ABCs of Immigration: Proposed Rule – Parole for Entrepreneurs

Highlights

On August 26, 2016, the Department of Homeland Security released a proposed rule to grant parole and employment status on a discretionary basis to entrepreneurs meeting various criteria. The proposal was mentioned in President Obama’s November 2014 announcing a series of executive actions on immigration. The proposal uses the President’s parole broad power to grant the right to stay and work to individuals when granting the benefit will provide a significant public benefit. The public will have 45 days to comment beginning on 29 August 2016. Presumably, the goal is to release a final regulation before the end of the year. Parole for Entrepreneurs will be made available to applicants who are founders of start-ups if the following conditions are met:

1. The founder has received at least $345,000 in capital investment from US investors with established records of successful investments or obtained $100,000+ in awards or grant funding from federal, state or local economic development agencies. Lesser amounts are possible if compelling evidence can be provided that the approval would provide a significant public benefit.
2. The start-up must be less than three years old when the initial parole application is filed.
3. The entrepreneur must have an initial equity stake in the start-up of 15% and have an “active and central role” in the business.
4. Up to three founders per start-up will be eligible for parole.
5. Entrepreneurs will be authorized to work “incident to status” with just an I-94 instead of having to apply for an employment authorization document. Employment is only authorized at the start-up that is the subject of the application.
6. Spouses and minor children can also get parole status. Spouses can also apply for an employment authorization document. Children are not authorized to work.
7.  Parolees must maintain a household income of 400% of the HHS poverty level for a family the size of the parolee’s family. The spouse’s income may be included.
8. Applicants will be granted an initial stay of up to two years; a single extension of up to three years is possible. Parolees are authorized to work for up to 240 days while the re-parole application is pending.
9. To get an extension, an applicant would need to show the start-up has shown signs of “significant growth” since the initial grant of parole and the start-up continues to have substantial potential for rapid growth and job creation. The entrepreneur’s equity stake can decline to 10% from the initial 15%. The start-up would continue to have to show potential for rapid growth and job creation which can be shown in a variety of ways including receiving $500,000 in new investments, generating $500,000 per year and growing at a 20% pace, or creating ten or more full time jobs for US workers.
10. USCIS estimates about 3,000 per year will be able to take advantage of the new program. There is no limit, however, on the number of applications that will be accepted and approved.
11. USCIS is creating a new Form I-941 to apply for Parole for Entrepreneurs status. Biometrics will also need to be provided. The proposed filing fee will be $1200 plus the biometrics fee (presumably less than $100). Applicants will be provided a travel document.
12.  Applicants can file either from inside the US or outside the country. If outside the US, biometrics will need to be collected at an overseas USCIS office. Parole is not considered to be an admission to the US so if one seeks to convert to a nonimmigrant status or permanent residency, consular processing would likely be needed.
13. This is a discretionary benefit and USCIS will not allow an appear or motion to reopen to be filed. USCIS will also not guarantee a chance to respond to reply to a request for evidence or a notice of intent to deny. However, they may file a motion to reopen on their own and may issue RFEs and NOIDs at their discretion.
14.  Material changes, such as the closing of the start-up, must be reported to USCIS and USCIS will automatically revoke parole if an extension is not timely filed or the parolee’s employment with the start-up terminates. Other material changes reported could lead to the termination of parole status subject to the discretion of USCIS.
15. DHS is extending employment authorization eligibility for the following nonimmigrant categories:

 

– Dependents of Taipei Economic and Cultural Representative Office (TECRO) E-1 nonimmigrants;
– J-2 dependent children of J-1 exchange visitors;
– Dependents of A-1 and A-2 foreign government officials;
– Dependents of G-1, G-3, and G-4 international organization officials; and
– Dependents of NATO officials.

 

For more information on the proposed rule, contact Greg Siskind at [email protected].

 

Section by Section Summary

The following is a summary of the 155-page proposed rule released on Friday. It’s about 14 pages printed and is prepared following the structure used by DHS. I’ll be preparing a much shorter overview today.

Submitted to Federal Register on August 24, 2016 (RIN 1615-AC04)

Preamble: The proposed rule is DHS’ initial response to President Obama’s call in November 2014 for the agency to use its discretionary parole authority to increase “entrepreneurship, innovation and job creation” in the US. Under the proposed rule, DHS would decide on a case-by-case basis on granting parole to founders of start-up entities whose entry would provide a “significant public benefit” and whose start-ups have the potential for “rapid business growth and job creation.”

DHS will consider this purpose to be demonstrated by

• The receipt of significant capital investment from US investors with established records of successful investments, or
• Obtaining significant awards or grants from certain Federal, State or local government entities.

Approved applicants will be granted an initial stay of up to two years which may then be extended for up to three additional years. New requests would be considered only if the entrepreneur and the start-up continue to provide a significant public benefit evidenced by substantial increases in capital investment, revenue, or job creation.

I. Public Participation

Deadline for comments: 45 days from publication (likely 45 days after Monday, August 29th).

DHS is requesting comments on the following:

• Filing requirements and procedures;
• Definitions and criteria for evaluating parole applications, including investment, award, revenue, job creation and alternative criteria;
•  Conditions, including limits on the number of parolees per start-up and time limits on parole;
• Provisions establishing employment authorization for entrepreneurs incident to parole;
• Provisions regarding termination of parole;
• Opportunity to request re-parole, length of period for re-parole and limitation on number of re-parole opportunities;
•  Economic analysis supporting the rule; and
• The proposed new form to request parole for entrepreneurs

II. Executive Summary

A. Purpose of the Regulatory Action

DHS cites Section 212(d)(5) of the Immigration and Nationality Act for its authority to propose this rule. That provision grants DHS the discretionary authority to parole individuals into the United States, on a case-by-basis, for urgent humanitarian reasons of significant public benefit.

As noted above, parole could be granted to people with significant capital financing from US investors with established records of successful investments or significant awards or grants from government agencies. DHS is also proposing alternative criteria for people who partially meet the proposed thresholds for financing or government awards who can provide additional reliable and compelling evidence of their entities’ significant potential for rapid growth and job creation.

An applicant would need to further show that he or she has a “substantial” ownership interest in the start-up, has an active role in the company’s operations and would substantially further the entity’s ability to engage in research and development or otherwise grow the business in the US. Parole is supposed to further the applicant’s ability to oversee and grow the start-up.

B. Legal Authority

DHS cites the following immigration laws as giving it authority to issue this proposed regulation:

– Section 402(4) of the Homeland Security Act of 2002
– Section 103(a)(1) and (3) of the Immigration and Nationality Act
– Section 212(d)(5) of the Immigration and Nationality Act
– Section 101(b)(1)(F) of the Homeland Security Act of 2002

C. Summary of Proposed Amendments

A new regulation is added as 8 CFR 212.19.

One seeking to run and grow a start-up would need to show the following to be considered for a discretionary grant of parole:

1. Formation of New Start-Up Entity

The applicant must have recently created a new entity I the US that has lawfully done business since it was crated and has “substantial potential for rapid growth and job creation.” “Recently” is considered to be met if the entity was created within the three years before the date of filing the initial parole application.

2. Applicant is an Entrepreneur

The applicant is an entrepreneur of the start-up who is “well-positioned” to advance the entity’s business. This can be shown by providing evidence that he or she:

– Possesses a significant (at least 15%) ownership interest in the entity at the time of adjudication of the initial grant of parole; and
– 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 running and growing the business. The applicant can’t simply be an investor in the start-up.

3. Significant US Capital Investment or Government Funding.

The applicant can further show the business’ substantial potential for “rapid growth and job creation.” This can be shown in several ways:

a. Investments from US investors – the entity has received investments of capital totaling $345,000 or more from established US 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 start-up 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. The requirement would be met if the start-up received awards or grants totaling $100,000 or more.

c. Alternative criteria – an applicant who partially meets one or both of the above criteria can be considered 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” and which would validate the entity’s “substantial validation of the entity’s substantial potential for rapid growth and job creation.”

If an applicant meets these criteria, the applicant, as well as his or her spouse and minor, unmarried children may be considered under this rule for a discretionary grant of parole for up to two years.

Applicants for this type of parole benefit will file a new type of application form specifically tailored for entrepreneurs along with a proposed application fee. Applicants would also provide biometrics.

No more than three entrepreneurs may receive parole per start-up.

USCIS will consider the totality of the evidence to determine if the applicant meets the criteria and whether negative factors exist that warrant denial as a matter of discretion.

If parole is granted, the entrepreneur would receive employment authorization which would be limited to the start-up. Spouses would be permitted to apply for employment authorization under 8 CFR 274a.12(c)(34).

DHS may revoke the parole “at any time as a matter of discretion” or if DHS decides the parole is no longer providing a significant public benefit such as when the entity has stopped operating or the application involves fraud or misrepresentation.

Applicants will be allowed to be considered for re-parole for an additional period of up to three years if they can show that the start-up has shown signs of “significant growth” since the initial grant of parole and the start-up continues to have substantial potential for rapid growth and job creation. Applicants would need to show the following to be considered for a discretionary grant of an additional period of parole:

1. Continuation of Start-Up Entity – the entity must continue to be a start-up entity. This can be shown if the entity.

a. Has been lawfully operating in the US 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 is still working as an entrepreneur at the start-up which can be shown with proof that he or she.

a. Continues to possess a significant (at least 10%) 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 start-up in conducting and continuing to grow the business in the US. The explanation from USCIS for the reduced ownership interest is because it sometimes is necessary to sell ownership interests in order to raise additional venture capital financing.

3.  Significant US Investment/Revenue/Job Creation – The applicant must document the start-up’s continued potential for rapid growth and job creation. This can be shown in one of several ways:

a. Investment from established US investors with established records of successful investments; significant award or grants from government entities that regularly provide start-up funding; or a combination of both.

b. Revenue generation – at least $500,000 of additional funding with average annualized revenue growth of at least 20% during the initial parole period.

c. Job creation – the applicant may show the entity has shown substantial job creation during the initial parole period. Generally, this means creating at least 10 full-time jobs for US workers during the initial parole period.

d. Alternative criteria – An applicant only partially meeting these requirements may be considered if he or she provides additional reliable and compelling alternative evidence.

Applicants may be granted one additional grant of parole to work with the same start-up for up to three years, for a total maximum period of parole of five years. No more than three entrepreneurs, their spouses and their children may receive additional periods of parole. As with initial parole, the grant is discretionary and may be revoked for the same reasons as an initial grant.

Entrepreneur parolees will be authorized to work incident to status and will be able to work with an I-94 and a passport. The I-9 regulations are being changed to recognize this.

D. Costs and Benefits

DHS doesn’t anticipate any significant costs other than the filing fees. The agency believes that 2,940 entrepreneurs could be eligible for parole annually. Approximately 3,234 dependent spouses and children are also expected to seek parole. Approximately

III. Background

A. Discretionary Parole Authority

INA Section 212(d)(5)(A) says “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” and the significant public benefit is the basis for the proposed rule. Parole is a discretionary grant and must be determined on a case-by-case basis.

Parole is not an admission to the US and if parole is revoked, the person is restored to the status held at the time parole was granted.

B. Historical Uses of Parole

The parole authority has been used for decades by USCIS and the former INS. It is often used in individual cases, but has been applied to groups including certain Cuban nationals, certain individuals seeking to enter the Commonwealth of the Northern Mariana Islands (CNMI) and certain family members of US military personnel.

C. Significant Public Benefit of Attracting Foreign Entrepreneurs to the United
States

DHS expounds in this section on the positive benefits to the country of entrepreneurs who start businesses.

D. Proposal for Parole for Entrepreneurs

This section details the changes outlined above.

IV. Proposed Changes

DHS is proposing to add a new section 8 CFR 212.19. Other regulations are being amended relating to employment authorization and I-9 compliance.

A. Overview of Parole for Entrepreneurs

This section repeats much of what was described above. Additional details not discussed above are mentioned below.

B. Criteria for Initial Parole

1. Recent Formation of a Start-Up Entity

The start-up must meet the definition of a “US business entity” which is defined as any corporation, limited liability company, partnership, or other entity organized under Federal law or the laws of any State and that conducts business in the US that is not an investment vehicle primarily engaged in securities dealing.

DHS considers a “start-up” 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.” The rule limits initial applications to be available to businesses less than three years old at the time the application is submitted. And only start-ups able to demonstrate they have been lawfully operating in the US since formation are eligible.

Additional documentation that may be submitted with an application to demonstrate that a business has the potential for rapid growth and job creation includes the following:

• 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 the applicant has played an active and central role in the success of prior start-ups;
• 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 US.

2. Applicant is an Entrepreneur Who is Well-Positioned to Advance the Entity’s Business

DHS describes “entrepreneur” as the active, material participation by an individual in the operations and grown of a new business. The agency also refers to the Black’s Law Dictionary definition which says an “entrepreneur” is “one who initiates and assumes the financial risks of a new enterprise and who usually undertakes its management.” “Active and central role” will be considered based on the totality of the evidence.

Regarding documenting the entrepreneur has the required equity stake, DHS expects applicants 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.

Regarding the entrepreneur’s role in the start-up, the following documentation may be submitted:

• 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 the applicant has played an active and central role in the success of prior start-ups;
•  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.

3. Capital Investment or Government Funding Criteria

In addition to information on venture capital or government grants, the following may be provided –

– 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).

a. Substantial Investment from Qualified U.S. Investors

DHS proposes that qualifying investors have a long history of making similar or greater investments over the prior five years and who can show at least two of the entities receiving such investments have subsequently experienced significant growth in revenue or job creation.

The investment must be received in the 365 days immediately preceding the filing of the application for initial parole.

The $345,000 investment must be made by a “qualified investor.” A qualified investor may be an organization or an individual (who is a US citizen or lawful permanent resident).

Organizational investors need to be organized under the laws of the US and be majority-owned and controlled, directly or indirectly, by US citizens or lawful permanent residents. Also, the investor cannot have previously been subject to various specified penalties related to selling securities. (8 CFR 212.19(a)(5)).

In the five years leading up to the filing of the application, the investor must have made one or more investments in other start-ups in at least three separate calendar years in exchange for equity or convertible debt comprising a total of no less than $1,000,000. (8 CFR 212.19(a)(5)(i). The rule requires monetary commitments, rather than non-monetary ones such as credit for in-kind value (e.g. credit for services). The applicant must show that after the investment by the investor, at least two entities created at least five qualified jobs or achieved at least $500,000 in revenue with average annualized revenue growth of at least 20% (8 CFR 212.19(a)(5(ii)).

“Qualified investments” are limited to investments of lawfully derived capital in start-ups through the purchase of equity or convertible debt issued by such entities. (8 CFR 212.19(a)(4). Investments cannot be from

– The entrepreneur him or herself;
– The parents, spouse, brother, sister, son, or daughter of the entrepreneur; or
– Any corporation, limited liability company, partnership, or other entity in which the entrepreneur or family members listed above have a direct or indirect ownership interest.

Such investments are not barred but will not be included in meeting the $345,000 threshold.

b. Substantial Government Awards or Grants

For cases supported by government awards and grants, the funding agency must be a Federal, State, or local government entity that regularly provides such funding to US businesses for economic development, innovation, research and development, or job creation reasons. Contractual commitments for goods or services are excluded. 8 CFR 212.19(a)(3). The grant or award threshold is $100,000. 8 CFR 212.19(b)(2)(ii)(B)(2).

c. Alternative Criteria for Parole Consideration

Applicants still must show the investment or award/grant is “substantial” even if it does not meet the $345,000/$100,000 threshold. And the applicant would need to show the start-up’s potential for rapid growth and job creation by submitting evidence that DHS finds to be “reliable and compelling”. “Reliable and compelling” is not defined by DHS in the proposed regulation in order to retain flexibility. But the evidence must be “particularly persuasive.”

The persuasiveness of the documentation would also relate to how close the applicant is to meeting the $345,000 or $100,000 thresholds. Also, evidence of likely future rapid growth will be given heavy weight such as being selected to participate in, is participating in, or has graduated from one or more established and reputable start-up accelerators (or incubators). DHS will evaluate accelerators using various factors including

– Years in existence
– Graduation rates
– Significant exits by portfolio startups
– Significant investment or fundraising by portfolio start-ups and
– Valuation of portfolio start-ups

C. Application Requirements for Initial Period of Parole

1. Filing the Application for Entrepreneur Parole (Form I-941)

Parole applicants will file a new Form I-941 application with USCIS. The filing fee will be $1200. 8 CFR 103.7(b)(1)(i)(FFF). A separate biometrics fee will also be paid.

2. Requirement to Appear for Submission of Biometric Information

Biometrics are being required so parolees can be subjected to background checks and to produce travel documents. Applicants in the US will do biometrics at Application Support Centers as is the case for other categories. Individual applying from outside the US may be required to appear at an overseas USCIS office. Overseas applicants receiving their travel documents at a consulate overseas will have their biometrics taken after the parole is authorized but before the travel document is issued.

3. Income-Related Condition on Parole

As a condition to maintaining parole, entrepreneurs are going to be required to meet a household income requirement of 400% of the Federal poverty line for his or her household size as defined by HHS. 8 CFR 212.19(i). The requirement must be maintained as a condition of parole and the entrepreneur must provide proof that this requirement has been satisfied if applying for re-parole or any material changes are reported. DHS can terminate parole status if the income level is not maintained. 8 CFR 212.19(k)(3)(iv).

4. Adjudication of Applications

USCIS will use the standard of whether the evidence is “credible and probative” when determining whether to exercise discretion for granting parole. The agency will determine whether the parole meets the significant public benefit test by considering and weighing all evidence, including derogatory evidence of information.

DHS is proposing that there will be no appeal of parole denials nor will they entertain a motion to reopen or reconsider a denial. 8 CFR 212.19(d)(4) unless it does so on its own motion. Entrepreneurs cannot claim any rights either if the parole is revoked.

5. Limitation on Number of Entrepreneur Parolees Per Start-Up Entity

Each start-up is limited to three entrepreneurs that can support parole applications.
8 CFR 212.19(f). Applicants must also provide information on others who have applied for or been granted parole based on the same start-up.

6. Authorized Period for Initial Grant of Entrepreneur Parole

Parole may be granted for up two years with a one-time renewal of up to three years. Because an entity can be up to three years old when the parole is requested, in theory a start-up can get to eight years old before the parole benefit ends. CBP retains the right to deny or shorten the period of parole. DHS will issue a multiple entry travel document to entrepreneurs granted parole.

7. Spouses and Minor Children

Spouses and children also qualify for parole with the entrepreneur and are granted the same period of parole. 8 CFR 212.19(h)(2). To be paroled with or later join the entrepreneur, the spouse/children will be required to file an I-131 Application for Travel Document (Form I-131). Each spouse and child must independently establish eligible based on significant public benefit or humanitarian grounds and that the individual merits a favorable exercise of discretion. USCIS seems to indicate that this may be derived from the interest in maintaining family unity and further encouraging the entrepreneur to operate and grow his or her US business.

Spouses and children also need to undertake biometrics and pay a biometrics fee. IF the spouse and children are in the US, they would provide the biometrics at a USCIS office. If outside the US, they would provide biometrics before receiving a travel document.

D. Employment Authorization

1. Employment Authorization Incident to Parole with a Specific Employer

The proposed rule allows entrepreneurs to work with the start-up incident to their parole status. 8 CFR 212.19(g). Employment is limited to only the start-up listed on the parole application. Entrepreneurs will not need to have a separate employment document.

Amendments to 8 CFR 274a.12(b) are being added to add parolees to nonimmigrants on the list of individuals authorized to be employed incident to status. New 8 CFR 274a.12(b)(37) would further specify that entrepreneur parolees are on a list of individuals authorized only for employment with a specific employer (as opposed to open market employment). Entrepreneur parolees will be assigned a new code for admission: PE-1.

2. Employment Authorization Eligibility for Spouses

Spouses will have the ability to be employed. Children will not. Unlike entrepreneurs, spouses will need to apply for employment authorization documents pursuant to 8 CFR 274a.12(c)(34). The spouse’s income will count toward the 400% of the poverty level household requirement.

Though it was not mentioned in prior statements regarding plans for the executive actions, DHS is extending employment authorization eligibility for the following nonimmigrant categories:

– Dependents of Taipei Economic and Cultural Representative Office (TECRO) E-1 nonimmigrants;
– J-2 dependent children of J-1 exchange visitors;
– Dependents of A-1 and A-2 foreign government officials;
– Dependents of G-1, G-3, and G-4 international organization officials; and
– Dependents of NATO officials.

3. Documentation for Employment Eligibility Verification (Form I-9)

The I-9 rules are being amended to reflect that entrepreneur parolees will be able to present an I-94 annotated with the PE-1 code of admission to demonstrate authorization to work.
8 CFR 274a.2(b)(1)(v)(A)(5). The PE-1 I-94 will indicate the period of validity for parole status. Applicants for parole extensions will be authorized to remain employed for up to 240 days while waiting on the parole extension.

4. Technical Changes

DHS is revising the rules on parole to replace outdated references to “for emergency reasons” and “reasons deemed strictly in the public interest” with “urgent humanitarian reasons” and “significant public benefit.”

E. Material Change Reporting

Entrepreneurs who have been granted parole will be required to immediately report to USCIS any material changes potentially affecting his or her grant of parole. 8 CFR 212.19(j). The way to notify USCIS of material changes when the entrepreneur continues to be employed by the start-up is to file a new Application for Entrepreneur Parole with fee. USCIS will either continue to authorize parole or seek to terminate parole. A “material change” is a is any that could reasonably affect DHS’s determination that the entrepreneur provides a significant public benefit to the US. According to 8 CFR 212.19(a)(10) and (j), changes might include

– any criminal charge, conviction, plea of no contest, or other judicial determination in a criminal case concerning the entrepreneur or start-up;
– any complaint, settlement, judgment, or other judicial or administrative determination brought by a government entity against parolee or start-up;
– any settlement, judgment, or other legal determination concerning the entrepreneur or start-up entity in a legal proceeding brought by a private individual or organization involving claims for damages exceeding 10% of the current assets;
– a sale or other disposition of all or substantially all of the start-up entity’s assets;
– the liquidation, dissolution or cessation of operations of the start-up entity;
– the voluntary or involuntary filing for bankruptcy by or against the start-up entity; and
– any significant change to the entrepreneur’s role in or ownership and control of the start-up entity or any other significant ownership and control change in the start-up.

Failing to timely file or comply with these requirements may result in the denial of new parole applications or a revocation of an existing parole status.

F. Re-Parole

The rules allow entrepreneurs to request one additional re-parole for up to three years with the same start-up. 8 CFR 212.19(c) and (f). Extensions must be filed in advance of the expiration of the first parole status or the entrepreneur will be deemed to have had an automatic termination of parole and a loss of employment authorization for the entrepreneur and his or her spouse and children. DHS will retain the discretion to provide any length of parole to an applicant including a cumulative period of shorter than five years.

1. Criteria for Re-Parole

Re-parole applicants must show their remaining would continue to provide a significant public benefit. This can be done by showing the start-up continues to demonstrate potential for rapid growth and job creation and that parole would significantly help the entity continue to conduct and grow the business in the US. 8 CFR 212.19(c)(2).

A. Entity Continues to Be a Start-Up Entity

The entity must continue to be a “start-up entity” which means showing the entity has (1) continued to lawfully do business during the initial period of parole and (2) continues to have the substantial potential to experience rapid growth and job creation, including through significant revenue generation or attraction of capital investment.

At the re-parole stage, this would mean showing by presenting evidence that the entity: (1) has continued to lawfully do business during the initial period of parole, and (2) continues to have the substantial potential to experience rapid growth and job creation, including through significant revenue generation or attraction of capital investment.

B. Applicant Continues to be an Entrepreneur

As part of the re-parole application, the applicant must show that he or she continues to meet the definition of “entrepreneur” at 8 CFR 212.19(a)(1). The applicants must show that he or she
(1) continues to possess a substantial ownership interest in the start-up and (2) continues to serve in a central and active capacity in the entity, such that his or her knowledge, skills, or experience would continue to substantially assist the entity with the growth and success of its business. 8 CFR 212.19(a)(1).

At the point of applying for re-parole an entrepreneur is considered to be possessing a substantial ownership interest if he or she maintains at least a 10% ownership stake in the start-up at all times during the period of parole and any subsequent period of re-parole.

Applicants can provide the following documents with the re-parole application to document ownership:

– formation and organizational documents,
– equity certificates,
– equity ledgers,
– ownership schedules, and
– capitalization tables

Regarding the entrepreneur’s continuing role in the start-up, DHS expects an application to provide evidence showing that the entrepreneur continues to serve in the same capacity as described in the initial application. If the applicant has changed positions, he or she would need to provide evidence showing he or she continues to service in a “central and active capacity” within the entity and that his or her knowledge, skills, or experience would continue to substantially assist the start-up and that his or her knowledge, skills or experience would continue to substantially assist the entity with the growth and success of the start-up.

C. Investment, Revenue, and Job Creation Criteria for Re-Parole Consideration

Applicants applying for re-parole must demonstrate that the start-up continues to have substantial potential for rapid growth and job creation. The requirement may be met by showing that the start-up has

(1) received substantial additional qualifying funding, such as awards or grants from qualifying government entities or investments of capital from U.S. investors with established records of successful investment;
(2) generated substantial and rapidly increasing revenue in the United States over the prior parole period; or
(3) generated a substantial number of qualified jobs for U.S. workers. 8 CFR 212.19(c)(2)(ii)(B).

If this can’t be shown, a partial showing with additional reliable and compelling evidence that his or her re-parole would provide a significant public benefit can be shown.

i. Qualifying Funding from U.S. Investors or Government Entities

This section restates the earlier explanation of qualifying investments and government grants or awards. The section also restates what types of investors can invest.

ii. Substantial Revenue Generation

Start-ups can show they have a substantial potential for rapid growth and job creation if they can show rapid growth in revenue generation during the relevant parole period. Reaching at least $500,000 in annual revenue with at least 20% annual revenue growth would be proof. 8 CFR 212.19(c)(2)(ii)(B)(3).

iii. Job Creation

Applicants can show substantial potential for rapid growth and job creation by showing that the start-up has exhibited rapid growth in terms of job creation during the relevant parole period. This can be shown if the entity has created at least 10 qualified jobs for US workers during the initial parole period. A “qualified job” means full-time employment located in the entrepreneur’s start-up that has been filled for at least one year by one or more qualifying employees (US citizens, a lawful permanent resident, or other immigrant lawfully authorized to be employed in the United States (e.g. an asylees or refugee) who is not an entrepreneur of the relevant start-up entity or the parent, spouse, brother, sister, son, or daughter of the entrepreneur. 8 CFR 212.19(a)(7). Full-time employment means a position requiring a minimum of 35 working hours per week. 8 CFR 212.19(a)(8). It does not include combinations of part-time positions (e.g. full-time equivalent). 8 CFR 212.19(a)(8).

iv. Alternative Criteria for Re-Parole Consideration

If the above criteria for re-parole can’t be met, an applicant can present “reliable and compelling” evidence of the entity’s continued substantial potential for rapid growth and job creation. It is NOT available to an applicant who fails to demonstrate any US investment, revenue generation or job creation.

Rather, the applicant would need to show as a preliminary matter that the start-up entity has: (1) received a substantial level of investment through a combination of qualifying investments and qualified government grants or awards (although less than $500,000); (2) generated a substantial level of revenue (although less than $500,000 with at least 20 percent average annual revenue growth); or (3) generated a substantial number of qualified jobs in the United States (although less than 10). The applicant would also need to demonstrate the entity’s 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 by this rulemaking for re-parole. DHS is deliberately not defining “reliable and compelling” to retain flexibility.

2. Application Requirements for Re-Parole

The application process for re-parole requires submitting the new Form I-941 Application for Entrepreneur Parole, the filing and biometric fees and supporting documents. 8 CFR 212.19(c)(1).

Applicants will file a re-parole application before he expiration of the current period of parole. If the entrepreneur is in the US at the time USCIS approves the request, the approval constitutes the grant of parole. 8 CFR 212.19(d)(3). Departing and returning to the US is not required. USCIS will issue a new I-94 reflecting the new period of parole. Spouses and children also extend the same way filing separate applications.

If the entrepreneur (or spouse or dependent child) is outside the US when the re-parole is approved, he or she would have to obtain a travel document from USCIS or DOS and appear at a port of entry for CBP to make the final re-parole determination and, if approved, issue a new I-94.

3. Ensuring Continuous Employment Authorization

Re-parole applications may be filed beginning 90 days prior to the expiration date of the current period of parole. Employment authorization automatically extends 240 days while the extension is pending. 8 CFR 274a.12(b)(37).

G. Termination of Parole

DHS may, in its discretion, terminate parole at any time without prior notice or opportunity to respond. DHS may give an entrepreneur notice and an opportunity to respond prior to terminating parole.

1. Automatic Termination

Parole may be automatically terminated if the period of parole expires unless the parolee timely files a non-frivolous application for re-parole or USCIS receives written notice from the entrepreneur that he or she no longer is employed by the start-up or ceases to possess at least a 10% ownership stake in the start-up. 8 CFR 212.19(k)(2). If the entrepreneur’s parole is automatically terminated, the same is true for the spouse or child. That includes employment authorization.

2. Termination on Notice

USCIS has the authority to terminate parole without prior notice but the agency says it will generally attempt to provide the entrepreneur with a notice of intent to terminate parole if it believes

(a) the facts or information contained in the request for parole were not true and accurate;
(b) the entrepreneur failed to timely file or comply with the material change reporting requirements;
(c) the entrepreneur is no longer employed in a central and active role by the start-up or ceases to possess at least a 10% ownership stake in the start-up entity;
(d) the entrepreneur otherwise violated the terms and conditions of parole; or
(e) parole was erroneously granted. 8 CFR 212.19(k)(3).

USCIS will provide a period of up to 30 days for the parolee to respond to the notice. 8 CFR 212.19(k)(4).

The parolee is required to depart the US when the parole period ends unless the person is eligible to lawfully remain in the US. At any time before the 5-year limit on parole is reached, the entrepreneur may apply for any immigrant or nonimmigrant status, but they would generally be required to depart the US and apply for a visa at a consulate.

H. Automatic Adjustment of Investment and Revenue Amount Requirements

The investment and revenue amounts in the proposed regulation will be automatically adjusted every three years by the Consumer Price Index.

I. Technical Change

DOS Form FS-240 Consular Report of Birth Abroad and successor forms are being moved to I-9 list C.

 

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