values the important role that
incubators and accelerators located on a
U.S. university or college campuses
perform in the entrepreneur community.
DHS believes, however, that the
framework provided by this rule does
allow DHS to consider, in its
discretionary case-by-case
determination, the fact that the start-up
entity is participating in such an
incubator or accelerator. DHS believes
that evidence of such participation is
one factor to be weighed for those
individuals who do not fully meet the
general capital investment or
government funding criteria and are
relying on additional reliable and
compelling evidence that the start-up
entity has the substantial potential for
rapid growth and job creation. DHS
believes that reliable and compelling
evidence may, depending on all the
circumstances, include evidence that
the start-up entity is participating in a
reputable incubator or accelerator
located on a U.S. university or college
campus.
6. Objection to Use of the Word
‘‘Parole’’
Comment: Multiple commenters
objected to the use of the word ‘‘parole’’
to describe the provisions in this rule.
Commenters are concerned that use of
the word in an immigration context will
be confused with the use of the word in
the criminal context. A commentator
suggested using the term ‘‘conditional
status’’ or ‘‘provisional status.’’
Response: DHS declines to accept the
commenters’ suggestion. ‘‘Parole’’ is a
term established by statute at section
212(d)(5) of the INA, 8 U.S.C.
1182(d)(5). The use of that term in the
INA should not be confused with the
word’s usage in non-immigration
contexts. Use of alternative terms as
suggested by the commenter would be
misleading.
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7. Concern Over Possible Exploitation of
Entrepreneurs
Comment: Two commenters suggested
that international entrepreneurs would
be vulnerable to exploitation by venture
capital investors under this rule. The
commenters compare the influence of
venture capitalists over entrepreneurs
granted parole to the influence of
employers over H–1B employees. One
commenter expressed concern that the
rule could allow a venture capitalist
almost total dominance over the
international entrepreneur’s life,
through the threat of withdrawing
funding and thereby triggering
termination of parole.
Response: DHS disagrees with the
commenters’ assertions that the final
rule will facilitate such exploitation of
international entrepreneurs by venture
capital investors. As a general matter,
venture capitalists and other investors
cannot easily withdraw funding from a
start-up entity once this investment
transaction has been duly executed.
Once an entrepreneur has applied for
parole on the basis of prior investment,
and has been granted such parole, the
investor will not be in a position to
directly interfere with the
entrepreneur’s continued eligibility
during the parole period. The final rule
will not create significant new
conditions for exploitation that do not
already exist currently for international
entrepreneurs—or for that matter,
domestic entrepreneurs—in the United
States.
Comment: One commenter stated that
the United States should be mindful of
what may happen to poorer countries
when the United States attracts their
best entrepreneurs.
Response: DHS stresses that
application for parole under this rule is
voluntary and has the primary goal of
yielding significant public benefit for
the United States. DHS believes that
applicants will assess economic and
business conditions both in the United
States and in other countries and will
consider these conditions, along with
numerous others, in the decision to
apply for parole under this rule. DHS
does not believe that the rule itself,
which authorizes parole only for a
limited period of time and under
specific limited circumstances, will
create significant negative consequences
for poorer countries. Additionally,
positive spillovers from new
innovations are not limited to the
specific country in which they were
developed. Parole under this rule in no
way prevents an entrepreneur
contributing to the economy of his or
her home, including through remittance
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payments or upon return. Furthermore,
individuals may be interested in
returning to their home countries in the
future for a variety of reasons, including
the temporary nature of parole.
M. Public Comments on Statutory and
Regulatory Requirements
1. Regulatory Impact Analysis
Comment: Two commenters suggested
alternative estimates for the number of
applicants that could apply to this rule.
One commenter estimated that 5,000
international entrepreneurs will apply
for parole under this rule. This estimate
was approximately 2,000 more
entrepreneurs than the estimate
provided by DHS. Another commenter
stated that the rule’s eligibility criteria
are narrow and therefore, the rule would
cause fewer than 3,000 people to apply.
Response: DHS recognizes that
uncertainty in business and economic
conditions, as well as data limitations,
make it difficult to accurately predict
how many entrepreneurs will apply for
parole under this rule. However, as
discussed in the ‘‘Volume Projections’’
section of this rule, DHS utilized limited
data available to estimate that
approximately 2,940 entrepreneurs
could seek parole each year. This
estimate was bolstered by an alternative
estimate based on accelerator
investment round data that DHS
analyzed. Given limits on DHS’s
information about such entrepreneurs
and that this is a new process, DHS does
not know how many people within the
estimated eligible population will
actually apply. Additionally,
fluctuations in business and economic
conditions could cause the number of
applications to vary across years.
While one commenter estimates that
the eligible number of entrepreneurs
will be higher than the DHS estimate,
another commenter estimates it will be
lower. Neither of the commenters
provided a basis or data from which
their figures were derived. DHS
reaffirms that the estimate provided in
this rule is reasonable. The assessment
is based on analysis of data and publicly
available information, and reflects,
where data and analysis allow,
reasonable medians or averages.
Comment: One commenter argued
that the rule would only benefit certain
special-interest venture capitalists.
Response: DHS respectfully disagrees
with this commenter. Fundamentally,
this rule is designed to yield significant
public benefit to the United States—
including through economic growth,
innovation, and job creation—and not to
any particular private-sector interest
group. While some venture capital firms
may benefit from the rule by having new
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opportunities to invest in start-up
entities that would not have otherwise
been able to locate in the United States,
this is also true for a range of other
‘‘qualified investors’’ as defined in the
rule. Moreover, many international
entrepreneurs may qualify for parole
under this rule without having raised
private-sector capital investment at all,
since funding from government entities
is also an eligibility criterion.
Comment: Several commenters stated
that the rule would provide significant
economic benefits.
Response: DHS agrees with these
commenters that the rule will provide
significant economic benefits to the
United States. As discussed in the
proposed rule and elsewhere in this
section, DHS believes that this rule will
help the United States compete with
programs implemented by other
countries to attract international
entrepreneurs. International
entrepreneurs will continue to make
outsized contributions to innovation
and economic growth in the United
States.
Comment: Several commenters
provided feedback on the costs of
applications. One commenter stated that
the fees were reasonable. Another
commenter suggested allowing market
prices to determine parole costs,
essentially allowing those entrepreneurs
with more likelihood of success to
invest in parole opportunities. Still
other commenters stated that the
application fee was too high, especially
compared to various visa applications.
Response: DHS appreciates
commenters’ feedback on the costs for
applications. DHS determines the costs
of applications through a biennial fee
study it conducts, which reviews
USCIS’ cost accounting process and
adjusts fees to recover the full costs of
services provided by USCIS. The
established fees are necessary to fully
recover costs and maintain adequate
service by the agency, as required by
INA section 286(m); 8 U.S.C. 1356(m).
Comment: Several commenters
generally stated support for the rule
because it will likely improve
innovation for local and regional
economic areas. Another commenter
stated support for the rule because it
would increase intangible assets.
Response: DHS concurs with this
expectation that the rule will foster
innovation at the local and regional
level. Studies on entrepreneurs reveal
that they are key drivers of innovation
throughout the United States, and that
such innovation benefits local, regional,
and the national economy through
technical progress and improvements in
efficiency and productivity. The rule’s
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eligibility criteria focus on start-ups
with high growth potential, and DHS
expects that new firms started by
entrepreneurs covered by the rule will
conduct research and development,
expand innovation, and bring new
technologies and products to market in
addition to creating jobs in the United
States. These activities will produce
benefits that will spill over to other
firms and sectors.
DHS also agrees with the commenter
on impacts to intangible assets.
Intangible assets are generally integrated
into a firm’s or sector’s total assets and
have become important in broad
analyses of productivity and efficiency.
Such assets can include proprietary
software, patents, and various forms of
research and development. This rule is
intended to attract the types of ventures
that will increase intangible assets.
sradovich on DSK3GMQ082PROD with RULES5
a. Job Creation
Comment: Many commenters agreed
that this rule would help create jobs and
significantly benefit the U.S. economy.
A commenter noted that immigrants
have helped to found one quarter of U.S.
firms and therefore allowing more
international entrepreneurs would
result in new job creation. Commenters
also mentioned that immigrants have
historically been successful in creating
and establishing new businesses, which
in turn create jobs in the United States.
Commenters also more specifically
endorsed the need to provide more
investment opportunities for venture
capitalists and angel investors who
indirectly create jobs. Finally,
commenters from the technology
industry stated that attracting
entrepreneurs to the Unites States to
operate in high unemployment areas
could provide access to new jobs where
they are most needed.
Response: DHS appreciates the
commenters’ support of this rule with
regard to attracting international
entrepreneurs, and emphasizes that job
creation for U.S. workers is one of the
rule’s primary goals, as discussed in the
Regulatory Impact Analysis (RIA).
b. Impact on Native U.S. Entrepreneurs
and Native U.S. Workers
Comment: Several commenters
suggested the rule will have negative
consequences for native U.S.
entrepreneurs and native U.S. workers.
These commenters were concerned that
the rule would be disadvantageous to
native U.S. entrepreneurs and would
create incentives for venture capital
firms to find international entrepreneurs
instead of investing in native U.S.
entrepreneurs. The commenters argued
that job creation could be accomplished
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through investment of native U.S.
entrepreneurs instead of foreign
entrepreneurs. Several commenters also
stated that the government should assist
U.S. entrepreneurs and workers before
helping international entrepreneurs.
Commenters also mentioned that the
need for international innovators was
overstated and that the number of native
U.S. innovators is already adequate.
Finally, these commenters asserted that
foreign workers are often exploited for
cheap labor and harm job prospects for
native U.S. workers.
Response: DHS disagrees with these
commenters’ assertion that the rule will
have negative impacts on native U.S.
entrepreneurs and native U.S. workers.
This rule focuses on identifying
entrepreneurs associated with start-up
entities with significant potential for
bringing growth, innovation, and job
creation in the United States. Much
research supports the conclusion that
high-growth firms drive job creation for
workers in the United States, including
for native U.S. workers. As discussed in
further detail in the RIA, research also
shows that immigrants have been
outsized contributors to business
ownership and entrepreneurship in the
United States and abroad. Selfemployment rates for immigrants are
higher than for the native U.S.
population. As discussed in the RIA,
although one economic study has
suggested that a very small number of
native U.S. entrepreneurs may be
displaced by international
entrepreneurs, other researchers have
noted that the finding simply raises the
possibility that such displacement could
occur without providing evidence that it
actually does.36 DHS reiterates,
moreover, that the numbers of
entrepreneurs who may be eligible for
parole under this rule is limited and
that the aim of the rule is to increase
overall entrepreneurial activity and
significant economic benefit throughout
the United States. In any event, the
purpose of the parole rule is to foster
innovation and entrepreneurial
activities in new or very young
endeavors, where the literature much
more decisively indicates a strong
potential of creating new net jobs for
U.S. workers.
36 Compare Fairlie, R.W., and B.D. Meyer. ‘‘The
effect of immigration on native self-employment.’’
Journal of Labor Economics 21:3 (2003): 619–650,
available at: https://people.ucsc.edu/∼rfairlie/
papers/published/jole%202003%20%20native%20se.pdf, with, e.g., Magnus Lofstrom,
‘‘Immigrants and Entrepreneurship,’’ Public Policy
Institute of California, USA, and IZA, Germany
(2014), p. 4, available at: https://wol.iza.org/articles/
immigrants-and-entrepreneurship.pdf.
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c. Impact on Innovation
Comment: Several commenters
provided feedback on the rule’s impact
on innovation. Two commenters stated
that this type of international
entrepreneurship supports innovation
in the United States. Another
commenter stated that the rule would
not help foreign innovators because of
complications with patents and
modeling designs.
Response: DHS agrees with the
commenters that stated that this rule
supports innovation in the United
States. Entrepreneurs tend to engage in
research and development in order to
develop and commercialize new
products and technologies, and often
stimulate patents and other intellectual
capital linked to these efforts. DHS does
not agree with the commenter that
stated the rule is not helpful to foreign
innovators because of issues with
patents and modeling designs, and DHS
sees no basis for this comment. Nothing
in the rule poses specific burdens or
constraints on the ability of
entrepreneurs to seek and obtain patents
or other intellectual capital.
2. Review Under the National
Environmental Policy Act (NEPA)
Comment: An advocacy organization
stated that all rules, including
immigration rules, are subject to review
under the National Environmental
Policy Act. The commenter suggested
that, at minimum, an Environmental
Assessment be conducted to account for
the growth-inducing impacts that would
occur with an influx in population
under this rule.
Response: DHS agrees that NEPA
applies to this, as to every, final
rulemaking. As explained in section
IV.E of this preamble, the rule has been
reviewed for environmental effects and
found to be within two categorical
exclusions from further review because
experience has shown rules of this
nature have no significant impacts on
the environment. DHS also notes that
any entrepreneurial ventures
undertaken will be governed by local,
state and federal laws and regulations,
including those protecting human
health and the environment. We
disagree with the commenter’s assertion
that an Environmental Assessment is
required.
3. Proposed Information Collections
Under the Paperwork Reduction Act
a. Employment Eligibility Verification,
Form I–9
Comment: An individual commenter
suggested that List A documents should
be updated to include the verified
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driver’s licenses (sample attached and
included in the file) that meet federal
guidelines and require the presentation
of the same documentation needed to
obtain a passport. The commenter stated
that it is no longer reasonable for those
who receive a verified license and who
paid the premium necessary for the
processing of the extra documents, to
have to locate their birth certificate and
social security card in order to complete
the Form I–9 process.
Response: DHS presumes that by
‘‘verified driver’s licenses’’ the
commenter is referring to State driver’s
licenses that comply with the REAL ID
Act of 2005, Public Law 109–13, 119
Stat. 302. The specific suggestion about
amending List A on Form I–9, which
would have wide-ranging effect and not
be limited to entrepreneurs under this
rule, is outside the scope of this
rulemaking. This rule and
accompanying form revisions limit
changes to List A of Form I–9 to the
modification of an existing document
specified at 8 CFR 274a.2(b)(1)(v)(A)(5)
to include individuals authorized to
work incident to parole.
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b. Application for Entrepreneur Parole,
Form I–941
Comment: DHS received a public
comment that stated that the time
burden estimate of 1.33 hours for the
respondent to complete the information
collection was too low.
Response: DHS appreciates and agrees
with this comment. Based on further
review of the information collection and
public comments on this specific issue,
DHS is revising the estimated time
burden from 1.33 hours to 4.7 hours for
Form I–941 respondents.
4. Comments and Responses to Impact
on Small Businesses
Comment: The U.S. Small Business
Administration, Office of Advocacy
(SBA) commented by supporting the
goals of this rule, but expressed concern
that the rule could significantly impact
small entities. The SBA commented that
the proposed rule was erroneously
certified under the Regulatory
Flexibility Act (RFA). The SBA stated
that the only international
entrepreneurs eligible for this parole
program are those with significant
ownership stakes in a start-up entity
formed in the previous three years. The
SBA also stated that the thresholds to
qualify for parole were directly tied to
the ability of the entrepreneur’s start-up
to produce significant public benefit to
the United States. The SBA noted that
under the proposed rule, an
entrepreneur is not permitted to transfer
work authorization to another start-up
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entity, and that these restrictions could
impact start-up entities if the
entrepreneur were no longer eligible to
stay in the United States. For these
reasons, SBA concluded that this rule
directly impacts start-up entities. The
SBA recommended that DHS submit a
supplemental analysis on the impact of
the final rule on small entities.
Response: DHS has concluded that a
RFA certification statement for this final
rule is appropriate. This final rule does
not regulate small entities nor does it
impose any mandatory requirements on
such entities. Instead, it provides an
option for certain individual
entrepreneurs to seek parole on a
voluntary basis. There are no
compliance costs or direct costs for any
entity, small or otherwise, imposed by
this rule since it does not impose any
mandatory requirements on any entity.
Historically, when an employer
petitions on behalf of an individual or
employee, DHS has provided an RFA
analysis for the impact to small
businesses. However, under this rule, a
small entity or an employer does not
apply for parole on behalf of an
employee; instead, an entrepreneur
applies for parole on a voluntary basis
on his or her own behalf, and only those
eligible individuals seeking parole
would be subject to the anticipated costs
of application. Entrepreneurs with an
ownership stake in a start-up make the
cost-benefit decision to voluntarily
apply for parole.
In both the RFA and SBA’s Guide for
Government Agencies on the RFA,
government agencies are required to
consider significant alternatives to the
rule when providing a full RFA
analysis. Among the kinds of
alternatives that SBA suggests
considering include ‘‘the exemption for
certain or all small entities from
coverage of the rule, in whole or in
part.’’ 38 Even if this rule directly
impacted small entities and DHS were
required to engage in an analysis to
minimize negative impacts of the rule
on small entities by exempting them
from the rule, that alternative would
only harm small entities, which would
no longer be able to benefit from the
rule’s allowing entrepreneurs to seek
parole and work authorization.
The SBA also commented on various
policy issues on the eligibility of
entrepreneurs in this rule.
Notwithstanding DHS’ belief that
entrepreneurs when filing for parole are
not small entities, DHS has carefully
38 The Regulatory Flexibility Act, 5 U.S.C.
603(c)(4). The Small Business Administration’s
RFA Guide for Government, p. 38, available at
https://www.sba.gov/sites/default/files/advocacy/
rfaguide_0512_0.pdf.
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considered all those comments and has
made policy changes in this final rule to
address the comments. Specifically, the
SBA commented that thresholds to
qualify for parole are directly tied to the
ability of the international
entrepreneur’s start-up to produce
significant public benefit for the United
States. DHS has considered this
comment along with other public
comments on this issue and has made
the decision to lower the eligible
threshold investment amount for initial
parole from the proposed $345,000 in
the NPRM to $250,000 in the final rule.
Additionally, in the NPRM and in this
final rule, DHS has provided some
flexibility and alternative criteria for
those entrepreneurs meeting partial
eligibility requirements, as described in
further detail in the preamble.
SBA also commented that the rule
only allows the entrepreneur to work for
the business identified on the parole
application without providing leniency
in transferring the work authorization to
another entity. The SBA further
comments that the start-up entity may
be imperiled if the entrepreneur is no
longer eligible to stay in the United
States. The eligibility criteria for
consideration for parole under this rule
require an entrepreneur to have recently
formed a new entity in the United States
with substantial potential for rapid
growth and job creation. Before an
application for parole under this rule is
approved, USCIS must make a
discretionary determination that the
entrepreneur is well-positioned to
provide a significant public benefit to
the United States. Therefore, these
eligibility criteria are not limiting
entrepreneurs, but aimed at ensuring
that only those entrepreneurs with high
growth potential are eligible for parole
consideration under this rule. DHS has
also provided avenues for an additional
parole period specifically to prevent
instability of a start-up entity.
DHS reiterates that RFA guidance
allows an agency to certify a rule,
instead of preparing an analysis, if the
rule is not expected to have a significant
economic impact on a substantial
number of small entities.39 DHS
reiterates that this rule does not regulate
small entities. Any costs imposed on
businesses will be driven by economic
and business conditions and not by the
39 See SBA, Office of Advocacy, ‘‘A Guide for
Government Agencies; ‘‘How to Comply with the
Regulatory Flexibility Act, Implementing the
President’s Small Business Agenda and Executive
Order 13272’’ (May 2012), available at: https://
www.sba.gov/sites/default/files/advocacy/rfaguide_
0512_0.pdf.
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voluntary participation for benefits from
this rule.
IV. Statutory and Regulatory
Requirements
1. Summary
A. Unfunded Mandates Reform Act of
1995
The Unfunded Mandates Reform Act
of 1995 (UMRA) is intended, among
other things, to curb the practice of
imposing unfunded Federal mandates
on State, local, and tribal governments.
Title II of the Act requires each Federal
agency to prepare a written statement
assessing the effects of any Federal
mandate in a proposed or final agency
rule that may result in a $100 million or
more expenditure (adjusted annually for
inflation) in any one year by State, local,
and tribal governments, in the aggregate,
or by the private sector. The value
equivalent of $100 million in 1995
adjusted for inflation to 2015 levels by
the Consumer Price Index for All Urban
Consumers (CPI–U) is $155 million.
This rule does not exceed the $100
million expenditure in any one year
when adjusted for inflation ($155
million in 2015 dollars), and this
rulemaking does not contain such a
mandate. The requirements of Title II of
the Act, therefore, do not apply, and
DHS has not prepared a statement under
the Act.
B. Small Business Regulatory
Enforcement Fairness Act of 1996
This rule is not a major rule as
defined by section 804 of the Small
Business Regulatory Enforcement Act of
1996. This rule will not result in an
annual effect on the economy of $100
million or more, a major increase in
costs or prices, or significant adverse
effects on competition, employment,
investment, productivity, innovation, or
on the ability of United States
companies to compete with foreignbased companies in domestic and
export markets.
sradovich on DSK3GMQ082PROD with RULES5
C. Executive Orders 12866 and 13563
Executive Orders 12866 and 13563
direct agencies to assess the costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This rule
has been designated a ‘‘significant
regulatory action’’ under section 3(f) of
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Executive Order 12866. Accordingly,
the rule has been reviewed by the Office
of Management and Budget.
This final rule is intended to add new
regulatory provisions guiding the use of
parole with respect to individual
international entrepreneurs who operate
start-up entities and who can
demonstrate through evidence of
substantial and demonstrated potential
for rapid business growth and job
creation that they would provide a
significant public benefit to the United
States. Such potential is indicated by,
among other things, the receipt of
significant capital financing from U.S.
investors with established records of
successful investments, or obtaining
significant awards or grants from certain
Federal, State or local government
entities. The regulatory amendments
will provide the general criteria for
considering requests for parole
submitted by such entrepreneurs.
DHS assesses that this final rule will,
by further implementing authority
provided by Congress, reduce a barrier
to entry for new innovative research and
entrepreneurial activity in the U.S.
economy.40 Under this final rule, some
additional international entrepreneurs
will be able to pursue their
entrepreneurial endeavors in the United
States and contribute to the U.S.
economy. In the absence of the rule,
these innovative entrepreneurs might be
delayed or discouraged altogether in
bringing innovation, job creation, and
other benefits to the United States.
Based on review of data on startup
entities, foreign ownership trends, and
Federal research grants, DHS expects
that approximately 2,940 entrepreneurs,
arising from 2,105 new firms with
investment capital and about 835 new
firms with Federal research grants,
could be eligible for this parole program
annually. This estimate assumes that
each new firm is started by one person
despite the possibility of up to three
owners being associated with each startup. DHS has not estimated the potential
for increased demand for parole among
foreign nationals who may obtain
40 Nina Roberts, For foreign tech entrepreneurs,
getting a visa to work in the US is a struggle, The
Guardian, Sept. 14, 2014, available at https://
www.theguardian.com/business/2014/sep/14/
foreign-tech-entrepreneurs-visa-us-struggle; Amy
Grenier, Majority of U.S. Patents Granted to Foreign
Individuals, April 11, 2014, available at https://
immigrationimpact.com/2014/04/11/majority-of-us-patents-granted-to-foreign-individuals/ (‘‘Because
of the limitations of the H–1B visa program, and the
lack of a dedicated immigrant visa for entrepreneurs
or innovators, foreign inventors struggle with
inadequate visa options that often prevent them
from obtaining permanent residency.’’).
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substantial investment from U.S.
investors and otherwise qualify for
entrepreneur parole, because changes in
the global market for entrepreneurs, or
other exogenous factors, could affect the
eligible population. Therefore, these
volume projections should be
interpreted as a reasonable estimate of
the eligible population based on past
conditions extrapolated forward.
Eligible foreign nationals who choose to
apply for parole as an entrepreneur will
incur the following costs: A filing fee for
the Application for Entrepreneur Parole
(Form I–941) in the amount of $1,200 to
cover the processing costs for the
application; a fee of $85 for biometrics
submission; and the opportunity costs
of time associated with completing the
application and biometrics collection.
After monetizing the expected
opportunity costs and combining them
with the filing fees, an eligible foreign
national applying for parole as an
entrepreneur will face a total cost of
$1,591. Any subsequent renewals of the
parole period will result in the same
previously discussed costs. Filings to
notify USCIS of material changes to the
basis for the entrepreneur’s parole,
when required, will result in similar
costs; specifically, in certain instances
the entrepreneur will be required to
submit to USCIS a new Form I–941
application to notify USCIS of such
material changes and will thus bear the
direct filing cost and concomitant
opportunity cost. However, because the
$85 biometrics fee will not be required
with such filings, these costs will be
slightly lower than those associated
with the initial parole request and any
request for re-parole.
Dependent spouses and children who
seek parole to accompany or join the
principal applicant by filing an
Application for Travel Document (Form
I–131), will be required to submit
biographical information and biometrics
as well. Based on a principal applicant
population of 2,940 entrepreneurs, DHS
assumes a total of 3,234 spouses and
children will be eligible for parole
under this rule. Each dependent will
incur a filing fee of $575, a biometric
processing fee of $85 (if 14 years of age
and over) and the opportunity costs
associated with completing the Form
I–131 application and biometrics
collection.41 After monetizing the
expected opportunity costs associated
with providing biographical information
to USCIS and submitting biometrics and
combining it with the biometrics
41 The filing fees have been updated and reflect
those promulgated in the 2016 Fee Rule (1615–
AC09, CIS No. 2577–15 DHS Docket No. USCIS–
2016–0001).
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processing fee, each dependent
applicant will face a total cost of $765.
DHS is also allowing the spouse of an
entrepreneur paroled under this rule to
apply for work authorization. Using a
one-to-one mapping of principal filers to
spouses, the total population of spouses
eligible to apply for work authorization
is 2,940. To obtain work authorization,
the entrepreneur’s spouse will be
required to file an Application for
Employment Authorization (Form
I–765), incurring a $410 filing fee and
the opportunity costs of time associated
with completing the application. After
monetizing the expected opportunity
costs and combining it with the filing
fees, an eligible spouse will face a total
additional cost of $446 (rounded). DHS
expects that applicants will face the
above costs, but does not anticipate that
this rule will generate significant
additional costs and burdens to private
entities, or that the rule will generate
additional processing costs to the
government to process applications.
While applicants may face a number of
costs linked to their business or research
endeavors, these costs will be driven by
the business and innovative activity that
the entrepreneur is engaged in and
many other exogenous factors, not the
rule itself or any processes related to the
rule. Thorough review of academic,
business, and policy research does not
indicate that significant expected costs
or negative consequences linked to
attracting international entrepreneurs
are likely to occur. As such, DHS
expects that the negative consequences,
if any, will be greatly exceeded by the
positive effects of this rule.
In each case in which an entrepreneur
will be granted parole under this rule,
DHS will have made a determination
that parole will yield a significant
public benefit and that the person
requesting parole merits a favorable
exercise of discretion. Consistent with
those decisions, the rule is expected to
produce broad economic benefits
through the creation of new business
ventures that otherwise would not be
formed in the United States. These
businesses are likely to create
significant additional innovation,
productivity, and job creation. It is
reasonable to conclude that investment
and research spending on new firms
associated with this rule will directly
and indirectly benefit the U.S. economy
and create jobs for American workers. In
addition, innovation and research and
development spending are likely to
generate new patents and new
technologies, further enhancing
innovation. Some portion of the
international entrepreneurs likely to be
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attracted to this parole process may
develop high-growth and high-impact
firms that can be expected to contribute
disproportionately to U.S. job creation.
In summary, DHS anticipates that this
rule will produce positive effects that
would greatly exceed any negative
consequences.
Using an estimate of 2,940 annual
applications for significant public
benefit entrepreneur parole as
developed in the ensuing volume
projections section of this analysis, DHS
anticipates the total cost of this rule for
principal filers who face a total per
applicant cost of $1,591 to be
$4,678,336 (undiscounted) annually for
any given year. (These estimates focus
only on principal initial filers, not
entrepreneurs who might be eligible for
a re-parole period of up to 30 months,
or their spouses.) Dependent spouses
and children who must submit the Form
I–131 application and biometrics will
face a per-applicant cost of $765, for a
total cost of $2,474,914 (undiscounted).
Dependent spouses who apply for
employment authorization will face a
per applicant cost of $446, which DHS
projects will total $1,311,830
(undiscounted). Adding together the
costs for the principal filers and family
members—including filing costs, costs
of submitting biometrics, and monetized
opportunity costs—yields a total cost of
this rule for the first year, 2017 and
subsequently 2018, of $8,465,080
(undiscounted). The total annual cost of
the rule of $8,465,080 can be expected
for each subsequent year in the ten-year
period. The total ten-year undiscounted
cost is $84,650,081.
2. Background and Purpose of the Rule
Section 212(d)(5) of the Immigration
and Nationality Act (INA), 8 U.S.C.
1182(d)(5), grants the Secretary of
Homeland Security the discretionary
authority to parole applicants for
admission into the United States
temporarily, on a case-by-case basis, for
urgent humanitarian reasons or
significant public benefit. DHS is
amending its regulations implementing
this authority to increase and enhance
entrepreneurship, research and
development and other forms of
innovation, and job creation in the
United States. The rule will establish
general criteria for the use of parole
with respect to individual entrepreneurs
who operate start-up entities and who
can demonstrate through evidence of
substantial and demonstrated potential
for rapid business growth and job
creation that they would provide a
significant public benefit to the United
States.
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The purpose of the rule is to attract
talented entrepreneurs to the United
States who might otherwise choose to
pursue such innovative activities
abroad, or otherwise be significantly
delayed in growing their companies in
the United States, given the barriers
they presently face. In addition to the
benefits associated with entrepreneurial
innovation, including new products,
business networks, and production
efficiencies that such activities are
likely to generate, entrepreneurs have
been and remain vital to economic
growth and job creation in the United
States and have generated a cohort of
high-growth firms that have driven a
highly disproportionate share of net
new job creation.42
A body of research documents both
the importance of entrepreneurial
activity to the U.S. economy and its link
to immigration. In this background
section, DHS does not attempt to
comprehensively summarize this large
body of work but instead focuses on
specific aspects central to the purpose of
the rule and to its potential impacts.43
In summary, DHS focuses on the role of
new entrepreneurial firms in job
creation in the United States, and the
role that immigrant entrepreneurs have
played in innovation and the high
technology sector.
The labor market of the United States
is highly dynamic. DHS analysis of data
published by the U.S. Department of
Labor’s Bureau of Labor Statistics (BLS)
indicates that between 2004 and 2013,
on average about 847,000 firms were
‘‘born’’ each year and 784,000 ‘‘died.’’ 44
To illustrate the extent of the labor
market churn, since 1980 the private
sector has generated about 16.3 million
gross jobs annually but an average of
only about 1.4 million net jobs annually.
In both general business cycle
expansions and contractions, large
numbers of jobs are created and
destroyed, comprising a key dynamic in
the forces of creative destruction.45
42 See Richard L. Clayton, Akbar Sadeghi, David
M. Talan, and James R. Spletzer, High-employmentgrowth firms: Defining and counting them, Office of
Industry Employment Statistics, Bureau of Labor
Statistics (BLS), Monthly Labor Review (June 2013),
p. 1–2, available at: https://www.bls.gov/opub/mlr/
2013/article/pdf/clayton.pdf.
43 DHS notes that the body of research concerning
immigration in general and its impact on the labor
market, most notably germane to earnings and
employment of domestic workers, is not addressed
in the present analysis.
44 Figures were obtained from the BLS, Business
employment Dynamics, Table 8, ‘‘Private sector
establishment births and deaths, seasonally
adjusted:’’ available at https://www.bls.gov/
news.release/cewbd.t08.htm. Firm ‘‘births’’ in these
data only include new firms and thus exclude new
franchises and expansions of existing firms.
45 See Ryan Decker, John Haltiwanger, Ron
Jarmin, and Javier Miranda, The Role of
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Research into the highly dynamic and
volatile labor market in the United
States has evolved. Earlier focuses on
small- and new-firm size as the primary
co-determinants of job creation has been
reoriented to focus on the role of a
relatively small subset of
entrepreneurial firms.
This rule focuses on identifying
entrepreneurs associated with types of
start-up firms that are more likely to
experience high growth, contribute to
innovation, and create jobs in the
United States. This deliberate focus is
critical to ensuring that parole in
individual cases is justified by
significant public benefit. Research has
shown that the average start-up
company does not survive long.46 Most
new firms do not add much net job
creation either, as they are not focused
on achieving high growth. By some
estimates, the vast majority—as much as
95 percent—of all new firms are not
substantial job creators or innovators.47
About 95 percent of new firms start with
fewer than 20 employees, and about the
same percentage ultimately close with
fewer than 20 employees, indicating
that business turnover is heavily
influenced by small firms.48
There is significant research,
however, demonstrating that a small
subset of new firms tends to be highly
dynamic and to contribute
disproportionately to net job creation.
The BLS has highlighted the role of the
small subset of high-growth firms that
comprise about 2 percent of all firms but
have accounted for 35 percent of gross
job gains in recent years. ‘‘High-growth
Entrepreneurship in U.S. Job Creation and
Economic Dynamism, Journal of Economic
Perspectives—Vol. 28, Number 3 (Summer 2014),
pp. 3–24, available at: https://pubs.aeaweb.org/doi/
pdfplus/10.1257/jep.28.3.3.
46 According to BLS findings, ‘‘20 percent of
newly created establishments don’t survive their
first year in business, 32 percent don’t survive their
first two years, and 50 percent don’t survive their
first 5 years.’’ See Richard L. Clayton, Akbar
Sadeghi, David M. Talan, and James R. Spletzer,
High-employment-growth firms: Defining and
counting them, Office of Industry Employment
Statistics, Bureau of Labor Statistics (BLS), Monthly
Labor Review (June 2013), p. 1, available at: https://
www.bls.gov/opub/mlr/2013/article/pdf/
clayton.pdf.
47 See Jason Wiens and Chris Jackson, The
Importance of Young Firms for Economic Growth,
Ewing Marion Kauffman Foundation (2014), pp. 1–
2, available at: https://www.kauffman.org/∼/media/
kauffman_org/resources/2014/
entrepreneurship%20policy%20digest/
september%202014/entrepreneurship_policy_
digest_september2014.pdf; see also Hurst, Erik, and
Benjamin Wild Pugsley. 2011; What Do Small
Businesses Do? Brookings Paper on Economic
Activity, no. 2 (2011), pp. 73–142.
48 See Headd, Brian, An Analysis of Small
Business and Jobs, SBA Office of Advocacy (2010),
p. 6, available at: https://www.sba.gov/sites/default/
files/files/an%20analysis%20of%20
small%20business%20and%20jobs(1).pdf.
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firms’’ are defined by the BLS and the
Organization for Economic Cooperation
(OECD) as those with at least ten
employees that grow by at least 20
percent for each of 3 consecutive years
based on employment. As of 2012, there
were 96,900 high-growth firms in the
United States that had created about 4.2
million jobs.49 A key finding by the BLS
is that high-growth firms especially add
jobs in their first ten years, though they
generally continue to add a diminishing
number of new jobs even after that
period of time to the extent they
survive. Job creation in the United
States for the last several decades has
been driven primarily by high-growth
firms that tend to be young and new,
and by a smaller number of surviving
high-growth firms that age for a decade
or more.50
This highly disproportionate, ‘‘up or
out’’ dynamism of high-growth firms
has been substantiated by many
researchers. The SBA reported that
about 350,000 ‘‘high impact firms’’—
defined as enterprises whose sales have
at least doubled over a 4-year period
and which have an employment growth
quantifier of 2 or more over the same
period—generated almost all net new
jobs in the United States between 1994
and 2006.51 The Kauffman Foundation,
a leading institute on research, data
collection, and advocacy for
entrepreneurial activity, reports that the
top-performing one percent of firms
generates roughly 40 percent of new job
creation, and, the fastest of them all—
the ‘‘gazelles’’—comprising less than
one percent of all companies, generated
roughly ten percent of new jobs.52 The
49 See R. Clayton et al. (June 2013), supra n. 50,
p. 2–4. For a description of the methodology
utilized to measure high growth firms, see OECD,
OECD-Eurostat Manual on Business Demography
Statistics (2007), pp. 59–65, available at: https://
www.oecd.org/std/39974460.pdf.
50 For specific detailed information on survival
rates and employment creation at various intervals
along the HGF life span, see R. Decker et al. (2014),
supra n. 53, pp. 6–24. The BLS and others use the
term ‘‘gazelles’’ to differentiate the fastest growing
young HGFs.
51 See Spencer Tracy, Jr., Accelerating Job
Creation in America: The Promise of High-Impact
Companies, SBA Office of Advocacy (2011), pp.
1–4, available at: https://www.sba.gov/sites/default/
files/advocacy/HighImpactReport.pdf; see also Acs,
Zoltan, William Parsons, and Spencer L. Tracy, Jr,
High-Impact Firms: Gazelles Revisited; Study
prepared for the SBA, Office of Advocacy (2008),
p. 1, available at: https://www.sba.gov/advo/
research/rs328tot.pdf. The SBA high-impact cohort
is about 6.3% of all firms, which is higher than the
2% high-growth category found in the BLS studies.
The SBA cohort is larger because the criteria are
slightly less restrictive and it includes older firms.
52 See Dane Stangler, High-Growth Firms and the
Future of the American Economy, Kauffman
Foundation Research Series: Firm Formation and
Economic Growth (2010), p. 2, available at: https://
www.kauffman.org/∼/media/kauffman_org/
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5275
same general result has been found
internationally; the OECD reports that
between three percent and six percent of
all firms can be considered high-growth
firms but about one percent can be
considered the even more highperforming ‘‘gazelles.’’ 53
Despite the finding across a large
number of studies that small new firms
tend to exhibit an ‘‘up or out’’ dynamic
in which a small number survive to age
five to become high-growth firms or
‘‘gazelles,’’ other key findings that have
emerged in the literature suggest that
the growth and performance of new
firms, even high-growth firms, vary
substantially (as indicated by metrics
that include labor productivity,
profitability, revenue, and research and
development intensity).54 Models that
can sort out various business
characteristics and economic conditions
to predict high-growth probabilities are
still in nascent stages. Nevertheless, this
rule includes threshold criteria for
parole consideration meant to identify
entrepreneurs associated with the kinds
of promising start-up entities that
appear more likely to contribute to
American innovation, economic
development, and job creation. As
described in more detail below,
businesses started and run by
immigrants have propelled these kinds
of broadly shared economic benefits for
many years.
Broadly speaking, high-growth
entrepreneurs engage in research and
development (R&D) in order to develop
and commercialize new products and
technologies. Several studies have
found that such entrepreneurs tend to
engage in R&D spending in the first
year, tend to attract patents and other
forms of intellectual capital, and tend to
attract venture capital financing.55
research%20reports%20and%20covers/2010/04/
highgrowthfirmsstudy.pdf.
53 David B. Audretsch, Determinants of HighGrowth Entrepreneurship, report prepared for the
OECD/DBA International Workshop on Highgrowth firms: local policies and local determinants,
OECD, p. 2–5, available at: https://www.oecd.org/cfe/
leed/Audretsch_determinants%20of%20highgrowth%20firms.pdf.
54 See R. Decker et al (2014), supra n. 53, pp.
5–7; see also Davis, Steven J., R. Jason Faberman,
John Haltiwanger, Ron Jarmin, and Javier Miranda,
Business Volatility, Job Destruction, and
Unemployment. American Economic Journal:
Macroeconomics 2(2) (2010): 259–87. Research and
development intensity is typically measured as the
ratio of research and development spending to
revenue, net income, or overall costs.
55 See Shah, Sonali K. and Winston Smith, Sheryl
and Reedy, E. J., Who are User Entrepreneurs?
Findings on Innovation, Founder Characteristics,
and Firm Characteristics, The Kauffman Firm
Survey (Feb. 2012), pp. 2–5, available at: https://
www.kauffman.org/∼/media/kauffman_org/
research%20reports%20and%20covers/2012/02/
whoareuserentrepreneurs.pdf.
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Immigrants have been central
contributors to business ownership and
entrepreneurship in the United States
and abroad. According to OECD data,
self-employment rates for immigrants
are higher than those of the native-born
populations in many counties,
including in the United States.56 Based
on the most recent data available from
the U.S. Census Bureau, 12.9 percent of
the United States population was
foreign-born. Their rate of selfemployment is about 30 percent higher
than that of the native-born population
(7.7 percent vs. 5.9 percent; n=1.8
million). The Census Bureau’s 2012
Survey of Business Owners showed that
14.4 percent of U.S. firms were owned
by at least one person not born a citizen
of the United States.57 Two studies
based on samples of U.S firms found
slightly higher r foreign-born ownership
rates.58
Many high-growth firms are involved
in activities classified in the STEM
(science, technology, engineering, and
math) fields. The high concentration of
immigrant entrepreneurs in these
industries has garnered much attention.
Between 2006 and 2012, one-third of
companies financed with venture
capital that made an initial public
offering had an immigrant founder, a
sharp rise from seven percent in 1980.
These companies have generated 66,000
jobs and $17 billion in sales.59 A survey
56 OECD, Migrant Entrepreneurship in OECD
Countries, prepared by Maria Vincenza Desiderio
`
(OECD) and Josep Mestres-Domenech for the
Working Party on Migration (2011), pp. 141–144,
available at: https://www.oecd.org/els/mig/
Part%20II_Entrepreneurs_engl.pdf. This, and many
other similar studies and analyses are based on selfemployment rates, which are a proxy, but not a
perfect measure, of business ownership, because
some ownership structures such as partnerships,
that could involve a foreign-born owner, are
generally not considered to be proprietary.
57 The categorization of ‘‘foreign-born’’ does not
differentiate between lawful permanent residents
and naturalized citizens. It also does not provide
details of the firm history, implying that some firms
owned by persons not born in the United States
could have been founded by U.S. citizens and sold
to foreign-born persons.
58 See David M. Hart, Zoltan J. Acs, and Spencer
L. Tracy, Jr., High-tech Immigrant Entrepreneurship
in the United States.; report developed under a
contract with the Small Business Administration,
Office of Advocacy (2009), page 8, available at:
https://www.sba.gov/sites/default/files/advocacy/
rs349tot_0.pdf; see also Robert W. Fairlie and
Magnus Lofstrom, Immigration and
Entrepreneurship, Institute for the Study of Labor
(2013), p. 1, available at: https://ftp.iza.org/
dp7669.pdf. The foreign born ownership rates for
U.S. firms reported in these papers is 16% and
18.2%, in order.
59 This information is found from various sources
and found in Stuart Anderson, American Made 2.0.
How Immigrant Entrepreneurs Continue to
Contribute to the United States Economy, National
Foundation for American Policy, sponsored by the
National Venture Capital Association (NVCA)
(2013), pp. 3–7.
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of entrepreneurs in technology-oriented
privately held companies with venture
backing also showed about one-third
were foreign born, and 61 percent held
at least one patent.60
Further evidence points to similar
findings. Between 1995 and 2005, 25
percent of science and technology
focused businesses founded in the
United States had a foreign-born chief
executive or lead technologist. In 2005,
those companies generated $52 billion
in sales revenue and employed 450,000
workers. In Silicon Valley, the share of
immigrant-founded start-ups increased
to 52 percent by 2005. In 2006, foreign
nationals residing in the United States
were involved (as inventors or coinventors) in about 26 percent of patent
applications filed that year. Immigrant
founders of Silicon Valley firms tend to
be highly educated, with 96 percent
holding bachelor’s degrees and 74
percent holding advanced degrees, and
with three-quarters of the latter in STEM
fields. As of 2010, according to one
study, more than 40 percent of the
Fortune 500 companies had been
founded by an immigrant or the child of
an immigrant.61
To reiterate, high-growth firms tend to
be new and young, and one of their
primary contributions to the highly
dynamic labor market of the United
States has been through job creation.
High-growth firms tend to innovate and
focus on developing new products and
services. The intense involvement of
immigrant entrepreneurs in successful
technology-driven activities suggests
substantial economic contributions.
While measuring the precise value and
impact of innovation is difficult and
still at a nascent stage in research, many
economists believe innovation creates
positive externalities and spillover
effects that further drive economic
growth.62
Notwithstanding the research on the
positive effects of high-growth
entrepreneurship, there is some
evidence of a long-term slowing in startup dynamism and entrepreneurial
activity in the United States; this trend
began several decades ago, driving many
economists to advocate for policies that
attract more entrepreneurs in general.63
Many business entrepreneurial
60 Id.
at pp. 2–5.
Wadhwa, Foreign-Born Entrepreneurs:
An Underestimated American Resource, Ewing
Marion Kauffman Foundation (2008), pp. 2–6,
available at: https://www.kauffman.org/∼/media/
kauffman_org/z_archive/article/2008/11/
wadhwatbook09.pdf.
62 See SMEs, Entrepreneurship and Innovation,
OECD (2010), pp 26–28, available at: https://
www.oecd.org/berlin/45493007.pdf.
63 See R. Decker et al. (2014), supra n. 53, p.
16–22.
61 Vivek
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advocacy centers have also advocated in
recent years for the United States to
enact a formalized pathway for
immigrant entrepreneurs. DHS is aware
of one estimate of the potential benefits
of a theoretical start-up visa (which, as
an entirely new visa classification, only
Congress can create). A Kauffman
Foundation study (2013) estimated that,
under certain conditions, the
establishment of a start-up visa program
could lead to the creation of between
500,000 and 1.6 million new jobs after
ten years.64 The potential benefits of
attracting immigrant entrepreneurs have
not gone unnoticed internationally.
Thirteen of the thirty-five nations that
are part of the Organization of Economic
Cooperation and Development (OECD)
have enacted special immigration
programs for entrepreneurs, although
the eligibility criteria vary among them
to a significant extent.65
3. Population of Entrepreneurs
Potentially Eligible
DHS cannot precisely predict the
volume of new businesses that will start
in the United States due to this rule.
DHS has instead examined available
data to provide a broad estimate of the
population of individual entrepreneurs
who may be eligible to request parole
consideration under this rule. Given
limits on DHS’s information about such
entrepreneurs, DHS does not know how
many people within the estimated
eligible population will actually seek
such consideration; the estimates
contained in this section represent an
approximation to the size of the eligible
population. DHS has estimated the
population of entrepreneurs potentially
eligible for parole under this rule based
on two sub-groups: (1) Foreign
individuals who seek to come to the
United States to start a new business
with financial backing from a qualified
U.S. investor; and (2) foreign
individuals who seek to come to the
United States to start a new business as
recipients of U.S. funded and awarded
64 See Dane Stangler and Jared Konczal, Give Me
your Entrepreneurs, Your innovators; Estimating
the Employment Impact of a Startup Visa, Ewing
Marion Kauffman Foundation, (Feb. 2013), pp.
1–3, available at: https://www.kauffman.org/∼/
media/kauffman_org/
research%20reports%20and%20covers/2013/02/
startup_visa_impact_finalsada. The estimates are
based on a fixed pool of 75,000 startup visas for a
10-year period, in which firm deaths each year
cycle some of visa to new entrants.
65 Most programs have been enacted after 2010. A
country list and some descriptive data can be found
at Jean-Christophe Dumont, Investor Visas in OECD
Countries, OECD Conference on Global HighSkilled Immigration Policy, The National
Academies Board on Science, Technology and
Economic Policy (2014), available at: https://
sites.nationalacademies.org/cs/groups/pgasite/
documents/Web page/pga_152202.pdf.
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research grants and who intend to
conduct the concomitant research in the
United States. DHS assumes that each
member of the eligible population will
start a business and that the general
criterion for investment from a qualified
investor (e.g., venture capital firms,
angel investors, or accelerators or
incubators) be set at $250,000, while for
government grants or awards the general
criterion will be $100,000. Based on
these amounts, DHS analyzed various
past endeavors for the potential sources
of funds. DHS estimates that
approximately 2,940 foreign nationals
annually could be eligible to apply for
parole under this rule. Table 1
summarizes the analysis by source of
funds.
that this number will hold steady for the
second year as well. The next section
provides key data and analytical
approaches utilized to arrive at the
estimates of eligible individuals. DHS
first considers volume estimates of
eligible individuals based on official
U.S. data. The resulting estimates based
on official data are those utilized for the
cost projections of the rule. Due to
particular constraints in the data, DHS
follows with an alternative method of
volume estimation of eligible
individuals that adds robustness to the
official estimate.
Volume Projections Data and
Methodology
A. Grants
Because U.S.-funded research grants
TABLE 1—NUMBER OF ENTREmay be a qualifying investment under
PRENEURS POTENTIALLY ELIGIBLE
this rule, DHS obtained publicly
available data on federally funded
Annual
grants for fiscal years 2013–2015.67
Sub-group
eligibility
Although numerous agencies within the
Federal Government award grants to
New firms funded with investment capital ................
2,105 foreign-born individuals, most are
humanitarian or development
New firms funded with U.S.
grants or awards ...............
835 focused.68 For this reason DHS parsed
the very large data set comprising 1.7
Total ...............................
2,940 million records to obtain a viable
analytical cohort. First, the records were
DHS has no way of predicting with
filtered to capture Federal Government
certainty the actual number of foreign
agencies that award grants to both
nationals who will seek parole under
United States and foreign-born
this rule over time, as the size of the
recipients. Secondly, the records were
eligible population could change
sorted to only include the Federal
significantly. DHS acknowledges that
Government agencies that award grants
the estimate of eligible individuals
focused on ‘‘projects,’’ thereby
annually is an approximation based on
excluding block and assistance grants.69
past foreign ownership and start-up
The foreign-born cohort used for the
capital amounts. The analysis utilized to eligibility projections excluded grants
estimate the potential eligible
made to recipients in U.S. territories, as
population is also based implicitly on
such recipients may be subject to
assumptions that: (1) The rule will not
special considerations outside the
significantly change the frequency of
U.S. funded grant applications from
types of investments involved, such as venture
capital, are fluid and becoming more global in
international researchers; and (2) that
scope. DHS has no means to determine how the
the rule will not significantly affect the
evolution of these investment markets will affect, or
market for international entrepreneurs
be affected by, the rule.
67 The data were obtained from
and the market for the types of
USASpending.gov: https://www.usaspending.gov/
investment structures the rule will
Pages/Default.aspx. From the homepage, the data
involve. Based on these assumptions
can be accessed from the linked ‘‘data download’’
and the data limitations, DHS projects
section. The files were obtained on April 20, 2015.
68 It is certainly the case that U.S. State
that for the first full year that the rule
governments and other governmental entities issue
will be effective, annual eligibility will
be approximately 2,940.66 DHS projects research grants that foreign recipients could
potentially utilize for parole eligibility. However,
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66 DHS
emphasizes that the total is a broad
estimate, as the Department has no means to
determine the demand for entrepreneurial parole,
changes in the eligible population that the rule may
cause, time-variant possibilities, and application
preferences. These conditions could change, if, for
example, some foreign researchers see parole as
attractive and apply for federally funded grants that
they otherwise might not have applied for in the
absence of the rule. In addition, volume estimates
should be interpreted to apply to only initial
applications, not considerations for re-parole at
some future point in time. Lastly, the market for the
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DHS is not aware of any database that collects and
provides such data publicly.
69 The Federal entities that awarded scientific
focused research to foreign recipients were:
Agricultural Resource Service, National Institutes of
Health, Centers for Disease Control and Prevention,
Food and Drug Administration, Department of
Defense, National Aeronautics and Space
Administration, National Oceanic and Atmospheric
Administration, National Institute of Standards and
Technology, and National Science Foundation. The
U.S. Department of State and the Agency for
International Development (USAID) were excluded
from the analysis.
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parole parameters.70 DHS also excluded
grant amounts recorded as negative,
zero, and trivial amounts of less than
$1,000—such values were recorded if
grants were rescinded or for some other
reason not ultimately funded. On
average, 138,447 grants comprised the
annual resulting analytical cohort
derived from the above filtering
procedures. Of that total, a small
portion, 2,043 grants, or 1.5 percent,
were awarded to foreign-born
individuals. Having determined a
reasonable eligibility threshold of
$100,000, DHS proceeded to the next
step, to determine the potential annual
eligible population of grant-sourced
researchers. Over the period of analysis,
41 percent of the Federal grants
awarded to foreign recipients equaled or
surpassed the $100,000 benchmark, for
an average of 835 annually.
B. Investment Capital
To estimate the number of potential
new entrepreneurial start-ups, DHS
obtained and analyzed data from the
BLS and the Census Bureau. From the
BLS Business Employment Dynamics
(BED) data suite, DHS obtained the
number of private establishments aged 1
year or less for nine broad sectors likely
to be involved in innovative activity, in
order to focus on entrants.71 Although a
reasonable proxy, the number of
establishments aged 1 year or less is not
a perfect measure of firm start-ups
(births). The chosen metric may
70 There is a particular way in which the data
germane to foreign grants were parsed and
analyzed. There are two possible foreign indicators
listed for each grant. One is the ‘‘principal place’’
involving the research and the other is the
‘‘recipient country.’’ The incumbent volume
projections are based on the latter because this
indicator generally implies that the grant was made
to a person or institution outside the United States.
The former is not used because this indicator could
apply to grants awarded to U.S. or foreign persons
in order to conduct the ensuing research outside the
United States. Implicit in this analysis is that
persons awarded U.S.-funded grants that are
overseas could conduct their research and
innovation in the United States, and are not
otherwise precluded from doing so, even if the
focus of such research is in a foreign country.
71 The BLS data is found at https://www.bls.gov/
bdm/bdmage.htm. DHS utilized the ‘‘Establishment
age and survival BED data for nation by major
industry’’ set and figures from Table 5, ‘‘Number of
private sector establishments by age,’’ for the nine
major sectors shown in Table 2. The BLS does
provide figures on firm births that could be used in
the present analysis. However, DHS chose
establishment age data because it is broken down
in a way that corresponds precisely to the
innovating sectors, discussed below. The firm birth
data is not categorized in the exact same manner.
The nine major sectors were chosen to envelope the
approximately 430 individual activities that DHS
considers to involve ‘‘science, technology,
engineering, and math’’ (STEM). The full list based
on the 2012 update can be found at: https://
www.ice.gov/sites/default/files/documents/
Document/2014/stem-list.pdf.
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overstate births, by including
expansions and new franchises of
existing businesses. Conversely, it may
understate the actual number of startups, because some fraction of firms does
not survive the first year (the data are
tabulated in March of the respective
year such that the establishments aged
1 year and less are those that opened
within the previous year but remained
in business as of March of the following
year), and those that opened in the
previous year and were still in business
but had not reached 2 years of age. DHS
utilized the relevant figure for March
2015, because the latter is the most
recent figure reported in the BED
dataset.
For each sector, DHS obtained the
corresponding share of firms owned by
a person ‘‘not born a citizen of the
United States’’ from the Census
Bureau’s Survey of Business Owners
data set.72 73 For brevity, we utilize the
term ‘‘foreign’’ here to describe such
firms. The foreign share was obtained by
dividing the number of foreign-owned
private firms in a sector by the total
number of reporting firms in the same
sector. This share applies to firms that
have a least one owner who was not
born in the United States but does not
differentiate between various types of
ownership structures. The figure for
new firms obtained from the BLS BED
data was multiplied first by the foreign
share to generate an estimate of firms
per sector started by a person not born
in the United States.
Next, DHS attempted to calculate how
many of the firms were started with at
least $250,000, the minimum
investment threshold that the rule sets.
The SBO data provides ranges of such
startup capital amounts but DHS could
not conduct a precise estimate because
the data do not provide a category
bound by the threshold minimum. In
fact, the encompassing tranche is very
large, from $249,500 to $1 million in
range. The SBO does not provide actual
cohort data or other information from
which DHS could evaluate the
distribution and, therefore, DHS has no
way of ascertaining how many firms in
this large range will occupy the
$250,000 to $1 million segment. As a
result, DHS relied on the share of firms
in this tranche and the additional
tranches over $1,000,000 relative to the
share of all firms reporting for the
sector, and recognizes that the volume
projection is likely larger than is
realistic. An additional assumption is
that the startup threshold is the same for
businesses with native and foreign-born
founders. The relevant data and
estimates per sector are shown in Table
2.
TABLE 2—SUMMARY OF ENTREPRENEUR ESTIMATES
Sector
New firms
Foreign share
(%)
Start-up
threshold
(%)
Annual eligible
Agriculture ........................................................................................................
Utilities .............................................................................................................
Manufacturing ..................................................................................................
Information .......................................................................................................
Professional Services * ....................................................................................
Management ....................................................................................................
Waste Services ................................................................................................
Education .........................................................................................................
Health Care ......................................................................................................
10,182
1,204
29,883
22,855
165,425
7,334
66,161
15,226
210,977
4.9
10.8
11.0
11.9
12.8
7.3
16.4
11.9
18.0
2.5
5.5
5.4
2.0
1.2
20.2
0.9
0.7
3.7
12
7
178
55
248
108
94
13
1,391
Total ..........................................................................................................
........................
........................
........................
2,105
* Abbreviation for ‘‘Professional, Scientific, and Technical Services’’.
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As is discussed in the preamble, DHS
has revised two substantive components
of the eligibility criteria for this final
rule. Foremost, the general investment
amount requirement has been lowered
from $345,000 to $250,000. DHS
believes that the volume estimate of
entrepreneurs based on investment
capital will be higher than the 2,105
presented above but cannot make a
determination of exactly how much
higher. The reason is that the lower
investment amount will allow some
firms to be created that otherwise would
not at the higher amount proposed
initially, but the Census Bureau capital
size bin relevant to the level proposed
is the $249,500 to $1 million in range,
which includes both figures. Because
DHS does not have data on the
distribution of amounts within this
range, the entire bin was included in the
proposed estimates and is retained in
the final estimates. However, as is
described below, DHS has conducted an
alternative method of estimation—to
include updates from the initial
proposal based on new information and
data—that compares very closely to the
estimated total volume of 2,940.
Specifically, an alternative estimate of
total volume annually is 2,920.
C. An Alternative Estimate of
Entrepreneurs Based on Investment
Structures
72 The Census SBO data are found at: https://
www.census.gov/data/tables/2012/econ/sbo/2012sbo-characteristics.html. The foreign ownership
figures per sector are found under ‘‘Characteristics
of Business owners,’’ Table SB1200CSBO11:
‘‘Statistics for Owners of Respondent Firms by
Whether the Owner Was Born in the United States
by Gender, Ethnicity, Race, and Veteran Status for
the U.S.’’ and the startup capital data are found
under Characteristics of Businesses, Table
SB1200CSB16: ‘‘Statistics for All United States
Firms by Total Amount of Capital Used to Start or
Acquire the Business by Industry, Gender,
Ethnicity, Race, and Veteran Status for the United
States: 2007.’’ The foreign ownership share of firms
is provided in the table and thus did not need to
be calculated by DHS. The SBO data are part of the
2012 survey for which data was released publicly
between February and June 2016.
73 A possible source of upward bias in the foreign
ownership share and hence the estimate of eligible
entrepreneurs is that this share does not
differentiate between foreign owners who came to
the United States to open a business and those who
acquired one after being in the United States for
some period of time (e.g., lawful permanent
residents or naturalized citizens). A general finding
among the literature on this topic is that many
foreign-born business owners were driven to start
a business by ‘‘push’’ factors in the labor market
after arrival in the United States. DHS does not have
a means to parse out the ownership rate in a more
granular way to account for such differences.
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DHS recognizes the imperfections in
estimating the potential population of
eligible entrepreneurs based on
extrapolating past conditions of foreign
ownership rates and capital thresholds.
The main benefit of this method is that
it is based on official data. A main
limitation is that it assumes that the
annual crop of firms created are
entrepreneurial and the types of firms
covered by the parole process in the
rule. In practice, some, but not all, will
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be innovators, even though the present
analysis focuses on the sectors of the
economy linked to STEM activity (DHS
is not aware of any methods or data that
can allocate a research-innovation share
of firms to each sector). A second
limitation is that the DHS method of
measuring new firms in the context of
the rule is imprecise. The final rule
revised the definition of ‘‘start-up
entity’’ in 8 CFR 212.19(a)(2) to include
firms that were formed up to 5 years
prior to the filing of the application for
parole, compared to three years as
proposed in the NPRM. However, the
BLS cohort of new firms utilized for the
volume projections are 1 year of age or
less, not five or even three years, and is
thus a smaller estimate of the number of
new firms that could be eligible. This
limitation cannot be overcome because
of the manner in which the survival
cohorts are presented.74 Because the
volume projections are derived from
information obtained from official
sources—the BLS and Census Bureau—
DHS retains them for purposes of the
costs and volume estimates of the rule.
DHS believes, however, that an
alternative method of estimation will
inform readers and strengthen the
regulatory analysis by providing a viable
comparison to the official projections. In
this alternative approach, DHS focuses
on business accelerators and incubators
(described together as ‘‘accelerators’’ for
brevity). By analyzing the foreign
component of these structures, data
permitting, an alternative estimate of
entrepreneurs can be obtained for
comparison purposes.
DHS obtained publicly available
information from Seed-DB, which
provides data on U.S. accelerators
collected from industry associations and
fee-based data providers such as
Crunchbase, which is a large data
provider for venture capital, angel
74 Specifically, the BLS BED provides the number
of firms surviving to a specific age and below. For
example, the five year cohort includes all firms
started within five years surviving up to that point,
and so on for younger cohorts. However, the data
does not count the number of firms within each
survival cohort by their true age. Hence, the five
year survivals do not include firms that started up
and may have died after three years that could have
been eligible at one time. Therefore, the five year
survival cohort significantly undercounts the
number of firms that will potentially have been
considered new in the context of the final rule.
Conversely, adding up the survival cohorts to a
point, say year five, will significantly over-count
the number of firms considered new in the context
of the final rule. The reason is that a firm that
survived four years and went on to age five will be
included in both the five and four year cohort, not
to mention the younger ones. Thus, adding the two
(age four and five) cohorts together would double
count the survivor. This problem is less onerous for
firms aged one or zero.
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investors, and accelerators.75 From the
Seed-DB Web site DHS utilized the link
to ‘‘firms that have exited’’ to collect the
cohort of firms that underwent
accelerators and then exited via an
acquisition or public offering. Next,
DHS parsed the data to capture firms
that reported total funding, exit value,
and were not recorded as ‘‘dead’’ (last
accessed on Nov. 7, 2016). The parsing
described above yielded a cohort of 89
firms. DHS followed the Seed-DB links
to Crunchbase for each firm and
extracted the seed round, recording its
value.76 Analysis of the investment
rounds reveals that the median is
$250,000. Having determined a median
seed round size from the data, DHS next
attempted to estimate a foreign share of
accelerated firms. The exit cohort from
which the median was calculated did
not provide such information, hence
DHS turned to the Seed-DB data suite
that lists the total number of companies
incubated for each accelerator and the
countries that the companies were
located in. Since there is wide variation
in the number of companies per
incubator, ranging from 1 to over a
thousand, DHS grouped the incubators
by country and then weighted each one
for its share of total companies. The
resulting weighted average indicates
that one quarter of incubated companies
were foreign.77 Having determined a
median seed round and a foreign share
estimate, the final point required is the
number of firms to apply these figures
to. Based on the most recent data from
the Center for Venture Research, the
2013–2015 annual average for angel
financed firms in the seed and startup
phase was 33 percent, which equals
23,336 firms annually. Multiplying this
75 The Seed-DB information is found at
www.seed-db.com/.
76 For most of the firms in the exit cohort, the
initial round of investment date-wise was also the
smallest round in terms of value and labeled as the
‘‘seed’’ or ‘‘angel’’ round. For about 10 percent of
the firms however, determining which round to use
for the analysis was not straightforward and DHS
had to utilize some discretion. For example, for
some firms the seed round was listed after other
rounds, such as venture capital or Series A rounds.
For others, the seed round was not the smallest
round recorded. DHS does not know why these
anomalies are present but proceeded to choose the
‘‘seed round’’ regardless of its dating or amount.
The only exception was in the few cases in which
the seed round post-dated other rounds and was
larger in amount. In these few cases the initial
round was chosen, regardless of what investment
type it was.
77 This foreign share found by DHS in the analysis
corresponds strongly to a finding in a study of high
technology firms that found that 24 percent of such
firms were founded by a foreign born person. See
America’s New Immigrant Entrepreneurs, Vivek
Wadhwa, AnnaLee Saxenian, Ben Rissing, and Gary
Gereffi, available at: https://
people.ischool.berkeley.edu/∼anno/Papers/
Americas_new_immigrant_entrepreneurs_I.pdf.
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average number of firms by 0.25 to
capture the foreign share and then by
0.5 to reflect the median and also the
investment level DHS has set yields an
annual estimate of 2,920.
This estimate compares well to the
official total volume estimate of 2,940.
The accelerator data captures seed
rounds that involve venture capital,
angel, accelerator investments, and
grants, which is why it is compared to
the total volume estimate.
D. Potential Variability in the Volume
Projections
This section discusses several
potential cohorts involving
entrepreneurial activity that is difficult
to estimate.
In light of the potential benefits to the
U.S. economy and job creation, DHS is
proposing this rule to provide a
mechanism that, consistent with the
requirements of the INA, encourages
international entrepreneurs described
herein to form and create innovative
firms in the United States. In 2011, DHS
began outreach and stood up the
Entrepreneurs in Residence initiative to
try to encourage entrepreneurship
among foreign nationals.78 DHS began
tracking the number of foreign nationals
who indicated interest in starting up an
entrepreneurial endeavor at some point
during their admission as an H–1B
nonimmigrant. Over four fiscal years
(FY 2010–2013), an average of 77
foreign nationals indicated such
interest. In light of the relatively small
numbers of foreign nationals who
indicated their entrepreneurial
intentions, DHS believes that
considering parole requests under this
rule will promote further innovation
and other economic benefits in addition
to those created by existing programs
and policies used by foreign nationals to
pursue high-growth entrepreneurial
activity in the United States. When the
rule is effective, there could be some
small substitution effects as some
portion of this cohort could switch to
seeking parole instead of relying on
other existing nonimmigrant programs
and policies. DHS, however, does not
believe such substitution will occur on
a large scale because the ability to be
admitted to the United States as a
nonimmigrant offers materially more
benefits and protections than parole.
In addition, the rule lists a number of
ancillary conditions for eligibility—and
conversely a number of conditions that
78 Source: ‘‘USCIS Announces ‘Entrepreneurs in
Residence Initiative,’ ’’ available at: https://
www.uscis.gov/news/public-releases-topic/businessimmigration/uscis-announces-entrepreneursresidence-initiative; see also https://www.uscis.gov/
eir/visa-guide/entrepreneur-visa-guide.
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will leave individuals unlikely or
unable to be paroled into the United
States (or continue to be paroled in the
country). Because ancillary conditions
can be considered for eligibility, the
actual volume may be smaller than the
estimates herein. Two examples are
that, under the rule, applicants must
maintain household income greater than
400 percent of the poverty line and that
the qualifying start-up capital cannot
come from family members. The volume
estimates presented in this analysis
assume all ancillary eligibility
conditions are met.
Finally, two potential elements of the
eligible population are considered. First,
as alluded to in the summary, the
volume estimates and ensuing cost
estimates assume one individual owner
for each new firm; under the rule, DHS
will allow up to three individuals per
firm to seek parole but does not attempt
to estimate how many of the startups
could have more than one owner.
Second, the volume estimate for grants
is based on Federal awards only. DHS
will consider eligibility based on State
or local grants and awards, including
those from State or local Economic
Development Corporations (EDCs).
However, unlike in the case of Federal
awards, there is not a database capturing
State and local grants or the
transmission mechanisms through
which some Federal grants are
distributed to other entities, such as
EDCs, and as such DHS was unable to
estimate the number of entrepreneurs
potentially eligible for parole as a result
of receiving State and local grants.
In addition, DHS is proposing that
applicants for parole as an entrepreneur
submit biometrics and incur the $85
biometric services fee. Because
entrepreneurs could start firms in any
number of occupations, DHS believes it
is appropriate to utilize the mean hourly
wage for all occupations, which is
$22.71.80 In order to anticipate the full
opportunity cost to petitioners, DHS
multiplied the average hourly U.S. wage
rate by 1.46 to account for the full cost
of employee benefits such as paid leave,
insurance, and retirement, for a total of
$33.16 per hour.
DHS estimates that the application
will take 4.7 hours to complete. After
DHS receives the application and fees,
if the applicant is physically present in
the United States, USCIS will send the
applicant a notice scheduling him or her
to visit a USCIS Application Support
Center (ASC) for biometrics collection.
Along with the $85 biometric services
fee, the applicant will incur the
following costs to comply with the
biometrics submission requirement: the
opportunity cost of traveling to an ASC,
the mileage cost of traveling to an ASC,
and the opportunity cost of time for
submitting his or her biometrics. While
travel times and distances vary, DHS
estimates that an applicant’s average
roundtrip distance to an ASC is 50
miles, and that the average time for that
trip is 2.5 hours. DHS estimates that an
applicant waits an average of 1.17 hours
for service and to have his or her
biometrics collected at an ASC, adding
up to a total biometrics-related time
burden of 3.67 hours.81 By applying the
4. Costs
A. Principal Filer Costs
The rule will permit certain foreign
nationals to apply for a 30-month (2.5year) initial period of parole into the
United States provided they meet the
eligibility criteria. Those who seek such
parole into the United States will face
the costs associated with the
application, which involve a $1,200
application fee plus other costs, detailed
below. The costs will stem from filing
fees and the opportunity costs of time
associated with filing the Application
for Entrepreneur Parole (Form I–941).
The filing fee for the Form I–941
application is $1,200. The fee is set at
a level intended to recover the
anticipated processing costs to DHS.79
adjudicated) to calculate a fee or fee adjustment for
a benefit type. A completion rate reflects an average
time an adjudicator spends actually working on a
case but does not include ‘‘queue’’ or wait times.
Because parole under this rule has not yet been
implemented, the completion rate used is based on
a 4-hour estimate provided by USCIS’ subject
matter experts. At this time, USCIS has estimated
that 30 additional staff will be required to satisfy
the forecasted workload associated with this rule.
However, USCIS requires adjudicators to report
actual adjudication hours and case completions by
benefit type. This reporting will occur after this rule
is implemented. Adjudication hours will be divided
by the number of completions for the same time
period to determine the actual average completion
rate. This rate will be used in future fee adjustments
and will help determine future staffing allocations
necessary to handle the projected workload for
parole under this rule.
80 Please see U.S. Department of Labor, Bureau of
Labor Statistics, Occupational Employment
Statistics program, National Occupational
Employment and Wage Estimates, United States
(May 2014), available at: https://www.bls.gov/oes/
2014/may/oes_nat.htm.
81 Foreign nationals who submit their
applications from outside the United States will
still be required to pay the $85 biometric processing
fee and travel to a USCIS office abroad, if available,
or a U.S. embassy or consulate office for biometric
processing at the time of travel document issuance.
Due to data limitations, and to capture general
79 USCIS calculates its fees to recover the full cost
of USCIS operations, including meeting national
security, customer service, and adjudicative
processing goals. As with other fees, USCIS uses
Activity Based Costing (ABC) to assign costs to
specific benefit requests. This model uses
completion rates (actual or estimated depending on
whether the benefit type is already being
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$33.16 hourly time value for applicants
to the total biometrics-related time
burden, DHS finds that the opportunity
cost for a principal applicant to travel to
and from an ASC, and to submit
biometrics, will total $121.68.82 In
addition to the opportunity cost of
providing biometrics, applicants will
experience travel costs related to
biometrics collection. The cost of such
travel will equal $28.75 per trip, based
on the 50-mile roundtrip distance to an
ASC and the General Services
Administration’s (GSA) travel rate of
$0.575 per mile.83 DHS assumes that
each individual will travel
independently to an ASC to submit his
or her biometrics, meaning that this rule
will impose a time cost on each of these
applicants.
DHS estimates that each principal
parole applicant will incur the
following costs: $1,285 in filing fees to
cover the processing costs for the
application and biometrics; $306.27
after summing the monetized cost of
travel to submit biometrics, the total
opportunity costs of time of the initial
applications, biometrics, and estimated
travel costs, resulting in a total cost of
$1,591.27 per application, rounded to
$1,591.84 If DHS receives 2,940
applications from persons eligible to
apply, DHS anticipates that such
applications will result in annual filing
fee transfers of $3,777,900
(undiscounted), which comprise the
application fee and cost of submitting
biometrics, and opportunity and other
burden costs of $900,436 for a total
annual cost of $4,678,366. Any
subsequent renewal of the parole period
will result in costs similar to those
previously discussed, with the
exceptions of travel costs, since the
applicant will not be required to depart
the United States and re-enter.
Similarly, the same costs will result for
material changes requiring the filing of
amended applications, with the
exception of the travel costs noted above
and costs associated with biometrics
collections, including the time and
travel to an ASC.
impacts of the rule, DHS has estimated costs of
submitting biometrics under the assumption that all
applicants are traveling to an ASC in the United
States.
82 Calculation: $33.16 * 3.67 hours = $121.68.
83 Calculation: 50 miles multiplied by $0.575 per
mile equals $28.75. See 79 FR 78437 (Dec. 30, 2014)
for GSA mileage rate.
84 Calculation: $1,285 + 306; $1,285 is the sum of
the direct cost of the $1,200 filing fee and the $85
cost of biometrics. The $306(rounded) figure is
obtained by adding the cost of travel ($28.75) plus
the total opportunity cost of $277, the latter of
which is the product of the total time burden (8.37
hours) and the average burdened hourly wage
($33.16).
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B. Dependent Spouses and Children
The rule will require all dependent
family members (spouses and children)
accompanying or joining the
entrepreneur to file an Application for
Travel Document (Form I–131), and will
require all spouses and children 14
years of age through age 79 to submit
biometrics.85 Those spouses and
children will face the costs associated
with filing the application and
submitting biometrics. DHS recognizes
that many dependent spouses and
children do not currently participate in
the U.S. labor market, and as a result,
are not represented in national average
wage calculations. In order to provide a
reasonable proxy of time valuation, DHS
has to assume some value of time above
zero and therefore uses an hourly cost
burdened minimum wage rate of $10.59
to estimate the opportunity cost of time
for dependent spouses. The value of
$10.59 per hour represents the Federal
minimum wage with an upward
adjustment for benefits.86 The value of
$10.59 per hour is consistent with other
DHS rulemakings when estimating time
burden costs for those who are not
authorized to work.87
DHS will require dependents of
parole applicants (spouses and children
of the parole applicant) to file an
Application for Travel Document (Form
I–131). There is a $575 filing fee
associated with the Form I–131
application, and DHS estimates it will
take 3.56 hours to complete each
submission. In addition to filing the
Form I–131 application, each dependent
spouse and child 14 years of age and
over will be required to submit
biometric information (fingerprints,
photograph, and signature) by attending
a biometrics services appointment at a
designated USCIS Application Support
Center (ASC). The biometrics processing
fee is $85.00 per applicant. In addition
to the $85 biometrics services fee, the
applicant will incur the following costs
to comply with the biometrics
submission requirement: the
opportunity and mileage costs of
85 Note: If a child under the age of 14 requires a
travel document, he or she will need to appear for
biometrics by traveling to an ASC, but will not be
required to pay a biometrics fee.
86 U.S. Department of Labor, Wage and Hour
Division. The minimum wage in effect as of July 24,
2009. Available at https://www.dol.gov/dol/topic/
wages/minimumwage.htm. The calculation for total
employer costs for employee compensation for
dependent spouses and children of principals with
an approved Form I–140: $7.25 per hour × 1.46 =
$10.59 per hour.
87 See ‘‘Employment Authorization for Certain H–
4 Dependent Spouses; Final rule,’’ 80 FR 10284
(Feb. 25, 2015); and ‘‘Provisional and Unlawful
Presence Waivers of Inadmissibility for Certain
Immediate Relatives; Final Rule,’’ 78 FR 536, 572
(Jan. 3, 2013).
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traveling to an ASC, and the
opportunity cost of submitting his or her
biometrics. While travel times and
distances vary, DHS estimates that an
applicant’s average roundtrip distance
to an ASC is 50 miles, and that the
average time for that trip is 2.5 hours.88
DHS estimates that an applicant waits
an average of 1.17 hours for service and
to have his or her biometrics collected
at an ASC, adding up to a total
biometrics-related time burden of 3.67
hours. In addition to the opportunity
cost of providing biometrics, applicants
will experience travel costs related to
biometrics collection. The cost of such
travel will equal $28.75 per trip, based
on the 50-mile roundtrip distance to an
ASC and the General Services
Administration’s (GSA) travel rate of
$0.575 per mile.89 DHS has assumed
that each applicant will travel
independently to an ASC to submit his
or her biometrics, meaning that this rule
will impose a time cost on each of these
applicants. DHS also assumed all
children were over the age of 14 for the
purposes of this analysis and, therefore,
this cost estimate may be slightly
overestimated.
DHS projects that approximately
3,234 dependents will be required to file
a Form I–131 application and submit
biometrics, based on the estimate of
2,940 principal applicants and using a
multiplier for expected family members
of 1.1.90 The total cost for those spouses
and children requesting parole under
this program includes the filing fee,
biometrics processing fee, travel costs
associated with biometrics processing,
and the opportunity cost of filing the
Form I–131 application and submitting
88 DHS has estimated travel distances and ensuing
travel times at 2.5 hours in prior rulemakings. See,
e.g., ‘‘Employment Authorization for Certain H–4
Dependent Spouses; Final rule,’’ 80 FR 10284 (Feb.
25, 2015); and ‘‘Provisional and Unlawful Presence
Waivers of Inadmissibility for Certain Immediate
Relatives; Final Rule,’’ 78 FR 536, 572 (Jan. 3, 2013).
89 See U.S. General Services Administration Web
site for Privately Owned Vehicle (POV) Mileage
Reimbursement Rates, https://www.gsa.gov/portal/
content/100715 (accessed Aug. 8, 2015).
90 The multiplier of 1.1 was obtained from DHS
estimates of the average historical ratio of principal
versus dependent recipients of lawful permanent
resident status. DHS studies based on statistics
obtained from office of Immigration Statistics reveal
that multipliers for the employment preference
categories EB–1, EB–2, and EB–3 range from 2.04
to 2.27. DHS believes that 2.1. is a reasonable
multiplier for the estimates and utilized this
multiplier in regulatory assessments involved in
American Competitiveness in the Twenty-First
Century Act, (AC21) provisions, specifically:
‘‘Retention of EB–1, EB–2, and EB–3 Immigrant
Workers and Program Improvements Affecting
High-Skilled Nonimmigrant Workers’’ (RIN 1615–
AC05), rule. Because the Form I–131 filings relevant
to this rule do not apply to principals, only spouses
and dependent children, DHS believes it is valid to
subtract 1 from the 2.1 multiplier to yield the final
multiplier of 1.1.
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biometrics. The total time burden is 7.23
hours. At the cost-burdened wage, the
total opportunity cost is $76.53. Adding
the $28.75 cost of travel, the total nonfiling cost is estimated to be $105.28,
and the total cost per applicant is
$765.28. At the projection of 3,234
applicants, the non-filing cost is
$340,474 (undiscounted), and combined
with filing costs of $2,134,440, the total
estimated cost for dependents germane
to the Form I–131 application is
$2,474,914.
In addition, DHS is allowing
independent employment authorization
for spouses of entrepreneurs granted
parole under this rule. DHS will permit
these individuals to apply for
employment authorization by filing a
Form I–765 application. To estimate the
number of potential persons applying
for employment authorization, DHS
used a simple one-to-one mapping of
entrepreneurs to spouses to obtain 2,940
spouses, the same number as
entrepreneur parolees.
The current filing fee for the Form I–
765 application is $410.00. The fee is set
at a level to recover the processing costs
to DHS. Based on the projection of 2,940
applicants, the total filing cost is
$1,205,400 (undiscounted). DHS
estimates the time burden of completing
the Form I–765 application is 3.42
hours.91 At the cost-burdened wage, the
total opportunity cost is $36.20. At the
projection of 2,940 applicants, the nonfiling cost is $106,430 (undiscounted)
and combined with filing costs of
$1,205,400 the total estimated cost for
spouses germane to the Form I–765
application is $1,311,830.
In addition to the filing costs,
applicants for parole may face other
costs associated with their
entrepreneurial activities. These could
include the administrative costs of
starting up a business, applying for
grants, obtaining various types of
licenses and permits, and pursuing
qualified investments. However, these
costs apply to the entrepreneurial
activity and the business activity that
the applicant has chosen to be involved
in and are not driven by the parole
process or other governmental functions
attributable to the rule itself. Hence,
DHS does not attempt to estimate,
quantify, or monetize such costs.
Lastly, DHS recognizes that some
individuals who were lawfully admitted
in the United States in certain
nonimmigrant classifications may seek
91 Source: Paperwork Reduction Act (PRA)
Supporting Statement for Form I–765 (OMB control
number 1615–0040). The PRA Supporting
Statement can be found at Question 13 on
Reginfo.gov at https://www.reginfo.gov/public/do/
PRAViewICR?ref_nbr=201502-1615-004.
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parole. Individuals who are present in
the United States at the time their parole
application is approved, based on
admission as a nonimmigrant, will have
to depart the United States and appear
at a U.S. port of entry in order to be
granted parole since USCIS is unable to
grant parole to individuals who are not
applicants for admission. See INA
section 212(d)(5), 8 U.S.C. 1182(d)(5).
These individuals will be ineligible for
a change of status under section 248 of
the INA, 8 U.S.C. 1258. Such applicants
will therefore bear the travel costs of
exit and returning to a port of entry.
However, because there are no similar
programs for comparison, DHS cannot
determine the demand for parole or
substitution effects from other
classifications and thus cannot estimate,
quantify, or monetize such potential
travel costs. Finally, because the
program allows for re-parole under
conditions that DHS has set,
entrepreneurs and their spouse and
children, if applicable, will likely face
filing and opportunity costs associated
with applying for re-parole. However,
DHS has no means of estimating the
share of the potential eligible
population that will seek and be eligible
for re-parole, hence re-parole conditions
are not included in this analysis. In
summary, DHS believes that it is
possible that there could be some
substitution into the parole program
from other programs and such
applicants and dependents will incur
travel and possible other costs related to
exit and requesting a grant of parole at
a U.S. port of entry.
C. Potential for Negative U.S. Labor
Market Impacts
DHS does not expect the rule to
generate significant costs or negative
consequences. Extensive review of
information relevant to immigrant
entrepreneurship indicates that while
much about the impact of such
entrepreneurship is not known, there is
no reason to expect that substantial
negative consequences, including
adverse impact on domestic workers,
are likely. The possibility that
immigrant entrepreneurs may displace
(‘‘crowd-out’’) native entrepreneurs has
been raised by a few researchers. One
study indicated that a very small
number of native entrepreneurs were
possibly displaced by immigrant
entrepreneurs.92 However, because of
difficulties in controlling for a large
amount of variables related to
92 Fairlie, R.W., and B.D. Meyer, The effect of
immigration on native self-employment, Journal of
Labor Economics 21:3 (2003): 619–650, available at:
https://people.ucsc.edu/∼rfairlie/papers/published/
jole%202003%20-%20native%20se.pdf.
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entrepreneurship, other researchers
have noted that this finding only raises
the possibility that displacement could
not be ruled out completely, but did not
actually provide evidence that it had
actually occurred.93 Another study,
conducted by the Brookings Institution,
did not find displacement but
acknowledged that more research and
refined control techniques, along with
longitudinal data, will need to be
studied before ruling out the possibility
completely.94 In any event, the purpose
of the parole rule is to foster innovation
and entrepreneurial activities in new or
very young endeavors, where the
literature much more decisively
indicates a strong potential of creating
new net jobs for U.S. workers.
DHS recognizes that the potential
inclusion of spouses can incur labor
market implications and possibly
impact U.S. workers. As was noted in
previous sections of the regulatory
impact analysis, DHS did not attempt to
assess or measure the labor market
impact of the estimated entrepreneurs
potentially eligible for parole because as
founders of firms, these persons will not
affect the labor market in the same way
as other workers. Although spouses
could have labor market impacts as new
labor market entrants, DHS believes
such potential impacts will be
negligible. The main reason is that the
size of the potential new cohort is very
small. As of the end of 2015, there were
an estimated 157,130,000 people in the
U.S. civilian labor force.95
Consequently, the estimated ‘‘new’’
available workers in the first year will
represent approximately 0.001 percent
of the overall U.S. civilian labor force.96
DHS believes this fraction is too small
93 See Magnus Lofstrom, Immigrants and
Entrepreneurship, Public Policy Institute of
California, USA, and IZA, Germany (2014), p. 4,
available at: https://wol.iza.org/articles/immigrantsand-entrepreneurship.pdf.
94 See Zoltan J. Acs and David M. Hart,
Immigration and High-Impact, High-Tech
Entrepreneurship, Brookings, Issues in
Technological innovation (Feb. 2011), available at
https://www.brookings.edu/research/papers/2011/
02/immigration-hart-acs.
95 See News Release, United States Department of
Labor, Bureau of Labor Statistics, Local Area
Unemployment Statistics, Regional and State
Unemployment–2015 Annual Averages, Table 1
‘‘Employment status of the civilian noninstitutional population 16 years of age and over by
region, division, and state, 2014–15 annual
averages’’ (Mar. 24, 2016), available at https://
www.bls.gov/news.release/pdf/srgune.pdf.
96 Source: United States Department of Labor,
Bureau of Labor Statistics, Local Area
Unemployment Statistic. Figure applies to
seasonally adjusted level for December 2014,
available at: https://data.bls.gov/timeseries/
LNS11000000. Calculation for new worker labor
force share: 1813/157,130,000.
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to have a significant impact on the labor
market.
While the figures above apply to the
general U.S. labor force, DHS recognizes
that concentration of new labor force
entrants can impact specific labor
markets. DHS believes that any such
potential impacts linked to this rule will
be insignificant. The NVCA and other
sources of information that DHS
reviewed indicates that while the area of
California known as Silicon Valley has
traditionally been, and continues to be,
the primary recipient geographically for
technology startup capital, other large
urban centers on the East Coast and,
even more recently, parts of the Midand Mountain West have seen increased
technology startup activity. To provide
just one example of a potential areaspecific impact, DHS considered the
San Jose-San Francisco-Oakland (CA)
Combined Statistical Area (CSA)
conjoining the seven Metropolitan
Statistical Areas (MSAs) and nine
encompassed counties constituting the
economic linkages of Silicon Valley.
Based on data from the BLS, the
population of this CSA is about 8.6
million (as of May 2014) and the
employed population (a narrower
measure of the labor market than the
labor force) about 3.75 million. If the
share of new entrants is based on the
proportion of venture capital to the area,
which is 42 percent, then 2,746 spousal
entrants could impact the area.97
Assuming such entrants gain
employment, this cohort represents just
0.02 percent of the employed
population of the specific CSA.
D. Government Costs
The INA provides for the collection of
fees at a level that will ensure recovery
of the full costs of providing services,
including administrative costs and
services provided without charge to
certain applicants and petitioners. See
INA section 286(m), 8 U.S.C. 1356(m).
DHS has established the fee for the
adjudication of the Form I–941
application based on notional
application filing volumes and
estimated resource commitments.
During the biennial fee review, DHS
97 The employment figures are provided by the
BLS, Occupational Employment Statistics (OES),
found at: https://www.bls.gov/oes/current/oes_
42100.htm. The population data is provided by the
Census Bureau, which tabulates CSAs: ‘‘Combined
Statistical Area Totals Dataset: Population and
Estimated Components of Change: April 1, 2010 to
July 1, 2014’’ (CSV), 2014 Population Estimates.
United States Census Bureau, Population Division.
March 2015. The information on the venture capital
share for the region is found in the NVCA 2015
yearbook, and is found in figure 8, p. 14. The
calculation is as follows: (.42 ×1813) = 761, which
is then divided by the CSA population of 3,750,000.
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will examine whether the fee is
sufficient to recover the full costs of
adjudication, as required by the INA.
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5. Benefits
As referenced previously, evidence
suggests that innovation-focused startups contribute disproportionately to job
creation. The rule will reduce entry
barriers, and thus support efforts by
international entrepreneurs to generate
entrepreneurial activity in the United
States.
The rule is expected to generate
important net benefits to the U.S.
economy. For one, expenditures on
research and development by the grantbased researchers that DHS has
identified that could qualify for
entrepreneur parole will generate direct
and indirect jobs. In addition, this
research-focused spending could
potentially generate patents, intellectual
property, licensing, and other intangible
assets that can be expected to contribute
to innovation and technological
advances and spill over into other
sectors of the overall economy. DHS
acknowledges that it is extremely
difficult to gauge the precise economic
value of such assets and that peerreviewed research in this area is still
nascent. Despite the nascent stage of the
research and the difficulty of measuring
quantitatively the benefit of innovation
driven by new high technology firms, a
large body of research indicates that the
innovation driven by entrepreneurs
contributes directly to economic growth,
generates important efficiencies and
cost reductions for firms that utilize
such innovation, and increases
productivity and profitability for firms
that benefit indirectly through new
products generated by such innovation.
Lastly, DHS believes that many of the
start-up firms operated by international
entrepreneurs during the parole period
could eventually become high-growth
firms that generate exceptionally high
levels of economic activity and
contribute disproportionately to job
creation in the United States.
D. Regulatory Flexibility Act
In accordance with the Regulatory
Flexibility Act (RFA), 5 U.S.C. 601(6),
DHS examined the impact of this rule
on small entities. A small entity may be
a small business (defined as any
independently owned and operated
business not dominant in its field that
qualifies as a small business per the
Small Business Act, 15 U.S.C. 632), a
small not-for-profit organization, or a
small governmental jurisdiction
(locality with fewer than 50,000 people).
In the proposed rule, DHS certified
that this rule would not have a
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significant impact on a substantial
number of small entities. DHS made this
determination based on the following
facts: This is not a mandatory rule; this
rule only impacts those individual
entrepreneurs who make the voluntary
decision to apply for parole; and this
rule does not regulate the business
entities in any way. After reviewing
public comments, including the formal
letter submitted on the record by the
U.S. Small Business Administration’s
Office of Advocacy (Advocacy), DHS
maintains its certification that the rule
does impose a significant impact on a
substantial number of small entities. For
a full discussion of the DHS response to
the letter submitted by Advocacy, please
see Section III.M.4 of this preamble.
Individuals are not defined as a
‘‘small entity’’ by the RFA. The rule will
not mandate that all individuals apply
for parole. This rule provides
flexibilities and options that do not
currently exist for individuals who wish
to establish or operate a start-up
business in the United States.
Importantly, the rule does not require
any individuals or businesses, including
those created by foreign nationals, to
seek parole—either generally or as a
specific condition for establishing or
operating a business in the United
States. Rather, as mentioned previously,
this rule is intended to provide an
additional flexibility for foreign
individuals who are unable to obtain
another appropriate nonimmigrant or
immigrant classification, in order to
facilitate the applicant’s ability to
oversee and grow the start-up entity. If
any individual believes this rule
imposes a significant economic impact,
that individual could simply choose not
to seek parole under the rule and thus
incur no economic impact. As discussed
previously, this rule imposes direct
filing costs of $1,285 (which includes
the $1,200 application fee and the $85
biometrics fee), plus $194 in timerelated opportunity costs for those
individuals who do choose to apply for
parole as entrepreneurs under the rule.
This cost is relatively minor when
considering the costs of starting up a
new business and the capital necessary
to start a business.
Under the general term
‘‘entrepreneur,’’ DHS includes those
who desire to form firms with
investment funds from certain U.S.
investors. For purposes of the RFA, the
regulatory requirements place
compliance costs and establish
eligibility criteria for the individual
requesting consideration for parole
under this rule. DHS believes that the
costs of application for parole will
burden the individual applicant, and
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5283
not the entrepreneurial venture (firm).
This rule will not alter or change the
normal procedure for fundraising or
other start-up administrative costs that
occur in forming a business entity. Such
costs are not direct costs of this rule and
could include, but are not limited to,
business application fees, legal fees, and
licensing that precede significant
infusions of investment, the latter of
which are primarily utilized for
operational and capital expenses in
order to produce goods or services.
It is possible that some of the 2,940
estimated entrepreneurs who could be
eligible for parole annually could
involve business structures in which the
filing fees are paid by a business entity.
In the event that small business entities
are impacted by this rule because they
choose to pay the filing fees on behalf
of an individual entrepreneur, DHS
believes that the filing cost of $1,285 per
application will be insignificant
compared to such entities’ annual gross
revenues, potential for revenue, and
other economic activity.
For businesses that may pay the filing
costs, the expected impact to such
businesses will be small. For businesses
that utilize either the minimum
threshold of $100,000 for a qualifying
government grant or award or $250,000
in capital investment to source the filing
costs, such costs will constitute 1.3
percent and 0.4 percent, respectively, of
the total capital amount. These
relatively low cost proportions apply to
those firms that only obtain the
minimum investment amounts and have
no other source of funding or revenues.
In addition, DHS analyzed the cost
impact relative to more typical RFA
indices. DHS analysis of Census Bureau
data on the smallest firms found that the
average revenue based on sales receipts
for firms with no paid employees is
$309,000, while the average for firms
with one to four paid employees is
$411,000.98 The filing cost relative to
these averages is 0.42 percent and 0.31
percent, respectively.
DHS also analyzed the average
revenue for new firms. Since the rule
defines a new firm as one that is less
than five years old at the time the initial
parole application is filed, DHS grouped
private sector firms for the 2012 survey
as those responding that the year of
98 The data utilized for the analysis are found in
the SBO Table SB1200CSA09, ‘‘Statistics for All
U.S. Firms with Paid Employees by Industry,
Gender, and Employment Size of Firm for the U.S.
and States: 2012, 2012 Survey of Business Owners:
https://census.gov/library/publications/2012/econ/
2012-sbo.html. The file location is: https://
factfinder.census.gov/faces/tableservices/jsf/pages/
productview.xhtml?pid=SBO_2012_
00CSA09&prodType=table. The figures are rounded
from $309,279 and $410,900, respectively.
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establishment was either 2012, 2011,
2010, 2009, or 2008. DHS obtained the
average revenue per firm and then
weighted the average by the yearly
proportion of firms. Based on the
resulting weighted average of $162,000,
such new firms will face a filing-cost
burden of 0.8 percent.99 DHS notes that
there is a large difference between the
revenue of new firms with paid
employees and those without such
employees (i.e., sole proprietors). For
the latter, average revenues are about
$34,000, and the cost burden will be 3.8
percent. However, because a central
component of this parole program
requires a demonstration of significant
public benefit in the form of economic
activity and job growth, DHS does not
anticipate that sole proprietors will be
eligible to participate in this program.
In summary, DHS believes that perapplicant costs will be primarily
incurred by the individual (which is not
covered by the RFA), any direct cost due
to this rule will be relatively minor, and
these costs will only be borne by those
who voluntarily choose to apply for
parole under this rule. While the
applicant for parole may be the owner
of a firm that could be considered small
within the definition of small entities
established by 5 U.S.C. 601(6), DHS
considers the applicants to be
individuals at the point in time they are
applying for parole, particularly since it
is the individual and not the entity that
files the application and it is the
individual whose parole must provide a
significant public benefit under this
rule. Furthermore, even if firms do
voluntarily decide to incur the
compliance costs on behalf of the
individual requesting consideration for
parole under this rule, the only
compliance costs those businesses will
be permitted to incur will be the filing
costs for the applications. As indicated
previously, based on the comparison
metric used, those costs are expected to
be insignificant.
Based on the evidence presented in
this RFA section and throughout this
preamble, DHS certifies that this rule
will not have a significant economic
impact on a substantial number of small
entities.
99 The data utilized for the analysis are found in
the SBO Table SB1200CSCB11, ‘‘Statistics for All
U.S. Firms by Year the Business Was Originally
Established or Self-Employment Activity Begun by
Industry, Gender, Ethnicity, Race, and Veteran
Status for the U.S.: 2012: 2012 Survey of Business
Owners: https://census.gov/library/publications/
2012/econ/2012-sbo.html. The file location is:
https://factfinder.census.gov/faces/tableservices/jsf/
pages/productview.xhtml?pid=SBO_2012_
00CSCB11&prodType=table. The average revenue
figure is rounded from $162,293.
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E. National Environmental Policy Act
DHS Directive (Dir) 023–01 Rev. 01
establishes the procedures that DHS and
its components use to comply with
NEPA and the Council on
Environmental Quality (CEQ)
regulations for implementing NEPA. 40
CFR parts 1500 through 1508.
The CEQ regulations allow federal
agencies to establish, with CEQ review
and concurrence, categories of actions
(‘‘categorical exclusions’’) which
experience has shown do not
individually or cumulatively have a
significant effect on the human
environment and, therefore, do not
require an Environmental Assessment
(EA) or Environmental Impact
Statement (EIS). 40 CFR
1507.3(b)(1)(iii), 1508.4. DHS Directive
023–01 Rev. 01 establishes Categorical
Exclusions that DHS has found to have
no such effect. Dir. 023–01 Rev. 01
Appendix A Table 1. For an action to be
categorically excluded, DHS Directive
023–01 Rev. 01 requires the action to
satisfy each of the following three
conditions: (1) The entire action clearly
fits within one or more of the
Categorical Exclusions; (2) the action is
not a piece of a larger action; and (3) no
extraordinary circumstances exist that
create the potential for a significant
environmental effect. Dir. 023–01 Rev.
01 section V.B (1)–(3).
DHS analyzed this action and does
not consider it to significantly affect the
quality of the human environment. This
rule provides criteria and procedures for
applying the Secretary’s existing
statutory parole authority to
entrepreneurs in a manner to assure
consistency in case-by-case
adjudications. DHS has determined that
this rule does not individually or
cumulatively have a significant effect on
the human environment because it fits
within two categorical exclusions under
DHS Directive 023– 01 Rev. 01,
Appendix A, Table 1. Specifically, the
rule fits within Categorical Exclusion
number A3(a) for rules strictly of an
administrative or procedural nature and
A3(d) for rules that interpret or amend
an existing regulation without changing
its environmental effect.
This rule is not part of a larger action
and presents no extraordinary
circumstances creating the potential for
significant environmental effects. Fewer
than 3,000 individuals, an insignificant
number in the context of the population
of the United States, are projected to
receive parole through this program.
Furthermore, any ventures will be
governed by local, state and federal laws
and regulations, including those
protecting the human health and the
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environment. Therefore, this rule is
categorically excluded from further
NEPA review.
F. Executive Order 13132
This rule will not have substantial
direct effects on the States, on the
relationship between the National
Government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. Therefore, in
accordance with section 6 of Executive
Order 13132, it is determined that this
rule does not have sufficient federalism
implications to warrant the preparation
of a federalism summary impact
statement.
G. Executive Order 12988
This rule meets the applicable
standards set forth in sections 3(a) and
3(b)(2) of Executive Order 12988.
H. Paperwork Reduction Act
Under the Paperwork Reduction Act
of 1995 (PRA), Public Law 104–13, all
Departments are required to submit to
the Office of Management and Budget
(OMB), for review and approval, any
reporting requirements inherent in a
rule. See Public Law 104–13, 109 Stat.
163 (May 22, 1995). This final rule
involves a new information collection
and makes revisions to the existing
information collections as follows:
Overview of Information Collection,
Application for Entrepreneur Parole,
Form I–941
This final rule requires that an
applicant requesting entrepreneur
parole complete an Application for
Entrepreneur Parole, Form I–941, and is
considered a new information collection
under the PRA. USCIS did receive one
comment regarding the time burden of
this form and, upon review of the work
involved to review the form, gather
necessary information to support the
submission, and the time required to
complete and submit the form, USCIS
has revised the estimated hour burden
per response to 4.7 hours.
a. Type of information collection:
New information collection.
b. Abstract: This collection will be
used by individuals who file an
application for entrepreneur parole
under INA section 212(d)(5)(A) (8 U.S.C.
1182(d)(5)(A)) and proposed new 8 CFR
212.19. Such individuals, other than
those filing an application on the basis
of a material change, are subject to
biometric collection in connection with
the filing of the application.
c. Title of Form/Collection:
Application for Entrepreneur Parole,
Form I–941.
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d. Agency form number, if any, and
the applicable component of the
Department of Homeland Security
sponsoring the collection: Form I–941,
U.S. Citizenship and Immigration
Services.
e. Affected public who will be asked
or required to respond: Businesses and
other for profit; Not-for-profit
Institutions.
f. An estimate of the total annual
numbers of respondents: 2,940.
g. Hours per response: The estimated
hour per response for Form I–941 is 4.7
hours; the estimated hour burden per
response for the biometric processing is
1.17 hours.
h. Total Annual Reporting Burden:
The total estimated annual hour burden
associated with this collection is 17,258
hours.
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Overview of Information Collection,
Application for Travel Document Form
I–131, OMB Control No. 1615–0013
DHS is revising this collection by
including spouses and children seeking
parole on the basis of an entrepreneur
parolee.
In addition to revising the form and
form instructions, DHS is revising the
estimate of total burden hours has
increased due to the addition of this
new population of Application for
Travel Document, Form I–131, filers,
and the increase of burden hours
associated with the collection of
biometrics from these applicants.
a. Type of information collection:
Revised information collection.
b. Abstract: This collection will be
used by dependents of individuals who
file an application for entrepreneur
parole under INA section 212(d)(5)(A) (8
U.S.C. 1182(d)(5)(A)) and proposed new
8 CFR 212.19. Such individuals are
subject to biometric collection in
connection with the filing of the
application.
c. Title of Form/Collection:
Application for Travel Document, Form
I–131.
d. Agency form number, if any, and
the applicable component of the
Department of Homeland Security
sponsoring the collection: Application
for Travel Document, Form I–131, U.S.
Citizenship and Immigration Services.
e. Affected public who will be asked
or required to respond: Individuals or
households.
f. An estimate of the total annual
numbers of respondents: 594,324.
The total number of respondents
includes the additional population of
3,234 individuals as estimated
previously in the analysis in Section
IV.C.
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g. Hours per response: The estimated
hour per response for Form I–131
Supplement is 1.9 hours; the estimated
hour burden per response for the
biometric processing is 1.17 hours; the
estimated hour burden per response for
the passport-style photographs is .5
hours.
h. Total Annual Reporting Burden:
The total estimated annual hour burden
associated with this collection is
1,372,928 hours.
Overview of Information Collection,
Employment Eligibility Verification,
Form I–9, OMB Control No. 1615–0047
In accordance with new 8 CFR
274a.2(b)(1)(v)(A)(5), DHS is revising
the Employment Eligibility Verification,
Form I–9, Lists of Acceptable
Documents, List A item 5 to replace
‘‘nonimmigrant alien’’ with
‘‘individual,’’ to replace ‘‘alien’s
nonimmigrant’’ with ‘‘individual,’’ and
to add ‘‘or parole’’ after ‘‘status’’ in List
A item 5.b.(2). With these changes the
acceptable List A document is described
as the following: For an individual
authorized to work for a specific
employer because of his or her status or
parole, a foreign passport and Form I–
94 (or Form I–94A) that has the same
name as the passport and has an
endorsement by DHS indicating such
employment-authorized status or parole,
as long as the period of endorsement has
not yet expired and the employment is
not in conflict with the individual’s
employment-authorized status or parole.
DHS is also updating the Lists of
Acceptable Documents, List C so that
the most current version of the
certification or report of birth issued by
the Department of State is acceptable for
Form I–9.
a. Type of information collection:
Revised information collection.
b. Abstract: This form was developed
to facilitate compliance with section
274A of the Immigration and
Nationality Act, which prohibits the
knowing employment of unauthorized
aliens. This information collection is
necessary for employers, agricultural
recruiters and referrers for a fee, and
state employment agencies to verify the
identity and employment authorization
of individuals hired (or recruited or
referred for a fee, if applicable) for
employment in the United States.
c. Title of Form/Collection:
Employment Eligibility Verification.
d. Agency form number, if any, and
the applicable component of the
Department of Homeland Security
sponsoring the collection: Form I–9,
U.S. Citizenship and Immigration
Services.
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5285
e. Affected public who will be asked
or required to respond: Business or
other for-profit; Individuals or
households; State, local or Tribal
Government.
f. An estimate of the total annual
numbers of respondents: 78 million
employers and 78 million individuals.
(The total number of responses will be
only 78 million responses. Each
response involves an employer and an
individual who is being hired.)
g. Hours per response:
• Time Burden for Employees—20
minutes (.33 hours) total;
• Time Burden for Employers—10
minutes (.17 hours) total;
• Time Burden for Recordkeeping—5
minutes (.08 hours) total
h. Total Annual Reporting Burden:
Approximately 40,600,000 total annual
burden hours.
Overview of Information Collection,
Application for Employment
Authorization, Form I–765, OMB
Control No. 1615–0040
DHS is making minor revisions to the
form instructions to reflect changes
made by this final rule that allow
spouses of an entrepreneur parolee to
request employment authorization.
a. Type of information collection:
Revised information collection.
b. Abstract: This collection will be
used by individuals who file an
application for entrepreneur parole
under INA section 212(d)(5)(A) (8 U.S.C.
1182(d)(5)(A)) and proposed new 8 CFR
212.19. Such individuals are subject to
biometric collection in connection with
the filing of the application.
This form was developed for
individual aliens to request employment
authorization and evidence of that
employment authorization. The form is
being amended to add a new class of
aliens eligible to apply for employment
authorization, specifically a spouse of
an entrepreneur parolee described as
eligible for employment authorization
under this rule. Supporting
documentation demonstrating eligibility
must be filed with the application. The
form lists examples of relevant
documentation.
c. Title of Form/Collection:
Application for Employment
Authorization, Form I–765.
d. Agency form number, if any, and
the applicable component of the
Department of Homeland Security
sponsoring the collection: Form I–765,
U.S. Citizenship and Immigration
Services.
e. Affected public who will be asked
or required to respond: Individuals or
households.
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f. An estimate of the total annual
numbers of respondents: 2,139,523.
This total represents the aggregate
estimate for this information collection,
to include the additional estimate of
2,940 respondents under this rule.
g. Hours per response: The estimated
hour per response for Form I–765 is 3.42
hours; the estimated hour burden per
response for biometric processing is
1.17 hours; the estimated hour burden
per response for Form I–765 WS is .5
hours; the estimated hour burden per
response for passport-style photographs
is .5 hours.
h. Total Annual Reporting Burden:
The total estimated annual hour burden
associated with this collection is
8,985,859 hours.
Regulatory Amendments
DHS adopted most of the proposed
regulatory amendments without change.
List of Subjects
8 CFR Part 103
Administrative practice and
procedure, Authority delegations
(Government agencies), Freedom of
information, Immigration, Privacy,
Reporting and recordkeeping
requirements.
8 CFR Part 212
Administrative practice and
procedure, Aliens, Immigration,
Passports and visas, Reporting and
recordkeeping requirements.
8 CFR Part 274a
Administrative practice and
procedure, Aliens, Employment,
Penalties, Reporting and recordkeeping
requirements.
Accordingly, DHS amends chapter I of
title 8 of the Code of Federal
Regulations as follows:
PART 103—IMMIGRATION BENEFITS;
BIOMETRIC REQUIREMENTS;
AVAILABILITY OF RECORDS
1. The authority citation for part 103
continues to read as follows:
■
Authority: 5 U.S.C. 301, 552, 552a; 8 U.S.C.
1101, 1103, 1304, 1356, 1365b; 31 U.S.C.
9701; Pub. L. 107–296, 116 Stat. 2135 (6
U.S.C. 1 et seq.); E.O. 12356, 47 FR 14874,
15557, 3 CFR, 1982 Comp., p.166; 8 CFR part
2; Pub. L. 112–54.
2. Section 103.7 is amended by adding
paragraph (b)(1)(i)(KKK) to read as
follows:
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■
§ 103.7
*
Fees.
*
(b) * *
(1) * *
(i) * *
*
*
*
*
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*
*
20:02 Jan 13, 2017
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(KKK) Application for Entrepreneur
Parole (Form I–941). For filing an
application for parole for entrepreneurs:
$1200.
*
*
*
*
*
PART 212—DOCUMENTARY
REQUIREMENTS: NONIMMIGRANTS;
WAIVERS; ADMISSION OF CERTAIN
INADMISSIBLE ALIENS; PAROLE
3. The authority citation for part 212
is revised to read as follows:
■
Authority: 6 U.S.C. 111, 202(4) and 271; 8
U.S.C. 1101 and note, 1102, 1103, 1182 and
note, 1184, 1185 note (section 7209 of Pub.
L. 108–458), 1187, 1223, 1225, 1226, 1227,
1255, 1359; 8 CFR part 2.
Section 212.1(q) also issued under section
702, Pub. L. 110–229, 122 Stat. 754, 854.
■
4. Add § 212.19 to read as follows:
§ 212.19
Parole for entrepreneurs.
(a) Definitions. For purposes of this
section, the following definitions apply:
(1) Entrepreneur means an alien who
possesses a substantial ownership
interest in a start-up entity and has a
central and active role in the operations
of that entity, such that the alien is wellpositioned, due to his or her knowledge,
skills, or experience, to substantially
assist the entity with the growth and
success of its business. For purposes of
this section, an alien may be considered
to possess a substantial ownership
interest if he or she possesses at least a
10 percent ownership interest in the
start-up entity at the time of
adjudication of the initial grant of parole
and possesses at least a 5 percent
ownership interest in the start-up entity
at the time of adjudication of a
subsequent period of re-parole. During
the period of initial parole, the
entrepreneur may continue to reduce
his or her ownership interest in the
start-up entity, but must, at all times
during the period of initial parole,
maintain at least a 5 percent ownership
interest in the entity. During the period
of re-parole, the entrepreneur may
continue to reduce his or her ownership
interest in the start-up entity, but must,
at all times during the period of parole,
maintain an ownership interest in the
entity.
(2) Start-up entity means a U.S.
business entity that was recently
formed, has lawfully done business
during any period of operation since its
date of formation, and has substantial
potential for rapid growth and job
creation. An entity that is the basis for
a request for parole under this section
may be considered recently formed if it
was created within the 5 years
immediately preceding the filing date of
the alien’s initial parole request. For
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purposes of paragraphs (a)(3) and (5) of
this section, an entity may be
considered recently formed if it was
created within the 5 years immediately
preceding the receipt of the relevant
grant(s), award(s), or investment(s).
(3) Qualified government award or
grant means an award or grant for
economic development, research and
development, or job creation (or other
similar monetary award typically given
to start-up entities) made by a federal,
state, or local government entity (not
including foreign government entities)
that regularly provides such awards or
grants to start-up entities. This
definition excludes any contractual
commitment for goods or services.
(4) Qualified investment means an
investment made in good faith, and that
is not an attempt to circumvent any
limitations imposed on investments
under this section, of lawfully derived
capital in a start-up entity that is a
purchase from such entity of its equity,
convertible debt, or other security
convertible into its equity commonly
used in financing transactions within
such entity’s industry. Such an
investment shall not include an
investment, directly or indirectly, from
the entrepreneur; the parents, spouse,
brother, sister, son, or daughter of such
entrepreneur; or any corporation,
limited liability company, partnership,
or other entity in which such
entrepreneur or the parents, spouse,
brother, sister, son, or daughter of such
entrepreneur directly or indirectly has
any ownership interest.
(5) Qualified investor means an
individual who is a U.S. citizen or
lawful permanent resident of the United
States, or an organization that is located
in the United States and operates
through a legal entity organized under
the laws of the United States or any
state, that is majority owned and
controlled, directly and indirectly, by
U.S. citizens or lawful permanent
residents of the United States, provided
such individual or organization
regularly makes substantial investments
in start-up entities that subsequently
exhibit substantial growth in terms of
revenue generation or job creation. The
term ‘‘qualified investor’’ shall not
include an individual or organization
that has been permanently or
temporarily enjoined from participating
in the offer or sale of a security or in the
provision of services as an investment
adviser, broker, dealer, municipal
securities dealer, government securities
broker, government securities dealer,
bank, transfer agent or credit rating
agency, barred from association with
any entity involved in the offer or sale
of securities or provision of such
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services, or otherwise found to have
participated in the offer or sale of
securities or provision of such services
in violation of law. For purposes of this
section, such an individual or
organization may be considered a
qualified investor if, during the
preceding 5 years:
(i) The individual or organization
made investments in start-up entities in
exchange for equity, convertible debt or
other security convertible into equity
commonly used in financing
transactions within their respective
industries comprising a total in such 5year period of no less than $600,000;
and
(ii) Subsequent to such investment by
such individual or organization, at least
2 such entities each created at least 5
qualified jobs or generated at least
$500,000 in revenue with average
annualized revenue growth of at least 20
percent.
(6) Qualified job means full-time
employment located in the United
States that has been filled for at least 1
year by one or more qualifying
employees.
(7) Qualifying employee means a U.S.
citizen, a lawful permanent resident, or
other immigrant lawfully authorized to
be employed in the United States, who
is not an entrepreneur of the relevant
start-up entity or the parent, spouse,
brother, sister, son, or daughter of such
an entrepreneur. This definition shall
not include independent contractors.
(8) Full-time employment means paid
employment in a position that requires
a minimum of 35 working hours per
week. This definition does not include
combinations of part-time positions
even if, when combined, such positions
meet the hourly requirement per week.
(9) U.S. business entity means any
corporation, limited liability company,
partnership, or other entity that is
organized under federal law or the laws
of any state, and that conducts business
in the United States, that is not an
investment vehicle primarily engaged in
the offer, purchase, sale or trading of
securities, futures contracts, derivatives
or similar instruments.
(10) Material change means any
change in facts that could reasonably
affect the outcome of the determination
whether the entrepreneur provides, or
continues to provide, a significant
public benefit to the United States. Such
changes include, but are not limited to,
the following: Any criminal charge,
conviction, plea of no contest, or other
judicial determination in a criminal case
concerning the entrepreneur or start-up
entity; any complaint, settlement,
judgment, or other judicial or
administrative determination
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concerning the entrepreneur or start-up
entity in a legal or administrative
proceeding brought by a government
entity; any settlement, judgment, or
other legal determination concerning
the entrepreneur or start-up entity in a
legal proceeding brought by a private
individual or organization other than
proceedings primarily involving claims
for damages not exceeding 10 percent of
the current assets of the entrepreneur or
start-up entity; a sale or other
disposition of all or substantially all of
the start-up entity’s assets; the
liquidation, dissolution or cessation of
operations of the start-up entity; the
voluntary or involuntary filing of a
bankruptcy petition by or against the
start-up entity; a significant change with
respect to ownership and control of the
start-up entity; and a cessation of the
entrepreneur’s qualifying ownership
interest in the start-up entity or the
entrepreneur’s central and active role in
the operations of that entity.
(b) Initial parole—(1) Filing of initial
parole request form. An alien seeking an
initial grant of parole as an entrepreneur
of a start-up entity must file an
Application for Entrepreneur Parole
(Form I–941) with USCIS, with the
required fees (including biometric
services fees), and supporting
documentary evidence in accordance
with this section and the form
instructions, demonstrating eligibility as
provided in paragraph (b)(2) of this
section.
(2) Criteria for consideration—(i) In
general. An alien may be considered for
parole under this section if the alien
demonstrates that a grant of parole will
provide a significant public benefit to
the United States based on his or her
role as an entrepreneur of a start-up
entity.
(ii) General criteria. An alien may
meet the standard described in
paragraph (b)(2)(i) of this section by
providing a detailed description, along
with supporting evidence:
(A) Demonstrating that the alien is an
entrepreneur as defined in paragraph
(a)(1) of this section and that his or her
entity is a start-up entity as defined in
paragraph (a)(2) of this section; and
(B) Establishing that the alien’s entity
has:
(1) Received, within 18 months
immediately preceding the filing of an
application for initial parole, a qualified
investment amount of at least $250,000
from one or more qualified investors; or
(2) Received, within 18 months
immediately preceding the filing of an
application for initial parole, an amount
of at least $100,000 through one or more
qualified government awards or grants.
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(iii) Alternative criteria. An alien who
satisfies the criteria in paragraph
(b)(2)(ii)(A) of this section and partially
meets one or both of the criteria in
paragraph (b)(2)(ii)(B) of this section
may alternatively meet the standard
described in paragraph (b)(2)(i) of this
section by providing other reliable and
compelling evidence of the start-up
entity’s substantial potential for rapid
growth and job creation.
(c) Additional periods of parole—(1)
Filing of re-parole request form. Prior to
the expiration of the initial period of
parole, an entrepreneur parolee may
request an additional period of parole
based on the same start-up entity that
formed the basis for his or her initial
period of parole granted under this
section. To request such parole, an
entrepreneur parolee must timely file
the Application for Entrepreneur Parole
(Form I–941) with USCIS, with the
required fees (including biometric
services fees), and supporting
documentation in accordance with the
form instructions, demonstrating
eligibility as provided in paragraph
(c)(2) of this section.
(2) Criteria for consideration—(i) In
general. An alien may be considered for
re-parole under this section if the alien
demonstrates that a grant of parole will
continue to provide a significant public
benefit to the United States based on his
or her role as an entrepreneur of a startup entity.
(ii) General criteria. An alien may
meet the standard described in
paragraph (c)(2)(i) of this section by
providing a detailed description, along
with supporting evidence:
(A) Demonstrating that the alien
continues to be an entrepreneur as
defined in paragraph (a)(1) of this
section and that his or her entity
continues to be a start-up entity as
defined in paragraph (a)(2) of this
section; and
(B) Establishing that the alien’s entity
has:
(1) Received at least $500,000 in
qualifying investments, qualified
government grants or awards, or a
combination of such funding, during the
initial parole period;
(2) Created at least 5 qualified jobs
with the start-up entity during the
initial parole period; or
(3) Reached at least $500,000 in
annual revenue in the United States and
averaged 20 percent in annual revenue
growth during the initial parole period.
(iii) Alternative criteria. An alien who
satisfies the criteria in paragraph
(c)(2)(ii)(A) of this section and partially
meets one or more of the criteria in
paragraph (c)(2)(ii)(B) of this section
may alternatively meet the standard
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described in paragraph (c)(2)(i) of this
section by providing other reliable and
compelling evidence of the start-up
entity’s substantial potential for rapid
growth and job creation.
(d) Discretionary authority; decision;
appeals and motions to reopen—(1)
Discretionary authority. DHS may grant
parole under this section in its sole
discretion on a case-by-case basis if the
Department determines, based on the
totality of the evidence, that an
applicant’s presence in the United
States will provide a significant public
benefit and that he or she otherwise
merits a favorable exercise of discretion.
In determining whether an alien’s
presence in the United States will
provide a significant public benefit and
whether the alien warrants a favorable
exercise of discretion, USCIS will
consider and weigh all evidence,
including any derogatory evidence or
information, such as but not limited to,
evidence of criminal activity or national
security concerns.
(2) Initial parole. DHS may grant an
initial period of parole based on the
start-up entity listed in the request for
parole for a period of up to 30 months
from the date the individual is initially
paroled into the United States. Approval
by USCIS of such a request must be
obtained before the alien may appear at
a port of entry to be granted parole, in
lieu of admission.
(3) Re-parole. DHS may re-parole an
entrepreneur for one additional period
of up to 30 months from the date of the
expiration of the initial parole period. If
the entrepreneur is in the United States
at the time that USCIS approves the
request for re-parole, such approval
shall be considered a grant of re-parole.
If the alien is outside the United States
at the time that USCIS approves the
request for re-parole, the alien must
appear at a port of entry to be granted
parole, in lieu of admission.
(4) Appeals and motions to reopen.
There is no appeal from a denial of
parole under this section. USCIS will
not consider a motion to reopen or
reconsider a denial of parole under this
section. On its own motion, USCIS may
reopen or reconsider a decision to deny
the Application for Entrepreneur Parole
(Form I–941), in accordance with 8 CFR
103.5(a)(5).
(e) Payment of biometric services fee
and collection of biometric information.
An alien seeking parole or re-parole
under this section will be required to
pay the biometric services fee as
prescribed by 8 CFR 103.7(b)(1)(i)(C).
An alien seeking an initial grant of
parole will be required to submit
biometric information. An alien seeking
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re-parole may be required to submit
biometric information.
(f) Limitations. No more than three
entrepreneurs may be granted parole
under this section based on the same
start-up entity. An alien shall not
receive more than one initial grant of
entrepreneur parole or more than one
additional grant of entrepreneur reparole based on the same start-up entity,
for a maximum period of parole of five
years.
(g) Employment authorization. An
entrepreneur who is paroled into the
United States pursuant to this section is
authorized for employment with the
start-up entity incident to the conditions
of his or her parole.
(h) Spouse and children. (1) The
entrepreneur’s spouse and children who
are seeking parole as derivatives of such
entrepreneur must individually file an
Application for Travel Document (Form
I–131). Such application must also
include evidence that the derivative has
a qualifying relationship to the
entrepreneur and otherwise merits a
grant of parole in the exercise of
discretion. A biometric services fee is
required to be filed with the application.
Such spouse or child will be required to
appear for collection of biometrics in
accordance with the form instructions
or upon request.
(2) The spouse and children of an
entrepreneur granted parole under this
section may be granted parole under
this section for no longer than the
period of parole granted to such
entrepreneur.
(3) The spouse of the entrepreneur
parolee, after being paroled into the
United States, may be eligible for
employment authorization on the basis
of parole under this section. To request
employment authorization, an eligible
spouse paroled into the United States
must file an Application for
Employment Authorization (Form I–
765), in accordance with 8 CFR 274a.13
and form instructions. An Application
for Employment Authorization must be
accompanied by documentary evidence
establishing eligibility, including
evidence of the spousal relationship.
(4) Notwithstanding 8 CFR
274a.12(c)(11), a child of the
entrepreneur parolee may not be
authorized for and may not accept
employment on the basis of parole
under this section.
(i) Conditions on parole. As a
condition of parole under this section,
a parolee must maintain household
income that is greater than 400 percent
of the federal poverty line for his or her
household size as defined by the
Department of Health and Human
Services. USCIS may impose other such
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reasonable conditions in its sole
discretion with respect to any alien
approved for parole under this section,
and it may request verification of the
parolee’s compliance with any such
condition at any time. Violation of any
condition of parole may lead to
termination of the parole in accordance
with paragraph (k) of this section or
denial of re-parole.
(j) Reporting of material changes. An
alien granted parole under this section
must immediately report any material
change(s) to USCIS. If the entrepreneur
will continue to be employed by the
start-up entity and maintain a qualifying
ownership interest in the start-up entity,
the entrepreneur must submit a form
prescribed by USCIS, with any
applicable fee (not including any
biometric fees), in accordance with the
form instructions to notify USCIS of the
material change(s). The entrepreneur
parolee must immediately notify USCIS
in writing if he or she will no longer be
employed by the start-up entity or
ceases to possess a qualifying ownership
stake in the start-up entity.
(k) Termination of parole—(1) In
general. DHS, in its discretion, may
terminate parole granted under this
section at any time and without prior
notice or opportunity to respond if it
determines that the alien’s continued
parole in the United States no longer
provides a significant public benefit.
Alternatively, DHS, in its discretion,
may provide the alien notice and an
opportunity to respond prior to
terminating the alien’s parole under this
section.
(2) Automatic termination. Parole
granted under this section will be
automatically terminated without notice
upon the expiration of the time for
which parole was authorized, unless the
alien timely files a non-frivolous
application for re-parole. Parole granted
under this section may be automatically
terminated when USCIS receives
written notice from the entrepreneur
parolee that he or she will no longer be
employed by the start-up entity or
ceases to possess a qualifying ownership
stake in the start-up entity in
accordance with paragraph (j) of this
section. Additionally, parole of the
spouse or child of the entrepreneur will
be automatically terminated without
notice if the parole of the entrepreneur
has been terminated. If parole is
terminated, any employment
authorization based on that parole is
automatically revoked.
(3) Termination on notice. USCIS may
terminate on notice or provide the
entrepreneur or his or her spouse or
children, as applicable, written notice of
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5289
its intent to terminate parole if USCIS
believes that:
(i) The facts or information contained
in the request for parole were not true
and accurate;
(ii) The alien failed to timely file or
otherwise comply with the material
change reporting requirements in this
section;
(iii) The entrepreneur parolee is no
longer employed in a central and active
role by the start-up entity or ceases to
possess a qualifying ownership stake in
the start-up entity;
(iv) The alien otherwise violated the
terms and conditions of parole; or
(v) Parole was erroneously granted.
(4) Notice and decision. A notice of
intent to terminate issued under this
paragraph should generally identify the
grounds for termination of the parole
and provide a period of up to 30 days
for the alien’s written rebuttal. The alien
may submit additional evidence in
support of his or her rebuttal, when
applicable, and USCIS will consider all
relevant evidence presented in deciding
whether to terminate the alien’s parole.
Failure to timely respond to a notice of
intent to terminate will result in
termination of the parole. When a
charging document is served on the
alien, the charging document will
constitute written notice of termination
of parole (if parole has not already been
terminated), unless otherwise specified.
Any further immigration and removal
actions will be conducted in accordance
with the Act and this chapter. The
decision to terminate parole may not be
appealed. USCIS will not consider a
motion to reopen or reconsider a
decision to terminate parole under this
section. On its own motion, USCIS may
reopen or reconsider a decision to
terminate.
(l) Increase of investment and revenue
amount requirements. The investment
and revenue amounts in this section
will be automatically adjusted every 3
years by the Consumer Price Index and
posted on the USCIS Web site at
www.uscis.gov. Investment and revenue
amounts adjusted under this paragraph
will apply to all applications filed on or
after the beginning of the fiscal year for
which the adjustment is made.
Authority: 8 U.S.C. 1101, 1103, 1324a; 48
U.S.C. 1806; 8 CFR part 2; Pub. L. 101–410,
104 Stat. 890, as amended by Pub. L. 114–
74, 129 Stat. 599.
*
*
*
*
(b) * * *
(1) * * *
(v) * * *
(A) * * *
(5) In the case of an individual who
is employment-authorized incident to
status or parole with a specific
employer, a foreign passport with an
Arrival/Departure Record, Form I–94 (as
defined in 8 CFR 1.4) or Form I–94A,
bearing the same name as the passport
and containing an endorsement by DHS
indicating such employment-authorized
status or parole, as long as the period of
endorsement has not yet expired and
the employment is not in conflict with
the individual’s employment-authorized
status or parole;
*
*
*
*
*
(C) * * *
(2) Certification or report of birth
issued by the Department of State,
including Forms FS–545, DS–1350, FS–
240;
*
*
*
*
*
■ 7. Section 274a.12 is amended by:
■ a. Revising paragraph (b) introductory
text;
■ b. Removing the word ‘‘or’’ at the end
of paragraph (b)(24);
■ c. Removing the period at the end of
paragraph (b)(25) and adding ‘‘; or’’ in
its place;
■ d. Adding and reserving paragraphs
(b)(26) through (36);
■ e. Adding paragraph (b)(37);
■ f. Revising paragraph (c)(11); and
■ g. Adding paragraph (c)(34).
The revisions and additions read as
follows:
status or parole. The following classes
of aliens are authorized to be employed
in the United States by the specific
employer and subject to any restrictions
described in the section(s) of this
chapter indicated as a condition of their
parole or of their admission in, or
subsequent change to, the designated
nonimmigrant classification. An alien in
one of these classes is not issued an
employment authorization document by
DHS:
*
*
*
*
*
(37) An alien paroled into the United
States as an entrepreneur pursuant to 8
CFR 212.19 for the period of authorized
parole. An entrepreneur who has timely
filed a non-frivolous application
requesting re-parole with respect to the
same start-up entity in accordance with
8 CFR 212.19 prior to the expiration of
his or her parole, but whose authorized
parole period expires during the
pendency of such application, is
authorized to continue employment
with the same start-up entity for a
period not to exceed 240 days beginning
on the date of expiration of parole. Such
authorization shall be subject to any
conditions and limitations on such
expired parole. If DHS adjudicates the
application prior to the expiration of
this 240-day period and denies the
application for re-parole, the
employment authorization under this
paragraph shall automatically terminate
upon notification to the alien of the
denial decision.
(c) * * *
(11) Except as provided in paragraphs
(b)(37) and (c)(34) of this section and
§ 212.19(h)(4) of this chapter, an alien
paroled into the United States
temporarily for urgent humanitarian
reasons or significant public benefit
pursuant to section 212(d)(5) of the Act.
*
*
*
*
*
(34) A spouse of an entrepreneur
parolee described as eligible for
employment authorization in
§ 212.19(h)(3) of this chapter.
*
*
*
*
*
PART 274a—CONTROL OF
EMPLOYMENT OF ALIENS
§ 274a.12 Classes of aliens authorized to
accept employment.
Jeh Charles Johnson,
Secretary of Homeland Security.
*
[FR Doc. 2017–00481 Filed 1–13–17; 8:45 am]
5. The authority citation for part 274a
continues to read as follows:
sradovich on DSK3GMQ082PROD with RULES5
■
VerDate Sep<11>2014
20:02 Jan 13, 2017
Jkt 241001
6. Section 274a.2 is amended by:
a. Revising paragraphs (b)(1)(v)(A)(5)
and (b)(1)(v)(C)(2);
■ b. Removing paragraph (b)(1)(v)(C)(3);
and
■ c. Redesignating paragraphs
(b)(1)(v)(C)(4) through (8) as paragraphs
(b)(1)(v)(C)(3) through (7).
The revisions read as follows:
■
■
§ 274a.2 Verification of identity and
employment authorization.
*
*
*
*
*
(b) Aliens authorized for employment
with a specific employer incident to
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BILLING CODE 9111–97–P
E:\FR\FM\17JAR5.SGM
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Agencies
[Federal Register Volume 82, Number 10 (Tuesday, January 17, 2017)]
[Rules and Regulations]
[Pages 5238-5289]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00481]
[[Page 5237]]
Vol. 82
Tuesday,
No. 10
January 17, 2017
Part V
Department of Homeland Security
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8 CFR Parts 103, 212, and 274a
International Entrepreneur Rule; Final Rule
Federal Register / Vol. 82 , No. 10 / Tuesday, January 17, 2017 /
Rules and Regulations
[[Page 5238]]
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
8 CFR Parts 103, 212, and 274a
[CIS No. 2572-15; DHS Docket No. USCIS-2015-0006]
RIN 1615-AC04
International Entrepreneur Rule
AGENCY: U.S. Citizenship and Immigration Services, DHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends Department of Homeland Security (DHS)
regulations to implement the Secretary of Homeland Security's
discretionary parole authority in order to increase and enhance
entrepreneurship, innovation, and job creation in the United States.
The final rule adds new regulatory provisions guiding the use of parole
on a case-by-case basis with respect to entrepreneurs of start-up
entities who can demonstrate through evidence of substantial and
demonstrated potential for rapid business growth and job creation that
they would provide a significant public benefit to the United States.
Such potential would be indicated by, among other things, the receipt
of significant capital investment from U.S. investors with established
records of successful investments, or obtaining significant awards or
grants from certain Federal, State or local government entities. If
granted, parole would provide a temporary initial stay of up to 30
months (which may be extended by up to an additional 30 months) to
facilitate the applicant's ability to oversee and grow his or her
start-up entity in the United States.
DATES: This final rule is effective July 17, 2017.
FOR FURTHER INFORMATION CONTACT: Steven Viger, Adjudications Officer,
Office of Policy and Strategy, U.S. Citizenship and Immigration
Services, Department of Homeland Security, 20 Massachusetts Avenue NW.,
Suite 1100, Washington, DC 20529-2140; Telephone (202) 272-1470.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
A. Purpose of the Regulatory Action
B. Legal Authority
C. Summary of the Final Rule Provisions
D. Summary of Changes From the Notice of Proposed Rulemaking
E. Summary of Costs and Benefits
F. Effective Date
II. Background
A. Current Framework
B. Final Rule
III. Public Comments on Proposed Rule
A. Summary of Public Comments
B. Legal Authority
C. Significant Public Benefit
D. Definitions
E. Application Requirements
F. Parole Criteria and Conditions
G. Employment Authorization
H. Comments on Parole Process
I. Appeals and Motions To Reopen
J. Termination of Parole
K. Opposition to the Overall Rule
L. Miscellaneous Comments on the Rule
M. Public Comments on Statutory and Regulatory Requirements
IV. Statutory and Regulatory Requirements
A. Unfunded Mandates Reform Act of 1995
B. Small Business Regulatory Enforcement Fairness Act of 1996
C. Executive Orders 12866 and 13563
1. Summary
2. Purpose of the Rule
3. Volume Estimate
4. Costs
5. Benefits
6. Alternatives Considered
D. Regulatory Flexibility Act
E. Executive Order 13132
F. Executive Order 12988
G. Paperwork Reduction Act
I. Executive Summary
A. Purpose of the Regulatory Action
Section 212(d)(5) of the Immigration and Nationality Act (INA), 8
U.S.C. 1182(d)(5), confers upon the Secretary of Homeland Security the
discretionary authority to parole individuals into the United States
temporarily, on a case-by-case basis, for urgent humanitarian reasons
or significant public benefit. DHS is amending its regulations
implementing this authority to increase and enhance entrepreneurship,
innovation, and job creation in the United States. As described in more
detail below, the final rule would establish general criteria for the
use of parole with respect to entrepreneurs of start-up entities who
can demonstrate through evidence of substantial and demonstrated
potential for rapid growth and job creation that they would provide a
significant public benefit to the United States. In all cases, whether
to parole a particular individual under this rule is a discretionary
determination that would be made on a case-by-case basis.
Given the complexities involved in adjudicating applications in
this context, DHS has decided to establish by regulation the criteria
for the case-by-case evaluation of parole applications filed by
entrepreneurs of start-up entities. By including such criteria in
regulation, as well as establishing application requirements that are
specifically tailored to capture the necessary information for
processing parole requests on this basis, DHS expects to facilitate the
use of parole in this area.
Under this final rule, an applicant would need to demonstrate that
his or her parole would provide a significant public benefit because he
or she is the entrepreneur of a new start-up entity in the United
States that has significant potential for rapid growth and job
creation. DHS believes that such potential would be indicated by, among
other things, the receipt of (1) significant capital investment from
U.S. investors with established records of successful investments or
(2) significant awards or grants from certain Federal, State, or local
government entities. The final rule also includes alternative criteria
for applicants who partially meet the thresholds for capital investment
or government awards or grants and can provide additional reliable and
compelling evidence of their entities' significant potential for rapid
growth and job creation. An applicant must also show that he or she has
a substantial ownership interest in such an entity, has an active and
central role in the entity's operations, and would substantially
further the entity's ability to engage in research and development or
otherwise conduct and grow its business in the United States. The grant
of parole is intended to facilitate the applicant's ability to oversee
and grow the start-up entity.
DHS believes that this final rule will encourage foreign
entrepreneurs to create and develop start-up entities with high growth
potential in the United States, which are expected to facilitate
research and development in the country, create jobs for U.S. workers,
and otherwise benefit the U.S. economy through increased business
activity, innovation, and dynamism. Particularly in light of the
complex considerations involved in entrepreneur-based parole requests,
DHS also believes that this final rule will provide a transparent
framework by which DHS will exercise its discretion to adjudicate such
requests on a case-by-case basis under section 212(d)(5) of the INA, 8
U.S.C. 1182(d)(5).
B. Legal Authority
The Secretary of Homeland Security's authority for the proposed
regulatory amendments can be found in various provisions of the
immigration laws. Sections 103(a)(1) and (3) of the INA, 8 U.S.C.
1103(a)(1), (3), provides the Secretary the authority to administer and
enforce the immigration and nationality laws. Section 402(4) of the
Homeland Security Act of 2002 (HSA), Public Law 107-296, 116 Stat.
2135, 6 U.S.C. 202(4), expressly authorizes the
[[Page 5239]]
Secretary to establish rules and regulations governing parole. Section
212(d)(5) of the INA, 8 U.S.C. 1182(d)(5), vests in the Secretary the
discretionary authority to grant parole for urgent humanitarian reasons
or significant public benefit to applicants for admission temporarily
on a case-by-case basis.\1\ Section 274A(h)(3)(B) of the INA, 8 U.S.C.
1324a(h)(3)(B), recognizes the Secretary's general authority to extend
employment authorization to noncitizens in the United States. And
section 101(b)(1)(F) of the HSA, 6 U.S.C. 111(b)(1)(F), establishes as
a primary mission of DHS the duty to ``ensure that the overall economic
security of the United States is not diminished by efforts, activities,
and programs aimed at securing the homeland.''
---------------------------------------------------------------------------
\1\ In sections 402 and 451 of the HSA, Congress transferred
from the Attorney General to the Secretary of Homeland Security the
general authority to enforce and administer the immigration laws,
including those pertaining to parole. In accordance with section
1517 of title XV of the HSA, any reference to the Attorney General
in a provision of the INA describing functions transferred from the
Department of Justice to DHS ``shall be deemed to refer to the
Secretary'' of Homeland Security. See 6 U.S.C. 557 (codifying the
HSA, tit. XV, section 1517). Authorities and functions of DHS to
administer and enforce the immigration laws are appropriately
delegated to DHS employees and others in accordance with section
102(b)(1) of the HSA, 6 U.S.C. 112(b)(1); section 103(a) of the INA,
8 U.S.C. 1103(a); and 8 CFR 2.1.
---------------------------------------------------------------------------
C. Summary of the Final Rule Provisions
This final rule adds a new section 8 CFR 212.19 to provide guidance
with respect to the use of parole for entrepreneurs of start-up
entities based upon significant public benefit. An individual seeking
to operate and grow his or her start-up entity in the United States
would generally need to demonstrate the following to be considered for
a discretionary grant of parole under this final rule:
1. Formation of New Start-Up Entity. The applicant has recently
formed a new entity in the United States that has lawfully done
business since its creation and has substantial potential for rapid
growth and job creation. An entity may be considered recently formed if
it was created within the 5 years immediately preceding the date of the
filing of the initial parole application. See 8 CFR 219.12(a)(2), 8 CFR
103.2(a)(7).
2. Applicant is an Entrepreneur. The applicant is an entrepreneur
of the start-up entity who is well-positioned to advance the entity's
business. An applicant may meet this standard by providing evidence
that he or she: (1) Possesses a significant (at least 10 percent)
ownership interest in the entity at the time of adjudication of the
initial grant of parole; and (2) has an active and central role in the
operations and future growth of the entity, such that his or her
knowledge, skills, or experience would substantially assist the entity
in conducting and growing its business in the United States. See final
8 CFR 212.19(a)(1). Such an applicant cannot be a mere investor.
3. Significant U.S. Capital Investment or Government Funding. The
applicant can further validate, through reliable supporting evidence,
the entity's substantial potential for rapid growth and job creation.
An applicant may be able to satisfy this criterion in one of several
ways:
a. Investments from established U.S. investors. The applicant may
show that the entity has received significant investment of capital
from certain qualified U.S. investors with established records of
successful investments. An applicant would generally be able to meet
this standard by demonstrating that the start-up entity has received
investments of capital totaling $250,000 or more from established U.S.
investors (such as venture capital firms, angel investors, or start-up
accelerators) with a history of substantial investment in successful
start-up entities.
b. Government grants. The applicant may show that the start-up
entity has received significant awards or grants from Federal, State or
local government entities with expertise in economic development,
research and development, or job creation. An applicant would generally
be able to meet this standard by demonstrating that the start-up entity
has received monetary awards or grants totaling $100,000 or more from
government entities that typically provide such funding to U.S.
businesses for economic, research and development, or job creation
purposes.
c. Alternative criteria. The final rule provides alternative
criteria under which an applicant who partially meets one or more of
the above criteria related to capital investment or government funding
may be considered for parole under this rule if he or she provides
additional reliable and compelling evidence that they would provide a
significant public benefit to the United States. Such evidence must
serve as a compelling validation of the entity's substantial potential
for rapid growth and job creation.
This final rule states that an applicant who meets the above
criteria (and his or her spouse and minor, unmarried children,\2\ if
any) generally may be considered under this rule for a discretionary
grant of parole lasting up to 30 months (2.5 years) based on the
significant public benefit that would be provided by the applicant's
(or family's) parole into the United States. An applicant will be
required to file a new application specifically tailored for
entrepreneurs to demonstrate eligibility for parole based upon
significant public benefit under this rule, along with applicable fees.
Applicants will also be required to appear for collection of biometric
information. No more than three entrepreneurs may receive parole with
respect to any one qualifying start-up entity.
---------------------------------------------------------------------------
\2\ The terms ``child'' and ``children'' in this proposed rule
have the same meaning as they do under section 101(b)(1) of the INA,
8 U.S.C. 1101(b)(1) (defining a child as one who is unmarried and
under twenty-one years of age).
---------------------------------------------------------------------------
USCIS adjudicators will consider the totality of the evidence,
including evidence obtained by USCIS through background checks and
other means, to determine whether the applicant has satisfied the above
criteria, whether the specific applicant's parole would provide a
significant public benefit, and whether negative factors exist that
warrant denial of parole as a matter of discretion. To grant parole,
adjudicators will be required to conclude, based on the totality of the
circumstances, that both: (1) The applicant's parole would provide a
significant public benefit, and (2) the applicant merits a grant of
parole as a matter of discretion.
If parole is granted, the entrepreneur will be authorized for
employment incident to the grant of parole, but only with respect to
the entrepreneur's start-up entity. The entrepreneur's spouse and
children, if any, will not be authorized for employment incident to the
grant of parole, but the entrepreneur's spouse, if paroled into the
United States pursuant to 8 CFR 212.19, will be permitted to apply for
employment authorization consistent with new 8 CFR 274a.12(c)(34). DHS
retains the authority to revoke any such grant of parole at any time as
a matter of discretion or if DHS determines that parole no longer
provides a significant public benefit, such as when the entity has
ceased operations in the United States or DHS has reason to believe
that the approved application involves fraud or misrepresentation. See
new 8 CFR 212.19(k).
As noted, the purpose of this parole process is to provide
qualified entrepreneurs of high-potential start-up entities in the
United States with the improved ability to conduct research and
development and expand the entities' operations in the United States so
that our nation's economy may
[[Page 5240]]
benefit from such development and expansion, including through
increased capital expenditures, innovation, and job creation. The final
rule allows individuals granted parole under this rule to be considered
for re-parole for an additional period of up to 30 months (2.5 years)
if, and only if, they can demonstrate that their entities have shown
signs of significant growth since the initial grant of parole and such
entities continue to have substantial potential for rapid growth and
job creation.
An applicant under this rule will generally need to demonstrate the
following to be considered for a discretionary grant of an additional
period of parole:
1. Continuation of Start-Up Entity. The entity continues to be a
start-up entity as defined by the proposed rule. For purposes of
seeking re-parole, an applicant may be able to meet this standard by
showing that the entity: (a) Has been lawfully operating in the United
States during the period of parole; and (b) continues to have
substantial potential for rapid growth and job creation.
2. Applicant Continues to Be an Entrepreneur. The applicant
continues to be an entrepreneur of the start-up entity who is well-
positioned to advance the entity's business. An applicant may meet this
standard by providing evidence that he or she: (a) Continues to possess
a significant (at least 5 percent) ownership interest in the entity at
the time of adjudication of the grant of re-parole; and (b) continues
to have an active and central role in the operations and future growth
of the entity, such that his or her knowledge, skills, or experience
would substantially assist the entity in conducting and continuing to
grow its business in the United States. This reduced ownership amount
takes into account the need of some successful start-up entities to
raise additional venture capital investment by selling ownership
interest during their initial years of operation.
3. Significant U.S. Investment/Revenue/Job Creation. The applicant
further validates, through reliable supporting evidence, the start-up
entity's continued potential for rapid growth and job creation. An
applicant may be able to satisfy this criterion in one of several ways:
a. Additional Investments or Grants. The applicant may show that
during the initial period of parole the start-up entity received
additional substantial investments of capital, including through
qualified investments from U.S. investors with established records of
successful investments; significant awards or grants from U.S.
government entities that regularly provide such funding to start-up
entities; or a combination of both. An applicant would generally be
expected to demonstrate that the entity received at least $500,000 in
additional qualifying funding during the initial parole period. As
noted previously, any private investment that the applicant is relying
upon as evidence that the investment criterion has been met must be
made by qualified U.S. investors (such as venture capital firms, angel
investors, or start-up accelerators) with a history of substantial
investment in successful start-up entities. Government awards or grants
must be from U.S. federal, state or local government entities with
expertise in economic development, research and development, or job
creation.
b. Revenue generation. The applicant may show that the start-up
entity has generated substantial and rapidly increasing revenue in the
United States during the initial parole period. To satisfy this
criterion, an applicant will need to demonstrate that the entity
reached at least $500,000 in annual revenue, with average annualized
revenue growth of at least 20 percent, during the initial parole
period.
c. Job creation. The applicant may show that the start-up entity
has demonstrated substantial job creation in the United States during
the initial parole period. To satisfy this criterion, an applicant will
need to demonstrate that the entity created at least 5 full-time jobs
for U.S. workers during the initial parole period.
d. Alternative criteria. As with initial parole, the final rule
includes alternative criteria under which an applicant who partially
meets one or more of the above criteria related to capital investment,
revenue generation, or job creation may be considered for re-parole
under this rule if he or she provides additional reliable and
compelling evidence that his or her parole will continue to provide a
significant public benefit. As discussed above, such evidence must
serve as a compelling validation of the entity's substantial potential
for rapid growth and job creation.
As indicated above, an applicant who generally meets the above
criteria and merits a favorable exercise of discretion may be granted
an additional 30-month period of re-parole, for a total maximum period
of 5 years of parole under 8 CFR 212.19, to work with the same start-up
entity based on the significant public benefit that would be served by
his or her continued parole in the United States. No more than three
entrepreneurs (and their spouses and children) may receive such
additional periods of parole with respect to any one qualifying entity.
As with initial parole applications, USCIS adjudicators will
consider the totality of the evidence, including evidence obtained by
USCIS through verification methods, to determine whether the applicant
has satisfied the above criteria and whether his or her continued
parole would provide a significant public benefit. To be re-paroled,
adjudicators will be required to conclude, based on the totality of the
circumstances, both: (1) That the applicant's continued parole would
provide a significant public benefit, and (2) that the applicant
continues to merit parole as a matter of discretion. If the applicant
is re-paroled, DHS retains the authority to revoke parole at any time
as a matter of discretion or if DHS determines that parole no longer
provides a significant public benefit, such as when the entity has
ceased operations in the United States or DHS believes that the
application involved fraud or made material misrepresentations.
The entrepreneur and any dependents granted parole under this
program will be required to depart the United States when their parole
periods have expired or have otherwise been terminated, unless such
individuals are otherwise eligible to lawfully remain in the United
States. At any time prior to reaching the 5-year limit for parole under
this final rule, such individuals may apply for any immigrant or
nonimmigrant classification for which they may be eligible (such as
classification as an O-1 nonimmigrant or as a lawful permanent resident
pursuant to an EB-2 National Interest Waiver). Because parole is not
considered an admission to the United States, parolees are ineligible
to adjust or change their status in the United States under many
immigrant or nonimmigrant visa classifications. For example, if such
individuals are approved for a nonimmigrant or employment-based
immigrant visa classification, they would generally need to depart the
United States and apply for a visa with the Department of State (DOS)
for admission to the United States as a nonimmigrant or lawful
permanent resident.
Finally, DHS is making conforming changes to the employment
authorization regulations at 8 CFR 274a.12(b) and (c), the employment
eligibility verification regulations at 8 CFR 274a.2(b), and fee
regulations at 8 CFR 103.7(b)(i). The final rule amends 8 CFR
274a.12(b) by: (1) Adding entrepreneur parolees to the classes of
[[Page 5241]]
aliens authorized for employment incident to their immigration status
or parole, and (2) providing temporary employment authorization for
those applying for re-parole. The final rule amends 8 CFR 274a.12(c) by
extending eligibility for employment authorization to the spouse of an
entrepreneur paroled into the United States under 8 CFR 212.19. The
final rule amends 8 CFR 274a.2(b) by designating the entrepreneur's
foreign passport and Arrival/Departure Record (Form I-94) indicating
entrepreneur parole as acceptable evidence for employment eligibility
verification (Form I-9) purposes.\3\ The final rule also amends 8 CFR
103.7(b)(i) by including the fee for the new Application for
Entrepreneur Parole form.
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\3\ Additionally, DHS is making a technical change to this
section by adding the Department of State (DOS) Consular Report of
Birth Abroad (Form FS-240) to the regulatory text and to the ``List
C'' listing of acceptable documents for Form I-9 verification
purposes. This rule departs from the Notice of Proposed Rulemaking
by not adding ``or successor form'' after Form FS-240. DHS
determined that inclusion of the phrase is unnecessary and may cause
confusion in the future.
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D. Summary of Changes From the Notice of Proposed Rulemaking
Following careful consideration of public comments received,
including relevant data provided by stakeholders, DHS has made several
modifications to the regulatory text proposed in the Notice of Proposed
Rulemaking (NPRM) published in the Federal Register on August 31, 2016.
See 81 FR 60129. Those changes include the following:
Minimum Investment Amount. In the final rule, DHS is
responding to public comment by revising proposed 8 CFR
212.19(b)(2)(ii)(B)(1), a provision that identifies the qualifying
investment amount required from one or more qualified investors. In the
NPRM, DHS proposed a minimum investment amount of $345,000. Based on
data provided by the public, DHS is revising this figure to $250,000.
Thus, under the final rule, an applicant would generally be able to
meet the investment standard by demonstrating that the start-up entity
has received investments of capital totaling $250,000 or more from
established U.S. investors (such as venture capital firms, angel
investors, or start-up accelerators) with a history of substantial
investment in successful start-up entities. In addition, DHS has
increased the timeframe during which the qualifying investments must be
received from 365 days to 18 months immediately preceding the filing of
an application for initial parole.
Definition of Entrepreneur: Ownership Criteria. In the
final rule, DHS is revising proposed 8 CFR 212.19(a)(1), a provision
that defines the term ``entrepreneur,'' and establishes a minimum
ownership percentage necessary to meet the definition. In the NPRM, DHS
proposed that the entrepreneur must have an ownership interest of at
least 15 percent for initial parole, and 10 percent for re-parole. In
response to public comment, DHS is modifying this requirement to allow
individuals who have an ownership interest of at least 10 percent in
the start-up entity at the time of adjudication of the initial grant of
parole, and at least a 5 percent ownership interest at the time of
adjudication of a subsequent period of re-parole, to qualify under this
definition.
Qualified Investment Definition. DHS is revising proposed
8 CFR 212.19(a)(4), which establishes the definition of a qualified
investment. In the NPRM, DHS proposed that the term ``qualified
investment'' means an investment made in good faith, and that is not an
attempt to circumvent any limitations imposed on investments under this
section, of lawfully derived capital in a start-up entity that is a
purchase from such entity of equity or convertible debt issued by such
entity. In response to public comment, DHS is modifying this definition
to include other securities that are convertible into equity issued by
such an entity and that are commonly used in financing transactions
within such entity's industry.
Qualified Investor Definition. DHS is revising proposed 8
CFR 212.19(a)(5), which establishes the definition of a qualified
investor. In the NPRM, DHS proposed that an individual or organization
may be considered a qualified investor if, during the preceding 5
years: (i) The individual or organization made investments in start-up
entities in exchange for equity or convertible debt in at least 3
separate calendar years comprising a total within such 5-year period of
no less than $1,000,000; and (ii) subsequent to such investment by such
individual or organization, at least 2 such entities each created at
least 5 qualified jobs or generated at least $500,000 in revenue with
average annualized revenue growth of at least 20 percent. In this final
rule, the minimum investment amount has been decreased from the
originally proposed $1,000,000 to $600,000. The requirement that
investments be made in at least 3 separate calendar years has also been
removed from this final rule. DHS is also making revisions to the form
of investment made by the individual or organization consistent with
the change to the qualified investment definition by adding ``or other
security convertible into equity commonly used in financing
transactions within their respective industries.''
Start-up Entity Definition. In the final rule, DHS is
revising the definition of a start-up entity as proposed in 8 CFR
212.19(a)(2). In the NPRM, DHS proposed that an entity may be
considered recently formed if it was created within the 3 years
preceding the date of filing of the initial parole request. In response
to public comment, DHS is modifying this provision so that an entity
may be considered recently formed if it was created within the 5 years
immediately preceding the filing date of the initial parole request.
Additionally, for purposes of paragraphs (a)(3) and (a)(5) of this
section, which pertain to the definitional requirements to be a
qualified investor or qualified government award or grant,
respectively, DHS made corresponding changes in this final rule such
that an entity may be considered recently formed if it was created
within the 5 years immediately preceding the receipt of the relevant
grant(s), award(s), or investment(s).
Job Creation Requirement. In the final rule, DHS is
revising proposed 8 CFR 212.19(c)(2)(ii)(B)(2), a provision that
identifies the minimum job creation requirement under the general re-
parole criteria. In the NPRM, DHS proposed that an entrepreneur may be
eligible for an additional period of parole by establishing that his or
her start-up entity has created at least 10 qualified jobs during the
initial parole period. In response to public comment, DHS is modifying
this provision so that an entrepreneur may qualify for re-parole if the
start-up entity created at least 5 qualified jobs with the start-up
entity during the initial parole period.
Revenue Generation. In the final rule, DHS is clarifying
proposed 8 CFR 212.19(c)(2)(ii)(B)(3), a provision that identifies the
minimum annual revenue requirement under the general re-parole
criteria. DHS has clarified that for the revenue to be considered for
purposes of re-parole, it must be generated in the United States.
Parole Validity Periods. In the final rule, DHS is
revising proposed 8 CFR 212.19(d)(2) and (3), which are provisions that
identify the length of the initial and re-parole periods. In the NPRM,
DHS proposed (1) a potential initial period of parole of up to 2 years
beginning on the date the request is approved by USCIS and (2) a
potential period of re-parole of up to 3 years beginning on the date of
the expiration
[[Page 5242]]
of the initial parole period. First, DHS revised 8 CFR 212.19(d)(2) to
correct that the initial parole period would begin running on the date
the individual is initially paroled into the United States. Second, in
response to public comment, DHS revised 8 CFR 212.19(d)(2) and (3) to
provide 2 potential parole periods of up to 30 months each, rather than
an initial 2-year period followed by a potential 3-year period of re-
parole. Specifically, 8 CFR 212.19(d)(2) now provides that an applicant
who meets the eligibility criteria (and his or her spouse and minor,
unmarried children, if any) may be considered under this rule for a
discretionary grant of an initial parole period of up to 30 months (2.5
years) based on the significant public benefit that would be provided
by the applicant's (or family's) parole into the United States. DHS
also revised in this final rule the period of re-parole in 8 CFR
212.19(d)(3) to reduce the period of re-parole from 3 years to 30
months in order to extend the initial parole period, while still
maintaining the overall 5-year period of parole limitation.
Material Changes. In the final rule, DHS is revising
proposed 8 CFR 212.19(a)(10), a provision that defines material
changes. The final rule adds the following to the definition of
material changes: ``a significant change with respect to ownership and
control of the start-up entity.'' This reflects a change from the
originally proposed language of any significant change to the
entrepreneur's role in or ownership and control in the start-up entity
or any other significant change with respect to ownership and control
of the start-up entity. Additionally, the final rule at 8 CFR
212.19(a)(1) adds language that permits the entrepreneur during the
initial parole period to reduce his or her ownership interest, as long
as at least 5 percent ownership is maintained. This provision was
revised in response to a number of public comments that requested that
DHS reconsider how and when material changes should be reported.
Reporting of Material Changes. In the final rule, DHS is
revising proposed 8 CFR 212.19(j), a provision that describes reporting
of material changes. DHS is revising 8 CFR 212.19(j) to allow DHS to
provide additional flexibility in the future with respect to the manner
in which material changes are reported to DHS. The final rule also
makes conforming changes based on changes to the definition of
entrepreneur.
Termination of Parole. In the final rule, DHS is revising
proposed 8 CFR 212.19(k)(2), a provision that describes automatic
termination of parole. The final rule makes conforming revisions to
this provision based on changes to the definition of entrepreneur and
to the material change provisions.
E. Summary of Costs and Benefits
DHS does not anticipate that this rule will generate significant
costs and burdens to private or public entities. Costs of the rule stem
from filing fees and opportunity costs associated with applying for
parole, and the requirement that the entrepreneur notify DHS of any
material changes.
DHS estimates that 2,940 entrepreneurs will be eligible for parole
annually and can apply using the Application for Entrepreneur Parole
(Form I-941). Each applicant for parole will face a total filing cost--
including the application form fee, biometric filing fee, travel costs,
and associated opportunity costs--of $1,591, resulting in a total cost
of $4,678,336 (undiscounted) for the first full year the rule will take
effect and any subsequent year. Additionally, dependent family members
(spouses and children) seeking parole with the principal applicant will
be required to file an Application for Travel Document (Form I-131) and
submit biographical information and biometrics. DHS estimates
approximately 3,234 dependent spouses and children could seek parole
based on the estimate of 2,940 principal applicants. Each spouse and
child 14 years of age and older seeking parole will face a total cost
of $765 per applicant,\4\ for a total aggregate cost of $2,474,914.\5\
Additionally, spouses who apply for work authorization via an
Application for Employment Authorization (Form I-765) will incur a
total additional cost of $446 each. Based on the same number of
entrepreneurs, the estimated 2,940 spouses \6\ will incur total costs
of $1,311,830 (undiscounted). The total cost of the rule to include
direct filing costs and monetized non-filing costs is estimated to be
$8,136,571 annually.
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\4\ On October 24, 2016, U.S. Citizenship and Immigration
Services published a final rule establishing a new fee schedule for
immigration benefits and services (81 FR 73292). The new filing fees
for Form I-131 and Form I-765, $575 and $410, respectively, will be
effective on December 23, 2016. This final rule uses those new
filing fees in estimating costs to potential applicants under this
rule.
\5\ For parole requests for children under the age of 14, only
the filing fee will be required, as such children do not appear for
biometric collection. Applicants under the age of 14 and over the
age of 79 are not required to be fingerprinted. However, they may
still be required to attend a biometrics appointment in order to
have their photographs and signatures captured.
\6\ DHS used a simple one-to-one mapping of entrepreneurs to
spouses to obtain 2,940 spouses, the same number as entrepreneur
parolees.
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DHS anticipates that establishing a parole process for those
entrepreneurs who stand to provide a significant public benefit will
advance the U.S. economy by enhancing innovation, generating capital
investments, and creating jobs. DHS does not expect significant
negative consequences or labor market impacts from this rule; indeed,
DHS believes this rule will encourage entrepreneurs to pursue business
opportunities in the United States rather than abroad, which can be
expected to generate significant scientific, research and development,
and technological impacts that could create new products and produce
positive spillover effects to other businesses and sectors. The impacts
stand to benefit the economy by supporting and strengthening high-
growth, job-creating businesses in the United States.
F. Effective Date
This final rule will be effective on July 17, 2017, 180 days from
the date of publication in the Federal Register. DHS has determined
that this 180-day period is necessary to provide USCIS with a
reasonable period to ensure resources are in place to process and
adjudicate Applications for Entrepreneur Parole filed by eligible
entrepreneurs and related applications filed by eligible dependents
under this rule without sacrificing the quality of customer service for
all USCIS stakeholders. USCIS believes it will thus be able to
implement this rule in a manner that will avoid delays of processing
these and other applications.
II. Background
A. Discretionary Parole Authority
The Secretary of Homeland Security has discretionary authority to
parole into the United States temporarily ``under conditions as he may
prescribe only on a case-by-case basis for urgent humanitarian reasons
or significant public benefit any individual applying for admission to
the United States,'' regardless of whether the alien is inadmissible.
INA section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A).\7\ The Secretary's
parole authority is expansive. Congress did not define the phrase
``urgent humanitarian reasons or significant public benefit,''
entrusting interpretation and application of those
[[Page 5243]]
standards to the Secretary. Aside from requiring case-by-case
determinations, Congress limited the parole authority by restricting
its use with respect to two classes of applicants for admissions: (1)
Aliens who are refugees (unless the Secretary determines that
``compelling reasons in the public interest with respect to that
particular alien require that the alien be paroled . . . rather than be
admitted as a refugee'' under INA section 207, 8 U.S.C. 1157), see INA
section 212(d)(5)(B), 8 U.S.C. 1182(d)(5)(B); and (2) certain alien
crewmen during a labor dispute in specified circumstances (unless the
Secretary ``determines that the parole of such alien is necessary to
protect the national security of the United States''), INA section
214(f)(2)(A), 8 U.S.C. 1184(f)(2)(A).
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\7\ Although section 212(d)(5) continues to refer to the
Attorney General, the parole authority now resides exclusively with
the Secretary of Homeland Security. See Matter of Arrabally, 25 I. &
N. Dec. 771, 777 n.5 (BIA 2012).
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Parole decisions are discretionary determinations and must be made
on a case-by-case basis consistent with the INA. To exercise its parole
authority, DHS must determine that an individual's parole into the
United States is justified by urgent humanitarian reasons or
significant public benefit. Even when one of those standards would be
met, DHS may nevertheless deny parole as a matter of discretion based
on other factors.\8\ In making such discretionary determinations, USCIS
considers all relevant information, including any criminal history or
other serious adverse factors that would weigh against a favorable
exercise of discretion.
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\8\ The denial of parole is not subject to judicial review. See
INA section 242(a)(2)(B)(ii), 8 U.S.C. 1252(a)(2)(B)(ii); Bolante v.
Keisler, 506 F.3d 618, 621 (7th Cir. 2007).
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Parole is not an admission to the United States. See INA sections
101(a)(13)(B), 212(d)(5)(A), 8 U.S.C. 1101(a)(13)(B), 1182(d)(5)(A);
see also 8 CFR 1.2 (``An arriving alien remains an arriving alien even
if paroled pursuant to section 212(d)(5) of the Act, and even after any
such parole is terminated or revoked.''). Parole may also be terminated
at any time in DHS's discretion, consistent with existing regulations;
in those cases, the individual is ``restored to the status that he or
she had at the time of parole.'' 8 CFR 212.5(e); see also INA section
212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A).\9\
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\9\ The grounds for termination set forth in 212.19(k) are in
addition to the general grounds for termination of parole described
at 8 CFR 212.5(e).
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DHS regulations at 8 CFR 212.5 generally describe DHS's
discretionary parole authority, including the authority to set the
terms and conditions of parole. Some conditions are described in the
regulations, including requiring reasonable assurances that the parolee
will appear at all hearings and will depart from the United States when
required to do so. See 8 CFR 212.5(d).
Each of the DHS immigration components--USCIS, U.S. Customs and
Border Protection (CBP), and U.S. Immigration and Customs Enforcement
(ICE)--has been delegated the authority to parole applicants for
admission in accordance with section 212(d)(5) of the INA, 8 U.S.C.
1182(d)(5). See 8 CFR 212.5(a). The parole authority is often utilized
to permit an individual who is outside the United States to travel to
and come into the United States without a visa. USCIS, however, also
accepts requests for ``advance parole'' by individuals who seek
authorization to depart the United States and return to the country
pursuant to parole in the future. See 8 CFR 212.5(f); Application for
Travel Document (Form I-131). Aliens who seek parole as entrepreneurs
under this rule may need to apply for advance parole if at the time of
application they are present in the United States after admission in,
for example, a nonimmigrant classification, as USCIS is unable to grant
parole to aliens who are not ``applicants for admission.'' See INA
section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A); see also INA section
235(a)(1), 8 U.S.C. 1225(a)(1) (describing ``applicants for
admission''). Advance authorization of parole by USCIS does not
guarantee that the individual will be paroled by CBP upon his or her
appearance at a port of entry.\10\ Rather, with a grant of advance
parole, the individual is issued a document authorizing travel (in lieu
of a visa) indicating ``that, so long as circumstances do not
meaningfully change and the DHS does not discover material information
that was previously unavailable, . . . DHS's discretion to parole him
at the time of his return to a port of entry will likely be exercised
favorably.'' \11\
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\10\ See Matter of Arrabally, 25 I. & N. Dec. at 779 n.6 (citing
71 FR 27585, 27586 n.1 (May 12, 2006) (``[A] decision authorizing
advance parole does not preclude denying parole when the alien
actually arrives at a port-of-entry, should DHS determine that
parole is no longer warranted.'')).
\11\ Id.
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Currently, upon an individual's arrival at a U.S. port of entry
with a parole travel document (e.g., a Department of State (DOS) foil,
Authorization for Parole of an Alien into the United States (Form I-
512L), or an Employment Authorization Document (Form I-766)), a CBP
officer at a port of entry inspects the prospective parolee. If parole
is authorized, the CBP officer issues an Arrival/Departure Record (Form
I-94) documenting the grant of parole and the length of the parolee's
authorized parole period. See 8 CFR 235.1(h)(2). CBP retains the
authority to deny parole to a parole applicant or to modify the length
of advance parole authorized by USCIS. See 8 CFR 212.5(c).
Because parole does not constitute an admission, individuals may be
paroled into the United States even if they are inadmissible under
section 212(a) of the INA, 8 U.S.C. 1182(a). Further, parole does not
provide a parolee with nonimmigrant status or lawful permanent resident
status. Nor does it provide the parolee with a basis for changing
status to that of a nonimmigrant or adjusting status to that of a
lawful permanent resident, unless the parolee is otherwise eligible.
Under current regulations, once paroled into the United States, a
parolee is eligible to request employment authorization from USCIS by
filing a Form I-765 application with USCIS. See 8 CFR 274a.12(c)(11).
If employment authorization is granted, USCIS issues the parolee an
employment authorization document (EAD) with an expiration date that is
commensurate with the period of parole on the parolee's Arrival/
Departure Record (Form I-94). The parolee may use this EAD to
demonstrate identity and employment authorization to an employer for
Form I-9 verification purposes as required by section 274A(a) and (b)
of the INA, 8 U.S.C. 1324a(a) and (b). Under current regulations, the
parolee is not employment authorized by virtue of being paroled, but
instead only after receiving a discretionary grant of employment
authorization from USCIS based on the Application for Employment
Authorization.
Parole will terminate automatically upon the expiration of the
authorized parole period or upon the departure of the individual from
the United States. See 8 CFR 212.5(e)(1). Parole also may be terminated
on written notice when DHS determines that the individual no longer
warrants parole or through the service of a Notice to Appear (NTA). See
8 CFR 212.5(e)(2)(i).
B. Final Rule
Following careful consideration of public comments received, DHS
has made several modifications to the regulatory text proposed in the
NPRM (as described above in Section I.C.). The rationale for the
proposed rule and the reasoning provided in the background section of
that rule remain valid with respect to these regulatory amendments.
Section III of this final rule includes a detailed summary and analysis
of public comments that are pertinent to the proposed rule and DHS's
role in
[[Page 5244]]
administering the International Entrepreneur Rule. A brief summary of
comments deemed by DHS to be out of scope or unrelated to this
rulemaking, making a detailed substantive response unnecessary, is
provided in Section III.K. Comments may be reviewed at the Federal
Docket Management System (FDMS) at https://www.regulations.gov, docket
number USCIS-2015-0006.
III. Public Comments on the Proposed Rule
A. Summary of Public Comments
In response to the proposed rule, DHS received 763 comments during
the 45-day public comment period. Of these, 43 comments were duplicate
submissions and approximately 242 were letters submitted through mass
mailing campaigns. As those letters were sufficiently unique, DHS
considered all of these comment submissions. Commenters consisted
primarily of individuals but also included startup incubators,
companies, venture capital firms, law firms and representatives from
State and local governments. Approximately 51 percent of commenters
expressed support for the rule and/or offered suggestions for
improvement. Nearly 46 percent of commenters expressed general
opposition to the rule without suggestions for improvement. For
approximately 3 percent of the public comments, DHS could not ascertain
whether the commenter supported or opposed the proposed rule.
DHS has reviewed all of the public comments received in response to
the proposed rule and addresses relevant comments in this final rule.
DHS's responses are grouped by subject area, with a focus on the most
common issues and suggestions raised by commenters.
B. Legal Authority
Comments. One commenter supported DHS's stated authority for
promulgating this regulation and said that the INA grants the Secretary
of Homeland Security the authority to establish policies governing
parole and that efforts to reduce barriers to entrepreneurship via
regulatory reform directly addresses DHS's mandate, ``to ensure that
the overall economic security of the United States is not diminished by
efforts, activities, and programs aimed at securing the homeland.'' On
the other hand, some commenters questioned DHS's authority to implement
this rule. A commenter asserted that the rule created a new visa
category which is under the exclusive purview of Congress, and
therefore an illegal extension of authority by the executive branch.
Another commenter indicated that the proposed rule is too vague
regarding whether ``the agency intends to grant parole to aliens
already present in the United States,'' and questioned whether the
proposed exercise of parole authority is supported by legislative
history, is consistent with the INA's overall statutory scheme, and
whether ``significant public benefit parole'' as outlined in this rule
is ``arbitrary and capricious.''
Response. DHS agrees with the commenter that contended that the
Secretary has authority to promulgate this rule. As noted above, DHS's
authority to promulgate this rule arises primarily from sections
101(b)(1)(F) and 402(4) of the HSA; sections 103(a)(1) and (3) of the
INA, 8 U.S.C. 1103(a)(1), (3); section 212(d)(5) of the INA, 8 U.S.C.
1182(d)(5); and section 274A(h)(3)(B) of the INA, 8 U.S.C.
1324a(h)(3)(B). The Secretary retains broad statutory authority to
exercise his discretionary parole authority based upon ``significant
public benefit.''
DHS disagrees with the comment asserting that the proposed rule
would effectively create a new visa category, which only Congress has
the authority to do. See INA section 101(a)(15), 8 U.S.C. 1101(a)(15)
(identifying nonimmigrant categories). Congress expressly empowered DHS
to grant parole on a case-by-case basis, and nothing in this rule uses
that authority to establish a new nonimmigrant classification. Among
other things, individuals who are granted parole--which can be
terminated at any time in the Secretary's discretion--are not
considered to have been ``admitted'' to the United States, see INA
sections 101(a)(13)(B), 212(d)(5)(A), 8 U.S.C. 1101(a)(13)(B),
1182(d)(5)(A); and cannot change to a nonimmigrant category as a
parolee, see INA section 248(a), 8 U.S.C. 1258(a). Nor does parole
confer lawful permanent resident status. To adjust status to that of a
lawful permanent resident, individuals generally must, among other
things, be admissible to the United States, have a family or
employment-based immigrant visa immediately available to them, and not
be subject to the various bars to adjustment of status. See INA section
245(a), (c), (k); 8 U.S.C. 1255(a), (c), (k); 8 CFR 245.1.
DHS further disagrees with the comment that this rule is
inconsistent with the legislative history on parole. Under current law,
Congress has expressly authorized the Secretary to grant parole on a
case-by-case basis for urgent humanitarian reasons or significant
public benefit. The statutory language in place today is somewhat more
restrictive than earlier versions of the parole authority, which did
not always require case-by-case review and now includes additional
limits on the use of parole for refugees and certain alien crewmen. See
INA section 212(d)(5)(B), 8 U.S.C. 1182(d)(5)(B) (refugees); INA
section 214(f)(2)(A), 8 U.S.C. 1184(f)(2)(A) (alien crewmen); Illegal
Immigration Reform and Immigrant Responsibility Act of 1996, Public Law
104-208, div. C, sec. 602(a)-(b), 110 Stat. 3009-689 (1996) (changing
the standard for parole). But the statute clearly continues to
authorize the granting of parole. Across Administrations, moreover, it
has been accepted that the Secretary can identify classes of
individuals to consider for parole so long as each individual decision
is made on a case-by-case basis according to the statutory criteria.
See, e.g., 8 CFR 212.5(b) (as amended in 1997); Cuban Family
Reunification Parole Program, 72 FR 65,588 (Nov. 21, 2007). This rule
implements the parole authority in that way.
In addition to the concerns described above, one commenter argued
that the proposed rule did not clearly explain whether ``the agency
intends to grant parole to aliens already present in the United
States.'' DHS believes it is clear under this rule that an individual
who is present in the United States as a nonimmigrant based on an
inspection and admission is not eligible for parole without first
departing the United States and appearing at a U.S. port of entry to be
paroled into United States. See INA sections 212(d)(5)(A), 235(a)(1); 8
U.S.C. 1182(d)(5)(A), 1225(a)(1). As further discussed in section
III.H. of this rule, moreover, DHS does not contemplate using this rule
to grant requests for parole in place for initial requests for parole.
Comment: A commenter objected to the extension of employment
authorization by this rule to entrepreneur parolees for the sole
purpose of engaging in entrepreneurial employment, stating that DHS is
barred from doing so given the comprehensive legislative scheme for
employment-based temporary and permanent immigration.
Response: DHS disagrees with the commenter. Under a plain reading
of INA section 103(a), 8 U.S.C. 1103(a), the Secretary is provided with
broad discretion to administer and enforce the Nation's immigration
laws and broad authority to ``establish such regulations . . . and
perform such other acts as he deems necessary for carrying out his
authority under the [INA],'' see INA section 103(a)(3), 8 U.S.C.
1103(a)(3). Further, the specific definitional
[[Page 5245]]
provision at section 274A(h)(3)(B) of the INA, 8 U.S.C. 1324a(h)(3)(B),
which was raised by the commenter, presumes that employment may be
authorized by the Secretary and not just by statute. See Arizona Dream
Act Coal. v. Brewer, 757 F.3d 1053, 1062 (9th Cir. 2014) (``Congress
has given the Executive Branch broad discretion to determine when
noncitizens may work in the United States.''); Perales v. Casillas, 903
F.2d 1043, 1048, 1050 (5th Cir. 1990) (describing the authority
recognized by INA 274A(h)(3) as ``permissive'' and largely
``unfettered''). The fact that Congress has directed the Secretary to
authorize employment to specific classes of foreign nationals in
certain statutory provisions does not diminish the Secretary's broad
authority under other statutory provisions to administer the
immigration laws, including through the extension of employment
authorization. See generally 8 CFR 274a.12 (identifying, by regulation,
numerous ``classes of aliens authorized to accept employment'').
C. Significant Public Benefit
Comment: One commenter stated that the quality of the jobs created
should be a factor in determining whether the entrepreneur's parole
will provide a significant public benefit. The commenter suggested
formalizing some form of priority criteria.
Response: Under this final rule, evidence regarding job creation
may be considered in determining whether to parole an individual into
the United States for ``significant public benefit.'' An entrepreneur
may be considered for an initial period of parole if the entrepreneur's
start-up entity has received a qualifying investment or grant.
Alternatively, if the entity has received a lesser investment or grant
amount, the entrepreneur may still be considered for parole by
providing other reliable and compelling evidence of the start-up
entity's substantial potential for rapid growth and job creation.
Evidence pertaining to the creation of jobs, as well as the
characteristics of the jobs created (e.g., occupational classification
and wage level) may be considered by DHS in determining whether the
evidence, when combined with the amount of investment, grant or award,
establishes that the entrepreneur will provide a significant public
benefit to the United States. As with initial parole determinations,
evidence pertaining to the creation of jobs, as well as the
characteristics of the jobs created (e.g., occupational classification
and wage level) may be considered by DHS to determine whether the
entrepreneur should be granted re-parole.
Given the way job creation will already be considered, DHS believes
it is unnecessary to make ``job quality'' its own separate criterion in
determining whether to grant parole or re-parole. It is also unclear
how the commenter believes DHS should apply any such criterion. Under
this final rule, DHS will evaluate the totality of the circumstances,
including the evidence about job creation, in determining whether to
parole an individual into the United States for significant public
benefit.
D. Definitions
1. Entrepreneur--Ownership Criteria
Comments: Several commenters expressed concern with the 15 percent
``substantial ownership interest'' requirement in the definition of
``entrepreneur'' in the proposed rule. One such commenter said the 15
percent ``substantial ownership interest'' requirement is only
reasonable for smaller startups and proposed that the rule also
separately include a dollar amount to satisfy the ``substantial
ownership interest'' requirement (e.g., 15 percent ownership interest
or ownership interest valued at $150,000 or more). Several commenters
recommended that the final rule reduce the initial parole threshold
from 15 to 10 percent and reduce the re-parole threshold from 10 to 5
percent. Other commenters suggested that 10 percent ownership per
individual would be a more appropriate threshold because some start-ups
may be founded by teams of founders that need to split equity and
requiring more than 15 percent ownership might be too restrictive and
limit business creativity and growth.
Response: Consistent with the commenters' concerns and suggestions,
DHS is revising the definition of entrepreneur in this final rule to
reduce the ownership percentage that the individual must possess. See 8
CFR 212.19(a)(1). Based on further analysis, DHS believes that the
thresholds from the proposed rule could have unnecessarily impacted an
entrepreneur's ability to dilute his or her ownership interest to raise
additional funds and grow the start-up entity. In this final rule, an
individual may be considered to possess a substantial ownership
interest if he or she possesses at least a 10 percent ownership
interest in the start-up entity at the time of adjudication of the
initial grant of parole and possesses at least a 5 percent ownership
interest in the start-up entity at the time of adjudication of a
subsequent period of re-parole. DHS believes that the revised ownership
percentage requirements in this final rule adequately account for the
possibility of equity dilution, while ensuring that the individual
continues to have a substantial ownership interest in, and assumes more
than a nominal financial risk related to, the start-up entity.
Given that this is a new and complex process, DHS declines to adopt
a separate option of establishing substantial ownership interest based
on a valuation of the entrepreneur's ownership interest. DHS believes
that the percentages provided within the final rule offer clear
guidance to stakeholders and adjudicators as to what constitutes a
substantial ownership interest regardless of the industry involved.
Reliance upon valuations of an owner's interest would unnecessarily
complicate the adjudicative review process, could potentially increase
fraud and abuse, and may be burdensome for the applicant to obtain from
an independent and reliable source. DHS, therefore, believes that the
best indicator of an entrepreneur's ownership interest is the
individual's ownership percentage since that is easy for an applicant
to establish and provides an objective indicator for DHS to assess. DHS
has decided to take an incremental approach and will consider potential
modifications in the future after it has assessed the implementation of
the rule and its impact on operational resources.
2. Other Comments on Entrepreneur Definition
Comment: One commenter stated that, in defining who counts as an
``entrepreneur,'' the rule should take into account whether an
individual has been successful in the past, including by having
previously owned and developed businesses, generated more than a
certain amount of revenue, created more than a certain number of jobs,
or earned at least a certain amount.
Response: Under this final rule, evidence regarding an
entrepreneur's track record may be considered in determining whether to
parole an individual into the United States for ``significant public
benefit.'' The final rule's definition of entrepreneur requires the
applicant to show that he or she both: (1) Possesses a substantial
ownership interest in the start-up entity, and (2) has a central and
active role in the operations of that entity, such that the alien is
well-positioned, due to his or her knowledge, skills, or experience, to
substantially assist the entity with the growth and success of its
business. See new 8 CFR 212.19(a)(1). Some of the factors suggested by
the commenter are
[[Page 5246]]
relevant evidence that the applicant can submit to show that he or she
is well-positioned to substantially assist the entity with the growth
and success of its business. DHS will also evaluate the totality of the
evidence to determine whether an applicant's presence in the United
States will provide a significant public benefit and that he or she
otherwise merits a favorable exercise of discretion. Given the way an
entrepreneur's track record may already be considered on a case-by-case
basis, DHS believes it is unnecessary to make the specific factors
identified by the commenter their own separate criteria in determining
whether to grant parole or re-parole.
Comment: A few commenters recommended that DHS clarify the term
``well-positioned'' as used in the definition of ``entrepreneur.'' See
final 8 CFR 212.19(a)(1) (requiring an international entrepreneur to
prove that he or she ``is well-positioned, due to his or her knowledge,
skills, or experience, to substantially assist the entity with the
growth and success of its business''). The commenters believe that the
proposed rule did not explain how an applicant would demonstrate that
he or she is ``well-positioned.'' The commenters recommend that the
``substantial ownership interest'' test in the same provision should
provide a rebuttable presumption that the entrepreneur is ``well-
positioned'' and that the ``significant capital financing''
requirements reflect the market demand for the entrepreneur to grow the
business.
Response: DHS believes that both the proposed rule and this final
rule sufficiently explain how an applicant may establish that he or she
is ``well-positioned'' to grow the start-up entity. An applicant may
generally establish that he or she is well-positioned to advance the
entity's business by providing evidence that he or she: (1) Possesses a
significant (at least 10 percent) ownership interest in the entity at
the time of adjudication of the initial grant of parole, and (2) has an
active and central role in the operations and future growth of the
entity, such that his or her knowledge, skills, or experience would
substantially assist the entity in conducting and growing its business
in the United States. Such an applicant cannot be a mere investor. The
applicant must be central to the entity's business and well-positioned
to actively assist in the growth of that business, such that his or her
presence would help the entity create jobs, spur research and
development, or provide other benefits to the United States. Whether an
applicant has an ``active and central role,'' and therefore is well-
positioned to advance the entity's business, will be determined based
on the totality of the evidence provided on a case-by-case basis. Such
evidence may include:
Letters from relevant government agencies, qualified
investors, or established business associations with an understanding
of the applicant's knowledge, skills or experience that would advance
the entity's business;
news articles or other similar evidence indicating that
the applicant has received significant attention and recognition;
documentation showing that the applicant or entity has
been recently invited to participate in, is currently participating in,
or has graduated from one or more established and reputable start-up
accelerators;
documentation showing that the applicant has played an
active and central role in the success of prior start-up or other
relevant business entities;
degrees or other documentation indicating that the
applicant has knowledge, skills, or experience that would significantly
advance the entity's business;
documentation pertaining to intellectual property of the
start-up entity, such as a patent, that was obtained by the applicant
or as a result of the applicant's efforts and expertise;
a position description of the applicant's role in the
operations of the company; and
any other relevant, probative, and credible evidence
indicating the applicant's ability to advance the entity's business in
the United States.
Particularly given the way this evidence will be evaluated on a
case-by-case basis, and the need to ensure parole is justified by
significant public benefit, DHS declines to adopt the commenters'
suggestion of adopting a rebuttable presumption that certain applicants
meet the ``well-positioned'' requirement. The burden of proof remains
with the applicant.
Comment: One commenter representing a group of technology companies
recommended that DHS add the term ``intellectual property'' as a metric
that an adjudicator would take into consideration when determining the
``active and central role'' that the international entrepreneur
performs in the organization. The commenter noted that it had several
member companies that have non-citizen inventors on a key patent
application, and have had core intellectual property developed by non-
citizens, often within the university environment. In many of these
situations, the non-citizen inventors were unable to obtain work
authorization and join the emerging startup company, resulting in loss
of key technical ability, delay, and additional cost for the startup
company to achieve market success. The commenter believes this rule
could alleviate this investment risk.
Response: As discussed above, an applicant for parole under this
rule may provide any relevant, probative, and credible evidence
indicating the applicant's ability to advance the entity's business in
the United States. Such evidence includes documentation pertaining to
intellectual property of the start-up entity, such as a patent, that
was obtained by the applicant or as a result of the applicant's efforts
and expertise. DHS will consider such evidence to determine whether the
applicant performs, or will perform, an active and central role in the
start-up entity.
Given the breadth of evidence that can already be considered in
these determinations, DHS declines to amend the definition of
``entrepreneur'' in 8 CFR 212.19(a)(1) to include some consideration of
``intellectual property'' as a specific metric to determine if the
applicant will have an active and central role in the start-up entity.
DHS believes it is appropriate to allow for sufficient flexibility in
the definition for adjudicators to evaluate each case on its own
merits. Given the considerable range of entrepreneurial ventures that
might form the basis for an application for parole under this rule, DHS
believes that such flexibility is important to ensure that cutting edge
industries or groundbreaking ventures are not precluded from
consideration simply because of an overly rigid or narrow definition of
``entrepreneur.''
Comment: One commenter noted that DHS's inclusion of criteria in
section IV.B.1. of the NPRM, ``Recent Formation of a Start-Up Entity,''
is reminiscent of criteria used in the O-1 nonimmigrant classification
for individuals with extraordinary ability, except for the focus on
entrepreneurial endeavors. The commenter especially welcomed the final
``catch-all'' that referenced ``any other relevant, probative, and
credible evidence indicating the entity's potential for growth.'' The
commenter asserted that as it pertains to ``newspaper articles,'' one
of the major difficulties of the O-1 petition process is the lack of
awareness by adjudicators of tech-press publications, such as Recode or
TechCrunch. The commenter explained that coverage in these publications
is very valuable to startups, and forcing startups to garner
traditional media coverage in publications like the Wall Street Journal
or the New York
[[Page 5247]]
Times is often counterproductive towards the entrepreneur's success.
Response: DHS agrees with the commenter that the list of evidence
provided in the preamble to the NPRM and this final rule provides an
illustrative, non-exhaustive list of the types of evidence that might
be submitted by an applicant to establish that he or she meets the
definition of entrepreneur in 8 CFR 212.19(a)(1). Applicants may submit
any relevant, probative and credible evidence that demonstrates the
entity's potential for growth, including tech-press publications.
Comment: One commenter recommended broadening the proposed
requirement that the parolee play a central role in operations. The
commenter noted that the DHS November 2014 memorandum,\12\ which
initially directed USCIS to develop a proposed rule under the
Secretary's parole authority, refers to researchers, not just managers
or founders. The commenter stated that in the technology world,
``technical founders'' are key employees who lead the research and
development phase, and recommended that these technical founders be
included even if they are not managing overall operations. To keep this
expansion targeted, the commenter recommended requiring a technical
founder to have an advanced degree in a STEM field from a U.S.
institution of higher education.
---------------------------------------------------------------------------
\12\ Memorandum from Jeh Johnson, DHS Secretary, Policies
Supporting U.S. High-Skilled Business and Workers 4 (Nov. 20, 2014),
at https://www.dhs.gov/sites/default/files/publications/14_1120_memo_business_actions.pdf.
---------------------------------------------------------------------------
Response: DHS agrees that ``technical founders'' are often key
employees who play an important role in the development and success of
a start-up entity. DHS disagrees, however, with the commenter's
assertion that the definition of entrepreneur in 8 CFR 212.19(a)(1)
does not sufficiently encompass technical founders. Technical founders
can perform a central and active role in the operations of their start-
up entity, and may be well-positioned, due to their knowledge, skills,
or experience, to substantially assist the entity with the growth and
success of its business. The definition of ``entrepreneur'' is not
limited to those individuals who manage the overall operations of the
start-up entity. Thus, DHS believes it is unnecessary to broaden the
definition of ``entrepreneur'' in the way the commenter suggests.
Comment: One commenter suggested that the rule should provide a
clear-cut definition of a typical entrepreneur. This commenter asserted
that the draft rule does not adequately account for situations where a
typical entrepreneur partially qualifies or does not qualify for
parole, but nevertheless seeks to start a business in the United
States. The commenter stated that USCIS and the White House should plan
to have a separate case study team to evaluate each application.
Response: DHS believes that the rule provides a reasonable and
clear definition of an entrepreneur. This rule is not designed or
intended to provide parole to everyone who seeks to be an entrepreneur,
but will instead provide a framework for case-by-case determinations
based upon specified criteria for determining that a grant of parole in
this context provides a significant public benefit. The framework in
this rule is consistent with DHS's parole authority under INA section
212(a)(5), 8 U.S.C. 1182(a)(5), and is based on the statutory
authorization to provide parole for significant public benefit. Each
application for parole under this rule will be adjudicated by an
Immigration Services Officer trained on the requirements for
significant public benefit parole under 8 CFR 212.19. DHS believes that
a separate case-study team could unnecessarily complicate and delay
adjudications and declines to adopt the commenter's suggestion.
3. Definition of Start-Up Entity--``Recently-Formed'' and the 3-year
Limitation
Comment: Several commenters expressed concern with the definition
of ``start-up entity'' and the requirement that an entity, in order to
satisfy that definition, must have been created within the 3 years
immediately preceding the parole request filing date. A few individual
commenters said that the 3-year limitation could be inadequate in
certain situations, such as when investing in an inactive business with
other co-founders to initiate the start-up, or when investing in high-
priority areas like healthcare, biotechnology, and clean energy that
have long gestation times. A couple of individual commenters said that
the 3-year limitation may not be necessary given the other, more
stringent requirements in the proposed rule. Some commenters provided
the following recommendations relating to the 3-year limitation:
Eliminate the limitation, lengthen the period to 5 years, lengthen the
period to 10 years, or include a case-by-case provision allowing for
submissions that may satisfy the definition of ``start-up entity.'' One
commenter recommended that ``recently formed'' should include entities
formed within the last 10 years, and also requested that where
applicable, DHS accept alternative evidence to determine and establish
that the company is a ``start-up'' entity, such as letters of
attestation from investors, industry experts within a particular niche
field, and government agencies that speak to the average growth cycle
of a new company within a particular area. A few commenters stated that
the 3-year limitation was appropriate.
Response: In response to these comments, DHS revised proposed 8 CFR
212.19(a)(2) and the definition of ``start-up entity'' in this final
rule to require that the entity must have been formed within the 5
years immediately preceding the filing of the initial parole
application, rather than 3 years as proposed. DHS believes that this
definition appropriately reflects that some entities, particularly
given the industry in which the entity operates, may require a longer
gestation time before receiving substantial investment, grants, or
awards. This 5-year limitation continues to reflect the Department's
intention for parole under this final rule: To incentivize and support
the creation and growth of new businesses in the United States, so that
the country may benefit from their substantial potential for rapid
growth and job creation. DHS recognizes that the term ``start-up'' is
usually used to refer to entities in early stages of development,
including various financing rounds used to raise capital and expand the
new business, but the term ``goes beyond a company just getting off the
ground.'' \13\ Limiting the definition of ``start-up'' in this proposed
rule to entities that are less than 5 years old at the time the parole
application is filed is a reasonable way to help ensure that the
entrepreneur's entity is the type of new business likely to experience
rapid growth and job creation, while still allowing a reasonable amount
of time for the entrepreneur to form the business and obtain qualifying
levels of investor financing (which may occur in several rounds) or
government grants or awards.
---------------------------------------------------------------------------
\13\ U.S. Small Business Administration, Startups & High Growth
Businesses, available at https://www.sba.gov/content/startups-high-growth-businesses (``In the world of business, the word `startup'
goes beyond a company just getting off the ground.'').
---------------------------------------------------------------------------
4. Other Comments on the Definition of Start-up Entity
Comment: One commenter said that formation should be defined to be
either the creation of a legal entity under which the activities of the
business
[[Page 5248]]
would be conducted or the effective date of an agreement between the
entrepreneur and an existing business to launch the business activities
as a start-up, branch, department, subsidiary, or other activity of an
existing business entity. Another commenter suggested that DHS consider
restructuring (e.g., use successor-in-interest rules) and other pivots
(in terms of changes in the service or product, as well as markets)
during the 3-year period immediately preceding the filing of the parole
application and at time of application for re-parole.
Response: DHS appreciates the commenters' suggestions and notes
that recent formation within the definition of ``start-up entity'' in 8
CFR 212.19(a)(2) is already limited to the creation of the entity
within the 5 years immediately preceding the filing date of the alien's
initial parole request. DHS further declines to amend 8 CFR
212.19(a)(2) to broaden what may be considered ``recently formed'' to
include the effective date of an agreement between the entrepreneur and
an existing business to launch new business activities, restructurings
and other pivots. Given that this is a new and complex process, DHS has
decided to take an incremental approach and will consider potential
modifications in the future after it has assessed the implementation of
the rule and its impact on operational resources.
Comment: One commenter suggested that start-up entities under this
rule should be limited to businesses that fill a need that is currently
not being fulfilled in the United States.
Response: One of the goals of this final rule is to increase and
enhance entrepreneurship, innovation, and job creation in the United
States; and, under this rule, evidence regarding the expected
contributions of a start-up entity will be considered in determining
whether to parole an individual into the United States. A successful
start-up entity, particularly one with high-growth potential, will
fulfill an identified business need. For example, the entrepreneur may
be starting the business to alter an existing industry through
innovative products or processes, innovative and more efficient methods
of production, or cutting-edge research and development to expand an
existing market or industry. It is also unclear from the commenter's
suggestion how ``business need'' would be defined, and DHS believes
that attempting to do so in this rule could result in an overly
restrictive definition that fails to account for future innovation,
would be unnecessarily rigid, and would lessen the rule's ability to
retain and attract international entrepreneurs who will provide a
significant public benefit to the United States.
Comment: An individual commenter requested that staffing companies
be included as a type of startup.
Response: In this final rule, and for purposes of parole under this
program, DHS defines a ``start-up entity'' as a U.S. business entity
that was recently formed, has lawfully done business during any period
of operation since its date of formation, and has substantial potential
for rapid growth and job creation. See 8 CFR 212.19(a)(2). The rule
requires that entities meet certain specified criteria for obtaining
parole, but the rule does not specifically exclude staffing companies
from participating if they otherwise meet these criteria. DHS therefore
will not revise the definition of start-up entity in this rule as
requested by the commenter.
Comment: One commenter asserted that the rule fails to specify how
a start-up entity can demonstrate that it has ``lawfully done
business'' or ``has substantial potential for rapid growth and job
creation.'' The commenter recommended revising the definition to more
closely align with 8 CFR 214.2(l)(1)(ii)(G)(2) and (l)(1)(ii)(H) by
instead requiring evidence that the entity is or will be engaged in the
regular, systematic, and continuous provision of goods or services.
This commenter suggested that the submission of expert witness
testimony by a reputable third party, such as a recognized professor or
leader in the start-up entity's proposed field, should be given
deference and treated under the final rule as a rebuttable presumption
establishing that the start-up ``has substantial potential for rapid
growth and job creation.''
Response: DHS declines to adopt the commenter's suggested changes
in this final rule. DHS believes that an applicant can demonstrate the
start-up entity's lawful business activities through many different
means and will keep this requirement flexible to account for the many
differences among start-up entities. Such evidence might include, but
is not limited to, business permits, equipment purchased or rented,
contracts for products or services, invoices, licensing agreements,
federal tax returns, sales tax filings, and evidence of marketing
efforts.
DHS believes that the rule provides a clear framework for
establishing that a start-up entity has substantial potential for rapid
growth and job creation. See 8 CFR 212.19(b)(2)(ii) and (iii). An
applicant generally must satisfy the criteria in 8 CFR 212.19(b)(2)(ii)
to be considered for parole under this rule. An applicant who only
partially meets one or both of the criteria in 8 CFR 212.19(b)(2)(ii)
may still be eligible for consideration for parole under this rule if
the applicant provides additional reliable and compelling evidence that
the start-up entity has the substantial potential for rapid growth and
job creation. DHS recognizes that the rule does not provide specific
evidence that must be submitted in order to satisfy the alternative
criteria in 8 CFR 212.19(b)(2)(iii). DHS believes that providing a
specific set of evidence would have the unintended effect of narrowing
a provision that was designed to allow for the submission of any
evidence that the applicant believes may establish the substantial
potential of his or her start-up entity, recognizing that such evidence
may vary depending on the nature of the business and the industry in
which it operates. DHS believes that it is important to retain criteria
that provide flexibility to the applicant and DHS. Such flexibility is
consistent with DHS's parole authority and the case-by-case nature of
each parole determination as required by statute. See INA section
212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A).
DHS does not believe that the rule should be revised to align with
8 CFR 214.2(l)(1)(ii)(G)(2) and (l)(1)(ii)(H). The requirements set
forth in 8 CFR 214.2(l)(1)(ii)(G)(2) and (l)(1)(ii)(H) relate
specifically to eligibility for classification as an L-1 nonimmigrant
and are not necessarily relevant to the requirements set forth in this
rule, which are specifically designed to provide the framework by which
USCIS will determine whether to grant parole to certain individuals for
significant public benefit. Particularly given the way this evidence
will be evaluated on a case-by-case basis, and the need to ensure
parole is justified by significant public benefit, DHS declines to
adopt the commenters' suggestion of adopting a rebuttable presumption
that certain entities have substantial potential for rapid growth and
job creation. The burden of proof remains with the applicant.
5. Qualified Government Award or Grant
Comment: One commenter stated that the rule's grant-based criteria
for consideration focused too narrowly on awards made by government
entities The commenter noted that entrepreneurs seek grants from a
variety of sources and that funding from non-profits or not-for-profit
entities (such as U.S. universities) can be significant sources of
start-up capital. The
[[Page 5249]]
commenter requested that the rule be revised to allow entrepreneurs of
non-profit start-up entities to qualify for parole under this program
based on the receipt of charitable grants.
Response: DHS appreciates the commenter's suggestion, but declines
to adopt the suggestion in this final rule to include charitable grants
as a type of qualifying grant or award under 8 CFR 212.19(a)(3). DHS
believes, given the nature of charitable grants, that they would not
present the same level of validation regarding the entity's high-growth
potential as would a grant or award from a Federal, State, or local
government entity with expertise in economic development, research and
development, or job creation. Since the validating quality of a
substantial government grant or award is an important factor DHS will
rely upon to determine if the entrepreneur will provide a significant
public benefit to the United States, and since that same validating
quality does not necessarily extend to charitable grants or awards, DHS
declines to adopt the commenter's suggestion. DHS notes, however, that
nothing in this final rule prohibits entrepreneurs from accepting
charitable grants or pointing to such funding as evidence that parole
would be justified and that they merit a favorable exercise of
discretion. Moreover, given that this is a new and complex process, DHS
has decided to take an incremental approach and will consider potential
modifications in the future after it has assessed the implementation of
the rule and its impact on operational resources.
Comment: One commenter noted that the definition of qualified
government award or grant and the phrase ``federal, state, or local
government entity,'' are ambiguous as to whether an entrepreneur may
qualify under the rule based on a grant by a foreign government.
According to the commenter, the rule does not explicitly state that the
``federal, state, or local government entity'' needs to be restricted
to entities in the United States. The commenter encouraged USCIS to
adopt a broad approach in determining which kinds of grants may qualify
and to allow entrepreneurs to qualify if their start-up entity attracts
substantial foreign government financing. The commenter also suggested
that USCIS and CBP should again emphasize that parole may be
discretionarily denied in cases that could risk national security or
impair international relations.
Response: While DHS always maintains the ability to deny parole in
its discretion, including in those cases where there may be a national
security or foreign relations concerns, DHS declines to expand the
definition of qualified government grant or award to include grants or
awards from a foreign governmental entity. To eliminate potential
confusion, DHS is revising the definition as proposed to specifically
exclude foreign government entities. The receipt of significant funding
from certain U.S. federal, state or local government entities is an
important factor that DHS will weigh in determining if the entrepreneur
will provide a significant public benefit to the United States. DHS
believes that significant funding from certain U.S. federal, state or
local governmental entities is a strong indicator of a start-up
entity's substantial potential for rapid growth, including through
enhancing innovation, generating revenue, obtaining significant
additional investments of capital, and creating jobs. Such government
entities regularly evaluate the potential of U.S. businesses, so the
choice to provide a significant award or grant to a particular start-up
entity can be a compelling indicator of that start-up's substantial
potential for rapid growth and job creation. Because these government
entities are formed to serve the U.S. public, their choice to fund a
particular business may be more indicative than that of a foreign
government as to whether the business's operations would provide a
significant public benefit in the United States. DHS believes that the
reliability and weight of the independent assessment performed by
certain U.S. federal, state or local governmental entities before
issuing a grant or award does not necessarily extend to grants or
awards made by foreign governmental entities. DHS therefore declines to
adopt the commenter's suggestion to revise the rule to include funding
from foreign governmental entities as one of the criteria in 8 CFR
212.19(a)(3).
6. Qualified Investment
Comment: Some commenters suggested that DHS define ``capital''
broadly to include cash, cash equivalents, secured or unsecured loan
proceeds, payments for or obligations under binding leases, the value
of goods, equipment, and intangible property such as patent rights,
trademarks, trade secrets, and distinctive ``know how.''
Response: DHS declines to adopt the commenters' suggestions.
``Qualified investment'' as a general criterion for parole is limited
to a specific monetary investment in the form of equity or convertible
debt, to ensure that the investment is easily valued as well as
significant in nature. This promotes fair and efficient administration
of the process under this rule, while also ensuring the integrity of
that process. In addition, equity investments and convertible debt
investments both involve a distinctive level of expert review, due
diligence, and oversight. For example, according to the Small Business
Administration, venture capital firms and angel investors typically
review a business plan and evaluate a start-up's management team,
market, products and services, operating history, corporate governance
documents, and financial statements before making an equity
investment.\14\ Such investment generally also involves active
monitoring via board participation, strategic marketing, governance,
and capital structure.\15\ While non-monetary contributions made to a
start-up entity may not be considered as a qualified investment for
purposes of the general criteria of a parole determination under this
rule, the rule does not prohibit such contributions and they may be
considered as evidence under the alternative criteria at 8 CFR
212.19(b)(2)(iii) and (c)(2)(iii) to establish that the start-up entity
has, or continues to have, substantial potential for rapid growth and
job creation.
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\14\ Venture Capital, https://www.sba.gov/starting-business/finance-your-business/venture-capital/venture-capital.
\15\ Id.
---------------------------------------------------------------------------
Comment: One commenter stated that the requirement that start-up
capital must be equity or convertible debt may be too limiting given
the venture finance markets today. The commenter said that other
investment instruments are commonly used by sophisticated market
participants, and that such investments might not technically be
considered equity or convertible debt even though they are bona fide
capital investments. The commenter recommended that the definition be
made ``future-proof'' by creating a catch-all for other investment
instruments that are convertible, exchangeable, or exercisable for
equity in the start-up, regardless of the name of the investment
instrument.
Response: DHS understands that the regulatory text may not capture
all possible future investment instruments and has amended the
regulatory text to capture other commonly used convertible securities
now and in the future. The final rule defines ``qualified investment''
as an investment made in good faith, and that is not an attempt to
circumvent any limitations imposed on investments under this section,
of lawfully derived capital in a start-up
[[Page 5250]]
entity that is a purchase from such entity of its equity, convertible
debt or other security convertible into its equity commonly used in
financing transactions within such entity's industry. DHS believes that
this definition, in practice, will apply to other securities
convertible into equity (other than convertible debt) that are or
become commonly used within the start-up entity's industry, and DHS may
issue additional guidance in the future regarding such securities as
necessary. Given that this program is new and complex, DHS has decided
to take an incremental approach and will consider potential
modifications in the future after it is able to assess implementation
of the rule and its impact on operational resources.
7. Qualified Investor
Comment: Several commenters, including associations and individual
commenters, stated that the proposed ``qualified investor'' definition
is more stringent than the ``accredited investor'' definition adopted
by the Securities and Exchange Commission (SEC). Several commenters
stated that many angel investors, especially newer investment firms and
angels, would not be considered ``qualified investors'' under this
rule. One of these commenters suggested revising the definition of a
qualified investor using the guidelines set forth by AngelList, which
requires all syndicate leads on their site to have registered as
accredited investors, to have made at least two direct investments in
technology start-ups, and to have attracted additional funding beyond
the syndicate lead. Some commenters generally stated that many
potentially high-growth firms started by international entrepreneurs
will not qualify for parole or re-parole because the business did not
receive an investment from a qualified U.S. investor, and encouraged
the rule to be more flexible to allow for additional sources of
capital.
Response: In response to comments received, DHS is revising
proposed 8 CFR 212.19(a)(5), which provides the definition of a
qualified investor. For purposes of this section, such an individual or
organization may be considered a qualified investor if, during the
preceding 5 years, the individual or organization made investments in
start-up entities in exchange for equity or convertible debt or other
security convertible into equity commonly used in financing
transactions within their respective industries comprising a total in
such 5-year period of no less than $600,000. See final 8 CFR
212.19(a)(5)(i). DHS has removed the proposed requirement that the
total investment amount be made in 3 separate calendar years and,
consistent with its analysis of relevant investment data, reduced the
amount from $1,000,000 to $600,000.\16\ DHS is also making revisions
consistent with the change to the qualified investment definition by
adding ``other securities that are convertible into equity issued by
such an entity and that are commonly used in financing transactions
within such entity's industry.'' DHS agrees with commenters that the
qualified investor requirement is more stringent than the SEC
``accredited investor'' definition, but believes the additional
parameters for qualified investors under the rule are appropriate. The
``accredited investor'' definition for SEC purposes is focused on the
investing entity's assets or the individual investor's net worth or
annual income,\17\ not on the investor's track record of successfully
investing in start-up entities. An investor's successful track record
of investing in start-up entities provides an important measure of
objective validation that DHS will rely upon as part of evaluating
whether granting parole to a particular individual would provide a
significant public benefit.
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\16\ To arrive at this level, DHS relied on the $250,000 median
seed round for active firms that successfully exited accelerators,
as is described more fully in in the ``Volume Projections''
subsection of the ``Statutory and Regulatory Requirements'' section
of this final rule notice. Second, DHS multiplied this figure by
2.4, which is an estimate of the average number of investments made
over a five-year period by qualified investors. DHS arrived at the
figure for average investments over five years using the following
methodology. DHS used the ``investor graph'' section of the Seed DB
data set to extract investment round information for investors that
have invested in various startup accelerators' portfolio companies.
The search engine is not set up in a manner in which random sampling
can be done, so DHS obtained data for nine accelerators chosen from
the 2016 Seed Accelerator Rankings project (SARP), the report of
which is found at: https://seedrankings.com/pdf/sarp_2016_accelerator_rankings.pdf. SARP ranks accelerators via a
composite scoring system based on various metrics, including funding
value averages and exit performance, and produces a list of the top-
rated accelerators, although there is no pre-set number of
accelerators that can appear in the ranking list each year. In the
2016 SARP report there were twenty-three Seed Accelerators ranked
out of a total of 160 that the program tracks. DHS was able to
extract investment round data from nine of the twenty-three SARP
ranked accelerators, for a total of about 3,600 individual
investment rounds. Next, DHS grouped these rounds for the five-year
period October 2011-November 2016 to result in 3,085 records. Next,
DHS removed duplicates to parse the list into records for unique
investor names. As a result, 1,329 unique investors remained.
Dividing the 3,085 by 1,329 investors yields an average of 2.4,
which DHS used as a reasonable estimate of the average number of
investments that qualified investors made in a five year period, at
least for the specific accelerators involved. DHS notes that there
are several caveats to this analysis. First, the data only includes
investments made through accelerators. If non-accelerator
investments were included, for which DHS could not obtain data, the
average would likely be higher. Second, some rounds did not include
an amount and some investor names appeared with variations. DHS
conducted several data runs based on different filtering techniques
and generally the range of average investments was between 2.32 and
2.5.
\17\ 17 CFR 230.501(a).
---------------------------------------------------------------------------
DHS also declines to adopt the investor track record criteria
associated with AngelList's requirements, as DHS believes that the past
success of qualified investors can be demonstrated sufficiently by
utilizing the criteria set forth in the final rule. DHS has maintained
the requirements under 8 CFR 212.19(a)(5)(ii) as evidence that the
investor has had previous successful investments, which are similar to
certain criteria for a start-up entity to demonstrate eligibility for
re-parole under this rule. See final 8 CFR 212.19(a)(5)(ii).
Comment: A joint submission from an advocacy group and a non-profit
organization proposed that DHS create a ``whitelist'' of qualified
investors and modify the rule such that any start-up receiving an
investment from a whitelisted investor proceed through an expedited
review process. The commenter said that this would both streamline the
parole process and diminish the burden on adjudicators to analyze the
merits of often complicated technology companies. The commenter said
that the qualification process for such an investor whitelist could be
significantly more robust than the rule's proposed definition of
``qualified investor'' and should be updated on an annual or biannual
basis. Another joint submission suggested the creation of a ``Known
Qualified Investor'' program, similar to the ``Known Employer'' pilot
program recently created by DHS in a different context, to assist the
overall adjudication process.
Response: DHS appreciates the commenters' suggestions. The Known
Employer program referenced by the commenter remains in a pilot stage.
DHS will assess the effectiveness of the Known Employer program after
the pilot is complete, and then determine whether the program should be
made permanent. If the program is successful, DHS will assess whether
it may be expanded to other adjudication contexts. Committing to use a
similar program in the context of this rulemaking would thus be
premature. DHS also declines to adopt the commenters' suggestion to
create a ``whitelist of qualified investors'' and an expedited process
for applications based on investment from such investors at this time.
Given that this is a new and
[[Page 5251]]
complex process, DHS has decided to take an incremental approach and
will consider potential modifications in the future after the
Department has assessed the implementation the process and its impact
on operational resources.
8. Evidence Required To Establish Qualified Investor
Comment: Several commenters expressed concern about the burden of
proving that investors have met the revenue and job creation criteria
in the definition of qualified investor, which the commenters said
could prevent investors from participating. One commenter stated that
early-stage investors usually do not keep records of employees or the
revenues of their portfolio companies, and that those companies would
not be inclined to respond to paperwork requests from their investors
that do not relate to their own success. Another commenter said that
some investors do not make their investments known publicly and the
vast majority of investors do not make public their returns (let alone
the number of jobs created). Another commenter said that the rule
should only require evidence of publicly available information,
concluding that it would be too invasive to require disclosure of
confidential employee data or other confidential financial information
of third-party companies that have no ties to the start-up entity
related to the parole applicant. A few commenters requested that DHS
allow venture capitalists, accelerators, and incubators to register so
that they would not be required to produce the evidence of their
qualifications with each parole application.
Response: DHS does not believe that providing evidence of revenues
generated or jobs created by entities in which the investor previously
invested is overly burdensome or would require the investor to publicly
reveal otherwise sensitive information. DHS believes, given the
significance of an investor's track record of successful investment in
start-ups to the determination of significant public benefit, that the
need for this evidence outweighs the potential burden on the applicant
and investor to compile and submit it. However, as DHS continues to
assess the implementation of the process once the rule is final, the
Department will consider potential ways to modify the process given the
kinds of issues raised by these comments.
9. Foreign Funding/Investment
Comment: Several commenters provided input on the proposed
requirement that ``qualified investor'' funds must come from either
U.S. citizens, lawful permanent residents, or entities that are
majority owned and controlled by U.S. citizens or lawful permanent
residents. Nearly all commenters on this topic expressed concerns about
this requirement as a major limiting factor of the rule. Some
commenters focused on the potential economic benefits of broadening the
definition of ``qualified investor'' to include foreign investment.
These commenters asserted that it would be economically beneficial to
allow non-U.S. investments, as there are many experienced investors
from outside the United States that could bring direct foreign
investment into the country and create jobs. Another commenter stated
that, by limiting qualification to domestic investors, DHS is foregoing
a critical opportunity to attract foreign entrepreneurs and their
investments.
Response: DHS disagrees with the assertion that this rule precludes
or otherwise discourages foreign investment. This rule does not
preclude entrepreneurs from seeking and obtaining investment from any
number of sources, whether that is foreign investment, personal funds,
or funds from friends and family. This rule, however, does limit the
types of investment that will be considered by DHS as a qualifying
investment for purpose of determining if the entrepreneur and his or
her start-up entity meet the requirements for consideration for parole
set out in 8 CFR 212.19. DHS believes it is important to limit the type
and source of investment that will be considered a qualifying
investment, since the investment is meant to serve in part as an
objective way to help ensure and validate that the start-up entity's
activities will benefit the United States. DHS does not believe
investments from foreign sources--which are significantly more
difficult for DHS to evaluate for legitimacy and screen for indicators
of fraud and abuse--would provide the same measure of objective
validation.
Comment: Multiple commenters stated that eligibility criteria
should focus exclusively on the location of the start-up entity and its
related growth and job creation, not on the citizenship and residence
of the investor. Some commenters stated that excluding foreign
investors from the definition of ``qualified investors'' is unduly
limiting, because many high-potential international entrepreneurs might
not have a pre-existing relationship with a U.S.-based investor.
Commenters state that such entrepreneurs, especially if living in other
countries, would have difficulty attracting investment from U.S.
investors and becoming eligible for parole under this rule. Another
commenter cited data concluding that foreign entrepreneurs currently
outside of the United States are at a particular disadvantage, as they
lack access to U.S.-based angel and venture funding.
Response: DHS agrees that the U.S. location of the start-up entity
and its related growth and job creation should be a critical component
of eligibility under this rule in order to help ensure the exercise of
parole is justified by significant public benefit to the United States.
DHS believes, however, that the ``qualifying investor'' must also be a
U.S. citizen or lawful permanent resident or an entity that is majority
owned or controlled by U.S. citizens or lawful permanent residents. DHS
can evaluate more rapidly, precisely, and effectively whether these
investors have an established track record of prior investments, in
part due to greater access to relevant and reliable records. Such
investors will also be subject to the laws of the United States, which
provides some additional assurance that the entrepreneurs they back
will provide a significant public benefit to the United States.
DHS is not prohibiting foreign investors from investing in the
entrepreneur's start-up entity, but rather is simply limiting those
investors that can serve as ``qualified investors'' for purposes of
establishing the entrepreneur's eligibility for parole under this rule.
DHS anticipates that entrepreneurs living outside the United States
will be able to demonstrate eligibility for parole consideration under
this rule, whether based on investment from U.S. investors, grants or
awards from certain U.S. Government entities, or a mixture of
alternative criteria. For all the reasons above, the definition of
``qualified investor'' will help DHS manage an efficient process for
adjudicating requests under this rule while appropriately screening for
potential fraud or abuse and ensuring that each grant of parole is
justified by significant public benefit to the United States.
Comment: Other commenters focused on specific ways that DHS might
allow applicants to use foreign investment to establish their
eligibility for parole consideration, including by limiting such
investment to the entrepreneur's country of origin, or to only those
foreign investors who do not present a national security concern. A few
commenters asserted that DHS has the capability to verify the bona
fides of foreign investors through, for example, the following
mechanisms: Making inquiries through U.S. embassy officials,
[[Page 5252]]
requesting resumes and the investment history for foreign angel
investors, requesting similar documentation used by EB-5 petitioners to
establish their lawful source of funds, and consulting publicly
available data on reputable foreign investors with a history of
successful investments in various countries. Some commenters provided
suggestions for alternative or revised definitions relating to foreign
investors that could remain easily verifiable by DHS, with the burden
being on the investor, including (1) professionally managed funds with
at least $10 million under management and registered with the local
jurisdiction, and (2) angel investors that have made credible
investments in U.S. companies under the same standards as U.S.
``qualified investors.'' Finally, an individual commenter expressed
concerns that even investments from U.S. sources could be suspect, and
could serve as a pass-through for ineligible investors such as the
entrepreneur's family or foreign nationals.
Response: While DHS understands that international entrepreneurs
can attract legitimate investment capital from non-U.S. sources, DHS
believes--as explained at greater length above--that it is appropriate
and important to require that a ``qualified investment'' come from a
U.S. source as one of the general criteria to establish that the start-
up entity has the substantial potential for rapid growth and job
creation. DHS is prepared to monitor the bona fide nature of such U.S.-
based investments, as described in greater detail above. Moreover, the
rule neither precludes an applicant from securing funding from non-U.S.
sources nor precludes such funding from being considered, non-
exclusively, under the alternative criteria at 8 CFR 212.19(b)(2)(iii)
or (c)(2)(iii). Given that this is a new and complex process, DHS will
consider potential modifications in the future after it has assessed
the implementation of the rule and its impact on operational resources.
10. Self-Funding/``Bootstrapping''
Comment: Several commenters argued that entrepreneurs should be
able to demonstrate eligibility for parole under this rule not only
through funding from U.S. investors or U.S. Government entities, but
also through self-financing (known as ``bootstrapping''). One commenter
noted that many highly successful start-up founders initially grew
their companies through bootstrapping, not by raising capital from
external investors.
Response: DHS declines to expand the definition of ``qualified
investment'' to include self-funding by the entrepreneur applicant. DHS
believes that this definition should include only those investors who
have a history of making similar investments over a 5-year period and
who can demonstrate that at least two of the entities receiving such
investments have subsequently experienced significant growth in revenue
or job creation. See final 8 CFR 212.19(a)(5). DHS believes that the
investment of a substantial amount of capital by qualified investors in
an entrepreneur's start-up entity can serve as a strong indication of
the entity's substantial and demonstrated potential for rapid business
growth and job creation. Self-funding, while a rational financing
strategy for many entrepreneurs, does not provide the same objective
and external validation that DHS requires in assessing whether granting
parole to an individual is justified based on significant public
benefit.
11. Other Comments on Qualified Investors
a. Crowdfunding
Comment: Several commenters stated that the rule should allow
crowdfunding as a qualified investment. These commenters noted that
entrepreneurs have raised over a billion dollars in investments through
various types of crowdfunding platforms, which serve to broaden the
base of available investors and demonstrate a venture's potential
growth. Commenters also cited the Jumpstart Our Business Startups Act
(JOBS Act) of 2012, which created a national regulatory framework for
securities-based crowdfunding platforms in particular, along with
public statements suggesting that securities-based crowdfunding is
recognized by Congress and the Administration as a valuable and
increasingly-used investment tool. One commenter also stated that
allowing the use of crowdfunding platforms would increase the pool of
potential applicants for entrepreneurial parole and could provide a
workable intermediary for foreign investment in eligible start-up
entities. One commenter suggested potential requirements that would
facilitate the use of crowdfunding investment sources, such as setting
a threshold amount for eligible crowdfunding investments and confirming
that such investments have been deposited in the start-up entity's bank
account after the end of the crowdfunding campaign.
Response: DHS appreciates the commenters' suggestions. Investments
made in a start-up entity through an SEC-compliant intermediary, such
as an SEC-compliant crowdfunding platform, will be treated no
differently for purposes of this rule than had the investments been
made directly. In order to promote the integrity of adjudications under
this rule, DHS declines to make changes to the definition of
``qualified investor'' that would effectively treat funds generated
through crowdfunding platforms as a different class of eligible
investment. DHS notes, however, that evidence of a successful donation-
based or securities-based crowdfunding campaign could be provided under
the rule's alternative eligibility criteria.
b. Established U.S. Investors
Comment: One commenter questioned the requirement that capital be
received ``from established U.S. investors (such as venture capital
firms, angel investors, or start-up accelerators) with a history of
substantial investment in successful start-up entities.'' The commenter
stated that the requirement increases the relative bargaining power of
established investors working with entrepreneurs seeking parole under
this rule, while diminishing that of new venture capital firms, new
angel investors, and new start-up accelerators. The commenter stated
that if it is kept in its current form, the rule is not clear whether
an investment from a non-established investor would jeopardize the
parole eligibility of an entrepreneur whose start-up entity is also
funded by established investors.
Response: The definition of ``qualified investor, including the
requirement that an investor have a history of substantial investment
in successful start-up entities, is intended to help ensure that such
investors are bona fide and not concealing fraud or other illicit
activity--and thus protect the integrity of the parole process under
this rule. The definition is also intended to ensure that a qualifying
investment serves as a strong and reliable indicator of the start-up
entity's substantial potential for rapid growth and job creation, which
is relevant to assessing whether granting parole to an entrepreneur is
justified by significant public benefit.
DHS emphasizes that the rule does not prohibit investment from U.S.
investors who do not have an established track record of substantial
investment in start-up entities under the rule's definition of
``qualified investor.'' Any investment from an investor who is not a
qualified investor, however, will not count toward the minimum
investment criteria associated with the initial parole period or re-
parole period. DHS will, of course, monitor all
[[Page 5253]]
elements of an application for evidence of fraud or other illegal or
illicit activities. It will also assess the totality of the evidence in
evaluating whether granting parole to an entrepreneur is justified by
significant public benefit.
c. Approved Regional Centers
Comment: One commenter requested that USCIS-approved Regional
Centers (based on an approved Form I-924) be allowed to qualify as
established U.S. investors. The commenter stated that investment by a
Regional Center in a U.S. start-up entity would be a natural extension
of what Regional Centers already do, since Regional Centers pool
investment for qualified EB-5 visa projects.
Response: DHS believes it is important to limit qualifying
investors to those who have an established record of successful
investments in start-up entities. DHS believes that such a record would
include, during the 5-year period immediately preceding the filing of
the parole application, one or more investments in other start-up
entities in exchange for equity or convertible debt comprising a total
of no less than $600,000. See final 8 CFR 212.19(a)(5)(i). DHS will
require monetary commitments, rather than non-monetary commitments such
as credit for in-kind value (e.g., credit for services), given the
difficulty of valuing such commitments and the potential for fraud and
abuse. The applicant would also need to show that, subsequent to such
investment by the investor, at least 2 such entities each created at
least 5 qualified jobs or achieved at least $500,000 in revenue with
average annualized revenue growth of at least 20 percent. See final 8
CFR 212.19(a)(5)(ii).
As described in greater detail above, these criteria are intended
to ensure that investors are bona fide and thus protect the integrity
of the parole process under this rule. They are also intended to ensure
that a qualifying investment serves as a strong and reliable indicator
of the start-up entity's substantial potential for rapid growth and job
creation, which is relevant to assessing whether granting parole to an
entrepreneur is justified by significant public benefit. DHS declines
to adopt a special provision for regional centers approved to
participate in the EB-5 visa program. Although such centers are not
categorically excluded from the definition of ``qualified investor''
under this rule, they would need to meet all the same criteria as any
other qualified investor.
12. Qualified Jobs
a. Qualifying Employee
Comments: Two commenters recommended that DHS broaden the
definition of the term ``qualifying employee.'' One commenter stated
that the term should include any individual authorized to work in the
United States, regardless of immigration status, to avoid creating a
conflict for employers who are prohibited from discriminating based on
an individual's citizenship or immigration status. Another commenter
advocated for the inclusion of independent contractors in the
definition of qualifying employee.
Response: DHS declines to expand the definition of qualifying
employee, which already includes a U.S. citizen, a lawful permanent
resident, or other immigrant lawfully authorized to be employed in the
United States, who is not an entrepreneur of the relevant start-up
entity or the parent, spouse, brother, sister, son, or daughter of such
an entrepreneur. See final 8 CFR 212.12(a)(7). DHS believes that
creating jobs for these individuals is more likely to provide a
significant public benefit given their stronger ties to the United
States. Similarly, DHS believes that entrepreneurs and start-up
entities that create positions for employees are more likely to provide
a significant public benefit than those who rely only on arrangements
with independent contractors. Such arrangements would generally have a
weaker nexus to the start-up entity, may not have been created as a
direct result of the start-up entity's activities, and could be more
difficult to validate. Nothing in this rule either supersedes or
conflicts with nondiscrimination laws enacted under the Immigration
Reform and Control Act (IRCA).\18\ Under existing law, it would
generally be an unfair immigration-related employment practice for an
entity to discriminate against someone authorized to work in the United
States because of that person's national origin or, in the case of a
``protected individual,'' citizenship status. See 8 U.S.C. 1324b(a)
(generally prohibiting such practices, subject to specific exceptions,
and defining ``protected individual'' to include U.S. citizens, lawful
permanent residents, and certain other immigrants). This rule does not
permit any such otherwise prohibited practices. Instead, it uses the
creation of jobs for U.S. citizens, permanent residents, and other
authorized immigrants as one indication of the benefit created by an
entrepreneur's start-up entity.\19\
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\18\ Public Law 99-603 section 102, 100 Stat. 3359 (Nov. 6,
1986); INA section 274B.
\19\ It is important to note that job creation during the
initial period of parole is not the only way to demonstrate the
start-up entity's continued substantial potential for rapid growth
and job creation. See final 8 CFR 212.19(c)(2)(ii)(A),
(c)(2)(ii)(C), and (c)(2)(iii).
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b. Full-Time Employment
Comments: Several commenters said that the rule should have a more
flexible definition of ``full-time employment.'' One commenter said
that the definition of the term should not require the job to be filled
for at least a year and should include job-sharing arrangements.
Another commenter recommended that the definition of full-time
employment include combinations of part-time positions.
Response: DHS declines to expand the definition of full-time
employment to include jobs filled for less than a year by a qualifying
employee, job-sharing arrangements, and combinations of part-time jobs.
DHS believes that the creation of long-term and full-time positions is
a more reliable indicator that an entrepreneur's start-up entity is
continuing to yield significant public benefit. Jobs filled for less
than a year could be temporary or seasonal, thus limiting the duration
and impact of the benefit. Additionally, including job-sharing or
combinations of part-time positions could significantly complicate
adjudications. The final rule, moreover, already reduces by half the
threshold number of jobs to qualify for a re-parole period, making it
all the more reasonable to require that each of such jobs be full-time
positions as part of the criteria for ensuring that granting parole to
an international entrepreneur is justified by significant public
benefit.\20\
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\20\ As explained earlier, job creation during the initial
period of parole is not the only way to demonstrate the start-up
entity's continued substantial potential for rapid growth and job
creation. See final 8 CFR 212.19(c)(2)(ii)(A), (c)(2)(ii)(C), and
(c)(2)(iii).
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13. Material Change
Comment: One commenter recommended that the final rule expressly
exempt from the definition of ``material change'' transitions that are
typical within start-ups, such as a company's (1) pivoting its products
or services; (2) bringing on board a significant round of funding that
could dilute the entrepreneur's ownership interest; (3) changing the
role of a founder to meet the needs of the growing company; or (4) by
virtue of a foreseeable stock or asset acquisition, executing a merger
into or with a related or unrelated entity, or some other form of
corporate restructuring. A few
[[Page 5254]]
commenters recommended that DHS clarify what constitutes a ``material
change'' given the rapidly evolving nature of start-ups.
Response: DHS appreciates the concerns expressed by commenters
regarding the material change definition in the NPRM. This final rule
reflects changes that help clarify what constitutes a material change,
with the understanding that start-up entities are likely to experience
a variety of transitions as part of their legitimate development and
growth. DHS disagrees, however, that all of the events listed by
commenters should be specifically exempted from the definition of
material change. Some changes to the start-up entity can clearly impact
the determination of whether the entrepreneur provides, or will
continue to provide, a significant public benefit to the United States.
It is essential to the rule's integrity that such material changes are
clearly defined and reported to DHS. In the final rule, DHS has
outlined those changes that DHS believes are critical to the continuing
eligibility of the entrepreneur to be granted parole based on a
significant public benefit to the United States. Specifically, the
final rule maintains that the following changes are material: Any
criminal charge, conviction, plea of no contest, or other judicial
determination in a criminal case concerning the entrepreneur or start-
up entity; any complaint, settlement, judgment, or other judicial or
administrative determination concerning the entrepreneur or start-up
entity in a legal or administrative proceeding brought by a government
entity; any settlement, judgment, or other legal determination
concerning the entrepreneur or start-up entity in a legal proceeding
brought by a private individual or organization other than proceedings
primarily involving claims for damages not exceeding 10 percent of the
current assets of the entrepreneur or start-up entity; a sale or other
disposition of all or substantially all of the start-up entity's
assets; the liquidation, dissolution, or cessation of operations of the
start-up entity; and the voluntary or involuntary filing of a
bankruptcy petition by or against the start-up entity. DHS has revised
the definition of ``material change'' to include the cessation of the
entrepreneur's qualifying ownership interest in the start-up entity.
DHS recognizes that not all changes to the ownership structure of a
start-up entity constitute a change of such significance that it would
reasonably affect the outcome of the determination of whether the
entrepreneur provides, or continues to provide, a significant public
benefit to the United States. DHS has revised the final rule to limit
material change regarding ownership changes only to ``a significant
change with respect to ownership and control of the start-up entity.''
For example, a significant change with respect to ownership and control
of the start-up entity may include a transfer of equity in the start-up
entity that results in an owner or owners not previously identified on
the Application for Entrepreneur Parole (Form I-941) collectively
acquiring a controlling stake in the entity. DHS recognizes that
achieving a significant round of funding for the start-up entity during
the initial parole period may often constitute the very qualifying
investment that renders the entrepreneur eligible for a re-parole
period under this rule's significant public benefit test, despite
diluting the entrepreneur's ownership interest. While DHS will make
these determinations on a case-by-case basis, DHS does not anticipate
that such significant changes with respect to ownership and control of
the start-up entity will often result in termination of parole. A full
vetting of new investors with a significant ownership interest,
however, can provide DHS with additional insights into the start-up
entity's activities in the United States and will help DHS ensure the
entrepreneur is continuing to provide a significant public benefit to
the United States. In the future, DHS may issue additional guidance on
the scope of such significant changes in ownership interest if deemed
necessary.
DHS believes these changes are sufficient to clarify the definition
of ``material change'' in regulation and to provide entrepreneurs with
sufficient detail about the kinds of changes that could impact their
eligibility and must be reported. Given that this is a new and complex
process, DHS will consider potential modifications in the future after
it has assessed the implementation of the rule and its impact on
operational resources.
E. Application Requirements
1. Application for Entrepreneur Parole
Comments: One commenter supported the Application for Entrepreneur
Parole (Form I-941), and called it ``ideal'' because without the form
applicants must attempt to list information on existing application
forms that do not specifically relate to entrepreneurs. Another
commenter requested that the application process resemble the Canadian
express entry immigration system and be simplified so that the
assistance of an attorney is not required.
Response: DHS agrees with the comment that the Form I-941 is
beneficial for capturing information specific to parole requests filed
under this rule. DHS declines to model the application process for
parole under this rule after the Canadian express entry program as that
program is a points system designed to manage applications for
permanent residence under certain Canadian federal economic immigration
programs.\21\ DHS has attempted to develop the Form I-941 to be as
simple as possible for applicants while capturing sufficient
information to enable adjudicators to make appropriate case-by-case
decisions under the statutory and regulatory requirements for parole.
---------------------------------------------------------------------------
\21\ https://www.cic.gc.ca/english/express-entry/.
---------------------------------------------------------------------------
2. Submissions of Documentary/Supporting Evidence
Comment: Two commenters expressed concern that the evidentiary
requirements were excessive and that start-up entities operating in
``stealth-mode'' would not be able to provide letters or media
articles. Both commenters suggested that evidence of a significant
capital investment from a qualified investor should be sufficient to
demonstrate the potential for rapid growth and job creation.
Response: As an initial matter, DHS recognizes there may be
legitimate reasons for operating a start-up in a manner that does not
attract significant public attention. In part for this reason, this
final rule extends the definition of start-up entity to include
entities formed within the 5 years immediately preceding the filing
date of the applicant's initial parole request. DHS believes that
start-up entities that are seeking to operate without significant
public attention will generally have sufficient time to emerge from
that status prior to the parole application.
DHS agrees with the commenters that evidence of having received
substantial investment from a qualified investor may be sufficient to
establish that the start-up entity has the potential for rapid growth
and job creation (one factor in making parole determinations under this
rule). See 8 final CFR 212.19(b)(2)(ii)(B)(1). DHS understands that
other evidence that may be required to establish eligibility for parole
consideration under this rule, including whether the applicant is well-
positioned to advance the entity's business, may not be a matter of
public record. DHS believes, however, that even an entrepreneur
operating a company in
[[Page 5255]]
``stealth mode'' should generally be able to provide such evidence for
purposes of satisfying the requirements of this rule. Indeed, for
entrepreneurs to be paroled under this rule, they must persuade
adjudicators, based on the totality of the evidence, that they will
provide a significant public benefit.
3. Application Requirements of Spouses and Minor Children
Comment: DHS received a few comments supporting the provision in
the proposed rule allowing the spouse and children of an entrepreneur
granted parole under this rule to also apply for and be granted parole
in the United States in order to accompany or ultimately join the
entrepreneur. One commenter also supported the proposal to allow the
spouse, if granted parole, to obtain employment authorization in the
United States in order to work and help support the entrepreneur's
family.
Response: DHS agrees with these comments. Each spouse or child
seeking parole must independently establish eligibility for parole
based on significant public benefit (or, alternatively, for urgent
humanitarian reasons), and that the individual merits a favorable
exercise of discretion. In a case in which an entrepreneur has been
granted parole based on significant public benefit under this rule, DHS
may consider granting parole to the entrepreneur's spouse and children
who provide a significant public benefit by maintaining family unity
and thereby further encouraging the entrepreneur to operate and grow
his or her business in the United States--and to provide the benefits
of such growth to the United States.
Under this final rule, spouses of entrepreneur parolees who wish to
obtain employment authorization must apply for an EAD pursuant to 8 CFR
274a.12(c)(34), consistent with current parole policy that allows
parolees to apply for employment authorization. DHS agrees with the
commenter that allowing spouses of entrepreneurs to apply for work
authorization may alleviate a significant portion of the potential
economic burdens that entrepreneurs and their families may face, such
as paying for education expenses for their children, and to ensure that
they satisfy the condition on their parole that they maintain household
income that is greater than 400 percent of the Federal poverty line, as
they grow and develop their start-up entities. Moreover, extending
employment authorization to the spouse may further incentivize an
international entrepreneur to bring a start-up entity to the United
States--along with new jobs, innovation, and growth--rather than create
it in another country.
4. Other Comments on Application Requirements
Comment: One commenter asked that DHS clarify the application
procedures for Canadians and whether they may apply at the border or
whether they must visit a U.S. consulate prior to requesting to be
paroled at a U.S. port of entry.
Response: Canadians and applicants from other countries may apply
for parole under this rule while inside or outside of the United
States. If the applicant's parole request is approved, the applicant
would request to be paroled by Customs and Border Protection at a U.S.
port of entry after arriving from outside the United States. Canadian
nationals who will be appearing at a U.S. port of entry directly from
Canada will not have to visit a U.S. consulate prior to appearing at
the port of entry and requesting that CBP grant parole. Canadian
nationals who will not be appearing at a U.S. port of entry directly
from Canada, and will instead be travelling to the United States from
another country abroad to request a grant of parole may, similar to
other applicants, have to visit a U.S. consulate first in order to
obtain travel documentation (e.g., a boarding foil) that allows the
individual to travel to a U.S. port of entry. In all cases, however,
the individual must have an approved Form I-941 before the individual
may appear at the port-of-entry to request a grant of parole.
F. Parole Criteria and Conditions
1. Minimum Investment
Comment: Numerous commenters--including advocacy groups, law firms,
associations, and individual commenters--argued that the proposed
rule's minimum investment criterion for the initial parole period would
set too high an eligibility bar for many high-potential entrepreneurs.
Citing a range of different kinds of evidence, several commenters
argued that the proposed $345,000 threshold represented significantly
more capital than is actually needed by most start-ups initially and
would unnecessarily exclude from consideration some entrepreneurs whose
entities would create significant public benefit in the United States.
Response: In response to public comments, DHS is reducing the
proposed minimum investment of $345,000 to $250,000 in the final rule.
See 8 final CFR 212.19(b)(2)(ii)(B)(1). Multiple public comments
recommended setting the threshold at $250,000, and DHS's further
analysis of seed and angel investment data indicates that this level is
reasonable. As is described more fully in the ``Volume Projections''
subsection of the ``Statutory and Regulatory Requirements'' section of
this final rule, DHS's analysis of investments received by a set of new
firms that graduated from startup accelerator programs revealed that
the median seed investment was $250,000.\22\ Following the intent of
this final rule to increase and enhance entrepreneurship, innovation,
and job creation in the United States, DHS determined that investment
amounts that entrepreneurs would need to meet to be considered for
parole under this rule should be more in line with typical early
investment rounds, rather than the higher investment levels typical of
later rounds. In each individual case, DHS must be persuaded that
granting parole would provide a significant public benefit and that the
person requesting parole merits a favorable exercise of discretion.
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\22\ The data utilized by DHS is provided publicly by SeedDB:
https://seed-db.com/accelerators, as well as the Angel List: https://angel.co/, and the Angel Capital Association (ACA): https://www.angelcapitalassociation.org/.
---------------------------------------------------------------------------
Comment: One commenter stated that there should not be a minimum
investment amount and suggested that the rule instead establish minimum
revenue amounts. Several other commenters suggested that evidence of
rapid revenue growth should be a standalone eligibility criterion for
the initial parole period under 8 CFR 212.19(b)(2)(ii).
Response: DHS disagrees with the suggestion that there should not
be a minimum investment amount. Establishing a minimum investment
amount based on available data provides a clear and predictable
benchmark for how an applicant may demonstrate that a start-up entity
has substantial potential for rapid growth and job creation (one factor
in making parole determinations under this rule). If international
entrepreneurs are unable to meet the threshold investment amount but
have received some qualified investments or qualified government awards
or grants, they may alternatively qualify for parole consideration
under this rule if they partially meet the threshold criteria and
provide ``other reliable and compelling evidence of the start-up
entity's substantial potential for rapid growth and job creation.'' See
final 8 CFR 212.19(b)(2)(iii).
[[Page 5256]]
DHS disagrees with the suggestion that evidence of rapid revenue
growth or generation of a certain amount of revenue should be a
separate criterion under 8 CFR 212.19(b)(2)(ii). In setting threshold
criteria, DHS intends to identify reliable indicators of a start-up
entity's substantial potential for rapid growth and job creation and,
ultimately, of the significant public benefit that a grant of parole
would provide in an individual case. DHS does not believe that revenue
should be the sole external validation factor as compared to
substantial funding from qualified U.S. investors and government
entities for initial parole applications. DHS reiterates, however, that
a start-up entity's revenue may be taken under consideration, both
under the ``alternative criteria'' test and as part of the totality of
evidence relevant to whether the grant of parole in an individual case
would be justified by significant public benefit and the person
requesting parole deserves a favorable exercise of discretion. See 8
CFR 219.2(b)(2)(iii), 219.2(c)(2)(B)(iii).
Comment: Several individual commenters recommended that the
investment threshold be based upon the type of business activity.
Response: In an effort to provide a reasonable level of simplicity
and predictability in the final rule, DHS decided to utilize a single
investment threshold rather than several amounts based on the type of
business activity. DHS believes that determining multiple investment
thresholds based on business activity or industry would be unduly
complicated, making adjudications more labor-intensive and increasing
processing times. DHS believes that using a single investment
threshold, backed by available data, is a reasonable approach and
provides a clearer benchmark for applicants, investors, and
adjudicators.
Comment: Some commenters provided input on the requirement that
funding be received within the preceding 365 days. A CEO roundtable
agreed that the $345,000 threshold was an appropriate amount, but
questioned the 365-day requirement, recommending that the rule be
changed to require that only 65 percent of the investment to have
occurred within the last 365 days. A trade association and a joint
submission from a professional association and a non-profit
organization recommended that the investment occur within a 3-year
window. As an alternative, the trade association stated that some of a
start-up entity's capital that would otherwise count toward the
qualified investment amount should do so even if its ultimate receipt
by the start-up entity is contingent upon the approval of parole.
Response: DHS is revising the proposed requirement that the
substantial investment be received within the 365 days immediately
preceding the filing of the application for initial parole. The final
rule increases this period from 12 months (365 days) to 18 months. DHS
made this change based on feedback that it often takes longer than 12
months for a start-up to secure and receive investment funding. This
revised requirement still ensures that a qualified investor or
government entity has recently validated (within 18 months) the start-
up entity's potential for rapid growth and job creation. With respect
to the comment suggesting that DHS accept funding contingent upon
approval of parole toward the qualified investment amount, DHS believes
that funds contingent on the occurrence of a future event, such as a
grant of parole to the entrepreneur, would not satisfy the general
criteria in 8 CFR 212.19(b)(2)(ii). DHS notes, however, that such funds
may be considered under the alternative criteria in 8 CFR
212.19(b)(2)(iii) if the entrepreneur partially meets one or both of
the criteria in 8 CFR 212.19(b)(2)(ii)(B), since DHS may consider such
contingent funds as other reliable and compelling evidence of the
start-up entity's substantial potential for rapid growth and job
creation. Given that this process is a new and complex one, DHS has
decided to take an incremental approach and will consider the suggested
modification in the future after assessing the implementation of the
rule and its impact on operational resources.
2. Minimum Government Grants or Awards
Comment: Several commenters argued that DHS should require less
than $100,000 to meet the eligibility criteria based on a start-up
entity's receipt of government grants and awards. An individual
commenter said that most government grants were well beneath the
$100,000 minimum threshold in the proposed rule. Another individual
commenter recommended a $50,000 government grant threshold. By
contrast, one commenter stated that the $100,000 minimum investment for
government grants and awards is too low to start a meaningful business
and suggested increasing the amount to $500,000 or more. Several
commenters stated that the $100,000 grant threshold aligns with the
timing of the Federal Small Business Innovation Research (SBIR) \23\
and Small Business Technology Transfer (STTR) awards and dollar
amounts.
---------------------------------------------------------------------------
\23\ The Small Business Innovation Research (SBIR) program is
coordinated by the Small Business Administration to seed capital for
start-up businesses. It is designed to stimulate technological
innovation among small private-sector businesses, and it is the
largest source of seed capital in the United States for technology
driven start-ups, funding between 5,000 and 7,000 projects a year.
The ``first phase'' award is an innovation grant made for initial
eligibility and corresponds to the start-up of the commercial
business and proof of ``concept phase''--the average award amounts
vary by department, but most SBIR Phase I awards are made at or
below $150,000. The Phase I awards are geared towards financing the
startup of the private commercial entity and also the innovation and
research and development (R&D) that the enterprise undertakes.
---------------------------------------------------------------------------
Response: DHS declines to make the suggested changes to the minimum
government grant or award threshold. In light of the range of comments
received on increasing or decreasing the minimum grant amount, DHS
believes its proposed minimum grant amount is reasonable. Because
government entities regularly evaluate the potential of U.S.
businesses, the choice to provide a significant award or grant to a
particular start-up entity will often be a strong indicator of that
start-up's substantial potential for growth and job creation.
Additionally, because government entities are by definition formed to
serve the public, the choice by such an entity to fund a particular
business generally indicates the government entity's independent
assessment that the business's operations would provide a significant
public benefit--and can be a strong indicator of a start-up entity's
substantial potential for rapid growth and job creation. The specific
$100,000 minimum government funding threshold identified in this final
rule is based in part on the fact that seed funding awards (``Phase I''
awards) from the Federal SBIR/STTR program are generally below
$150,000.
3. Initial Parole Alternative Criteria
Comment: Several commenters offered suggestions for the factors to
be considered by DHS under the rule's alternative criteria for the
initial parole period, such as adding a metric for number of users or
customers of the entrepreneur's start-up entity, the start-up entity's
social impact, and the start-up entity's national scope or location in
a low- or middle-class neighborhood. Other commenters proposed the
following factors: The applicant's academic degree; participation in or
training from a start-up accelerator; prior success as demonstrated by
market share from patented innovations, annual sales volume, or job
creation; and
[[Page 5257]]
demonstrated success using alternative funding platforms.
Response: DHS agrees with these suggestions. DHS may consider the
following additional types of evidence, among others, as factors under
the alternative criteria for those applicants who partially satisfy 8
CFR 212.19(b)(2)(ii):
number of users or customers;
revenue generated by the start-up entity;
social impact of the start-up entity;
national scope of the start-up entity;
positive effects on the start-up entity's locality or
region;
success using alternative funding platforms, including
crowdfunding platforms;
the applicant's academic degrees;
the applicant's prior success in operating start-up
entities as demonstrated by patented innovations, annual revenue, job
creation, or other factors; and
selection of the start-up entity to participate in one or
more established and reputable start-up accelerators or incubators.
With respect to start-up accelerators and incubators, DHS expects
to evaluate them on several relevant factors, including years in
existence, graduation rates, significant exits by portfolio start-ups,
significant investment or fundraising by portfolio start-ups, and
valuation of portfolio start-ups.
DHS understands that some applicants will be able to establish that
their start-up entity is likely to grow rapidly and create jobs based
on other factors beyond only the amount of capital investment or
government funding received, which is why DHS has not limited the types
of evidence that may be considered under the alternative criteria at 8
CFR 212.19(b)(2)(iii) for those who only partially meet the initial
threshold criteria at 8 CFR 212.19(b)(2)(ii)(B).
Comment: One commenter suggested linking the rule's application to
applications for other initiatives, such as National Minority Supplier
Development Council Certification and, when applicable, Minority Women
Based Entrepreneur Certification.
Response: DHS appreciates the commenters' suggestions but declines
to adopt these factors as evidence of substantial potential for rapid
business growth or job creation. Nothing in this rule prohibits or
discourages entrepreneurs from participating in initiatives or
certification processes designed to help promote more diverse and
inclusive entrepreneurship. DHS does not believe, however, that such
initiatives and certifications independently provide sufficient
external validation that a start-up entity has the substantial
potential for rapid growth or job creation and meets the ``significant
public benefit'' requirement under this rule. Evidence that the start-
up is involved with certain initiatives in the public interest can,
however, be considered a positive factor in determining whether an
entrepreneur merits a grant of parole as a matter of discretion. Given
that this is a new and complex process, DHS has decided to take an
incremental approach and will consider potential modifications in the
future after it has assessed the implementation of the rule and its
impact on operational resources.
Comment: One commenter said the term ``reliable and compelling
evidence'' in proposed 8 CFR 212.19(b)(2)(iii), with respect to the
start-up entity's substantial potential for rapid growth and job
creation, is too vague and should be elaborated on further in the
regulatory text.
Response: DHS disagrees with the commenter's suggestion to
elaborate further in 8 CFR 212.19(b)(2)(iii) on the type of evidence
that may be submitted and considered as reliable and compelling. DHS
believes that this alternative criterion should be flexible so as not
to restrict the types of evidence that may be submitted and relied upon
to determine if the start-up entity has substantial potential for rapid
growth and job creation. DHS believes that such flexibility is
important given the case-by-case nature of these discretionary parole
determinations. An applicant for parole under this rule who does not
meet the threshold capital investment or government funding criteria in
8 CFR 212.19(b)(2)(ii)(B) may submit any evidence that the applicant
believes is reliable and compelling to support the claim that the
applicant's start-up entity has substantial potential for rapid growth
and job creation. DHS, after reviewing the application and all of the
evidence submitted in support of the application, will make a
determination as to whether the applicant is eligible for parole
consideration under the relevant statutory and regulatory standards,
and as to whether the person seeking parole merits a favorable exercise
of discretion.
Comment: One commenter asserted that securing an investment from a
U.S. investor or obtaining a U.S. government grant or award is not a
viable option for most people.
Response: DHS believes that qualified investments or government
funding are appropriate factors to consider when assessing the ability
of a start-up entity to achieve rapid growth and job creation (one
factor in making parole determinations under this rule). DHS, however,
understands that some start-up entities with the potential to yield
significant public benefit may have legitimate economic or strategic
reasons to not pursue or accept capital investment or government
funding at the levels set forth in 8 CFR 212.19(b)(2)(ii)(B).
Therefore, DHS has provided in the rule an alternative criterion for
further consideration of those applications where the applicant only
partially satisfies the capital investment or government funding
thresholds, but provides additional reliable and compelling evidence
that establishes the substantial potential of the start-up entity for
rapid growth and job creation.
Comment: A commenter suggested that, instead of focusing on capital
investment and job creation criteria, DHS should focus on whether the
start-up entity would be in industries in traded sectors. The commenter
proposed that the following industries would qualify: Manufacturing,
software publishers, Internet publishing, and research and development
services.
Response: While DHS recognizes the benefits of increased exports to
the U.S economy, it declines to limit eligible start-up entities to
traded sectors, since start-up entities in a much wider set of
industries can yield significant public benefit to the United States
through rapid growth and job creation.
Comment: A commenter requested that DHS form an advisory group of
industry experts to recommend alternative criteria.
Response: DHS afforded an opportunity for notice and comment on the
NPRM and expressly sought proposals for alternative criteria from the
public. DHS does not believe that forming a new advisory group is
necessary at this time.
Comment: One commenter suggested that the term ``rapid growth''
should be determined based on factors pertaining to the start-up
entity's industry, normal business growth in the industry, geographic
area, and the amount of investment in the entity. The commenter also
recommended that the term ``substantial potential'' take into account
the start-up entity's particular geographic area rather than a national
scale.
Response: While the industry- and geography-specific factors
suggested by the commenter may be taken into consideration by DHS as
part of the totality of the circumstances for a given application, DHS
believes that the general and alternative eligibility criteria provided
in the final rule are
[[Page 5258]]
sufficient to determine if a start-up entity has the substantial
potential for rapid growth and job creation, and provide a more
predictable framework by which these parole applications will be
adjudicated than would a more mechanical and unduly rigid consideration
of the variables suggested by the commenter.
4. Re-parole Criteria
a. Minimum Investment or Grants/Awards
Comment: Several commenters discussed the proposed re-parole
eligibility criteria at 8 CFR 212.19(c)(2)(ii)(B)(1), namely that the
applicant's start-up entity has received at least $500,000 in
qualifying investments, qualified government grants or awards, or a
combination of such funding, during the initial parole period. Most
commenters argued that this funding level was unduly high, especially
given the duration of the initial parole period.
Response: DHS declines to adjust the $500,000 funding threshold.
See final 8 CFR 212.19(c)(2)(ii)(B)(1). DHS believes that $500,000 is a
reasonable level for re-parole. An industry report on startups shows
the median seed investment round for the first half of 2016 was
$625,000, which rose from $425,000 in 2015. This figure is valuable
because it includes seed rounds for firms that participate with
accelerators and that often start out with investment rounds below
$100,000.\24\ The median for angel group seed investments is reported
at $620,000 as the annual average over 2013-2015, which rose sharply to
$850,000 in 2015 from a median of $505,000 from the previous two years.
Venture capital round sizes are even larger, as the 2014 median round
size for both seed and startup stage venture rounds was $1,000,000.
---------------------------------------------------------------------------
\24\ The report on the seed median is published as a newsletter
by Crunchbase and is found at: https://techcrunch.com/2016/09/07/crunchbase-sees-rise-in-average-seed-round-in-2016/. The Angel group
median round size is obtained from the Angel Resource Institute's
annual (2015) ``Halo Report,'' found at https://angelresourceinstitute.org/reports/halo-report-full-version-ye-2015.pdf. The venture capital figures are obtained from the Ernst
and Young Venture Capital Insights Report (4th quarter 2014) and are
found at: https://www.ey.com/Publication/vwLUAssets/Venture_Capital_Insights_4Q14_-_January_2015/%24FILE/ey-venture-capital-insights-4Q14.pdf.
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DHS has also increased the length of the initial parole period from
24 months to 30 months. This change will allow entrepreneurs additional
time to seek and receive qualified investments or government funding,
to meet the re-parole criteria. If an entrepreneur is unable to meet
the minimum funding criterion, moreover, he or she may still be
eligible for re-parole based on revenue generated or jobs created. See
final 8 CFR 212.19(c)(2)(ii)(B)(2) and (3). Under the final rule,
entrepreneurs partially meeting the threshold re-parole criteria may
alternatively qualify ``by providing other reliable and compelling
evidence of the start-up entity's substantial potential for rapid
growth and job creation.'' Final 8 CFR 212.19(c)(2)(iii).
b. Minimum Annual Revenue
Comment: Several commenters discussed the proposed re-parole
criterion at 8 CFR 212.19(c)(2)(ii)(B)(3), which establishes an
eligibility threshold when the applicant's start-up entity has reached
at least $500,000 in annual revenue and averaged 20 percent in annual
revenue growth during the initial parole period. Most commenters
suggested alternative approaches, arguing that start-ups are often
legitimately focused on the development of an innovative product or
service, and not on generating early revenue. Another commenter stated
that the revenue criterion is reasonable.
Response: DHS declines to adjust these criteria. See final 8 CFR
212.19(c)(2)(ii)(B)(1). DHS chose $500,000 in revenue and 20 percent
annual revenue growth as threshold criteria because, after consulting
with SBA, DHS determined these criteria: (1) Would be reasonable as
applied across start-up entities regardless of industry or location;
and (2) would serve as strong indications of an entity's potential for
rapid growth and job creation (and that such entity is not, for
example, a small business created for the sole or primary purpose to
provide income to the owner and his or her family). As noted, DHS has
also increased the length of the initial parole period from 24 months
to 30 months. This change will allow entrepreneurs additional time to
meet the minimum revenue threshold for re-parole. If an entrepreneur is
unable to meet the minimum revenue requirement, he or she may still be
eligible under the minimum investment or job creation criteria. See
final 8 CFR 212.19(c)(2)(ii)(B)(1) and (2). Under the final rule,
entrepreneurs partially meeting the threshold re-parole criteria may
alternatively qualify ``by providing other reliable and compelling
evidence of the start-up entity's substantial potential for rapid
growth and job creation.'' Final 8 CFR 212.19(c)(2)(iii).
Comment: An individual commenter suggested that DHS should include
in the rule a criterion for user growth, rather than revenue growth, as
many start-ups focus more on growing their number of users in their
early years.
Response: DHS declines to include user growth as a stand-alone
criterion for establishing eligibility for re-parole. DHS, however, may
consider user growth as a factor when evaluating an entrepreneur's
eligibility under the alternative criteria provision. The list of
factors provided in the preamble to the proposed rule was intended only
to illustrate the kinds of factors that DHS may consider as reliable
and compelling evidence of the start-up entity's substantial potential
for rapid growth and job creation.
As noted in the NPRM, DHS is not defining in regulation the
specific types of evidence that may be deemed ``reliable and
compelling'' at this time, because DHS seeks to retain flexibility as
to the kinds of supporting evidence that may warrant the Secretary's
exercise of discretion in granting parole based on significant public
benefit. DHS believes, however, that such evidence would need to be
compelling to demonstrate that the entrepreneur's presence in the
United States would provide a significant public benefit. DHS will
evaluate on a case-by-case basis whether such evidence--in conjunction
with the entity's substantial funding, revenue generation, or job
creation--establishes that the applicant's presence in the United
States will provide a significant public benefit during a re-parole
period.
Comment: An individual commenter suggested that the minimum annual
revenue threshold for re-parole be set as just enough to sustain the
entrepreneur's salary and continue business operations.
Response: The final rule states that the start-up entity must be of
a type that has the substantial potential to experience rapid growth
and job creation, including through significant levels of capital
investment, government awards or grants, revenue generation, or job
creation during the re-parole period. These factors are intended to
help DHS identify the types of start-up entities that are most likely
to provide a significant public benefit, while excluding entities
without such potential--such as a business with limited growth
potential created by an entrepreneur for the sole or primary purpose of
providing income to the entrepreneur and his or her family.\25\ Because
this latter type of business is less likely to experience rapid growth
[[Page 5259]]
and job creation, DHS believes it is unlikely that the entrepreneur of
such a business would be able to meet the significant public benefit
requirement for a grant of parole. Establishing a minimum annual
revenue threshold for re-parole that would, by definition, cover only
an entrepreneur's salary and continue business operations would not
likely help identify whether an entrepreneur's activity in the United
States would provide a significant public benefit. DHS therefore
declines to adopt the commenter's suggestion.
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\25\ Erik Hurst & Benjamin Wild Pugsley, ``What Do Small
Businesses Do?'' (Aug. 2011), available at https://www.brookings.edu/
~/media/files/programs/es/bpea/2011_fall_bpea_papers/
2011_fall_bpea_conference_hurst.pdf.
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c. Minimum Jobs Created
Comment: Several commenters discussed the proposed re-parole
criterion at 8 CFR 212.19(c)(2)(ii)(B)(2), which establishes an
eligibility threshold for applicants whose start-up entities have
created at least 10 qualified jobs within the start-up entities during
the initial parole period. Most commenters argued that this job
creation requirement was unduly high or that the time period for
compliance was too short.
Response: Based on comments received, DHS has lowered the job
creation criterion for re-parole from 10 to 5 qualified jobs. See final
8 CFR 212.19(c)(2)(ii)(B)(2). DHS agrees with commenters that requiring
10 jobs to satisfy this criterion may be unduly high for many start-
ups, even those with demonstrated substantial potential for rapid
growth and job creation. DHS believes that the creation of 5 qualifying
jobs during the initial period of parole is sufficient to determine
that the start-up entity continues to have substantial potential for
rapid growth and job creation, particularly in light of the substantial
capital investment, government funding, or other reliable and
compelling evidence that supported the initial parole determination. In
each case, DHS must be persuaded that re-parole is justified by
significant public benefit and that the person seeking re-parole merits
a favorable exercise of discretion. As discussed elsewhere in this
preamble, DHS has also extended the initial period of parole from 2
years to 30 months, in order to allow additional time for start-up
entities to grow, obtain additional substantial funding, generate
substantial revenue, or create jobs. See 8 CFR 212.19(c)(2)(iii).
d. Re-Parole Alternative Criteria
Comment: One commenter suggested that DHS should consider taxes
paid by a start-up entity as a criterion for re-parole, leaving the
task to DHS to define the threshold of the amount and type of taxes
paid.
Response: DHS declines to adopt the commenter's suggestion. DHS
believes that a start-up entity would have to generate a significant
level of revenue or job creation (which are already criteria under this
rule) to meet any separate, standalone tax-based threshold. Any such
additional criterion would therefore be unlikely to be particularly
probative in determining whether re-parole is justified by significant
public benefit or the person seeking re-parole merits a favorable
exercise of discretion. DHS therefore declines to include the payment
of taxes as a stand-alone eligibility criterion.
Comment: A commenter suggested that if DHS lowers the funding and
job creation thresholds for re-parole, there should be no need for
alternative criteria.
Response: While DHS did reduce the job creation threshold for re-
parole in the final rule, DHS believes that parolees should have the
flexibility to present other reliable and compelling evidence of the
start-up entity's substantial potential for rapid growth and job
creation. Examples of such evidence are provided above, in the
discussion on alternative criteria for the initial parole period. DHS
believes that it is important to retain such flexibility in the final
rule, consistent with the case-by-case nature of these parole
determinations. DHS, therefore, has not adopted the commenter's
suggestions.
5. Authorized Periods of Parole
Comment: Several commenters discussed the initial 2-year parole
period at 8 CFR 212.19(d)(2). Most commenters argued that the 2-year
period was unduly short, as start-ups with significant potential for
rapid growth and job creation may require more time to meet re-parole
eligibility requirements. Some commenters suggested having a 3-year
initial period of parole and a 2-year period of re-parole. Other
commenters suggested a range for initial parole from 3 to 5 years. A
number of comments discussed the overall duration of the parole
periods, the majority of which advocated for longer periods ranging
from 6 to 10 years in total. Some of these commenters based the need
for an extended parole period on the typical duration of the start-up
growth path from seed funding to venture capital financing to exit
(through an initial public offering or a merger or acquisition).
Response: Based on the comments received, DHS is changing the
maximum periods for initial parole and re-parole to 30 months (2.5
years) each, for a total maximum parole period under this rule of up to
5 years. The additional time for the initial parole period will provide
entrepreneurs with more time to receive additional qualified
investments or government funding, increase revenue, or create
qualified jobs sufficient to meet the eligibility criteria for an
additional period of parole. While this change does reduce the length
of the re-parole period, DHS believes that this approach is necessary
to provide additional time during the initial period of parole while
maintaining the same maximum overall parole period of 5 years. DHS
further believes that a 5-year total maximum parole period is
consistent with the amount of time successful start-up entities
generally require to realize rapid growth and job creation potential.
Moreover, an entrepreneur of a start-up entity that is almost 5 years
old when the parole application is filed would have the possibility to
obtain up to 5 years of parole, which would allow the entity to realize
its rapid growth and job creation potential by the time it is 10 years
old--and to provide those benefits in the United States.\26\ DHS
retains the discretion to provide any length of parole to an applicant,
including a period shorter than 30 months where appropriate. DHS also
notes that although USCIS would designate an appropriate initial parole
period upon approval of the Application for Entrepreneur Parole, CBP
would retain its authority to deny parole to an applicant or to modify
the length of parole authorized by USCIS upon issuing parole at the
port of entry, consistent with CBP's discretion with respect to any
advance authorization of parole by USCIS.
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\26\ Estimates based on the Census Bureau Business Dynamics
Statistics suggest that on average 55 percent of new firms survived
after 3 years, but 80 percent of the firms that survived 3 years
also made it through 5 years. Dane Stangler and Jared Konczal ``Give
me your entrepreneurs, your innovators: Estimating the Employment
Impact of a Startup Visa'', Ewing Marion Kauffman Foundation (Feb.
2013), available at https://www.kauffman.org/~/media/kauffman_org/
research%2Oreports%20and%20covers/2013/02/
startup_visa_impact_final.pdf; ``CrunchBase Reveals: The Average
Successful Startup Raises $41M, Exits at $242.9M,'' Techcrunch.com
(Dec. 14, 2013), available at https://techcrunch.com/2013/12/14/crunchbase-reveals-the-average-successful-startup-raises-41m-exits-at-242-9m/; see also TruBridge Capitol Partners, Why the `Next
Billion Dollar Startup' Is not Always the Next IPO, Forbes, Apr. 15,
2015, available at https://www.forbes.com/sites/truebridge/2015/04/15/why-next-billion-dollar-startup-not-always-next-ipo/ (``From
2001-2004, the average age of a company at its public exit was 5.4
years. . . . From 2009-2012, the average age was 7.9.'').
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[[Page 5260]]
6. Limitation on Number of Entrepreneurs
Comment: Several commenters addressed 8 CFR 212.19(f) in the
proposed rule, which states that no more than three entrepreneurs may
be granted parole based on the same start-up entity. Most commenters on
this provision recommended that DHS increase the number of
entrepreneurs, with suggestions to increase the maximum number to 4 or
5. Several other commenters, including a trade association and a
professional association, supported the proposed rule's limit of 3
entrepreneurs obtaining parole under this rule based on the same start-
up entity. An individual commenter stated that DHS should allow for
additional entrepreneurs to qualify for parole based on the same start-
up entity, not only at the time of application but also at a later
date, asserting that it is very common for technology companies to
introduce multiple co-owners over time that are key personnel vital to
the operations of the start-up entity.
Response: DHS appreciates the comments regarding this limitation
and recognizes that some start-ups may initially have more than 3
founders or owners. After reviewing all comments, DHS declines to
increase the number of entrepreneurs permitted to request parole
related to the same start-up entity, and will retain the current limit
of no more than 3 eligible entrepreneur applicants per start-up entity.
See final 8 CFR 212.19(f). As an initial matter, DHS believes it would
be difficult for a larger number of entrepreneurs associated with the
same start-up entity to each meet the eligibility criteria and comply
with the conditions on parole while ultimately developing a successful
business in the United States. A higher number of entrepreneurs
associated with the same start-up entity may affect the start-up's
ability to grow and succeed, and may even result in the startup's
failure, thus preventing the goals of the parole process under this
rule from being realized.\27\ Imposing a limit on the number of
entrepreneurs who may be granted parole based on the same start-up
entity is thus consistent with ensuring that each entrepreneur's parole
will provide a significant public benefit.
---------------------------------------------------------------------------
\27\ Max Marmer, Bjoern Lasse Herrmann, Ertan Dogrultan, Ron
Berman, Startup Genome Report Extra on Premature Scaling, Startup
Genome Report: Premature scaling v 1.2 (Mar. 2012 ed.) (explaining
that ``hiring too many people too early'' in a start-up's
development is one of several reasons that most start-ups fail),
available at https://s3.amazonaws.com/startupcompass-public/StartupGenomeReport2_Why_Startups_Fail_v2.pdf.
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The limitation, moreover, will help strengthen the integrity of the
international entrepreneur parole process in various ways. Among other
things, limiting the number of individuals who may be granted parole
under this rule in connection with the same start-up entity will
provide an additional safeguard against an entity being used as a means
to fraudulently allow individuals to come to the United States. Such a
limit diminishes, for example, the incentive to dilute equity in the
start-up entity as a means to apply for parole for individuals who are
not bona fide entrepreneurs. Finally, DHS clarifies that the rule does
not require that additional entrepreneurs, up to 3 entrepreneurs per
start-up entity, apply for parole based on the same start-up entity at
the same time.
7. Income-Related Conditions on Parole
Comment: Several commenters discussed the proposed rule's provision
requiring that entrepreneurs paroled into the United States must
maintain a household income that is greater than 400 percent of the
Federal poverty line for their household size, as defined by the
Department of Health and Human Services. Many of these commenters
discussed the financial difficulties faced by start-ups and argued that
the income requirements were unduly high or suggested other
alternatives. The majority of commenters on this issue stated that
entrepreneurs in start-up endeavors typically do not take a salary or
take a minimal salary in the early years. Several commenters
recommended lowering this income threshold, with many suggesting
lowering it to 100 percent, while others suggested alternatives of 125
percent, 200 percent, or 250 percent of the Federal poverty level. An
individual commenter recommended that DHS institute a minimum yearly
income requirement of $80,000, while another individual commenter
stated that DHS should adopt a more nuanced approach that takes into
account factors like standard of living, unemployment rates, and
economic growth by state. Other commenters recommended that DHS allow
for other types of compensation, in the form of benefits or rewards, in
addition to salary to satisfy the income-related conditions on parole.
Another individual commenter stated that DHS should use the income
threshold already established by the Affidavit of Support,\28\ which is
set at 125 percent above the poverty guidelines. Lastly, one commenter
said the ``significant public benefit'' determination should not just
be applied to entrepreneurs who meet a particular income or wealth
criterion, but should be liberally applied to all entrepreneurs who are
seeking to build and grow a business.
---------------------------------------------------------------------------
\28\ Affidavits of Support, filed using Form I-134 or I-864, are
required for certain immigrants to show that they have adequate
means of financial support and are not likely to rely on the U.S.
government for financial support.
---------------------------------------------------------------------------
Response: DHS appreciates the concerns raised by these commenters,
but declines to adopt the commenter's suggestion to eliminate or alter
the income-related condition on parole. Establishing this income-
related condition on parole is consistent with the Secretary's
discretionary authority to grant parole ``under conditions as he may
prescribe.'' INA section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A). As
stated in the NPRM, DHS established this income threshold to ensure
that applicants seeking parole under this rule will have sufficient
personal economic stability to make significant economic and related
contributions to the United States. Those policy goals remain valid and
are appropriate in guiding the decision to retain the requirement that
the household income of an entrepreneur requesting parole under this
rule be greater than 400 percent of the Federal poverty line.
Under this rule, DHS will take steps to ensure that each grant of
parole will provide a positive net benefit to the economy of the United
States, consistent with the statutory framework authorizing parole only
for significant public benefit absent urgent humanitarian issues. In
addition to considering all the other positive evidence--from job
creation to investment to growth--DHS includes the income threshold as
an additional safeguard that the entrepreneur and his or her family
will not be eligible to draw upon Federal public benefits or premium
tax credits under the Health Insurance Marketplace of the Affordable
Care Act. Furthermore, Secretary Johnson indicated in his memorandum
titled ``Policies Supporting U.S. High-Skilled Business and Workers''
that such thresholds would be created so that individuals would not be
eligible for these public benefits or premium tax credits in light of
the purpose of the policy.\29\
---------------------------------------------------------------------------
\29\ Memorandum from Jeh Johnson, DHS Secretary, Policies
Supporting U.S. High-Skilled Business and Workers 4 (Nov. 20, 2014),
at https://www.dhs.gov/sites/default/files/publications/14_1120_memo_business_actions.pdf.
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DHS emphasizes that the funding amounts received by a start-up
entity from governmental sources or from
[[Page 5261]]
qualified investors in order to meet the rule's eligibility thresholds
are distinct from the possible sources of salary payments to the
individual entrepreneur. Nothing in this rule prevents a start-up
entity from raising higher funding levels than the minimum parole
eligibility thresholds, and from a wider set of funders than those in
the rule's definitions of qualified investors and government entities.
DHS intends for the eligibility criteria for parole to be useful
independent validation tools for assessing the significant growth and
job creation potential of the start-up entity. While there is certainly
validity to the arguments made by some of the commenters that many
entrepreneurs do not take large salaries, choosing instead to re-invest
available funds back into the start-up entity or to take other forms of
non-cash compensation, DHS must establish criteria that protect the
overall policy goals of this rule in accordance with the requirements
of the INA. The income-related requirements offer a clear and
predictable mechanism for DHS to have a strong measure of confidence
that the entrepreneur and his or her family, while paroled into the
United States under this rule, will be net positive contributors to the
American economy.
8. Reporting of Material Changes
Comment: Several commenters discussed the proposed requirement that
entrepreneurs report any material changes during a parole period to DHS
by submitting a new application for parole. Most commenters argued that
such a requirement would be onerous given the constantly changing
nature of start-ups. A law firm argued that requiring entrepreneurs to
report and reapply when there are pending actions against the start-up
entity or entrepreneur would be unfair, as both are entitled to due
process, and suggested a reporting requirement only if an adverse
judgment were issued. An individual commenter stressed that a $1,200
fee to report every material change would create a major financial
burden for entrepreneurs.
Response: DHS recognizes that the nature of start-up entities
involves constant change. DHS also appreciates the concerns regarding
the administrative and financial burden placed on entrepreneurs by
additional filings. DHS believes, however, that the revised definition
of material change in the final rule will help to clarify the
situations in which the entrepreneur must notify the agency of material
changes, and thus limit the administrative and financial burdens on the
entrepreneur. Specifically, DHS understands that start-ups may have
frequent ownership changes over the course of successive funding
rounds, and thus has revised the definition of ``material change''
regarding ownership changes to cover only those that are
``significant'' in nature. Clarifying the scope of the material change
definition also limits the reporting requirement, which should help
reduce the anticipated burden on entrepreneurs. DHS also emphasizes
that the rule requires notification of pending actions only in the
context of a criminal case or other action brought by a government
entity, while actions brought by private individuals or entities are
not considered ``material changes'' until a settlement, judgment, or
other final determination is reached. DHS does not believe that the
material change reporting requirement under this rule will impact an
individual's due process or would otherwise be unfair. DHS believes,
however, that it is important for an entrepreneur granted parole under
this rule to immediately inform USCIS if certain actions are brought
against the entrepreneur or his or her start-up entity.
Comment: One commenter recommended that the process of addressing
material changes would be improved if DHS were to implement a policy
similar to the ``deference'' policy it applies in the EB-5 investor
program. Such a policy provides that DHS will defer to prior
determinations regarding certain documentary evidence used to
establishing program eligibility requirements absent fraud,
misrepresentation, a mistake of law or fact, or a material change.
Response: As discussed above, DHS decided to narrow and clarify the
definition of ``material change'' in order to address commenters'
concerns about reporting burdens. In the absence of specific
suggestions, DHS could not ascertain from this comment what aspect of
the EB-5 deference policy could be applied under this rule. DHS
believes it is important for this rule to provide mechanisms, including
the requirement to report material changes, to ensure that parole
continues to be justified by significant public benefit in each
particular case.
Comment: A joint submission from a professional association and a
non-profit organization stated that, where a material change filing is
mandated by the rule, the entrepreneur should only be required to file
an update with USCIS, instead of being required to re-file an entire
parole or re-parole application.
Response: As explained above, while DHS appreciates that a new
filing may appear burdensome to the entrepreneur, DHS believes that a
new filing is necessary in order to re-evaluate the entrepreneur's
eligibility when such material changes occur. Material changes, by
their definition, may affect the entrepreneur's ability to demonstrate
that the start-up entity has potential for rapid growth and job
creation, and whether the entrepreneur will continue to provide a
significant public benefit to the United States. Therefore, at present,
the entrepreneur must file a new application to allow DHS the
opportunity to determine the entrepreneur's continued eligibility for
parole. Given that this is a new and complex process, DHS has decided
to take an incremental approach and will consider potential
modifications in the future after it has assessed the implementation of
the rule and its impact on operational resources.
9. Other Comments on Parole Criteria and Conditions
Comment: Several comments expressed concern that the rule did not
require that the entrepreneur receive prevailing wages for their work,
with some commenters expressing concern that the only wage requirements
relate to the Federal Poverty Level.
Response: DHS appreciates commenters' concerns regarding prevailing
wages. Unlike some employment-based visa classifications, however, the
intention of this parole process is not to address labor shortages in
the United States. Rather, it is to encourage international
entrepreneurs to create and develop start-up entities with high growth
potential in the United States. DHS believes that requiring the parolee
to maintain a household income of greater than 400 percent of the
Federal Poverty Level adequately ensures that he or she will have
sufficient personal economic stability to provide a significant public
benefit to the United States through entrepreneurial activities.
Comment: One commenter recommended that DHS should not require an
applicant's start-up entity to receive investment prior to the initial
application for parole; that DHS should recognize cash infusions during
the growth period of a start-up entity as eligibility criteria for re-
parole; and that at the end of the initial parole period, if the
venture is deemed successful, no additional funding milestones should
be required for re-parole eligibility.
Response: DHS appreciates the comment but declines to revise the
rule as suggested. DHS believes that the alternative criteria provided
in this rule to determine if the start-up entity has
[[Page 5262]]
substantial potential for rapid growth and job creation provide
sufficient flexibility for those entrepreneurs who may have received
amounts of qualified investments or government funding that are less
than those required to satisfy the general criteria for parole
consideration under this rule. The determination that the entity has
substantial potential for rapid growth and job creation will be made
based on the evidence in the record at the time the parole application
is adjudicated, rather than the possibility that the entity may receive
cash infusions at some point in the future. If cash infusions from
various sources are received by the start-up entity during the period
of initial parole, evidence of such cash infusions may be taken into
consideration if the entrepreneur applies for re-parole. DHS, however,
does not believe that cash infusions into the start-up entity during
the initial parole period will independently suffice to establish that
the entity continues to have the significant potential for rapid growth
and job creation. Infusions of cash, as a general matter, do not have
the same validating qualities as do evidence of additional investment
from qualifying investors, grants or awards from qualifying government
entities, significant revenue growth, or job creation.
Comment: One commenter asserted that entrepreneurs who have left
their start-up entity should not have their parole status immediately
revoked. The commenter suggested that DHS issue guidance and options
for entrepreneurs who leave their start-up entity but have contributed
to the significant public benefit of the United States. A similar
comment recommended that individuals be able to remain in the United
States under parole and qualify for re-parole if a second start-up
meets the requirements of the rule. Another related comment argued that
entrepreneurs whose start-up entities fail should be given a second
chance, in order to account for the dynamism and uncertainty inherent
in new businesses.
Response: DHS appreciates the comments but declines to adopt the
commenters' suggestions. As a matter of statutory authority, once, in
the opinion of DHS, the purpose of parole has been served, parole
should be terminated. See INA section 212(d)(5)(A), 8 U.S.C.
1182(d)(5)(A). DHS emphasizes that the purpose of granting parole under
this rule is to allow an entrepreneur to grow a start-up entity in the
United States with substantial potential for rapid growth and job
creation, by working in an active and central role for the entity.
Accordingly, DHS will not continue parole for entrepreneurs who are no
longer actively working in a central role with the start-up entity that
served as the basis for the initial parole application. The
individual's activity through a new start-up entity, however, could
serve as a basis for a new grant of parole if all requirements for such
parole are met.
Comment: One commenter suggested that DHS should utilize the same
methodology for granting parole for entrepreneurs as defined in a
proposed nonimmigrant visa classification in a Senate bill, S. 744, 113
Cong. section 4801(2013).
Response: DHS appreciates the comment but declines to adopt the
commenter's suggestion. Under this rule, DHS has identified a process
for implementing the Secretary's existing statutory authority to grant
parole consistent with section 212(d)(5) of the INA. DHS does not
believe it is advisable to import in this rule the standards from
unenacted legislation focused on nonimmigrant visas rather than
discretionary grants of parole.
G. Employment Authorization
1. Automatic Employment Authorization Upon Parole
Comment: One commenter suggested that if employment authorization
were deemed incident to parole, rather than through a follow-up
application, then the regulations governing employment verification
would need to be amended to permit employment by the parolee and spouse
without an EAD.
Response: DHS agrees that the employment verification provisions of
the regulations should be appropriately revised. In this final rule,
and as proposed, DHS is revising the employment eligibility
verification regulations by expanding the foreign passport and Form I-
94 document combination described at 8 CFR 274a.2(b)(1)(v)(A)(5) to
include Forms I-94A containing an endorsement that an individual is
authorized to work incident to parole. This document combination was
previously acceptable only for certain nonimmigrants authorized to work
for a specific employer incident to status pursuant to 8 CFR
274a.12(b), which the final rule amends to include those paroled into
the United States as entrepreneurs under this rule. See final 8 CFR
274a.12(b)(37).
However, in this final rule, and as proposed, only the entrepreneur
parolee is accorded employment authorization incident to his or her
parole. See final 8 CFR 274a.12(b). Given the basis for parole, it is
essential to limit any delays in the entrepreneur's own employment
authorization. Such delays could create difficulties for the
entrepreneur's operation of the start-up entity, as he or she would be
prohibited from working until work authorization was approved, and
would frustrate the very purpose for paroling the entrepreneur into the
United States. As an entrepreneur's spouse would not be coming for the
same kind of specific employment purpose, DHS does not believe there is
a similar need to provide him or her work authorization incident to
parole. Instead, this rule adds a new provision making the spouse of an
entrepreneur parolee eligible to seek employment authorization. See
final 8 CFR 274a.12(c)(34). Based on this provision and 8 CFR
274a.13(a), an entrepreneur's spouse seeking employment authorization
under this rule would need to file an Application for Employment
Authorization (Form I-765) with USCIS in accordance with the relevant
form instructions.
Comment: One commenter expressed concern that the proposed
employment authorization provision is too narrow in scope. The
commenter stated that DHS should clarify that employment with an entity
that is under common control as the start-up entity, such as a
subsidiary or affiliate, would be permissible.
Response: Under the final rule, the entrepreneur parolee's
employment authorization is limited to the specific start-up entity
listed on the Application for Entrepreneur Parole, Form I-941. This
limitation helps ensure that the entrepreneur's work is consistent with
the purposes for which parole was granted, especially since parole
applications will be evaluated based in part on the activities and
performance of that particular start-up entity. DHS appreciates that
there are certain circumstances in which some flexibility could further
the purpose of encouraging entrepreneurship, innovation, economic
growth, and job creation in the United States. Given that this is a new
process however, DHS has decided to take an incremental approach and
will consider potential modifications in the future after assessing the
implementation of the rule.
Comment: One commenter stated that difficulties obtaining a work
visa have caused many entrepreneurs to move out of the United States.
Response: DHS agrees with the commenter's statement. While this
rule does not address all of the difficulties that entrepreneurs may
face, or make legislative changes that only Congress can make, DHS
believes it will encourage international entrepreneurs
[[Page 5263]]
to develop and grow their start-up entities--and provide the benefits
of such growth--in the United States. Entrepreneurs paroled into the
United States under this rule will be authorized to work for the start-
up entity for the duration of the parole (and any re-parole) period.
2. Spousal Employment
Comment: Several commenters, including a business incubator,
asserted that spouses should be granted employment authorization and
argued that spouse employment authorization will entice more
entrepreneurs to come to the United States. Several other commenters
stated that, in order to attract the best entrepreneurial talent,
spouses of entrepreneur parolees should automatically receive work
authorization incident to status without the need to apply separately.
Response: DHS agrees with commenters that extending employment
authorization to spouses of entrepreneur parolees is important to help
attract entrepreneurs to establish and grow start-up entities in the
United States. For reasons provided above, however, DHS disagrees that
these spouses must be provided with employment authorization incident
to their parole. Instead, these spouses may seek employment
authorization under 8 CFR 274a.12(c)(34).
Comment: A few commenters stated opposition to permitting
employment authorization for the spouses of international
entrepreneurs.
Response: DHS disagrees with the commenters' opposition to allowing
an entrepreneur's spouse to apply for employment authorization.
Permitting spouses to seek employment authorization is an important
aspect of the rule's intent to attract international entrepreneurs who
may provide a significant public benefit by growing their start-up
entities in the United States.
Comment: One commenter objected to spousal employment authorization
unless it is restricted to the same new high-potential start-up entity
that served as the basis for the parole.
Response: DHS disagrees with the suggestion that spousal employment
should be authorized only for employment with the start-up entity that
served as the basis of parole for the entrepreneur. Nothing in this
rule prevents people married to each other from applying for parole
associated with the same start-up entity. But DHS believes that it is
not appropriate or necessary to limit the employment of an
entrepreneur's spouse to that entity. Making those spouses eligible to
seek employment from a broader range of employers can further the
central purpose of the rulemaking--encouraging international
entrepreneurs to develop and grow their start-up entities within the
United States and provide the benefits of such growth to the United
States. It may also encourage entrepreneurs to create more jobs outside
the family through the start-up entity, furthering the benefits
provided to others in the United States. DHS therefore declines to
revise the rule as suggested.
H. Comments on the Parole Process
1. Ability of Individuals To Qualify for Parole Under This Rule
Comment: Two individual commenters asked what kind of immigration
status or visa an international entrepreneur should maintain in order
to be eligible to apply for parole under this rule. The commenters
expressed concern about the types of activities that would need to be
conducted in the United States prior to a parole application in order
to establish a business, obtain funds from investors, and otherwise
qualify for the parole under this rule. These commenters also expressed
concern about requiring prior investment as a condition for parole, and
that investors would be hesitant to make such an investment in a start-
up entity if the entrepreneur lacked an immigrant or nonimmigrant visa.
A professional association stated that, since parole does not
constitute formal admission to the United States, it will likely be
very difficult for international entrepreneurs without formal
immigration status to enter into long-term contracts, raise significant
investment capital, and employ people.
Response: This final rule aims to encourage international
entrepreneurs to create and develop start-up entities with high growth
potential in the United States, which are in turn expected to
facilitate research and development in the country, create jobs for
U.S. workers, and otherwise benefit the U.S. economy. Under this final
rule, an international entrepreneur may request parole in accordance
with the form instructions. The final rule provides that individuals
seeking initial parole under this program must present themselves at a
U.S. port of entry to be paroled into the United States; there is no
requirement that an international entrepreneur currently be in the
United States or maintain any prior immigration status. DHS notes,
however, that under the statute governing parole authority, individuals
who have already been admitted to the United States are ineligible to
be considered for parole inside the United States because only
applicants for admission are eligible to be considered for parole. See
INA section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A); see also INA section
235(a)(1), 8 U.S.C. 1225(a)(1) (describing ``applicants for
admission''). Individuals who have been admitted in a nonimmigrant
classification, and are currently in the United States pursuant to that
admission, may not be paroled, even if they have overstayed their
admission, unless they first depart the United States.
DHS appreciates that international entrepreneurs may face many
challenges in starting and growing a business in the United States,
including attracting investment capital or government grants or awards.
DHS disagrees with the premise, however, that qualifying investors will
be very reluctant to make a qualifying investment in a start-up entity
that is wholly or partially owned by an individual that will be seeking
a grant of parole under this rule. DHS believes that there are a myriad
of factors that go into a decision to invest significant funds in a
start-up entity. While the underlying immigration status, or lack
thereof, of the start-up entity's owner(s) may be a factor presenting a
degree of additional risk, DHS believes that this rule will effectively
mitigate some of that risk by providing a known framework under which
certain significant public benefit parole requests will be reviewed and
adjudicated. This final rule provides investors and entrepreneurs with
greater transparency into the evaluation process and manner in which
such requests will be reviewed, so that those individuals and entities
can weigh the various risks and benefits that might apply to the
particular investment decision being considered. Given that this is a
new and complex process, DHS has decided to take an incremental
approach and will consider potential modifications in the future after
assessing the implementation of the rule.
2. Waiver for Entrepreneurs Presently Failing To Maintain Status
Comment: An individual commenter stated that international
entrepreneurs already in the United States should be able to receive a
waiver in order to establish eligibility for parole under this rule if
they do not have a valid prior immigration status. Another commenter
suggested that immigration status violations, such as unauthorized
employment, should not be grounds for denying parole under this rule
and, if parole is granted, any prior
[[Page 5264]]
unauthorized employment that was used to meet the requirements for
parole should be disregarded for purposes of any future immigration
applications.
Response: As discussed above, eligibility for parole under INA
section 212(d)(5), 8 U.S.C. 1182(d)(5), is not wholly dependent upon an
individual's current immigration status. Unauthorized employment or a
prior status violation will not necessarily preclude an individual from
qualifying for parole under this rule. However, the fact that an
entrepreneur has worked without authorization, is out of status, or not
legally present in the United States would be considered in determining
whether DHS should grant parole under its discretionary authority. All
requests for a discretionary grant of parole are adjudicated on a case-
by-case basis and ultimately determined by evaluating all positive and
negative factors.
DHS will not adopt the commenter's suggestion to disregard, for
purposes of any future immigration applications, any prior unauthorized
employment that was used to meet the requirements for parole. DHS
believes that such a provision would require a statutory change, as
eligibility for certain benefits is barred by statute if the applicant
previously worked without authorization.\30\
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\30\ See, e.g., INA section 245(c), 8 U.S.C. 1255(c).
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3. Relationship Between Parole and Various Nonimmigrant Visa
Classifications
a. Pathway for Current Nonimmigrants To Use Entrepreneur Parole
Comment: Some commenters expressed concern that it would be
challenging for foreign students, recent graduates of U.S.
universities, and other nonimmigrants presently in the United States to
meet this rule's requirements for parole consideration under the
constraints of their current visas. These commenters said that the rule
should allow these individuals a realistic and clear pathway to easily
utilize parole, and should clarify that potential applicants currently
in the United States in nonimmigrant status will not be violating their
existing visa status when taking the necessary steps to establish
eligibility for significant public benefit parole. One commenter
requested that students in F-1 nonimmigrant status and eligible to work
on Curricular Practical Training (CPT) or Optional Practical Training
(OPT) should become eligible for parole under the rule if they founded
a start-up and raised $100,000 in capital.
Response: DHS appreciates that some entrepreneurs who are present
in the United States and who might otherwise qualify for parole under
this program may be unable to engage in certain activities given the
limitations placed on their nonimmigrant status, making it difficult,
for example, for them to raise significant capital for a start-up
entity. DHS, however, disagrees with the commenters' assertion that
individuals present in the United States in F-1 nonimmigrant status
will be unable to meet the requirements for parole under this program,
such as starting a business and raising significant investment, without
violating their F-1 nonimmigrant status. For example, an individual in
F-1 status who has obtained OPT employment authorization may start and
work for his or her own business in the United States. The OPT
employment, and thus the business, must relate to the F-1
nonimmigrant's program of study and can occur either before (pre-
completion OPT) or after the completion of a program of study (post-
completion OPT).\31\ Additional requirements apply to F-1 nonimmigrants
who are otherwise eligible for a STEM OPT extension, such as
establishing that their STEM OPT employer will have a valid employer-
employee relationship with the F-1 OPT nonimmigrant, but those
additional requirements do not pertain to the initial 12-month OPT
period, and in any event do not present an absolute bar against
entrepreneurial activities. DHS believes that it is certainly realistic
that an F-1 nonimmigrant in the United States can start a business
during his or her OPT period, and during that time can take steps to
obtain significant investment in the start-up entity, which the
individual may then rely upon if applying for parole under this rule.
DHS declines to adopt the commenters' suggestion to include in this
rule a blanket provision stating that potential applicants currently in
the United States in nonimmigrant status will not be violating their
existing status when taking steps to establish eligibility for parole.
Such changes would pertain to the statutory and regulatory limitations
placed on various nonimmigrant classifications and are outside the
scope of this rule.
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\31\ https://studyinthestates.dhs.gov/training-opportunities-in-the-united-states.
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DHS believes that this final rule provides a realistic and clear
option for certain entrepreneurs to actively grow their qualifying
start-up entity in the United States. As discussed below, parole is not
a nonimmigrant status, and individuals present in the United States in
a nonimmigrant status will not be able to change status or otherwise be
granted parole without first departing the United States and appearing
at a U.S. port of entry for inspection and parole. Under this final
rule, however, an individual present in the United States in a
nonimmigrant status may apply for and obtain an approval of the
Application for Entrepreneur Parole (Form I-941). Filing and obtaining
approval of a Form I-941 application under this rule will not, by
itself, constitute a violation of the individual's nonimmigrant status.
After approval of the Form I-941 application, if the individual decides
to rely upon parole to actively grow his or her business in the United
States, the individual will need to appear at a U.S. port of entry for
a final parole determination to allow him or her to come into the
United States as a parolee.
This final rule already provides appropriate criteria under which
all applications will be reviewed, including those submitted by any F-1
nonimmigrants. As indicated in this final rule, one basis on which an
individual may be considered for parole under this rule is if he or she
has raised at least $250,000 in investment capital from a qualifying
investor (and meets certain other criteria). Individuals who raise a
substantial amount of capital from a qualifying investor, but less than
$250,000, may still qualify for and be granted parole under other
criteria identified in the rule--including the receipt of a qualifying
government grant or award or other reliable and compelling evidence of
the start-up entity's substantial potential for rapid growth and job
creation.
b. Switching Between Nonimmigrant Status and Parole
Comment: Several commenters raised questions or provided
suggestions regarding switching from a nonimmigrant status to parole,
or from parole to a nonimmigrant status. Specifically, one commenter
asked what her status would be if she were in the United States as an
H-4 nonimmigrant, authorized to work pursuant to an EAD, but
nevertheless pursued parole under this rule. Another commenter
suggested that DHS should include a provision in this rule that
expressly allows someone to switch from nonimmigrant status to parole,
and from parole to nonimmigrant status, similar to DHS's policy to
terminate and restore the H-1B or L-1 status of certain individuals who
have temporarily departed the United States but came back using an
advance parole document that was
[[Page 5265]]
issued based on a pending Form I-485 application for adjustment of
status.
Response: DHS declines to adopt a provision in this rule allowing
individuals to change between nonimmigrant status and parole while in
the United States. An individual who is present in the United States as
a nonimmigrant based on an inspection and admission is not eligible for
parole without first departing the United States and appearing at a
U.S. port of entry to be paroled into United States. See INA section
212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A). Moreover, an individual who has
been paroled into the United States cannot change to nonimmigrant
status without leaving the United States, as INA section 248, 8 U.S.C.
1258, only permits individuals who are maintaining nonimmigrant status
to change to another nonimmigrant status. If an individual who has been
paroled into the United States under this rule has a petition for
nonimmigrant classification approved on his or her behalf, he or she
would have to leave the United States and pursue consular processing of
a nonimmigrant visa application before seeking to return to the United
States.
c. Entrepreneur Pathways and Entrepreneur Parole
Comment: One commenter stated that the international entrepreneur
parole rule should complement and not supplant prior USCIS policy
pertaining to entrepreneurs, including those reflected on the USCIS
Entrepreneur Pathways Web site.\32\ The commenter, while expressing
concerns with aspects of existing policies pertaining to entrepreneurs
and this rule, suggested that if an entrepreneur cannot qualify for
parole under this rule, USCIS should encourage the entrepreneur to seek
a visa associated with his or her start-up entity under the existing
immigrant or nonimmigrant visa system. Specifically, the commenter
suggested that the final rule should expressly include an amendment to
the H-1B regulations to allow approval of an H-1B petition under the
policies articulated on the Entrepreneur Pathways Web site, and that
USCIS adjudicators should see an express statement in the final rule
that, notwithstanding the existence of this rule, the H-1B visa remains
available for working owners of start-up entities. The commenter noted
that the USCIS Entrepreneur Pathways Web site also provides guidance
for entrepreneurs to use other existing nonimmigrant visa
classifications (e.g., L-1, O, and E visas) that could be more
advantageous to the entrepreneur than the parole rule, so adjudicators
should continue to approve petitions in that spirit. The commenter
asserted that the unique requirements under the parole rule, such as a
threshold investment amount, should not be allowed to ``bleed into and
taint'' the adjudicatory process for securing employment-based visas
traditionally used by entrepreneurs.
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\32\ See https://www.uscis.gov/eir.
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Response: DHS appreciates the commenter's suggestions, but the
suggested changes to the H-1B regulations are outside the scope of this
rulemaking. DHS agrees with the commenter that parole under this
program is intended to complement, and not supplant, other options that
may already exist for entrepreneurs under other immigrant and
nonimmigrant visa classifications. This rule does not alter existing
rules or policies regarding the ability of entrepreneurs to qualify for
any immigrant or nonimmigrant status. This rule does, however, provide
an additional avenue for entrepreneurs to consider when exploring
options that may be available to them to grow a start-up entity in the
United States.
4. Travel Document Issuance
Comment: A commenter urged DHS to grant multiple-entry parole to
foreign nationals so that they may travel internationally and return to
the United States, as this is not explicit in the regulation. The
commenter stated that this ability is essential to ensure that
entrepreneurs can raise additional funds and market innovations
worldwide. In addition, this commenter stated that some foreign
nationals may begin their businesses and seek entrepreneur parole while
in nonimmigrant status in the United States, such as in F-1 or H-1B
nonimmigrant status (and thus seek to depart the United States with
advance parole and then request parole from CBP upon their return to a
U.S. port of entry). The commenter suggested that the regulation
clarify how these foreign nationals will be able to return to the
United States.
Response: DHS notes that individuals who have been admitted to the
United States, such as those in nonimmigrant status, are not eligible
to be granted parole unless they first depart the United States. DHS
clarifies that any immigration status violations by any applicant for
parole, including those related to their entrepreneurial efforts, will
be taken into account as negative factors in the case-by-case
determination of whether the applicant merits an exercise of discretion
to grant parole, though they will not necessarily prohibit the
individual from obtaining a grant of parole under this rule.
DHS recognizes that international travel can be essential for the
success of some start-up entities. Under existing law, an individual's
authorized period of parole ends each time he or she departs the United
States. See 8 CFR 212.5(e)(1)(i). DHS may, however, authorize advance
parole before departure and can specify that such authorization is
valid for multiple uses. An entrepreneur granted advance parole would
be able to leave the country, present himself or herself at a port of
entry upon return, and request a subsequent grant of parole for the
remaining period of his or her initially granted parole period. At such
time, DHS must then inspect the individual and determine whether or not
to grant parole into the United States.\33\ If the individual is
granted parole, he or she may only be paroled for up to the time
initially granted. Any time spent outside the United States after the
parole period is initiated will count against the total period of
parole, so that the total time period of the parole period remains
consistent with the date of initial parole granted by CBP.
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\33\ This process is not appropriately described as ``multiple-
entry parole.'' Parole does not constitute an admission to the
United States, INA sections 101(a)(13)(B), 212(d)(5)(A), 8 U.S.C.
1101(a)(13)(B), 1182(d)(5)(A); and parole terminates upon the
individual's departure from the United States, 8 CFR 212.5(e)(1)(i).
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5. Parole in Place
Comment: Several commenters requested that DHS allow parole-in-
place under this rule. Some of these commenters stated that parole-in-
place should be added so that individuals already in the United States
in a nonimmigrant status, such as H-1B or F-1 nonimmigrant status, can
apply for and be granted parole under this rule without having to
depart the United States. Several other commenters noted that DHS has
the jurisdiction to allow parole-in-place for spouses or dependents, as
they do for military family members, and that this could be applied to
the International Entrepreneur Rule. Some commenters argued that the
requirement to be out of the country to apply for parole under this
rule puts an unnecessary financial burden on applicants who are already
residing in the United States.
Response: DHS appreciates, but declines to adopt, the commenters'
suggestions that parole-in-place be allowed under this rule for
individuals already in the United States in H-1B or F-1 nonimmigrant
status. Only applicants for admission are eligible to
[[Page 5266]]
be considered for parole, thus precluding individuals who have already
been admitted from being considered for parole inside the United
States. See INA section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A); see also
INA section 235(a)(1), 8 U.S.C. 1225(a)(1) (describing ``applicants for
admission''). Such individuals are not eligible for parole, regardless
of whether they have overstayed their admission, unless they first
depart the United States.
6. Comments on Options After 5-Year Total Parole Period Ends
Comment: Many commenters provided views on the options available to
entrepreneurs who have exhausted their up to 5 years of eligibility for
parole under this rule. Some commenters were concerned that the rule
does not provide a direct path to lawful permanent residence, which
could limit the investment prospects for start-up entities. Other
commenters were concerned that including such a path could exacerbate
current immigrant visa backlogs and thus disadvantage those already in
the queue for immigrant visa numbers.
A number of commenters were more broadly concerned that the overall
uncertainty inherent in parole may discourage entrepreneurs from using
this rule to start and grow their businesses in the United States. One
particular commenter expressed concerns about an entrepreneur's ability
to demonstrate nonimmigrant intent for purposes of a visa that does not
permit dual intent. Others wanted DHS to consider entrepreneurs who
have completed a 5-year parole period, and whose start-ups continue to
demonstrate growth, as eligible for an EB-2 immigrant visa with a
National Interest Waiver based upon the economic benefit to the United
States. Other commenters urged DHS to establish prima facie eligibility
for lawful permanent residence based on 3 years of parole under this
rule. Still others wanted assurance that an individual who is the
beneficiary of an approved immigrant petition would keep his or her
priority date for purposes of receiving lawful permanent residence if
he or she were granted parole under this rule.
Response: DHS appreciates the wide range of comments about
immigration options for entrepreneurs after the end of their authorized
period or periods of parole under this rule. Nothing in this rule
forecloses otherwise available options for international entrepreneurs
who are granted parole. DHS further notes that this rule does not
impact existing rules and policies pertaining to retention of priority
dates in the immigrant petition context. The rule does not, however,
establish a direct path to lawful permanent residence by creating a new
immigrant visa classification for international entrepreneurs, which
could only be done by Congress.
As discussed in the NPRM, the entrepreneur and any dependents
granted parole under this program will be required to depart the United
States when their parole periods have expired or have otherwise been
terminated, unless such individuals are otherwise eligible to lawfully
remain in the United States. Such individuals may apply for any
immigrant or nonimmigrant classification for which they may be eligible
(such as classification as an O-1 nonimmigrant or lawful permanent
residence through employer sponsorship). Individuals who are granted
parole under this rule may ultimately be able to qualify for an EB-2
immigrant visa with a National Interest Waiver. If an entrepreneur is
approved for a nonimmigrant or employment-based immigrant visa
classification, he or she would generally be required to depart the
United States and apply for a visa at a U.S. embassy or consulate
abroad. As noted above, because parole is not considered an admission
to the United States, parolees will be unable to apply to adjust or
change their status in the United States under many immigrant or
nonimmigrant visa classifications. DHS does not believe that merely
being granted parole under this rule would prevent an individual from
demonstrating nonimmigrant intent for purposes of obtaining a
subsequent nonimmigrant visa for entry into United States. DHS believes
that this rule presents sufficient clarity and predictability for many
individuals who want to establish and grow their businesses in the
United States, and will contribute significantly to economic growth and
job creation here. Such positive outcomes may be relevant in the event
that entrepreneurs granted parole under this rule later seek to apply
for an existing nonimmigrant or immigrant visa.
I. Appeals and Motions To Reopen
Comment: Several commenters requested that applicants be allowed to
file appeals or motions to reconsider adverse parole decisions. A
business association requested that submissions of motions to reopen or
motions for reconsideration result in uninterrupted employment
authorization for the parolee.
Response: DHS appreciates but declines to adopt these suggestions.
DHS has concluded that granting a right of appeal following a decision
to deny entrepreneur parole would be inconsistent with the
discretionary nature of the adjudication and contrary to how DHS treats
other parole decisions. The final rule also precludes applicants from
filing motions to reopen or for reconsideration under 8 CFR
103.5(a)(1). DHS retains its authority and discretion, however, to
reopen or reconsider a decision on its own motion as proposed. See
final 8 CFR 212.19(d)(4). Applicants may alert DHS, through existing
customer service channels, that they believe that a decision to deny
parole was issued in error and include factual statements and arguments
supporting such claims.
Because the determination to grant or deny a request for parole is
discretionary, the parole process in this final rule may not be relied
upon to create any right or benefit, substantive or procedural,
enforceable at law or by any individual or other party in removal
proceedings, in litigation with the United States, or in any other form
or manner. Parole determinations would continue to be discretionary,
case-by-case determinations made by DHS, and parole may be revoked or
terminated at any time in accordance with the termination provisions
established by this rule at 8 CFR 212.19(k). Parolees under this final
rule would assume sole risk for any and all costs, expenses,
opportunity costs, and any other potential liability resulting from a
revocation or termination of parole. A grant of parole would in no way
create any reliance or due process interest in obtaining or maintaining
parole or being able to remain in the United States to continue to
operate a start-up entity or for other reasons.
J. Termination of Parole
1. Discretionary Authority To Revoke/Terminate Parole
Comments: One commenter expressed concern that the basis for
terminating parole is subjective, particularly with respect to
reporting material changes. This commenter suggested that USCIS should
limit such reporting to adverse judgments, since entrepreneurs and
start-up entities are entitled to due process. Other commenters
requested that USCIS adjudicators be specifically trained on
entrepreneurship issues so that they can make the most informed
decisions regarding parole.
Response: USCIS is committed to providing sufficient training on
entrepreneurship issues for those adjudicators who will be assigned to
adjudicating entrepreneur parole
[[Page 5267]]
requests. DHS does not believe that further revisions to the rule are
necessary to protect against possible unfair or inconsistent
determinations among adjudicators. By statute, parole decisions are
discretionary and must be made on a case-by-case basis. This rule
establishes transparent parameters for termination of parole, including
automatic termination and termination on notice. Automatic termination
applies at the expiration of parole, or upon written notification to
DHS from the entrepreneur parolee that he or she is no longer employed
by the start-up entity or no longer possesses the required qualifying
ownership stake in the start-up entity. See final 8 CFR 212.19(k)(2).
Termination on notice with an opportunity for the entrepreneur to
respond is authorized by 8 CFR 212.19(k)(3). These bases for
termination are tied to objective facts regarding eligibility for
parole, thereby placing all parolees on the same footing.
The commenter expressed particular concern regarding terminations
based on material changes. DHS believes that this concern is
sufficiently addressed by the parameters set by this rule's definition
of material change. Under this rule, material change means any change
in facts that could reasonably affect the outcome of the determination
whether the entrepreneur provides, or continues to provide, a
significant public benefit to the United States. See final 8 CFR
212.19(a)(10). This rule provides further guidance by listing several
examples illustrating material changes, including: Any criminal charge,
conviction, plea of no contest, or other judicial determination in a
criminal case concerning the entrepreneur or start-up entity; any
complaint, settlement, judgment, or other judicial or administrative
determination concerning the entrepreneur or start-up entity in a legal
or administrative proceeding brought by a government entity; any
settlement, judgment, or other legal determination concerning the
entrepreneur or start-up entity in a legal proceeding brought by a
private individual or organization other than proceedings primarily
involving claims for damages not exceeding 10 percent of the current
assets of the entrepreneur or start-up entity; a sale or other
disposition of all or substantially all of the start-up entity's
assets; the liquidation, dissolution or cessation of operations of the
start-up entity; the voluntary or involuntary filing of a bankruptcy
petition by or against the start-up entity; a significant change with
respect to ownership and control of the start-up entity; and a
cessation of the entrepreneur's qualifying ownership interest in the
start-up entity or the entrepreneur's central and active role in the
operations of that entity. See final 8 CFR 212.19(a)(10).
2. Notice and Decision
Comments: A couple of commenters suggested that DHS provide notice
and opportunity to respond before terminating parole.
Response: DHS agrees with the commenters that providing the
entrepreneur parolee with notice and an opportunity to respond prior to
termination is reasonable in certain scenarios, such as when grounds
for termination require an assessment of the underlying case by the
adjudicator. However, where no such assessment is required, DHS
believes that automatic termination is appropriate. The NPRM provided
for termination at DHS's discretion, including automatic termination in
limited circumstances and termination on notice under a range of
circumstances deemed appropriate by DHS. This rule finalizes that
proposal without change. See final 8 CFR 212.19(k)(2) and (3). Under
this rule, therefore, DHS will generally provide notice of termination
and an opportunity to respond where it believes that:
(1) The facts or information contained in the request for parole
were not true and accurate;
(2) The alien failed to timely file or otherwise comply with the
material change reporting requirements in this section;
(3) The entrepreneur parolee is no longer employed in a central and
active role by the start-up entity or ceases to possess the required
ownership stake in the start-up entity;
(4) The alien otherwise violated the terms and conditions of
parole; or
(5) Parole was erroneously granted.
Automatic termination will apply upon the expiration of parole or
if DHS receives written notice from the parolee informing DHS that he
or she is no longer employed by the start-up entity or no longer
possesses the required qualifying ownership stake in the start-up
entity. DHS believes that these bases for automatic termination clearly
evidence that the entrepreneur no longer qualifies for parole under
this rule; therefore, notice and opportunity to respond are
unnecessary. Additionally, parole of the spouse or child of the
entrepreneur will be automatically terminated without notice if the
parole of the entrepreneur has been terminated. This rule also
finalizes the provision indicating that the decision to terminate
parole may not be appealed, that USCIS will not consider a motion to
reopen or reconsider a decision to terminate parole, and, upon its own
motion, USCIS may reopen or reconsider a decision to terminate. See
final 8 CFR 212.19(k)(4).
3. Other Comments on Application Adjudication and Parole Termination
Comments: Multiple commenters suggested an expedited or premium
processing option for entrepreneur parole applicants. Some of these
commenters suggested a maximum 30-day adjudication time period.
Response: While DHS appreciates the concern for timely
adjudications, at this time DHS declines to include premium or
expedited processing as part of the final rule. DHS may consider the
possibility of premium processing or expedited processing after
assessing implementation of the rule and an average adjudication time
for processing requests for parole under this rule has been determined.
K. Opposition to the Overall Rule
Comment: Multiple commenters expressed overall opposition to the
rule, stating that there is no reason to add an additional parole
process for highly trained and talented entrepreneurs when visa and
residency pathways already exist, such as the O nonimmigrant visa, EB-5
immigrant visa, or EB-2 immigrant visa based on a National Interest
Waiver. Other commenters asserted that the United States needs to limit
immigration, not create more immigration programs. Several individual
commenters argued that the U.S. Government should reform other visa
programs, such as the H-1B nonimmigrant classification, and address the
current immigrant visa backlog before creating more programs. Several
individual commenters asserted that taxpayer money should be used on
domestic issues, such as reviving the American economy, rebuilding
infrastructure, promoting national security, and supporting veterans,
rather than on administering a parole process for international
entrepreneurs.
Response: DHS disagrees with the commenters' assertions that
sufficient avenues for international entrepreneurs already exist. DHS
believes that this final rule will, by further implementing authority
provided by Congress, reduce barriers standing in the way of innovation
and entrepreneurial activity that will benefit the U.S. economy.\34\
[[Page 5268]]
This final rule provides an avenue for innovative entrepreneurs to
pursue their entrepreneurial endeavors in the United States and
contribute to the U.S. economy. In the absence of this rule, these
innovative entrepreneurs might be delayed or discouraged altogether in
contributing innovation, job creation, and other benefits to the United
States.
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\34\ Nina Roberts, For foreign tech entrepreneurs, getting a
visa to work in the U.S. is a struggle, The Guardian, Sept. 14,
2014, available at https://www.theguardian.com/business/2014/sep/14/foreign-tech-entrepreneurs-visa-us-struggle; Amy Grenier, Majority
of U.S. Patents Granted to Foreign Individuals, April 11, 2014,
available at https://immigrationimpact.com/2014/04/11/majority-of-u-s-patents-granted-to-foreign-individuals/ (``Because of the
limitations of the H-1B visa program, and the lack of a dedicated
immigrant visa for entrepreneurs or innovators, foreign inventors
struggle with inadequate visa options that often prevent them from
obtaining permanent residency.'').
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DHS also disagrees with the commenters' assertions that reforms
should be made to the H-1B nonimmigrant classification and that the
immigrant visa backlog should be addressed before this rule is
finalized. Parole is an entirely separate option within the Secretary's
authority to allow individuals to come to the United States on a case-
by-case basis for urgent humanitarian reasons or significant public
benefit. While DHS appreciates the commenters' sentiment that changes
should be made in other contexts, the exact changes contemplated by the
commenters are unclear, are outside the scope of this rulemaking, or
would require congressional action.
DHS also disagrees with the assertion that taxpayer funds will be
misallocated to process applications for parole under this final rule.
Applicants for parole under this rule will be required to submit a
filing fee to fully cover the cost of processing of applications.
L. Miscellaneous Comments on the Rule
1. Additional Suggested Changes to the Rule
Comments: A number of commenters suggested additional changes to
the final rule that are beyond the scope of this rulemaking. These
comments proposed changes to the regulations governing certain
nonimmigrant programs, namely: Employment of F-1 nonimmigrant students
through Optional Practical Training (OPT); annual H-1B numerical
limitations; ``period of stay'' duration for L-1 nonimmigrants starting
a new office in the United States; and merging significant public
benefit parole with the O-1 visa program. A commenter suggested
providing Employment Authorization Documents or lawful permanent
resident status to individuals who obtained their Master's degrees in
the United States. Other commenters suggested providing tax incentives
to established U.S. corporations that would agree to mentor immigrant
entrepreneurs, or establishing a system of compensation for certain
senior citizens in the United States to mentor immigrant entrepreneurs.
Other commenters recommended balancing parole for entrepreneurs with
refugee admissions.
Response: DHS thanks commenters for these suggestions but declines
to make changes to the rule as these comments are outside the scope of
this rulemaking.
Comment: A joint submission from an advocacy group and professional
association recommended that DHS consider parole for individuals who
work in social services fields that do not command a high income or who
might otherwise perform work in the national interest.
Response: This final rule is aimed at international entrepreneurs
who will provide a significant public benefit to the United States--
which could include entrepreneurs whose startup entities operate in the
field of social services, so long as they meet the criteria for parole
in this final rule. Furthermore, this rule does not limit the
Secretary's broader authority to grant parole to other applicants for
admission on a case-by-case basis for urgent humanitarian reasons or
significant public benefit.
2. Information/Guidance
Comment: One commenter recommended that DHS make parole data from
the program publicly available.
Response: While DHS did not propose to disclose parole data related
to this rule, DHS appreciates the commenter's suggestion, and may
consider making such data publicly available after this rule is
implemented.
Comment: Other commenters suggested that DHS provide additional
guidance to those granted parole under this rule and to provide
resources for small start-ups interested in applying for the rule.
Response: DHS will evaluate whether to provide additional guidance
following publication of this final rule and an assessment of its
implementation.
Comment: One commenter suggested that DHS add a provision to the
rule for retrospective review, in order to analyze the effects of the
rule's implementation.
Response: DHS agrees with the commenter's suggestion that the
effects of the rule, after its implementation, should be reviewed;
however, DHS does not believe adding a provision to the final
regulatory text requiring such review is necessary. DHS intends to
review all aspects of this parole rule and process subsequent to its
implementation and consistent with the direction of Executive Order
13563. Given that this is a new and complex process, DHS will consider
potential modifications in the future after assessing the
implementation of the rule and its impact on operational resources.
Comment: One commenter said these rules should serve as a guide,
but that companies and entrepreneurs should be analyzed on case-by-case
basis.
Response: DHS may grant parole on a case-by-case basis under this
rule if the Department determines, based on the totality of the
evidence, that an applicant's presence in the United States will
provide a significant public benefit and that he or she otherwise
merits a favorable exercise of discretion.
Comment: An individual commenter suggested that DHS should, as part
of its assessment of parole applications under this rule, evaluate the
performance of applicants' prior start-ups in their home countries.
Response: DHS agrees with the commenter and believes that the
performance of applicants' prior start-ups in their home countries is
the type of evidence already contemplated by the final rule both under
the alternative criteria provisions and as part of the determination as
to whether an applicant merits a favorable exercise of discretion. The
alternative criteria allow an applicant who partially meets one or more
of the general criteria related to capital investment or government
funding to be considered for initial parole under this rule if he or
she provides additional reliable and compelling evidence that his or
her parole would provide a significant public benefit to the United
States. Such evidence would need to serve as a compelling validation of
the entity's substantial potential for rapid growth and job creation.
DHS is not defining the specific types of evidence that may be deemed
``reliable and compelling'' at this time, as DHS seeks to retain
flexibility as to the kinds of supporting evidence that may warrant
DHS's exercise of discretion in granting parole based on significant
public benefit.
3. Comments Regarding the E-2 Nonimmigrant Classification
Comment: Several commenters submitted comments regarding the E-2
nonimmigrant classification. The majority supported the inclusion of E-
2 businesses into the parole process under this rule. Several companies
and an individual commenter further recommended that the rule should
[[Page 5269]]
accommodate E-2 businesses already in the United States.
Response: The final rule lays out specific criteria for determining
the kind of start-up enterprise that has substantial potential for job
growth and job creation, and for assessing whether an individual
entrepreneur's parole would be justified by significant public benefit.
DHS believes it is unnecessary to identify these enterprises even more
specifically than in this final rule. DHS notes that the rule does not
prevent individuals who might otherwise qualify for an existing
immigrant or nonimmigrant classification from applying for parole under
this rule.
Comment: One commenter stated that the proposed rule is much more
complicated than the E-2 nonimmigrant classification, and that DHS
should incorporate elements of the E-2 program into this rule's parole
process.
Response: DHS disagrees with the commenter's suggestion.\35\ A
grant of parole under this rule is based on a determination that the
individual will provide a significant public benefit to the United
States. Eligibility for E-2 nonimmigrant classification is based on
different standards, and DHS believes that applying E-2 requirements
would not suffice to meet the statutory requirements for parole and
establish that an individual merits a favorable exercise of discretion.
DHS therefore declines to adopt the commenter's suggestion.
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\35\ The E-2 nonimmigrant classification allows a national of a
treaty country (a country with which the United States maintains a
treaty of commerce and navigation) to be admitted to the United
States when investing a substantial amount of his or her own capital
in a U.S. business.
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Comment: A commenter suggested that the proposed rule is
unnecessary since the E-2 program already supports international
entrepreneurs.
Response: DHS disagrees with the commenter's statement. The E-2
program allows nationals of a treaty country (a country with which the
United States maintains a qualifying Treaty of Friendship, Commerce and
Navigation or its equivalent) to be admitted to the United States when
investing a substantial amount of capital in a U.S. business. Foreign
entrepreneurs from nontreaty countries, such as Brazil, China, India,
Israel, or Russia, are currently not eligible for an E-2 nonimmigrant
visa. Also, the E-2 category requires the entrepreneur to invest his or
her own funds, and is therefore not applicable to entrepreneurs relying
upon funds from investors or government entities to build and grow
their business. DHS believes that this rule provides a viable option,
consistent with the Secretary's parole authority, to allow
entrepreneurs to build and grow their businesses in the United States,
providing significant public benefit here.
4. Usefulness of the Rule
Comment: Multiple commenters argued that this rule will not
necessarily help international entrepreneurs succeed, because there are
too many restrictions in place for foreign residents to qualify. One
commenter asserted that the rule as proposed is too complex and its
goals will be impossible to achieve.
Response: DHS disagrees with these assertions. DHS acknowledges
that this final rule will not benefit all international entrepreneurs
seeking to enter or remain in the United States. As several commenters
have stated, the final rule does not and cannot create a new visa
classification specifically designed for international entrepreneurs,
which is something that can only be done by Congress. This final rule,
however, provides an additional option that may be available to those
entrepreneurs who will provide a significant public benefit to the
United States. This parole option complements, but does not supplant,
current immigrant and nonimmigrant visa classifications for which some
international entrepreneurs might qualify to bring or keep their start-
up entities in the United States.
The requirements governing eligibility for consideration for parole
under this rule establish a high evidentiary bar that must be met in
order to assist DHS in its determination that the individual will
provide a significant public benefit to the United States. DHS,
however, does not agree with the commenter's assertion that the
requirements are impossible for all entrepreneurs to meet. Given that
this is a new and complex process, DHS will consider potential
modifications in the future after assessing the implementation of the
rule and its impact on operational resources.
5. Include On-Campus Business Incubators in the Rule
Comment: One commenter urged USCIS to tie eligibility for parole to
an applicant's participation in business incubators and accelerators
located on U.S. university and college campuses that allow
international entrepreneurs to grow start-up companies. The commenter
stated that these programs meet the goal of the rule while providing
benefits on a local and national scale. The commenter elaborated that
the proposed rule only contemplates a traditional start-up arrangement,
which creates requirements based on ownership interest, type of
investor, and amount of money invested. The commenter asserted that
international entrepreneurs that engage with campus-based incubators
cannot meet these requirements because the structure and opportunities
provided by a higher education institution do not follow the
traditional models. The commenter urged DHS to create alternative
criteria to recognize the role higher education plays in fostering
international entrepreneurs.
Response: DHS appreciates the comment but will not adopt changes to
the rule in response. DHS recognizes and values the important role that
incubators and accelerators located on a U.S. university or college
campuses perform in the entrepreneur community. DHS believes, however,
that the framework provided by this rule does allow DHS to consider, in
its discretionary case-by-case determination, the fact that the start-
up entity is participating in such an incubator or accelerator. DHS
believes that evidence of such participation is one factor to be
weighed for those individuals who do not fully meet the general capital
investment or government funding criteria and are relying on additional
reliable and compelling evidence that the start-up entity has the
substantial potential for rapid growth and job creation. DHS believes
that reliable and compelling evidence may, depending on all the
circumstances, include evidence that the start-up entity is
participating in a reputable incubator or accelerator located on a U.S.
university or college campus.
6. Objection to Use of the Word ``Parole''
Comment: Multiple commenters objected to the use of the word
``parole'' to describe the provisions in this rule. Commenters are
concerned that use of the word in an immigration context will be
confused with the use of the word in the criminal context. A
commentator suggested using the term ``conditional status'' or
``provisional status.''
Response: DHS declines to accept the commenters' suggestion.
``Parole'' is a term established by statute at section 212(d)(5) of the
INA, 8 U.S.C. 1182(d)(5). The use of that term in the INA should not be
confused with the word's usage in non-immigration contexts. Use of
alternative terms as suggested by the commenter would be misleading.
[[Page 5270]]
7. Concern Over Possible Exploitation of Entrepreneurs
Comment: Two commenters suggested that international entrepreneurs
would be vulnerable to exploitation by venture capital investors under
this rule. The commenters compare the influence of venture capitalists
over entrepreneurs granted parole to the influence of employers over H-
1B employees. One commenter expressed concern that the rule could allow
a venture capitalist almost total dominance over the international
entrepreneur's life, through the threat of withdrawing funding and
thereby triggering termination of parole.
Response: DHS disagrees with the commenters' assertions that the
final rule will facilitate such exploitation of international
entrepreneurs by venture capital investors. As a general matter,
venture capitalists and other investors cannot easily withdraw funding
from a start-up entity once this investment transaction has been duly
executed. Once an entrepreneur has applied for parole on the basis of
prior investment, and has been granted such parole, the investor will
not be in a position to directly interfere with the entrepreneur's
continued eligibility during the parole period. The final rule will not
create significant new conditions for exploitation that do not already
exist currently for international entrepreneurs--or for that matter,
domestic entrepreneurs--in the United States.
Comment: One commenter stated that the United States should be
mindful of what may happen to poorer countries when the United States
attracts their best entrepreneurs.
Response: DHS stresses that application for parole under this rule
is voluntary and has the primary goal of yielding significant public
benefit for the United States. DHS believes that applicants will assess
economic and business conditions both in the United States and in other
countries and will consider these conditions, along with numerous
others, in the decision to apply for parole under this rule. DHS does
not believe that the rule itself, which authorizes parole only for a
limited period of time and under specific limited circumstances, will
create significant negative consequences for poorer countries.
Additionally, positive spillovers from new innovations are not limited
to the specific country in which they were developed. Parole under this
rule in no way prevents an entrepreneur contributing to the economy of
his or her home, including through remittance payments or upon return.
Furthermore, individuals may be interested in returning to their home
countries in the future for a variety of reasons, including the
temporary nature of parole.
M. Public Comments on Statutory and Regulatory Requirements
1. Regulatory Impact Analysis
Comment: Two commenters suggested alternative estimates for the
number of applicants that could apply to this rule. One commenter
estimated that 5,000 international entrepreneurs will apply for parole
under this rule. This estimate was approximately 2,000 more
entrepreneurs than the estimate provided by DHS. Another commenter
stated that the rule's eligibility criteria are narrow and therefore,
the rule would cause fewer than 3,000 people to apply.
Response: DHS recognizes that uncertainty in business and economic
conditions, as well as data limitations, make it difficult to
accurately predict how many entrepreneurs will apply for parole under
this rule. However, as discussed in the ``Volume Projections'' section
of this rule, DHS utilized limited data available to estimate that
approximately 2,940 entrepreneurs could seek parole each year. This
estimate was bolstered by an alternative estimate based on accelerator
investment round data that DHS analyzed. Given limits on DHS's
information about such entrepreneurs and that this is a new process,
DHS does not know how many people within the estimated eligible
population will actually apply. Additionally, fluctuations in business
and economic conditions could cause the number of applications to vary
across years.
While one commenter estimates that the eligible number of
entrepreneurs will be higher than the DHS estimate, another commenter
estimates it will be lower. Neither of the commenters provided a basis
or data from which their figures were derived. DHS reaffirms that the
estimate provided in this rule is reasonable. The assessment is based
on analysis of data and publicly available information, and reflects,
where data and analysis allow, reasonable medians or averages.
Comment: One commenter argued that the rule would only benefit
certain special-interest venture capitalists.
Response: DHS respectfully disagrees with this commenter.
Fundamentally, this rule is designed to yield significant public
benefit to the United States--including through economic growth,
innovation, and job creation--and not to any particular private-sector
interest group. While some venture capital firms may benefit from the
rule by having new opportunities to invest in start-up entities that
would not have otherwise been able to locate in the United States, this
is also true for a range of other ``qualified investors'' as defined in
the rule. Moreover, many international entrepreneurs may qualify for
parole under this rule without having raised private-sector capital
investment at all, since funding from government entities is also an
eligibility criterion.
Comment: Several commenters stated that the rule would provide
significant economic benefits.
Response: DHS agrees with these commenters that the rule will
provide significant economic benefits to the United States. As
discussed in the proposed rule and elsewhere in this section, DHS
believes that this rule will help the United States compete with
programs implemented by other countries to attract international
entrepreneurs. International entrepreneurs will continue to make
outsized contributions to innovation and economic growth in the United
States.
Comment: Several commenters provided feedback on the costs of
applications. One commenter stated that the fees were reasonable.
Another commenter suggested allowing market prices to determine parole
costs, essentially allowing those entrepreneurs with more likelihood of
success to invest in parole opportunities. Still other commenters
stated that the application fee was too high, especially compared to
various visa applications.
Response: DHS appreciates commenters' feedback on the costs for
applications. DHS determines the costs of applications through a
biennial fee study it conducts, which reviews USCIS' cost accounting
process and adjusts fees to recover the full costs of services provided
by USCIS. The established fees are necessary to fully recover costs and
maintain adequate service by the agency, as required by INA section
286(m); 8 U.S.C. 1356(m).
Comment: Several commenters generally stated support for the rule
because it will likely improve innovation for local and regional
economic areas. Another commenter stated support for the rule because
it would increase intangible assets.
Response: DHS concurs with this expectation that the rule will
foster innovation at the local and regional level. Studies on
entrepreneurs reveal that they are key drivers of innovation throughout
the United States, and that such innovation benefits local, regional,
and the national economy through technical progress and improvements in
efficiency and productivity. The rule's
[[Page 5271]]
eligibility criteria focus on start-ups with high growth potential, and
DHS expects that new firms started by entrepreneurs covered by the rule
will conduct research and development, expand innovation, and bring new
technologies and products to market in addition to creating jobs in the
United States. These activities will produce benefits that will spill
over to other firms and sectors.
DHS also agrees with the commenter on impacts to intangible assets.
Intangible assets are generally integrated into a firm's or sector's
total assets and have become important in broad analyses of
productivity and efficiency. Such assets can include proprietary
software, patents, and various forms of research and development. This
rule is intended to attract the types of ventures that will increase
intangible assets.
a. Job Creation
Comment: Many commenters agreed that this rule would help create
jobs and significantly benefit the U.S. economy. A commenter noted that
immigrants have helped to found one quarter of U.S. firms and therefore
allowing more international entrepreneurs would result in new job
creation. Commenters also mentioned that immigrants have historically
been successful in creating and establishing new businesses, which in
turn create jobs in the United States. Commenters also more
specifically endorsed the need to provide more investment opportunities
for venture capitalists and angel investors who indirectly create jobs.
Finally, commenters from the technology industry stated that attracting
entrepreneurs to the Unites States to operate in high unemployment
areas could provide access to new jobs where they are most needed.
Response: DHS appreciates the commenters' support of this rule with
regard to attracting international entrepreneurs, and emphasizes that
job creation for U.S. workers is one of the rule's primary goals, as
discussed in the Regulatory Impact Analysis (RIA).
b. Impact on Native U.S. Entrepreneurs and Native U.S. Workers
Comment: Several commenters suggested the rule will have negative
consequences for native U.S. entrepreneurs and native U.S. workers.
These commenters were concerned that the rule would be disadvantageous
to native U.S. entrepreneurs and would create incentives for venture
capital firms to find international entrepreneurs instead of investing
in native U.S. entrepreneurs. The commenters argued that job creation
could be accomplished through investment of native U.S. entrepreneurs
instead of foreign entrepreneurs. Several commenters also stated that
the government should assist U.S. entrepreneurs and workers before
helping international entrepreneurs. Commenters also mentioned that the
need for international innovators was overstated and that the number of
native U.S. innovators is already adequate. Finally, these commenters
asserted that foreign workers are often exploited for cheap labor and
harm job prospects for native U.S. workers.
Response: DHS disagrees with these commenters' assertion that the
rule will have negative impacts on native U.S. entrepreneurs and native
U.S. workers. This rule focuses on identifying entrepreneurs associated
with start-up entities with significant potential for bringing growth,
innovation, and job creation in the United States. Much research
supports the conclusion that high-growth firms drive job creation for
workers in the United States, including for native U.S. workers. As
discussed in further detail in the RIA, research also shows that
immigrants have been outsized contributors to business ownership and
entrepreneurship in the United States and abroad. Self-employment rates
for immigrants are higher than for the native U.S. population. As
discussed in the RIA, although one economic study has suggested that a
very small number of native U.S. entrepreneurs may be displaced by
international entrepreneurs, other researchers have noted that the
finding simply raises the possibility that such displacement could
occur without providing evidence that it actually does.\36\ DHS
reiterates, moreover, that the numbers of entrepreneurs who may be
eligible for parole under this rule is limited and that the aim of the
rule is to increase overall entrepreneurial activity and significant
economic benefit throughout the United States. In any event, the
purpose of the parole rule is to foster innovation and entrepreneurial
activities in new or very young endeavors, where the literature much
more decisively indicates a strong potential of creating new net jobs
for U.S. workers.
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\36\ Compare Fairlie, R.W., and B.D. Meyer. ``The effect of
immigration on native self-employment.'' Journal of Labor Economics
21:3 (2003): 619-650, available at: https://people.ucsc.edu/
~rfairlie/papers/published/jole%202003%20-%20native%20se.pdf, with,
e.g., Magnus Lofstrom, ``Immigrants and Entrepreneurship,'' Public
Policy Institute of California, USA, and IZA, Germany (2014), p. 4,
available at: https://wol.iza.org/articles/immigrants-and-entrepreneurship.pdf.
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c. Impact on Innovation
Comment: Several commenters provided feedback on the rule's impact
on innovation. Two commenters stated that this type of international
entrepreneurship supports innovation in the United States. Another
commenter stated that the rule would not help foreign innovators
because of complications with patents and modeling designs.
Response: DHS agrees with the commenters that stated that this rule
supports innovation in the United States. Entrepreneurs tend to engage
in research and development in order to develop and commercialize new
products and technologies, and often stimulate patents and other
intellectual capital linked to these efforts. DHS does not agree with
the commenter that stated the rule is not helpful to foreign innovators
because of issues with patents and modeling designs, and DHS sees no
basis for this comment. Nothing in the rule poses specific burdens or
constraints on the ability of entrepreneurs to seek and obtain patents
or other intellectual capital.
2. Review Under the National Environmental Policy Act (NEPA)
Comment: An advocacy organization stated that all rules, including
immigration rules, are subject to review under the National
Environmental Policy Act. The commenter suggested that, at minimum, an
Environmental Assessment be conducted to account for the growth-
inducing impacts that would occur with an influx in population under
this rule.
Response: DHS agrees that NEPA applies to this, as to every, final
rulemaking. As explained in section IV.E of this preamble, the rule has
been reviewed for environmental effects and found to be within two
categorical exclusions from further review because experience has shown
rules of this nature have no significant impacts on the environment.
DHS also notes that any entrepreneurial ventures undertaken will be
governed by local, state and federal laws and regulations, including
those protecting human health and the environment. We disagree with the
commenter's assertion that an Environmental Assessment is required.
3. Proposed Information Collections Under the Paperwork Reduction Act
a. Employment Eligibility Verification, Form I-9
Comment: An individual commenter suggested that List A documents
should be updated to include the verified
[[Page 5272]]
driver's licenses (sample attached and included in the file) that meet
federal guidelines and require the presentation of the same
documentation needed to obtain a passport. The commenter stated that it
is no longer reasonable for those who receive a verified license and
who paid the premium necessary for the processing of the extra
documents, to have to locate their birth certificate and social
security card in order to complete the Form I-9 process.
Response: DHS presumes that by ``verified driver's licenses'' the
commenter is referring to State driver's licenses that comply with the
REAL ID Act of 2005, Public Law 109-13, 119 Stat. 302. The specific
suggestion about amending List A on Form I-9, which would have wide-
ranging effect and not be limited to entrepreneurs under this rule, is
outside the scope of this rulemaking. This rule and accompanying form
revisions limit changes to List A of Form I-9 to the modification of an
existing document specified at 8 CFR 274a.2(b)(1)(v)(A)(5) to include
individuals authorized to work incident to parole.
b. Application for Entrepreneur Parole, Form I-941
Comment: DHS received a public comment that stated that the time
burden estimate of 1.33 hours for the respondent to complete the
information collection was too low.
Response: DHS appreciates and agrees with this comment. Based on
further review of the information collection and public comments on
this specific issue, DHS is revising the estimated time burden from
1.33 hours to 4.7 hours for Form I-941 respondents.
4. Comments and Responses to Impact on Small Businesses
Comment: The U.S. Small Business Administration, Office of Advocacy
(SBA) commented by supporting the goals of this rule, but expressed
concern that the rule could significantly impact small entities. The
SBA commented that the proposed rule was erroneously certified under
the Regulatory Flexibility Act (RFA). The SBA stated that the only
international entrepreneurs eligible for this parole program are those
with significant ownership stakes in a start-up entity formed in the
previous three years. The SBA also stated that the thresholds to
qualify for parole were directly tied to the ability of the
entrepreneur's start-up to produce significant public benefit to the
United States. The SBA noted that under the proposed rule, an
entrepreneur is not permitted to transfer work authorization to another
start-up entity, and that these restrictions could impact start-up
entities if the entrepreneur were no longer eligible to stay in the
United States. For these reasons, SBA concluded that this rule directly
impacts start-up entities. The SBA recommended that DHS submit a
supplemental analysis on the impact of the final rule on small
entities.
Response: DHS has concluded that a RFA certification statement for
this final rule is appropriate. This final rule does not regulate small
entities nor does it impose any mandatory requirements on such
entities. Instead, it provides an option for certain individual
entrepreneurs to seek parole on a voluntary basis. There are no
compliance costs or direct costs for any entity, small or otherwise,
imposed by this rule since it does not impose any mandatory
requirements on any entity. Historically, when an employer petitions on
behalf of an individual or employee, DHS has provided an RFA analysis
for the impact to small businesses. However, under this rule, a small
entity or an employer does not apply for parole on behalf of an
employee; instead, an entrepreneur applies for parole on a voluntary
basis on his or her own behalf, and only those eligible individuals
seeking parole would be subject to the anticipated costs of
application. Entrepreneurs with an ownership stake in a start-up make
the cost-benefit decision to voluntarily apply for parole.
In both the RFA and SBA's Guide for Government Agencies on the RFA,
government agencies are required to consider significant alternatives
to the rule when providing a full RFA analysis. Among the kinds of
alternatives that SBA suggests considering include ``the exemption for
certain or all small entities from coverage of the rule, in whole or in
part.'' \38\ Even if this rule directly impacted small entities and DHS
were required to engage in an analysis to minimize negative impacts of
the rule on small entities by exempting them from the rule, that
alternative would only harm small entities, which would no longer be
able to benefit from the rule's allowing entrepreneurs to seek parole
and work authorization.
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\38\ The Regulatory Flexibility Act, 5 U.S.C. 603(c)(4). The
Small Business Administration's RFA Guide for Government, p. 38,
available at https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
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The SBA also commented on various policy issues on the eligibility
of entrepreneurs in this rule. Notwithstanding DHS' belief that
entrepreneurs when filing for parole are not small entities, DHS has
carefully considered all those comments and has made policy changes in
this final rule to address the comments. Specifically, the SBA
commented that thresholds to qualify for parole are directly tied to
the ability of the international entrepreneur's start-up to produce
significant public benefit for the United States. DHS has considered
this comment along with other public comments on this issue and has
made the decision to lower the eligible threshold investment amount for
initial parole from the proposed $345,000 in the NPRM to $250,000 in
the final rule. Additionally, in the NPRM and in this final rule, DHS
has provided some flexibility and alternative criteria for those
entrepreneurs meeting partial eligibility requirements, as described in
further detail in the preamble.
SBA also commented that the rule only allows the entrepreneur to
work for the business identified on the parole application without
providing leniency in transferring the work authorization to another
entity. The SBA further comments that the start-up entity may be
imperiled if the entrepreneur is no longer eligible to stay in the
United States. The eligibility criteria for consideration for parole
under this rule require an entrepreneur to have recently formed a new
entity in the United States with substantial potential for rapid growth
and job creation. Before an application for parole under this rule is
approved, USCIS must make a discretionary determination that the
entrepreneur is well-positioned to provide a significant public benefit
to the United States. Therefore, these eligibility criteria are not
limiting entrepreneurs, but aimed at ensuring that only those
entrepreneurs with high growth potential are eligible for parole
consideration under this rule. DHS has also provided avenues for an
additional parole period specifically to prevent instability of a
start-up entity.
DHS reiterates that RFA guidance allows an agency to certify a
rule, instead of preparing an analysis, if the rule is not expected to
have a significant economic impact on a substantial number of small
entities.\39\ DHS reiterates that this rule does not regulate small
entities. Any costs imposed on businesses will be driven by economic
and business conditions and not by the
[[Page 5273]]
voluntary participation for benefits from this rule.
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\39\ See SBA, Office of Advocacy, ``A Guide for Government
Agencies; ``How to Comply with the Regulatory Flexibility Act,
Implementing the President's Small Business Agenda and Executive
Order 13272'' (May 2012), available at: https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
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IV. Statutory and Regulatory Requirements
A. Unfunded Mandates Reform Act of 1995
The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among
other things, to curb the practice of imposing unfunded Federal
mandates on State, local, and tribal governments. Title II of the Act
requires each Federal agency to prepare a written statement assessing
the effects of any Federal mandate in a proposed or final agency rule
that may result in a $100 million or more expenditure (adjusted
annually for inflation) in any one year by State, local, and tribal
governments, in the aggregate, or by the private sector. The value
equivalent of $100 million in 1995 adjusted for inflation to 2015
levels by the Consumer Price Index for All Urban Consumers (CPI-U) is
$155 million.
This rule does not exceed the $100 million expenditure in any one
year when adjusted for inflation ($155 million in 2015 dollars), and
this rulemaking does not contain such a mandate. The requirements of
Title II of the Act, therefore, do not apply, and DHS has not prepared
a statement under the Act.
B. Small Business Regulatory Enforcement Fairness Act of 1996
This rule is not a major rule as defined by section 804 of the
Small Business Regulatory Enforcement Act of 1996. This rule will not
result in an annual effect on the economy of $100 million or more, a
major increase in costs or prices, or significant adverse effects on
competition, employment, investment, productivity, innovation, or on
the ability of United States companies to compete with foreign-based
companies in domestic and export markets.
C. Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action'' under section 3(f) of Executive Order 12866. Accordingly, the
rule has been reviewed by the Office of Management and Budget.
1. Summary
This final rule is intended to add new regulatory provisions
guiding the use of parole with respect to individual international
entrepreneurs who operate start-up entities and who can demonstrate
through evidence of substantial and demonstrated potential for rapid
business growth and job creation that they would provide a significant
public benefit to the United States. Such potential is indicated by,
among other things, the receipt of significant capital financing from
U.S. investors with established records of successful investments, or
obtaining significant awards or grants from certain Federal, State or
local government entities. The regulatory amendments will provide the
general criteria for considering requests for parole submitted by such
entrepreneurs.
DHS assesses that this final rule will, by further implementing
authority provided by Congress, reduce a barrier to entry for new
innovative research and entrepreneurial activity in the U.S.
economy.\40\ Under this final rule, some additional international
entrepreneurs will be able to pursue their entrepreneurial endeavors in
the United States and contribute to the U.S. economy. In the absence of
the rule, these innovative entrepreneurs might be delayed or
discouraged altogether in bringing innovation, job creation, and other
benefits to the United States.
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\40\ Nina Roberts, For foreign tech entrepreneurs, getting a
visa to work in the US is a struggle, The Guardian, Sept. 14, 2014,
available at https://www.theguardian.com/business/2014/sep/14/foreign-tech-entrepreneurs-visa-us-struggle; Amy Grenier, Majority
of U.S. Patents Granted to Foreign Individuals, April 11, 2014,
available at https://immigrationimpact.com/2014/04/11/majority-of-u-s-patents-granted-to-foreign-individuals/ (``Because of the
limitations of the H-1B visa program, and the lack of a dedicated
immigrant visa for entrepreneurs or innovators, foreign inventors
struggle with inadequate visa options that often prevent them from
obtaining permanent residency.'').
---------------------------------------------------------------------------
Based on review of data on startup entities, foreign ownership
trends, and Federal research grants, DHS expects that approximately
2,940 entrepreneurs, arising from 2,105 new firms with investment
capital and about 835 new firms with Federal research grants, could be
eligible for this parole program annually. This estimate assumes that
each new firm is started by one person despite the possibility of up to
three owners being associated with each start-up. DHS has not estimated
the potential for increased demand for parole among foreign nationals
who may obtain substantial investment from U.S. investors and otherwise
qualify for entrepreneur parole, because changes in the global market
for entrepreneurs, or other exogenous factors, could affect the
eligible population. Therefore, these volume projections should be
interpreted as a reasonable estimate of the eligible population based
on past conditions extrapolated forward. Eligible foreign nationals who
choose to apply for parole as an entrepreneur will incur the following
costs: A filing fee for the Application for Entrepreneur Parole (Form
I-941) in the amount of $1,200 to cover the processing costs for the
application; a fee of $85 for biometrics submission; and the
opportunity costs of time associated with completing the application
and biometrics collection. After monetizing the expected opportunity
costs and combining them with the filing fees, an eligible foreign
national applying for parole as an entrepreneur will face a total cost
of $1,591. Any subsequent renewals of the parole period will result in
the same previously discussed costs. Filings to notify USCIS of
material changes to the basis for the entrepreneur's parole, when
required, will result in similar costs; specifically, in certain
instances the entrepreneur will be required to submit to USCIS a new
Form I-941 application to notify USCIS of such material changes and
will thus bear the direct filing cost and concomitant opportunity cost.
However, because the $85 biometrics fee will not be required with such
filings, these costs will be slightly lower than those associated with
the initial parole request and any request for re-parole.
Dependent spouses and children who seek parole to accompany or join
the principal applicant by filing an Application for Travel Document
(Form I-131), will be required to submit biographical information and
biometrics as well. Based on a principal applicant population of 2,940
entrepreneurs, DHS assumes a total of 3,234 spouses and children will
be eligible for parole under this rule. Each dependent will incur a
filing fee of $575, a biometric processing fee of $85 (if 14 years of
age and over) and the opportunity costs associated with completing the
Form I-131 application and biometrics collection.\41\ After monetizing
the expected opportunity costs associated with providing biographical
information to USCIS and submitting biometrics and combining it with
the biometrics
[[Page 5274]]
processing fee, each dependent applicant will face a total cost of
$765. DHS is also allowing the spouse of an entrepreneur paroled under
this rule to apply for work authorization. Using a one-to-one mapping
of principal filers to spouses, the total population of spouses
eligible to apply for work authorization is 2,940. To obtain work
authorization, the entrepreneur's spouse will be required to file an
Application for Employment Authorization (Form I-765), incurring a $410
filing fee and the opportunity costs of time associated with completing
the application. After monetizing the expected opportunity costs and
combining it with the filing fees, an eligible spouse will face a total
additional cost of $446 (rounded). DHS expects that applicants will
face the above costs, but does not anticipate that this rule will
generate significant additional costs and burdens to private entities,
or that the rule will generate additional processing costs to the
government to process applications. While applicants may face a number
of costs linked to their business or research endeavors, these costs
will be driven by the business and innovative activity that the
entrepreneur is engaged in and many other exogenous factors, not the
rule itself or any processes related to the rule. Thorough review of
academic, business, and policy research does not indicate that
significant expected costs or negative consequences linked to
attracting international entrepreneurs are likely to occur. As such,
DHS expects that the negative consequences, if any, will be greatly
exceeded by the positive effects of this rule.
---------------------------------------------------------------------------
\41\ The filing fees have been updated and reflect those
promulgated in the 2016 Fee Rule (1615-AC09, CIS No. 2577-15 DHS
Docket No. USCIS-2016-0001).
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In each case in which an entrepreneur will be granted parole under
this rule, DHS will have made a determination that parole will yield a
significant public benefit and that the person requesting parole merits
a favorable exercise of discretion. Consistent with those decisions,
the rule is expected to produce broad economic benefits through the
creation of new business ventures that otherwise would not be formed in
the United States. These businesses are likely to create significant
additional innovation, productivity, and job creation. It is reasonable
to conclude that investment and research spending on new firms
associated with this rule will directly and indirectly benefit the U.S.
economy and create jobs for American workers. In addition, innovation
and research and development spending are likely to generate new
patents and new technologies, further enhancing innovation. Some
portion of the international entrepreneurs likely to be attracted to
this parole process may develop high-growth and high-impact firms that
can be expected to contribute disproportionately to U.S. job creation.
In summary, DHS anticipates that this rule will produce positive
effects that would greatly exceed any negative consequences.
Using an estimate of 2,940 annual applications for significant
public benefit entrepreneur parole as developed in the ensuing volume
projections section of this analysis, DHS anticipates the total cost of
this rule for principal filers who face a total per applicant cost of
$1,591 to be $4,678,336 (undiscounted) annually for any given year.
(These estimates focus only on principal initial filers, not
entrepreneurs who might be eligible for a re-parole period of up to 30
months, or their spouses.) Dependent spouses and children who must
submit the Form I-131 application and biometrics will face a per-
applicant cost of $765, for a total cost of $2,474,914 (undiscounted).
Dependent spouses who apply for employment authorization will face a
per applicant cost of $446, which DHS projects will total $1,311,830
(undiscounted). Adding together the costs for the principal filers and
family members--including filing costs, costs of submitting biometrics,
and monetized opportunity costs--yields a total cost of this rule for
the first year, 2017 and subsequently 2018, of $8,465,080
(undiscounted). The total annual cost of the rule of $8,465,080 can be
expected for each subsequent year in the ten-year period. The total
ten-year undiscounted cost is $84,650,081.
2. Background and Purpose of the Rule
Section 212(d)(5) of the Immigration and Nationality Act (INA), 8
U.S.C. 1182(d)(5), grants the Secretary of Homeland Security the
discretionary authority to parole applicants for admission into the
United States temporarily, on a case-by-case basis, for urgent
humanitarian reasons or significant public benefit. DHS is amending its
regulations implementing this authority to increase and enhance
entrepreneurship, research and development and other forms of
innovation, and job creation in the United States. The rule will
establish general criteria for the use of parole with respect to
individual entrepreneurs who operate start-up entities and who can
demonstrate through evidence of substantial and demonstrated potential
for rapid business growth and job creation that they would provide a
significant public benefit to the United States.
The purpose of the rule is to attract talented entrepreneurs to the
United States who might otherwise choose to pursue such innovative
activities abroad, or otherwise be significantly delayed in growing
their companies in the United States, given the barriers they presently
face. In addition to the benefits associated with entrepreneurial
innovation, including new products, business networks, and production
efficiencies that such activities are likely to generate, entrepreneurs
have been and remain vital to economic growth and job creation in the
United States and have generated a cohort of high-growth firms that
have driven a highly disproportionate share of net new job
creation.\42\
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\42\ See Richard L. Clayton, Akbar Sadeghi, David M. Talan, and
James R. Spletzer, High-employment-growth firms: Defining and
counting them, Office of Industry Employment Statistics, Bureau of
Labor Statistics (BLS), Monthly Labor Review (June 2013), p. 1-2,
available at: https://www.bls.gov/opub/mlr/2013/article/pdf/clayton.pdf.
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A body of research documents both the importance of entrepreneurial
activity to the U.S. economy and its link to immigration. In this
background section, DHS does not attempt to comprehensively summarize
this large body of work but instead focuses on specific aspects central
to the purpose of the rule and to its potential impacts.\43\ In
summary, DHS focuses on the role of new entrepreneurial firms in job
creation in the United States, and the role that immigrant
entrepreneurs have played in innovation and the high technology sector.
---------------------------------------------------------------------------
\43\ DHS notes that the body of research concerning immigration
in general and its impact on the labor market, most notably germane
to earnings and employment of domestic workers, is not addressed in
the present analysis.
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The labor market of the United States is highly dynamic. DHS
analysis of data published by the U.S. Department of Labor's Bureau of
Labor Statistics (BLS) indicates that between 2004 and 2013, on average
about 847,000 firms were ``born'' each year and 784,000 ``died.'' \44\
To illustrate the extent of the labor market churn, since 1980 the
private sector has generated about 16.3 million gross jobs annually but
an average of only about 1.4 million net jobs annually. In both general
business cycle expansions and contractions, large numbers of jobs are
created and destroyed, comprising a key dynamic in the forces of
creative destruction.\45\
[[Page 5275]]
Research into the highly dynamic and volatile labor market in the
United States has evolved. Earlier focuses on small- and new-firm size
as the primary co-determinants of job creation has been reoriented to
focus on the role of a relatively small subset of entrepreneurial
firms.
---------------------------------------------------------------------------
\44\ Figures were obtained from the BLS, Business employment
Dynamics, Table 8, ``Private sector establishment births and deaths,
seasonally adjusted:'' available at https://www.bls.gov/news.release/cewbd.t08.htm. Firm ``births'' in these data only include new firms
and thus exclude new franchises and expansions of existing firms.
\45\ See Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier
Miranda, The Role of Entrepreneurship in U.S. Job Creation and
Economic Dynamism, Journal of Economic Perspectives--Vol. 28, Number
3 (Summer 2014), pp. 3-24, available at: https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.28.3.3.
---------------------------------------------------------------------------
This rule focuses on identifying entrepreneurs associated with
types of start-up firms that are more likely to experience high growth,
contribute to innovation, and create jobs in the United States. This
deliberate focus is critical to ensuring that parole in individual
cases is justified by significant public benefit. Research has shown
that the average start-up company does not survive long.\46\ Most new
firms do not add much net job creation either, as they are not focused
on achieving high growth. By some estimates, the vast majority--as much
as 95 percent--of all new firms are not substantial job creators or
innovators.\47\ About 95 percent of new firms start with fewer than 20
employees, and about the same percentage ultimately close with fewer
than 20 employees, indicating that business turnover is heavily
influenced by small firms.\48\
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\46\ According to BLS findings, ``20 percent of newly created
establishments don't survive their first year in business, 32
percent don't survive their first two years, and 50 percent don't
survive their first 5 years.'' See Richard L. Clayton, Akbar
Sadeghi, David M. Talan, and James R. Spletzer, High-employment-
growth firms: Defining and counting them, Office of Industry
Employment Statistics, Bureau of Labor Statistics (BLS), Monthly
Labor Review (June 2013), p. 1, available at: https://www.bls.gov/opub/mlr/2013/article/pdf/clayton.pdf.
\47\ See Jason Wiens and Chris Jackson, The Importance of Young
Firms for Economic Growth, Ewing Marion Kauffman Foundation (2014),
pp. 1-2, available at: https://www.kauffman.org/~/media/kauffman_org/
resources/2014/entrepreneurship%20policy%20digest/september%202014/
entrepreneurship_policy_digest_september2014.pdf; see also Hurst,
Erik, and Benjamin Wild Pugsley. 2011; What Do Small Businesses Do?
Brookings Paper on Economic Activity, no. 2 (2011), pp. 73-142.
\48\ See Headd, Brian, An Analysis of Small Business and Jobs,
SBA Office of Advocacy (2010), p. 6, available at: https://www.sba.gov/sites/default/files/files/an%20analysis%20of%20small%20business%20and%20jobs(1).pdf.
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There is significant research, however, demonstrating that a small
subset of new firms tends to be highly dynamic and to contribute
disproportionately to net job creation. The BLS has highlighted the
role of the small subset of high-growth firms that comprise about 2
percent of all firms but have accounted for 35 percent of gross job
gains in recent years. ``High-growth firms'' are defined by the BLS and
the Organization for Economic Cooperation (OECD) as those with at least
ten employees that grow by at least 20 percent for each of 3
consecutive years based on employment. As of 2012, there were 96,900
high-growth firms in the United States that had created about 4.2
million jobs.\49\ A key finding by the BLS is that high-growth firms
especially add jobs in their first ten years, though they generally
continue to add a diminishing number of new jobs even after that period
of time to the extent they survive. Job creation in the United States
for the last several decades has been driven primarily by high-growth
firms that tend to be young and new, and by a smaller number of
surviving high-growth firms that age for a decade or more.\50\
---------------------------------------------------------------------------
\49\ See R. Clayton et al. (June 2013), supra n. 50, p. 2-4. For
a description of the methodology utilized to measure high growth
firms, see OECD, OECD-Eurostat Manual on Business Demography
Statistics (2007), pp. 59-65, available at: https://www.oecd.org/std/39974460.pdf.
\50\ For specific detailed information on survival rates and
employment creation at various intervals along the HGF life span,
see R. Decker et al. (2014), supra n. 53, pp. 6-24. The BLS and
others use the term ``gazelles'' to differentiate the fastest
growing young HGFs.
---------------------------------------------------------------------------
This highly disproportionate, ``up or out'' dynamism of high-growth
firms has been substantiated by many researchers. The SBA reported that
about 350,000 ``high impact firms''--defined as enterprises whose sales
have at least doubled over a 4-year period and which have an employment
growth quantifier of 2 or more over the same period--generated almost
all net new jobs in the United States between 1994 and 2006.\51\ The
Kauffman Foundation, a leading institute on research, data collection,
and advocacy for entrepreneurial activity, reports that the top-
performing one percent of firms generates roughly 40 percent of new job
creation, and, the fastest of them all--the ``gazelles''--comprising
less than one percent of all companies, generated roughly ten percent
of new jobs.\52\ The same general result has been found
internationally; the OECD reports that between three percent and six
percent of all firms can be considered high-growth firms but about one
percent can be considered the even more high-performing ``gazelles.''
\53\
---------------------------------------------------------------------------
\51\ See Spencer Tracy, Jr., Accelerating Job Creation in
America: The Promise of High-Impact Companies, SBA Office of
Advocacy (2011), pp. 1-4, available at: https://www.sba.gov/sites/default/files/advocacy/HighImpactReport.pdf; see also Acs, Zoltan,
William Parsons, and Spencer L. Tracy, Jr, High-Impact Firms:
Gazelles Revisited; Study prepared for the SBA, Office of Advocacy
(2008), p. 1, available at: https://www.sba.gov/advo/research/rs328tot.pdf. The SBA high-impact cohort is about 6.3% of all firms,
which is higher than the 2% high-growth category found in the BLS
studies. The SBA cohort is larger because the criteria are slightly
less restrictive and it includes older firms.
\52\ See Dane Stangler, High-Growth Firms and the Future of the
American Economy, Kauffman Foundation Research Series: Firm
Formation and Economic Growth (2010), p. 2, available at: https://
www.kauffman.org/~/media/kauffman_org/
research%20reports%20and%20covers/2010/04/highgrowthfirmsstudy.pdf.
\53\ David B. Audretsch, Determinants of High-Growth
Entrepreneurship, report prepared for the OECD/DBA International
Workshop on High-growth firms: local policies and local
determinants, OECD, p. 2-5, available at: https://www.oecd.org/cfe/leed/Audretsch_determinants%20of%20high-growth%20firms.pdf.
---------------------------------------------------------------------------
Despite the finding across a large number of studies that small new
firms tend to exhibit an ``up or out'' dynamic in which a small number
survive to age five to become high-growth firms or ``gazelles,'' other
key findings that have emerged in the literature suggest that the
growth and performance of new firms, even high-growth firms, vary
substantially (as indicated by metrics that include labor productivity,
profitability, revenue, and research and development intensity).\54\
Models that can sort out various business characteristics and economic
conditions to predict high-growth probabilities are still in nascent
stages. Nevertheless, this rule includes threshold criteria for parole
consideration meant to identify entrepreneurs associated with the kinds
of promising start-up entities that appear more likely to contribute to
American innovation, economic development, and job creation. As
described in more detail below, businesses started and run by
immigrants have propelled these kinds of broadly shared economic
benefits for many years.
---------------------------------------------------------------------------
\54\ See R. Decker et al (2014), supra n. 53, pp. 5-7; see also
Davis, Steven J., R. Jason Faberman, John Haltiwanger, Ron Jarmin,
and Javier Miranda, Business Volatility, Job Destruction, and
Unemployment. American Economic Journal: Macroeconomics 2(2) (2010):
259-87. Research and development intensity is typically measured as
the ratio of research and development spending to revenue, net
income, or overall costs.
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Broadly speaking, high-growth entrepreneurs engage in research and
development (R&D) in order to develop and commercialize new products
and technologies. Several studies have found that such entrepreneurs
tend to engage in R&D spending in the first year, tend to attract
patents and other forms of intellectual capital, and tend to attract
venture capital financing.\55\
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\55\ See Shah, Sonali K. and Winston Smith, Sheryl and Reedy, E.
J., Who are User Entrepreneurs? Findings on Innovation, Founder
Characteristics, and Firm Characteristics, The Kauffman Firm Survey
(Feb. 2012), pp. 2-5, available at: https://www.kauffman.org/~/media/
kauffman_org/research%20reports%20and%20covers/2012/02/
whoareuserentrepreneurs.pdf.
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[[Page 5276]]
Immigrants have been central contributors to business ownership and
entrepreneurship in the United States and abroad. According to OECD
data, self-employment rates for immigrants are higher than those of the
native-born populations in many counties, including in the United
States.\56\ Based on the most recent data available from the U.S.
Census Bureau, 12.9 percent of the United States population was
foreign-born. Their rate of self-employment is about 30 percent higher
than that of the native-born population (7.7 percent vs. 5.9 percent;
n=1.8 million). The Census Bureau's 2012 Survey of Business Owners
showed that 14.4 percent of U.S. firms were owned by at least one
person not born a citizen of the United States.\57\ Two studies based
on samples of U.S firms found slightly higher r foreign-born ownership
rates.\58\
---------------------------------------------------------------------------
\56\ OECD, Migrant Entrepreneurship in OECD Countries, prepared
by Maria Vincenza Desiderio (OECD) and Josep Mestres-Dom[egrave]nech
for the Working Party on Migration (2011), pp. 141-144, available
at: https://www.oecd.org/els/mig/Part%20II_Entrepreneurs_engl.pdf.
This, and many other similar studies and analyses are based on self-
employment rates, which are a proxy, but not a perfect measure, of
business ownership, because some ownership structures such as
partnerships, that could involve a foreign-born owner, are generally
not considered to be proprietary.
\57\ The categorization of ``foreign-born'' does not
differentiate between lawful permanent residents and naturalized
citizens. It also does not provide details of the firm history,
implying that some firms owned by persons not born in the United
States could have been founded by U.S. citizens and sold to foreign-
born persons.
\58\ See David M. Hart, Zoltan J. Acs, and Spencer L. Tracy,
Jr., High-tech Immigrant Entrepreneurship in the United States.;
report developed under a contract with the Small Business
Administration, Office of Advocacy (2009), page 8, available at:
https://www.sba.gov/sites/default/files/advocacy/rs349tot_0.pdf; see
also Robert W. Fairlie and Magnus Lofstrom, Immigration and
Entrepreneurship, Institute for the Study of Labor (2013), p. 1,
available at: https://ftp.iza.org/dp7669.pdf. The foreign born
ownership rates for U.S. firms reported in these papers is 16% and
18.2%, in order.
---------------------------------------------------------------------------
Many high-growth firms are involved in activities classified in the
STEM (science, technology, engineering, and math) fields. The high
concentration of immigrant entrepreneurs in these industries has
garnered much attention. Between 2006 and 2012, one-third of companies
financed with venture capital that made an initial public offering had
an immigrant founder, a sharp rise from seven percent in 1980. These
companies have generated 66,000 jobs and $17 billion in sales.\59\ A
survey of entrepreneurs in technology-oriented privately held companies
with venture backing also showed about one-third were foreign born, and
61 percent held at least one patent.\60\
---------------------------------------------------------------------------
\59\ This information is found from various sources and found in
Stuart Anderson, American Made 2.0. How Immigrant Entrepreneurs
Continue to Contribute to the United States Economy, National
Foundation for American Policy, sponsored by the National Venture
Capital Association (NVCA) (2013), pp. 3-7.
\60\ Id. at pp. 2-5.
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Further evidence points to similar findings. Between 1995 and 2005,
25 percent of science and technology focused businesses founded in the
United States had a foreign-born chief executive or lead technologist.
In 2005, those companies generated $52 billion in sales revenue and
employed 450,000 workers. In Silicon Valley, the share of immigrant-
founded start-ups increased to 52 percent by 2005. In 2006, foreign
nationals residing in the United States were involved (as inventors or
co-inventors) in about 26 percent of patent applications filed that
year. Immigrant founders of Silicon Valley firms tend to be highly
educated, with 96 percent holding bachelor's degrees and 74 percent
holding advanced degrees, and with three-quarters of the latter in STEM
fields. As of 2010, according to one study, more than 40 percent of the
Fortune 500 companies had been founded by an immigrant or the child of
an immigrant.\61\
---------------------------------------------------------------------------
\61\ Vivek Wadhwa, Foreign-Born Entrepreneurs: An Underestimated
American Resource, Ewing Marion Kauffman Foundation (2008), pp. 2-6,
available at: https://www.kauffman.org/~/media/kauffman_org/
z_archive/article/2008/11/wadhwatbook09.pdf.
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To reiterate, high-growth firms tend to be new and young, and one
of their primary contributions to the highly dynamic labor market of
the United States has been through job creation. High-growth firms tend
to innovate and focus on developing new products and services. The
intense involvement of immigrant entrepreneurs in successful
technology-driven activities suggests substantial economic
contributions. While measuring the precise value and impact of
innovation is difficult and still at a nascent stage in research, many
economists believe innovation creates positive externalities and
spillover effects that further drive economic growth.\62\
---------------------------------------------------------------------------
\62\ See SMEs, Entrepreneurship and Innovation, OECD (2010), pp
26-28, available at: https://www.oecd.org/berlin/45493007.pdf.
---------------------------------------------------------------------------
Notwithstanding the research on the positive effects of high-growth
entrepreneurship, there is some evidence of a long-term slowing in
start-up dynamism and entrepreneurial activity in the United States;
this trend began several decades ago, driving many economists to
advocate for policies that attract more entrepreneurs in general.\63\
Many business entrepreneurial advocacy centers have also advocated in
recent years for the United States to enact a formalized pathway for
immigrant entrepreneurs. DHS is aware of one estimate of the potential
benefits of a theoretical start-up visa (which, as an entirely new visa
classification, only Congress can create). A Kauffman Foundation study
(2013) estimated that, under certain conditions, the establishment of a
start-up visa program could lead to the creation of between 500,000 and
1.6 million new jobs after ten years.\64\ The potential benefits of
attracting immigrant entrepreneurs have not gone unnoticed
internationally. Thirteen of the thirty-five nations that are part of
the Organization of Economic Cooperation and Development (OECD) have
enacted special immigration programs for entrepreneurs, although the
eligibility criteria vary among them to a significant extent.\65\
---------------------------------------------------------------------------
\63\ See R. Decker et al. (2014), supra n. 53, p. 16-22.
\64\ See Dane Stangler and Jared Konczal, Give Me your
Entrepreneurs, Your innovators; Estimating the Employment Impact of
a Startup Visa, Ewing Marion Kauffman Foundation, (Feb. 2013), pp.
1-3, available at: https://www.kauffman.org/~/media/kauffman_org/
research%20reports%20and%20covers/2013/02/
startup_visa_impact_finalsada. The estimates are based on a fixed
pool of 75,000 startup visas for a 10-year period, in which firm
deaths each year cycle some of visa to new entrants.
\65\ Most programs have been enacted after 2010. A country list
and some descriptive data can be found at Jean-Christophe Dumont,
Investor Visas in OECD Countries, OECD Conference on Global High-
Skilled Immigration Policy, The National Academies Board on Science,
Technology and Economic Policy (2014), available at: https://sites.nationalacademies.org/cs/groups/pgasite/documents/Web page/
pga_152202.pdf.
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3. Population of Entrepreneurs Potentially Eligible
DHS cannot precisely predict the volume of new businesses that will
start in the United States due to this rule. DHS has instead examined
available data to provide a broad estimate of the population of
individual entrepreneurs who may be eligible to request parole
consideration under this rule. Given limits on DHS's information about
such entrepreneurs, DHS does not know how many people within the
estimated eligible population will actually seek such consideration;
the estimates contained in this section represent an approximation to
the size of the eligible population. DHS has estimated the population
of entrepreneurs potentially eligible for parole under this rule based
on two sub-groups: (1) Foreign individuals who seek to come to the
United States to start a new business with financial backing from a
qualified U.S. investor; and (2) foreign individuals who seek to come
to the United States to start a new business as recipients of U.S.
funded and awarded
[[Page 5277]]
research grants and who intend to conduct the concomitant research in
the United States. DHS assumes that each member of the eligible
population will start a business and that the general criterion for
investment from a qualified investor (e.g., venture capital firms,
angel investors, or accelerators or incubators) be set at $250,000,
while for government grants or awards the general criterion will be
$100,000. Based on these amounts, DHS analyzed various past endeavors
for the potential sources of funds. DHS estimates that approximately
2,940 foreign nationals annually could be eligible to apply for parole
under this rule. Table 1 summarizes the analysis by source of funds.
Table 1--Number of Entrepreneurs Potentially Eligible
------------------------------------------------------------------------
Annual
Sub-group eligibility
------------------------------------------------------------------------
New firms funded with investment capital................ 2,105
New firms funded with U.S. grants or awards............. 835
---------------
Total............................................... 2,940
------------------------------------------------------------------------
DHS has no way of predicting with certainty the actual number of
foreign nationals who will seek parole under this rule over time, as
the size of the eligible population could change significantly. DHS
acknowledges that the estimate of eligible individuals annually is an
approximation based on past foreign ownership and start-up capital
amounts. The analysis utilized to estimate the potential eligible
population is also based implicitly on assumptions that: (1) The rule
will not significantly change the frequency of U.S. funded grant
applications from international researchers; and (2) that the rule will
not significantly affect the market for international entrepreneurs and
the market for the types of investment structures the rule will
involve. Based on these assumptions and the data limitations, DHS
projects that for the first full year that the rule will be effective,
annual eligibility will be approximately 2,940.\66\ DHS projects that
this number will hold steady for the second year as well. The next
section provides key data and analytical approaches utilized to arrive
at the estimates of eligible individuals. DHS first considers volume
estimates of eligible individuals based on official U.S. data. The
resulting estimates based on official data are those utilized for the
cost projections of the rule. Due to particular constraints in the
data, DHS follows with an alternative method of volume estimation of
eligible individuals that adds robustness to the official estimate.
---------------------------------------------------------------------------
\66\ DHS emphasizes that the total is a broad estimate, as the
Department has no means to determine the demand for entrepreneurial
parole, changes in the eligible population that the rule may cause,
time-variant possibilities, and application preferences. These
conditions could change, if, for example, some foreign researchers
see parole as attractive and apply for federally funded grants that
they otherwise might not have applied for in the absence of the
rule. In addition, volume estimates should be interpreted to apply
to only initial applications, not considerations for re-parole at
some future point in time. Lastly, the market for the types of
investments involved, such as venture capital, are fluid and
becoming more global in scope. DHS has no means to determine how the
evolution of these investment markets will affect, or be affected
by, the rule.
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Volume Projections Data and Methodology
A. Grants
Because U.S.-funded research grants may be a qualifying investment
under this rule, DHS obtained publicly available data on federally
funded grants for fiscal years 2013-2015.\67\ Although numerous
agencies within the Federal Government award grants to foreign-born
individuals, most are humanitarian or development focused.\68\ For this
reason DHS parsed the very large data set comprising 1.7 million
records to obtain a viable analytical cohort. First, the records were
filtered to capture Federal Government agencies that award grants to
both United States and foreign-born recipients. Secondly, the records
were sorted to only include the Federal Government agencies that award
grants focused on ``projects,'' thereby excluding block and assistance
grants.\69\ The foreign-born cohort used for the eligibility
projections excluded grants made to recipients in U.S. territories, as
such recipients may be subject to special considerations outside the
parole parameters.\70\ DHS also excluded grant amounts recorded as
negative, zero, and trivial amounts of less than $1,000--such values
were recorded if grants were rescinded or for some other reason not
ultimately funded. On average, 138,447 grants comprised the annual
resulting analytical cohort derived from the above filtering
procedures. Of that total, a small portion, 2,043 grants, or 1.5
percent, were awarded to foreign-born individuals. Having determined a
reasonable eligibility threshold of $100,000, DHS proceeded to the next
step, to determine the potential annual eligible population of grant-
sourced researchers. Over the period of analysis, 41 percent of the
Federal grants awarded to foreign recipients equaled or surpassed the
$100,000 benchmark, for an average of 835 annually.
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\67\ The data were obtained from USASpending.gov: https://www.usaspending.gov/Pages/Default.aspx. From the homepage, the data
can be accessed from the linked ``data download'' section. The files
were obtained on April 20, 2015.
\68\ It is certainly the case that U.S. State governments and
other governmental entities issue research grants that foreign
recipients could potentially utilize for parole eligibility.
However, DHS is not aware of any database that collects and provides
such data publicly.
\69\ The Federal entities that awarded scientific focused
research to foreign recipients were: Agricultural Resource Service,
National Institutes of Health, Centers for Disease Control and
Prevention, Food and Drug Administration, Department of Defense,
National Aeronautics and Space Administration, National Oceanic and
Atmospheric Administration, National Institute of Standards and
Technology, and National Science Foundation. The U.S. Department of
State and the Agency for International Development (USAID) were
excluded from the analysis.
\70\ There is a particular way in which the data germane to
foreign grants were parsed and analyzed. There are two possible
foreign indicators listed for each grant. One is the ``principal
place'' involving the research and the other is the ``recipient
country.'' The incumbent volume projections are based on the latter
because this indicator generally implies that the grant was made to
a person or institution outside the United States. The former is not
used because this indicator could apply to grants awarded to U.S. or
foreign persons in order to conduct the ensuing research outside the
United States. Implicit in this analysis is that persons awarded
U.S.-funded grants that are overseas could conduct their research
and innovation in the United States, and are not otherwise precluded
from doing so, even if the focus of such research is in a foreign
country.
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B. Investment Capital
To estimate the number of potential new entrepreneurial start-ups,
DHS obtained and analyzed data from the BLS and the Census Bureau. From
the BLS Business Employment Dynamics (BED) data suite, DHS obtained the
number of private establishments aged 1 year or less for nine broad
sectors likely to be involved in innovative activity, in order to focus
on entrants.\71\ Although a reasonable proxy, the number of
establishments aged 1 year or less is not a perfect measure of firm
start-ups (births). The chosen metric may
[[Page 5278]]
overstate births, by including expansions and new franchises of
existing businesses. Conversely, it may understate the actual number of
start-ups, because some fraction of firms does not survive the first
year (the data are tabulated in March of the respective year such that
the establishments aged 1 year and less are those that opened within
the previous year but remained in business as of March of the following
year), and those that opened in the previous year and were still in
business but had not reached 2 years of age. DHS utilized the relevant
figure for March 2015, because the latter is the most recent figure
reported in the BED dataset.
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\71\ The BLS data is found at https://www.bls.gov/bdm/bdmage.htm.
DHS utilized the ``Establishment age and survival BED data for
nation by major industry'' set and figures from Table 5, ``Number of
private sector establishments by age,'' for the nine major sectors
shown in Table 2. The BLS does provide figures on firm births that
could be used in the present analysis. However, DHS chose
establishment age data because it is broken down in a way that
corresponds precisely to the innovating sectors, discussed below.
The firm birth data is not categorized in the exact same manner. The
nine major sectors were chosen to envelope the approximately 430
individual activities that DHS considers to involve ``science,
technology, engineering, and math'' (STEM). The full list based on
the 2012 update can be found at: https://www.ice.gov/sites/default/files/documents/Document/2014/stem-list.pdf.
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For each sector, DHS obtained the corresponding share of firms
owned by a person ``not born a citizen of the United States'' from the
Census Bureau's Survey of Business Owners data set.72 73 For
brevity, we utilize the term ``foreign'' here to describe such firms.
The foreign share was obtained by dividing the number of foreign-owned
private firms in a sector by the total number of reporting firms in the
same sector. This share applies to firms that have a least one owner
who was not born in the United States but does not differentiate
between various types of ownership structures. The figure for new firms
obtained from the BLS BED data was multiplied first by the foreign
share to generate an estimate of firms per sector started by a person
not born in the United States.
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\72\ The Census SBO data are found at: https://www.census.gov/data/tables/2012/econ/sbo/2012-sbo-characteristics.html. The foreign
ownership figures per sector are found under ``Characteristics of
Business owners,'' Table SB1200CSBO11: ``Statistics for Owners of
Respondent Firms by Whether the Owner Was Born in the United States
by Gender, Ethnicity, Race, and Veteran Status for the U.S.'' and
the startup capital data are found under Characteristics of
Businesses, Table SB1200CSB16: ``Statistics for All United States
Firms by Total Amount of Capital Used to Start or Acquire the
Business by Industry, Gender, Ethnicity, Race, and Veteran Status
for the United States: 2007.'' The foreign ownership share of firms
is provided in the table and thus did not need to be calculated by
DHS. The SBO data are part of the 2012 survey for which data was
released publicly between February and June 2016.
\73\ A possible source of upward bias in the foreign ownership
share and hence the estimate of eligible entrepreneurs is that this
share does not differentiate between foreign owners who came to the
United States to open a business and those who acquired one after
being in the United States for some period of time (e.g., lawful
permanent residents or naturalized citizens). A general finding
among the literature on this topic is that many foreign-born
business owners were driven to start a business by ``push'' factors
in the labor market after arrival in the United States. DHS does not
have a means to parse out the ownership rate in a more granular way
to account for such differences.
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Next, DHS attempted to calculate how many of the firms were started
with at least $250,000, the minimum investment threshold that the rule
sets. The SBO data provides ranges of such startup capital amounts but
DHS could not conduct a precise estimate because the data do not
provide a category bound by the threshold minimum. In fact, the
encompassing tranche is very large, from $249,500 to $1 million in
range. The SBO does not provide actual cohort data or other information
from which DHS could evaluate the distribution and, therefore, DHS has
no way of ascertaining how many firms in this large range will occupy
the $250,000 to $1 million segment. As a result, DHS relied on the
share of firms in this tranche and the additional tranches over
$1,000,000 relative to the share of all firms reporting for the sector,
and recognizes that the volume projection is likely larger than is
realistic. An additional assumption is that the startup threshold is
the same for businesses with native and foreign-born founders. The
relevant data and estimates per sector are shown in Table 2.
Table 2--Summary of Entrepreneur Estimates
----------------------------------------------------------------------------------------------------------------
Foreign share Start-up Annual
Sector New firms (%) threshold (%) eligible
----------------------------------------------------------------------------------------------------------------
Agriculture..................................... 10,182 4.9 2.5 12
Utilities....................................... 1,204 10.8 5.5 7
Manufacturing................................... 29,883 11.0 5.4 178
Information..................................... 22,855 11.9 2.0 55
Professional Services *......................... 165,425 12.8 1.2 248
Management...................................... 7,334 7.3 20.2 108
Waste Services.................................. 66,161 16.4 0.9 94
Education....................................... 15,226 11.9 0.7 13
Health Care..................................... 210,977 18.0 3.7 1,391
---------------------------------------------------------------
Total....................................... .............. .............. .............. 2,105
----------------------------------------------------------------------------------------------------------------
* Abbreviation for ``Professional, Scientific, and Technical Services''.
As is discussed in the preamble, DHS has revised two substantive
components of the eligibility criteria for this final rule. Foremost,
the general investment amount requirement has been lowered from
$345,000 to $250,000. DHS believes that the volume estimate of
entrepreneurs based on investment capital will be higher than the 2,105
presented above but cannot make a determination of exactly how much
higher. The reason is that the lower investment amount will allow some
firms to be created that otherwise would not at the higher amount
proposed initially, but the Census Bureau capital size bin relevant to
the level proposed is the $249,500 to $1 million in range, which
includes both figures. Because DHS does not have data on the
distribution of amounts within this range, the entire bin was included
in the proposed estimates and is retained in the final estimates.
However, as is described below, DHS has conducted an alternative method
of estimation--to include updates from the initial proposal based on
new information and data--that compares very closely to the estimated
total volume of 2,940. Specifically, an alternative estimate of total
volume annually is 2,920.
C. An Alternative Estimate of Entrepreneurs Based on Investment
Structures
DHS recognizes the imperfections in estimating the potential
population of eligible entrepreneurs based on extrapolating past
conditions of foreign ownership rates and capital thresholds. The main
benefit of this method is that it is based on official data. A main
limitation is that it assumes that the annual crop of firms created are
entrepreneurial and the types of firms covered by the parole process in
the rule. In practice, some, but not all, will
[[Page 5279]]
be innovators, even though the present analysis focuses on the sectors
of the economy linked to STEM activity (DHS is not aware of any methods
or data that can allocate a research-innovation share of firms to each
sector). A second limitation is that the DHS method of measuring new
firms in the context of the rule is imprecise. The final rule revised
the definition of ``start-up entity'' in 8 CFR 212.19(a)(2) to include
firms that were formed up to 5 years prior to the filing of the
application for parole, compared to three years as proposed in the
NPRM. However, the BLS cohort of new firms utilized for the volume
projections are 1 year of age or less, not five or even three years,
and is thus a smaller estimate of the number of new firms that could be
eligible. This limitation cannot be overcome because of the manner in
which the survival cohorts are presented.\74\ Because the volume
projections are derived from information obtained from official
sources--the BLS and Census Bureau--DHS retains them for purposes of
the costs and volume estimates of the rule. DHS believes, however, that
an alternative method of estimation will inform readers and strengthen
the regulatory analysis by providing a viable comparison to the
official projections. In this alternative approach, DHS focuses on
business accelerators and incubators (described together as
``accelerators'' for brevity). By analyzing the foreign component of
these structures, data permitting, an alternative estimate of
entrepreneurs can be obtained for comparison purposes.
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\74\ Specifically, the BLS BED provides the number of firms
surviving to a specific age and below. For example, the five year
cohort includes all firms started within five years surviving up to
that point, and so on for younger cohorts. However, the data does
not count the number of firms within each survival cohort by their
true age. Hence, the five year survivals do not include firms that
started up and may have died after three years that could have been
eligible at one time. Therefore, the five year survival cohort
significantly undercounts the number of firms that will potentially
have been considered new in the context of the final rule.
Conversely, adding up the survival cohorts to a point, say year
five, will significantly over-count the number of firms considered
new in the context of the final rule. The reason is that a firm that
survived four years and went on to age five will be included in both
the five and four year cohort, not to mention the younger ones.
Thus, adding the two (age four and five) cohorts together would
double count the survivor. This problem is less onerous for firms
aged one or zero.
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DHS obtained publicly available information from Seed-DB, which
provides data on U.S. accelerators collected from industry associations
and fee-based data providers such as Crunchbase, which is a large data
provider for venture capital, angel investors, and accelerators.\75\
From the Seed-DB Web site DHS utilized the link to ``firms that have
exited'' to collect the cohort of firms that underwent accelerators and
then exited via an acquisition or public offering. Next, DHS parsed the
data to capture firms that reported total funding, exit value, and were
not recorded as ``dead'' (last accessed on Nov. 7, 2016). The parsing
described above yielded a cohort of 89 firms. DHS followed the Seed-DB
links to Crunchbase for each firm and extracted the seed round,
recording its value.\76\ Analysis of the investment rounds reveals that
the median is $250,000. Having determined a median seed round size from
the data, DHS next attempted to estimate a foreign share of accelerated
firms. The exit cohort from which the median was calculated did not
provide such information, hence DHS turned to the Seed-DB data suite
that lists the total number of companies incubated for each accelerator
and the countries that the companies were located in. Since there is
wide variation in the number of companies per incubator, ranging from 1
to over a thousand, DHS grouped the incubators by country and then
weighted each one for its share of total companies. The resulting
weighted average indicates that one quarter of incubated companies were
foreign.\77\ Having determined a median seed round and a foreign share
estimate, the final point required is the number of firms to apply
these figures to. Based on the most recent data from the Center for
Venture Research, the 2013-2015 annual average for angel financed firms
in the seed and startup phase was 33 percent, which equals 23,336 firms
annually. Multiplying this average number of firms by 0.25 to capture
the foreign share and then by 0.5 to reflect the median and also the
investment level DHS has set yields an annual estimate of 2,920.
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\75\ The Seed-DB information is found at www.seed-db.com/.
\76\ For most of the firms in the exit cohort, the initial round
of investment date-wise was also the smallest round in terms of
value and labeled as the ``seed'' or ``angel'' round. For about 10
percent of the firms however, determining which round to use for the
analysis was not straightforward and DHS had to utilize some
discretion. For example, for some firms the seed round was listed
after other rounds, such as venture capital or Series A rounds. For
others, the seed round was not the smallest round recorded. DHS does
not know why these anomalies are present but proceeded to choose the
``seed round'' regardless of its dating or amount. The only
exception was in the few cases in which the seed round post-dated
other rounds and was larger in amount. In these few cases the
initial round was chosen, regardless of what investment type it was.
\77\ This foreign share found by DHS in the analysis corresponds
strongly to a finding in a study of high technology firms that found
that 24 percent of such firms were founded by a foreign born person.
See America's New Immigrant Entrepreneurs, Vivek Wadhwa, AnnaLee
Saxenian, Ben Rissing, and Gary Gereffi, available at: https://
people.ischool.berkeley.edu/~anno/Papers/
Americas_new_immigrant_entrepreneurs_I.pdf.
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This estimate compares well to the official total volume estimate
of 2,940. The accelerator data captures seed rounds that involve
venture capital, angel, accelerator investments, and grants, which is
why it is compared to the total volume estimate.
D. Potential Variability in the Volume Projections
This section discusses several potential cohorts involving
entrepreneurial activity that is difficult to estimate.
In light of the potential benefits to the U.S. economy and job
creation, DHS is proposing this rule to provide a mechanism that,
consistent with the requirements of the INA, encourages international
entrepreneurs described herein to form and create innovative firms in
the United States. In 2011, DHS began outreach and stood up the
Entrepreneurs in Residence initiative to try to encourage
entrepreneurship among foreign nationals.\78\ DHS began tracking the
number of foreign nationals who indicated interest in starting up an
entrepreneurial endeavor at some point during their admission as an H-
1B nonimmigrant. Over four fiscal years (FY 2010-2013), an average of
77 foreign nationals indicated such interest. In light of the
relatively small numbers of foreign nationals who indicated their
entrepreneurial intentions, DHS believes that considering parole
requests under this rule will promote further innovation and other
economic benefits in addition to those created by existing programs and
policies used by foreign nationals to pursue high-growth
entrepreneurial activity in the United States. When the rule is
effective, there could be some small substitution effects as some
portion of this cohort could switch to seeking parole instead of
relying on other existing nonimmigrant programs and policies. DHS,
however, does not believe such substitution will occur on a large scale
because the ability to be admitted to the United States as a
nonimmigrant offers materially more benefits and protections than
parole.
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\78\ Source: ``USCIS Announces `Entrepreneurs in Residence
Initiative,' '' available at: https://www.uscis.gov/news/public-releases-topic/business-immigration/uscis-announces-entrepreneurs-residence-initiative; see also https://www.uscis.gov/eir/visa-guide/entrepreneur-visa-guide.
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In addition, the rule lists a number of ancillary conditions for
eligibility--and conversely a number of conditions that
[[Page 5280]]
will leave individuals unlikely or unable to be paroled into the United
States (or continue to be paroled in the country). Because ancillary
conditions can be considered for eligibility, the actual volume may be
smaller than the estimates herein. Two examples are that, under the
rule, applicants must maintain household income greater than 400
percent of the poverty line and that the qualifying start-up capital
cannot come from family members. The volume estimates presented in this
analysis assume all ancillary eligibility conditions are met.
Finally, two potential elements of the eligible population are
considered. First, as alluded to in the summary, the volume estimates
and ensuing cost estimates assume one individual owner for each new
firm; under the rule, DHS will allow up to three individuals per firm
to seek parole but does not attempt to estimate how many of the
startups could have more than one owner. Second, the volume estimate
for grants is based on Federal awards only. DHS will consider
eligibility based on State or local grants and awards, including those
from State or local Economic Development Corporations (EDCs). However,
unlike in the case of Federal awards, there is not a database capturing
State and local grants or the transmission mechanisms through which
some Federal grants are distributed to other entities, such as EDCs,
and as such DHS was unable to estimate the number of entrepreneurs
potentially eligible for parole as a result of receiving State and
local grants.
4. Costs
A. Principal Filer Costs
The rule will permit certain foreign nationals to apply for a 30-
month (2.5-year) initial period of parole into the United States
provided they meet the eligibility criteria. Those who seek such parole
into the United States will face the costs associated with the
application, which involve a $1,200 application fee plus other costs,
detailed below. The costs will stem from filing fees and the
opportunity costs of time associated with filing the Application for
Entrepreneur Parole (Form I-941).
The filing fee for the Form I-941 application is $1,200. The fee is
set at a level intended to recover the anticipated processing costs to
DHS.\79\ In addition, DHS is proposing that applicants for parole as an
entrepreneur submit biometrics and incur the $85 biometric services
fee. Because entrepreneurs could start firms in any number of
occupations, DHS believes it is appropriate to utilize the mean hourly
wage for all occupations, which is $22.71.\80\ In order to anticipate
the full opportunity cost to petitioners, DHS multiplied the average
hourly U.S. wage rate by 1.46 to account for the full cost of employee
benefits such as paid leave, insurance, and retirement, for a total of
$33.16 per hour.
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\79\ USCIS calculates its fees to recover the full cost of USCIS
operations, including meeting national security, customer service,
and adjudicative processing goals. As with other fees, USCIS uses
Activity Based Costing (ABC) to assign costs to specific benefit
requests. This model uses completion rates (actual or estimated
depending on whether the benefit type is already being adjudicated)
to calculate a fee or fee adjustment for a benefit type. A
completion rate reflects an average time an adjudicator spends
actually working on a case but does not include ``queue'' or wait
times. Because parole under this rule has not yet been implemented,
the completion rate used is based on a 4-hour estimate provided by
USCIS' subject matter experts. At this time, USCIS has estimated
that 30 additional staff will be required to satisfy the forecasted
workload associated with this rule. However, USCIS requires
adjudicators to report actual adjudication hours and case
completions by benefit type. This reporting will occur after this
rule is implemented. Adjudication hours will be divided by the
number of completions for the same time period to determine the
actual average completion rate. This rate will be used in future fee
adjustments and will help determine future staffing allocations
necessary to handle the projected workload for parole under this
rule.
\80\ Please see U.S. Department of Labor, Bureau of Labor
Statistics, Occupational Employment Statistics program, National
Occupational Employment and Wage Estimates, United States (May
2014), available at: https://www.bls.gov/oes/2014/may/oes_nat.htm.
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DHS estimates that the application will take 4.7 hours to complete.
After DHS receives the application and fees, if the applicant is
physically present in the United States, USCIS will send the applicant
a notice scheduling him or her to visit a USCIS Application Support
Center (ASC) for biometrics collection. Along with the $85 biometric
services fee, the applicant will incur the following costs to comply
with the biometrics submission requirement: the opportunity cost of
traveling to an ASC, the mileage cost of traveling to an ASC, and the
opportunity cost of time for submitting his or her biometrics. While
travel times and distances vary, DHS estimates that an applicant's
average roundtrip distance to an ASC is 50 miles, and that the average
time for that trip is 2.5 hours. DHS estimates that an applicant waits
an average of 1.17 hours for service and to have his or her biometrics
collected at an ASC, adding up to a total biometrics-related time
burden of 3.67 hours.\81\ By applying the $33.16 hourly time value for
applicants to the total biometrics-related time burden, DHS finds that
the opportunity cost for a principal applicant to travel to and from an
ASC, and to submit biometrics, will total $121.68.\82\ In addition to
the opportunity cost of providing biometrics, applicants will
experience travel costs related to biometrics collection. The cost of
such travel will equal $28.75 per trip, based on the 50-mile roundtrip
distance to an ASC and the General Services Administration's (GSA)
travel rate of $0.575 per mile.\83\ DHS assumes that each individual
will travel independently to an ASC to submit his or her biometrics,
meaning that this rule will impose a time cost on each of these
applicants.
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\81\ Foreign nationals who submit their applications from
outside the United States will still be required to pay the $85
biometric processing fee and travel to a USCIS office abroad, if
available, or a U.S. embassy or consulate office for biometric
processing at the time of travel document issuance. Due to data
limitations, and to capture general impacts of the rule, DHS has
estimated costs of submitting biometrics under the assumption that
all applicants are traveling to an ASC in the United States.
\82\ Calculation: $33.16 * 3.67 hours = $121.68.
\83\ Calculation: 50 miles multiplied by $0.575 per mile equals
$28.75. See 79 FR 78437 (Dec. 30, 2014) for GSA mileage rate.
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DHS estimates that each principal parole applicant will incur the
following costs: $1,285 in filing fees to cover the processing costs
for the application and biometrics; $306.27 after summing the monetized
cost of travel to submit biometrics, the total opportunity costs of
time of the initial applications, biometrics, and estimated travel
costs, resulting in a total cost of $1,591.27 per application, rounded
to $1,591.\84\ If DHS receives 2,940 applications from persons eligible
to apply, DHS anticipates that such applications will result in annual
filing fee transfers of $3,777,900 (undiscounted), which comprise the
application fee and cost of submitting biometrics, and opportunity and
other burden costs of $900,436 for a total annual cost of $4,678,366.
Any subsequent renewal of the parole period will result in costs
similar to those previously discussed, with the exceptions of travel
costs, since the applicant will not be required to depart the United
States and re-enter. Similarly, the same costs will result for material
changes requiring the filing of amended applications, with the
exception of the travel costs noted above and costs associated with
biometrics collections, including the time and travel to an ASC.
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\84\ Calculation: $1,285 + 306; $1,285 is the sum of the direct
cost of the $1,200 filing fee and the $85 cost of biometrics. The
$306(rounded) figure is obtained by adding the cost of travel
($28.75) plus the total opportunity cost of $277, the latter of
which is the product of the total time burden (8.37 hours) and the
average burdened hourly wage ($33.16).
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[[Page 5281]]
B. Dependent Spouses and Children
The rule will require all dependent family members (spouses and
children) accompanying or joining the entrepreneur to file an
Application for Travel Document (Form I-131), and will require all
spouses and children 14 years of age through age 79 to submit
biometrics.\85\ Those spouses and children will face the costs
associated with filing the application and submitting biometrics. DHS
recognizes that many dependent spouses and children do not currently
participate in the U.S. labor market, and as a result, are not
represented in national average wage calculations. In order to provide
a reasonable proxy of time valuation, DHS has to assume some value of
time above zero and therefore uses an hourly cost burdened minimum wage
rate of $10.59 to estimate the opportunity cost of time for dependent
spouses. The value of $10.59 per hour represents the Federal minimum
wage with an upward adjustment for benefits.\86\ The value of $10.59
per hour is consistent with other DHS rulemakings when estimating time
burden costs for those who are not authorized to work.\87\
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\85\ Note: If a child under the age of 14 requires a travel
document, he or she will need to appear for biometrics by traveling
to an ASC, but will not be required to pay a biometrics fee.
\86\ U.S. Department of Labor, Wage and Hour Division. The
minimum wage in effect as of July 24, 2009. Available at https://www.dol.gov/dol/topic/wages/minimumwage.htm. The calculation for
total employer costs for employee compensation for dependent spouses
and children of principals with an approved Form I-140: $7.25 per
hour x 1.46 = $10.59 per hour.
\87\ See ``Employment Authorization for Certain H-4 Dependent
Spouses; Final rule,'' 80 FR 10284 (Feb. 25, 2015); and
``Provisional and Unlawful Presence Waivers of Inadmissibility for
Certain Immediate Relatives; Final Rule,'' 78 FR 536, 572 (Jan. 3,
2013).
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DHS will require dependents of parole applicants (spouses and
children of the parole applicant) to file an Application for Travel
Document (Form I-131). There is a $575 filing fee associated with the
Form I-131 application, and DHS estimates it will take 3.56 hours to
complete each submission. In addition to filing the Form I-131
application, each dependent spouse and child 14 years of age and over
will be required to submit biometric information (fingerprints,
photograph, and signature) by attending a biometrics services
appointment at a designated USCIS Application Support Center (ASC). The
biometrics processing fee is $85.00 per applicant. In addition to the
$85 biometrics services fee, the applicant will incur the following
costs to comply with the biometrics submission requirement: the
opportunity and mileage costs of traveling to an ASC, and the
opportunity cost of submitting his or her biometrics. While travel
times and distances vary, DHS estimates that an applicant's average
roundtrip distance to an ASC is 50 miles, and that the average time for
that trip is 2.5 hours.\88\ DHS estimates that an applicant waits an
average of 1.17 hours for service and to have his or her biometrics
collected at an ASC, adding up to a total biometrics-related time
burden of 3.67 hours. In addition to the opportunity cost of providing
biometrics, applicants will experience travel costs related to
biometrics collection. The cost of such travel will equal $28.75 per
trip, based on the 50-mile roundtrip distance to an ASC and the General
Services Administration's (GSA) travel rate of $0.575 per mile.\89\ DHS
has assumed that each applicant will travel independently to an ASC to
submit his or her biometrics, meaning that this rule will impose a time
cost on each of these applicants. DHS also assumed all children were
over the age of 14 for the purposes of this analysis and, therefore,
this cost estimate may be slightly overestimated.
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\88\ DHS has estimated travel distances and ensuing travel times
at 2.5 hours in prior rulemakings. See, e.g., ``Employment
Authorization for Certain H-4 Dependent Spouses; Final rule,'' 80 FR
10284 (Feb. 25, 2015); and ``Provisional and Unlawful Presence
Waivers of Inadmissibility for Certain Immediate Relatives; Final
Rule,'' 78 FR 536, 572 (Jan. 3, 2013).
\89\ See U.S. General Services Administration Web site for
Privately Owned Vehicle (POV) Mileage Reimbursement Rates, https://www.gsa.gov/portal/content/100715 (accessed Aug. 8, 2015).
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DHS projects that approximately 3,234 dependents will be required
to file a Form I-131 application and submit biometrics, based on the
estimate of 2,940 principal applicants and using a multiplier for
expected family members of 1.1.\90\ The total cost for those spouses
and children requesting parole under this program includes the filing
fee, biometrics processing fee, travel costs associated with biometrics
processing, and the opportunity cost of filing the Form I-131
application and submitting biometrics. The total time burden is 7.23
hours. At the cost-burdened wage, the total opportunity cost is $76.53.
Adding the $28.75 cost of travel, the total non-filing cost is
estimated to be $105.28, and the total cost per applicant is $765.28.
At the projection of 3,234 applicants, the non-filing cost is $340,474
(undiscounted), and combined with filing costs of $2,134,440, the total
estimated cost for dependents germane to the Form I-131 application is
$2,474,914.
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\90\ The multiplier of 1.1 was obtained from DHS estimates of
the average historical ratio of principal versus dependent
recipients of lawful permanent resident status. DHS studies based on
statistics obtained from office of Immigration Statistics reveal
that multipliers for the employment preference categories EB-1, EB-
2, and EB-3 range from 2.04 to 2.27. DHS believes that 2.1. is a
reasonable multiplier for the estimates and utilized this multiplier
in regulatory assessments involved in American Competitiveness in
the Twenty-First Century Act, (AC21) provisions, specifically:
``Retention of EB-1, EB-2, and EB-3 Immigrant Workers and Program
Improvements Affecting High-Skilled Nonimmigrant Workers'' (RIN
1615-AC05), rule. Because the Form I-131 filings relevant to this
rule do not apply to principals, only spouses and dependent
children, DHS believes it is valid to subtract 1 from the 2.1
multiplier to yield the final multiplier of 1.1.
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In addition, DHS is allowing independent employment authorization
for spouses of entrepreneurs granted parole under this rule. DHS will
permit these individuals to apply for employment authorization by
filing a Form I-765 application. To estimate the number of potential
persons applying for employment authorization, DHS used a simple one-
to-one mapping of entrepreneurs to spouses to obtain 2,940 spouses, the
same number as entrepreneur parolees.
The current filing fee for the Form I-765 application is $410.00.
The fee is set at a level to recover the processing costs to DHS. Based
on the projection of 2,940 applicants, the total filing cost is
$1,205,400 (undiscounted). DHS estimates the time burden of completing
the Form I-765 application is 3.42 hours.\91\ At the cost-burdened
wage, the total opportunity cost is $36.20. At the projection of 2,940
applicants, the non-filing cost is $106,430 (undiscounted) and combined
with filing costs of $1,205,400 the total estimated cost for spouses
germane to the Form I-765 application is $1,311,830.
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\91\ Source: Paperwork Reduction Act (PRA) Supporting Statement
for Form I-765 (OMB control number 1615-0040). The PRA Supporting
Statement can be found at Question 13 on Reginfo.gov at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201502-1615-004.
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In addition to the filing costs, applicants for parole may face
other costs associated with their entrepreneurial activities. These
could include the administrative costs of starting up a business,
applying for grants, obtaining various types of licenses and permits,
and pursuing qualified investments. However, these costs apply to the
entrepreneurial activity and the business activity that the applicant
has chosen to be involved in and are not driven by the parole process
or other governmental functions attributable to the rule itself. Hence,
DHS does not attempt to estimate, quantify, or monetize such costs.
Lastly, DHS recognizes that some individuals who were lawfully
admitted in the United States in certain nonimmigrant classifications
may seek
[[Page 5282]]
parole. Individuals who are present in the United States at the time
their parole application is approved, based on admission as a
nonimmigrant, will have to depart the United States and appear at a
U.S. port of entry in order to be granted parole since USCIS is unable
to grant parole to individuals who are not applicants for admission.
See INA section 212(d)(5), 8 U.S.C. 1182(d)(5). These individuals will
be ineligible for a change of status under section 248 of the INA, 8
U.S.C. 1258. Such applicants will therefore bear the travel costs of
exit and returning to a port of entry. However, because there are no
similar programs for comparison, DHS cannot determine the demand for
parole or substitution effects from other classifications and thus
cannot estimate, quantify, or monetize such potential travel costs.
Finally, because the program allows for re-parole under conditions that
DHS has set, entrepreneurs and their spouse and children, if
applicable, will likely face filing and opportunity costs associated
with applying for re-parole. However, DHS has no means of estimating
the share of the potential eligible population that will seek and be
eligible for re-parole, hence re-parole conditions are not included in
this analysis. In summary, DHS believes that it is possible that there
could be some substitution into the parole program from other programs
and such applicants and dependents will incur travel and possible other
costs related to exit and requesting a grant of parole at a U.S. port
of entry.
C. Potential for Negative U.S. Labor Market Impacts
DHS does not expect the rule to generate significant costs or
negative consequences. Extensive review of information relevant to
immigrant entrepreneurship indicates that while much about the impact
of such entrepreneurship is not known, there is no reason to expect
that substantial negative consequences, including adverse impact on
domestic workers, are likely. The possibility that immigrant
entrepreneurs may displace (``crowd-out'') native entrepreneurs has
been raised by a few researchers. One study indicated that a very small
number of native entrepreneurs were possibly displaced by immigrant
entrepreneurs.\92\ However, because of difficulties in controlling for
a large amount of variables related to entrepreneurship, other
researchers have noted that this finding only raises the possibility
that displacement could not be ruled out completely, but did not
actually provide evidence that it had actually occurred.\93\ Another
study, conducted by the Brookings Institution, did not find
displacement but acknowledged that more research and refined control
techniques, along with longitudinal data, will need to be studied
before ruling out the possibility completely.\94\ In any event, the
purpose of the parole rule is to foster innovation and entrepreneurial
activities in new or very young endeavors, where the literature much
more decisively indicates a strong potential of creating new net jobs
for U.S. workers.
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\92\ Fairlie, R.W., and B.D. Meyer, The effect of immigration on
native self-employment, Journal of Labor Economics 21:3 (2003): 619-
650, available at: https://people.ucsc.edu/~rfairlie/papers/
published/jole%202003%20-%20native%20se.pdf.
\93\ See Magnus Lofstrom, Immigrants and Entrepreneurship,
Public Policy Institute of California, USA, and IZA, Germany (2014),
p. 4, available at: https://wol.iza.org/articles/immigrants-and-entrepreneurship.pdf.
\94\ See Zoltan J. Acs and David M. Hart, Immigration and High-
Impact, High-Tech Entrepreneurship, Brookings, Issues in
Technological innovation (Feb. 2011), available at https://www.brookings.edu/research/papers/2011/02/immigration-hart-acs.
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DHS recognizes that the potential inclusion of spouses can incur
labor market implications and possibly impact U.S. workers. As was
noted in previous sections of the regulatory impact analysis, DHS did
not attempt to assess or measure the labor market impact of the
estimated entrepreneurs potentially eligible for parole because as
founders of firms, these persons will not affect the labor market in
the same way as other workers. Although spouses could have labor market
impacts as new labor market entrants, DHS believes such potential
impacts will be negligible. The main reason is that the size of the
potential new cohort is very small. As of the end of 2015, there were
an estimated 157,130,000 people in the U.S. civilian labor force.\95\
Consequently, the estimated ``new'' available workers in the first year
will represent approximately 0.001 percent of the overall U.S. civilian
labor force.\96\ DHS believes this fraction is too small to have a
significant impact on the labor market.
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\95\ See News Release, United States Department of Labor, Bureau
of Labor Statistics, Local Area Unemployment Statistics, Regional
and State Unemployment-2015 Annual Averages, Table 1 ``Employment
status of the civilian non-institutional population 16 years of age
and over by region, division, and state, 2014-15 annual averages''
(Mar. 24, 2016), available at https://www.bls.gov/news.release/pdf/srgune.pdf.
\96\ Source: United States Department of Labor, Bureau of Labor
Statistics, Local Area Unemployment Statistic. Figure applies to
seasonally adjusted level for December 2014, available at: https://data.bls.gov/timeseries/LNS11000000. Calculation for new worker
labor force share: 1813/157,130,000.
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While the figures above apply to the general U.S. labor force, DHS
recognizes that concentration of new labor force entrants can impact
specific labor markets. DHS believes that any such potential impacts
linked to this rule will be insignificant. The NVCA and other sources
of information that DHS reviewed indicates that while the area of
California known as Silicon Valley has traditionally been, and
continues to be, the primary recipient geographically for technology
startup capital, other large urban centers on the East Coast and, even
more recently, parts of the Mid- and Mountain West have seen increased
technology startup activity. To provide just one example of a potential
area-specific impact, DHS considered the San Jose-San Francisco-Oakland
(CA) Combined Statistical Area (CSA) conjoining the seven Metropolitan
Statistical Areas (MSAs) and nine encompassed counties constituting the
economic linkages of Silicon Valley. Based on data from the BLS, the
population of this CSA is about 8.6 million (as of May 2014) and the
employed population (a narrower measure of the labor market than the
labor force) about 3.75 million. If the share of new entrants is based
on the proportion of venture capital to the area, which is 42 percent,
then 2,746 spousal entrants could impact the area.\97\ Assuming such
entrants gain employment, this cohort represents just 0.02 percent of
the employed population of the specific CSA.
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\97\ The employment figures are provided by the BLS,
Occupational Employment Statistics (OES), found at: https://www.bls.gov/oes/current/oes_42100.htm. The population data is
provided by the Census Bureau, which tabulates CSAs: ``Combined
Statistical Area Totals Dataset: Population and Estimated Components
of Change: April 1, 2010 to July 1, 2014'' (CSV), 2014 Population
Estimates. United States Census Bureau, Population Division. March
2015. The information on the venture capital share for the region is
found in the NVCA 2015 yearbook, and is found in figure 8, p. 14.
The calculation is as follows: (.42 x1813) = 761, which is then
divided by the CSA population of 3,750,000.
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D. Government Costs
The INA provides for the collection of fees at a level that will
ensure recovery of the full costs of providing services, including
administrative costs and services provided without charge to certain
applicants and petitioners. See INA section 286(m), 8 U.S.C. 1356(m).
DHS has established the fee for the adjudication of the Form I-941
application based on notional application filing volumes and estimated
resource commitments. During the biennial fee review, DHS
[[Page 5283]]
will examine whether the fee is sufficient to recover the full costs of
adjudication, as required by the INA.
5. Benefits
As referenced previously, evidence suggests that innovation-focused
start-ups contribute disproportionately to job creation. The rule will
reduce entry barriers, and thus support efforts by international
entrepreneurs to generate entrepreneurial activity in the United
States.
The rule is expected to generate important net benefits to the U.S.
economy. For one, expenditures on research and development by the
grant-based researchers that DHS has identified that could qualify for
entrepreneur parole will generate direct and indirect jobs. In
addition, this research-focused spending could potentially generate
patents, intellectual property, licensing, and other intangible assets
that can be expected to contribute to innovation and technological
advances and spill over into other sectors of the overall economy. DHS
acknowledges that it is extremely difficult to gauge the precise
economic value of such assets and that peer-reviewed research in this
area is still nascent. Despite the nascent stage of the research and
the difficulty of measuring quantitatively the benefit of innovation
driven by new high technology firms, a large body of research indicates
that the innovation driven by entrepreneurs contributes directly to
economic growth, generates important efficiencies and cost reductions
for firms that utilize such innovation, and increases productivity and
profitability for firms that benefit indirectly through new products
generated by such innovation.
Lastly, DHS believes that many of the start-up firms operated by
international entrepreneurs during the parole period could eventually
become high-growth firms that generate exceptionally high levels of
economic activity and contribute disproportionately to job creation in
the United States.
D. Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act (RFA), 5 U.S.C.
601(6), DHS examined the impact of this rule on small entities. A small
entity may be a small business (defined as any independently owned and
operated business not dominant in its field that qualifies as a small
business per the Small Business Act, 15 U.S.C. 632), a small not-for-
profit organization, or a small governmental jurisdiction (locality
with fewer than 50,000 people).
In the proposed rule, DHS certified that this rule would not have a
significant impact on a substantial number of small entities. DHS made
this determination based on the following facts: This is not a
mandatory rule; this rule only impacts those individual entrepreneurs
who make the voluntary decision to apply for parole; and this rule does
not regulate the business entities in any way. After reviewing public
comments, including the formal letter submitted on the record by the
U.S. Small Business Administration's Office of Advocacy (Advocacy), DHS
maintains its certification that the rule does impose a significant
impact on a substantial number of small entities. For a full discussion
of the DHS response to the letter submitted by Advocacy, please see
Section III.M.4 of this preamble.
Individuals are not defined as a ``small entity'' by the RFA. The
rule will not mandate that all individuals apply for parole. This rule
provides flexibilities and options that do not currently exist for
individuals who wish to establish or operate a start-up business in the
United States. Importantly, the rule does not require any individuals
or businesses, including those created by foreign nationals, to seek
parole--either generally or as a specific condition for establishing or
operating a business in the United States. Rather, as mentioned
previously, this rule is intended to provide an additional flexibility
for foreign individuals who are unable to obtain another appropriate
nonimmigrant or immigrant classification, in order to facilitate the
applicant's ability to oversee and grow the start-up entity. If any
individual believes this rule imposes a significant economic impact,
that individual could simply choose not to seek parole under the rule
and thus incur no economic impact. As discussed previously, this rule
imposes direct filing costs of $1,285 (which includes the $1,200
application fee and the $85 biometrics fee), plus $194 in time-related
opportunity costs for those individuals who do choose to apply for
parole as entrepreneurs under the rule. This cost is relatively minor
when considering the costs of starting up a new business and the
capital necessary to start a business.
Under the general term ``entrepreneur,'' DHS includes those who
desire to form firms with investment funds from certain U.S. investors.
For purposes of the RFA, the regulatory requirements place compliance
costs and establish eligibility criteria for the individual requesting
consideration for parole under this rule. DHS believes that the costs
of application for parole will burden the individual applicant, and not
the entrepreneurial venture (firm). This rule will not alter or change
the normal procedure for fundraising or other start-up administrative
costs that occur in forming a business entity. Such costs are not
direct costs of this rule and could include, but are not limited to,
business application fees, legal fees, and licensing that precede
significant infusions of investment, the latter of which are primarily
utilized for operational and capital expenses in order to produce goods
or services.
It is possible that some of the 2,940 estimated entrepreneurs who
could be eligible for parole annually could involve business structures
in which the filing fees are paid by a business entity. In the event
that small business entities are impacted by this rule because they
choose to pay the filing fees on behalf of an individual entrepreneur,
DHS believes that the filing cost of $1,285 per application will be
insignificant compared to such entities' annual gross revenues,
potential for revenue, and other economic activity.
For businesses that may pay the filing costs, the expected impact
to such businesses will be small. For businesses that utilize either
the minimum threshold of $100,000 for a qualifying government grant or
award or $250,000 in capital investment to source the filing costs,
such costs will constitute 1.3 percent and 0.4 percent, respectively,
of the total capital amount. These relatively low cost proportions
apply to those firms that only obtain the minimum investment amounts
and have no other source of funding or revenues. In addition, DHS
analyzed the cost impact relative to more typical RFA indices. DHS
analysis of Census Bureau data on the smallest firms found that the
average revenue based on sales receipts for firms with no paid
employees is $309,000, while the average for firms with one to four
paid employees is $411,000.\98\ The filing cost relative to these
averages is 0.42 percent and 0.31 percent, respectively.
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\98\ The data utilized for the analysis are found in the SBO
Table SB1200CSA09, ``Statistics for All U.S. Firms with Paid
Employees by Industry, Gender, and Employment Size of Firm for the
U.S. and States: 2012, 2012 Survey of Business Owners: https://census.gov/library/publications/2012/econ/2012-sbo.html. The file
location is: https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=SBO_2012_00CSA09&prodType=table. The
figures are rounded from $309,279 and $410,900, respectively.
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DHS also analyzed the average revenue for new firms. Since the rule
defines a new firm as one that is less than five years old at the time
the initial parole application is filed, DHS grouped private sector
firms for the 2012 survey as those responding that the year of
[[Page 5284]]
establishment was either 2012, 2011, 2010, 2009, or 2008. DHS obtained
the average revenue per firm and then weighted the average by the
yearly proportion of firms. Based on the resulting weighted average of
$162,000, such new firms will face a filing-cost burden of 0.8
percent.\99\ DHS notes that there is a large difference between the
revenue of new firms with paid employees and those without such
employees (i.e., sole proprietors). For the latter, average revenues
are about $34,000, and the cost burden will be 3.8 percent. However,
because a central component of this parole program requires a
demonstration of significant public benefit in the form of economic
activity and job growth, DHS does not anticipate that sole proprietors
will be eligible to participate in this program.
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\99\ The data utilized for the analysis are found in the SBO
Table SB1200CSCB11, ``Statistics for All U.S. Firms by Year the
Business Was Originally Established or Self-Employment Activity
Begun by Industry, Gender, Ethnicity, Race, and Veteran Status for
the U.S.: 2012: 2012 Survey of Business Owners: https://census.gov/library/publications/2012/econ/2012-sbo.html. The file location is:
https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=SBO_2012_00CSCB11&prodType=table. The average
revenue figure is rounded from $162,293.
---------------------------------------------------------------------------
In summary, DHS believes that per-applicant costs will be primarily
incurred by the individual (which is not covered by the RFA), any
direct cost due to this rule will be relatively minor, and these costs
will only be borne by those who voluntarily choose to apply for parole
under this rule. While the applicant for parole may be the owner of a
firm that could be considered small within the definition of small
entities established by 5 U.S.C. 601(6), DHS considers the applicants
to be individuals at the point in time they are applying for parole,
particularly since it is the individual and not the entity that files
the application and it is the individual whose parole must provide a
significant public benefit under this rule. Furthermore, even if firms
do voluntarily decide to incur the compliance costs on behalf of the
individual requesting consideration for parole under this rule, the
only compliance costs those businesses will be permitted to incur will
be the filing costs for the applications. As indicated previously,
based on the comparison metric used, those costs are expected to be
insignificant.
Based on the evidence presented in this RFA section and throughout
this preamble, DHS certifies that this rule will not have a significant
economic impact on a substantial number of small entities.
E. National Environmental Policy Act
DHS Directive (Dir) 023-01 Rev. 01 establishes the procedures that
DHS and its components use to comply with NEPA and the Council on
Environmental Quality (CEQ) regulations for implementing NEPA. 40 CFR
parts 1500 through 1508.
The CEQ regulations allow federal agencies to establish, with CEQ
review and concurrence, categories of actions (``categorical
exclusions'') which experience has shown do not individually or
cumulatively have a significant effect on the human environment and,
therefore, do not require an Environmental Assessment (EA) or
Environmental Impact Statement (EIS). 40 CFR 1507.3(b)(1)(iii), 1508.4.
DHS Directive 023-01 Rev. 01 establishes Categorical Exclusions that
DHS has found to have no such effect. Dir. 023-01 Rev. 01 Appendix A
Table 1. For an action to be categorically excluded, DHS Directive 023-
01 Rev. 01 requires the action to satisfy each of the following three
conditions: (1) The entire action clearly fits within one or more of
the Categorical Exclusions; (2) the action is not a piece of a larger
action; and (3) no extraordinary circumstances exist that create the
potential for a significant environmental effect. Dir. 023-01 Rev. 01
section V.B (1)-(3).
DHS analyzed this action and does not consider it to significantly
affect the quality of the human environment. This rule provides
criteria and procedures for applying the Secretary's existing statutory
parole authority to entrepreneurs in a manner to assure consistency in
case-by-case adjudications. DHS has determined that this rule does not
individually or cumulatively have a significant effect on the human
environment because it fits within two categorical exclusions under DHS
Directive 023- 01 Rev. 01, Appendix A, Table 1. Specifically, the rule
fits within Categorical Exclusion number A3(a) for rules strictly of an
administrative or procedural nature and A3(d) for rules that interpret
or amend an existing regulation without changing its environmental
effect.
This rule is not part of a larger action and presents no
extraordinary circumstances creating the potential for significant
environmental effects. Fewer than 3,000 individuals, an insignificant
number in the context of the population of the United States, are
projected to receive parole through this program. Furthermore, any
ventures will be governed by local, state and federal laws and
regulations, including those protecting the human health and the
environment. Therefore, this rule is categorically excluded from
further NEPA review.
F. Executive Order 13132
This rule will not have substantial direct effects on the States,
on the relationship between the National Government and the States, or
on the distribution of power and responsibilities among the various
levels of government. Therefore, in accordance with section 6 of
Executive Order 13132, it is determined that this rule does not have
sufficient federalism implications to warrant the preparation of a
federalism summary impact statement.
G. Executive Order 12988
This rule meets the applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988.
H. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13,
all Departments are required to submit to the Office of Management and
Budget (OMB), for review and approval, any reporting requirements
inherent in a rule. See Public Law 104-13, 109 Stat. 163 (May 22,
1995). This final rule involves a new information collection and makes
revisions to the existing information collections as follows:
Overview of Information Collection, Application for Entrepreneur
Parole, Form I-941
This final rule requires that an applicant requesting entrepreneur
parole complete an Application for Entrepreneur Parole, Form I-941, and
is considered a new information collection under the PRA. USCIS did
receive one comment regarding the time burden of this form and, upon
review of the work involved to review the form, gather necessary
information to support the submission, and the time required to
complete and submit the form, USCIS has revised the estimated hour
burden per response to 4.7 hours.
a. Type of information collection: New information collection.
b. Abstract: This collection will be used by individuals who file
an application for entrepreneur parole under INA section 212(d)(5)(A)
(8 U.S.C. 1182(d)(5)(A)) and proposed new 8 CFR 212.19. Such
individuals, other than those filing an application on the basis of a
material change, are subject to biometric collection in connection with
the filing of the application.
c. Title of Form/Collection: Application for Entrepreneur Parole,
Form I-941.
[[Page 5285]]
d. Agency form number, if any, and the applicable component of the
Department of Homeland Security sponsoring the collection: Form I-941,
U.S. Citizenship and Immigration Services.
e. Affected public who will be asked or required to respond:
Businesses and other for profit; Not-for-profit Institutions.
f. An estimate of the total annual numbers of respondents: 2,940.
g. Hours per response: The estimated hour per response for Form I-
941 is 4.7 hours; the estimated hour burden per response for the
biometric processing is 1.17 hours.
h. Total Annual Reporting Burden: The total estimated annual hour
burden associated with this collection is 17,258 hours.
Overview of Information Collection, Application for Travel Document
Form I-131, OMB Control No. 1615-0013
DHS is revising this collection by including spouses and children
seeking parole on the basis of an entrepreneur parolee.
In addition to revising the form and form instructions, DHS is
revising the estimate of total burden hours has increased due to the
addition of this new population of Application for Travel Document,
Form I-131, filers, and the increase of burden hours associated with
the collection of biometrics from these applicants.
a. Type of information collection: Revised information collection.
b. Abstract: This collection will be used by dependents of
individuals who file an application for entrepreneur parole under INA
section 212(d)(5)(A) (8 U.S.C. 1182(d)(5)(A)) and proposed new 8 CFR
212.19. Such individuals are subject to biometric collection in
connection with the filing of the application.
c. Title of Form/Collection: Application for Travel Document, Form
I-131.
d. Agency form number, if any, and the applicable component of the
Department of Homeland Security sponsoring the collection: Application
for Travel Document, Form I-131, U.S. Citizenship and Immigration
Services.
e. Affected public who will be asked or required to respond:
Individuals or households.
f. An estimate of the total annual numbers of respondents: 594,324.
The total number of respondents includes the additional population
of 3,234 individuals as estimated previously in the analysis in Section
IV.C.
g. Hours per response: The estimated hour per response for Form I-
131 Supplement is 1.9 hours; the estimated hour burden per response for
the biometric processing is 1.17 hours; the estimated hour burden per
response for the passport-style photographs is .5 hours.
h. Total Annual Reporting Burden: The total estimated annual hour
burden associated with this collection is 1,372,928 hours.
Overview of Information Collection, Employment Eligibility
Verification, Form I-9, OMB Control No. 1615-0047
In accordance with new 8 CFR 274a.2(b)(1)(v)(A)(5), DHS is revising
the Employment Eligibility Verification, Form I-9, Lists of Acceptable
Documents, List A item 5 to replace ``nonimmigrant alien'' with
``individual,'' to replace ``alien's nonimmigrant'' with
``individual,'' and to add ``or parole'' after ``status'' in List A
item 5.b.(2). With these changes the acceptable List A document is
described as the following: For an individual authorized to work for a
specific employer because of his or her status or parole, a foreign
passport and Form I-94 (or Form I-94A) that has the same name as the
passport and has an endorsement by DHS indicating such employment-
authorized status or parole, as long as the period of endorsement has
not yet expired and the employment is not in conflict with the
individual's employment-authorized status or parole. DHS is also
updating the Lists of Acceptable Documents, List C so that the most
current version of the certification or report of birth issued by the
Department of State is acceptable for Form I-9.
a. Type of information collection: Revised information collection.
b. Abstract: This form was developed to facilitate compliance with
section 274A of the Immigration and Nationality Act, which prohibits
the knowing employment of unauthorized aliens. This information
collection is necessary for employers, agricultural recruiters and
referrers for a fee, and state employment agencies to verify the
identity and employment authorization of individuals hired (or
recruited or referred for a fee, if applicable) for employment in the
United States.
c. Title of Form/Collection: Employment Eligibility Verification.
d. Agency form number, if any, and the applicable component of the
Department of Homeland Security sponsoring the collection: Form I-9,
U.S. Citizenship and Immigration Services.
e. Affected public who will be asked or required to respond:
Business or other for-profit; Individuals or households; State, local
or Tribal Government.
f. An estimate of the total annual numbers of respondents: 78
million employers and 78 million individuals. (The total number of
responses will be only 78 million responses. Each response involves an
employer and an individual who is being hired.)
g. Hours per response:
Time Burden for Employees--20 minutes (.33 hours) total;
Time Burden for Employers--10 minutes (.17 hours) total;
Time Burden for Recordkeeping--5 minutes (.08 hours) total
h. Total Annual Reporting Burden: Approximately 40,600,000 total
annual burden hours.
Overview of Information Collection, Application for Employment
Authorization, Form I-765, OMB Control No. 1615-0040
DHS is making minor revisions to the form instructions to reflect
changes made by this final rule that allow spouses of an entrepreneur
parolee to request employment authorization.
a. Type of information collection: Revised information collection.
b. Abstract: This collection will be used by individuals who file
an application for entrepreneur parole under INA section 212(d)(5)(A)
(8 U.S.C. 1182(d)(5)(A)) and proposed new 8 CFR 212.19. Such
individuals are subject to biometric collection in connection with the
filing of the application.
This form was developed for individual aliens to request employment
authorization and evidence of that employment authorization. The form
is being amended to add a new class of aliens eligible to apply for
employment authorization, specifically a spouse of an entrepreneur
parolee described as eligible for employment authorization under this
rule. Supporting documentation demonstrating eligibility must be filed
with the application. The form lists examples of relevant
documentation.
c. Title of Form/Collection: Application for Employment
Authorization, Form I-765.
d. Agency form number, if any, and the applicable component of the
Department of Homeland Security sponsoring the collection: Form I-765,
U.S. Citizenship and Immigration Services.
e. Affected public who will be asked or required to respond:
Individuals or households.
[[Page 5286]]
f. An estimate of the total annual numbers of respondents:
2,139,523.
This total represents the aggregate estimate for this information
collection, to include the additional estimate of 2,940 respondents
under this rule.
g. Hours per response: The estimated hour per response for Form I-
765 is 3.42 hours; the estimated hour burden per response for biometric
processing is 1.17 hours; the estimated hour burden per response for
Form I-765 WS is .5 hours; the estimated hour burden per response for
passport-style photographs is .5 hours.
h. Total Annual Reporting Burden: The total estimated annual hour
burden associated with this collection is 8,985,859 hours.
Regulatory Amendments
DHS adopted most of the proposed regulatory amendments without
change.
List of Subjects
8 CFR Part 103
Administrative practice and procedure, Authority delegations
(Government agencies), Freedom of information, Immigration, Privacy,
Reporting and recordkeeping requirements.
8 CFR Part 212
Administrative practice and procedure, Aliens, Immigration,
Passports and visas, Reporting and recordkeeping requirements.
8 CFR Part 274a
Administrative practice and procedure, Aliens, Employment,
Penalties, Reporting and recordkeeping requirements.
Accordingly, DHS amends chapter I of title 8 of the Code of Federal
Regulations as follows:
PART 103--IMMIGRATION BENEFITS; BIOMETRIC REQUIREMENTS;
AVAILABILITY OF RECORDS
0
1. The authority citation for part 103 continues to read as follows:
Authority: 5 U.S.C. 301, 552, 552a; 8 U.S.C. 1101, 1103, 1304,
1356, 1365b; 31 U.S.C. 9701; Pub. L. 107-296, 116 Stat. 2135 (6
U.S.C. 1 et seq.); E.O. 12356, 47 FR 14874, 15557, 3 CFR, 1982
Comp., p.166; 8 CFR part 2; Pub. L. 112-54.
0
2. Section 103.7 is amended by adding paragraph (b)(1)(i)(KKK) to read
as follows:
Sec. 103.7 Fees.
* * * * *
(b) * * *
(1) * * *
(i) * * *
(KKK) Application for Entrepreneur Parole (Form I-941). For filing
an application for parole for entrepreneurs: $1200.
* * * * *
PART 212--DOCUMENTARY REQUIREMENTS: NONIMMIGRANTS; WAIVERS;
ADMISSION OF CERTAIN INADMISSIBLE ALIENS; PAROLE
0
3. The authority citation for part 212 is revised to read as follows:
Authority: 6 U.S.C. 111, 202(4) and 271; 8 U.S.C. 1101 and note,
1102, 1103, 1182 and note, 1184, 1185 note (section 7209 of Pub. L.
108-458), 1187, 1223, 1225, 1226, 1227, 1255, 1359; 8 CFR part 2.
Section 212.1(q) also issued under section 702, Pub. L. 110-229,
122 Stat. 754, 854.
0
4. Add Sec. 212.19 to read as follows:
Sec. 212.19 Parole for entrepreneurs.
(a) Definitions. For purposes of this section, the following
definitions apply:
(1) Entrepreneur means an alien who possesses a substantial
ownership interest in a start-up entity and has a central and active
role in the operations of that entity, such that the alien is well-
positioned, due to his or her knowledge, skills, or experience, to
substantially assist the entity with the growth and success of its
business. For purposes of this section, an alien may be considered to
possess a substantial ownership interest if he or she possesses at
least a 10 percent ownership interest in the start-up entity at the
time of adjudication of the initial grant of parole and possesses at
least a 5 percent ownership interest in the start-up entity at the time
of adjudication of a subsequent period of re-parole. During the period
of initial parole, the entrepreneur may continue to reduce his or her
ownership interest in the start-up entity, but must, at all times
during the period of initial parole, maintain at least a 5 percent
ownership interest in the entity. During the period of re-parole, the
entrepreneur may continue to reduce his or her ownership interest in
the start-up entity, but must, at all times during the period of
parole, maintain an ownership interest in the entity.
(2) Start-up entity means a U.S. business entity that was recently
formed, has lawfully done business during any period of operation since
its date of formation, and has substantial potential for rapid growth
and job creation. An entity that is the basis for a request for parole
under this section may be considered recently formed if it was created
within the 5 years immediately preceding the filing date of the alien's
initial parole request. For purposes of paragraphs (a)(3) and (5) of
this section, an entity may be considered recently formed if it was
created within the 5 years immediately preceding the receipt of the
relevant grant(s), award(s), or investment(s).
(3) Qualified government award or grant means an award or grant for
economic development, research and development, or job creation (or
other similar monetary award typically given to start-up entities) made
by a federal, state, or local government entity (not including foreign
government entities) that regularly provides such awards or grants to
start-up entities. This definition excludes any contractual commitment
for goods or services.
(4) Qualified investment means an investment made in good faith,
and that is not an attempt to circumvent any limitations imposed on
investments under this section, of lawfully derived capital in a start-
up entity that is a purchase from such entity of its equity,
convertible debt, or other security convertible into its equity
commonly used in financing transactions within such entity's industry.
Such an investment shall not include an investment, directly or
indirectly, from the entrepreneur; the parents, spouse, brother,
sister, son, or daughter of such entrepreneur; or any corporation,
limited liability company, partnership, or other entity in which such
entrepreneur or the parents, spouse, brother, sister, son, or daughter
of such entrepreneur directly or indirectly has any ownership interest.
(5) Qualified investor means an individual who is a U.S. citizen or
lawful permanent resident of the United States, or an organization that
is located in the United States and operates through a legal entity
organized under the laws of the United States or any state, that is
majority owned and controlled, directly and indirectly, by U.S.
citizens or lawful permanent residents of the United States, provided
such individual or organization regularly makes substantial investments
in start-up entities that subsequently exhibit substantial growth in
terms of revenue generation or job creation. The term ``qualified
investor'' shall not include an individual or organization that has
been permanently or temporarily enjoined from participating in the
offer or sale of a security or in the provision of services as an
investment adviser, broker, dealer, municipal securities dealer,
government securities broker, government securities dealer, bank,
transfer agent or credit rating agency, barred from association with
any entity involved in the offer or sale of securities or provision of
such
[[Page 5287]]
services, or otherwise found to have participated in the offer or sale
of securities or provision of such services in violation of law. For
purposes of this section, such an individual or organization may be
considered a qualified investor if, during the preceding 5 years:
(i) The individual or organization made investments in start-up
entities in exchange for equity, convertible debt or other security
convertible into equity commonly used in financing transactions within
their respective industries comprising a total in such 5-year period of
no less than $600,000; and
(ii) Subsequent to such investment by such individual or
organization, at least 2 such entities each created at least 5
qualified jobs or generated at least $500,000 in revenue with average
annualized revenue growth of at least 20 percent.
(6) Qualified job means full-time employment located in the United
States that has been filled for at least 1 year by one or more
qualifying employees.
(7) Qualifying employee means a U.S. citizen, a lawful permanent
resident, or other immigrant lawfully authorized to be employed in the
United States, who is not an entrepreneur of the relevant start-up
entity or the parent, spouse, brother, sister, son, or daughter of such
an entrepreneur. This definition shall not include independent
contractors.
(8) Full-time employment means paid employment in a position that
requires a minimum of 35 working hours per week. This definition does
not include combinations of part-time positions even if, when combined,
such positions meet the hourly requirement per week.
(9) U.S. business entity means any corporation, limited liability
company, partnership, or other entity that is organized under federal
law or the laws of any state, and that conducts business in the United
States, that is not an investment vehicle primarily engaged in the
offer, purchase, sale or trading of securities, futures contracts,
derivatives or similar instruments.
(10) Material change means any change in facts that could
reasonably affect the outcome of the determination whether the
entrepreneur provides, or continues to provide, a significant public
benefit to the United States. Such changes include, but are not limited
to, the following: Any criminal charge, conviction, plea of no contest,
or other judicial determination in a criminal case concerning the
entrepreneur or start-up entity; any complaint, settlement, judgment,
or other judicial or administrative determination concerning the
entrepreneur or start-up entity in a legal or administrative proceeding
brought by a government entity; any settlement, judgment, or other
legal determination concerning the entrepreneur or start-up entity in a
legal proceeding brought by a private individual or organization other
than proceedings primarily involving claims for damages not exceeding
10 percent of the current assets of the entrepreneur or start-up
entity; a sale or other disposition of all or substantially all of the
start-up entity's assets; the liquidation, dissolution or cessation of
operations of the start-up entity; the voluntary or involuntary filing
of a bankruptcy petition by or against the start-up entity; a
significant change with respect to ownership and control of the start-
up entity; and a cessation of the entrepreneur's qualifying ownership
interest in the start-up entity or the entrepreneur's central and
active role in the operations of that entity.
(b) Initial parole--(1) Filing of initial parole request form. An
alien seeking an initial grant of parole as an entrepreneur of a start-
up entity must file an Application for Entrepreneur Parole (Form I-941)
with USCIS, with the required fees (including biometric services fees),
and supporting documentary evidence in accordance with this section and
the form instructions, demonstrating eligibility as provided in
paragraph (b)(2) of this section.
(2) Criteria for consideration--(i) In general. An alien may be
considered for parole under this section if the alien demonstrates that
a grant of parole will provide a significant public benefit to the
United States based on his or her role as an entrepreneur of a start-up
entity.
(ii) General criteria. An alien may meet the standard described in
paragraph (b)(2)(i) of this section by providing a detailed
description, along with supporting evidence:
(A) Demonstrating that the alien is an entrepreneur as defined in
paragraph (a)(1) of this section and that his or her entity is a start-
up entity as defined in paragraph (a)(2) of this section; and
(B) Establishing that the alien's entity has:
(1) Received, within 18 months immediately preceding the filing of
an application for initial parole, a qualified investment amount of at
least $250,000 from one or more qualified investors; or
(2) Received, within 18 months immediately preceding the filing of
an application for initial parole, an amount of at least $100,000
through one or more qualified government awards or grants.
(iii) Alternative criteria. An alien who satisfies the criteria in
paragraph (b)(2)(ii)(A) of this section and partially meets one or both
of the criteria in paragraph (b)(2)(ii)(B) of this section may
alternatively meet the standard described in paragraph (b)(2)(i) of
this section by providing other reliable and compelling evidence of the
start-up entity's substantial potential for rapid growth and job
creation.
(c) Additional periods of parole--(1) Filing of re-parole request
form. Prior to the expiration of the initial period of parole, an
entrepreneur parolee may request an additional period of parole based
on the same start-up entity that formed the basis for his or her
initial period of parole granted under this section. To request such
parole, an entrepreneur parolee must timely file the Application for
Entrepreneur Parole (Form I-941) with USCIS, with the required fees
(including biometric services fees), and supporting documentation in
accordance with the form instructions, demonstrating eligibility as
provided in paragraph (c)(2) of this section.
(2) Criteria for consideration--(i) In general. An alien may be
considered for re-parole under this section if the alien demonstrates
that a grant of parole will continue to provide a significant public
benefit to the United States based on his or her role as an
entrepreneur of a start-up entity.
(ii) General criteria. An alien may meet the standard described in
paragraph (c)(2)(i) of this section by providing a detailed
description, along with supporting evidence:
(A) Demonstrating that the alien continues to be an entrepreneur as
defined in paragraph (a)(1) of this section and that his or her entity
continues to be a start-up entity as defined in paragraph (a)(2) of
this section; and
(B) Establishing that the alien's entity has:
(1) Received at least $500,000 in qualifying investments, qualified
government grants or awards, or a combination of such funding, during
the initial parole period;
(2) Created at least 5 qualified jobs with the start-up entity
during the initial parole period; or
(3) Reached at least $500,000 in annual revenue in the United
States and averaged 20 percent in annual revenue growth during the
initial parole period.
(iii) Alternative criteria. An alien who satisfies the criteria in
paragraph (c)(2)(ii)(A) of this section and partially meets one or more
of the criteria in paragraph (c)(2)(ii)(B) of this section may
alternatively meet the standard
[[Page 5288]]
described in paragraph (c)(2)(i) of this section by providing other
reliable and compelling evidence of the start-up entity's substantial
potential for rapid growth and job creation.
(d) Discretionary authority; decision; appeals and motions to
reopen--(1) Discretionary authority. DHS may grant parole under this
section in its sole discretion on a case-by-case basis if the
Department determines, based on the totality of the evidence, that an
applicant's presence in the United States will provide a significant
public benefit and that he or she otherwise merits a favorable exercise
of discretion. In determining whether an alien's presence in the United
States will provide a significant public benefit and whether the alien
warrants a favorable exercise of discretion, USCIS will consider and
weigh all evidence, including any derogatory evidence or information,
such as but not limited to, evidence of criminal activity or national
security concerns.
(2) Initial parole. DHS may grant an initial period of parole based
on the start-up entity listed in the request for parole for a period of
up to 30 months from the date the individual is initially paroled into
the United States. Approval by USCIS of such a request must be obtained
before the alien may appear at a port of entry to be granted parole, in
lieu of admission.
(3) Re-parole. DHS may re-parole an entrepreneur for one additional
period of up to 30 months from the date of the expiration of the
initial parole period. If the entrepreneur is in the United States at
the time that USCIS approves the request for re-parole, such approval
shall be considered a grant of re-parole. If the alien is outside the
United States at the time that USCIS approves the request for re-
parole, the alien must appear at a port of entry to be granted parole,
in lieu of admission.
(4) Appeals and motions to reopen. There is no appeal from a denial
of parole under this section. USCIS will not consider a motion to
reopen or reconsider a denial of parole under this section. On its own
motion, USCIS may reopen or reconsider a decision to deny the
Application for Entrepreneur Parole (Form I-941), in accordance with 8
CFR 103.5(a)(5).
(e) Payment of biometric services fee and collection of biometric
information. An alien seeking parole or re-parole under this section
will be required to pay the biometric services fee as prescribed by 8
CFR 103.7(b)(1)(i)(C). An alien seeking an initial grant of parole will
be required to submit biometric information. An alien seeking re-parole
may be required to submit biometric information.
(f) Limitations. No more than three entrepreneurs may be granted
parole under this section based on the same start-up entity. An alien
shall not receive more than one initial grant of entrepreneur parole or
more than one additional grant of entrepreneur re-parole based on the
same start-up entity, for a maximum period of parole of five years.
(g) Employment authorization. An entrepreneur who is paroled into
the United States pursuant to this section is authorized for employment
with the start-up entity incident to the conditions of his or her
parole.
(h) Spouse and children. (1) The entrepreneur's spouse and children
who are seeking parole as derivatives of such entrepreneur must
individually file an Application for Travel Document (Form I-131). Such
application must also include evidence that the derivative has a
qualifying relationship to the entrepreneur and otherwise merits a
grant of parole in the exercise of discretion. A biometric services fee
is required to be filed with the application. Such spouse or child will
be required to appear for collection of biometrics in accordance with
the form instructions or upon request.
(2) The spouse and children of an entrepreneur granted parole under
this section may be granted parole under this section for no longer
than the period of parole granted to such entrepreneur.
(3) The spouse of the entrepreneur parolee, after being paroled
into the United States, may be eligible for employment authorization on
the basis of parole under this section. To request employment
authorization, an eligible spouse paroled into the United States must
file an Application for Employment Authorization (Form I-765), in
accordance with 8 CFR 274a.13 and form instructions. An Application for
Employment Authorization must be accompanied by documentary evidence
establishing eligibility, including evidence of the spousal
relationship.
(4) Notwithstanding 8 CFR 274a.12(c)(11), a child of the
entrepreneur parolee may not be authorized for and may not accept
employment on the basis of parole under this section.
(i) Conditions on parole. As a condition of parole under this
section, a parolee must maintain household income that is greater than
400 percent of the federal poverty line for his or her household size
as defined by the Department of Health and Human Services. USCIS may
impose other such reasonable conditions in its sole discretion with
respect to any alien approved for parole under this section, and it may
request verification of the parolee's compliance with any such
condition at any time. Violation of any condition of parole may lead to
termination of the parole in accordance with paragraph (k) of this
section or denial of re-parole.
(j) Reporting of material changes. An alien granted parole under
this section must immediately report any material change(s) to USCIS.
If the entrepreneur will continue to be employed by the start-up entity
and maintain a qualifying ownership interest in the start-up entity,
the entrepreneur must submit a form prescribed by USCIS, with any
applicable fee (not including any biometric fees), in accordance with
the form instructions to notify USCIS of the material change(s). The
entrepreneur parolee must immediately notify USCIS in writing if he or
she will no longer be employed by the start-up entity or ceases to
possess a qualifying ownership stake in the start-up entity.
(k) Termination of parole--(1) In general. DHS, in its discretion,
may terminate parole granted under this section at any time and without
prior notice or opportunity to respond if it determines that the
alien's continued parole in the United States no longer provides a
significant public benefit. Alternatively, DHS, in its discretion, may
provide the alien notice and an opportunity to respond prior to
terminating the alien's parole under this section.
(2) Automatic termination. Parole granted under this section will
be automatically terminated without notice upon the expiration of the
time for which parole was authorized, unless the alien timely files a
non-frivolous application for re-parole. Parole granted under this
section may be automatically terminated when USCIS receives written
notice from the entrepreneur parolee that he or she will no longer be
employed by the start-up entity or ceases to possess a qualifying
ownership stake in the start-up entity in accordance with paragraph (j)
of this section. Additionally, parole of the spouse or child of the
entrepreneur will be automatically terminated without notice if the
parole of the entrepreneur has been terminated. If parole is
terminated, any employment authorization based on that parole is
automatically revoked.
(3) Termination on notice. USCIS may terminate on notice or provide
the entrepreneur or his or her spouse or children, as applicable,
written notice of
[[Page 5289]]
its intent to terminate parole if USCIS believes that:
(i) The facts or information contained in the request for parole
were not true and accurate;
(ii) The alien failed to timely file or otherwise comply with the
material change reporting requirements in this section;
(iii) The entrepreneur parolee is no longer employed in a central
and active role by the start-up entity or ceases to possess a
qualifying ownership stake in the start-up entity;
(iv) The alien otherwise violated the terms and conditions of
parole; or
(v) Parole was erroneously granted.
(4) Notice and decision. A notice of intent to terminate issued
under this paragraph should generally identify the grounds for
termination of the parole and provide a period of up to 30 days for the
alien's written rebuttal. The alien may submit additional evidence in
support of his or her rebuttal, when applicable, and USCIS will
consider all relevant evidence presented in deciding whether to
terminate the alien's parole. Failure to timely respond to a notice of
intent to terminate will result in termination of the parole. When a
charging document is served on the alien, the charging document will
constitute written notice of termination of parole (if parole has not
already been terminated), unless otherwise specified. Any further
immigration and removal actions will be conducted in accordance with
the Act and this chapter. The decision to terminate parole may not be
appealed. USCIS will not consider a motion to reopen or reconsider a
decision to terminate parole under this section. On its own motion,
USCIS may reopen or reconsider a decision to terminate.
(l) Increase of investment and revenue amount requirements. The
investment and revenue amounts in this section will be automatically
adjusted every 3 years by the Consumer Price Index and posted on the
USCIS Web site at www.uscis.gov. Investment and revenue amounts
adjusted under this paragraph will apply to all applications filed on
or after the beginning of the fiscal year for which the adjustment is
made.
PART 274a--CONTROL OF EMPLOYMENT OF ALIENS
0
5. The authority citation for part 274a continues to read as follows:
Authority: 8 U.S.C. 1101, 1103, 1324a; 48 U.S.C. 1806; 8 CFR
part 2; Pub. L. 101-410, 104 Stat. 890, as amended by Pub. L. 114-
74, 129 Stat. 599.
0
6. Section 274a.2 is amended by:
0
a. Revising paragraphs (b)(1)(v)(A)(5) and (b)(1)(v)(C)(2);
0
b. Removing paragraph (b)(1)(v)(C)(3); and
0
c. Redesignating paragraphs (b)(1)(v)(C)(4) through (8) as paragraphs
(b)(1)(v)(C)(3) through (7).
The revisions read as follows:
Sec. 274a.2 Verification of identity and employment authorization.
* * * * *
(b) * * *
(1) * * *
(v) * * *
(A) * * *
(5) In the case of an individual who is employment-authorized
incident to status or parole with a specific employer, a foreign
passport with an Arrival/Departure Record, Form I-94 (as defined in 8
CFR 1.4) or Form I-94A, bearing the same name as the passport and
containing an endorsement by DHS indicating such employment-authorized
status or parole, as long as the period of endorsement has not yet
expired and the employment is not in conflict with the individual's
employment-authorized status or parole;
* * * * *
(C) * * *
(2) Certification or report of birth issued by the Department of
State, including Forms FS-545, DS-1350, FS-240;
* * * * *
0
7. Section 274a.12 is amended by:
0
a. Revising paragraph (b) introductory text;
0
b. Removing the word ``or'' at the end of paragraph (b)(24);
0
c. Removing the period at the end of paragraph (b)(25) and adding ``;
or'' in its place;
0
d. Adding and reserving paragraphs (b)(26) through (36);
0
e. Adding paragraph (b)(37);
0
f. Revising paragraph (c)(11); and
0
g. Adding paragraph (c)(34).
The revisions and additions read as follows:
Sec. 274a.12 Classes of aliens authorized to accept employment.
* * * * *
(b) Aliens authorized for employment with a specific employer
incident to status or parole. The following classes of aliens are
authorized to be employed in the United States by the specific employer
and subject to any restrictions described in the section(s) of this
chapter indicated as a condition of their parole or of their admission
in, or subsequent change to, the designated nonimmigrant
classification. An alien in one of these classes is not issued an
employment authorization document by DHS:
* * * * *
(37) An alien paroled into the United States as an entrepreneur
pursuant to 8 CFR 212.19 for the period of authorized parole. An
entrepreneur who has timely filed a non-frivolous application
requesting re-parole with respect to the same start-up entity in
accordance with 8 CFR 212.19 prior to the expiration of his or her
parole, but whose authorized parole period expires during the pendency
of such application, is authorized to continue employment with the same
start-up entity for a period not to exceed 240 days beginning on the
date of expiration of parole. Such authorization shall be subject to
any conditions and limitations on such expired parole. If DHS
adjudicates the application prior to the expiration of this 240-day
period and denies the application for re-parole, the employment
authorization under this paragraph shall automatically terminate upon
notification to the alien of the denial decision.
(c) * * *
(11) Except as provided in paragraphs (b)(37) and (c)(34) of this
section and Sec. 212.19(h)(4) of this chapter, an alien paroled into
the United States temporarily for urgent humanitarian reasons or
significant public benefit pursuant to section 212(d)(5) of the Act.
* * * * *
(34) A spouse of an entrepreneur parolee described as eligible for
employment authorization in Sec. 212.19(h)(3) of this chapter.
* * * * *
Jeh Charles Johnson,
Secretary of Homeland Security.
[FR Doc. 2017-00481 Filed 1-13-17; 8:45 am]
BILLING CODE 9111-97-P