Immigration and firm news

International Entrepreneur Parole Proposed Regulation Issued

On August 31, USCIS will announce a forthcoming proposed regulation at 8 CFR 212.19 creating a new benefit called “International Entrepreneur” or “significant public benefit parole for entrepreneurs.” I am really excited about this proposal in part because in my many years of immigration practice, this is the first new major business immigration benefit in ages, maybe decades. There are a lot of immigrant entrepreneurs who fall between the cracks of our existing business immigration categories that are outdated in the modern economy. However, as will be discussed further below, parole is neither a visa nor a green card.  USCIS held a listening session about significant benefit parole for entrepreneurs over a year ago. Although there is statutory authority to back up this new program, it is a creature of Presidential Executive Action rather than a new statute or Act of Congress, surely to arouse the passions of the anti-immigrant crowd. As promised in November 2014, President Obama announced a series of Executive Actions to “modernize and streamline the legal immigration process” in the absence of Congressional will to enact immigration reform. An earlier Senate bill, S.744, that never reached the House floor for a vote would have created a new “X visa” for entrepreneurs. The purpose of International Entrepreneur parole is to attract and keep immigrants involved with “high-potential” start-up entities in the US with the improved ability to conduct research and development and expand the entities’ operations in the US so that our economy can benefit through increased capital expenditures, innovation and job creation. Estimates are that 2105 entrepreneurs would come from abroad funded with investment capital and another 835 entrepreneurs would establish new firms with US grants or awards for a total estimate of 2940 potential entrepreneurs plus 3234 spouses and children who might seek this new parole.

The proposed rule is out for comment until October 17, 2016. Therefore, applications are not yet being accepted and this rule is not final. The final rule could be different. Once the agency mulls over the comments, it will issue a final rule and only then will applications be accepted. Keep in mind that politically, this is a last hurrah by the Obama Administration and the next President could revoke the program and people’s parole or keep it going. Ideally, the next Congress should deal with immigration legislation that creates specific visa and green card categories for entrepreneurs. USCIS is asking for comments and input between August 31, 2016 and October 17, 2016. Please send your comments via email to On the subject line, include “Docket Number USCIS-2015-0006 International Entrepreneur Rule.”

The following are some FAQs on this new program.

What is parole?

Parole is a legal fiction but also a statutory provision passed by Congress decades ago. It is found in section 212(d)(5) of the Immigration and Nationality Act (INA). Parole is neither a visa nor a green card (permanent residence). It is permission to be in the USA with the government’s knowledge and approval on a case-by-case basis at the discretion of an immigration agency for “urgent humanitarian” or “significant public benefit” reasons. Parole is NOT an “admission” into the USA. It may be terminated by the immigration agency at any time for any reason. Denial of parole cannot be appealed to the courts. It is completely discretionary (weighing the good facts [equities] with the negative facts) and decided case-by- case. The agencies look at all relevant facts including background checks. 8 CFR §212.5. Someone who has parole may eventually adjust status to permanent residence if there is a family or employer sponsor or other ground to do so. A person may adjust status to permanent residence if “inspected and admitted or paroled” where there is an underlying basis or category for permanent residence. INA section 245(a).

Who has authority to issue parole?

The three main immigration agencies each share parole authority: Customs and Border Protection (CBP), Immigration Customs and Enforcement (ICE), and Citizenship and Immigration Services (CIS or USCIS). Their authority is from statute enacted by Congress decades ago at INA section 212(d)(5).  Therefore, the parole mentioned here is not newly made up by the President.

How has parole been used before?

Parole is used several different ways. It is often used for medical emergencies where a person does not qualify for or have time to get a visa. It is used to reunite families in humanitarian situations such as reuniting refugee families. It is granted to people who might otherwise not be eligible for a visa but who need to come to the USA to testify or engage in litigation. ICE uses its parole function to allow detained immigrants to get out of detention. USCIS has issued parole to spouses, children and parents of military service members who would otherwise have to consular process an immigrant visa case because of illegal entry. The parole allows them to adjust status in the USA. “Advance parole” is issued frequently to individuals with pending adjustment of status cases allowing them to travel during the process. It is also issued to recipients of other unusual categories such as DACA, TPS and other categories allowing for travel. “Humanitarian parole” is issued by USCIS in Washington D.C. to people with extraordinary or unusual situations.

Why is USCIS doing this now?

In this author’s opinion, USCIS is issuing this regulation now for three main reasons: 1) Politics – Congress failed to enact immigration reform and this is one of several things President Obama wants to get completed before he leaves office. 2) Practicality – there is a significant urgent need to find immigration benefits for this narrow category of applicants based on international business competition for the best and brightest immigrants engaged in promising start-ups, research and development. It is in the national interest to attract and retain entrepreneurs who can create jobs, foster innovation and help grow the economy. 3) Current business immigration categories do not fit the type of applicants anticipated in this program.

Who is eligible to apply?

A short punch list of who can apply includes the following (more details below) –

  • Applicants with a significant ownership interest (of at least 15%) in a start- up AND who have an active and central role in the operations. (In other words, it is not for passive investors or broker/dealers.)
  • The start-up was formed in the last three years before application
  • The start-up has “substantial and demonstrated potential for rapid business growth and job creation” shown by one of the following:
    • The entity has received in the one year prior to filing at least $345,000 in capital investment from qualified US investors (US citizens or permanent residents), who in turn have established records of successful investments; OR
    • The entity has received in the one year prior to filing at least $100,000 from certain federal, state or local government entities typically in the form of grants; OR
    • If partially satisfying either of the above, the entity shows “reliable and compelling evidence” of “substantial potential for rapid growth and job creation.”
  • While in the US, the entrepreneur will be required to have household income greater than 400% of the poverty line for his/her household size. Entrepreneurs will not be eligible for federal public benefits or Obamacare health insurance premium tax credits.
  • The regulations propose that the minimum investment and revenue amounts above (and for re-parole below) be updated every three years based on the Consumer Price Index for All Urban Consumers.

How would an entrepreneur apply?

There are two ways to apply. If abroad first apply to USCIS on a new form I-941. The proposed regulation states appearances “may” be required at a USCIS overseas office (not available in every country). Once parole is authorized, applicants would go to a consulate for biometrics and a background check and issuance of a travel document (foil). Canadians might be able to apply directly at a border post. If approved, at a port of entry, CBP will issue an I-94 indicating entrepreneur parole status. Keep in mind that CBP has the authority to deny parole or to modify the length of time permitted. If already in the USA, one would apply directly to USCIS for parole for status. The proposed application fees for parole and re-parole are $1200.00 plus the biometrics fee of $85.00.

Can spouses and children accompany the entrepreneur?

Yes. Spouses and children (unmarried and under 21) will also receive parole. If applying separately, they will need to independently show the principal still qualifies, and spouses and children will also require biometrics and background checks. Filing fees are proposed to be $480 plus the $85 biometrics fee.

Can the spouses and children work?

Spouses will be able to work but not the children. However, unlike the principal spouse who will be work authorized at time of entry/approval with the parole document, spouses must separately apply for work authorization, which can take a good 60-90 days or more after entry. The spouses can work anywhere while the principal will be bound to working only for the parole entity sponsor. The spouse cannot start working until receiving the work authorization card (EAD). The work permit fee is proposed to be $416.00

Does the entrepreneur need to apply for a work permit separately?

No. International entrepreneurs will be work authorized “incident to status” in a new “PE-1” status. USCIS is amending the regulations elsewhere to allow the principal entrepreneurs to present passports and parole documents as evidence of work authorization for purposes of I-9 forms and E-Verify.

What are the requirements for parole?

Besides meeting the individual start-up US based entity, ownership, demonstrated history and related provisions mentioned above, the applicant will have biometrics taken for background checks. In addition, since parole is discretionary, the agency will weigh the good facts with any negative factors to determine whether the case should be approved in the positive exercise of discretion.

Can parole be extended?

Initial parole will be granted for two years. At least 90 days before the initial parole expires, the entrepreneur and dependents can apply for re-parole for another three years. While the re-parole request is pending, work authorization will be automatically extended for 240 days or until decision. Again, given this is a political move and there is an upcoming election, it is not certain parole will be around after January 2017. USCIS (and the border patrol) retain the authority to shorten the length of time that parole can be issued at its discretion.

Does the entrepreneur need to be an investor?

No, but the entrepreneur must have at least a 15% stake in the business to obtain initial parole. Because USCIS recognizes that ownerships tend to get diluted as more rounds of financing become available, for re-parole purposes, the entrepreneur need only have at least a 10% ownership interest. Unlike treaty E-2 visas and permanent resident EB-5 investors, the paroled entrepreneur’s investment will not be counted toward the minimum investment required in the entity.

Can there be more than one foreign entrepreneur with parole in a business?

The proposed regulation allows for up to three entrepreneurs with parole in any business. USCIS is very concerned about fraud and integrity in the program, and is therefore, limiting the number of paroled entrepreneurs per entity.

Who is a qualified US investor?

  • Only lawful permanent residents and US citizens
  • Investors with demonstrated “established records of successful investments”
  • Venture capital firms, angel investors, start-up accelerators with a history of substantial investments in successful start-up entities. They would have to be US entities primarily owned by US citizens and permanent residents, who in the five years prior to filing had invested in one or more start-ups in at least three separate calendar years in exchange for equity or convertible debt of at least $1,000,000. These must be monetary commitments, not credit for in-kind value. Further, subsequent to these investments, at least two of the entities must have created at least 5 jobs or $500,000 in revenues with at least 20% average annual growth.
  • Local, state and federal government entities/grantors with expertise in economic development, research and development and/or job creation. Total grants received must be at least $100,000 and do not include grants for goods or services.
  • Qualified investors do NOT include relatives of the investor or an entity in which the relatives invested, or funds invested by the immigrant entrepreneur. The purpose of this restriction is to limit opportunities for fraud and to insure integrity of the program. This requirement is to ensure arms-length transactions are involved.
  • Start-up accelerators will be evaluated by several 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.

What is required to get re-parole?

  • The start-up continues to operate lawfully in the US and continues to have substantial potential for rapid growth and job creation.
  • The applicant entrepreneur owns at least 10% of the entity and continues to have an active and central role in the operations and growth of the entity.

–     Evidence that the entity continues to have potential rapid growth and job creation can be shown by:

-Receipt of additional investments, awards or grants of at least $500,000 in additional qualifying funding during the initial parole OR

-Receipt of substantial and rapidly increasing revenues of at least $500,000 with an average annualized revenue growth of at least 20% OR

-Substantial job creation of at least 10 full-time (at least 35 hrs/week) jobs for US workers (not including the entrepreneur or family of the entrepreneur) in the US during the initial parole (with the jobs being filled for at least one year) OR

-If the above is partially satisfied, other reliable and compelling evidence of significant public benefit that validates potential for rapid growth and job creation.

– Biometrics and background check

– Review of the totality of information to determine that the re-parole should be granted in the exercise of discretion.

Can an International Entrepreneur switch to another nonimmigrant status?

If the entrepreneur with parole status later becomes eligible for a nonimmigrant visa such as E-1/E-2, TN, L-1, H-1B, O-1, etc., then the immigrant will need to leave the US and obtain a visa at a US consulate (or in the case of Canadians, depending upon the category, apply at the border for the new category). Parolees are not deemed admitted; therefore, they are not in a status that permits change of status to another nonimmigrant status.

What if a parole application is denied?

The proposed rule prohibits appeals and motions to reconsider/reopen. However, USCIS could reopen on its own motion if the decision was issued in error. Further, USCIS can revoke parole if it feels an approval was issued in error. Consequently, applicants should understand the risk of filing and the potential to lose money, time and other opportunity costs.

Will entrepreneurs (and family members) be permitted to travel during the parole period?

Yes – parole will be issued valid for multiple entries.

What “material changes” must be reported, when and how?

A new application with fee will be required to report material changes such as changes in facts that could affect the outcome of USCIS determinations such as but not limited to a) ownership interest; b) employment ceases with the sponsoring entity; c) lack of active participation, d) criminal charges, convictions, pleas or other outcomes concerning the entrepreneur or the entity; e) complaints, settlements, judgments regarding the entrepreneur or entity; f) sale or disposition, liquidation, dissolution of substantially all the entity assets, and other factors related to eligibility.

When can parole be terminated?

As noted above, parole is completely discretionary by the agency and is decided case-by-case on the facts and evidence presented. Although it can be granted for an initial 2 years with a one-time 3-year re-parole authorization, USCIS/CBP reserve the right to revoke parole or to limit parole to a shorter period. Parole can be terminated under these situations in the proposed regulations:

  • Automatic: when parole expires, or when USCIS gets notice that the entrepreneur will no longer be employed by the start-up, or it ceases to exist, or the entrepreneur has less than a 10% ownership interest. Spouse/child parole terminates when the principal’s parole terminates.
  • Termination on notice: USCIS believes facts or evidence are not true or accurate, failure to comply with material change notices, the entrepreneur is no longer employed in an active or central role, or owns less than 10% of the entity; there are violations of terms/conditions of parole, or parole was erroneously granted. In these situations, USCIS normally sends out a notice of intent to terminate and the applicant has 30 days to respond.

 What are the pros and cons of this program and who would really be interested in it?

Although there is plenty of statutory authority for this type of parole and it will be a creature of regulation, the next administration may or may not want to keep the program going. Therefore, there is short and long-term risk involved. However, once people start obtaining parole as a matter of course, it makes it harder to terminate the program. Unfortunately, if the comments are due in October and if the final regulation comes out before the end of the year, there will not be enough evidence of program use before the next President and Congress take office.

The better solution will be Congressional action that creates visa categories that mirror these requirements. For now, it is hard to imagine why someone who has invested time, money and effort into creating a business entity would want an immigration status that is neither a visa or permanent residence and has a maximum stay of five years, and is revocable at any time.  On the other hand, it is appealing because it is all that we have for this group of entrepreneurs short of Congressional action.  The background information in support of the program indicates that most startups will know in the 3-5 year period whether the company will be able to survive.  If the business fails, no harm done – the immigrant and investors tried. It happens every day.  But five years should be enough to know whether the business has long term potential. Even in the green card and visa categories that we already have, ability to pay and financial stability evidence is often required for newer companies.

There is no right to appeal or motions to reopen or reconsider in the proposed rule. Therefore, the best applicants will be the ones with clearly thought out and well-documented cases to show their potential for rapid growth and job creation. At the same time, parole for 2-5 years has the risks mentioned above. It can be revoked or terminated much more easily and by itself does not lead to a long term status or ability to sponsor older kids or parents. To later obtain a visa, the applicant will need to leave the USA and return.

This parole program seems targeted to those with companies in earlier stages of development but not brand new start-ups or long term well established companies. The company has to have already been around for three years but is probably still in the risky stages of development and funding. Therefore, there are risks in the business as well as in the immigration status.   But, the good thing is that the program is targeted to entrepreneurs, not the investors that can’t qualify for treaty E-1/E-2 visas either due to nationality or insufficient “substantial” investments, or inability to meet EB-5 $500,000-$1,000,000 personal investments.  Likewise, the H-1B cap and limits on ownership stakes due to the required employer-employee relationships make this parole somewhat appealing.  And, it provides some time to either develop related overseas entities for future L-1 multinational transferee visas or time to develop the entrepreneur’s reputation in the field or national scope of the business for O-1 visas and/or EB-1 and EB-2 permanent residence categories.  Where an entrepreneur gets started while in school or just after graduation, especially for students who cannot qualify for the extended STEM OPT, non-STEM OPT students might want to consider transition to parole if the entity meets the three year rule to apply and the entrepreneur is not yet eligible for some of the other existing visas. STEM OPT students can use their three years on OPT to meet the initial qualifying requirement.

For potential investors in start-ups where immigrants are founders or key employees, the parole with a possibility of five years stay gives potential investors more confidence (although possibly not enough confidence) to make investments knowing the entrepreneur will have an immigration avenue to stay long enough to help build the business. This seems beneficial primarily for the investors who need an immigrant or serial entrepreneur with innovative ideas and know-how who can quickly get the business going and then get out or sell in a shorter time-frame.

In addition, the features of continued work authorization while applying for re-parole and ability to bring spouses and children are helpful incentives. The bottom line is that this parole has some potential short of Congressional action to create a visa category for this group, but it has risks.  And, it may not be the only solution. A good overall holistic assessment of all options should be discussed with an experienced immigration lawyer.

Outstanding issues

Some initial questions that I have after a cursory review of the proposed regulation are:

  1. Can a person who is here unlawfully apply for parole? (There are indeed many undocumented immigrants with successful or growing businesses.) Like the military “parole in place” program, this could lead to parole status that down the line would allow for adjustment of status based on one of the employment or family based categories. Similarly, a number of people with DACA (Deferred Action for Childhood Arrivals) or TPS (Temporary Protected Status) may be entrepreneurs, and applying for parole might give them more options.
  2. Will Canadians be able to apply at the border or must they get travel foils from a US consulate?
  3. Who will really be interested in a less than an ideal immigration status in the form of parole? Parole helps many people now who might otherwise have no other options to be in the USA.  But for business people, will it be a status good enough and long term enough to be satisfying without a visa or green card?

Finally, as a reminder, the above listed features and requirements of parole are proposed and are not final or in effect. USCIS is seeking feedback on the proposed regulation before it is finalized, probably before the end of the year.

(Updated 9/8/16) To see comments to the rule so far, look here.