# International Entrepreneur Rule > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2016-20663 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** August 31, 2016 - **Citation:** 81 FR 60130 ## Text 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: Proposed rule. SUMMARY: The Department of Homeland Security (DHS) proposes to amend its regulations implementing the Secretary of Homeland Security's discretionary parole authority to increase and enhance entrepreneurship, innovation, and job creation in the United States. The proposed rule would add new regulatory provisions guiding the use of parole on a case-by-case basis with respect to entrepreneurs of start-up entities whose entry into the United States would provide a significant public benefit through the substantial and demonstrated potential for rapid business growth and job creation. 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 2 years (which may be extended by up to an additional 3 years) to facilitate the applicant's ability to oversee and grow his or her start-up entity in the United States. A subsequent request for re-parole would be considered only when the entrepreneur and his or her start-up entity continues to provide a significant public benefit as evidenced by substantial increases in capital investment, revenue, or job creation. DHS believes that a regulatory process for seeking and granting parole in this business-creation context—including by establishing criteria for evaluating individual parole applications on a case-by-case basis—is important given the complexities involved in such adjudications and the need for guidance regarding the general criteria for eligibility by the start-up entrepreneurs, entities, and investors involved. DATES: Written comments must be received on or before October 17, 2016. ADDRESSES: You may submit comments, identified by DHS Docket No. USCIS-2015-0006, by any one of the following methods: • Federal eRulemaking Portal: http://www.regulations.gov. Follow the Web site instructions for submitting comments. • Email: You may submit comments directly to U.S. Citizenship and Immigration Services (USCIS) by email at uscisfrcomment@dhs.gov. Please include DHS docket number USCIS-2015-0006 in the subject line of the message. • Mail: You may submit comments directly to USCIS by mail by sending correspondence to Samantha Deshommes, Chief, Regulatory Coordination Division, Office of Policy and Strategy, U.S. Citizenship and Immigration Services, Department of Homeland Security, 20 Massachusetts Avenue NW., Washington, DC 20529. To ensure proper handling, please reference DHS Docket No. USCIS-2015-0006 in your correspondence. This mailing address may be used for paper, disk, or CD-ROM submissions. • Hand Delivery/Courier: You may submit comments directly to USCIS through hand delivery to: Samantha Deshommes, Chief, Regulatory Coordination Division, Office of Policy and Strategy, U.S. Citizenship and Immigration Services, Department of Homeland Security, 20 Massachusetts Avenue NW., Washington, DC 20529; Telephone (202) 272-8377. To ensure proper handling, please reference DHS Docket No. USCIS-2015-0006 in your correspondence. 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) 272-8377. SUPPLEMENTARY INFORMATION: Table of Contents I. Public Participation II. Executive Summary A. Purpose of the Regulatory Action B. Legal Authority C. Summary of Proposed Amendments D. Costs and Benefits III. Background A. Discretionary Parole Authority B. Historical Uses of Parole C. Significant Public Benefit of Attracting Foreign Entrepreneurs to the United States D. Proposal for Parole for Entrepreneurs IV. Proposed Changes A. Overview of Parole for Entrepreneurs B. Criteria for Initial Parole 1. Recent Formation of a Start-Up Entity 2. Applicant is an Entrepreneur Who Is Well-Positioned To Advance the Entity's Business 3. Capital Investment or Government Funding Criteria C. Application Requirements for Initial Period of Parole 1. Filing the Application for Entrepreneur Parole (Form I-941) 2. Requirement To Appear for Submission of Biometric Information 3. Income-Related Condition on Parole 4. Adjudication of Applications 5. Limitation on Number of Entrepreneur Parolees Per Start-Up Entity 6. Authorized Period for Initial Grant of Entrepreneur Parole 7. Spouses and Minor Children D. Employment Authorization 1. Employment Authorization Incident to Parole With a Specific Employer 2. Employment Authorization Eligibility for Spouses 3. Documentation for Employment Eligibility Verification (Form I-9) 4. Technical Changes E. Material Change Reporting F. Re-Parole 1. Criteria for Re-Parole 2. Application Requirements for Re-Parole 3. Ensuring Continuous Employment Authorization G. Termination of Parole 1. Automatic Termination 2. Termination on Notice H. Automatic Adjustment of Investment and Revenue Amount Requirements I. Technical Change V. 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. Background and Purpose of the Proposed Rule 3. Population of Entrepreneurs Potentially Eligible 4. Costs 5. Benefits D. Regulatory Flexibility Act E. Executive Order 13132 F. Executive Order 12988 G. Paperwork Reduction Act I. Public Participation DHS invites comments, data, and information from all interested parties, including advocacy groups, nongovernmental organizations, community-based organizations, entrepreneurs, investors, other entities in the entrepreneurial ecosystem of the United States, and legal representatives who specialize in immigration law on any and all aspects of this proposed rule. Comments that will provide the most assistance to DHS in developing these procedures will reference a specific portion of the proposed rule, explain the reason for any recommended change, and include data, information, or authorities that support such recommended change. DHS is generally seeking comments on: A. Proposed filing requirements and procedures; B. Proposed definitions and criteria for evaluating parole applications, including investment, award, revenue, job creation, and alternative criteria; C. Proposed conditions, including limits on the number of entrepreneur parolees per start-up entity and time limits on parole periods; D. Proposed provisions establishing employment authorization for entrepreneurs incident to parole; E. Proposed provisions regarding termination of parole; and F. Proposed opportunity to request re-parole, length of period for re-parole, and limitation on number of re-parole opportunities. DHS also invites comments on the economic analysis supporting this rule and the proposed new parole request form for entrepreneurs. Instructions: All submissions must include the agency name and the DHS Docket No. USCIS-2015-0006 for this rulemaking. Regardless of the method used for submitting comments or material, all submissions will be posted, without change, to the Federal eRulemaking Portal at http://www.regulations.gov, and will include any personal information you provide. Therefore, submitting this information makes it public. You may wish to consider limiting the amount of personal information that you provide in any voluntary public comment submission you make to DHS. DHS may withhold information provided in comments from public viewing that it determines may impact the privacy of an individual or is offensive. For additional information, please read the Privacy Act notice that is available via the link in the footer of http://www.regulations.gov. Docket: For access to the docket to read background documents or comments received, go to http://www.regulations.gov. II. 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), grants the Secretary of Homeland Security the discretionary authority to parole individuals into the United States, on a case-by-case basis, for urgent humanitarian reasons or significant public benefit. DHS proposes to amend 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 proposed rule would establish general criteria for the use of parole with respect to entrepreneurs of start-up entities whose entry into the United States would provide a significant public benefit through the substantial and demonstrated potential for rapid growth and job creation. In all cases, whether to parole a particular individual under this rule would be a discretionary determination that would be made on a case-by-case basis. Given the complexities involved in adjudicating applications in this context and the need for guidance regarding the criteria for exercising parole in this area, 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. As discussed, the proposed rule would establish criteria for seeking and obtaining parole based on the creation of a start-up entity in the United States. DHS proposes that to be considered for parole under this 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 proposes that such potential would be indicated by, among other things, the receipt of (1) significant capital financing from U.S. investors with established records of successful investments or (2) significant awards or grants from certain Federal, State or local government entities. DHS also proposes alternative criteria for applicants who partially meet the proposed thresholds for capital financing or government awards or grants and who can provide additional reliable and compelling evidence of their entities' significant potential for rapid growth and job creation. An applicant would qualify for further consideration by showing 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 proposal would 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 proposal 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. Section 402(4) of the Homeland Security Act of 2002 (HSA), Public Law 107-296, 116 Stat. 2135, 6 U.S.C. 202(4), provides the Secretary the authority to administer and enforce the immigration and nationality laws. Sections 103(a)(1) and (3) of the INA, 8 U.S.C. 1103(a)(1), (3), expressly authorize the 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 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 Proposed Amendments DHS is proposing to add 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 proposed 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. DHS proposes that an entity may be generally considered recently formed if it was created within the 3 years preceding the date of the filing of the initial parole application. 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. DHS proposes that an applicant may generally meet this standard by providing evidence that he or she: (1) Possesses a significant (at least 15 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. 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. DHS proposes that 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. DHS proposes that an applicant would generally be able to meet this standard by demonstrating that the start-up entity has received investments of capital totaling $345,000 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, and/or job creation. DHS proposes that 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. DHS further proposes alternative criteria under which an applicant who partially meets one or more of the above sub-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 his or her entry 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 proposes that an applicant who meets the above criteria (and his or her spouse and minor, unmarried children, if any) generally may be considered under this rule for a discretionary grant of parole lasting up to 2 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 would 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 proposed fees. Applicants would also be required to appear for collection of biometric information. DHS further proposes that no more than three entrepreneurs may receive parole with respect to any one qualifying entity. USCIS adjudicators would be required to 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 would 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. DHS further proposes that if parole is granted, the entrepreneur would 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, would 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, would be permitted to apply for employment authorization consistent with proposed 8 CFR 274a.12(c)(34). DHS retains the right to revoke any such grant of parole at any time as a matter of discretion or if the Department 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 involves fraud or misrepresentation. As noted, the purpose of the proposed 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 benefit from such development and expansion, including through increased capital expenditures, innovation and job creation. DHS proposes to allow individuals granted parole under this rule to be considered for re-parole for an additional period of up to 3 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. As proposed, an applicant under this rule would 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 would 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. DHS proposes that an applicant may generally meet this standard by providing evidence that he or she: (a) Continues to possess a significant (at least 10 percent) ownership interest in the entity; 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 financing by selling ownership interest during their initial years of operation. 3. Significant U.S. Investment/Revenue/Job Creation. The applicant can further validate, through reliable supporting evidence, the start-up entity's continued potential for rapid growth and job creation. DHS proposes that an applicant would be able to satisfy this criterion in one of several ways: a. Investments from established U.S. investors. 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 government entities that regularly provide such funding to start-up entities; or a combination of both. DHS proposes that 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 investments 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 Federal, State or local government entities with expertise in economic development, research and development, and/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. DHS proposes that an applicant would generally be expected 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. DHS proposes that an applicant would generally be expected to demonstrate that the entity created at least 10 full-time jobs for U.S. workers during the initial parole period. d. Alternative criteria. As with initial parole, DHS further proposes alternative criteria under which an applicant who partially meets one or more of the above sub-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 would continue to provide a significant public benefit. As discussed above, such evidence would need to serve as a compelling validation of the entity's substantial potential for rapid growth and job creation. DHS proposes that an applicant who generally meets the above criteria may be considered for one additional grant of parole 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, if the applicant also merits a favorable exercise of discretion. If granted, re-parole may be for up to 3 years, for a total maximum period of 5 years for parole under 8 CFR 212.19. 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 would be required to 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 re-parole, adjudicators would 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 re-paroled, DHS retains the right to revoke parole at any time as a matter of discretion or if the Department 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 applicant committed fraud or made material misrepresentations. Finally, DHS is proposing 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 proposed rule would amend 8 CFR 274a.12(b) by: (1) Adding entrepreneur parolees to the classes of aliens authorized for employment incident to their immigration status or parole, and (2) providing for temporary employment authorization for those applying for re-parole. The proposed rule would amend 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 proposed rule would amend 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. 2 Finally, the proposed rule would amend 8 CFR 103.7(b)(i) by including the fee for the new proposed application form. 2 Additionally, DHS is also proposing a technical change to this section to add the Department of State (DOS) Consular Report of Birth Abroad (Form FS-240, or successor form) to the “List C” column of acceptable documents for Form I-9 purposes. D. Costs and Benefits DHS does not anticipate that this rule, if finalized, would generate significant costs and burdens to private or public entities. Costs of the rule would stem from filing fees and opportunity costs associated with applying for parole, and the requirement that the entrepreneur alert DHS to any material changes. DHS estimates that 2,940 entrepreneurs could be eligible for parole annually. Each applicant for parole would face a total filing cost—including the application form fee, biometric filing fee, travel costs, and associated opportunity costs—of $1,480, resulting in a total cost of $4,349,827 (undiscounted) for the first full year the rule could take effect and any subsequent year. Additionally, dependent family members (spouses and children) seeking parole with the principal applicant would 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 base estimate of 2,940 principal applicants. Each spouse and child 14 years of age and older seeking parole would face a total cost of $550 per applicant, for a total aggregate cost of $1,779,604. 3 Additionally, spouses who apply for work authorization via a Form I-765 application would incur a total additional cost of $416.20 each. Based on the same number of entrepreneurs, the estimated 2,940 spouses 4 would incur total costs of $1,223,630 (undiscounted). The total cost of the rule to include direct filing costs and monetized non-filing costs is estimated to be $7,353,061 annually. 3 For parole requests for children under the age of 14, only the filing fee will be required, as they 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 photograph and signature captured. 4 DHS used a simple one-to-one mapping of entrepreneurs to spouses to obtain 1,813 spouses, the same number as entrepreneur parolees. DHS anticipates that establishing a parole process for those entrepreneurs who stand to provide a significant public benefit would 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 proposal would 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. III. Background A. Discretionary Parole Authority The Secretary of Homeland Security has discretionary authority to grant temporary parole “under conditions as he may prescribe only on a case-by-case basis for urgent humanitarian reasons or significant public benefit [to] any individual applying for admission to the United States.” INA section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A). 5 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 standards to the Secretary. Aside from requiring case-by-case determinations, Congress limited the parole authority by prohibiting its use with respect to two classes of applicants for admissions: (1) Aliens who are refugees (unless the Secretary determines that parole is required for a particular alien for compelling reasons in the public interest), see INA section 212(d)(5)(B), 8 U.S.C. 1182(d)(5)(B); and (2) alien crewmen during certain labor disputes, see INA section 214(f)(2)(A), 8 U.S.C. 1184(f)(2)(A). 5 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). Parole decisions are discretionary determinations and must be made on a case-by-case basis consistent with the INA. DHS may exercise its authority to 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. 6 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. 6 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). Parole is not an admission to the United States. See INA section 101(a)(13)(B), 8 U.S.C. 1101(a)(13)(B); 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), 8 U.S.C. 1182(d)(5). DHS regulations at 8 CFR 212.5 describe DHS's discretionary parole authority for arriving aliens to the United States (other than detained aliens), 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 alien 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 aliens who seek authorization to depart the United States and return to the country pursuant to parole in the future. 7 See 8 CFR 212.5(f); Application for Travel Document (Form I-131). Advance authorization of parole by USCIS does not guarantee that the alien will be paroled by CBP upon his or her appearance at a port of entry. Rather, with a grant of advance parole, the alien is issued a document authorizing travel (in lieu of a visa) indicating the presumption that CBP will favorably exercise discretion to parole the alien in the future (so long as material circumstances do not change). 7 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 a nonimmigrant classification, as USCIS is unable to grant parole to aliens who are not “applicants for admission.” See INA section 212(d)(5), 8 U.S.C. 1182(d)(5). Currently, upon an alien's arrival to the United States with a parole travel document ( e.g., a Department ofState (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). Importantly, 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. See section 212(a) of the INA, 8 U.S.C. 1182(a). Further, parole does not confer any immigration “status.” See section 101(a)(13)(B) of the INA, 8 U.S.C. 1101(a)(13)(B); section 212(d)(5)(A) of the INA, 8 U.S.C. 1182(d)(5)(A). Parole does not provide a parolee with temporary 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 an Application for Employment Authorization (Form I-765) with USCIS. See 8 CFR 274a.12(c)(11). If employment authorization is granted, USCIS issues the parolee an 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 may 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. Historical Uses of Parole DHS and the former Immigration and Naturalization Service (INS) have long extended parole to individuals for urgent humanitarian reasons or significant public benefit. The authority has been exercised on behalf of individuals on an ad hoc basis, as well as through policy guidance or regulations identifying classes of individuals to be considered for parole through individualized case-by-case adjudications. For example, parole has long been used on an ad hoc basis for individuals with serious medical conditions who need to come into the United States for medical treatment, individuals subject to prosecution or who are required to testify in court, individuals cooperating with law enforcement agencies, volunteers offering assistance in response to natural or other disasters, and foreign officials and other dignitaries who are inadmissible but seek to attend events in the country. Depending on the circumstances, such uses of parole have been justified on “urgent humanitarian” or “significant public benefit” grounds, or both. Parole has also long been exercised on a case-by-case basis with respect to individuals falling within certain designated parameters, as defined through regulation or policy guidance. Longstanding regulations, for example, provide discretionary criteria and other guidance for the use of parole with respect to arriving aliens detained in the United States. See 8 CFR 212.5. Those regulations provide that parole from immigration custody generally would be “justified” on a case-by-case basis if an individual falls within one of several specific categories, including individuals with serious medical conditions, pregnant women, juveniles, or individuals whose “continued detention is not in the public interest” as determined by certain listed officials. Id. Through longstanding policy memoranda or other guidance, DHS and the former INS have also provided instructions on the use of parole for other individuals, including certain vulnerable individuals who have been denied refugee status. More recently, DHS has provided guidance on the case-by-case exercise of the parole authority through policy memoranda or notices in the Federal Register , including, for example, on behalf of certain Cuban nationals, certain individuals seeking to enter the Commonwealth of the Northern Mariana Islands (CNMI), and certain family members of U.S. military personnel: • In 2007, DHS implemented the Cuban Family Reunification Parole Program to promote safe, legal, and orderly migration as an alternative to maritime crossings from Cuba. This program offers Cuban beneficiaries of approved family-based immigrant visa petitions an opportunity to apply for parole rather than remain in Cuba while awaiting the availability of an immigrant visa number. 8 USCIS implemented the program based on the significant public benefit rationales of “enabling the United States to meet its commitments under the Migration Accords” and “reducing the perceived need for family members left behind in Cuba to make irregular and inherently dangerous attempts to arrive in the United States.” 9 8 Cuban Family Reunification Parole Program, 72 FR 65,588 (Nov. 21, 2007); see also Changes to Application Procedures for the Cuban Family Reunification Parole Program, 79 FR 75579 (Dec. 18, 2014). 9 Id. • In 2009, DHS announced a policy on the use of parole into the CNMI for certain foreign workers, as well as visitors from the Russian Federation and the People's Republic of China. 10 The parole policy was justified based on the economic benefit such workers and visitors would provide to the U.S. territory. 10 See 8 CFR 214.2(w)(1)(v); USCIS, Commonwealth of the Northern Mariana Islands (CNMI) Federalization of Immigration Law (Sept. 22, 2014), available at http://www.uscis.gov/laws/immigration-commonwealth-northern-mariana-islands-cnmi/commonwealth-northern-mariana-islands-cnmi-federalization-immigration-law; USCIS, Extending Parole in the CNMI (Jan. 30, 2012), available at http://www.uscis.gov/laws/immigration-commonwealth-northern-mariana-islands-cnmi/extending-parole-cnmi. • In 2013, DHS issued guidance encouraging the use of parole for spouses, children, and parents of active duty members of the U.S. Armed Forces, individuals in the Selected Reserve of the Ready Reserve, and individuals who previously served in the U.S. Armed Forces or the Selected Reserve of the Ready Reserve. 11 The cited benefits included mitigating the adverse effects on Service Members and military preparedness stemming from the stress and anxiety of their immediate family members due to immigration concerns. 11 See USCIS Policy Mem. PM-602-0091, Parole of Spouses, Children and Parents of Active Duty Members of the U. S. Armed Forces, the Selected Reserve of the Ready Reserve, and Former Members of the U.S. Armed Forces or Selected Reserve of the Ready Reserve and the Effect of Parole on Inadmissibility under Immigration and Nationality Act § 212(a)(6)(A)(i) at 2-3 (Nov. 13, 2013), available at http://www.uscis.gov/sites/default/files/USCIS/Laws/Memoranda/2013/2013-1115_Parole_in_Place_Memo_.pdf. C. Significant Public Benefit From Attracting Foreign Entrepreneurs to the United States DHS believes that enabling foreign entrepreneurs to establish and grow their start-up entities in the United States, rather than abroad, would yield a significant public benefit in certain cases. This would be expected to promote entrepreneurship and investment; facilitate research and development and other forms of innovation; support the continued growth of the U.S. economy; and lead to job creation for U.S. workers. To this end, DHS has considered the economic benefits of foreign entrepreneurs. Evidence indicates that young business ventures, especially new start-up businesses, are important economic drivers and that the U.S. economy significantly benefits from the economic activity generated by entrepreneurs who start and grow new businesses here rather than abroad. 12 Indeed, evidence suggests that future economic and job growth for nations will hinge heavily on their ability to attract entrepreneurs, including those from abroad. 13 As entrepreneurs have increasing opportunities to establish and operate their start-up entities around the world, the need to create conditions that reduce barriers to entry and attract entrepreneurs has become a priority policy goal for a number of economically advanced and less economically advanced nations. 14 To compete for talented entrepreneurs, these countries have, or are planning to have, processes similar to that proposed in this rule. 15 12 See, e.g. Edward L. Glaeser, Sari Pekkala Kerr, and William R. Kerr “Entrepreneurship And Urban Growth: An Empirical Assessment With Historical Mines” (2013). Working Papers 13-15, Center for Economic Studies, U.S. Census Bureau. (Finding that increasing the proportion of startup employment within a region increases the growth rate of overall employment and wages.); John C. Haltiwanger, Ron S. Jarmin, Javier Miranda, “Who Creates Jobs? Small vs. Large vs. Young” NBER Working Paper No. 16300, August 2010, available at http://www.nber.org/papers/w16300 (Findings “highlight the important role of business startups and young businesses in U.S. job creation.”); Jose Plehn-Dujowich, “Product Innovations by Young and Small Firms,” Small Business Administration, Research Summary No. 408 available at http://www.sba.gov/advocacy/7540/621871 (Finding that “innovation is characteristic of both young and small firms”); Tim Kane, “The Importance of Startups in Job Creation and Job Destruction,” July 2010 Kauffman Foundation Research Series: Firm Formation and Economic Growth, available at http://www.kauffman.org/~/media/kauffman_org/research%20reports%20and%20covers/2010/07/firm_formation_importance_of_startups.pdf (showing the importance of startups for net job growth in the U.S. economy). 13 Council of Economic Advisers The Economic Effects of Administrative Action on Immigration, 18 (November 2014, updated February 2015), available at https://www.whitehouse.gov/sites/defaulUfiles/docs/economic_effects_of_immigration_ea_february_2015_update_final_v2.pdf (“A body of academic research conducted over the past ten years has found that high-skilled immigration has positive effects on innovation (as measured by patenting) and on total factor productivity.”); Robert Litan, Start-Up Slowdown; Council on Foreign Relation, Jan./Feb. 2015, available at https://www.foreignaffairs.com/articles/americas/2014-12-15/start-slowdown; Robert Fairlie, Kauffman Index of Entrepreneurial Activity, 1996-2011, Ewing Marion Kauffman Foundation, March 19, 2012, http://www.kauffman.org/uploadedfiles/kiea_2012_report.pdf (finding that immigrants were more than twice as likely as Americans to start new businesses in 2011); Madeleine Sumption, “Visas for Entrepreneurs: How Countries Are Seeking Out Immigrant Job Creators,” June 13, 2012 Migration Information Source, Migration Institute, available at http://www.migrationpolicy.org/article/visas-entrepreneurs-how-countries-are-seeking-out-immigrant-job-creators. 14 Robert Litan, “Start-Up Slowdown”; Council on Foreign Relation, Jan./Feb. 2015, available at https://www.foreignaffairs.com/articles/americas/2014-12-15/start-slowdown; Madeleine Sumption, “Visas for Entrepreneurs: How Countries Are Seeking Out Immigrant Job Creators,” June 13, 2012 Migration Information Source, Migration Institute, available at http://www.migrationpolicy.org/article/visas-entrepreneurs-how-countries-are-seeking-out-immigrant-job-creators. 15 Canada Start-up Visa, http://www.cic.gc.ca/english/immigrate/business/start-up/; UK Tier 1 (Entrepreneur) visa, https://www.gov.uk/tier-1-entrepreneur/overview. Allowing certain qualified entrepreneurs to come to the United States as parolees on a case-by-case basis would produce a significant public benefit through substantial and positive contributions to innovation, economic growth, and job creation. New business ventures, especially start-up businesses, are important economic drivers. 16 A significant percentage of the employment generated by high-tech manufacturers backed by U.S. venture capital investment has come from immigrant-founded companies. 17 A study on the top 50 venture capital-funded start-up companies in the United States showed that 48 percent had at least one immigrant founder. 18 16 Tim Kane, “The Importance of Startups in Job Creation and Job Destruction,” July 2010 Kauffman Foundation Research Series: Firm Formation and Economic Growth, available at http://www.kauffman.org/~/media/kauffman_org/research%20reports%20and%20covers/2010/07/firm_formation_importance_of_startups.pdf (showing the importance of startups for net job growth in the U.S. economy); Edward L. Glaeser, Sari Pekkala Kerr, and William R. Kerr, “Entrepreneurship And Urban Growth: An Empirical Assessment With Historical Mines,” Working Papers 13-15, Center for Economic Studies, U.S. Census Bureau, 2013 (finding that increasing the proportion of startup employment within a region increases the growth rate of overall employment and wages.); John C. Haltiwanger, Ron S. Jarmin, Javier Miranda, “Who Creates Jobs? Small vs. Large vs: Young,” NBER Working Paper No. 16300, August 2010, available at http://www.nber.org/papers/w16300 (highlighting “the important role of business startups and young businesses in U.S. job creation”). 17 Stuart Anderson & Michaela Platzer, “American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness,” National Venture Capital Association, Nov. 2006, at 11. 18 Stuart Anderson, “Immigration Founders and Key Personnel in America's 50 Top Venture-Funded Companies,” Dec. 2010, available at http://www.nfap.com/pdf/NFAPPolicyBriefImmigrantFoundersandKeyPersonnelinAmericasTopVentureFundedCompanies.pdf. Innovative foreign-born entrepreneurs are critical forces in the U.S. economy, having founded roughly one-quarter of technology and engineering companies created between 2006 and 2012. 19 As of June 2013, publicly-traded immigrant-founded venture-backed companies had a total market capitalization of $900 billion. 20 Another study by the National Venture Capital Association found that 40 percent of the immigrant founders in the survey entered the United States as employment-sponsored immigrants, 38 percent as international students, 13 percent as family-sponsored immigrants, and the rest in other categories. 21 These studies, however, do not reflect the number of entrepreneurs who may have decided to start businesses in other countries because of the difficulty in locating their businesses in the United States due to current immigration policies. 22 The full potential of foreign entrepreneurs to benefit the U.S. economy through, for example, cutting-edge research, revenue generation, and job creation, is thus unknown. That current immigration policies create barriers for foreign entrepreneurs was a primary conclusion of the USCIS Entrepreneurs in Residence (EIR) program, 23 which was launched in 2012 to better understand how entrepreneurs fit within existing immigration classifications and to make policy recommendations based on its findings. 19 Vivek Wadhwa, AnnaLee Saxenian & F. Daniel Siciliano, “America's New Immigrant Entrepreneurs: Then and Now,” Kauffman Foundation, Oct. 2012, at 3, available at http://www.kauffman.org/what-we-do/research/immigration-and-the-american-economy/americas-new-immigrant-entrepreneurs-then-and-now. 20 Stuart Anderson, “American Made 2.0: How Immigrant Entrepreneurs Continue to Contribute to the U.S. Economy,” National Venture Capital Association, 2013, at 5, available at http://nvca.org/research/stats-studies/. 21 Stuart Anderson, “American Made 2.0—How Immigrant Entrepreneurs Continue to Contribute to the U.S. Economy,” supra 28. 22 See, e.g., Vivek Wadhwa, “The Immigrant Exodus” (Philadelphia: Wharton Digital Press) (2012); Amy Grenier, “Majority of U.S. Patents Granted to Foreign Individuals, Immigration Impact,” April 11, 2014, available at http://immigrationimpact.com/2014/04/11/majority-of-u-s-patents-granted-to-foreign-individuals/ (noting difficulties that foreign inventors face in coming to and staying in the United States). 23 See http://www.uscis.gov/about-us/entrepreneurs-residence-initiative/entrepreneurs-residence-eir. For the EIR program, USCIS recruited both start-up experts from the private sector, using DHS's Loaned Executive Program, and internal immigration experts from across the agency. Working within the framework of current immigration law, the team set out with the overarching goal of optimizing existing visa categories used by entrepreneurs to provide pathways that are clear, consistent, and aligned with business realities. D. Proposal for Parole for Entrepreneurs DHS proposes to exercise its parole authority, on a case-by-case basis, for entrepreneurs of start-up entities whose parole into the United States would provide a significant public benefit through the substantial potential of his or her start-up entity for rapid growth and job creation. Under the proposed rule, such potential would be evidenced by, among other things, the receipt of (1) substantial significant capital financing by U.S. investors with established records of successful investments or (2) significant awards or grants from certain government entities. DHS also proposes alternative criteria for applicants who partially meet the proposed thresholds for capital financing or government awards or grants and who can provide additional reliable and compelling evidence of their entities' significant potential for rapid growth and job creation. If granted, parole would be authorized for up to 2 years to facilitate the entrepreneur's ability to oversee and grow his or her start-up entity in the United States. A subsequent request for re-parole would be considered only if the start-up entity continues to show significant promise of rapid growth and job creation through substantial and demonstrated increases in qualifying funding (whether capital investment or government grants or awards), revenue, or job creation. In all cases, whether to parole a particular individual under this rule would be a discretionary determination that would be made on a case-by-case basis. DHS believes that a regulatory process for seeking and granting parole in this business-creation context—including by establishing criteria for evaluating individual parole applications on a case-by-case basis—is important given the complexities involved in such adjudications and the need for general guidance regarding the relevant factors for eligibility by the start-up entrepreneurs, entities, and investors involved. IV. Proposed Changes In this rule, DHS is proposing to add a new section 8 CFR 212.19 to its regulations to set forth application procedures and criteria specifically for considering parole requests filed by entrepreneurs of start-up entities. See proposed 8 CFR 212.19. Consistent with this new section, the proposed rule would also: (1) Amend 8 CFR 274a.12(b) to authorize entrepreneur parolees to work for their approved start-up entities in the United States, see proposed 8 CFR 274a.12(b)(37); (2) amend 8 CFR 274a.12(c) to extend eligibility for employment authorization to the spouses of entrepreneur parolees, see proposed 8 CFR 274a.12(c)(34); (3) make a conforming amendment to the employment eligibility verification regulations at 8 CFR 274a.2(b)(v)(A)(5) to allow entrepreneur parolees to use their foreign passports and Arrival/Departure Records (Forms I-94) indicating they have entrepreneur parole as evidence of identity and employment authorization for purposes of meeting the Employment Eligibility Verification (Form I-9) requirements, see proposed 8 CFR 274a.2(b)(v)(A)(5); and (4) amend 8 CFR 103.7(b)(1)(i) to include a fee for the new proposed entrepreneur parole application form, see proposed 8 CFR 103.7(b)(1)(i)(FFF). A. Overview of Parole for Entrepreneurs At the proposed section 8 CFR 212.19, DHS sets forth the application requirements and proposed criteria for extending discretionary parole, on a case-by-case basis, to entrepreneurs of start-up entities and their spouses and children. As required by statute, the entrepreneur must demonstrate that his or her parole into the United States would provide a significant public benefit. DHS proposes that an individual may meet that standard under this rule by demonstrating that his or her start-up entity has substantial potential for rapid growth and job creation and that his or her parole would significantly help the entity conduct and grow its business here. See proposed new 8 CFR 212.19(b)(2). As described in more detail below, an applicant would generally be able to meet this standard by demonstrating the following: • The entrepreneur's entity was recently formed ( i.e., generally within the 3 years immediately preceding the filing date of the entrepreneur's application for parole) in the United States and has the substantial potential for rapid growth and job creation. See proposed 8 CFR 212.19(a)(2). • The applicant is an entrepreneur in that he or she possesses a substantial ownership interest ( i.e., generally 15 percent or more) in the entity and has an active and central role in the entity such that he or she is well-positioned to advance the entity's business. See proposed 8 CFR 212.19(a)(1). • The entity has: (1) Received substantial investment from U.S. investors with established records of successful investments; or (2) received substantial awards or grants from certain Federal, State, or local government entities. See proposed 8 CFR 212.19(b)(2)(ii). Alternatively, an applicant who partially meets one or more of these two sub-criteria may be considered for parole if he or she provides additional reliable and compelling evidence that his or her parole would provide a significant public benefit. See proposed 8 CFR 212.19(b)(2)(iii). Under the proposed rule, an applicant would file a new application specifically tailored for entrepreneurs to demonstrate eligibility for parole based upon significant public benefit, along with proposed fees. See proposed 8 CFR 212.19(b)(1). Applicants would also be required to appear for collection of biometric information. See proposed 8 CFR 212.19(e). To grant parole, USCIS adjudicators would be required to conclude, following an individualized assessment and 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. See proposed 8 CFR 212.19(d)(1). If a determination is made that parole of the applicant would provide a significant public benefit, DHS may parole the entrepreneur for a period of up to 2 years, with an opportunity to apply for one additional period of parole of up to 3 years upon showing that parole would continue to provide a significant public benefit. See proposed 8 CFR 212.19(d)(2) and (h). DHS further proposes that no more than three principal entrepreneurs may receive parole with respect to any one qualifying entity. See proposed 8 CFR 212.19(f). Following is a detailed discussion of the specific provisions proposed by DHS in this rulemaking. B. Criteria for Initial Parole Consideration To be considered for an initial grant of parole based on significant public benefit under this rule, DHS is proposing that the individual generally meet the following criteria: 1. Recent Formation of a Start-Up Entity The key criterion under this proposed rule is the formation of a new entity in the United States that has substantial potential to rapidly increase revenue and create jobs for U.S. workers. DHS thus proposes that an applicant for parole under this rule be able to show that his or her start-up entity was recently formed in the United States, has lawfully done business during any period of operation since its date of formation, and has the substantial potential to experience rapid growth and job creation, including through the significant attraction of capital investment or government awards or grants. See proposed 8 CFR 212.19(a)(2). An entity that is the basis for a request for parole under this section may be considered “recently formed” if it is a U.S. business entity that was created within the 3 years immediately preceding the filing date of the entrepreneur's application for parole. Id. As a preliminary matter, DHS proposes that a proffered start-up entity must meet the definition of “U.S. business entity” at proposed 8 CFR 212.19(a)(9). The term is defined as any corporation, limited liability company, partnership, or other entity that is organized under Federal law or the laws of any State, 24 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. See proposed 8 CFR 212.19(a)(9). DHS believes that this definition appropriately captures the range of start-up entities that are formed in the United States by entrepreneurs and that have the substantial potential for rapid growth and job creation. DHS is proposing to exclude an entity that is an investment vehicle primarily engaged in the offer, purchase, sale or trading of securities, futures contracts, derivatives or similar instruments to ensure that the start-up entities receiving investment capital under this proposed rule are not merely serving as a conduit for reinvestment, but providing or seeking to provide goods or services with the substantial potential for rapid growth and job creation. 24 “State” is a defined term at INA section 101(a)(36). In addition to the 50 States, the term “includes the District of Columbia, Puerto Rico, Guam, the Virgin Islands of the United States, and the Commonwealth of the Northern Mariana Islands.” As noted above, an entity must be recently formed in the United States to be considered a start-up entity for purposes of this rule. See proposed 8 CFR 212.19(a)(2). DHS proposes that an entity that is the basis for seeking parole under this rule may be considered recently formed if it is less than 3 years old at the time of filing the parole application. 25 Id. This limitation reflects the Department's intention for parole under this proposed rule to incentivize and support the creation and growth of new businesses in the United States, so that the country may benefit from their 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 “goes beyond a company just getting off the ground.” 26 DHS believes that limiting the definition of “start-up” in this proposed rule to entities that are less than 3 years old at the time the parole application is filed is reasonable to 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, obtain qualifying levels of investor financing (which may occur in several rounds) or government grants or awards, and still meet the definition of a “start-up entity” under this rule. 25 With respect to certain proposed definitions at 8 CFR 212.19(a)(3) and (a)(5), which discuss other entities that receive grants, awards, or investments, an entity may be considered recently formed if it was created within the 3 years immediately preceding the receipt of a relevant grant, award, or investment. See proposed 8 CFR 212.19(a)(2). 26 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.”). DHS further proposes to consider parole under this rule only where it is demonstrated that the start-up entity has been operating lawfully in the United States since its formation. See proposed 8 CFR 212.19(a)(2). This limitation is intended to protect the integrity of this new parole process. Part of the parole determination would therefore include a review by DHS of the start-up entity's activities from the time of its formation in the United States. Finally, DHS proposes that the start-up entity must be of a type that has the substantial potential to experience rapid growth and job creation, including through the significant attraction of capital investment or government awards or grants. This factor is intended to capture the types of start-up entities that are most likely to provide a significant public benefit, while excluding entities without such potential—such as small businesses with limited growth potential created by entrepreneurs for the sole or primary purpose of providing income to the entrepreneurs and their families. 27 Because this latter type of business is less likely to experience rapid growth 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. 27 Erik Hurst & Benjamin Wild Pugsley, “What Do Small Businesses Do?” (Aug. 2011), available at http://www.brookings.edu/~/media/files/programs/es/bpea/2011_fall_bpea_papers/2011_fall_bpea_conference_hurst.pdf. DHS anticipates that an applicant seeking parole under this rule would be able to meet the above criteria by providing various types of evidence. As part of the application process, an applicant would generally be expected to submit supporting documentation concerning the entity's business and its substantial potential for rapid growth and job creation (as well as the entrepreneur's day-to-day role in the business). See proposed 8 CFR 212.19(b)(2)(ii)(A). In addition to meeting the capital investment or government funding criteria discussed further below, such additional documentation may include: • Evidence of capital investments from qualified investors, or government awards or grants, other than those relied on to satisfy the requirements of 8 CFR 212.19(b)(2)(ii)(B); • letters from relevant government entities, qualified investors, or established business associations with knowledge of the entity's research, products or services and/or the applicant's knowledge, skills or experience that would advance the entity's business; • newspaper articles or other similar evidence that the applicant or entity has received significant attention or recognition; • evidence 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; • evidence of significant revenue generation and growth in revenue; • patent awards or other documents indicating that the entity or applicant is focused on developing new technologies or cutting-edge research; • evidence that the applicant has played an active and central role in the success of prior start-up entities; • degrees or other documentation indicating that the applicant has knowledge, skills, or experience that would significantly advance the entity's business; • payroll, bookkeeping, salary, or bank records or other documents related to jobs created prior to filing the request for parole; and • any other relevant, probative, and credible evidence indicating the entity's potential for growth and/or the applicant's ability to advance the entity's business in the United States. DHS believes that such evidence would assist USCIS officers in determining whether an entity has substantial potential for rapid growth and job creation and, ultimately, whether an applicant has met the required standard for parole and merits a favorable exercise of discretion. DHS welcomes public comment on the proposed definitions of the terms “start-up entity” and “U.S. business entity,” as well as the requirement that the entity be formed within the 3 years preceding a request for parole. DHS also welcomes comments on the types of evidence that may be considered when determining whether such provisions have been met, including alternative suggestions on how applicants may be able to demonstrate eligibility. 2. Applicant Is an Entrepreneur Who Is Well-Positioned To Advance the Entity's Business DHS is proposing that to be considered for parole under this rule, an applicant must be an entrepreneur who is well-positioned to advance his or her start-up entity's business. Specifically, DHS proposes that an applicant be able to demonstrate that he or she is an “entrepreneur” as defined at 8 CFR 212.19(a)(1). This definition would require 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 his or her knowledge, skills, or experience will substantially assist the entity with the growth and success of its business. See proposed 8 CFR 212.19(a)(1). The definition further provides that for purposes of this rule, an individual may be considered to possess a substantial ownership interest if he or she possesses at least a 15 percent ownership stake in the start-up entity at the time of adjudication of the initial grant of parole (and maintains at least a 10 percent ownership stake in the start-up entity at all times during the parole period, including any period of re-parole). Id. DHS believes these criteria are appropriate, as active ownership and participation provide stronger justifications for parole based on significant public benefit than investment alone. To establish that parole would serve a significant public benefit, DHS believes that the applicant should 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 provide related benefits in the United States, including by conducting research and development, increasing revenue, or creating jobs. DHS thus adopts the common meaning of the term “entrepreneur,” which embodies the concept of active, material participation by an individual in the operations and growth of a new business entity. See Black's Law Dictionary (9th ed. 2009) (defining “entrepreneur” as “[o]ne who initiates and assumes the financial risks of a new enterprise and who usually undertakes its management”). Whether an applicant has an “active and central role” will be determined based on the totality of the evidence provided. The ownership criterion proposed by DHS in this rule is also essential for connecting the individual to the start-up entity providing the significant public benefit. DHS has determined that a minimum 15 percent ownership interest is a reasonable threshold for seeking parole under this rule. DHS recognizes that entrepreneurs may possess larger equity stakes in the start-up entity at the time of formation or during initial seed rounds of financing (often ranging from 50-100 percent). 28 This equity stake, however, may be diluted significantly during financing rounds, or by the provision of equity compensation to key personnel within the entity. DHS further recognizes that start-up entities are not limited to one entrepreneur, and that there may be instances when a team of entrepreneurs will form the start-up entity. The specific equity stake by the entrepreneur in the start-up entity will therefore vary based on the particular facts and circumstances of each case. DHS thus believes establishing a minimum 15 percent threshold with respect to ownership adequately accounts for the possibility of equity dilution for the reasons described above, while ensuring that the individual continues to have a substantial ownership interest in, and assumes more than a nominal financial risk related to, the entity. 28 “Venture Capital,” Encyclopedia of Small Business, 2007. Retrieved September 22, 2015 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-2687200596.html (“The percentage of equity ownership required by a venture capital firm can range from 10 percent to 80 percent, depending on the amount of capital provided and the anticipated return. But most venture capital organizations want to secure equity in the 30-50 percent range so that the small business owners still have an incentive to grow the business. Since venture capital is in effect an investment in a small business' management team, the venture capitalists usually want to leave management with some control.”). DHS anticipates that an applicant would be able to demonstrate sufficient satisfaction of the above criteria by providing various forms of evidence. With respect to ownership, DHS anticipates that an applicant would be able to provide copies of legal or financial documents—such as formation and organizational documents, equity certificates, equity ledgers, ownership schedules, or capitalization tables—indicating the applicant's ownership interest in the start-up entity. With respect to the applicant's role within the entity, DHS expects that an applicant would provide supporting documentation of his or her role within the entity, as well as the knowledge and experience that is central to the entity's business. Such supporting documentation 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; • newspaper articles or other similar evidence that the applicant has received significant attention and recognition; • evidence 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; • evidence that the applicant has played an active and central role in the success of prior start-up entities; • degrees or other documentation indicating that the applicant has knowledge, skills, or experience that would significantly advance the entity's business; and • any other relevant, probative, and credible evidence indicating the applicant's ability to advance the entity's business in the United States. DHS welcomes public comments on all aspects of these standards, including the definition of the term “entrepreneur.” DHS also welcomes comment on the types of evidence that may be considered when determining whether an applicant is an entrepreneur, including alternative suggestions on how applicants may be able to demonstrate eligibility. 3. Capital Investment or Government Funding Criteria DHS is also proposing that an individual who seeks parole under this rule must validate the entity's substantial potential for rapid growth and job creation by providing additional reliable evidence of such potential. DHS is proposing that this requirement may generally be satisfied by demonstrating that the entity has: (1) Received substantial investment of capital from U.S. investors with established records of successful investments; or (2) received substantial awards or grants for purposes of economic development, research and development, or job creation from Federal, State, or local government entities that regularly provide such awards or grants to U.S. businesses. See proposed 8 CFR 212.19(b)(2)(ii)(B). DHS further proposes alternative criteria under which an applicant who partially meets one or more of these two criteria may be considered for 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. See proposed 8 CFR 212.19(b)(2)(iii). These investment and funding criteria are proposed to serve as reliable indicators of an 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. Meeting these criteria, however, is intended to supplement—and not supplant—the need to provide other supporting evidence (such as that described in section IV.B.1) establishing that the applicant meets the general criteria for a grant of parole under the proposed rule. Even if an entity meets the investment or funding criteria discussed herein, additional evidence would generally assist USCIS officers in determining whether an applicant has met the required standard for parole and merits a favorable exercise of discretion. Among other things, such supplementary evidence may: provide additional external validation of the start-up entity ( e.g., receiving additional funding from a government entity, being accepted into a start-up accelerator, generating significant revenue, or creating jobs); show that the entity works in fields important to economic growth ( e.g., creating new technologies or engaging in cutting-edge research); or demonstrate that the entrepreneur has knowledge, skills, or experience that would substantially advance the entity's business ( e.g., successfully leading prior start-up entities, having advanced degrees in the appropriate field, or establishing critical patents). DHS also anticipates that such additional evidence would be available in the majority of cases involving recently formed entities that have substantial potential for growth and that otherwise meet the standards proposed in this rulemaking. a. Substantial Investment From Qualified U.S. Investors DHS proposes to allow an applicant to demonstrate his or her entity's substantial potential for rapid growth and job creation by showing that the entity has received substantial investment of capital from established U.S. investors (such as venture capital firms, angel investors, or start-up accelerators) with a history of successful investments in start-up entities. See proposed 8 CFR 212.19(b)(2)(ii)(B). DHS proposes that investments may generally be considered “substantial” with respect to an initial application for entrepreneur parole if total investments, which can be from one or more qualified U.S. investors, meet or exceed $345,000. Id. DHS further proposes that qualifying investors include only those investors who have a history of making similar or greater investments on a regular basis over the last 5 years 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 proposed 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 may serve as a strong indication of an entity's potential to positively impact the U.S. economy and labor force. DHS is proposing a general qualified investment threshold of $345,000, which DHS believes is a reasonable minimum investment amount that will serve as a reliable external validation factor by qualified investors. 29 DHS reached this figure after analyzing available data on angel investments—the largest source of start-up capital for innovative firms—as well as initial or “seed” round investments from venture capital firms and start-up accelerators. 30 DHS also analyzed other available data on capital amounts used to create new businesses, and consulted with the Small Business Administration (SBA). In determining a minimum investment amount applicable to all qualified investors ( e.g., venture capital firms, 31 angel investors, 32 and start-up accelerators 33 ), the $345,000 amount is generally on par with, based on data that DHS reviewed, the combined capital investment typically obtained in early rounds of investment from venture capital firms or angel investors. 34 29 The $345,000 figure is rounded from the actual figure $345,390, which is the 2015 average for all angel investments (the largest source of start-up capital for innovative firms) received by start-up entities. See Jeffrey Sohl, “The Angel Investor Market in 2015: A Buyers' Market,” Center for Venture Research, May 25, 2015, available at: https://paulcollege.unh.edu/sites/paulcollege.unh.edu/files/webform/Full%20Year%202015%20Analysis%20Report.pdf. The rounded $345,000 figure from 2015 is also very close to the $342,000 grand mean for the period 2012-2015, id., and it is corroborated by other sources. For example, according to a report from the business Web site Fundable, which specializes in startup finance, the average angel-financed firm receives approximately $333,000 in angel capital. This report can be found at: https://www.fundable.com/learn/resources/guides/investor-guide/types-of-investors. 30 DHS is aware that there is a wide range of investment amounts for angel, venture, and accelerator investment applied to startups. For example, DHS analysis of data from SeedDB reveals that some large accelerators provide initial investments of less than $100,000. DHS analysis reveals that angel investments that are conducted in groups, or that are co-invested with venture or other institutional investors, have ranged from about $350,000 to $725,000 since 2013, with an up-trend over the last two years, and several data sources reveal medians of about $500,000. Seed and startup venture investments are generally over $1,000,000. DHS believes that the $345,000 angel average for 2015 is reasonable because it represents nearly a mid-point across the various data and sources DHS has reviewed for such investments, is publicly available from a reputable source, and includes all angel investments. Additional details on the Seed DB accelerators data are found in Section C, “An Alternative Estimate of Entrepreneurs Based on Investment Structures,” in the ensuing “Statutory and Regulatory Requirements” section of this notice. Mean and median figures for venture backed and angel group can be found in the following sources: http://www.ey.com/Publication/vwLUAssets/Venture_Capital_Insights_4Q14_-_January_2015/$FILE/ey-venture-capital-insights-4Q14.pdf; http://www.angelresourceinstitute.org/~/media/Files/Halo%20Report%202015%20Annual%20vFinal.pdf; and http://www.inc.com/linkedin/tomasz-tunguz/inflation-deflation-startup-fundraising-market-tomasz-tunguz.html. 31 Government, semi-government, or private firm that provides startup or growth equity capital and/or loan capital to promising ventures for returns that are higher than market interest rates. See http://www.businessdictionary.com/definition/venture-capital-firm.html. 32 Business “angels” are high net worth individual investors who seek high returns through private investments in start-up companies. See https://www.sba.gov/content/venture-capital#Angel Investors. 33 Business entities that make seed-stage investments in promising companies in exchange for equity as part of a fixed-term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo day. See https://www.sba.gov/advocacy/innovation-accelerators-defining-characteristics-among-startup-assistance-organizations . 34 See note 29. DHS is also proposing a requirement that the substantial investment be received within the 365 days immediately preceding the filing of the application for initial parole. In addition to addressing potential fraud concerns, this requirement assists in validating the entity's substantial potential for rapid growth and job creation and, ultimately, of the significant public benefit that a grant of parole to the entrepreneur would provide. This requirement ensures that a qualified investor or government entity has recently validated (within 365 days) the start-up entity's potential for rapid growth and job creation. However, DHS recognizes that start-up investment is a rapidly evolving field, and welcomes additional feedback, including data on trends in investment that may be available, as such feedback and data may impact the minimum investment threshold in the Department's final rule. As noted above, in order to meet the investment criteria for consideration of parole under this proposed rule, the $345,000 total investment must be made by one or more qualified U.S. investors. See proposed 8 CFR 212.19(a)(5) and (b)(2)(ii)(B)( 1 ). DHS proposes to define “qualified investor” as either an individual or an organization. See proposed 8 CFR 212.19(a)(5). If the investor is an individual, the investor would need to be a U.S. citizen or lawful permanent resident. Id. If the investor is an organization, the investor would need to be located in the United States and operate through a legal entity organized under the laws of the United States that is majority owned and controlled, directly or indirectly, by U.S. citizens or lawful permanent residents. Id. In either case, such investor could not have 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 services, or otherwise found to have participated in the offer or sale of securities or provision of such services in violation of law. See proposed 8 CFR 212.19(a)(5). In addition, DHS proposes to limit qualifying investors to those who have an established record of successful investments in start-up entities. DHS proposes that such a record would include, during the 5-year period prior to the date of filing of the parole application, 1 or more investments in other start-up entities in at least 3 separate calendar years in exchange for equity or convertible debt comprising a total of no less than $1,000,000. 35 See proposed 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 proposed 8 CFR 212.19(a)(5)(ii). 35 “Venture Capital,” Encyclopedia of Small Business, 2007. Retrieved September 22, 2015 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-2687200596.html (“Most venture capital firms look for investment opportunities in the $250,000 to $2 million range.”) These criteria are intended to ensure that investors are bona fide, and thus to prevent fraud and 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 indication of the start-up entity's substantial potential for rapid growth and job creation. By requiring an investor to have a track record of investing substantial funds in start-up entities that subsequently achieve significant revenue and job creation, these provisions would enhance the Department's ability to have confidence in the investments made by qualified investors as reliable validation of a start-up entity's potential. At the same time, the criteria would mitigate potential misuse of the parole process, including by individuals or entities that may claim to be bona fide investors to conceal fraud or other illicit activity. DHS expects that individuals and entities that meet these criteria would include existing and bona fide start-up investors that are known to operate successfully in the business community—including established venture capital firms, angel investors, and start-up accelerators. Finally, DHS proposes to limit “qualified investments” under this rule to investments of lawfully derived capital in start-up entities through the purchase of equity or convertible debt issued by such entities. See proposed 8 CFR 212.19(a)(4). DHS proposes that a qualified investment would not include an investment from: (1) The entrepreneur him or herself; (2) the parents, spouse, brother, sister, son, or daughter of such entrepreneur; or (3) 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. Id. DHS is proposing these exclusions to help ensure that the qualified investment was acquired through an arms-length transaction and is a bona fide investment. Any investment that does not meet the definition of “qualified investment” will not count toward the criteria to meet the proposed rule's minimum investment threshold. DHS welcomes comments on all aspects of this section, including the proposed investment threshold, any potential alternative amounts for that threshold, and additional data. For comments recommending investment threshold amounts, the Department requests that commenters provide rationales and data, if available, to support their recommendations. b. Substantial Government Awards or Grants DHS proposes that an applicant may alternatively demonstrate a start-up entity's substantial potential for rapid growth and job creation by showing that the entity has received significant funding in the form of awards or grants from Federal, State or local government entities. DHS proposes that to satisfy this criterion, the awards or grants generally would need to be made by one or more Federal, State, or local government entities that regularly provide such funding to U.S. businesses for economic development, innovation, research and development, or job creation reasons. DHS proposes to exclude any contractual commitment for goods or services, including any contracts that might appear to be, or could be made to look like, an award or grant. DHS believes this exclusion is reasonable since a contract for goods and services with a Federal, State or local government entity would typically provide a direct benefit to that government entity and not a public benefit, such as encouraging economic development and innovation, that an award or grant would provide as required by this proposed rule. See proposed 8 CFR 212.19(a)(3). DHS also proposes that to be considered substantial, such awards or grants generally would need to total $100,000 or more. See proposed 8 CFR 212.19(b)(2)(ii)(B)( 2 ). In the United States today, a range of Federal, State, and local government entities, including State or local economic development corporations (EDCs), evaluate U.S. businesses and provide awards or grants when such funding is deemed to be in the public interest. 36 DHS believes that significant funding from such a government entity 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. Because such 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 is generally a compelling 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. For these reasons, DHS believes it is reasonable to establish a lower threshold amount for government funding in comparison to the previously discussed threshold amount for private investment. DHS proposes a general $100,000 minimum government funding threshold based on the above and the fact that seed capital awards (“Phase I” awards) from the Small Business Innovation Research (SBIR) program are generally below $150,000. 37 36 See, e.g., U.S. Small Business Administration, https://www.sbir.gov (describing Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which provide early-stage capital for innovative small companies in the United States) and National Institutes of Health, https://sbir.nih.gov/ (describing healthcare opportunities under SBIR and STTR); U.S. Economic Development Association (EDA), Regional Innovation Strategies Program (RIS), http://www.eda.gov/oie/ris/ (providing grants to cities and local EDCs, among others, to fund startups); Energy Innovations Small Grant Program, www.energy.ca.gov/research/innovations (providing State grants of up to $150,000 to small businesses, among others, to research innovative energy concepts); Startup Philadelphia Call for Ideas, http://www.startupphl.com/startup-phl-call-for-ideas (partnership between City of Philadelphia and the Philadelphia Industrial Development Corporation to provide $500,000 to grow the startup and early-stage business economy in Philadelphia). 37 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 encourages small businesses to market the SBIR technology in the private sector. 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. DHS welcomes comments on all aspects of this section, including the proposed government funding threshold, any potential alternative amounts for that threshold, and additional data. For comments recommending government funding threshold amounts, the Department requests that commenters provide rationales and data, if available, to support their recommendations. c. Alternative Criteria for Parole Consideration Additionally, DHS proposes that an applicant who only partially meets one or both of the above investment or government funding sub-criteria for parole under this rule may still be considered for parole under this rule in certain limited circumstances. See proposed 8 CFR 212.19(b)(2)(iii). Specifically, DHS would consider parole for such an applicant if the applicant provides additional “reliable and compelling” evidence of the entity's substantial potential for rapid growth and job creation. See proposed 8 CFR 212.19(b)(2)(iii). Importantly, such parole would not be available to applicants who are unable to demonstrate that their start-up entities have received a substantial amount of U.S. capital investment or government funding. Rather, the applicant would need to show as a preliminary matter that his or her entity has received a substantial level of capital investment or government funding, although less than $345,000 or $100,000, respectively. The applicant would also need to further validate the entity's substantial potential for rapid growth and job creation by submitting additional evidence that DHS determines to be both reliable and compelling. DHS proposes that such evidence be reliable and compelling in its own right to overcome the applicant's inability to fully meet the threshold criteria otherwise required under the proposed rule. DHS is not proposing to define the specific types of evidence that may be deemed “reliable and compelling” at this time, as the Department 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. But DHS believes that to meet the parole standard in this context without meeting the threshold criteria, such additional evidence would need to be particularly persuasive. In other words, although all applicants for entrepreneur parole would be expected to provide supplementary evidence indicating that their parole would serve a significant public benefit, applicants who only partially meet the threshold criteria mentioned above would need to provide other reliable and compelling evidence to ensure that the totality of the evidence demonstrates that the start-up entity has the substantial potential for rapid growth and job creation. DHS anticipates that the necessary amount and requisite evidentiary weight of such additional evidence would depend on the degree to which an applicant meets one or both of the threshold sub-criteria related to capital investment or government funding. For example, an applicant whose entity has received $200,000 in qualifying capital investment would be expected to provide more validating evidence than an applicant whose entity received $300,000 in such investment. Moreover, DHS may give particular weight to evidence that tends to serve as a strong validation of the entity's substantial potential for rapid growth and job creation. For example, evidence that an entity has been selected to participate in, is participating in, or has graduated from one or more established and reputable start-up accelerators (or incubators) may serve as, depending on the accelerator's success rate and other factors, a strong indicator of the entity's potential. With respect to start-up accelerators, 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. Ultimately, the USCIS adjudicator would be required to determine whether such additional evidence—in conjunction with the entity's substantial capital investment or government funding, among other factors—is sufficient to establish that the applicant's parole into the United States will provide a significant public benefit (and that the applicant merits a favorable exercise of discretion). This approach is consistent with the discretionary nature of the Secretary's statutory parole authority and the fact that each parole request will be adjudicated, on a case-by-case basis, after considering the particularized facts of each case. DHS invites public comment on the types of reliable and compelling evidence that may warrant a discretionary grant of parole in such cases. As noted above, DHS also invites public comment on alternatives to the proposed investment amount and government funding thresholds that applicants may use to demonstrate a start-up entity's substantial potential for rapid growth and job creation and that may serve as a principal basis for seeking parole under this rule. Commenters are invited to submit comments on whether significant revenue generation, participation in established and reputable start-up accelerators, or any other significant external validation factor should be included as a principal basis for seeking parole under this rule. DHS specifically invites comment on whether applicants can adequately demonstrate the future substantial potential for rapid growth and job creation through established records of revenue generation, revenue growth, job creation, or any combination of these and other factors. Commenters should recommend threshold levels for obtaining parole under suggested criteria, data to support the recommended alternative thresholds, and the types of reliable evidence that applicants may submit to substantiate their claims. Comments should include any relevant data to substantiate recommendations, if available. C. Application Requirements for Initial Period of Parole 1. Filing the Application for Entrepreneur Parole (Form I-941) DHS is proposing to establish new application requirements for entrepreneurs seeking parole under this rule. Prior to appearing before DHS as an applicant for admission requesting parole, entrepreneurs would be required to file with USCIS an Application for Entrepreneur Parole (Form I-941 or successor form), established by this rulemaking, along with supporting documentation. This application is designed to capture information pertaining to the criteria that are specific to parole requests filed under this rule. USCIS would accept Applications for Entrepreneur Parole filed from within the United States or outside the United States. DHS is proposing an application filing fee of $1200. See proposed 8 CFR 103.7(b)(1)(i)(FFF). In addition to filing the application, supporting documentation, and filing fee, applicants would be required to submit a biometric services fee as prescribed by 8 CFR 103.7(b)(1)(i)(C). 2. Requirement To Appear for Submission of Biometric Information DHS proposes that all individuals filing the Application for Entrepreneur Parole would be required to appear for collection of their biometric information, including fingerprints and photographs. See proposed 8 CFR 212.19(e). DHS is proposing a biometric collection requirement so that background checks can be completed for each applicant, and so that any necessary travel documents can be produced. As noted above, applicants would be required to pay the fee for biometric services at the time of filing the Application for Entrepreneur Parole. As is currently the case for other applicants for parole, the location for the collection of biometric information will depend on whether the applicant filed the application from within the United States or outside the United States. See form instructions to Application for Entrepreneur Parole (Form I-941). Applicants applying from within the United States will be required to appear at a USCIS Application Support Center (ASC) for submission of biometrics. Applicants applying from outside the United States may be required to appear at an overseas USCIS office. Applicants who will be receiving their travel documents overseas from a Department of State Consulate (or Embassy) will have their biometrics taken after their parole is authorized, but before their travel document is issued. Under current DHS regulations, DHS may determine that an application has been abandoned and thus should be denied if the applicant fails to appear at the biometrics appointment or otherwise fails to provide required biometric information. See 8 CFR 103.2(b)(13)(ii). 3. Income-Related Condition on Parole Under the process proposed by this rule, DHS would consider granting parole to individuals whose enterprises have the substantial potential for rapid growth and job creation, including through the development of new technologies or the pursuit of cutting-edge research. To further ensure this is the case, and in addition to the high threshold criteria discussed above, DHS is proposing that an individual who is paroled into the United States under this rule must, as a condition of that parole, maintain household income while in the United States 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 (HHS). See proposed 8 CFR 212.19(i). DHS is further proposing to require the applicant to attest, as part of the Application for Entrepreneur Parole, that he or she will maintain household income at this level as a condition of parole and to provide evidence that he or she satisfied this condition if applying for re-parole. Id. This income threshold is intended to establish that applicants seeking parole under this rule will have sufficient personal economic stability so as to better ensure that they will make significant economic and related contributions to the United States. The income threshold and time limits on parole also mean that individuals eligible for parole under this rule would generally not be eligible for Federal public benefits or premium tax credits under the Health Insurance Marketplace of the Affordable Care Act. 38 Under the proposed rule, DHS would be authorized to terminate parole for any individual who fails to maintain the threshold income level. See proposed new 8 CFR 212.19(k)(3)(iv). DHS would request verification of the parolee's household income when the parolee applies for re-parole, if applicable, or subsequent to any material change notification submitted by the parolee to USCIS. 38 Although individuals who are granted parole for more than one year become “qualified aliens” for the purpose of applying for such benefits, see 8 U.S.C. 1641(b), such individuals must generally be “qualified aliens” for at least 5 years before becoming eligible for those benefits, see 8 U.S.C. 1613. Individuals paroled under this rule will thus generally not qualify for such benefits. DHS welcomes comment on the proposed income threshold. 4. Adjudication of Applications When adjudicating the Application for Entrepreneur Parole, DHS is proposing that USCIS will examine whether the entrepreneur has demonstrated, through credible and probative evidence, that he or she warrants a favorable exercise of the Secretary's discretion. See proposed new 8 CFR 212.19(d)(1). If the entrepreneur meets the criteria for parole under the proposed rule, and a favorable exercise of discretion is warranted, USCIS may approve the request for parole. Id. Moreover, in determining whether an individual applicant's parole would provide a significant public benefit and whether to favorably exercise the Secretary's discretion in that individual case, USCIS will consider and weigh all evidence, including any derogatory evidence or information, such as but not limited to evidence of criminal history or other adverse factors. Id. If USCIS, in its discretion, determines that the applicant does not warrant a grant of parole under the proposed rule, it may deny the application. See proposed 8 CFR 212.19(b) and (c). DHS is also proposing that there would be no right of appeal following a decision to deny entrepreneur parole, just as is the case currently with other parole requests. See proposed 8 CFR 212.19(d)(4). DHS is also proposing that applicants be precluded from filing motions to reopen or reconsideration under 8 CFR 103.5(a)(1). Id. DHS, however, proposes to retain its authority and discretion to reopen or reconsider a decision only on its own motion. See proposed 8 CFR 212.19(d)(4). For the parole process proposed in this rulemaking, DHS may, in its discretion, reopen a decision and deny or approve parole at any time if DHS finds that the decision was issued in error. If USCIS determines that approval of an Application for Entrepreneur Parole was made in error, parole may be revoked. DHS would follow the requirements of 8 CFR 103.5(a)(5) before reopening a case and denying a parole application. Because the determination to grant or deny a request for parole is a discretionary determination, the parole process proposed in this 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. Parolees under this proposal 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 direct a start-up entity or for other reasons. 5. Limitation on Number of Entrepreneur Parolees per Start-Up Entity DHS proposes to limit the number of entrepreneurs who may be granted parole under this rule with the same start-up entity. DHS recognizes that a start-up entity may be developed by more than one entrepreneur. DHS also believes that it would be difficult for a large number of entrepreneurs associated with the same start-up entity to each meet the proposed criteria and comply with the proposed conditions while ultimately developing a successful business in the United States. DHS therefore believes that imposing a limit on the number of entrepreneurs who may be granted parole based on the same start-up entity is consistent with ensuring that each entrepreneur's parole will provide a significant public benefit. Specifically, DHS is proposing that parole may be granted to no more than 3 entrepreneurs per start-up entity. See proposed 8 CFR 212.19(f). This limitation is intended to strengthen the integrity of the proposed entrepreneur parole process in various ways. Among other things, limiting the number of individuals who may be granted parole under this rule with respect to the same start-up entity will be an additional means of preventing an entity from being used as a means to fraudulently allow individuals to enter the United States. Such a limit, for example, diminishes the incentive to dilute equity in the start-up entity as a means to fraudulently acquire parole for individuals who are not bona fide entrepreneurs. Such a limit will also help ensure that the tangible benefits that may flow from the start-up entity's success in the United States—such as rapid revenue generation and job creation—are more likely to inure to the United States and its workers. Relatedly, DHS is concerned that 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 proposed parole process. 39 To facilitate this determination, DHS is proposing to require an applicant to provide information on the application about any other individuals who have applied for or been granted parole based on the same start-up entity. 39 Scaling Startup Genome Report: premature scaling v 1.2 (edited March 2012). Copyright 2011, Startup Genome Report Extra on Premature, Max Marmer, CSO Startup Genome, Bjoern Lasse Herrmann, CEO Startup Genome, Ertan Dogrultan, CTO Startup Genome, Ron Berman, Ph.D. at UC Berkeley (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 . DHS welcomes comments on the proposed limitation on the number of entrepreneurs who can qualify for parole under this rule with the same start-up entity, including alternative proposals. 6. Authorized Period for Initial Grant of Entrepreneur Parole DHS proposes that applicants who are granted entrepreneur parole may be authorized for an initial parole period of up to 2 years. See proposed new 8 CFR 212.19(d)(2). DHS has determined that entrepreneurs paroled under this rule may need up to a 2-year period of parole initially to allow them sufficient time to develop their start-up entity, which would be at an early stage of development, and achieve rapid growth in terms of revenue generation and job creation. DHS further believes that an initial period of parole of up to 2 years, followed by one possible period of re-parole of up to 3 additional years as described below, is consistent with the amount of time successful start-up entities generally require to realize growth potential. An entrepreneur of a start-up entity that is almost 3 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 growth potential by the time it is 8 years old. 40 As proposed, DHS retains the discretion to provide any length of parole to an applicant, including a period shorter than 2 or 3 years where appropriate. Moreover, although USCIS would designate an appropriate initial parole validity period upon approval of the Application for Entrepreneur Parole, CBP would retain the 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. DHS will issue a multiple entry travel document for individuals granted parole under this rule to permit travel during their parole validity period. 40 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 (February 2013), available at http://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 http://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 http://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.”). DHS welcomes public comment on the proposed limits on the duration of parole under this rule and any relevant data to support alternative durations of parole. 7. Spouses and Minor Children DHS proposes that the spouse and children 41 of an entrepreneur granted parole under this proposed rule may also be granted parole for the same period as the entrepreneur. See proposed new 8 CFR 212.19(h)(2). To be paroled with (or later join) the entrepreneur, his or her spouse and children would each be required to file an Application for Travel Document (Form I-131) in accordance with the form instructions. 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, USCIS may consider granting parole to the entrepreneur's spouse and children, if any, to maintain family unity and thereby further encourage the entrepreneur to operate and grow his or her business in the United States. As with the entrepreneur, certain biometric information for each spouse and child must be included on the application, along with a biometric services fee for each dependent. If the spouse and children are in the United States, they would also be required to appear at a USCIS office within the United States. If the applicants are outside the United States, the collection of additional biometric information (fingerprints and photographs) will take place prior to travel document issuance rather than before the parole applications are adjudicated. In such cases, however, USCIS would conduct preliminary background checks on each accompanying or joining family member prior to making its discretionary determination on their parole applications. 41 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). DHS is proposing to consider granting parole to the spouses and children of entrepreneur parolees to further the central purpose of the rulemaking—encouraging foreign entrepreneurs to come to and remain in the United States to develop and grow their start-up entities and provide the benefits of such growth to the United States. DHS retains the authority to decide whether to grant parole to such spouses and children on a case-by-case basis and may determine that such individuals do not warrant parole (or re-parole) either because their parole would not be justified on significant public benefit grounds or as a matter of discretion. D. Employment Authorization 1. Employment Authorization Incident to Parole With a Specific Employer DHS is proposing that an entrepreneur who is paroled into the United States under this rule would be authorized for employment incident to his or her parole with the start-up entity. See proposed new 8 CFR 212.19(g). Under the proposed rule, the entrepreneur parolee's employment authorization would be limited to the specific start-up entity listed on the Application for Entrepreneur Parole. This limitation is intended to keep the scope of employment authorization within the purposes for which parole was granted. As the purpose of this proposed rule is to encourage foreign entrepreneurs to develop and grow their start-up businesses in the United States—rather than obtain new sources of employment—DHS believes this limitation on employment authorization is a reasonable restriction. DHS further proposes that such employment authorization be “automatic” upon the grant of parole so that the entrepreneur can pursue his or her parole-related activities with the start-up entity without delay. DHS believes that requiring entrepreneurs to file separate applications for employment authorization and wait for Employment Authorization Documents (EADs, Form I-766) before beginning work 42 would undermine the very basis for extending parole to entrepreneurs—the rapid growth and success of the start-up entity. The delay resulting from the need to apply for and receive EADs (up to 90 days or more) could be detrimental to the success of the start-up entity. 42 This is the case with other parolees under existing regulations. See 8 CFR 274a.12(c)(11). Finally, DHS is proposing several conforming amendments to 8 CFR 274a.12(b), which lists the classes of foreign nationals authorized for employment incident to status with specific employers. DHS proposes to amend the introductory paragraph of this provision, which currently refers only to employment-authorized “nonimmigrants,” by adding a reference to parolees under this rule. See revised 8 CFR 274a.12(b). DHS also proposes to add entrepreneur parolees under this rule to the list of classes of individuals authorized only for employment with a specific employer (as opposed to open market employment). See proposed new 8 CFR 274a.12(b)(37). Specifically, the amendment would provide that entrepreneurs paroled under this rule would be employment authorized incident to their parole with their start-up entities, pursuant to proposed new 8 CFR 212.19(g). DHS would also assign a new code of admission for this class: “PE-1.” 2. Employment Authorization Eligibility for Spouses DHS is also proposing to extend eligibility for employment authorization to the accompanying spouses (but not the children) of entrepreneur parolees who have been paroled into the United States. See proposed new 8 CFR 212.19(h)(3). Under the proposed rule, such spouses who wish to obtain employment authorization would need to 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 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2016-20663. Public record. Not legal advice.