[Federal Register Volume 82, Number 10 (Tuesday, January 17, 2017)]
[Rules and Regulations]
[Pages 5238-5289]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00481]

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Vol. 82

Tuesday,

No. 10

January 17, 2017

Part V

Department of Homeland Security

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8 CFR Parts 103, 212, and 274a

International Entrepreneur Rule; Final Rule

Federal Register / Vol. 82 , No. 10 / Tuesday, January 17, 2017 /
Rules and Regulations

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DEPARTMENT OF HOMELAND SECURITY

8 CFR Parts 103, 212, and 274a

[CIS No. 2572-15; DHS Docket No. USCIS-2015-0006]
RIN 1615-AC04

International Entrepreneur Rule

AGENCY: U.S. Citizenship and Immigration Services, DHS.

ACTION: Final rule.

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SUMMARY: This final rule amends Department of Homeland Security (DHS)
regulations to implement the Secretary of Homeland Security's
discretionary parole authority in order to increase and enhance
entrepreneurship, innovation, and job creation in the United States.
The final rule adds new regulatory provisions guiding the use of parole
on a case-by-case basis with respect to entrepreneurs of start-up
entities who can demonstrate through evidence of substantial and
demonstrated potential for rapid business growth and job creation that
they would provide a significant public benefit to the United States.
Such potential would be indicated by, among other things, the receipt
of significant capital investment from U.S. investors with established
records of successful investments, or obtaining significant awards or
grants from certain Federal, State or local government entities. If
granted, parole would provide a temporary initial stay of up to 30
months (which may be extended by up to an additional 30 months) to
facilitate the applicant's ability to oversee and grow his or her
start-up entity in the United States.

DATES: This final rule is effective July 17, 2017.

FOR FURTHER INFORMATION CONTACT: Steven Viger, Adjudications Officer,
Office of Policy and Strategy, U.S. Citizenship and Immigration
Services, Department of Homeland Security, 20 Massachusetts Avenue NW.,
Suite 1100, Washington, DC 20529-2140; Telephone (202) 272-1470.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
A. Purpose of the Regulatory Action
B. Legal Authority
C. Summary of the Final Rule Provisions
D. Summary of Changes From the Notice of Proposed Rulemaking
E. Summary of Costs and Benefits
F. Effective Date
II. Background
A. Current Framework
B. Final Rule
III. Public Comments on Proposed Rule
A. Summary of Public Comments
B. Legal Authority
C. Significant Public Benefit
D. Definitions
E. Application Requirements
F. Parole Criteria and Conditions
G. Employment Authorization
H. Comments on Parole Process
I. Appeals and Motions To Reopen
J. Termination of Parole
K. Opposition to the Overall Rule
L. Miscellaneous Comments on the Rule
M. Public Comments on Statutory and Regulatory Requirements
IV. Statutory and Regulatory Requirements
A. Unfunded Mandates Reform Act of 1995
B. Small Business Regulatory Enforcement Fairness Act of 1996
C. Executive Orders 12866 and 13563
1. Summary
2. Purpose of the Rule
3. Volume Estimate
4. Costs
5. Benefits
6. Alternatives Considered
D. Regulatory Flexibility Act
E. Executive Order 13132
F. Executive Order 12988
G. Paperwork Reduction Act

I. Executive Summary

A. Purpose of the Regulatory Action

Section 212(d)(5) of the Immigration and Nationality Act (INA), 8
U.S.C. 1182(d)(5), confers upon the Secretary of Homeland Security the
discretionary authority to parole individuals into the United States
temporarily, on a case-by-case basis, for urgent humanitarian reasons
or significant public benefit. DHS is amending its regulations
implementing this authority to increase and enhance entrepreneurship,
innovation, and job creation in the United States. As described in more
detail below, the final rule would establish general criteria for the
use of parole with respect to entrepreneurs of start-up entities who
can demonstrate through evidence of substantial and demonstrated
potential for rapid growth and job creation that they would provide a
significant public benefit to the United States. In all cases, whether
to parole a particular individual under this rule is a discretionary
determination that would be made on a case-by-case basis.
Given the complexities involved in adjudicating applications in
this context, DHS has decided to establish by regulation the criteria
for the case-by-case evaluation of parole applications filed by
entrepreneurs of start-up entities. By including such criteria in
regulation, as well as establishing application requirements that are
specifically tailored to capture the necessary information for
processing parole requests on this basis, DHS expects to facilitate the
use of parole in this area.
Under this final rule, an applicant would need to demonstrate that
his or her parole would provide a significant public benefit because he
or she is the entrepreneur of a new start-up entity in the United
States that has significant potential for rapid growth and job
creation. DHS believes that such potential would be indicated by, among
other things, the receipt of (1) significant capital investment from
U.S. investors with established records of successful investments or
(2) significant awards or grants from certain Federal, State, or local
government entities. The final rule also includes alternative criteria
for applicants who partially meet the thresholds for capital investment
or government awards or grants and can provide additional reliable and
compelling evidence of their entities' significant potential for rapid
growth and job creation. An applicant must also show that he or she has
a substantial ownership interest in such an entity, has an active and
central role in the entity's operations, and would substantially
further the entity's ability to engage in research and development or
otherwise conduct and grow its business in the United States. The grant
of parole is intended to facilitate the applicant's ability to oversee
and grow the start-up entity.
DHS believes that this final rule will encourage foreign
entrepreneurs to create and develop start-up entities with high growth
potential in the United States, which are expected to facilitate
research and development in the country, create jobs for U.S. workers,
and otherwise benefit the U.S. economy through increased business
activity, innovation, and dynamism. Particularly in light of the
complex considerations involved in entrepreneur-based parole requests,
DHS also believes that this final rule will provide a transparent
framework by which DHS will exercise its discretion to adjudicate such
requests on a case-by-case basis under section 212(d)(5) of the INA, 8
U.S.C. 1182(d)(5).

B. Legal Authority

The Secretary of Homeland Security's authority for the proposed
regulatory amendments can be found in various provisions of the
immigration laws. Sections 103(a)(1) and (3) of the INA, 8 U.S.C.
1103(a)(1), (3), provides the Secretary the authority to administer and
enforce the immigration and nationality laws. Section 402(4) of the
Homeland Security Act of 2002 (HSA), Public Law 107-296, 116 Stat.
2135, 6 U.S.C. 202(4), expressly authorizes the

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Secretary to establish rules and regulations governing parole. Section
212(d)(5) of the INA, 8 U.S.C. 1182(d)(5), vests in the Secretary the
discretionary authority to grant parole for urgent humanitarian reasons
or significant public benefit to applicants for admission temporarily
on a case-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.''
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\1\ In sections 402 and 451 of the HSA, Congress transferred
from the Attorney General to the Secretary of Homeland Security the
general authority to enforce and administer the immigration laws,
including those pertaining to parole. In accordance with section
1517 of title XV of the HSA, any reference to the Attorney General
in a provision of the INA describing functions transferred from the
Department of Justice to DHS ``shall be deemed to refer to the
Secretary'' of Homeland Security. See 6 U.S.C. 557 (codifying the
HSA, tit. XV, section 1517). Authorities and functions of DHS to
administer and enforce the immigration laws are appropriately
delegated to DHS employees and others in accordance with section
102(b)(1) of the HSA, 6 U.S.C. 112(b)(1); section 103(a) of the INA,
8 U.S.C. 1103(a); and 8 CFR 2.1.
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C. Summary of the Final Rule Provisions

This final rule adds a new section 8 CFR 212.19 to provide guidance
with respect to the use of parole for entrepreneurs of start-up
entities based upon significant public benefit. An individual seeking
to operate and grow his or her start-up entity in the United States
would generally need to demonstrate the following to be considered for
a discretionary grant of parole under this final rule:
1. Formation of New Start-Up Entity. The applicant has recently
formed a new entity in the United States that has lawfully done
business since its creation and has substantial potential for rapid
growth and job creation. An entity may be considered recently formed if
it was created within the 5 years immediately preceding the date of the
filing of the initial parole application. See 8 CFR 219.12(a)(2), 8 CFR
103.2(a)(7).
2. Applicant is an Entrepreneur. The applicant is an entrepreneur
of the start-up entity who is well-positioned to advance the entity's
business. An applicant may meet this standard by providing evidence
that he or she: (1) Possesses a significant (at least 10 percent)
ownership interest in the entity at the time of adjudication of the
initial grant of parole; and (2) has an active and central role in the
operations and future growth of the entity, such that his or her
knowledge, skills, or experience would substantially assist the entity
in conducting and growing its business in the United States. See final
8 CFR 212.19(a)(1). Such an applicant cannot be a mere investor.
3. Significant U.S. Capital Investment or Government Funding. The
applicant can further validate, through reliable supporting evidence,
the entity's substantial potential for rapid growth and job creation.
An applicant may be able to satisfy this criterion in one of several
ways:
a. Investments from established U.S. investors. The applicant may
show that the entity has received significant investment of capital
from certain qualified U.S. investors with established records of
successful investments. An applicant would generally be able to meet
this standard by demonstrating that the start-up entity has received
investments of capital totaling $250,000 or more from established U.S.
investors (such as venture capital firms, angel investors, or start-up
accelerators) with a history of substantial investment in successful
start-up entities.
b. Government grants. The applicant may show that the start-up
entity has received significant awards or grants from Federal, State or
local government entities with expertise in economic development,
research and development, or job creation. An applicant would generally
be able to meet this standard by demonstrating that the start-up entity
has received monetary awards or grants totaling $100,000 or more from
government entities that typically provide such funding to U.S.
businesses for economic, research and development, or job creation
purposes.
c. Alternative criteria. The final rule provides alternative
criteria under which an applicant who partially meets one or more of
the above criteria related to capital investment or government funding
may be considered for parole under this rule if he or she provides
additional reliable and compelling evidence that they would provide a
significant public benefit to the United States. Such evidence must
serve as a compelling validation of the entity's substantial potential
for rapid growth and job creation.
This final rule states that an applicant who meets the above
criteria (and his or her spouse and minor, unmarried children,\2\ if
any) generally may be considered under this rule for a discretionary
grant of parole lasting up to 30 months (2.5 years) based on the
significant public benefit that would be provided by the applicant's
(or family's) parole into the United States. An applicant will be
required to file a new application specifically tailored for
entrepreneurs to demonstrate eligibility for parole based upon
significant public benefit under this rule, along with applicable fees.
Applicants will also be required to appear for collection of biometric
information. No more than three entrepreneurs may receive parole with
respect to any one qualifying start-up entity.
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\2\ The terms ``child'' and ``children'' in this proposed rule
have the same meaning as they do under section 101(b)(1) of the INA,
8 U.S.C. 1101(b)(1) (defining a child as one who is unmarried and
under twenty-one years of age).
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USCIS adjudicators will consider the totality of the evidence,
including evidence obtained by USCIS through background checks and
other means, to determine whether the applicant has satisfied the above
criteria, whether the specific applicant's parole would provide a
significant public benefit, and whether negative factors exist that
warrant denial of parole as a matter of discretion. To grant parole,
adjudicators will be required to conclude, based on the totality of the
circumstances, that both: (1) The applicant's parole would provide a
significant public benefit, and (2) the applicant merits a grant of
parole as a matter of discretion.
If parole is granted, the entrepreneur will be authorized for
employment incident to the grant of parole, but only with respect to
the entrepreneur's start-up entity. The entrepreneur's spouse and
children, if any, will not be authorized for employment incident to the
grant of parole, but the entrepreneur's spouse, if paroled into the
United States pursuant to 8 CFR 212.19, will be permitted to apply for
employment authorization consistent with new 8 CFR 274a.12(c)(34). DHS
retains the authority to revoke any such grant of parole at any time as
a matter of discretion or if DHS determines that parole no longer
provides a significant public benefit, such as when the entity has
ceased operations in the United States or DHS has reason to believe
that the approved application involves fraud or misrepresentation. See
new 8 CFR 212.19(k).
As noted, the purpose of this parole process is to provide
qualified entrepreneurs of high-potential start-up entities in the
United States with the improved ability to conduct research and
development and expand the entities' operations in the United States so
that our nation's economy may

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benefit from such development and expansion, including through
increased capital expenditures, innovation, and job creation. The final
rule allows individuals granted parole under this rule to be considered
for re-parole for an additional period of up to 30 months (2.5 years)
if, and only if, they can demonstrate that their entities have shown
signs of significant growth since the initial grant of parole and such
entities continue to have substantial potential for rapid growth and
job creation.
An applicant under this rule will generally need to demonstrate the
following to be considered for a discretionary grant of an additional
period of parole:
1. Continuation of Start-Up Entity. The entity continues to be a
start-up entity as defined by the proposed rule. For purposes of
seeking re-parole, an applicant may be able to meet this standard by
showing that the entity: (a) Has been lawfully operating in the United
States during the period of parole; and (b) continues to have
substantial potential for rapid growth and job creation.
2. Applicant Continues to Be an Entrepreneur. The applicant
continues to be an entrepreneur of the start-up entity who is well-
positioned to advance the entity's business. An applicant may meet this
standard by providing evidence that he or she: (a) Continues to possess
a significant (at least 5 percent) ownership interest in the entity at
the time of adjudication of the grant of re-parole; and (b) continues
to have an active and central role in the operations and future growth
of the entity, such that his or her knowledge, skills, or experience
would substantially assist the entity in conducting and continuing to
grow its business in the United States. This reduced ownership amount
takes into account the need of some successful start-up entities to
raise additional venture capital investment by selling ownership
interest during their initial years of operation.
3. Significant U.S. Investment/Revenue/Job Creation. The applicant
further validates, through reliable supporting evidence, the start-up
entity's continued potential for rapid growth and job creation. An
applicant may be able to satisfy this criterion in one of several ways:
a. Additional Investments or Grants. The applicant may show that
during the initial period of parole the start-up entity received
additional substantial investments of capital, including through
qualified investments from U.S. investors with established records of
successful investments; significant awards or grants from U.S.
government entities that regularly provide such funding to start-up
entities; or a combination of both. An applicant would generally be
expected to demonstrate that the entity received at least $500,000 in
additional qualifying funding during the initial parole period. As
noted previously, any private investment that the applicant is relying
upon as evidence that the investment criterion has been met must be
made by qualified U.S. investors (such as venture capital firms, angel
investors, or start-up accelerators) with a history of substantial
investment in successful start-up entities. Government awards or grants
must be from U.S. federal, state or local government entities with
expertise in economic development, research and development, or job
creation.
b. Revenue generation. The applicant may show that the start-up
entity has generated substantial and rapidly increasing revenue in the
United States during the initial parole period. To satisfy this
criterion, an applicant will need to demonstrate that the entity
reached at least $500,000 in annual revenue, with average annualized
revenue growth of at least 20 percent, during the initial parole
period.
c. Job creation. The applicant may show that the start-up entity
has demonstrated substantial job creation in the United States during
the initial parole period. To satisfy this criterion, an applicant will
need to demonstrate that the entity created at least 5 full-time jobs
for U.S. workers during the initial parole period.
d. Alternative criteria. As with initial parole, the final rule
includes alternative criteria under which an applicant who partially
meets one or more of the above criteria related to capital investment,
revenue generation, or job creation may be considered for re-parole
under this rule if he or she provides additional reliable and
compelling evidence that his or her parole will continue to provide a
significant public benefit. As discussed above, such evidence must
serve as a compelling validation of the entity's substantial potential
for rapid growth and job creation.
As indicated above, an applicant who generally meets the above
criteria and merits a favorable exercise of discretion may be granted
an additional 30-month period of re-parole, for a total maximum period
of 5 years of parole under 8 CFR 212.19, to work with the same start-up
entity based on the significant public benefit that would be served by
his or her continued parole in the United States. No more than three
entrepreneurs (and their spouses and children) may receive such
additional periods of parole with respect to any one qualifying entity.
As with initial parole applications, USCIS adjudicators will
consider the totality of the evidence, including evidence obtained by
USCIS through verification methods, to determine whether the applicant
has satisfied the above criteria and whether his or her continued
parole would provide a significant public benefit. To be re-paroled,
adjudicators will be required to conclude, based on the totality of the
circumstances, both: (1) That the applicant's continued parole would
provide a significant public benefit, and (2) that the applicant
continues to merit parole as a matter of discretion. If the applicant
is re-paroled, DHS retains the authority to revoke parole at any time
as a matter of discretion or if DHS determines that parole no longer
provides a significant public benefit, such as when the entity has
ceased operations in the United States or DHS believes that the
application involved fraud or made material misrepresentations.
The entrepreneur and any dependents granted parole under this
program will be required to depart the United States when their parole
periods have expired or have otherwise been terminated, unless such
individuals are otherwise eligible to lawfully remain in the United
States. At any time prior to reaching the 5-year limit for parole under
this final rule, such individuals may apply for any immigrant or
nonimmigrant classification for which they may be eligible (such as
classification as an O-1 nonimmigrant or as a lawful permanent resident
pursuant to an EB-2 National Interest Waiver). Because parole is not
considered an admission to the United States, parolees are ineligible
to adjust or change their status in the United States under many
immigrant or nonimmigrant visa classifications. For example, if such
individuals are approved for a nonimmigrant or employment-based
immigrant visa classification, they would generally need to depart the
United States and apply for a visa with the Department of State (DOS)
for admission to the United States as a nonimmigrant or lawful
permanent resident.
Finally, DHS is making conforming changes to the employment
authorization regulations at 8 CFR 274a.12(b) and (c), the employment
eligibility verification regulations at 8 CFR 274a.2(b), and fee
regulations at 8 CFR 103.7(b)(i). The final rule amends 8 CFR
274a.12(b) by: (1) Adding entrepreneur parolees to the classes of

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aliens authorized for employment incident to their immigration status
or parole, and (2) providing temporary employment authorization for
those applying for re-parole. The final rule amends 8 CFR 274a.12(c) by
extending eligibility for employment authorization to the spouse of an
entrepreneur paroled into the United States under 8 CFR 212.19. The
final rule amends 8 CFR 274a.2(b) by designating the entrepreneur's
foreign passport and Arrival/Departure Record (Form I-94) indicating
entrepreneur parole as acceptable evidence for employment eligibility
verification (Form I-9) purposes.\3\ The final rule also amends 8 CFR
103.7(b)(i) by including the fee for the new Application for
Entrepreneur Parole form.
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\3\ Additionally, DHS is making a technical change to this
section by adding the Department of State (DOS) Consular Report of
Birth Abroad (Form FS-240) to the regulatory text and to the ``List
C'' listing of acceptable documents for Form I-9 verification
purposes. This rule departs from the Notice of Proposed Rulemaking
by not adding ``or successor form'' after Form FS-240. DHS
determined that inclusion of the phrase is unnecessary and may cause
confusion in the future.
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D. Summary of Changes From the Notice of Proposed Rulemaking

Following careful consideration of public comments received,
including relevant data provided by stakeholders, DHS has made several
modifications to the regulatory text proposed in the Notice of Proposed
Rulemaking (NPRM) published in the Federal Register on August 31, 2016.
See 81 FR 60129. Those changes include the following:
Minimum Investment Amount. In the final rule, DHS is
responding to public comment by revising proposed 8 CFR
212.19(b)(2)(ii)(B)(1), a provision that identifies the qualifying
investment amount required from one or more qualified investors. In the
NPRM, DHS proposed a minimum investment amount of $345,000. Based on
data provided by the public, DHS is revising this figure to $250,000.
Thus, under the final rule, an applicant would generally be able to
meet the investment standard by demonstrating that the start-up entity
has received investments of capital totaling $250,000 or more from
established U.S. investors (such as venture capital firms, angel
investors, or start-up accelerators) with a history of substantial
investment in successful start-up entities. In addition, DHS has
increased the timeframe during which the qualifying investments must be
received from 365 days to 18 months immediately preceding the filing of
an application for initial parole.
Definition of Entrepreneur: Ownership Criteria. In the
final rule, DHS is revising proposed 8 CFR 212.19(a)(1), a provision
that defines the term ``entrepreneur,'' and establishes a minimum
ownership percentage necessary to meet the definition. In the NPRM, DHS
proposed that the entrepreneur must have an ownership interest of at
least 15 percent for initial parole, and 10 percent for re-parole. In
response to public comment, DHS is modifying this requirement to allow
individuals who have an ownership interest of at least 10 percent in
the start-up entity at the time of adjudication of the initial grant of
parole, and at least a 5 percent ownership interest at the time of
adjudication of a subsequent period of re-parole, to qualify under this
definition.
Qualified Investment Definition. DHS is revising proposed
8 CFR 212.19(a)(4), which establishes the definition of a qualified
investment. In the NPRM, DHS proposed that the term ``qualified
investment'' means an investment made in good faith, and that is not an
attempt to circumvent any limitations imposed on investments under this
section, of lawfully derived capital in a start-up entity that is a
purchase from such entity of equity or convertible debt issued by such
entity. In response to public comment, DHS is modifying this definition
to include other securities that are convertible into equity issued by
such an entity and that are commonly used in financing transactions
within such entity's industry.
Qualified Investor Definition. DHS is revising proposed 8
CFR 212.19(a)(5), which establishes the definition of a qualified
investor. In the NPRM, DHS proposed that an individual or organization
may be considered a qualified investor if, during the preceding 5
years: (i) The individual or organization made investments in start-up
entities in exchange for equity or convertible debt in at least 3
separate calendar years comprising a total within such 5-year period of
no less than $1,000,000; and (ii) subsequent to such investment by such
individual or organization, at least 2 such entities each created at
least 5 qualified jobs or generated at least $500,000 in revenue with
average annualized revenue growth of at least 20 percent. In this final
rule, the minimum investment amount has been decreased from the
originally proposed $1,000,000 to $600,000. The requirement that
investments be made in at least 3 separate calendar years has also been
removed from this final rule. DHS is also making revisions to the form
of investment made by the individual or organization consistent with
the change to the qualified investment definition by adding ``or other
security convertible into equity commonly used in financing
transactions within their respective industries.''
Start-up Entity Definition. In the final rule, DHS is
revising the definition of a start-up entity as proposed in 8 CFR
212.19(a)(2). In the NPRM, DHS proposed that an entity may be
considered recently formed if it was created within the 3 years
preceding the date of filing of the initial parole request. In response
to public comment, DHS is modifying this provision so that an entity
may be considered recently formed if it was created within the 5 years
immediately preceding the filing date of the initial parole request.
Additionally, for purposes of paragraphs (a)(3) and (a)(5) of this
section, which pertain to the definitional requirements to be a
qualified investor or qualified government award or grant,
respectively, DHS made corresponding changes in this final rule such
that an entity may be considered recently formed if it was created
within the 5 years immediately preceding the receipt of the relevant
grant(s), award(s), or investment(s).
Job Creation Requirement. In the final rule, DHS is
revising proposed 8 CFR 212.19(c)(2)(ii)(B)(2), a provision that
identifies the minimum job creation requirement under the general re-
parole criteria. In the NPRM, DHS proposed that an entrepreneur may be
eligible for an additional period of parole by establishing that his or
her start-up entity has created at least 10 qualified jobs during the
initial parole period. In response to public comment, DHS is modifying
this provision so that an entrepreneur may qualify for re-parole if the
start-up entity created at least 5 qualified jobs with the start-up
entity during the initial parole period.
Revenue Generation. In the final rule, DHS is clarifying
proposed 8 CFR 212.19(c)(2)(ii)(B)(3), a provision that identifies the
minimum annual revenue requirement under the general re-parole
criteria. DHS has clarified that for the revenue to be considered for
purposes of re-parole, it must be generated in the United States.
Parole Validity Periods. In the final rule, DHS is
revising proposed 8 CFR 212.19(d)(2) and (3), which are provisions that
identify the length of the initial and re-parole periods. In the NPRM,
DHS proposed (1) a potential initial period of parole of up to 2 years
beginning on the date the request is approved by USCIS and (2) a
potential period of re-parole of up to 3 years beginning on the date of
the expiration

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of the initial parole period. First, DHS revised 8 CFR 212.19(d)(2) to
correct that the initial parole period would begin running on the date
the individual is initially paroled into the United States. Second, in
response to public comment, DHS revised 8 CFR 212.19(d)(2) and (3) to
provide 2 potential parole periods of up to 30 months each, rather than
an initial 2-year period followed by a potential 3-year period of re-
parole. Specifically, 8 CFR 212.19(d)(2) now provides that an applicant
who meets the eligibility criteria (and his or her spouse and minor,
unmarried children, if any) may be considered under this rule for a
discretionary grant of an initial parole period of up to 30 months (2.5
years) based on the significant public benefit that would be provided
by the applicant's (or family's) parole into the United States. DHS
also revised in this final rule the period of re-parole in 8 CFR
212.19(d)(3) to reduce the period of re-parole from 3 years to 30
months in order to extend the initial parole period, while still
maintaining the overall 5-year period of parole limitation.
Material Changes. In the final rule, DHS is revising
proposed 8 CFR 212.19(a)(10), a provision that defines material
changes. The final rule adds the following to the definition of
material changes: ``a significant change with respect to ownership and
control of the start-up entity.'' This reflects a change from the
originally proposed language of any significant change to the
entrepreneur's role in or ownership and control in the start-up entity
or any other significant change with respect to ownership and control
of the start-up entity. Additionally, the final rule at 8 CFR
212.19(a)(1) adds language that permits the entrepreneur during the
initial parole period to reduce his or her ownership interest, as long
as at least 5 percent ownership is maintained. This provision was
revised in response to a number of public comments that requested that
DHS reconsider how and when material changes should be reported.
Reporting of Material Changes. In the final rule, DHS is
revising proposed 8 CFR 212.19(j), a provision that describes reporting
of material changes. DHS is revising 8 CFR 212.19(j) to allow DHS to
provide additional flexibility in the future with respect to the manner
in which material changes are reported to DHS. The final rule also
makes conforming changes based on changes to the definition of
entrepreneur.
Termination of Parole. In the final rule, DHS is revising
proposed 8 CFR 212.19(k)(2), a provision that describes automatic
termination of parole. The final rule makes conforming revisions to
this provision based on changes to the definition of entrepreneur and
to the material change provisions.

E. Summary of Costs and Benefits

DHS does not anticipate that this rule will generate significant
costs and burdens to private or public entities. Costs of the rule stem
from filing fees and opportunity costs associated with applying for
parole, and the requirement that the entrepreneur notify DHS of any
material changes.
DHS estimates that 2,940 entrepreneurs will be eligible for parole
annually and can apply using the Application for Entrepreneur Parole
(Form I-941). Each applicant for parole will face a total filing cost--
including the application form fee, biometric filing fee, travel costs,
and associated opportunity costs--of $1,591, resulting in a total cost
of $4,678,336 (undiscounted) for the first full year the rule will take
effect and any subsequent year. Additionally, dependent family members
(spouses and children) seeking parole with the principal applicant will
be required to file an Application for Travel Document (Form I-131) and
submit biographical information and biometrics. DHS estimates
approximately 3,234 dependent spouses and children could seek parole
based on the estimate of 2,940 principal applicants. Each spouse and
child 14 years of age and older seeking parole will face a total cost
of $765 per applicant,\4\ for a total aggregate cost of $2,474,914.\5\
Additionally, spouses who apply for work authorization via an
Application for Employment Authorization (Form I-765) will incur a
total additional cost of $446 each. Based on the same number of
entrepreneurs, the estimated 2,940 spouses \6\ will incur total costs
of $1,311,830 (undiscounted). The total cost of the rule to include
direct filing costs and monetized non-filing costs is estimated to be
$8,136,571 annually.
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\4\ On October 24, 2016, U.S. Citizenship and Immigration
Services published a final rule establishing a new fee schedule for
immigration benefits and services (81 FR 73292). The new filing fees
for Form I-131 and Form I-765, $575 and $410, respectively, will be
effective on December 23, 2016. This final rule uses those new
filing fees in estimating costs to potential applicants under this
rule.
\5\ For parole requests for children under the age of 14, only
the filing fee will be required, as such children do not appear for
biometric collection. Applicants under the age of 14 and over the
age of 79 are not required to be fingerprinted. However, they may
still be required to attend a biometrics appointment in order to
have their photographs and signatures captured.
\6\ DHS used a simple one-to-one mapping of entrepreneurs to
spouses to obtain 2,940 spouses, the same number as entrepreneur
parolees.
---------------------------------------------------------------------------

DHS anticipates that establishing a parole process for those
entrepreneurs who stand to provide a significant public benefit will
advance the U.S. economy by enhancing innovation, generating capital
investments, and creating jobs. DHS does not expect significant
negative consequences or labor market impacts from this rule; indeed,
DHS believes this rule will encourage entrepreneurs to pursue business
opportunities in the United States rather than abroad, which can be
expected to generate significant scientific, research and development,
and technological impacts that could create new products and produce
positive spillover effects to other businesses and sectors. The impacts
stand to benefit the economy by supporting and strengthening high-
growth, job-creating businesses in the United States.

F. Effective Date

This final rule will be effective on July 17, 2017, 180 days from
the date of publication in the Federal Register. DHS has determined
that this 180-day period is necessary to provide USCIS with a
reasonable period to ensure resources are in place to process and
adjudicate Applications for Entrepreneur Parole filed by eligible
entrepreneurs and related applications filed by eligible dependents
under this rule without sacrificing the quality of customer service for
all USCIS stakeholders. USCIS believes it will thus be able to
implement this rule in a manner that will avoid delays of processing
these and other applications.

II. Background

A. Discretionary Parole Authority

The Secretary of Homeland Security has discretionary authority to
parole into the United States temporarily ``under conditions as he may
prescribe only on a case-by-case basis for urgent humanitarian reasons
or significant public benefit any individual applying for admission to
the United States,'' regardless of whether the alien is inadmissible.
INA section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A).\7\ The Secretary's
parole authority is expansive. Congress did not define the phrase
``urgent humanitarian reasons or significant public benefit,''
entrusting interpretation and application of those

[[Page 5243]]

standards to the Secretary. Aside from requiring case-by-case
determinations, Congress limited the parole authority by restricting
its use with respect to two classes of applicants for admissions: (1)
Aliens who are refugees (unless the Secretary determines that
``compelling reasons in the public interest with respect to that
particular alien require that the alien be paroled . . . rather than be
admitted as a refugee'' under INA section 207, 8 U.S.C. 1157), see INA
section 212(d)(5)(B), 8 U.S.C. 1182(d)(5)(B); and (2) certain alien
crewmen during a labor dispute in specified circumstances (unless the
Secretary ``determines that the parole of such alien is necessary to
protect the national security of the United States''), INA section
214(f)(2)(A), 8 U.S.C. 1184(f)(2)(A).
---------------------------------------------------------------------------

\7\ Although section 212(d)(5) continues to refer to the
Attorney General, the parole authority now resides exclusively with
the Secretary of Homeland Security. See Matter of Arrabally, 25 I. &
N. Dec. 771, 777 n.5 (BIA 2012).
---------------------------------------------------------------------------

Parole decisions are discretionary determinations and must be made
on a case-by-case basis consistent with the INA. To exercise its parole
authority, DHS must determine that an individual's parole into the
United States is justified by urgent humanitarian reasons or
significant public benefit. Even when one of those standards would be
met, DHS may nevertheless deny parole as a matter of discretion based
on other factors.\8\ In making such discretionary determinations, USCIS
considers all relevant information, including any criminal history or
other serious adverse factors that would weigh against a favorable
exercise of discretion.
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\8\ The denial of parole is not subject to judicial review. See
INA section 242(a)(2)(B)(ii), 8 U.S.C. 1252(a)(2)(B)(ii); Bolante v.
Keisler, 506 F.3d 618, 621 (7th Cir. 2007).
---------------------------------------------------------------------------

Parole is not an admission to the United States. See INA sections
101(a)(13)(B), 212(d)(5)(A), 8 U.S.C. 1101(a)(13)(B), 1182(d)(5)(A);
see also 8 CFR 1.2 (``An arriving alien remains an arriving alien even
if paroled pursuant to section 212(d)(5) of the Act, and even after any
such parole is terminated or revoked.''). Parole may also be terminated
at any time in DHS's discretion, consistent with existing regulations;
in those cases, the individual is ``restored to the status that he or
she had at the time of parole.'' 8 CFR 212.5(e); see also INA section
212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A).\9\
---------------------------------------------------------------------------

\9\ The grounds for termination set forth in 212.19(k) are in
addition to the general grounds for termination of parole described
at 8 CFR 212.5(e).
---------------------------------------------------------------------------

DHS regulations at 8 CFR 212.5 generally describe DHS's
discretionary parole authority, including the authority to set the
terms and conditions of parole. Some conditions are described in the
regulations, including requiring reasonable assurances that the parolee
will appear at all hearings and will depart from the United States when
required to do so. See 8 CFR 212.5(d).
Each of the DHS immigration components--USCIS, U.S. Customs and
Border Protection (CBP), and U.S. Immigration and Customs Enforcement
(ICE)--has been delegated the authority to parole applicants for
admission in accordance with section 212(d)(5) of the INA, 8 U.S.C.
1182(d)(5). See 8 CFR 212.5(a). The parole authority is often utilized
to permit an individual who is outside the United States to travel to
and come into the United States without a visa. USCIS, however, also
accepts requests for ``advance parole'' by individuals who seek
authorization to depart the United States and return to the country
pursuant to parole in the future. See 8 CFR 212.5(f); Application for
Travel Document (Form I-131). Aliens who seek parole as entrepreneurs
under this rule may need to apply for advance parole if at the time of
application they are present in the United States after admission in,
for example, a nonimmigrant classification, as USCIS is unable to grant
parole to aliens who are not ``applicants for admission.'' See INA
section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A); see also INA section
235(a)(1), 8 U.S.C. 1225(a)(1) (describing ``applicants for
admission''). Advance authorization of parole by USCIS does not
guarantee that the individual will be paroled by CBP upon his or her
appearance at a port of entry.\10\ Rather, with a grant of advance
parole, the individual is issued a document authorizing travel (in lieu
of a visa) indicating ``that, so long as circumstances do not
meaningfully change and the DHS does not discover material information
that was previously unavailable, . . . DHS's discretion to parole him
at the time of his return to a port of entry will likely be exercised
favorably.'' \11\
---------------------------------------------------------------------------

\10\ See Matter of Arrabally, 25 I. & N. Dec. at 779 n.6 (citing
71 FR 27585, 27586 n.1 (May 12, 2006) (``[A] decision authorizing
advance parole does not preclude denying parole when the alien
actually arrives at a port-of-entry, should DHS determine that
parole is no longer warranted.'')).
\11\ Id.
---------------------------------------------------------------------------

Currently, upon an individual's arrival at a U.S. port of entry
with a parole travel document (e.g., a Department of State (DOS) foil,
Authorization for Parole of an Alien into the United States (Form I-
512L), or an Employment Authorization Document (Form I-766)), a CBP
officer at a port of entry inspects the prospective parolee. If parole
is authorized, the CBP officer issues an Arrival/Departure Record (Form
I-94) documenting the grant of parole and the length of the parolee's
authorized parole period. See 8 CFR 235.1(h)(2). CBP retains the
authority to deny parole to a parole applicant or to modify the length
of advance parole authorized by USCIS. See 8 CFR 212.5(c).
Because parole does not constitute an admission, individuals may be
paroled into the United States even if they are inadmissible under
section 212(a) of the INA, 8 U.S.C. 1182(a). Further, parole does not
provide a parolee with nonimmigrant status or lawful permanent resident
status. Nor does it provide the parolee with a basis for changing
status to that of a nonimmigrant or adjusting status to that of a
lawful permanent resident, unless the parolee is otherwise eligible.
Under current regulations, once paroled into the United States, a
parolee is eligible to request employment authorization from USCIS by
filing a Form I-765 application with USCIS. See 8 CFR 274a.12(c)(11).
If employment authorization is granted, USCIS issues the parolee an
employment authorization document (EAD) with an expiration date that is
commensurate with the period of parole on the parolee's Arrival/
Departure Record (Form I-94). The parolee may use this EAD to
demonstrate identity and employment authorization to an employer for
Form I-9 verification purposes as required by section 274A(a) and (b)
of the INA, 8 U.S.C. 1324a(a) and (b). Under current regulations, the
parolee is not employment authorized by virtue of being paroled, but
instead only after receiving a discretionary grant of employment
authorization from USCIS based on the Application for Employment
Authorization.
Parole will terminate automatically upon the expiration of the
authorized parole period or upon the departure of the individual from
the United States. See 8 CFR 212.5(e)(1). Parole also may be terminated
on written notice when DHS determines that the individual no longer
warrants parole or through the service of a Notice to Appear (NTA). See
8 CFR 212.5(e)(2)(i).

B. Final Rule

Following careful consideration of public comments received, DHS
has made several modifications to the regulatory text proposed in the
NPRM (as described above in Section I.C.). The rationale for the
proposed rule and the reasoning provided in the background section of
that rule remain valid with respect to these regulatory amendments.
Section III of this final rule includes a detailed summary and analysis
of public comments that are pertinent to the proposed rule and DHS's
role in

[[Page 5244]]

administering the International Entrepreneur Rule. A brief summary of
comments deemed by DHS to be out of scope or unrelated to this
rulemaking, making a detailed substantive response unnecessary, is
provided in Section III.K. Comments may be reviewed at the Federal
Docket Management System (FDMS) at http://www.regulations.gov, docket
number USCIS-2015-0006.

III. Public Comments on the Proposed Rule

A. Summary of Public Comments

In response to the proposed rule, DHS received 763 comments during
the 45-day public comment period. Of these, 43 comments were duplicate
submissions and approximately 242 were letters submitted through mass
mailing campaigns. As those letters were sufficiently unique, DHS
considered all of these comment submissions. Commenters consisted
primarily of individuals but also included startup incubators,
companies, venture capital firms, law firms and representatives from
State and local governments. Approximately 51 percent of commenters
expressed support for the rule and/or offered suggestions for
improvement. Nearly 46 percent of commenters expressed general
opposition to the rule without suggestions for improvement. For
approximately 3 percent of the public comments, DHS could not ascertain
whether the commenter supported or opposed the proposed rule.
DHS has reviewed all of the public comments received in response to
the proposed rule and addresses relevant comments in this final rule.
DHS's responses are grouped by subject area, with a focus on the most
common issues and suggestions raised by commenters.

B. Legal Authority

Comments. One commenter supported DHS's stated authority for
promulgating this regulation and said that the INA grants the Secretary
of Homeland Security the authority to establish policies governing
parole and that efforts to reduce barriers to entrepreneurship via
regulatory reform directly addresses DHS's mandate, ``to ensure that
the overall economic security of the United States is not diminished by
efforts, activities, and programs aimed at securing the homeland.'' On
the other hand, some commenters questioned DHS's authority to implement
this rule. A commenter asserted that the rule created a new visa
category which is under the exclusive purview of Congress, and
therefore an illegal extension of authority by the executive branch.
Another commenter indicated that the proposed rule is too vague
regarding whether ``the agency intends to grant parole to aliens
already present in the United States,'' and questioned whether the
proposed exercise of parole authority is supported by legislative
history, is consistent with the INA's overall statutory scheme, and
whether ``significant public benefit parole'' as outlined in this rule
is ``arbitrary and capricious.''
Response. DHS agrees with the commenter that contended that the
Secretary has authority to promulgate this rule. As noted above, DHS's
authority to promulgate this rule arises primarily from sections
101(b)(1)(F) and 402(4) of the HSA; sections 103(a)(1) and (3) of the
INA, 8 U.S.C. 1103(a)(1), (3); section 212(d)(5) of the INA, 8 U.S.C.
1182(d)(5); and section 274A(h)(3)(B) of the INA, 8 U.S.C.
1324a(h)(3)(B). The Secretary retains broad statutory authority to
exercise his discretionary parole authority based upon ``significant
public benefit.''
DHS disagrees with the comment asserting that the proposed rule
would effectively create a new visa category, which only Congress has
the authority to do. See INA section 101(a)(15), 8 U.S.C. 1101(a)(15)
(identifying nonimmigrant categories). Congress expressly empowered DHS
to grant parole on a case-by-case basis, and nothing in this rule uses
that authority to establish a new nonimmigrant classification. Among
other things, individuals who are granted parole--which can be
terminated at any time in the Secretary's discretion--are not
considered to have been ``admitted'' to the United States, see INA
sections 101(a)(13)(B), 212(d)(5)(A), 8 U.S.C. 1101(a)(13)(B),
1182(d)(5)(A); and cannot change to a nonimmigrant category as a
parolee, see INA section 248(a), 8 U.S.C. 1258(a). Nor does parole
confer lawful permanent resident status. To adjust status to that of a
lawful permanent resident, individuals generally must, among other
things, be admissible to the United States, have a family or
employment-based immigrant visa immediately available to them, and not
be subject to the various bars to adjustment of status. See INA section
245(a), (c), (k); 8 U.S.C. 1255(a), (c), (k); 8 CFR 245.1.
DHS further disagrees with the comment that this rule is
inconsistent with the legislative history on parole. Under current law,
Congress has expressly authorized the Secretary to grant parole on a
case-by-case basis for urgent humanitarian reasons or significant
public benefit. The statutory language in place today is somewhat more
restrictive than earlier versions of the parole authority, which did
not always require case-by-case review and now includes additional
limits on the use of parole for refugees and certain alien crewmen. See
INA section 212(d)(5)(B), 8 U.S.C. 1182(d)(5)(B) (refugees); INA
section 214(f)(2)(A), 8 U.S.C. 1184(f)(2)(A) (alien crewmen); Illegal
Immigration Reform and Immigrant Responsibility Act of 1996, Public Law
104-208, div. C, sec. 602(a)-(b), 110 Stat. 3009-689 (1996) (changing
the standard for parole). But the statute clearly continues to
authorize the granting of parole. Across Administrations, moreover, it
has been accepted that the Secretary can identify classes of
individuals to consider for parole so long as each individual decision
is made on a case-by-case basis according to the statutory criteria.
See, e.g., 8 CFR 212.5(b) (as amended in 1997); Cuban Family
Reunification Parole Program, 72 FR 65,588 (Nov. 21, 2007). This rule
implements the parole authority in that way.
In addition to the concerns described above, one commenter argued
that the proposed rule did not clearly explain whether ``the agency
intends to grant parole to aliens already present in the United
States.'' DHS believes it is clear under this rule that an individual
who is present in the United States as a nonimmigrant based on an
inspection and admission is not eligible for parole without first
departing the United States and appearing at a U.S. port of entry to be
paroled into United States. See INA sections 212(d)(5)(A), 235(a)(1); 8
U.S.C. 1182(d)(5)(A), 1225(a)(1). As further discussed in section
III.H. of this rule, moreover, DHS does not contemplate using this rule
to grant requests for parole in place for initial requests for parole.
Comment: A commenter objected to the extension of employment
authorization by this rule to entrepreneur parolees for the sole
purpose of engaging in entrepreneurial employment, stating that DHS is
barred from doing so given the comprehensive legislative scheme for
employment-based temporary and permanent immigration.
Response: DHS disagrees with the commenter. Under a plain reading
of INA section 103(a), 8 U.S.C. 1103(a), the Secretary is provided with
broad discretion to administer and enforce the Nation's immigration
laws and broad authority to ``establish such regulations . . . and
perform such other acts as he deems necessary for carrying out his
authority under the [INA],'' see INA section 103(a)(3), 8 U.S.C.
1103(a)(3). Further, the specific definitional

[[Page 5245]]

provision at section 274A(h)(3)(B) of the INA, 8 U.S.C. 1324a(h)(3)(B),
which was raised by the commenter, presumes that employment may be
authorized by the Secretary and not just by statute. See Arizona Dream
Act Coal. v. Brewer, 757 F.3d 1053, 1062 (9th Cir. 2014) (``Congress
has given the Executive Branch broad discretion to determine when
noncitizens may work in the United States.''); Perales v. Casillas, 903
F.2d 1043, 1048, 1050 (5th Cir. 1990) (describing the authority
recognized by INA 274A(h)(3) as ``permissive'' and largely
``unfettered''). The fact that Congress has directed the Secretary to
authorize employment to specific classes of foreign nationals in
certain statutory provisions does not diminish the Secretary's broad
authority under other statutory provisions to administer the
immigration laws, including through the extension of employment
authorization. See generally 8 CFR 274a.12 (identifying, by regulation,
numerous ``classes of aliens authorized to accept employment'').
C. Significant Public Benefit
Comment: One commenter stated that the quality of the jobs created
should be a factor in determining whether the entrepreneur's parole
will provide a significant public benefit. The commenter suggested
formalizing some form of priority criteria.
Response: Under this final rule, evidence regarding job creation
may be considered in determining whether to parole an individual into
the United States for ``significant public benefit.'' An entrepreneur
may be considered for an initial period of parole if the entrepreneur's
start-up entity has received a qualifying investment or grant.
Alternatively, if the entity has received a lesser investment or grant
amount, the entrepreneur may still be considered for parole by
providing other reliable and compelling evidence of the start-up
entity's substantial potential for rapid growth and job creation.
Evidence pertaining to the creation of jobs, as well as the
characteristics of the jobs created (e.g., occupational classification
and wage level) may be considered by DHS in determining whether the
evidence, when combined with the amount of investment, grant or award,
establishes that the entrepreneur will provide a significant public
benefit to the United States. As with initial parole determinations,
evidence pertaining to the creation of jobs, as well as the
characteristics of the jobs created (e.g., occupational classification
and wage level) may be considered by DHS to determine whether the
entrepreneur should be granted re-parole.
Given the way job creation will already be considered, DHS believes
it is unnecessary to make ``job quality'' its own separate criterion in
determining whether to grant parole or re-parole. It is also unclear
how the commenter believes DHS should apply any such criterion. Under
this final rule, DHS will evaluate the totality of the circumstances,
including the evidence about job creation, in determining whether to
parole an individual into the United States for significant public
benefit.

D. Definitions

1. Entrepreneur--Ownership Criteria
Comments: Several commenters expressed concern with the 15 percent
``substantial ownership interest'' requirement in the definition of
``entrepreneur'' in the proposed rule. One such commenter said the 15
percent ``substantial ownership interest'' requirement is only
reasonable for smaller startups and proposed that the rule also
separately include a dollar amount to satisfy the ``substantial
ownership interest'' requirement (e.g., 15 percent ownership interest
or ownership interest valued at $150,000 or more). Several commenters
recommended that the final rule reduce the initial parole threshold
from 15 to 10 percent and reduce the re-parole threshold from 10 to 5
percent. Other commenters suggested that 10 percent ownership per
individual would be a more appropriate threshold because some start-ups
may be founded by teams of founders that need to split equity and
requiring more than 15 percent ownership might be too restrictive and
limit business creativity and growth.
Response: Consistent with the commenters' concerns and suggestions,
DHS is revising the definition of entrepreneur in this final rule to
reduce the ownership percentage that the individual must possess. See 8
CFR 212.19(a)(1). Based on further analysis, DHS believes that the
thresholds from the proposed rule could have unnecessarily impacted an
entrepreneur's ability to dilute his or her ownership interest to raise
additional funds and grow the start-up entity. In this final rule, an
individual may be considered to possess a substantial ownership
interest if he or she possesses at least a 10 percent ownership
interest in the start-up entity at the time of adjudication of the
initial grant of parole and possesses at least a 5 percent ownership
interest in the start-up entity at the time of adjudication of a
subsequent period of re-parole. DHS believes that the revised ownership
percentage requirements in this final rule adequately account for the
possibility of equity dilution, while ensuring that the individual
continues to have a substantial ownership interest in, and assumes more
than a nominal financial risk related to, the start-up entity.
Given that this is a new and complex process, DHS declines to adopt
a separate option of establishing substantial ownership interest based
on a valuation of the entrepreneur's ownership interest. DHS believes
that the percentages provided within the final rule offer clear
guidance to stakeholders and adjudicators as to what constitutes a
substantial ownership interest regardless of the industry involved.
Reliance upon valuations of an owner's interest would unnecessarily
complicate the adjudicative review process, could potentially increase
fraud and abuse, and may be burdensome for the applicant to obtain from
an independent and reliable source. DHS, therefore, believes that the
best indicator of an entrepreneur's ownership interest is the
individual's ownership percentage since that is easy for an applicant
to establish and provides an objective indicator for DHS to assess. DHS
has decided to take an incremental approach and will consider potential
modifications in the future after it has assessed the implementation of
the rule and its impact on operational resources.
2. Other Comments on Entrepreneur Definition
Comment: One commenter stated that, in defining who counts as an
``entrepreneur,'' the rule should take into account whether an
individual has been successful in the past, including by having
previously owned and developed businesses, generated more than a
certain amount of revenue, created more than a certain number of jobs,
or earned at least a certain amount.
Response: Under this final rule, evidence regarding an
entrepreneur's track record may be considered in determining whether to
parole an individual into the United States for ``significant public
benefit.'' The final rule's definition of entrepreneur requires the
applicant to show that he or she both: (1) Possesses a substantial
ownership interest in the start-up entity, and (2) has a central and
active role in the operations of that entity, such that the alien is
well-positioned, due to his or her knowledge, skills, or experience, to
substantially assist the entity with the growth and success of its
business. See new 8 CFR 212.19(a)(1). Some of the factors suggested by
the commenter are

[[Page 5246]]

relevant evidence that the applicant can submit to show that he or she
is well-positioned to substantially assist the entity with the growth
and success of its business. DHS will also evaluate the totality of the
evidence to determine whether an applicant's presence in the United
States will provide a significant public benefit and that he or she
otherwise merits a favorable exercise of discretion. Given the way an
entrepreneur's track record may already be considered on a case-by-case
basis, DHS believes it is unnecessary to make the specific factors
identified by the commenter their own separate criteria in determining
whether to grant parole or re-parole.
Comment: A few commenters recommended that DHS clarify the term
``well-positioned'' as used in the definition of ``entrepreneur.'' See
final 8 CFR 212.19(a)(1) (requiring an international entrepreneur to
prove that he or she ``is well-positioned, due to his or her knowledge,
skills, or experience, to substantially assist the entity with the
growth and success of its business''). The commenters believe that the
proposed rule did not explain how an applicant would demonstrate that
he or she is ``well-positioned.'' The commenters recommend that the
``substantial ownership interest'' test in the same provision should
provide a rebuttable presumption that the entrepreneur is ``well-
positioned'' and that the ``significant capital financing''
requirements reflect the market demand for the entrepreneur to grow the
business.
Response: DHS believes that both the proposed rule and this final
rule sufficiently explain how an applicant may establish that he or she
is ``well-positioned'' to grow the start-up entity. An applicant may
generally establish that he or she is well-positioned to advance the
entity's business by providing evidence that he or she: (1) Possesses a
significant (at least 10 percent) ownership interest in the entity at
the time of adjudication of the initial grant of parole, and (2) has an
active and central role in the operations and future growth of the
entity, such that his or her knowledge, skills, or experience would
substantially assist the entity in conducting and growing its business
in the United States. Such an applicant cannot be a mere investor. The
applicant must be central to the entity's business and well-positioned
to actively assist in the growth of that business, such that his or her
presence would help the entity create jobs, spur research and
development, or provide other benefits to the United States. Whether an
applicant has an ``active and central role,'' and therefore is well-
positioned to advance the entity's business, will be determined based
on the totality of the evidence provided on a case-by-case basis. Such
evidence may include:
Letters from relevant government agencies, qualified
investors, or established business associations with an understanding
of the applicant's knowledge, skills or experience that would advance
the entity's business;
news articles or other similar evidence indicating that
the applicant has received significant attention and recognition;
documentation showing that the applicant or entity has
been recently invited to participate in, is currently participating in,
or has graduated from one or more established and reputable start-up
accelerators;
documentation showing that the applicant has played an
active and central role in the success of prior start-up or other
relevant business entities;
degrees or other documentation indicating that the
applicant has knowledge, skills, or experience that would significantly
advance the entity's business;
documentation pertaining to intellectual property of the
start-up entity, such as a patent, that was obtained by the applicant
or as a result of the applicant's efforts and expertise;
a position description of the applicant's role in the
operations of the company; and
any other relevant, probative, and credible evidence
indicating the applicant's ability to advance the entity's business in
the United States.
Particularly given the way this evidence will be evaluated on a
case-by-case basis, and the need to ensure parole is justified by
significant public benefit, DHS declines to adopt the commenters'
suggestion of adopting a rebuttable presumption that certain applicants
meet the ``well-positioned'' requirement. The burden of proof remains
with the applicant.
Comment: One commenter representing a group of technology companies
recommended that DHS add the term ``intellectual property'' as a metric
that an adjudicator would take into consideration when determining the
``active and central role'' that the international entrepreneur
performs in the organization. The commenter noted that it had several
member companies that have non-citizen inventors on a key patent
application, and have had core intellectual property developed by non-
citizens, often within the university environment. In many of these
situations, the non-citizen inventors were unable to obtain work
authorization and join the emerging startup company, resulting in loss
of key technical ability, delay, and additional cost for the startup
company to achieve market success. The commenter believes this rule
could alleviate this investment risk.
Response: As discussed above, an applicant for parole under this
rule may provide any relevant, probative, and credible evidence
indicating the applicant's ability to advance the entity's business in
the United States. Such evidence includes documentation pertaining to
intellectual property of the start-up entity, such as a patent, that
was obtained by the applicant or as a result of the applicant's efforts
and expertise. DHS will consider such evidence to determine whether the
applicant performs, or will perform, an active and central role in the
start-up entity.
Given the breadth of evidence that can already be considered in
these determinations, DHS declines to amend the definition of
``entrepreneur'' in 8 CFR 212.19(a)(1) to include some consideration of
``intellectual property'' as a specific metric to determine if the
applicant will have an active and central role in the start-up entity.
DHS believes it is appropriate to allow for sufficient flexibility in
the definition for adjudicators to evaluate each case on its own
merits. Given the considerable range of entrepreneurial ventures that
might form the basis for an application for parole under this rule, DHS
believes that such flexibility is important to ensure that cutting edge
industries or groundbreaking ventures are not precluded from
consideration simply because of an overly rigid or narrow definition of
``entrepreneur.''
Comment: One commenter noted that DHS's inclusion of criteria in
section IV.B.1. of the NPRM, ``Recent Formation of a Start-Up Entity,''
is reminiscent of criteria used in the O-1 nonimmigrant classification
for individuals with extraordinary ability, except for the focus on
entrepreneurial endeavors. The commenter especially welcomed the final
``catch-all'' that referenced ``any other relevant, probative, and
credible evidence indicating the entity's potential for growth.'' The
commenter asserted that as it pertains to ``newspaper articles,'' one
of the major difficulties of the O-1 petition process is the lack of
awareness by adjudicators of tech-press publications, such as Recode or
TechCrunch. The commenter explained that coverage in these publications
is very valuable to startups, and forcing startups to garner
traditional media coverage in publications like the Wall Street Journal
or the New York

[[Page 5247]]

Times is often counterproductive towards the entrepreneur's success.
Response: DHS agrees with the commenter that the list of evidence
provided in the preamble to the NPRM and this final rule provides an
illustrative, non-exhaustive list of the types of evidence that might
be submitted by an applicant to establish that he or she meets the
definition of entrepreneur in 8 CFR 212.19(a)(1). Applicants may submit
any relevant, probative and credible evidence that demonstrates the
entity's potential for growth, including tech-press publications.
Comment: One commenter recommended broadening the proposed
requirement that the parolee play a central role in operations. The
commenter noted that the DHS November 2014 memorandum,\12\ which
initially directed USCIS to develop a proposed rule under the
Secretary's parole authority, refers to researchers, not just managers
or founders. The commenter stated that in the technology world,
``technical founders'' are key employees who lead the research and
development phase, and recommended that these technical founders be
included even if they are not managing overall operations. To keep this
expansion targeted, the commenter recommended requiring a technical
founder to have an advanced degree in a STEM field from a U.S.
institution of higher education.
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\12\ Memorandum from Jeh Johnson, DHS Secretary, Policies
Supporting U.S. High-Skilled Business and Workers 4 (Nov. 20, 2014),
at https://www.dhs.gov/sites/default/files/publications/14_1120_memo_business_actions.pdf.
---------------------------------------------------------------------------

Response: DHS agrees that ``technical founders'' are often key
employees who play an important role in the development and success of
a start-up entity. DHS disagrees, however, with the commenter's
assertion that the definition of entrepreneur in 8 CFR 212.19(a)(1)
does not sufficiently encompass technical founders. Technical founders
can perform a central and active role in the operations of their start-
up entity, and may be well-positioned, due to their knowledge, skills,
or experience, to substantially assist the entity with the growth and
success of its business. The definition of ``entrepreneur'' is not
limited to those individuals who manage the overall operations of the
start-up entity. Thus, DHS believes it is unnecessary to broaden the
definition of ``entrepreneur'' in the way the commenter suggests.
Comment: One commenter suggested that the rule should provide a
clear-cut definition of a typical entrepreneur. This commenter asserted
that the draft rule does not adequately account for situations where a
typical entrepreneur partially qualifies or does not qualify for
parole, but nevertheless seeks to start a business in the United
States. The commenter stated that USCIS and the White House should plan
to have a separate case study team to evaluate each application.
Response: DHS believes that the rule provides a reasonable and
clear definition of an entrepreneur. This rule is not designed or
intended to provide parole to everyone who seeks to be an entrepreneur,
but will instead provide a framework for case-by-case determinations
based upon specified criteria for determining that a grant of parole in
this context provides a significant public benefit. The framework in
this rule is consistent with DHS's parole authority under INA section
212(a)(5), 8 U.S.C. 1182(a)(5), and is based on the statutory
authorization to provide parole for significant public benefit. Each
application for parole under this rule will be adjudicated by an
Immigration Services Officer trained on the requirements for
significant public benefit parole under 8 CFR 212.19. DHS believes that
a separate case-study team could unnecessarily complicate and delay
adjudications and declines to adopt the commenter's suggestion.
3. Definition of Start-Up Entity--``Recently-Formed'' and the 3-year
Limitation
Comment: Several commenters expressed concern with the definition
of ``start-up entity'' and the requirement that an entity, in order to
satisfy that definition, must have been created within the 3 years
immediately preceding the parole request filing date. A few individual
commenters said that the 3-year limitation could be inadequate in
certain situations, such as when investing in an inactive business with
other co-founders to initiate the start-up, or when investing in high-
priority areas like healthcare, biotechnology, and clean energy that
have long gestation times. A couple of individual commenters said that
the 3-year limitation may not be necessary given the other, more
stringent requirements in the proposed rule. Some commenters provided
the following recommendations relating to the 3-year limitation:
Eliminate the limitation, lengthen the period to 5 years, lengthen the
period to 10 years, or include a case-by-case provision allowing for
submissions that may satisfy the definition of ``start-up entity.'' One
commenter recommended that ``recently formed'' should include entities
formed within the last 10 years, and also requested that where
applicable, DHS accept alternative evidence to determine and establish
that the company is a ``start-up'' entity, such as letters of
attestation from investors, industry experts within a particular niche
field, and government agencies that speak to the average growth cycle
of a new company within a particular area. A few commenters stated that
the 3-year limitation was appropriate.
Response: In response to these comments, DHS revised proposed 8 CFR
212.19(a)(2) and the definition of ``start-up entity'' in this final
rule to require that the entity must have been formed within the 5
years immediately preceding the filing of the initial parole
application, rather than 3 years as proposed. DHS believes that this
definition appropriately reflects that some entities, particularly
given the industry in which the entity operates, may require a longer
gestation time before receiving substantial investment, grants, or
awards. This 5-year limitation continues to reflect the Department's
intention for parole under this final rule: To incentivize and support
the creation and growth of new businesses in the United States, so that
the country may benefit from their substantial potential for rapid
growth and job creation. DHS recognizes that the term ``start-up'' is
usually used to refer to entities in early stages of development,
including various financing rounds used to raise capital and expand the
new business, but the term ``goes beyond a company just getting off the
ground.'' \13\ Limiting the definition of ``start-up'' in this proposed
rule to entities that are less than 5 years old at the time the parole
application is filed is a reasonable way to help ensure that the
entrepreneur's entity is the type of new business likely to experience
rapid growth and job creation, while still allowing a reasonable amount
of time for the entrepreneur to form the business and obtain qualifying
levels of investor financing (which may occur in several rounds) or
government grants or awards.
---------------------------------------------------------------------------

\13\ U.S. Small Business Administration, Startups & High Growth
Businesses, available at https://www.sba.gov/content/startups...wth-businesses (``In the world of business, the word `startup'
goes beyond a company just getting off the ground.'').
---------------------------------------------------------------------------

4. Other Comments on the Definition of Start-up Entity
Comment: One commenter said that formation should be defined to be
either the creation of a legal entity under which the activities of the
business

[[Page 5248]]

would be conducted or the effective date of an agreement between the
entrepreneur and an existing business to launch the business activities
as a start-up, branch, department, subsidiary, or other activity of an
existing business entity. Another commenter suggested that DHS consider
restructuring (e.g., use successor-in-interest rules) and other pivots
(in terms of changes in the service or product, as well as markets)
during the 3-year period immediately preceding the filing of the parole
application and at time of application for re-parole.
Response: DHS appreciates the commenters' suggestions and notes
that recent formation within the definition of ``start-up entity'' in 8
CFR 212.19(a)(2) is already limited to the creation of the entity
within the 5 years immediately preceding the filing date of the alien's
initial parole request. DHS further declines to amend 8 CFR
212.19(a)(2) to broaden what may be considered ``recently formed'' to
include the effective date of an agreement between the entrepreneur and
an existing business to launch new business activities, restructurings
and other pivots. Given that this is a new and complex process, DHS has
decided to take an incremental approach and will consider potential
modifications in the future after it has assessed the implementation of
the rule and its impact on operational resources.
Comment: One commenter suggested that start-up entities under this
rule should be limited to businesses that fill a need that is currently
not being fulfilled in the United States.
Response: One of the goals of this final rule is to increase and
enhance entrepreneurship, innovation, and job creation in the United
States; and, under this rule, evidence regarding the expected
contributions of a start-up entity will be considered in determining
whether to parole an individual into the United States. A successful
start-up entity, particularly one with high-growth potential, will
fulfill an identified business need. For example, the entrepreneur may
be starting the business to alter an existing industry through
innovative products or processes, innovative and more efficient methods
of production, or cutting-edge research and development to expand an
existing market or industry. It is also unclear from the commenter's
suggestion how ``business need'' would be defined, and DHS believes
that attempting to do so in this rule could result in an overly
restrictive definition that fails to account for future innovation,
would be unnecessarily rigid, and would lessen the rule's ability to
retain and attract international entrepreneurs who will provide a
significant public benefit to the United States.
Comment: An individual commenter requested that staffing companies
be included as a type of startup.
Response: In this final rule, and for purposes of parole under this
program, DHS defines a ``start-up entity'' as a U.S. business entity
that was recently formed, has lawfully done business during any period
of operation since its date of formation, and has substantial potential
for rapid growth and job creation. See 8 CFR 212.19(a)(2). The rule
requires that entities meet certain specified criteria for obtaining
parole, but the rule does not specifically exclude staffing companies
from participating if they otherwise meet these criteria. DHS therefore
will not revise the definition of start-up entity in this rule as
requested by the commenter.
Comment: One commenter asserted that the rule fails to specify how
a start-up entity can demonstrate that it has ``lawfully done
business'' or ``has substantial potential for rapid growth and job
creation.'' The commenter recommended revising the definition to more
closely align with 8 CFR 214.2(l)(1)(ii)(G)(2) and (l)(1)(ii)(H) by
instead requiring evidence that the entity is or will be engaged in the
regular, systematic, and continuous provision of goods or services.
This commenter suggested that the submission of expert witness
testimony by a reputable third party, such as a recognized professor or
leader in the start-up entity's proposed field, should be given
deference and treated under the final rule as a rebuttable presumption
establishing that the start-up ``has substantial potential for rapid
growth and job creation.''
Response: DHS declines to adopt the commenter's suggested changes
in this final rule. DHS believes that an applicant can demonstrate the
start-up entity's lawful business activities through many different
means and will keep this requirement flexible to account for the many
differences among start-up entities. Such evidence might include, but
is not limited to, business permits, equipment purchased or rented,
contracts for products or services, invoices, licensing agreements,
federal tax returns, sales tax filings, and evidence of marketing
efforts.
DHS believes that the rule provides a clear framework for
establishing that a start-up entity has substantial potential for rapid
growth and job creation. See 8 CFR 212.19(b)(2)(ii) and (iii). An
applicant generally must satisfy the criteria in 8 CFR 212.19(b)(2)(ii)
to be considered for parole under this rule. An applicant who only
partially meets one or both of the criteria in 8 CFR 212.19(b)(2)(ii)
may still be eligible for consideration for parole under this rule if
the applicant provides additional reliable and compelling evidence that
the start-up entity has the substantial potential for rapid growth and
job creation. DHS recognizes that the rule does not provide specific
evidence that must be submitted in order to satisfy the alternative
criteria in 8 CFR 212.19(b)(2)(iii). DHS believes that providing a
specific set of evidence would have the unintended effect of narrowing
a provision that was designed to allow for the submission of any
evidence that the applicant believes may establish the substantial
potential of his or her start-up entity, recognizing that such evidence
may vary depending on the nature of the business and the industry in
which it operates. DHS believes that it is important to retain criteria
that provide flexibility to the applicant and DHS. Such flexibility is
consistent with DHS's parole authority and the case-by-case nature of
each parole determination as required by statute. See INA section
212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A).
DHS does not believe that the rule should be revised to align with
8 CFR 214.2(l)(1)(ii)(G)(2) and (l)(1)(ii)(H). The requirements set
forth in 8 CFR 214.2(l)(1)(ii)(G)(2) and (l)(1)(ii)(H) relate
specifically to eligibility for classification as an L-1 nonimmigrant
and are not necessarily relevant to the requirements set forth in this
rule, which are specifically designed to provide the framework by which
USCIS will determine whether to grant parole to certain individuals for
significant public benefit. Particularly given the way this evidence
will be evaluated on a case-by-case basis, and the need to ensure
parole is justified by significant public benefit, DHS declines to
adopt the commenters' suggestion of adopting a rebuttable presumption
that certain entities have substantial potential for rapid growth and
job creation. The burden of proof remains with the applicant.
5. Qualified Government Award or Grant
Comment: One commenter stated that the rule's grant-based criteria
for consideration focused too narrowly on awards made by government
entities The commenter noted that entrepreneurs seek grants from a
variety of sources and that funding from non-profits or not-for-profit
entities (such as U.S. universities) can be significant sources of
start-up capital. The

[[Page 5249]]

commenter requested that the rule be revised to allow entrepreneurs of
non-profit start-up entities to qualify for parole under this program
based on the receipt of charitable grants.
Response: DHS appreciates the commenter's suggestion, but declines
to adopt the suggestion in this final rule to include charitable grants
as a type of qualifying grant or award under 8 CFR 212.19(a)(3). DHS
believes, given the nature of charitable grants, that they would not
present the same level of validation regarding the entity's high-growth
potential as would a grant or award from a Federal, State, or local
government entity with expertise in economic development, research and
development, or job creation. Since the validating quality of a
substantial government grant or award is an important factor DHS will
rely upon to determine if the entrepreneur will provide a significant
public benefit to the United States, and since that same validating
quality does not necessarily extend to charitable grants or awards, DHS
declines to adopt the commenter's suggestion. DHS notes, however, that
nothing in this final rule prohibits entrepreneurs from accepting
charitable grants or pointing to such funding as evidence that parole
would be justified and that they merit a favorable exercise of
discretion. Moreover, given that this is a new and complex process, DHS
has decided to take an incremental approach and will consider potential
modifications in the future after it has assessed the implementation of
the rule and its impact on operational resources.
Comment: One commenter noted that the definition of qualified
government award or grant and the phrase ``federal, state, or local
government entity,'' are ambiguous as to whether an entrepreneur may
qualify under the rule based on a grant by a foreign government.
According to the commenter, the rule does not explicitly state that the
``federal, state, or local government entity'' needs to be restricted
to entities in the United States. The commenter encouraged USCIS to
adopt a broad approach in determining which kinds of grants may qualify
and to allow entrepreneurs to qualify if their start-up entity attracts
substantial foreign government financing. The commenter also suggested
that USCIS and CBP should again emphasize that parole may be
discretionarily denied in cases that could risk national security or
impair international relations.
Response: While DHS always maintains the ability to deny parole in
its discretion, including in those cases where there may be a national
security or foreign relations concerns, DHS declines to expand the
definition of qualified government grant or award to include grants or
awards from a foreign governmental entity. To eliminate potential
confusion, DHS is revising the definition as proposed to specifically
exclude foreign government entities. The receipt of significant funding
from certain U.S. federal, state or local government entities is an
important factor that DHS will weigh in determining if the entrepreneur
will provide a significant public benefit to the United States. DHS
believes that significant funding from certain U.S. federal, state or
local governmental entities is a strong indicator of a start-up
entity's substantial potential for rapid growth, including through
enhancing innovation, generating revenue, obtaining significant
additional investments of capital, and creating jobs. Such government
entities regularly evaluate the potential of U.S. businesses, so the
choice to provide a significant award or grant to a particular start-up
entity can be a compelling indicator of that start-up's substantial
potential for rapid growth and job creation. Because these government
entities are formed to serve the U.S. public, their choice to fund a
particular business may be more indicative than that of a foreign
government as to whether the business's operations would provide a
significant public benefit in the United States. DHS believes that the
reliability and weight of the independent assessment performed by
certain U.S. federal, state or local governmental entities before
issuing a grant or award does not necessarily extend to grants or
awards made by foreign governmental entities. DHS therefore declines to
adopt the commenter's suggestion to revise the rule to include funding
from foreign governmental entities as one of the criteria in 8 CFR
212.19(a)(3).
6. Qualified Investment
Comment: Some commenters suggested that DHS define ``capital''
broadly to include cash, cash equivalents, secured or unsecured loan
proceeds, payments for or obligations under binding leases, the value
of goods, equipment, and intangible property such as patent rights,
trademarks, trade secrets, and distinctive ``know how.''
Response: DHS declines to adopt the commenters' suggestions.
``Qualified investment'' as a general criterion for parole is limited
to a specific monetary investment in the form of equity or convertible
debt, to ensure that the investment is easily valued as well as
significant in nature. This promotes fair and efficient administration
of the process under this rule, while also ensuring the integrity of
that process. In addition, equity investments and convertible debt
investments both involve a distinctive level of expert review, due
diligence, and oversight. For example, according to the Small Business
Administration, venture capital firms and angel investors typically
review a business plan and evaluate a start-up's management team,
market, products and services, operating history, corporate governance
documents, and financial statements before making an equity
investment.\14\ Such investment generally also involves active
monitoring via board participation, strategic marketing, governance,
and capital structure.\15\ While non-monetary contributions made to a
start-up entity may not be considered as a qualified investment for
purposes of the general criteria of a parole determination under this
rule, the rule does not prohibit such contributions and they may be
considered as evidence under the alternative criteria at 8 CFR
212.19(b)(2)(iii) and (c)(2)(iii) to establish that the start-up entity
has, or continues to have, substantial potential for rapid growth and
job creation.
---------------------------------------------------------------------------

\14\ Venture Capital, https://www.sba.gov/starting-business/finance-your-business/venture-capital/venture-capital.
\15\ Id.
---------------------------------------------------------------------------

Comment: One commenter stated that the requirement that start-up
capital must be equity or convertible debt may be too limiting given
the venture finance markets today. The commenter said that other
investment instruments are commonly used by sophisticated market
participants, and that such investments might not technically be
considered equity or convertible debt even though they are bona fide
capital investments. The commenter recommended that the definition be
made ``future-proof'' by creating a catch-all for other investment
instruments that are convertible, exchangeable, or exercisable for
equity in the start-up, regardless of the name of the investment
instrument.
Response: DHS understands that the regulatory text may not capture
all possible future investment instruments and has amended the
regulatory text to capture other commonly used convertible securities
now and in the future. The final rule defines ``qualified investment''
as an investment made in good faith, and that is not an attempt to
circumvent any limitations imposed on investments under this section,
of lawfully derived capital in a start-up

[[Page 5250]]

entity that is a purchase from such entity of its equity, convertible
debt or other security convertible into its equity commonly used in
financing transactions within such entity's industry. DHS believes that
this definition, in practice, will apply to other securities
convertible into equity (other than convertible debt) that are or
become commonly used within the start-up entity's industry, and DHS may
issue additional guidance in the future regarding such securities as
necessary. Given that this program is new and complex, DHS has decided
to take an incremental approach and will consider potential
modifications in the future after it is able to assess implementation
of the rule and its impact on operational resources.
7. Qualified Investor
Comment: Several commenters, including associations and individual
commenters, stated that the proposed ``qualified investor'' definition
is more stringent than the ``accredited investor'' definition adopted
by the Securities and Exchange Commission (SEC). Several commenters
stated that many angel investors, especially newer investment firms and
angels, would not be considered ``qualified investors'' under this
rule. One of these commenters suggested revising the definition of a
qualified investor using the guidelines set forth by AngelList, which
requires all syndicate leads on their site to have registered as
accredited investors, to have made at least two direct investments in
technology start-ups, and to have attracted additional funding beyond
the syndicate lead. Some commenters generally stated that many
potentially high-growth firms started by international entrepreneurs
will not qualify for parole or re-parole because the business did not
receive an investment from a qualified U.S. investor, and encouraged
the rule to be more flexible to allow for additional sources of
capital.
Response: In response to comments received, DHS is revising
proposed 8 CFR 212.19(a)(5), which provides the definition of a
qualified investor. For purposes of this section, such an individual or
organization may be considered a qualified investor if, during the
preceding 5 years, the individual or organization made investments in
start-up entities in exchange for equity or convertible debt or other
security convertible into equity commonly used in financing
transactions within their respective industries comprising a total in
such 5-year period of no less than $600,000. See final 8 CFR
212.19(a)(5)(i). DHS has removed the proposed requirement that the
total investment amount be made in 3 separate calendar years and,
consistent with its analysis of relevant investment data, reduced the
amount from $1,000,000 to $600,000.\16\ DHS is also making revisions
consistent with the change to the qualified investment definition by
adding ``other securities that are convertible into equity issued by
such an entity and that are commonly used in financing transactions
within such entity's industry.'' DHS agrees with commenters that the
qualified investor requirement is more stringent than the SEC
``accredited investor'' definition, but believes the additional
parameters for qualified investors under the rule are appropriate. The
``accredited investor'' definition for SEC purposes is focused on the
investing entity's assets or the individual investor's net worth or
annual income,\17\ not on the investor's track record of successfully
investing in start-up entities. An investor's successful track record
of investing in start-up entities provides an important measure of
objective validation that DHS will rely upon as part of evaluating
whether granting parole to a particular individual would provide a
significant public benefit.
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\16\ To arrive at this level, DHS relied on the $250,000 median
seed round for active firms that successfully exited accelerators,
as is described more fully in in the ``Volume Projections''
subsection of the ``Statutory and Regulatory Requirements'' section
of this final rule notice. Second, DHS multiplied this figure by
2.4, which is an estimate of the average number of investments made
over a five-year period by qualified investors. DHS arrived at the
figure for average investments over five years using the following
methodology. DHS used the ``investor graph'' section of the Seed DB
data set to extract investment round information for investors that
have invested in various startup accelerators' portfolio companies.
The search engine is not set up in a manner in which random sampling
can be done, so DHS obtained data for nine accelerators chosen from
the 2016 Seed Accelerator Rankings project (SARP), the report of
which is found at: http://seedrankings.com/pdf/sarp_201...r_rankings.pdf. SARP ranks accelerators via a
composite scoring system based on various metrics, including funding
value averages and exit performance, and produces a list of the top-
rated accelerators, although there is no pre-set number of
accelerators that can appear in the ranking list each year. In the
2016 SARP report there were twenty-three Seed Accelerators ranked
out of a total of 160 that the program tracks. DHS was able to
extract investment round data from nine of the twenty-three SARP
ranked accelerators, for a total of about 3,600 individual
investment rounds. Next, DHS grouped these rounds for the five-year
period October 2011-November 2016 to result in 3,085 records. Next,
DHS removed duplicates to parse the list into records for unique
investor names. As a result, 1,329 unique investors remained.
Dividing the 3,085 by 1,329 investors yields an average of 2.4,
which DHS used as a reasonable estimate of the average number of
investments that qualified investors made in a five year period, at
least for the specific accelerators involved. DHS notes that there
are several caveats to this analysis. First, the data only includes
investments made through accelerators. If non-accelerator
investments were included, for which DHS could not obtain data, the
average would likely be higher. Second, some rounds did not include
an amount and some investor names appeared with variations. DHS
conducted several data runs based on different filtering techniques
and generally the range of average investments was between 2.32 and
2.5.
\17\ 17 CFR 230.501(a).
---------------------------------------------------------------------------

DHS also declines to adopt the investor track record criteria
associated with AngelList's requirements, as DHS believes that the past
success of qualified investors can be demonstrated sufficiently by
utilizing the criteria set forth in the final rule. DHS has maintained
the requirements under 8 CFR 212.19(a)(5)(ii) as evidence that the
investor has had previous successful investments, which are similar to
certain criteria for a start-up entity to demonstrate eligibility for
re-parole under this rule. See final 8 CFR 212.19(a)(5)(ii).
Comment: A joint submission from an advocacy group and a non-profit
organization proposed that DHS create a ``whitelist'' of qualified
investors and modify the rule such that any start-up receiving an
investment from a whitelisted investor proceed through an expedited
review process. The commenter said that this would both streamline the
parole process and diminish the burden on adjudicators to analyze the
merits of often complicated technology companies. The commenter said
that the qualification process for such an investor whitelist could be
significantly more robust than the rule's proposed definition of
``qualified investor'' and should be updated on an annual or biannual
basis. Another joint submission suggested the creation of a ``Known
Qualified Investor'' program, similar to the ``Known Employer'' pilot
program recently created by DHS in a different context, to assist the
overall adjudication process.
Response: DHS appreciates the commenters' suggestions. The Known
Employer program referenced by the commenter remains in a pilot stage.
DHS will assess the effectiveness of the Known Employer program after
the pilot is complete, and then determine whether the program should be
made permanent. If the program is successful, DHS will assess whether
it may be expanded to other adjudication contexts. Committing to use a
similar program in the context of this rulemaking would thus be
premature. DHS also declines to adopt the commenters' suggestion to
create a ``whitelist of qualified investors'' and an expedited process
for applications based on investment from such investors at this time.
Given that this is a new and

[[Page 5251]]

complex process, DHS has decided to take an incremental approach and
will consider potential modifications in the future after the
Department has assessed the implementation the process and its impact
on operational resources.
8. Evidence Required To Establish Qualified Investor
Comment: Several commenters expressed concern about the burden of
proving that investors have met the revenue and job creation criteria
in the definition of qualified investor, which the commenters said
could prevent investors from participating. One commenter stated that
early-stage investors usually do not keep records of employees or the
revenues of their portfolio companies, and that those companies would
not be inclined to respond to paperwork requests from their investors
that do not relate to their own success. Another commenter said that
some investors do not make their investments known publicly and the
vast majority of investors do not make public their returns (let alone
the number of jobs created). Another commenter said that the rule
should only require evidence of publicly available information,
concluding that it would be too invasive to require disclosure of
confidential employee data or other confidential financial information
of third-party companies that have no ties to the start-up entity
related to the parole applicant. A few commenters requested that DHS
allow venture capitalists, accelerators, and incubators to register so
that they would not be required to produce the evidence of their
qualifications with each parole application.
Response: DHS does not believe that providing evidence of revenues
generated or jobs created by entities in which the investor previously
invested is overly burdensome or would require the investor to publicly
reveal otherwise sensitive information. DHS believes, given the
significance of an investor's track record of successful investment in
start-ups to the determination of significant public benefit, that the
need for this evidence outweighs the potential burden on the applicant
and investor to compile and submit it. However, as DHS continues to
assess the implementation of the process once the rule is final, the
Department will consider potential ways to modify the process given the
kinds of issues raised by these comments.
9. Foreign Funding/Investment
Comment: Several commenters provided input on the proposed
requirement that ``qualified investor'' funds must come from either
U.S. citizens, lawful permanent residents, or entities that are
majority owned and controlled by U.S. citizens or lawful permanent
residents. Nearly all commenters on this topic expressed concerns about
this requirement as a major limiting factor of the rule. Some
commenters focused on the potential economic benefits of broadening the
definition of ``qualified investor'' to include foreign investment.
These commenters asserted that it would be economically beneficial to
allow non-U.S. investments, as there are many experienced investors
from outside the United States that could bring direct foreign
investment into the country and create jobs. Another commenter stated
that, by limiting qualification to domestic investors, DHS is foregoing
a critical opportunity to attract foreign entrepreneurs and their
investments.
Response: DHS disagrees with the assertion that this rule precludes
or otherwise discourages foreign investment. This rule does not
preclude entrepreneurs from seeking and obtaining investment from any
number of sources, whether that is foreign investment, personal funds,
or funds from friends and family. This rule, however, does limit the
types of investment that will be considered by DHS as a qualifying
investment for purpose of determining if the entrepreneur and his or
her start-up entity meet the requirements for consideration for parole
set out in 8 CFR 212.19. DHS believes it is important to limit the type
and source of investment that will be considered a qualifying
investment, since the investment is meant to serve in part as an
objective way to help ensure and validate that the start-up entity's
activities will benefit the United States. DHS does not believe
investments from foreign sources--which are significantly more
difficult for DHS to evaluate for legitimacy and screen for indicators
of fraud and abuse--would provide the same measure of objective
validation.
Comment: Multiple commenters stated that eligibility criteria
should focus exclusively on the location of the start-up entity and its
related growth and job creation, not on the citizenship and residence
of the investor. Some commenters stated that excluding foreign
investors from the definition of ``qualified investors'' is unduly
limiting, because many high-potential international entrepreneurs might
not have a pre-existing relationship with a U.S.-based investor.
Commenters state that such entrepreneurs, especially if living in other
countries, would have difficulty attracting investment from U.S.
investors and becoming eligible for parole under this rule. Another
commenter cited data concluding that foreign entrepreneurs currently
outside of the United States are at a particular disadvantage, as they
lack access to U.S.-based angel and venture funding.
Response: DHS agrees that the U.S. location of the start-up entity
and its related growth and job creation should be a critical component
of eligibility under this rule in order to help ensure the exercise of
parole is justified by significant public benefit to the United States.
DHS believes, however, that the ``qualifying investor'' must also be a
U.S. citizen or lawful permanent resident or an entity that is majority
owned or controlled by U.S. citizens or lawful permanent residents. DHS
can evaluate more rapidly, precisely, and effectively whether these
investors have an established track record of prior investments, in
part due to greater access to relevant and reliable records. Such
investors will also be subject to the laws of the United States, which
provides some additional assurance that the entrepreneurs they back
will provide a significant public benefit to the United States.
DHS is not prohibiting foreign investors from investing in the
entrepreneur's start-up entity, but rather is simply limiting those
investors that can serve as ``qualified investors'' for purposes of
establishing the entrepreneur's eligibility for parole under this rule.
DHS anticipates that entrepreneurs living outside the United States
will be able to demonstrate eligibility for parole consideration under
this rule, whether based on investment from U.S. investors, grants or
awards from certain U.S. Government entities, or a mixture of
alternative criteria. For all the reasons above, the definition of
``qualified investor'' will help DHS manage an efficient process for
adjudicating requests under this rule while appropriately screening for
potential fraud or abuse and ensuring that each grant of parole is
justified by significant public benefit to the United States.
Comment: Other commenters focused on specific ways that DHS might
allow applicants to use foreign investment to establish their
eligibility for parole consideration, including by limiting such
investment to the entrepreneur's country of origin, or to only those
foreign investors who do not present a national security concern. A few
commenters asserted that DHS has the capability to verify the bona
fides of foreign investors through, for example, the following
mechanisms: Making inquiries through U.S. embassy officials,

[[Page 5252]]

requesting resumes and the investment history for foreign angel
investors, requesting similar documentation used by EB-5 petitioners to
establish their lawful source of funds, and consulting publicly
available data on reputable foreign investors with a history of
successful investments in various countries. Some commenters provided
suggestions for alternative or revised definitions relating to foreign
investors that could remain easily verifiable by DHS, with the burden
being on the investor, including (1) professionally managed funds with
at least $10 million under management and registered with the local
jurisdiction, and (2) angel investors that have made credible
investments in U.S. companies under the same standards as U.S.
``qualified investors.'' Finally, an individual commenter expressed
concerns that even investments from U.S. sources could be suspect, and
could serve as a pass-through for ineligible investors such as the
entrepreneur's family or foreign nationals.
Response: While DHS understands that international entrepreneurs
can attract legitimate investment capital from non-U.S. sources, DHS
believes--as explained at greater length above--that it is appropriate
and important to require that a ``qualified investment'' come from a
U.S. source as one of the general criteria to establish that the start-
up entity has the substantial potential for rapid growth and job
creation. DHS is prepared to monitor the bona fide nature of such U.S.-
based investments, as described in greater detail above. Moreover, the
rule neither precludes an applicant from securing funding from non-U.S.
sources nor precludes such funding from being considered, non-
exclusively, under the alternative criteria at 8 CFR 212.19(b)(2)(iii)
or (c)(2)(iii). Given that this is a new and complex process, DHS will
consider potential modifications in the future after it has assessed
the implementation of the rule and its impact on operational resources.
10. Self-Funding/``Bootstrapping''
Comment: Several commenters argued that entrepreneurs should be
able to demonstrate eligibility for parole under this rule not only
through funding from U.S. investors or U.S. Government entities, but
also through self-financing (known as ``bootstrapping''). One commenter
noted that many highly successful start-up founders initially grew
their companies through bootstrapping, not by raising capital from
external investors.
Response: DHS declines to expand the definition of ``qualified
investment'' to include self-funding by the entrepreneur applicant. DHS
believes that this definition should include only those investors who
have a history of making similar investments over a 5-year period and
who can demonstrate that at least two of the entities receiving such
investments have subsequently experienced significant growth in revenue
or job creation. See final 8 CFR 212.19(a)(5). DHS believes that the
investment of a substantial amount of capital by qualified investors in
an entrepreneur's start-up entity can serve as a strong indication of
the entity's substantial and demonstrated potential for rapid business
growth and job creation. Self-funding, while a rational financing
strategy for many entrepreneurs, does not provide the same objective
and external validation that DHS requires in assessing whether granting
parole to an individual is justified based on significant public
benefit.
11. Other Comments on Qualified Investors
a. Crowdfunding
Comment: Several commenters stated that the rule should allow
crowdfunding as a qualified investment. These commenters noted that
entrepreneurs have raised over a billion dollars in investments through
various types of crowdfunding platforms, which serve to broaden the
base of available investors and demonstrate a venture's potential
growth. Commenters also cited the Jumpstart Our Business Startups Act
(JOBS Act) of 2012, which created a national regulatory framework for
securities-based crowdfunding platforms in particular, along with
public statements suggesting that securities-based crowdfunding is
recognized by Congress and the Administration as a valuable and
increasingly-used investment tool. One commenter also stated that
allowing the use of crowdfunding platforms would increase the pool of
potential applicants for entrepreneurial parole and could provide a
workable intermediary for foreign investment in eligible start-up
entities. One commenter suggested potential requirements that would
facilitate the use of crowdfunding investment sources, such as setting
a threshold amount for eligible crowdfunding investments and confirming
that such investments have been deposited in the start-up entity's bank
account after the end of the crowdfunding campaign.
Response: DHS appreciates the commenters' suggestions. Investments
made in a start-up entity through an SEC-compliant intermediary, such
as an SEC-compliant crowdfunding platform, will be treated no
differently for purposes of this rule than had the investments been
made directly. In order to promote the integrity of adjudications under
this rule, DHS declines to make changes to the definition of
``qualified investor'' that would effectively treat funds generated
through crowdfunding platforms as a different class of eligible
investment. DHS notes, however, that evidence of a successful donation-
based or securities-based crowdfunding campaign could be provided under
the rule's alternative eligibility criteria.
b. Established U.S. Investors
Comment: One commenter questioned the requirement that capital be
received ``from established U.S. investors (such as venture capital
firms, angel investors, or start-up accelerators) with a history of
substantial investment in successful start-up entities.'' The commenter
stated that the requirement increases the relative bargaining power of
established investors working with entrepreneurs seeking parole under
this rule, while diminishing that of new venture capital firms, new
angel investors, and new start-up accelerators. The commenter stated
that if it is kept in its current form, the rule is not clear whether
an investment from a non-established investor would jeopardize the
parole eligibility of an entrepreneur whose start-up entity is also
funded by established investors.
Response: The definition of ``qualified investor, including the
requirement that an investor have a history of substantial investment
in successful start-up entities, is intended to help ensure that such
investors are bona fide and not concealing fraud or other illicit
activity--and thus protect the integrity of the parole process under
this rule. The definition is also intended to ensure that a qualifying
investment serves as a strong and reliable indicator of the start-up
entity's substantial potential for rapid growth and job creation, which
is relevant to assessing whether granting parole to an entrepreneur is
justified by significant public benefit.
DHS emphasizes that the rule does not prohibit investment from U.S.
investors who do not have an established track record of substantial
investment in start-up entities under the rule's definition of
``qualified investor.'' Any investment from an investor who is not a
qualified investor, however, will not count toward the minimum
investment criteria associated with the initial parole period or re-
parole period. DHS will, of course, monitor all

[[Page 5253]]

elements of an application for evidence of fraud or other illegal or
illicit activities. It will also assess the totality of the evidence in
evaluating whether granting parole to an entrepreneur is justified by
significant public benefit.
c. Approved Regional Centers
Comment: One commenter requested that USCIS-approved Regional
Centers (based on an approved Form I-924) be allowed to qualify as
established U.S. investors. The commenter stated that investment by a
Regional Center in a U.S. start-up entity would be a natural extension
of what Regional Centers already do, since Regional Centers pool
investment for qualified EB-5 visa projects.
Response: DHS believes it is important to limit qualifying
investors to those who have an established record of successful
investments in start-up entities. DHS believes that such a record would
include, during the 5-year period immediately preceding the filing of
the parole application, one or more investments in other start-up
entities in exchange for equity or convertible debt comprising a total
of no less than $600,000. See final 8 CFR 212.19(a)(5)(i). DHS will
require monetary commitments, rather than non-monetary commitments such
as credit for in-kind value (e.g., credit for services), given the
difficulty of valuing such commitments and the potential for fraud and
abuse. The applicant would also need to show that, subsequent to such
investment by the investor, at least 2 such entities each created at
least 5 qualified jobs or achieved at least $500,000 in revenue with
average annualized revenue growth of at least 20 percent. See final 8
CFR 212.19(a)(5)(ii).
As described in greater detail above, these criteria are intended
to ensure that investors are bona fide and thus protect the integrity
of the parole process under this rule. They are also intended to ensure
that a qualifying investment serves as a strong and reliable indicator
of the start-up entity's substantial potential for rapid growth and job
creation, which is relevant to assessing whether granting parole to an
entrepreneur is justified by significant public benefit. DHS declines
to adopt a special provision for regional centers approved to
participate in the EB-5 visa program. Although such centers are not
categorically excluded from the definition of ``qualified investor''
under this rule, they would need to meet all the same criteria as any
other qualified investor.
12. Qualified Jobs
a. Qualifying Employee
Comments: Two commenters recommended that DHS broaden the
definition of the term ``qualifying employee.'' One commenter stated
that the term should include any individual authorized to work in the
United States, regardless of immigration status, to avoid creating a
conflict for employers who are prohibited from discriminating based on
an individual's citizenship or immigration status. Another commenter
advocated for the inclusion of independent contractors in the
definition of qualifying employee.
Response: DHS declines to expand the definition of qualifying
employee, which already includes a U.S. citizen, a lawful permanent
resident, or other immigrant lawfully authorized to be employed in the
United States, who is not an entrepreneur of the relevant start-up
entity or the parent, spouse, brother, sister, son, or daughter of such
an entrepreneur. See final 8 CFR 212.12(a)(7). DHS believes that
creating jobs for these individuals is more likely to provide a
significant public benefit given their stronger ties to the United
States. Similarly, DHS believes that entrepreneurs and start-up
entities that create positions for employees are more likely to provide
a significant public benefit than those who rely only on arrangements
with independent contractors. Such arrangements would generally have a
weaker nexus to the start-up entity, may not have been created as a
direct result of the start-up entity's activities, and could be more
difficult to validate. Nothing in this rule either supersedes or
conflicts with nondiscrimination laws enacted under the Immigration
Reform and Control Act (IRCA).\18\ Under existing law, it would
generally be an unfair immigration-related employment practice for an
entity to discriminate against someone authorized to work in the United
States because of that person's national origin or, in the case of a
``protected individual,'' citizenship status. See 8 U.S.C. 1324b(a)
(generally prohibiting such practices, subject to specific exceptions,
and defining ``protected individual'' to include U.S. citizens, lawful
permanent residents, and certain other immigrants). This rule does not
permit any such otherwise prohibited practices. Instead, it uses the
creation of jobs for U.S. citizens, permanent residents, and other
authorized immigrants as one indication of the benefit created by an
entrepreneur's start-up entity.\19\
---------------------------------------------------------------------------

\18\ Public Law 99-603 section 102, 100 Stat. 3359 (Nov. 6,
1986); INA section 274B.
\19\ It is important to note that job creation during the
initial period of parole is not the only way to demonstrate the
start-up entity's continued substantial potential for rapid growth
and job creation. See final 8 CFR 212.19(c)(2)(ii)(A),
(c)(2)(ii)(C), and (c)(2)(iii).
---------------------------------------------------------------------------

b. Full-Time Employment
Comments: Several commenters said that the rule should have a more
flexible definition of ``full-time employment.'' One commenter said
that the definition of the term should not require the job to be filled
for at least a year and should include job-sharing arrangements.
Another commenter recommended that the definition of full-time
employment include combinations of part-time positions.
Response: DHS declines to expand the definition of full-time
employment to include jobs filled for less than a year by a qualifying
employee, job-sharing arrangements, and combinations of part-time jobs.
DHS believes that the creation of long-term and full-time positions is
a more reliable indicator that an entrepreneur's start-up entity is
continuing to yield significant public benefit. Jobs filled for less
than a year could be temporary or seasonal, thus limiting the duration
and impact of the benefit. Additionally, including job-sharing or
combinations of part-time positions could significantly complicate
adjudications. The final rule, moreover, already reduces by half the
threshold number of jobs to qualify for a re-parole period, making it
all the more reasonable to require that each of such jobs be full-time
positions as part of the criteria for ensuring that granting parole to
an international entrepreneur is justified by significant public
benefit.\20\
---------------------------------------------------------------------------

\20\ As explained earlier, job creation during the initial
period of parole is not the only way to demonstrate the start-up
entity's continued substantial potential for rapid growth and job
creation. See final 8 CFR 212.19(c)(2)(ii)(A), (c)(2)(ii)(C), and
(c)(2)(iii).
---------------------------------------------------------------------------

13. Material Change
Comment: One commenter recommended that the final rule expressly
exempt from the definition of ``material change'' transitions that are
typical within start-ups, such as a company's (1) pivoting its products
or services; (2) bringing on board a significant round of funding that
could dilute the entrepreneur's ownership interest; (3) changing the
role of a founder to meet the needs of the growing company; or (4) by
virtue of a foreseeable stock or asset acquisition, executing a merger
into or with a related or unrelated entity, or some other form of
corporate restructuring. A few

[[Page 5254]]

commenters recommended that DHS clarify what constitutes a ``material
change'' given the rapidly evolving nature of start-ups.
Response: DHS appreciates the concerns expressed by commenters
regarding the material change definition in the NPRM. This final rule
reflects changes that help clarify what constitutes a material change,
with the understanding that start-up entities are likely to experience
a variety of transitions as part of their legitimate development and
growth. DHS disagrees, however, that all of the events listed by
commenters should be specifically exempted from the definition of
material change. Some changes to the start-up entity can clearly impact
the determination of whether the entrepreneur provides, or will
continue to provide, a significant public benefit to the United States.
It is essential to the rule's integrity that such material changes are
clearly defined and reported to DHS. In the final rule, DHS has
outlined those changes that DHS believes are critical to the continuing
eligibility of the entrepreneur to be granted parole based on a
significant public benefit to the United States. Specifically, the
final rule maintains that the following changes are material: Any
criminal charge, conviction, plea of no contest, or other judicial
determination in a criminal case concerning the entrepreneur or start-
up entity; any complaint, settlement, judgment, or other judicial or
administrative determination concerning the entrepreneur or start-up
entity in a legal or administrative proceeding brought by a government
entity; any settlement, judgment, or other legal determination
concerning the entrepreneur or start-up entity in a legal proceeding
brought by a private individual or organization other than proceedings
primarily involving claims for damages not exceeding 10 percent of the
current assets of the entrepreneur or start-up entity; a sale or other
disposition of all or substantially all of the start-up entity's
assets; the liquidation, dissolution, or cessation of operations of the
start-up entity; and the voluntary or involuntary filing of a
bankruptcy petition by or against the start-up entity. DHS has revised
the definition of ``material change'' to include the cessation of the
entrepreneur's qualifying ownership interest in the start-up entity.
DHS recognizes that not all changes to the ownership structure of a
start-up entity constitute a change of such significance that it would
reasonably affect the outcome of the determination of whether the
entrepreneur provides, or continues to provide, a significant public
benefit to the United States. DHS has revised the final rule to limit
material change regarding ownership changes only to ``a significant
change with respect to ownership and control of the start-up entity.''
For example, a significant change with respect to ownership and control
of the start-up entity may include a transfer of equity in the start-up
entity that results in an owner or owners not previously identified on
the Application for Entrepreneur Parole (Form I-941) collectively
acquiring a controlling stake in the entity. DHS recognizes that
achieving a significant round of funding for the start-up entity during
the initial parole period may often constitute the very qualifying
investment that renders the entrepreneur eligible for a re-parole
period under this rule's significant public benefit test, despite
diluting the entrepreneur's ownership interest. While DHS will make
these determinations on a case-by-case basis, DHS does not anticipate
that such significant changes with respect to ownership and control of
the start-up entity will often result in termination of parole. A full
vetting of new investors with a significant ownership interest,
however, can provide DHS with additional insights into the start-up
entity's activities in the United States and will help DHS ensure the
entrepreneur is continuing to provide a significant public benefit to
the United States. In the future, DHS may issue additional guidance on
the scope of such significant changes in ownership interest if deemed
necessary.
DHS believes these changes are sufficient to clarify the definition
of ``material change'' in regulation and to provide entrepreneurs with
sufficient detail about the kinds of changes that could impact their
eligibility and must be reported. Given that this is a new and complex
process, DHS will consider potential modifications in the future after
it has assessed the implementation of the rule and its impact on
operational resources.

E. Application Requirements

1. Application for Entrepreneur Parole
Comments: One commenter supported the Application for Entrepreneur
Parole (Form I-941), and called it ``ideal'' because without the form
applicants must attempt to list information on existing application
forms that do not specifically relate to entrepreneurs. Another
commenter requested that the application process resemble the Canadian
express entry immigration system and be simplified so that the
assistance of an attorney is not required.
Response: DHS agrees with the comment that the Form I-941 is
beneficial for capturing information specific to parole requests filed
under this rule. DHS declines to model the application process for
parole under this rule after the Canadian express entry program as that
program is a points system designed to manage applications for
permanent residence under certain Canadian federal economic immigration
programs.\21\ DHS has attempted to develop the Form I-941 to be as
simple as possible for applicants while capturing sufficient
information to enable adjudicators to make appropriate case-by-case
decisions under the statutory and regulatory requirements for parole.
---------------------------------------------------------------------------

\21\ http://www.cic.gc.ca/english/express-entry/.
---------------------------------------------------------------------------

2. Submissions of Documentary/Supporting Evidence
Comment: Two commenters expressed concern that the evidentiary
requirements were excessive and that start-up entities operating in
``stealth-mode'' would not be able to provide letters or media
articles. Both commenters suggested that evidence of a significant
capital investment from a qualified investor should be sufficient to
demonstrate the potential for rapid growth and job creation.
Response: As an initial matter, DHS recognizes there may be
legitimate reasons for operating a start-up in a manner that does not
attract significant public attention. In part for this reason, this
final rule extends the definition of start-up entity to include
entities formed within the 5 years immediately preceding the filing
date of the applicant's initial parole request. DHS believes that
start-up entities that are seeking to operate without significant
public attention will generally have sufficient time to emerge from
that status prior to the parole application.
DHS agrees with the commenters that evidence of having received
substantial investment from a qualified investor may be sufficient to
establish that the start-up entity has the potential for rapid growth
and job creation (one factor in making parole determinations under this
rule). See 8 final CFR 212.19(b)(2)(ii)(B)(1). DHS understands that
other evidence that may be required to establish eligibility for parole
consideration under this rule, including whether the applicant is well-
positioned to advance the entity's business, may not be a matter of
public record. DHS believes, however, that even an entrepreneur
operating a company in

[[Page 5255]]

``stealth mode'' should generally be able to provide such evidence for
purposes of satisfying the requirements of this rule. Indeed, for
entrepreneurs to be paroled under this rule, they must persuade
adjudicators, based on the totality of the evidence, that they will
provide a significant public benefit.
3. Application Requirements of Spouses and Minor Children
Comment: DHS received a few comments supporting the provision in
the proposed rule allowing the spouse and children of an entrepreneur
granted parole under this rule to also apply for and be granted parole
in the United States in order to accompany or ultimately join the
entrepreneur. One commenter also supported the proposal to allow the
spouse, if granted parole, to obtain employment authorization in the
United States in order to work and help support the entrepreneur's
family.
Response: DHS agrees with these comments. Each spouse or child
seeking parole must independently establish eligibility for parole
based on significant public benefit (or, alternatively, for urgent
humanitarian reasons), and that the individual merits a favorable
exercise of discretion. In a case in which an entrepreneur has been
granted parole based on significant public benefit under this rule, DHS
may consider granting parole to the entrepreneur's spouse and children
who provide a significant public benefit by maintaining family unity
and thereby further encouraging the entrepreneur to operate and grow
his or her business in the United States--and to provide the benefits
of such growth to the United States.
Under this final rule, spouses of entrepreneur parolees who wish to
obtain employment authorization must apply for an EAD pursuant to 8 CFR
274a.12(c)(34), consistent with current parole policy that allows
parolees to apply for employment authorization. DHS agrees with the
commenter that allowing spouses of entrepreneurs to apply for work
authorization may alleviate a significant portion of the potential
economic burdens that entrepreneurs and their families may face, such
as paying for education expenses for their children, and to ensure that
they satisfy the condition on their parole that they maintain household
income that is greater than 400 percent of the Federal poverty line, as
they grow and develop their start-up entities. Moreover, extending
employment authorization to the spouse may further incentivize an
international entrepreneur to bring a start-up entity to the United
States--along with new jobs, innovation, and growth--rather than create
it in another country.
4. Other Comments on Application Requirements
Comment: One commenter asked that DHS clarify the application
procedures for Canadians and whether they may apply at the border or
whether they must visit a U.S. consulate prior to requesting to be
paroled at a U.S. port of entry.
Response: Canadians and applicants from other countries may apply
for parole under this rule while inside or outside of the United
States. If the applicant's parole request is approved, the applicant
would request to be paroled by Customs and Border Protection at a U.S.
port of entry after arriving from outside the United States. Canadian
nationals who will be appearing at a U.S. port of entry directly from
Canada will not have to visit a U.S. consulate prior to appearing at
the port of entry and requesting that CBP grant parole. Canadian
nationals who will not be appearing at a U.S. port of entry directly
from Canada, and will instead be travelling to the United States from
another country abroad to request a grant of parole may, similar to
other applicants, have to visit a U.S. consulate first in order to
obtain travel documentation (e.g., a boarding foil) that allows the
individual to travel to a U.S. port of entry. In all cases, however,
the individual must have an approved Form I-941 before the individual
may appear at the port-of-entry to request a grant of parole.

F. Parole Criteria and Conditions

1. Minimum Investment
Comment: Numerous commenters--including advocacy groups, law firms,
associations, and individual commenters--argued that the proposed
rule's minimum investment criterion for the initial parole period would
set too high an eligibility bar for many high-potential entrepreneurs.
Citing a range of different kinds of evidence, several commenters
argued that the proposed $345,000 threshold represented significantly
more capital than is actually needed by most start-ups initially and
would unnecessarily exclude from consideration some entrepreneurs whose
entities would create significant public benefit in the United States.
Response: In response to public comments, DHS is reducing the
proposed minimum investment of $345,000 to $250,000 in the final rule.
See 8 final CFR 212.19(b)(2)(ii)(B)(1). Multiple public comments
recommended setting the threshold at $250,000, and DHS's further
analysis of seed and angel investment data indicates that this level is
reasonable. As is described more fully in the ``Volume Projections''
subsection of the ``Statutory and Regulatory Requirements'' section of
this final rule, DHS's analysis of investments received by a set of new
firms that graduated from startup accelerator programs revealed that
the median seed investment was $250,000.\22\ Following the intent of
this final rule to increase and enhance entrepreneurship, innovation,
and job creation in the United States, DHS determined that investment
amounts that entrepreneurs would need to meet to be considered for
parole under this rule should be more in line with typical early
investment rounds, rather than the higher investment levels typical of
later rounds. In each individual case, DHS must be persuaded that
granting parole would provide a significant public benefit and that the
person requesting parole merits a favorable exercise of discretion.
---------------------------------------------------------------------------

\22\ The data utilized by DHS is provided publicly by SeedDB:
http://seed-db.com/accelerators, as well as the Angel List: https://angel.co/, and the Angel Capital Association (ACA): https://www.angelcapitalassociation.org/.
---------------------------------------------------------------------------

Comment: One commenter stated that there should not be a minimum
investment amount and suggested that the rule instead establish minimum
revenue amounts. Several other commenters suggested that evidence of
rapid revenue growth should be a standalone eligibility criterion for
the initial parole period under 8 CFR 212.19(b)(2)(ii).
Response: DHS disagrees with the suggestion that there should not
be a minimum investment amount. Establishing a minimum investment
amount based on available data provides a clear and predictable
benchmark for how an applicant may demonstrate that a start-up entity
has substantial potential for rapid growth and job creation (one factor
in making parole determinations under this rule). If international
entrepreneurs are unable to meet the threshold investment amount but
have received some qualified investments or qualified government awards
or grants, they may alternatively qualify for parole consideration
under this rule if they partially meet the threshold criteria and
provide ``other reliable and compelling evidence of the start-up
entity's substantial potential for rapid growth and job creation.'' See
final 8 CFR 212.19(b)(2)(iii).

[[Page 5256]]

DHS disagrees with the suggestion that evidence of rapid revenue
growth or generation of a certain amount of revenue should be a
separate criterion under 8 CFR 212.19(b)(2)(ii). In setting threshold
criteria, DHS intends to identify reliable indicators of a start-up
entity's substantial potential for rapid growth and job creation and,
ultimately, of the significant public benefit that a grant of parole
would provide in an individual case. DHS does not believe that revenue
should be the sole external validation factor as compared to
substantial funding from qualified U.S. investors and government
entities for initial parole applications. DHS reiterates, however, that
a start-up entity's revenue may be taken under consideration, both
under the ``alternative criteria'' test and as part of the totality of
evidence relevant to whether the grant of parole in an individual case
would be justified by significant public benefit and the person
requesting parole deserves a favorable exercise of discretion. See 8
CFR 219.2(b)(2)(iii), 219.2(c)(2)(B)(iii).
Comment: Several individual commenters recommended that the
investment threshold be based upon the type of business activity.
Response: In an effort to provide a reasonable level of simplicity
and predictability in the final rule, DHS decided to utilize a single
investment threshold rather than several amounts based on the type of
business activity. DHS believes that determining multiple investment
thresholds based on business activity or industry would be unduly
complicated, making adjudications more labor-intensive and increasing
processing times. DHS believes that using a single investment
threshold, backed by available data, is a reasonable approach and
provides a clearer benchmark for applicants, investors, and
adjudicators.
Comment: Some commenters provided input on the requirement that
funding be received within the preceding 365 days. A CEO roundtable
agreed that the $345,000 threshold was an appropriate amount, but
questioned the 365-day requirement, recommending that the rule be
changed to require that only 65 percent of the investment to have
occurred within the last 365 days. A trade association and a joint
submission from a professional association and a non-profit
organization recommended that the investment occur within a 3-year
window. As an alternative, the trade association stated that some of a
start-up entity's capital that would otherwise count toward the
qualified investment amount should do so even if its ultimate receipt
by the start-up entity is contingent upon the approval of parole.
Response: DHS is revising the proposed requirement that the
substantial investment be received within the 365 days immediately
preceding the filing of the application for initial parole. The final
rule increases this period from 12 months (365 days) to 18 months. DHS
made this change based on feedback that it often takes longer than 12
months for a start-up to secure and receive investment funding. This
revised requirement still ensures that a qualified investor or
government entity has recently validated (within 18 months) the start-
up entity's potential for rapid growth and job creation. With respect
to the comment suggesting that DHS accept funding contingent upon
approval of parole toward the qualified investment amount, DHS believes
that funds contingent on the occurrence of a future event, such as a
grant of parole to the entrepreneur, would not satisfy the general
criteria in 8 CFR 212.19(b)(2)(ii). DHS notes, however, that such funds
may be considered under the alternative criteria in 8 CFR
212.19(b)(2)(iii) if the entrepreneur partially meets one or both of
the criteria in 8 CFR 212.19(b)(2)(ii)(B), since DHS may consider such
contingent funds as other reliable and compelling evidence of the
start-up entity's substantial potential for rapid growth and job
creation. Given that this process is a new and complex one, DHS has
decided to take an incremental approach and will consider the suggested
modification in the future after assessing the implementation of the
rule and its impact on operational resources.
2. Minimum Government Grants or Awards
Comment: Several commenters argued that DHS should require less
than $100,000 to meet the eligibility criteria based on a start-up
entity's receipt of government grants and awards. An individual
commenter said that most government grants were well beneath the
$100,000 minimum threshold in the proposed rule. Another individual
commenter recommended a $50,000 government grant threshold. By
contrast, one commenter stated that the $100,000 minimum investment for
government grants and awards is too low to start a meaningful business
and suggested increasing the amount to $500,000 or more. Several
commenters stated that the $100,000 grant threshold aligns with the
timing of the Federal Small Business Innovation Research (SBIR) \23\
and Small Business Technology Transfer (STTR) awards and dollar
amounts.
---------------------------------------------------------------------------

\23\ The Small Business Innovation Research (SBIR) program is
coordinated by the Small Business Administration to seed capital for
start-up businesses. It is designed to stimulate technological
innovation among small private-sector businesses, and it is the
largest source of seed capital in the United States for technology
driven start-ups, funding between 5,000 and 7,000 projects a year.
The ``first phase'' award is an innovation grant made for initial
eligibility and corresponds to the start-up of the commercial
business and proof of ``concept phase''--the average award amounts
vary by department, but most SBIR Phase I awards are made at or
below $150,000. The Phase I awards are geared towards financing the
startup of the private commercial entity and also the innovation and
research and development (R&D) that the enterprise undertakes.
---------------------------------------------------------------------------

Response: DHS declines to make the suggested changes to the minimum
government grant or award threshold. In light of the range of comments
received on increasing or decreasing the minimum grant amount, DHS
believes its proposed minimum grant amount is reasonable. Because
government entities regularly evaluate the potential of U.S.
businesses, the choice to provide a significant award or grant to a
particular start-up entity will often be a strong indicator of that
start-up's substantial potential for growth and job creation.
Additionally, because government entities are by definition formed to
serve the public, the choice by such an entity to fund a particular
business generally indicates the government entity's independent
assessment that the business's operations would provide a significant
public benefit--and can be a strong indicator of a start-up entity's
substantial potential for rapid growth and job creation. The specific
$100,000 minimum government funding threshold identified in this final
rule is based in part on the fact that seed funding awards (``Phase I''
awards) from the Federal SBIR/STTR program are generally below
$150,000.
3. Initial Parole Alternative Criteria
Comment: Several commenters offered suggestions for the factors to
be considered by DHS under the rule's alternative criteria for the
initial parole period, such as adding a metric for number of users or
customers of the entrepreneur's start-up entity, the start-up entity's
social impact, and the start-up entity's national scope or location in
a low- or middle-class neighborhood. Other commenters proposed the
following factors: The applicant's academic degree; participation in or
training from a start-up accelerator; prior success as demonstrated by
market share from patented innovations, annual sales volume, or job
creation; and

[[Page 5257]]

demonstrated success using alternative funding platforms.
Response: DHS agrees with these suggestions. DHS may consider the
following additional types of evidence, among others, as factors under
the alternative criteria for those applicants who partially satisfy 8
CFR 212.19(b)(2)(ii):
number of users or customers;
revenue generated by the start-up entity;
social impact of the start-up entity;
national scope of the start-up entity;
positive effects on the start-up entity's locality or
region;
success using alternative funding platforms, including
crowdfunding platforms;
the applicant's academic degrees;
the applicant's prior success in operating start-up
entities as demonstrated by patented innovations, annual revenue, job
creation, or other factors; and
selection of the start-up entity to participate in one or
more established and reputable start-up accelerators or incubators.
With respect to start-up accelerators and incubators, DHS expects
to evaluate them on several relevant factors, including years in
existence, graduation rates, significant exits by portfolio start-ups,
significant investment or fundraising by portfolio start-ups, and
valuation of portfolio start-ups.
DHS understands that some applicants will be able to establish that
their start-up entity is likely to grow rapidly and create jobs based
on other factors beyond only the amount of capital investment or
government funding received, which is why DHS has not limited the types
of evidence that may be considered under the alternative criteria at 8
CFR 212.19(b)(2)(iii) for those who only partially meet the initial
threshold criteria at 8 CFR 212.19(b)(2)(ii)(B).
Comment: One commenter suggested linking the rule's application to
applications for other initiatives, such as National Minority Supplier
Development Council Certification and, when applicable, Minority Women
Based Entrepreneur Certification.
Response: DHS appreciates the commenters' suggestions but declines
to adopt these factors as evidence of substantial potential for rapid
business growth or job creation. Nothing in this rule prohibits or
discourages entrepreneurs from participating in initiatives or
certification processes designed to help promote more diverse and
inclusive entrepreneurship. DHS does not believe, however, that such
initiatives and certifications independently provide sufficient
external validation that a start-up entity has the substantial
potential for rapid growth or job creation and meets the ``significant
public benefit'' requirement under this rule. Evidence that the start-
up is involved with certain initiatives in the public interest can,
however, be considered a positive factor in determining whether an
entrepreneur merits a grant of parole as a matter of discretion. Given
that this is a new and complex process, DHS has decided to take an
incremental approach and will consider potential modifications in the
future after it has assessed the implementation of the rule and its
impact on operational resources.
Comment: One commenter said the term ``reliable and compelling
evidence'' in proposed 8 CFR 212.19(b)(2)(iii), with respect to the
start-up entity's substantial potential for rapid growth and job
creation, is too vague and should be elaborated on further in the
regulatory text.
Response: DHS disagrees with the commenter's suggestion to
elaborate further in 8 CFR 212.19(b)(2)(iii) on the type of evidence
that may be submitted and considered as reliable and compelling. DHS
believes that this alternative criterion should be flexible so as not
to restrict the types of evidence that may be submitted and relied upon
to determine if the start-up entity has substantial potential for rapid
growth and job creation. DHS believes that such flexibility is
important given the case-by-case nature of these discretionary parole
determinations. An applicant for parole under this rule who does not
meet the threshold capital investment or government funding criteria in
8 CFR 212.19(b)(2)(ii)(B) may submit any evidence that the applicant
believes is reliable and compelling to support the claim that the
applicant's start-up entity has substantial potential for rapid growth
and job creation. DHS, after reviewing the application and all of the
evidence submitted in support of the application, will make a
determination as to whether the applicant is eligible for parole
consideration under the relevant statutory and regulatory standards,
and as to whether the person seeking parole merits a favorable exercise
of discretion.
Comment: One commenter asserted that securing an investment from a
U.S. investor or obtaining a U.S. government grant or award is not a
viable option for most people.
Response: DHS believes that qualified investments or government
funding are appropriate factors to consider when assessing the ability
of a start-up entity to achieve rapid growth and job creation (one
factor in making parole determinations under this rule). DHS, however,
understands that some start-up entities with the potential to yield
significant public benefit may have legitimate economic or strategic
reasons to not pursue or accept capital investment or government
funding at the levels set forth in 8 CFR 212.19(b)(2)(ii)(B).
Therefore, DHS has provided in the rule an alternative criterion for
further consideration of those applications where the applicant only
partially satisfies the capital investment or government funding
thresholds, but provides additional reliable and compelling evidence
that establishes the substantial potential of the start-up entity for
rapid growth and job creation.
Comment: A commenter suggested that, instead of focusing on capital
investment and job creation criteria, DHS should focus on whether the
start-up entity would be in industries in traded sectors. The commenter
proposed that the following industries would qualify: Manufacturing,
software publishers, Internet publishing, and research and development
services.
Response: While DHS recognizes the benefits of increased exports to
the U.S economy, it declines to limit eligible start-up entities to
traded sectors, since start-up entities in a much wider set of
industries can yield significant public benefit to the United States
through rapid growth and job creation.
Comment: A commenter requested that DHS form an advisory group of
industry experts to recommend alternative criteria.
Response: DHS afforded an opportunity for notice and comment on the
NPRM and expressly sought proposals for alternative criteria from the
public. DHS does not believe that forming a new advisory group is
necessary at this time.
Comment: One commenter suggested that the term ``rapid growth''
should be determined based on factors pertaining to the start-up
entity's industry, normal business growth in the industry, geographic
area, and the amount of investment in the entity. The commenter also
recommended that the term ``substantial potential'' take into account
the start-up entity's particular geographic area rather than a national
scale.
Response: While the industry- and geography-specific factors
suggested by the commenter may be taken into consideration by DHS as
part of the totality of the circumstances for a given application, DHS
believes that the general and alternative eligibility criteria provided
in the final rule are

[[Page 5258]]

sufficient to determine if a start-up entity has the substantial
potential for rapid growth and job creation, and provide a more
predictable framework by which these parole applications will be
adjudicated than would a more mechanical and unduly rigid consideration
of the variables suggested by the commenter.
4. Re-parole Criteria
a. Minimum Investment or Grants/Awards
Comment: Several commenters discussed the proposed re-parole
eligibility criteria at 8 CFR 212.19(c)(2)(ii)(B)(1), namely that the
applicant's start-up entity has received at least $500,000 in
qualifying investments, qualified government grants or awards, or a
combination of such funding, during the initial parole period. Most
commenters argued that this funding level was unduly high, especially
given the duration of the initial parole period.
Response: DHS declines to adjust the $500,000 funding threshold.
See final 8 CFR 212.19(c)(2)(ii)(B)(1). DHS believes that $500,000 is a
reasonable level for re-parole. An industry report on startups shows
the median seed investment round for the first half of 2016 was
$625,000, which rose from $425,000 in 2015. This figure is valuable
because it includes seed rounds for firms that participate with
accelerators and that often start out with investment rounds below
$100,000.\24\ The median for angel group seed investments is reported
at $620,000 as the annual average over 2013-2015, which rose sharply to
$850,000 in 2015 from a median of $505,000 from the previous two years.
Venture capital round sizes are even larger, as the 2014 median round
size for both seed and startup stage venture rounds was $1,000,000.
---------------------------------------------------------------------------

\24\ The report on the seed median is published as a newsletter
by Crunchbase and is found at: https://techcrunch.com/2016/09/07/cr...round-in-2016/. The Angel group
median round size is obtained from the Angel Resource Institute's
annual (2015) ``Halo Report,'' found at http://angelresourceinstitute.org/re...on-ye-2015.pdf. The venture capital figures are obtained from the Ernst
and Young Venture Capital Insights Report (4th quarter 2014) and are
found at: http://www.ey.com/Publication/vwLUAssets/Venture_Capital_Insights_4Q14_-_January_2015/%24FILE/ey-venture-capital-insights-4Q14.pdf.
---------------------------------------------------------------------------

DHS has also increased the length of the initial parole period from
24 months to 30 months. This change will allow entrepreneurs additional
time to seek and receive qualified investments or government funding,
to meet the re-parole criteria. If an entrepreneur is unable to meet
the minimum funding criterion, moreover, he or she may still be
eligible for re-parole based on revenue generated or jobs created. See
final 8 CFR 212.19(c)(2)(ii)(B)(2) and (3). Under the final rule,
entrepreneurs partially meeting the threshold re-parole criteria may
alternatively qualify ``by providing other reliable and compelling
evidence of the start-up entity's substantial potential for rapid
growth and job creation.'' Final 8 CFR 212.19(c)(2)(iii).
b. Minimum Annual Revenue
Comment: Several commenters discussed the proposed re-parole
criterion at 8 CFR 212.19(c)(2)(ii)(B)(3), which establishes an
eligibility threshold when the applicant's start-up entity has reached
at least $500,000 in annual revenue and averaged 20 percent in annual
revenue growth during the initial parole period. Most commenters
suggested alternative approaches, arguing that start-ups are often
legitimately focused on the development of an innovative product or
service, and not on generating early revenue. Another commenter stated
that the revenue criterion is reasonable.
Response: DHS declines to adjust these criteria. See final 8 CFR
212.19(c)(2)(ii)(B)(1). DHS chose $500,000 in revenue and 20 percent
annual revenue growth as threshold criteria because, after consulting
with SBA, DHS determined these criteria: (1) Would be reasonable as
applied across start-up entities regardless of industry or location;
and (2) would serve as strong indications of an entity's potential for
rapid growth and job creation (and that such entity is not, for
example, a small business created for the sole or primary purpose to
provide income to the owner and his or her family). As noted, DHS has
also increased the length of the initial parole period from 24 months
to 30 months. This change will allow entrepreneurs additional time to
meet the minimum revenue threshold for re-parole. If an entrepreneur is
unable to meet the minimum revenue requirement, he or she may still be
eligible under the minimum investment or job creation criteria. See
final 8 CFR 212.19(c)(2)(ii)(B)(1) and (2). Under the final rule,
entrepreneurs partially meeting the threshold re-parole criteria may
alternatively qualify ``by providing other reliable and compelling
evidence of the start-up entity's substantial potential for rapid
growth and job creation.'' Final 8 CFR 212.19(c)(2)(iii).
Comment: An individual commenter suggested that DHS should include
in the rule a criterion for user growth, rather than revenue growth, as
many start-ups focus more on growing their number of users in their
early years.
Response: DHS declines to include user growth as a stand-alone
criterion for establishing eligibility for re-parole. DHS, however, may
consider user growth as a factor when evaluating an entrepreneur's
eligibility under the alternative criteria provision. The list of
factors provided in the preamble to the proposed rule was intended only
to illustrate the kinds of factors that DHS may consider as reliable
and compelling evidence of the start-up entity's substantial potential
for rapid growth and job creation.
As noted in the NPRM, DHS is not defining in regulation the
specific types of evidence that may be deemed ``reliable and
compelling'' at this time, because DHS seeks to retain flexibility as
to the kinds of supporting evidence that may warrant the Secretary's
exercise of discretion in granting parole based on significant public
benefit. DHS believes, however, that such evidence would need to be
compelling to demonstrate that the entrepreneur's presence in the
United States would provide a significant public benefit. DHS will
evaluate on a case-by-case basis whether such evidence--in conjunction
with the entity's substantial funding, revenue generation, or job
creation--establishes that the applicant's presence in the United
States will provide a significant public benefit during a re-parole
period.
Comment: An individual commenter suggested that the minimum annual
revenue threshold for re-parole be set as just enough to sustain the
entrepreneur's salary and continue business operations.
Response: The final rule states that the start-up entity must be of
a type that has the substantial potential to experience rapid growth
and job creation, including through significant levels of capital
investment, government awards or grants, revenue generation, or job
creation during the re-parole period. These factors are intended to
help DHS identify the types of start-up entities that are most likely
to provide a significant public benefit, while excluding entities
without such potential--such as a business with limited growth
potential created by an entrepreneur for the sole or primary purpose of
providing income to the entrepreneur and his or her family.\25\ Because
this latter type of business is less likely to experience rapid growth

[[Page 5259]]

and job creation, DHS believes it is unlikely that the entrepreneur of
such a business would be able to meet the significant public benefit
requirement for a grant of parole. Establishing a minimum annual
revenue threshold for re-parole that would, by definition, cover only
an entrepreneur's salary and continue business operations would not
likely help identify whether an entrepreneur's activity in the United
States would provide a significant public benefit. DHS therefore
declines to adopt the commenter's suggestion.
---------------------------------------------------------------------------

\25\ 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.
---------------------------------------------------------------------------

c. Minimum Jobs Created
Comment: Several commenters discussed the proposed re-parole
criterion at 8 CFR 212.19(c)(2)(ii)(B)(2), which establishes an
eligibility threshold for applicants whose start-up entities have
created at least 10 qualified jobs within the start-up entities during
the initial parole period. Most commenters argued that this job
creation requirement was unduly high or that the time period for
compliance was too short.
Response: Based on comments received, DHS has lowered the job
creation criterion for re-parole from 10 to 5 qualified jobs. See final
8 CFR 212.19(c)(2)(ii)(B)(2). DHS agrees with commenters that requiring
10 jobs to satisfy this criterion may be unduly high for many start-
ups, even those with demonstrated substantial potential for rapid
growth and job creation. DHS believes that the creation of 5 qualifying
jobs during the initial period of parole is sufficient to determine
that the start-up entity continues to have substantial potential for
rapid growth and job creation, particularly in light of the substantial
capital investment, government funding, or other reliable and
compelling evidence that supported the initial parole determination. In
each case, DHS must be persuaded that re-parole is justified by
significant public benefit and that the person seeking re-parole merits
a favorable exercise of discretion. As discussed elsewhere in this
preamble, DHS has also extended the initial period of parole from 2
years to 30 months, in order to allow additional time for start-up
entities to grow, obtain additional substantial funding, generate
substantial revenue, or create jobs. See 8 CFR 212.19(c)(2)(iii).
d. Re-Parole Alternative Criteria
Comment: One commenter suggested that DHS should consider taxes
paid by a start-up entity as a criterion for re-parole, leaving the
task to DHS to define the threshold of the amount and type of taxes
paid.
Response: DHS declines to adopt the commenter's suggestion. DHS
believes that a start-up entity would have to generate a significant
level of revenue or job creation (which are already criteria under this
rule) to meet any separate, standalone tax-based threshold. Any such
additional criterion would therefore be unlikely to be particularly
probative in determining whether re-parole is justified by significant
public benefit or the person seeking re-parole merits a favorable
exercise of discretion. DHS therefore declines to include the payment
of taxes as a stand-alone eligibility criterion.
Comment: A commenter suggested that if DHS lowers the funding and
job creation thresholds for re-parole, there should be no need for
alternative criteria.
Response: While DHS did reduce the job creation threshold for re-
parole in the final rule, DHS believes that parolees should have the
flexibility to present other reliable and compelling evidence of the
start-up entity's substantial potential for rapid growth and job
creation. Examples of such evidence are provided above, in the
discussion on alternative criteria for the initial parole period. DHS
believes that it is important to retain such flexibility in the final
rule, consistent with the case-by-case nature of these parole
determinations. DHS, therefore, has not adopted the commenter's
suggestions.
5. Authorized Periods of Parole
Comment: Several commenters discussed the initial 2-year parole
period at 8 CFR 212.19(d)(2). Most commenters argued that the 2-year
period was unduly short, as start-ups with significant potential for
rapid growth and job creation may require more time to meet re-parole
eligibility requirements. Some commenters suggested having a 3-year
initial period of parole and a 2-year period of re-parole. Other
commenters suggested a range for initial parole from 3 to 5 years. A
number of comments discussed the overall duration of the parole
periods, the majority of which advocated for longer periods ranging
from 6 to 10 years in total. Some of these commenters based the need
for an extended parole period on the typical duration of the start-up
growth path from seed funding to venture capital financing to exit
(through an initial public offering or a merger or acquisition).
Response: Based on the comments received, DHS is changing the
maximum periods for initial parole and re-parole to 30 months (2.5
years) each, for a total maximum parole period under this rule of up to
5 years. The additional time for the initial parole period will provide
entrepreneurs with more time to receive additional qualified
investments or government funding, increase revenue, or create
qualified jobs sufficient to meet the eligibility criteria for an
additional period of parole. While this change does reduce the length
of the re-parole period, DHS believes that this approach is necessary
to provide additional time during the initial period of parole while
maintaining the same maximum overall parole period of 5 years. DHS
further believes that a 5-year total maximum parole period is
consistent with the amount of time successful start-up entities
generally require to realize rapid growth and job creation potential.
Moreover, an entrepreneur of a start-up entity that is almost 5 years
old when the parole application is filed would have the possibility to
obtain up to 5 years of parole, which would allow the entity to realize
its rapid growth and job creation potential by the time it is 10 years
old--and to provide those benefits in the United States.\26\ DHS
retains the discretion to provide any length of parole to an applicant,
including a period shorter than 30 months where appropriate. DHS also
notes that although USCIS would designate an appropriate initial parole
period upon approval of the Application for Entrepreneur Parole, CBP
would retain its authority to deny parole to an applicant or to modify
the length of parole authorized by USCIS upon issuing parole at the
port of entry, consistent with CBP's discretion with respect to any
advance authorization of parole by USCIS.
---------------------------------------------------------------------------

\26\ Estimates based on the Census Bureau Business Dynamics
Statistics suggest that on average 55 percent of new firms survived
after 3 years, but 80 percent of the firms that survived 3 years
also made it through 5 years. Dane Stangler and Jared Konczal ``Give
me your entrepreneurs, your innovators: Estimating the Employment
Impact of a Startup Visa'', Ewing Marion Kauffman Foundation (Feb.
2013), available at 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/cru...ts-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/truebrid...ways-next-ipo/ (``From
2001-2004, the average age of a company at its public exit was 5.4
years. . . . From 2009-2012, the average age was 7.9.'').

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[[Page 5260]]

6. Limitation on Number of Entrepreneurs
Comment: Several commenters addressed 8 CFR 212.19(f) in the
proposed rule, which states that no more than three entrepreneurs may
be granted parole based on the same start-up entity. Most commenters on
this provision recommended that DHS increase the number of
entrepreneurs, with suggestions to increase the maximum number to 4 or
5. Several other commenters, including a trade association and a
professional association, supported the proposed rule's limit of 3
entrepreneurs obtaining parole under this rule based on the same start-
up entity. An individual commenter stated that DHS should allow for
additional entrepreneurs to qualify for parole based on the same start-
up entity, not only at the time of application but also at a later
date, asserting that it is very common for technology companies to
introduce multiple co-owners over time that are key personnel vital to
the operations of the start-up entity.
Response: DHS appreciates the comments regarding this limitation
and recognizes that some start-ups may initially have more than 3
founders or owners. After reviewing all comments, DHS declines to
increase the number of entrepreneurs permitted to request parole
related to the same start-up entity, and will retain the current limit
of no more than 3 eligible entrepreneur applicants per start-up entity.
See final 8 CFR 212.19(f). As an initial matter, DHS believes it would
be difficult for a larger number of entrepreneurs associated with the
same start-up entity to each meet the eligibility criteria and comply
with the conditions on parole while ultimately developing a successful
business in the United States. A higher number of entrepreneurs
associated with the same start-up entity may affect the start-up's
ability to grow and succeed, and may even result in the startup's
failure, thus preventing the goals of the parole process under this
rule from being realized.\27\ Imposing a limit on the number of
entrepreneurs who may be granted parole based on the same start-up
entity is thus consistent with ensuring that each entrepreneur's parole
will provide a significant public benefit.
---------------------------------------------------------------------------

\27\ Max Marmer, Bjoern Lasse Herrmann, Ertan Dogrultan, Ron
Berman, Startup Genome Report Extra on Premature Scaling, Startup
Genome Report: Premature scaling v 1.2 (Mar. 2012 ed.) (explaining
that ``hiring too many people too early'' in a start-up's
development is one of several reasons that most start-ups fail),
available at https://s3.amazonaws.com/startupcompass-public/StartupGenomeReport2_Why_Startups_Fail_v2.pdf.
---------------------------------------------------------------------------

The limitation, moreover, will help strengthen the integrity of the
international entrepreneur parole process in various ways. Among other
things, limiting the number of individuals who may be granted parole
under this rule in connection with the same start-up entity will
provide an additional safeguard against an entity being used as a means
to fraudulently allow individuals to come to the United States. Such a
limit diminishes, for example, the incentive to dilute equity in the
start-up entity as a means to apply for parole for individuals who are
not bona fide entrepreneurs. Finally, DHS clarifies that the rule does
not require that additional entrepreneurs, up to 3 entrepreneurs per
start-up entity, apply for parole based on the same start-up entity at
the same time.
7. Income-Related Conditions on Parole
Comment: Several commenters discussed the proposed rule's provision
requiring that entrepreneurs paroled into the United States must
maintain a household income that is greater than 400 percent of the
Federal poverty line for their household size, as defined by the
Department of Health and Human Services. Many of these commenters
discussed the financial difficulties faced by start-ups and argued that
the income requirements were unduly high or suggested other
alternatives. The majority of commenters on this issue stated that
entrepreneurs in start-up endeavors typically do not take a salary or
take a minimal salary in the early years. Several commenters
recommended lowering this income threshold, with many suggesting
lowering it to 100 percent, while others suggested alternatives of 125
percent, 200 percent, or 250 percent of the Federal poverty level. An
individual commenter recommended that DHS institute a minimum yearly
income requirement of $80,000, while another individual commenter
stated that DHS should adopt a more nuanced approach that takes into
account factors like standard of living, unemployment rates, and
economic growth by state. Other commenters recommended that DHS allow
for other types of compensation, in the form of benefits or rewards, in
addition to salary to satisfy the income-related conditions on parole.
Another individual commenter stated that DHS should use the income
threshold already established by the Affidavit of Support,\28\ which is
set at 125 percent above the poverty guidelines. Lastly, one commenter
said the ``significant public benefit'' determination should not just
be applied to entrepreneurs who meet a particular income or wealth
criterion, but should be liberally applied to all entrepreneurs who are
seeking to build and grow a business.
---------------------------------------------------------------------------

\28\ Affidavits of Support, filed using Form I-134 or I-864, are
required for certain immigrants to show that they have adequate
means of financial support and are not likely to rely on the U.S.
government for financial support.
---------------------------------------------------------------------------

Response: DHS appreciates the concerns raised by these commenters,
but declines to adopt the commenter's suggestion to eliminate or alter
the income-related condition on parole. Establishing this income-
related condition on parole is consistent with the Secretary's
discretionary authority to grant parole ``under conditions as he may
prescribe.'' INA section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A). As
stated in the NPRM, DHS established this income threshold to ensure
that applicants seeking parole under this rule will have sufficient
personal economic stability to make significant economic and related
contributions to the United States. Those policy goals remain valid and
are appropriate in guiding the decision to retain the requirement that
the household income of an entrepreneur requesting parole under this
rule be greater than 400 percent of the Federal poverty line.
Under this rule, DHS will take steps to ensure that each grant of
parole will provide a positive net benefit to the economy of the United
States, consistent with the statutory framework authorizing parole only
for significant public benefit absent urgent humanitarian issues. In
addition to considering all the other positive evidence--from job
creation to investment to growth--DHS includes the income threshold as
an additional safeguard that the entrepreneur and his or her family
will not be eligible to draw upon Federal public benefits or premium
tax credits under the Health Insurance Marketplace of the Affordable
Care Act. Furthermore, Secretary Johnson indicated in his memorandum
titled ``Policies Supporting U.S. High-Skilled Business and Workers''
that such thresholds would be created so that individuals would not be
eligible for these public benefits or premium tax credits in light of
the purpose of the policy.\29\
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\29\ Memorandum from Jeh Johnson, DHS Secretary, Policies
Supporting U.S. High-Skilled Business and Workers 4 (Nov. 20, 2014),
at https://www.dhs.gov/sites/default/files/publications/14_1120_memo_business_actions.pdf.
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DHS emphasizes that the funding amounts received by a start-up
entity from governmental sources or from

[[Page 5261]]

qualified investors in order to meet the rule's eligibility thresholds
are distinct from the possible sources of salary payments to the
individual entrepreneur. Nothing in this rule prevents a start-up
entity from raising higher funding levels than the minimum parole
eligibility thresholds, and from a wider set of funders than those in
the rule's definitions of qualified investors and government entities.
DHS intends for the eligibility criteria for parole to be useful
independent validation tools for assessing the significant growth and
job creation potential of the start-up entity. While there is certainly
validity to the arguments made by some of the commenters that many
entrepreneurs do not take large salaries, choosing instead to re-invest
available funds back into the start-up entity or to take other forms of
non-cash compensation, DHS must establish criteria that protect the
overall policy goals of this rule in accordance with the requirements
of the INA. The income-related requirements offer a clear and
predictable mechanism for DHS to have a strong measure of confidence
that the entrepreneur and his or her family, while paroled into the
United States under this rule, will be net positive contributors to the
American economy.
8. Reporting of Material Changes
Comment: Several commenters discussed the proposed requirement that
entrepreneurs report any material changes during a parole period to DHS
by submitting a new application for parole. Most commenters argued that
such a requirement would be onerous given the constantly changing
nature of start-ups. A law firm argued that requiring entrepreneurs to
report and reapply when there are pending actions against the start-up
entity or entrepreneur would be unfair, as both are entitled to due
process, and suggested a reporting requirement only if an adverse
judgment were issued. An individual commenter stressed that a $1,200
fee to report every material change would create a major financial
burden for entrepreneurs.
Response: DHS recognizes that the nature of start-up entities
involves constant change. DHS also appreciates the concerns regarding
the administrative and financial burden placed on entrepreneurs by
additional filings. DHS believes, however, that the revised definition
of material change in the final rule will help to clarify the
situations in which the entrepreneur must notify the agency of material
changes, and thus limit the administrative and financial burdens on the
entrepreneur. Specifically, DHS understands that start-ups may have
frequent ownership changes over the course of successive funding
rounds, and thus has revised the definition of ``material change''
regarding ownership changes to cover only those that are
``significant'' in nature. Clarifying the scope of the material change
definition also limits the reporting requirement, which should help
reduce the anticipated burden on entrepreneurs. DHS also emphasizes
that the rule requires notification of pending actions only in the
context of a criminal case or other action brought by a government
entity, while actions brought by private individuals or entities are
not considered ``material changes'' until a settlement, judgment, or
other final determination is reached. DHS does not believe that the
material change reporting requirement under this rule will impact an
individual's due process or would otherwise be unfair. DHS believes,
however, that it is important for an entrepreneur granted parole under
this rule to immediately inform USCIS if certain actions are brought
against the entrepreneur or his or her start-up entity.
Comment: One commenter recommended that the process of addressing
material changes would be improved if DHS were to implement a policy
similar to the ``deference'' policy it applies in the EB-5 investor
program. Such a policy provides that DHS will defer to prior
determinations regarding certain documentary evidence used to
establishing program eligibility requirements absent fraud,
misrepresentation, a mistake of law or fact, or a material change.
Response: As discussed above, DHS decided to narrow and clarify the
definition of ``material change'' in order to address commenters'
concerns about reporting burdens. In the absence of specific
suggestions, DHS could not ascertain from this comment what aspect of
the EB-5 deference policy could be applied under this rule. DHS
believes it is important for this rule to provide mechanisms, including
the requirement to report material changes, to ensure that parole
continues to be justified by significant public benefit in each
particular case.
Comment: A joint submission from a professional association and a
non-profit organization stated that, where a material change filing is
mandated by the rule, the entrepreneur should only be required to file
an update with USCIS, instead of being required to re-file an entire
parole or re-parole application.
Response: As explained above, while DHS appreciates that a new
filing may appear burdensome to the entrepreneur, DHS believes that a
new filing is necessary in order to re-evaluate the entrepreneur's
eligibility when such material changes occur. Material changes, by
their definition, may affect the entrepreneur's ability to demonstrate
that the start-up entity has potential for rapid growth and job
creation, and whether the entrepreneur will continue to provide a
significant public benefit to the United States. Therefore, at present,
the entrepreneur must file a new application to allow DHS the
opportunity to determine the entrepreneur's continued eligibility for
parole. Given that this is a new and complex process, DHS has decided
to take an incremental approach and will consider potential
modifications in the future after it has assessed the implementation of
the rule and its impact on operational resources.
9. Other Comments on Parole Criteria and Conditions
Comment: Several comments expressed concern that the rule did not
require that the entrepreneur receive prevailing wages for their work,
with some commenters expressing concern that the only wage requirements
relate to the Federal Poverty Level.
Response: DHS appreciates commenters' concerns regarding prevailing
wages. Unlike some employment-based visa classifications, however, the
intention of this parole process is not to address labor shortages in
the United States. Rather, it is to encourage international
entrepreneurs to create and develop start-up entities with high growth
potential in the United States. DHS believes that requiring the parolee
to maintain a household income of greater than 400 percent of the
Federal Poverty Level adequately ensures that he or she will have
sufficient personal economic stability to provide a significant public
benefit to the United States through entrepreneurial activities.
Comment: One commenter recommended that DHS should not require an
applicant's start-up entity to receive investment prior to the initial
application for parole; that DHS should recognize cash infusions during
the growth period of a start-up entity as eligibility criteria for re-
parole; and that at the end of the initial parole period, if the
venture is deemed successful, no additional funding milestones should
be required for re-parole eligibility.
Response: DHS appreciates the comment but declines to revise the
rule as suggested. DHS believes that the alternative criteria provided
in this rule to determine if the start-up entity has

[[Page 5262]]

substantial potential for rapid growth and job creation provide
sufficient flexibility for those entrepreneurs who may have received
amounts of qualified investments or government funding that are less
than those required to satisfy the general criteria for parole
consideration under this rule. The determination that the entity has
substantial potential for rapid growth and job creation will be made
based on the evidence in the record at the time the parole application
is adjudicated, rather than the possibility that the entity may receive
cash infusions at some point in the future. If cash infusions from
various sources are received by the start-up entity during the period
of initial parole, evidence of such cash infusions may be taken into
consideration if the entrepreneur applies for re-parole. DHS, however,
does not believe that cash infusions into the start-up entity during
the initial parole period will independently suffice to establish that
the entity continues to have the significant potential for rapid growth
and job creation. Infusions of cash, as a general matter, do not have
the same validating qualities as do evidence of additional investment
from qualifying investors, grants or awards from qualifying government
entities, significant revenue growth, or job creation.
Comment: One commenter asserted that entrepreneurs who have left
their start-up entity should not have their parole status immediately
revoked. The commenter suggested that DHS issue guidance and options
for entrepreneurs who leave their start-up entity but have contributed
to the significant public benefit of the United States. A similar
comment recommended that individuals be able to remain in the United
States under parole and qualify for re-parole if a second start-up
meets the requirements of the rule. Another related comment argued that
entrepreneurs whose start-up entities fail should be given a second
chance, in order to account for the dynamism and uncertainty inherent
in new businesses.
Response: DHS appreciates the comments but declines to adopt the
commenters' suggestions. As a matter of statutory authority, once, in
the opinion of DHS, the purpose of parole has been served, parole
should be terminated. See INA section 212(d)(5)(A), 8 U.S.C.
1182(d)(5)(A). DHS emphasizes that the purpose of granting parole under
this rule is to allow an entrepreneur to grow a start-up entity in the
United States with substantial potential for rapid growth and job
creation, by working in an active and central role for the entity.
Accordingly, DHS will not continue parole for entrepreneurs who are no
longer actively working in a central role with the start-up entity that
served as the basis for the initial parole application. The
individual's activity through a new start-up entity, however, could
serve as a basis for a new grant of parole if all requirements for such
parole are met.
Comment: One commenter suggested that DHS should utilize the same
methodology for granting parole for entrepreneurs as defined in a
proposed nonimmigrant visa classification in a Senate bill, S. 744, 113
Cong. section 4801(2013).
Response: DHS appreciates the comment but declines to adopt the
commenter's suggestion. Under this rule, DHS has identified a process
for implementing the Secretary's existing statutory authority to grant
parole consistent with section 212(d)(5) of the INA. DHS does not
believe it is advisable to import in this rule the standards from
unenacted legislation focused on nonimmigrant visas rather than
discretionary grants of parole.

G. Employment Authorization

1. Automatic Employment Authorization Upon Parole
Comment: One commenter suggested that if employment authorization
were deemed incident to parole, rather than through a follow-up
application, then the regulations governing employment verification
would need to be amended to permit employment by the parolee and spouse
without an EAD.
Response: DHS agrees that the employment verification provisions of
the regulations should be appropriately revised. In this final rule,
and as proposed, DHS is revising the employment eligibility
verification regulations by expanding the foreign passport and Form I-
94 document combination described at 8 CFR 274a.2(b)(1)(v)(A)(5) to
include Forms I-94A containing an endorsement that an individual is
authorized to work incident to parole. This document combination was
previously acceptable only for certain nonimmigrants authorized to work
for a specific employer incident to status pursuant to 8 CFR
274a.12(b), which the final rule amends to include those paroled into
the United States as entrepreneurs under this rule. See final 8 CFR
274a.12(b)(37).
However, in this final rule, and as proposed, only the entrepreneur
parolee is accorded employment authorization incident to his or her
parole. See final 8 CFR 274a.12(b). Given the basis for parole, it is
essential to limit any delays in the entrepreneur's own employment
authorization. Such delays could create difficulties for the
entrepreneur's operation of the start-up entity, as he or she would be
prohibited from working until work authorization was approved, and
would frustrate the very purpose for paroling the entrepreneur into the
United States. As an entrepreneur's spouse would not be coming for the
same kind of specific employment purpose, DHS does not believe there is
a similar need to provide him or her work authorization incident to
parole. Instead, this rule adds a new provision making the spouse of an
entrepreneur parolee eligible to seek employment authorization. See
final 8 CFR 274a.12(c)(34). Based on this provision and 8 CFR
274a.13(a), an entrepreneur's spouse seeking employment authorization
under this rule would need to file an Application for Employment
Authorization (Form I-765) with USCIS in accordance with the relevant
form instructions.
Comment: One commenter expressed concern that the proposed
employment authorization provision is too narrow in scope. The
commenter stated that DHS should clarify that employment with an entity
that is under common control as the start-up entity, such as a
subsidiary or affiliate, would be permissible.
Response: Under the final rule, the entrepreneur parolee's
employment authorization is limited to the specific start-up entity
listed on the Application for Entrepreneur Parole, Form I-941. This
limitation helps ensure that the entrepreneur's work is consistent with
the purposes for which parole was granted, especially since parole
applications will be evaluated based in part on the activities and
performance of that particular start-up entity. DHS appreciates that
there are certain circumstances in which some flexibility could further
the purpose of encouraging entrepreneurship, innovation, economic
growth, and job creation in the United States. Given that this is a new
process however, DHS has decided to take an incremental approach and
will consider potential modifications in the future after assessing the
implementation of the rule.
Comment: One commenter stated that difficulties obtaining a work
visa have caused many entrepreneurs to move out of the United States.
Response: DHS agrees with the commenter's statement. While this
rule does not address all of the difficulties that entrepreneurs may
face, or make legislative changes that only Congress can make, DHS
believes it will encourage international entrepreneurs

[[Page 5263]]

to develop and grow their start-up entities--and provide the benefits
of such growth--in the United States. Entrepreneurs paroled into the
United States under this rule will be authorized to work for the start-
up entity for the duration of the parole (and any re-parole) period.
2. Spousal Employment
Comment: Several commenters, including a business incubator,
asserted that spouses should be granted employment authorization and
argued that spouse employment authorization will entice more
entrepreneurs to come to the United States. Several other commenters
stated that, in order to attract the best entrepreneurial talent,
spouses of entrepreneur parolees should automatically receive work
authorization incident to status without the need to apply separately.
Response: DHS agrees with commenters that extending employment
authorization to spouses of entrepreneur parolees is important to help
attract entrepreneurs to establish and grow start-up entities in the
United States. For reasons provided above, however, DHS disagrees that
these spouses must be provided with employment authorization incident
to their parole. Instead, these spouses may seek employment
authorization under 8 CFR 274a.12(c)(34).
Comment: A few commenters stated opposition to permitting
employment authorization for the spouses of international
entrepreneurs.
Response: DHS disagrees with the commenters' opposition to allowing
an entrepreneur's spouse to apply for employment authorization.
Permitting spouses to seek employment authorization is an important
aspect of the rule's intent to attract international entrepreneurs who
may provide a significant public benefit by growing their start-up
entities in the United States.
Comment: One commenter objected to spousal employment authorization
unless it is restricted to the same new high-potential start-up entity
that served as the basis for the parole.
Response: DHS disagrees with the suggestion that spousal employment
should be authorized only for employment with the start-up entity that
served as the basis of parole for the entrepreneur. Nothing in this
rule prevents people married to each other from applying for parole
associated with the same start-up entity. But DHS believes that it is
not appropriate or necessary to limit the employment of an
entrepreneur's spouse to that entity. Making those spouses eligible to
seek employment from a broader range of employers can further the
central purpose of the rulemaking--encouraging international
entrepreneurs to develop and grow their start-up entities within the
United States and provide the benefits of such growth to the United
States. It may also encourage entrepreneurs to create more jobs outside
the family through the start-up entity, furthering the benefits
provided to others in the United States. DHS therefore declines to
revise the rule as suggested.

H. Comments on the Parole Process

1. Ability of Individuals To Qualify for Parole Under This Rule
Comment: Two individual commenters asked what kind of immigration
status or visa an international entrepreneur should maintain in order
to be eligible to apply for parole under this rule. The commenters
expressed concern about the types of activities that would need to be
conducted in the United States prior to a parole application in order
to establish a business, obtain funds from investors, and otherwise
qualify for the parole under this rule. These commenters also expressed
concern about requiring prior investment as a condition for parole, and
that investors would be hesitant to make such an investment in a start-
up entity if the entrepreneur lacked an immigrant or nonimmigrant visa.
A professional association stated that, since parole does not
constitute formal admission to the United States, it will likely be
very difficult for international entrepreneurs without formal
immigration status to enter into long-term contracts, raise significant
investment capital, and employ people.
Response: This final rule aims to encourage international
entrepreneurs to create and develop start-up entities with high growth
potential in the United States, which are in turn expected to
facilitate research and development in the country, create jobs for
U.S. workers, and otherwise benefit the U.S. economy. Under this final
rule, an international entrepreneur may request parole in accordance
with the form instructions. The final rule provides that individuals
seeking initial parole under this program must present themselves at a
U.S. port of entry to be paroled into the United States; there is no
requirement that an international entrepreneur currently be in the
United States or maintain any prior immigration status. DHS notes,
however, that under the statute governing parole authority, individuals
who have already been admitted to the United States are ineligible to
be considered for parole inside the United States because only
applicants for admission are eligible to be considered for parole. See
INA section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A); see also INA section
235(a)(1), 8 U.S.C. 1225(a)(1) (describing ``applicants for
admission''). Individuals who have been admitted in a nonimmigrant
classification, and are currently in the United States pursuant to that
admission, may not be paroled, even if they have overstayed their
admission, unless they first depart the United States.
DHS appreciates that international entrepreneurs may face many
challenges in starting and growing a business in the United States,
including attracting investment capital or government grants or awards.
DHS disagrees with the premise, however, that qualifying investors will
be very reluctant to make a qualifying investment in a start-up entity
that is wholly or partially owned by an individual that will be seeking
a grant of parole under this rule. DHS believes that there are a myriad
of factors that go into a decision to invest significant funds in a
start-up entity. While the underlying immigration status, or lack
thereof, of the start-up entity's owner(s) may be a factor presenting a
degree of additional risk, DHS believes that this rule will effectively
mitigate some of that risk by providing a known framework under which
certain significant public benefit parole requests will be reviewed and
adjudicated. This final rule provides investors and entrepreneurs with
greater transparency into the evaluation process and manner in which
such requests will be reviewed, so that those individuals and entities
can weigh the various risks and benefits that might apply to the
particular investment decision being considered. Given that this is a
new and complex process, DHS has decided to take an incremental
approach and will consider potential modifications in the future after
assessing the implementation of the rule.
2. Waiver for Entrepreneurs Presently Failing To Maintain Status
Comment: An individual commenter stated that international
entrepreneurs already in the United States should be able to receive a
waiver in order to establish eligibility for parole under this rule if
they do not have a valid prior immigration status. Another commenter
suggested that immigration status violations, such as unauthorized
employment, should not be grounds for denying parole under this rule
and, if parole is granted, any prior

[[Page 5264]]

unauthorized employment that was used to meet the requirements for
parole should be disregarded for purposes of any future immigration
applications.
Response: As discussed above, eligibility for parole under INA
section 212(d)(5), 8 U.S.C. 1182(d)(5), is not wholly dependent upon an
individual's current immigration status. Unauthorized employment or a
prior status violation will not necessarily preclude an individual from
qualifying for parole under this rule. However, the fact that an
entrepreneur has worked without authorization, is out of status, or not
legally present in the United States would be considered in determining
whether DHS should grant parole under its discretionary authority. All
requests for a discretionary grant of parole are adjudicated on a case-
by-case basis and ultimately determined by evaluating all positive and
negative factors.
DHS will not adopt the commenter's suggestion to disregard, for
purposes of any future immigration applications, any prior unauthorized
employment that was used to meet the requirements for parole. DHS
believes that such a provision would require a statutory change, as
eligibility for certain benefits is barred by statute if the applicant
previously worked without authorization.\30\
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\30\ See, e.g., INA section 245(c), 8 U.S.C. 1255(c).
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3. Relationship Between Parole and Various Nonimmigrant Visa
Classifications
a. Pathway for Current Nonimmigrants To Use Entrepreneur Parole
Comment: Some commenters expressed concern that it would be
challenging for foreign students, recent graduates of U.S.
universities, and other nonimmigrants presently in the United States to
meet this rule's requirements for parole consideration under the
constraints of their current visas. These commenters said that the rule
should allow these individuals a realistic and clear pathway to easily
utilize parole, and should clarify that potential applicants currently
in the United States in nonimmigrant status will not be violating their
existing visa status when taking the necessary steps to establish
eligibility for significant public benefit parole. One commenter
requested that students in F-1 nonimmigrant status and eligible to work
on Curricular Practical Training (CPT) or Optional Practical Training
(OPT) should become eligible for parole under the rule if they founded
a start-up and raised $100,000 in capital.
Response: DHS appreciates that some entrepreneurs who are present
in the United States and who might otherwise qualify for parole under
this program may be unable to engage in certain activities given the
limitations placed on their nonimmigrant status, making it difficult,
for example, for them to raise significant capital for a start-up
entity. DHS, however, disagrees with the commenters' assertion that
individuals present in the United States in F-1 nonimmigrant status
will be unable to meet the requirements for parole under this program,
such as starting a business and raising significant investment, without
violating their F-1 nonimmigrant status. For example, an individual in
F-1 status who has obtained OPT employment authorization may start and
work for his or her own business in the United States. The OPT
employment, and thus the business, must relate to the F-1
nonimmigrant's program of study and can occur either before (pre-
completion OPT) or after the completion of a program of study (post-
completion OPT).\31\ Additional requirements apply to F-1 nonimmigrants
who are otherwise eligible for a STEM OPT extension, such as
establishing that their STEM OPT employer will have a valid employer-
employee relationship with the F-1 OPT nonimmigrant, but those
additional requirements do not pertain to the initial 12-month OPT
period, and in any event do not present an absolute bar against
entrepreneurial activities. DHS believes that it is certainly realistic
that an F-1 nonimmigrant in the United States can start a business
during his or her OPT period, and during that time can take steps to
obtain significant investment in the start-up entity, which the
individual may then rely upon if applying for parole under this rule.
DHS declines to adopt the commenters' suggestion to include in this
rule a blanket provision stating that potential applicants currently in
the United States in nonimmigrant status will not be violating their
existing status when taking steps to establish eligibility for parole.
Such changes would pertain to the statutory and regulatory limitations
placed on various nonimmigrant classifications and are outside the
scope of this rule.
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\31\ https://studyinthestates.dhs.gov/training-opportunities-in-the-united-states.
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DHS believes that this final rule provides a realistic and clear
option for certain entrepreneurs to actively grow their qualifying
start-up entity in the United States. As discussed below, parole is not
a nonimmigrant status, and individuals present in the United States in
a nonimmigrant status will not be able to change status or otherwise be
granted parole without first departing the United States and appearing
at a U.S. port of entry for inspection and parole. Under this final
rule, however, an individual present in the United States in a
nonimmigrant status may apply for and obtain an approval of the
Application for Entrepreneur Parole (Form I-941). Filing and obtaining
approval of a Form I-941 application under this rule will not, by
itself, constitute a violation of the individual's nonimmigrant status.
After approval of the Form I-941 application, if the individual decides
to rely upon parole to actively grow his or her business in the United
States, the individual will need to appear at a U.S. port of entry for
a final parole determination to allow him or her to come into the
United States as a parolee.
This final rule already provides appropriate criteria under which
all applications will be reviewed, including those submitted by any F-1
nonimmigrants. As indicated in this final rule, one basis on which an
individual may be considered for parole under this rule is if he or she
has raised at least $250,000 in investment capital from a qualifying
investor (and meets certain other criteria). Individuals who raise a
substantial amount of capital from a qualifying investor, but less than
$250,000, may still qualify for and be granted parole under other
criteria identified in the rule--including the receipt of a qualifying
government grant or award or other reliable and compelling evidence of
the start-up entity's substantial potential for rapid growth and job
creation.
b. Switching Between Nonimmigrant Status and Parole
Comment: Several commenters raised questions or provided
suggestions regarding switching from a nonimmigrant status to parole,
or from parole to a nonimmigrant status. Specifically, one commenter
asked what her status would be if she were in the United States as an
H-4 nonimmigrant, authorized to work pursuant to an EAD, but
nevertheless pursued parole under this rule. Another commenter
suggested that DHS should include a provision in this rule that
expressly allows someone to switch from nonimmigrant status to parole,
and from parole to nonimmigrant status, similar to DHS's policy to
terminate and restore the H-1B or L-1 status of certain individuals who
have temporarily departed the United States but came back using an
advance parole document that was

[[Page 5265]]

issued based on a pending Form I-485 application for adjustment of
status.
Response: DHS declines to adopt a provision in this rule allowing
individuals to change between nonimmigrant status and parole while in
the United States. An individual who is present in the United States as
a nonimmigrant based on an inspection and admission is not eligible for
parole without first departing the United States and appearing at a
U.S. port of entry to be paroled into United States. See INA section
212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A). Moreover, an individual who has
been paroled into the United States cannot change to nonimmigrant
status without leaving the United States, as INA section 248, 8 U.S.C.
1258, only permits individuals who are maintaining nonimmigrant status
to change to another nonimmigrant status. If an individual who has been
paroled into the United States under this rule has a petition for
nonimmigrant classification approved on his or her behalf, he or she
would have to leave the United States and pursue consular processing of
a nonimmigrant visa application before seeking to return to the United
States.
c. Entrepreneur Pathways and Entrepreneur Parole
Comment: One commenter stated that the international entrepreneur
parole rule should complement and not supplant prior USCIS policy
pertaining to entrepreneurs, including those reflected on the USCIS
Entrepreneur Pathways Web site.\32\ The commenter, while expressing
concerns with aspects of existing policies pertaining to entrepreneurs
and this rule, suggested that if an entrepreneur cannot qualify for
parole under this rule, USCIS should encourage the entrepreneur to seek
a visa associated with his or her start-up entity under the existing
immigrant or nonimmigrant visa system. Specifically, the commenter
suggested that the final rule should expressly include an amendment to
the H-1B regulations to allow approval of an H-1B petition under the
policies articulated on the Entrepreneur Pathways Web site, and that
USCIS adjudicators should see an express statement in the final rule
that, notwithstanding the existence of this rule, the H-1B visa remains
available for working owners of start-up entities. The commenter noted
that the USCIS Entrepreneur Pathways Web site also provides guidance
for entrepreneurs to use other existing nonimmigrant visa
classifications (e.g., L-1, O, and E visas) that could be more
advantageous to the entrepreneur than the parole rule, so adjudicators
should continue to approve petitions in that spirit. The commenter
asserted that the unique requirements under the parole rule, such as a
threshold investment amount, should not be allowed to ``bleed into and
taint'' the adjudicatory process for securing employment-based visas
traditionally used by entrepreneurs.
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\32\ See https://www.uscis.gov/eir.
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Response: DHS appreciates the commenter's suggestions, but the
suggested changes to the H-1B regulations are outside the scope of this
rulemaking. DHS agrees with the commenter that parole under this
program is intended to complement, and not supplant, other options that
may already exist for entrepreneurs under other immigrant and
nonimmigrant visa classifications. This rule does not alter existing
rules or policies regarding the ability of entrepreneurs to qualify for
any immigrant or nonimmigrant status. This rule does, however, provide
an additional avenue for entrepreneurs to consider when exploring
options that may be available to them to grow a start-up entity in the
United States.
4. Travel Document Issuance
Comment: A commenter urged DHS to grant multiple-entry parole to
foreign nationals so that they may travel internationally and return to
the United States, as this is not explicit in the regulation. The
commenter stated that this ability is essential to ensure that
entrepreneurs can raise additional funds and market innovations
worldwide. In addition, this commenter stated that some foreign
nationals may begin their businesses and seek entrepreneur parole while
in nonimmigrant status in the United States, such as in F-1 or H-1B
nonimmigrant status (and thus seek to depart the United States with
advance parole and then request parole from CBP upon their return to a
U.S. port of entry). The commenter suggested that the regulation
clarify how these foreign nationals will be able to return to the
United States.
Response: DHS notes that individuals who have been admitted to the
United States, such as those in nonimmigrant status, are not eligible
to be granted parole unless they first depart the United States. DHS
clarifies that any immigration status violations by any applicant for
parole, including those related to their entrepreneurial efforts, will
be taken into account as negative factors in the case-by-case
determination of whether the applicant merits an exercise of discretion
to grant parole, though they will not necessarily prohibit the
individual from obtaining a grant of parole under this rule.
DHS recognizes that international travel can be essential for the
success of some start-up entities. Under existing law, an individual's
authorized period of parole ends each time he or she departs the United
States. See 8 CFR 212.5(e)(1)(i). DHS may, however, authorize advance
parole before departure and can specify that such authorization is
valid for multiple uses. An entrepreneur granted advance parole would
be able to leave the country, present himself or herself at a port of
entry upon return, and request a subsequent grant of parole for the
remaining period of his or her initially granted parole period. At such
time, DHS must then inspect the individual and determine whether or not
to grant parole into the United States.\33\ If the individual is
granted parole, he or she may only be paroled for up to the time
initially granted. Any time spent outside the United States after the
parole period is initiated will count against the total period of
parole, so that the total time period of the parole period remains
consistent with the date of initial parole granted by CBP.
---------------------------------------------------------------------------

\33\ This process is not appropriately described as ``multiple-
entry parole.'' Parole does not constitute an admission to the
United States, INA sections 101(a)(13)(B), 212(d)(5)(A), 8 U.S.C.
1101(a)(13)(B), 1182(d)(5)(A); and parole terminates upon the
individual's departure from the United States, 8 CFR 212.5(e)(1)(i).
---------------------------------------------------------------------------

5. Parole in Place
Comment: Several commenters requested that DHS allow parole-in-
place under this rule. Some of these commenters stated that parole-in-
place should be added so that individuals already in the United States
in a nonimmigrant status, such as H-1B or F-1 nonimmigrant status, can
apply for and be granted parole under this rule without having to
depart the United States. Several other commenters noted that DHS has
the jurisdiction to allow parole-in-place for spouses or dependents, as
they do for military family members, and that this could be applied to
the International Entrepreneur Rule. Some commenters argued that the
requirement to be out of the country to apply for parole under this
rule puts an unnecessary financial burden on applicants who are already
residing in the United States.
Response: DHS appreciates, but declines to adopt, the commenters'
suggestions that parole-in-place be allowed under this rule for
individuals already in the United States in H-1B or F-1 nonimmigrant
status. Only applicants for admission are eligible to

[[Page 5266]]

be considered for parole, thus precluding individuals who have already
been admitted from being considered for parole inside the United
States. See INA section 212(d)(5)(A), 8 U.S.C. 1182(d)(5)(A); see also
INA section 235(a)(1), 8 U.S.C. 1225(a)(1) (describing ``applicants for
admission''). Such individuals are not eligible for parole, regardless
of whether they have overstayed their admission, unless they first
depart the United States.
6. Comments on Options After 5-Year Total Parole Period Ends
Comment: Many commenters provided views on the options available to
entrepreneurs who have exhausted their up to 5 years of eligibility for
parole under this rule. Some commenters were concerned that the rule
does not provide a direct path to lawful permanent residence, which
could limit the investment prospects for start-up entities. Other
commenters were concerned that including such a path could exacerbate
current immigrant visa backlogs and thus disadvantage those already in
the queue for immigrant visa numbers.
A number of commenters were more broadly concerned that the overall
uncertainty inherent in parole may discourage entrepreneurs from using
this rule to start and grow their businesses in the United States. One
particular commenter expressed concerns about an entrepreneur's ability
to demonstrate nonimmigrant intent for purposes of a visa that does not
permit dual intent. Others wanted DHS to consider entrepreneurs who
have completed a 5-year parole period, and whose start-ups continue to
demonstrate growth, as eligible for an EB-2 immigrant visa with a
National Interest Waiver based upon the economic benefit to the United
States. Other commenters urged DHS to establish prima facie eligibility
for lawful permanent residence based on 3 years of parole under this
rule. Still others wanted assurance that an individual who is the
beneficiary of an approved immigrant petition would keep his or her
priority date for purposes of receiving lawful permanent residence if
he or she were granted parole under this rule.
Response: DHS appreciates the wide range of comments about
immigration options for entrepreneurs after the end of their authorized
period or periods of parole under this rule. Nothing in this rule
forecloses otherwise available options for international entrepreneurs
who are granted parole. DHS further notes that this rule does not
impact existing rules and policies pertaining to retention of priority
dates in the immigrant petition context. The rule does not, however,
establish a direct path to lawful permanent residence by creating a new
immigrant visa classification for international entrepreneurs, which
could only be done by Congress.
As discussed in the NPRM, the entrepreneur and any dependents
granted parole under this program will be required to depart the United
States when their parole periods have expired or have otherwise been
terminated, unless such individuals are otherwise eligible to lawfully
remain in the United States. Such individuals may apply for any
immigrant or nonimmigrant classification for which they may be eligible
(such as classification as an O-1 nonimmigrant or lawful permanent
residence through employer sponsorship). Individuals who are granted
parole under this rule may ultimately be able to qualify for an EB-2
immigrant visa with a National Interest Waiver. If an entrepreneur is
approved for a nonimmigrant or employment-based immigrant visa
classification, he or she would generally be required to depart the
United States and apply for a visa at a U.S. embassy or consulate
abroad. As noted above, because parole is not considered an admission
to the United States, parolees will be unable to apply to adjust or
change their status in the United States under many immigrant or
nonimmigrant visa classifications. DHS does not believe that merely
being granted parole under this rule would prevent an individual from
demonstrating nonimmigrant intent for purposes of obtaining a
subsequent nonimmigrant visa for entry into United States. DHS believes
that this rule presents sufficient clarity and predictability for many
individuals who want to establish and grow their businesses in the
United States, and will contribute significantly to economic growth and
job creation here. Such positive outcomes may be relevant in the event
that entrepreneurs granted parole under this rule later seek to apply
for an existing nonimmigrant or immigrant visa.

I. Appeals and Motions To Reopen

Comment: Several commenters requested that applicants be allowed to
file appeals or motions to reconsider adverse parole decisions. A
business association requested that submissions of motions to reopen or
motions for reconsideration result in uninterrupted employment
authorization for the parolee.
Response: DHS appreciates but declines to adopt these suggestions.
DHS has concluded that granting a right of appeal following a decision
to deny entrepreneur parole would be inconsistent with the
discretionary nature of the adjudication and contrary to how DHS treats
other parole decisions. The final rule also precludes applicants from
filing motions to reopen or for reconsideration under 8 CFR
103.5(a)(1). DHS retains its authority and discretion, however, to
reopen or reconsider a decision on its own motion as proposed. See
final 8 CFR 212.19(d)(4). Applicants may alert DHS, through existing
customer service channels, that they believe that a decision to deny
parole was issued in error and include factual statements and arguments
supporting such claims.
Because the determination to grant or deny a request for parole is
discretionary, the parole process in this final rule may not be relied
upon to create any right or benefit, substantive or procedural,
enforceable at law or by any individual or other party in removal
proceedings, in litigation with the United States, or in any other form
or manner. Parole determinations would continue to be discretionary,
case-by-case determinations made by DHS, and parole may be revoked or
terminated at any time in accordance with the termination provisions
established by this rule at 8 CFR 212.19(k). Parolees under this final
rule would assume sole risk for any and all costs, expenses,
opportunity costs, and any other potential liability resulting from a
revocation or termination of parole. A grant of parole would in no way
create any reliance or due process interest in obtaining or maintaining
parole or being able to remain in the United States to continue to
operate a start-up entity or for other reasons.

J. Termination of Parole

1. Discretionary Authority To Revoke/Terminate Parole
Comments: One commenter expressed concern that the basis for
terminating parole is subjective, particularly with respect to
reporting material changes. This commenter suggested that USCIS should
limit such reporting to adverse judgments, since entrepreneurs and
start-up entities are entitled to due process. Other commenters
requested that USCIS adjudicators be specifically trained on
entrepreneurship issues so that they can make the most informed
decisions regarding parole.
Response: USCIS is committed to providing sufficient training on
entrepreneurship issues for those adjudicators who will be assigned to
adjudicating entrepreneur parole

[[Page 5267]]

requests. DHS does not believe that further revisions to the rule are
necessary to protect against possible unfair or inconsistent
determinations among adjudicators. By statute, parole decisions are
discretionary and must be made on a case-by-case basis. This rule
establishes transparent parameters for termination of parole, including
automatic termination and termination on notice. Automatic termination
applies at the expiration of parole, or upon written notification to
DHS from the entrepreneur parolee that he or she is no longer employed
by the start-up entity or no longer possesses the required qualifying
ownership stake in the start-up entity. See final 8 CFR 212.19(k)(2).
Termination on notice with an opportunity for the entrepreneur to
respond is authorized by 8 CFR 212.19(k)(3). These bases for
termination are tied to objective facts regarding eligibility for
parole, thereby placing all parolees on the same footing.
The commenter expressed particular concern regarding terminations
based on material changes. DHS believes that this concern is
sufficiently addressed by the parameters set by this rule's definition
of material change. Under this rule, material change means any change
in facts that could reasonably affect the outcome of the determination
whether the entrepreneur provides, or continues to provide, a
significant public benefit to the United States. See final 8 CFR
212.19(a)(10). This rule provides further guidance by listing several
examples illustrating material changes, including: Any criminal charge,
conviction, plea of no contest, or other judicial determination in a
criminal case concerning the entrepreneur or start-up entity; any
complaint, settlement, judgment, or other judicial or administrative
determination concerning the entrepreneur or start-up entity in a legal
or administrative proceeding brought by a government entity; any
settlement, judgment, or other legal determination concerning the
entrepreneur or start-up entity in a legal proceeding brought by a
private individual or organization other than proceedings primarily
involving claims for damages not exceeding 10 percent of the current
assets of the entrepreneur or start-up entity; a sale or other
disposition of all or substantially all of the start-up entity's
assets; the liquidation, dissolution or cessation of operations of the
start-up entity; the voluntary or involuntary filing of a bankruptcy
petition by or against the start-up entity; a significant change with
respect to ownership and control of the start-up entity; and a
cessation of the entrepreneur's qualifying ownership interest in the
start-up entity or the entrepreneur's central and active role in the
operations of that entity. See final 8 CFR 212.19(a)(10).
2. Notice and Decision
Comments: A couple of commenters suggested that DHS provide notice
and opportunity to respond before terminating parole.
Response: DHS agrees with the commenters that providing the
entrepreneur parolee with notice and an opportunity to respond prior to
termination is reasonable in certain scenarios, such as when grounds
for termination require an assessment of the underlying case by the
adjudicator. However, where no such assessment is required, DHS
believes that automatic termination is appropriate. The NPRM provided
for termination at DHS's discretion, including automatic termination in
limited circumstances and termination on notice under a range of
circumstances deemed appropriate by DHS. This rule finalizes that
proposal without change. See final 8 CFR 212.19(k)(2) and (3). Under
this rule, therefore, DHS will generally provide notice of termination
and an opportunity to respond where it believes that:
(1) The facts or information contained in the request for parole
were not true and accurate;
(2) The alien failed to timely file or otherwise comply with the
material change reporting requirements in this section;
(3) The entrepreneur parolee is no longer employed in a central and
active role by the start-up entity or ceases to possess the required
ownership stake in the start-up entity;
(4) The alien otherwise violated the terms and conditions of
parole; or
(5) Parole was erroneously granted.
Automatic termination will apply upon the expiration of parole or
if DHS receives written notice from the parolee informing DHS that he
or she is no longer employed by the start-up entity or no longer
possesses the required qualifying ownership stake in the start-up
entity. DHS believes that these bases for automatic termination clearly
evidence that the entrepreneur no longer qualifies for parole under
this rule; therefore, notice and opportunity to respond are
unnecessary. Additionally, parole of the spouse or child of the
entrepreneur will be automatically terminated without notice if the
parole of the entrepreneur has been terminated. This rule also
finalizes the provision indicating that the decision to terminate
parole may not be appealed, that USCIS will not consider a motion to
reopen or reconsider a decision to terminate parole, and, upon its own
motion, USCIS may reopen or reconsider a decision to terminate. See
final 8 CFR 212.19(k)(4).
3. Other Comments on Application Adjudication and Parole Termination
Comments: Multiple commenters suggested an expedited or premium
processing option for entrepreneur parole applicants. Some of these
commenters suggested a maximum 30-day adjudication time period.
Response: While DHS appreciates the concern for timely
adjudications, at this time DHS declines to include premium or
expedited processing as part of the final rule. DHS may consider the
possibility of premium processing or expedited processing after
assessing implementation of the rule and an average adjudication time
for processing requests for parole under this rule has been determined.

K. Opposition to the Overall Rule

Comment: Multiple commenters expressed overall opposition to the
rule, stating that there is no reason to add an additional parole
process for highly trained and talented entrepreneurs when visa and
residency pathways already exist, such as the O nonimmigrant visa, EB-5
immigrant visa, or EB-2 immigrant visa based on a National Interest
Waiver. Other commenters asserted that the United States needs to limit
immigration, not create more immigration programs. Several individual
commenters argued that the U.S. Government should reform other visa
programs, such as the H-1B nonimmigrant classification, and address the
current immigrant visa backlog before creating more programs. Several
individual commenters asserted that taxpayer money should be used on
domestic issues, such as reviving the American economy, rebuilding
infrastructure, promoting national security, and supporting veterans,
rather than on administering a parole process for international
entrepreneurs.
Response: DHS disagrees with the commenters' assertions that
sufficient avenues for international entrepreneurs already exist. DHS
believes that this final rule will, by further implementing authority
provided by Congress, reduce barriers standing in the way of innovation
and entrepreneurial activity that will benefit the U.S. economy.\34\

[[Page 5268]]

This final rule provides an avenue for innovative entrepreneurs to
pursue their entrepreneurial endeavors in the United States and
contribute to the U.S. economy. In the absence of this rule, these
innovative entrepreneurs might be delayed or discouraged altogether in
contributing innovation, job creation, and other benefits to the United
States.
---------------------------------------------------------------------------

\34\ Nina Roberts, For foreign tech entrepreneurs, getting a
visa to work in the U.S. is a struggle, The Guardian, Sept. 14,
2014, available at http://www.theguardian.com/business/...a-us-struggle; Amy Grenier, Majority
of U.S. Patents Granted to Foreign Individuals, April 11, 2014,
available at http://immigrationimpact.com/2014/04...n-individuals/ (``Because of the
limitations of the H-1B visa program, and the lack of a dedicated
immigrant visa for entrepreneurs or innovators, foreign inventors
struggle with inadequate visa options that often prevent them from
obtaining permanent residency.'').
---------------------------------------------------------------------------

DHS also disagrees with the commenters' assertions that reforms
should be made to the H-1B nonimmigrant classification and that the
immigrant visa backlog should be addressed before this rule is
finalized. Parole is an entirely separate option within the Secretary's
authority to allow individuals to come to the United States on a case-
by-case basis for urgent humanitarian reasons or significant public
benefit. While DHS appreciates the commenters' sentiment that changes
should be made in other contexts, the exact changes contemplated by the
commenters are unclear, are outside the scope of this rulemaking, or
would require congressional action.
DHS also disagrees with the assertion that taxpayer funds will be
misallocated to process applications for parole under this final rule.
Applicants for parole under this rule will be required to submit a
filing fee to fully cover the cost of processing of applications.

L. Miscellaneous Comments on the Rule

1. Additional Suggested Changes to the Rule
Comments: A number of commenters suggested additional changes to
the final rule that are beyond the scope of this rulemaking. These
comments proposed changes to the regulations governing certain
nonimmigrant programs, namely: Employment of F-1 nonimmigrant students
through Optional Practical Training (OPT); annual H-1B numerical
limitations; ``period of stay'' duration for L-1 nonimmigrants starting
a new office in the United States; and merging significant public
benefit parole with the O-1 visa program. A commenter suggested
providing Employment Authorization Documents or lawful permanent
resident status to individuals who obtained their Master's degrees in
the United States. Other commenters suggested providing tax incentives
to established U.S. corporations that would agree to mentor immigrant
entrepreneurs, or establishing a system of compensation for certain
senior citizens in the United States to mentor immigrant entrepreneurs.
Other commenters recommended balancing parole for entrepreneurs with
refugee admissions.
Response: DHS thanks commenters for these suggestions but declines
to make changes to the rule as these comments are outside the scope of
this rulemaking.
Comment: A joint submission from an advocacy group and professional
association recommended that DHS consider parole for individuals who
work in social services fields that do not command a high income or who
might otherwise perform work in the national interest.
Response: This final rule is aimed at international entrepreneurs
who will provide a significant public benefit to the United States--
which could include entrepreneurs whose startup entities operate in the
field of social services, so long as they meet the criteria for parole
in this final rule. Furthermore, this rule does not limit the
Secretary's broader authority to grant parole to other applicants for
admission on a case-by-case basis for urgent humanitarian reasons or
significant public benefit.
2. Information/Guidance
Comment: One commenter recommended that DHS make parole data from
the program publicly available.
Response: While DHS did not propose to disclose parole data related
to this rule, DHS appreciates the commenter's suggestion, and may
consider making such data publicly available after this rule is
implemented.
Comment: Other commenters suggested that DHS provide additional
guidance to those granted parole under this rule and to provide
resources for small start-ups interested in applying for the rule.
Response: DHS will evaluate whether to provide additional guidance
following publication of this final rule and an assessment of its
implementation.
Comment: One commenter suggested that DHS add a provision to the
rule for retrospective review, in order to analyze the effects of the
rule's implementation.
Response: DHS agrees with the commenter's suggestion that the
effects of the rule, after its implementation, should be reviewed;
however, DHS does not believe adding a provision to the final
regulatory text requiring such review is necessary. DHS intends to
review all aspects of this parole rule and process subsequent to its
implementation and consistent with the direction of Executive Order
13563. Given that this is a new and complex process, DHS will consider
potential modifications in the future after assessing the
implementation of the rule and its impact on operational resources.
Comment: One commenter said these rules should serve as a guide,
but that companies and entrepreneurs should be analyzed on case-by-case
basis.
Response: DHS may grant parole on a case-by-case basis under this
rule if the Department determines, based on the totality of the
evidence, that an applicant's presence in the United States will
provide a significant public benefit and that he or she otherwise
merits a favorable exercise of discretion.
Comment: An individual commenter suggested that DHS should, as part
of its assessment of parole applications under this rule, evaluate the
performance of applicants' prior start-ups in their home countries.
Response: DHS agrees with the commenter and believes that the
performance of applicants' prior start-ups in their home countries is
the type of evidence already contemplated by the final rule both under
the alternative criteria provisions and as part of the determination as
to whether an applicant merits a favorable exercise of discretion. The
alternative criteria allow an applicant who partially meets one or more
of the general criteria related to capital investment or government
funding to be considered for initial parole under this rule if he or
she provides additional reliable and compelling evidence that his or
her parole would provide a significant public benefit to the United
States. Such evidence would need to serve as a compelling validation of
the entity's substantial potential for rapid growth and job creation.
DHS is not defining the specific types of evidence that may be deemed
``reliable and compelling'' at this time, as DHS seeks to retain
flexibility as to the kinds of supporting evidence that may warrant
DHS's exercise of discretion in granting parole based on significant
public benefit.
3. Comments Regarding the E-2 Nonimmigrant Classification
Comment: Several commenters submitted comments regarding the E-2
nonimmigrant classification. The majority supported the inclusion of E-
2 businesses into the parole process under this rule. Several companies
and an individual commenter further recommended that the rule should

[[Page 5269]]

accommodate E-2 businesses already in the United States.
Response: The final rule lays out specific criteria for determining
the kind of start-up enterprise that has substantial potential for job
growth and job creation, and for assessing whether an individual
entrepreneur's parole would be justified by significant public benefit.
DHS believes it is unnecessary to identify these enterprises even more
specifically than in this final rule. DHS notes that the rule does not
prevent individuals who might otherwise qualify for an existing
immigrant or nonimmigrant classification from applying for parole under
this rule.
Comment: One commenter stated that the proposed rule is much more
complicated than the E-2 nonimmigrant classification, and that DHS
should incorporate elements of the E-2 program into this rule's parole
process.
Response: DHS disagrees with the commenter's suggestion.\35\ A
grant of parole under this rule is based on a determination that the
individual will provide a significant public benefit to the United
States. Eligibility for E-2 nonimmigrant classification is based on
different standards, and DHS believes that applying E-2 requirements
would not suffice to meet the statutory requirements for parole and
establish that an individual merits a favorable exercise of discretion.
DHS therefore declines to adopt the commenter's suggestion.
---------------------------------------------------------------------------

\35\ The E-2 nonimmigrant classification allows a national of a
treaty country (a country with which the United States maintains a
treaty of commerce and navigation) to be admitted to the United
States when investing a substantial amount of his or her own capital
in a U.S. business.
---------------------------------------------------------------------------

Comment: A commenter suggested that the proposed rule is
unnecessary since the E-2 program already supports international
entrepreneurs.
Response: DHS disagrees with the commenter's statement. The E-2
program allows nationals of a treaty country (a country with which the
United States maintains a qualifying Treaty of Friendship, Commerce and
Navigation or its equivalent) to be admitted to the United States when
investing a substantial amount of capital in a U.S. business. Foreign
entrepreneurs from nontreaty countries, such as Brazil, China, India,
Israel, or Russia, are currently not eligible for an E-2 nonimmigrant
visa. Also, the E-2 category requires the entrepreneur to invest his or
her own funds, and is therefore not applicable to entrepreneurs relying
upon funds from investors or government entities to build and grow
their business. DHS believes that this rule provides a viable option,
consistent with the Secretary's parole authority, to allow
entrepreneurs to build and grow their businesses in the United States,
providing significant public benefit here.
4. Usefulness of the Rule
Comment: Multiple commenters argued that this rule will not
necessarily help international entrepreneurs succeed, because there are
too many restrictions in place for foreign residents to qualify. One
commenter asserted that the rule as proposed is too complex and its
goals will be impossible to achieve.
Response: DHS disagrees with these assertions. DHS acknowledges
that this final rule will not benefit all international entrepreneurs
seeking to enter or remain in the United States. As several commenters
have stated, the final rule does not and cannot create a new visa
classification specifically designed for international entrepreneurs,
which is something that can only be done by Congress. This final rule,
however, provides an additional option that may be available to those
entrepreneurs who will provide a significant public benefit to the
United States. This parole option complements, but does not supplant,
current immigrant and nonimmigrant visa classifications for which some
international entrepreneurs might qualify to bring or keep their start-
up entities in the United States.
The requirements governing eligibility for consideration for parole
under this rule establish a high evidentiary bar that must be met in
order to assist DHS in its determination that the individual will
provide a significant public benefit to the United States. DHS,
however, does not agree with the commenter's assertion that the
requirements are impossible for all entrepreneurs to meet. Given that
this is a new and complex process, DHS will consider potential
modifications in the future after assessing the implementation of the
rule and its impact on operational resources.
5. Include On-Campus Business Incubators in the Rule
Comment: One commenter urged USCIS to tie eligibility for parole to
an applicant's participation in business incubators and accelerators
located on U.S. university and college campuses that allow
international entrepreneurs to grow start-up companies. The commenter
stated that these programs meet the goal of the rule while providing
benefits on a local and national scale. The commenter elaborated that
the proposed rule only contemplates a traditional start-up arrangement,
which creates requirements based on ownership interest, type of
investor, and amount of money invested. The commenter asserted that
international entrepreneurs that engage with campus-based incubators
cannot meet these requirements because the structure and opportunities
provided by a higher education institution do not follow the
traditional models. The commenter urged DHS to create alternative
criteria to recognize the role higher education plays in fostering
international entrepreneurs.
Response: DHS appreciates the comment but will not adopt changes to
the rule in response. DHS recognizes and values the important role that
incubators and accelerators located on a U.S. university or college
campuses perform in the entrepreneur community. DHS believes, however,
that the framework provided by this rule does allow DHS to consider, in
its discretionary case-by-case determination, the fact that the start-
up entity is participating in such an incubator or accelerator. DHS
believes that evidence of such participation is one factor to be
weighed for those individuals who do not fully meet the general capital
investment or government funding criteria and are relying on additional
reliable and compelling evidence that the start-up entity has the
substantial potential for rapid growth and job creation. DHS believes
that reliable and compelling evidence may, depending on all the
circumstances, include evidence that the start-up entity is
participating in a reputable incubator or accelerator located on a U.S.
university or college campus.
6. Objection to Use of the Word ``Parole''
Comment: Multiple commenters objected to the use of the word
``parole'' to describe the provisions in this rule. Commenters are
concerned that use of the word in an immigration context will be
confused with the use of the word in the criminal context. A
commentator suggested using the term ``conditional status'' or
``provisional status.''
Response: DHS declines to accept the commenters' suggestion.
``Parole'' is a term established by statute at section 212(d)(5) of the
INA, 8 U.S.C. 1182(d)(5). The use of that term in the INA should not be
confused with the word's usage in non-immigration contexts. Use of
alternative terms as suggested by the commenter would be misleading.

[[Page 5270]]

7. Concern Over Possible Exploitation of Entrepreneurs
Comment: Two commenters suggested that international entrepreneurs
would be vulnerable to exploitation by venture capital investors under
this rule. The commenters compare the influence of venture capitalists
over entrepreneurs granted parole to the influence of employers over H-
1B employees. One commenter expressed concern that the rule could allow
a venture capitalist almost total dominance over the international
entrepreneur's life, through the threat of withdrawing funding and
thereby triggering termination of parole.
Response: DHS disagrees with the commenters' assertions that the
final rule will facilitate such exploitation of international
entrepreneurs by venture capital investors. As a general matter,
venture capitalists and other investors cannot easily withdraw funding
from a start-up entity once this investment transaction has been duly
executed. Once an entrepreneur has applied for parole on the basis of
prior investment, and has been granted such parole, the investor will
not be in a position to directly interfere with the entrepreneur's
continued eligibility during the parole period. The final rule will not
create significant new conditions for exploitation that do not already
exist currently for international entrepreneurs--or for that matter,
domestic entrepreneurs--in the United States.
Comment: One commenter stated that the United States should be
mindful of what may happen to poorer countries when the United States
attracts their best entrepreneurs.
Response: DHS stresses that application for parole under this rule
is voluntary and has the primary goal of yielding significant public
benefit for the United States. DHS believes that applicants will assess
economic and business conditions both in the United States and in other
countries and will consider these conditions, along with numerous
others, in the decision to apply for parole under this rule. DHS does
not believe that the rule itself, which authorizes parole only for a
limited period of time and under specific limited circumstances, will
create significant negative consequences for poorer countries.
Additionally, positive spillovers from new innovations are not limited
to the specific country in which they were developed. Parole under this
rule in no way prevents an entrepreneur contributing to the economy of
his or her home, including through remittance payments or upon return.
Furthermore, individuals may be interested in returning to their home
countries in the future for a variety of reasons, including the
temporary nature of parole.

M. Public Comments on Statutory and Regulatory Requirements

1. Regulatory Impact Analysis
Comment: Two commenters suggested alternative estimates for the
number of applicants that could apply to this rule. One commenter
estimated that 5,000 international entrepreneurs will apply for parole
under this rule. This estimate was approximately 2,000 more
entrepreneurs than the estimate provided by DHS. Another commenter
stated that the rule's eligibility criteria are narrow and therefore,
the rule would cause fewer than 3,000 people to apply.
Response: DHS recognizes that uncertainty in business and economic
conditions, as well as data limitations, make it difficult to
accurately predict how many entrepreneurs will apply for parole under
this rule. However, as discussed in the ``Volume Projections'' section
of this rule, DHS utilized limited data available to estimate that
approximately 2,940 entrepreneurs could seek parole each year. This
estimate was bolstered by an alternative estimate based on accelerator
investment round data that DHS analyzed. Given limits on DHS's
information about such entrepreneurs and that this is a new process,
DHS does not know how many people within the estimated eligible
population will actually apply. Additionally, fluctuations in business
and economic conditions could cause the number of applications to vary
across years.
While one commenter estimates that the eligible number of
entrepreneurs will be higher than the DHS estimate, another commenter
estimates it will be lower. Neither of the commenters provided a basis
or data from which their figures were derived. DHS reaffirms that the
estimate provided in this rule is reasonable. The assessment is based
on analysis of data and publicly available information, and reflects,
where data and analysis allow, reasonable medians or averages.
Comment: One commenter argued that the rule would only benefit
certain special-interest venture capitalists.
Response: DHS respectfully disagrees with this commenter.
Fundamentally, this rule is designed to yield significant public
benefit to the United States--including through economic growth,
innovation, and job creation--and not to any particular private-sector
interest group. While some venture capital firms may benefit from the
rule by having new opportunities to invest in start-up entities that
would not have otherwise been able to locate in the United States, this
is also true for a range of other ``qualified investors'' as defined in
the rule. Moreover, many international entrepreneurs may qualify for
parole under this rule without having raised private-sector capital
investment at all, since funding from government entities is also an
eligibility criterion.
Comment: Several commenters stated that the rule would provide
significant economic benefits.
Response: DHS agrees with these commenters that the rule will
provide significant economic benefits to the United States. As
discussed in the proposed rule and elsewhere in this section, DHS
believes that this rule will help the United States compete with
programs implemented by other countries to attract international
entrepreneurs. International entrepreneurs will continue to make
outsized contributions to innovation and economic growth in the United
States.
Comment: Several commenters provided feedback on the costs of
applications. One commenter stated that the fees were reasonable.
Another commenter suggested allowing market prices to determine parole
costs, essentially allowing those entrepreneurs with more likelihood of
success to invest in parole opportunities. Still other commenters
stated that the application fee was too high, especially compared to
various visa applications.
Response: DHS appreciates commenters' feedback on the costs for
applications. DHS determines the costs of applications through a
biennial fee study it conducts, which reviews USCIS' cost accounting
process and adjusts fees to recover the full costs of services provided
by USCIS. The established fees are necessary to fully recover costs and
maintain adequate service by the agency, as required by INA section
286(m); 8 U.S.C. 1356(m).
Comment: Several commenters generally stated support for the rule
because it will likely improve innovation for local and regional
economic areas. Another commenter stated support for the rule because
it would increase intangible assets.
Response: DHS concurs with this expectation that the rule will
foster innovation at the local and regional level. Studies on
entrepreneurs reveal that they are key drivers of innovation throughout
the United States, and that such innovation benefits local, regional,
and the national economy through technical progress and improvements in
efficiency and productivity. The rule's

[[Page 5271]]

eligibility criteria focus on start-ups with high growth potential, and
DHS expects that new firms started by entrepreneurs covered by the rule
will conduct research and development, expand innovation, and bring new
technologies and products to market in addition to creating jobs in the
United States. These activities will produce benefits that will spill
over to other firms and sectors.
DHS also agrees with the commenter on impacts to intangible assets.
Intangible assets are generally integrated into a firm's or sector's
total assets and have become important in broad analyses of
productivity and efficiency. Such assets can include proprietary
software, patents, and various forms of research and development. This
rule is intended to attract the types of ventures that will increase
intangible assets.
a. Job Creation
Comment: Many commenters agreed that this rule would help create
jobs and significantly benefit the U.S. economy. A commenter noted that
immigrants have helped to found one quarter of U.S. firms and therefore
allowing more international entrepreneurs would result in new job
creation. Commenters also mentioned that immigrants have historically
been successful in creating and establishing new businesses, which in
turn create jobs in the United States. Commenters also more
specifically endorsed the need to provide more investment opportunities
for venture capitalists and angel investors who indirectly create jobs.
Finally, commenters from the technology industry stated that attracting
entrepreneurs to the Unites States to operate in high unemployment
areas could provide access to new jobs where they are most needed.
Response: DHS appreciates the commenters' support of this rule with
regard to attracting international entrepreneurs, and emphasizes that
job creation for U.S. workers is one of the rule's primary goals, as
discussed in the Regulatory Impact Analysis (RIA).
b. Impact on Native U.S. Entrepreneurs and Native U.S. Workers
Comment: Several commenters suggested the rule will have negative
consequences for native U.S. entrepreneurs and native U.S. workers.
These commenters were concerned that the rule would be disadvantageous
to native U.S. entrepreneurs and would create incentives for venture
capital firms to find international entrepreneurs instead of investing
in native U.S. entrepreneurs. The commenters argued that job creation
could be accomplished through investment of native U.S. entrepreneurs
instead of foreign entrepreneurs. Several commenters also stated that
the government should assist U.S. entrepreneurs and workers before
helping international entrepreneurs. Commenters also mentioned that the
need for international innovators was overstated and that the number of
native U.S. innovators is already adequate. Finally, these commenters
asserted that foreign workers are often exploited for cheap labor and
harm job prospects for native U.S. workers.
Response: DHS disagrees with these commenters' assertion that the
rule will have negative impacts on native U.S. entrepreneurs and native
U.S. workers. This rule focuses on identifying entrepreneurs associated
with start-up entities with significant potential for bringing growth,
innovation, and job creation in the United States. Much research
supports the conclusion that high-growth firms drive job creation for
workers in the United States, including for native U.S. workers. As
discussed in further detail in the RIA, research also shows that
immigrants have been outsized contributors to business ownership and
entrepreneurship in the United States and abroad. Self-employment rates
for immigrants are higher than for the native U.S. population. As
discussed in the RIA, although one economic study has suggested that a
very small number of native U.S. entrepreneurs may be displaced by
international entrepreneurs, other researchers have noted that the
finding simply raises the possibility that such displacement could
occur without providing evidence that it actually does.\36\ DHS
reiterates, moreover, that the numbers of entrepreneurs who may be
eligible for parole under this rule is limited and that the aim of the
rule is to increase overall entrepreneurial activity and significant
economic benefit throughout the United States. In any event, the
purpose of the parole rule is to foster innovation and entrepreneurial
activities in new or very young endeavors, where the literature much
more decisively indicates a strong potential of creating new net jobs
for U.S. workers.
---------------------------------------------------------------------------

\36\ Compare Fairlie, R.W., and B.D. Meyer. ``The effect of
immigration on native self-employment.'' Journal of Labor Economics
21:3 (2003): 619-650, available at: http://people.ucsc.edu/
~rfairlie/papers/published/jole%202003%20-%20native%20se.pdf, with,
e.g., Magnus Lofstrom, ``Immigrants and Entrepreneurship,'' Public
Policy Institute of California, USA, and IZA, Germany (2014), p. 4,
available at: http://wol.iza.org/articles/immigrants-and-entrepreneurship.pdf.
---------------------------------------------------------------------------

c. Impact on Innovation
Comment: Several commenters provided feedback on the rule's impact
on innovation. Two commenters stated that this type of international
entrepreneurship supports innovation in the United States. Another
commenter stated that the rule would not help foreign innovators
because of complications with patents and modeling designs.
Response: DHS agrees with the commenters that stated that this rule
supports innovation in the United States. Entrepreneurs tend to engage
in research and development in order to develop and commercialize new
products and technologies, and often stimulate patents and other
intellectual capital linked to these efforts. DHS does not agree with
the commenter that stated the rule is not helpful to foreign innovators
because of issues with patents and modeling designs, and DHS sees no
basis for this comment. Nothing in the rule poses specific burdens or
constraints on the ability of entrepreneurs to seek and obtain patents
or other intellectual capital.
2. Review Under the National Environmental Policy Act (NEPA)
Comment: An advocacy organization stated that all rules, including
immigration rules, are subject to review under the National
Environmental Policy Act. The commenter suggested that, at minimum, an
Environmental Assessment be conducted to account for the growth-
inducing impacts that would occur with an influx in population under
this rule.
Response: DHS agrees that NEPA applies to this, as to every, final
rulemaking. As explained in section IV.E of this preamble, the rule has
been reviewed for environmental effects and found to be within two
categorical exclusions from further review because experience has shown
rules of this nature have no significant impacts on the environment.
DHS also notes that any entrepreneurial ventures undertaken will be
governed by local, state and federal laws and regulations, including
those protecting human health and the environment. We disagree with the
commenter's assertion that an Environmental Assessment is required.
3. Proposed Information Collections Under the Paperwork Reduction Act
a. Employment Eligibility Verification, Form I-9
Comment: An individual commenter suggested that List A documents
should be updated to include the verified

[[Page 5272]]

driver's licenses (sample attached and included in the file) that meet
federal guidelines and require the presentation of the same
documentation needed to obtain a passport. The commenter stated that it
is no longer reasonable for those who receive a verified license and
who paid the premium necessary for the processing of the extra
documents, to have to locate their birth certificate and social
security card in order to complete the Form I-9 process.
Response: DHS presumes that by ``verified driver's licenses'' the
commenter is referring to State driver's licenses that comply with the
REAL ID Act of 2005, Public Law 109-13, 119 Stat. 302. The specific
suggestion about amending List A on Form I-9, which would have wide-
ranging effect and not be limited to entrepreneurs under this rule, is
outside the scope of this rulemaking. This rule and accompanying form
revisions limit changes to List A of Form I-9 to the modification of an
existing document specified at 8 CFR 274a.2(b)(1)(v)(A)(5) to include
individuals authorized to work incident to parole.
b. Application for Entrepreneur Parole, Form I-941
Comment: DHS received a public comment that stated that the time
burden estimate of 1.33 hours for the respondent to complete the
information collection was too low.
Response: DHS appreciates and agrees with this comment. Based on
further review of the information collection and public comments on
this specific issue, DHS is revising the estimated time burden from
1.33 hours to 4.7 hours for Form I-941 respondents.
4. Comments and Responses to Impact on Small Businesses
Comment: The U.S. Small Business Administration, Office of Advocacy
(SBA) commented by supporting the goals of this rule, but expressed
concern that the rule could significantly impact small entities. The
SBA commented that the proposed rule was erroneously certified under
the Regulatory Flexibility Act (RFA). The SBA stated that the only
international entrepreneurs eligible for this parole program are those
with significant ownership stakes in a start-up entity formed in the
previous three years. The SBA also stated that the thresholds to
qualify for parole were directly tied to the ability of the
entrepreneur's start-up to produce significant public benefit to the
United States. The SBA noted that under the proposed rule, an
entrepreneur is not permitted to transfer work authorization to another
start-up entity, and that these restrictions could impact start-up
entities if the entrepreneur were no longer eligible to stay in the
United States. For these reasons, SBA concluded that this rule directly
impacts start-up entities. The SBA recommended that DHS submit a
supplemental analysis on the impact of the final rule on small
entities.
Response: DHS has concluded that a RFA certification statement for
this final rule is appropriate. This final rule does not regulate small
entities nor does it impose any mandatory requirements on such
entities. Instead, it provides an option for certain individual
entrepreneurs to seek parole on a voluntary basis. There are no
compliance costs or direct costs for any entity, small or otherwise,
imposed by this rule since it does not impose any mandatory
requirements on any entity. Historically, when an employer petitions on
behalf of an individual or employee, DHS has provided an RFA analysis
for the impact to small businesses. However, under this rule, a small
entity or an employer does not apply for parole on behalf of an
employee; instead, an entrepreneur applies for parole on a voluntary
basis on his or her own behalf, and only those eligible individuals
seeking parole would be subject to the anticipated costs of
application. Entrepreneurs with an ownership stake in a start-up make
the cost-benefit decision to voluntarily apply for parole.
In both the RFA and SBA's Guide for Government Agencies on the RFA,
government agencies are required to consider significant alternatives
to the rule when providing a full RFA analysis. Among the kinds of
alternatives that SBA suggests considering include ``the exemption for
certain or all small entities from coverage of the rule, in whole or in
part.'' \38\ Even if this rule directly impacted small entities and DHS
were required to engage in an analysis to minimize negative impacts of
the rule on small entities by exempting them from the rule, that
alternative would only harm small entities, which would no longer be
able to benefit from the rule's allowing entrepreneurs to seek parole
and work authorization.
---------------------------------------------------------------------------

\38\ The Regulatory Flexibility Act, 5 U.S.C. 603(c)(4). The
Small Business Administration's RFA Guide for Government, p. 38,
available at https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------

The SBA also commented on various policy issues on the eligibility
of entrepreneurs in this rule. Notwithstanding DHS' belief that
entrepreneurs when filing for parole are not small entities, DHS has
carefully considered all those comments and has made policy changes in
this final rule to address the comments. Specifically, the SBA
commented that thresholds to qualify for parole are directly tied to
the ability of the international entrepreneur's start-up to produce
significant public benefit for the United States. DHS has considered
this comment along with other public comments on this issue and has
made the decision to lower the eligible threshold investment amount for
initial parole from the proposed $345,000 in the NPRM to $250,000 in
the final rule. Additionally, in the NPRM and in this final rule, DHS
has provided some flexibility and alternative criteria for those
entrepreneurs meeting partial eligibility requirements, as described in
further detail in the preamble.
SBA also commented that the rule only allows the entrepreneur to
work for the business identified on the parole application without
providing leniency in transferring the work authorization to another
entity. The SBA further comments that the start-up entity may be
imperiled if the entrepreneur is no longer eligible to stay in the
United States. The eligibility criteria for consideration for parole
under this rule require an entrepreneur to have recently formed a new
entity in the United States with substantial potential for rapid growth
and job creation. Before an application for parole under this rule is
approved, USCIS must make a discretionary determination that the
entrepreneur is well-positioned to provide a significant public benefit
to the United States. Therefore, these eligibility criteria are not
limiting entrepreneurs, but aimed at ensuring that only those
entrepreneurs with high growth potential are eligible for parole
consideration under this rule. DHS has also provided avenues for an
additional parole period specifically to prevent instability of a
start-up entity.
DHS reiterates that RFA guidance allows an agency to certify a
rule, instead of preparing an analysis, if the rule is not expected to
have a significant economic impact on a substantial number of small
entities.\39\ DHS reiterates that this rule does not regulate small
entities. Any costs imposed on businesses will be driven by economic
and business conditions and not by the

[[Page 5273]]

voluntary participation for benefits from this rule.
---------------------------------------------------------------------------

\39\ See SBA, Office of Advocacy, ``A Guide for Government
Agencies; ``How to Comply with the Regulatory Flexibility Act,
Implementing the President's Small Business Agenda and Executive
Order 13272'' (May 2012), available at: https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------

IV. Statutory and Regulatory Requirements

A. Unfunded Mandates Reform Act of 1995

The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among
other things, to curb the practice of imposing unfunded Federal
mandates on State, local, and tribal governments. Title II of the Act
requires each Federal agency to prepare a written statement assessing
the effects of any Federal mandate in a proposed or final agency rule
that may result in a $100 million or more expenditure (adjusted
annually for inflation) in any one year by State, local, and tribal
governments, in the aggregate, or by the private sector. The value
equivalent of $100 million in 1995 adjusted for inflation to 2015
levels by the Consumer Price Index for All Urban Consumers (CPI-U) is
$155 million.
This rule does not exceed the $100 million expenditure in any one
year when adjusted for inflation ($155 million in 2015 dollars), and
this rulemaking does not contain such a mandate. The requirements of
Title II of the Act, therefore, do not apply, and DHS has not prepared
a statement under the Act.

B. Small Business Regulatory Enforcement Fairness Act of 1996

This rule is not a major rule as defined by section 804 of the
Small Business Regulatory Enforcement Act of 1996. This rule will not
result in an annual effect on the economy of $100 million or more, a
major increase in costs or prices, or significant adverse effects on
competition, employment, investment, productivity, innovation, or on
the ability of United States companies to compete with foreign-based
companies in domestic and export markets.

C. Executive Orders 12866 and 13563

Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action'' under section 3(f) of Executive Order 12866. Accordingly, the
rule has been reviewed by the Office of Management and Budget.
1. Summary
This final rule is intended to add new regulatory provisions
guiding the use of parole with respect to individual international
entrepreneurs who operate start-up entities and who can demonstrate
through evidence of substantial and demonstrated potential for rapid
business growth and job creation that they would provide a significant
public benefit to the United States. Such potential is indicated by,
among other things, the receipt of significant capital financing from
U.S. investors with established records of successful investments, or
obtaining significant awards or grants from certain Federal, State or
local government entities. The regulatory amendments will provide the
general criteria for considering requests for parole submitted by such
entrepreneurs.
DHS assesses that this final rule will, by further implementing
authority provided by Congress, reduce a barrier to entry for new
innovative research and entrepreneurial activity in the U.S.
economy.\40\ Under this final rule, some additional international
entrepreneurs will be able to pursue their entrepreneurial endeavors in
the United States and contribute to the U.S. economy. In the absence of
the rule, these innovative entrepreneurs might be delayed or
discouraged altogether in bringing innovation, job creation, and other
benefits to the United States.
---------------------------------------------------------------------------

\40\ Nina Roberts, For foreign tech entrepreneurs, getting a
visa to work in the US is a struggle, The Guardian, Sept. 14, 2014,
available at http://www.theguardian.com/business/...a-us-struggle; Amy Grenier, Majority
of U.S. Patents Granted to Foreign Individuals, April 11, 2014,
available at http://immigrationimpact.com/2014/04...n-individuals/ (``Because of the
limitations of the H-1B visa program, and the lack of a dedicated
immigrant visa for entrepreneurs or innovators, foreign inventors
struggle with inadequate visa options that often prevent them from
obtaining permanent residency.'').
---------------------------------------------------------------------------

Based on review of data on startup entities, foreign ownership
trends, and Federal research grants, DHS expects that approximately
2,940 entrepreneurs, arising from 2,105 new firms with investment
capital and about 835 new firms with Federal research grants, could be
eligible for this parole program annually. This estimate assumes that
each new firm is started by one person despite the possibility of up to
three owners being associated with each start-up. DHS has not estimated
the potential for increased demand for parole among foreign nationals
who may obtain substantial investment from U.S. investors and otherwise
qualify for entrepreneur parole, because changes in the global market
for entrepreneurs, or other exogenous factors, could affect the
eligible population. Therefore, these volume projections should be
interpreted as a reasonable estimate of the eligible population based
on past conditions extrapolated forward. Eligible foreign nationals who
choose to apply for parole as an entrepreneur will incur the following
costs: A filing fee for the Application for Entrepreneur Parole (Form
I-941) in the amount of $1,200 to cover the processing costs for the
application; a fee of $85 for biometrics submission; and the
opportunity costs of time associated with completing the application
and biometrics collection. After monetizing the expected opportunity
costs and combining them with the filing fees, an eligible foreign
national applying for parole as an entrepreneur will face a total cost
of $1,591. Any subsequent renewals of the parole period will result in
the same previously discussed costs. Filings to notify USCIS of
material changes to the basis for the entrepreneur's parole, when
required, will result in similar costs; specifically, in certain
instances the entrepreneur will be required to submit to USCIS a new
Form I-941 application to notify USCIS of such material changes and
will thus bear the direct filing cost and concomitant opportunity cost.
However, because the $85 biometrics fee will not be required with such
filings, these costs will be slightly lower than those associated with
the initial parole request and any request for re-parole.
Dependent spouses and children who seek parole to accompany or join
the principal applicant by filing an Application for Travel Document
(Form I-131), will be required to submit biographical information and
biometrics as well. Based on a principal applicant population of 2,940
entrepreneurs, DHS assumes a total of 3,234 spouses and children will
be eligible for parole under this rule. Each dependent will incur a
filing fee of $575, a biometric processing fee of $85 (if 14 years of
age and over) and the opportunity costs associated with completing the
Form I-131 application and biometrics collection.\41\ After monetizing
the expected opportunity costs associated with providing biographical
information to USCIS and submitting biometrics and combining it with
the biometrics

[[Page 5274]]

processing fee, each dependent applicant will face a total cost of
$765. DHS is also allowing the spouse of an entrepreneur paroled under
this rule to apply for work authorization. Using a one-to-one mapping
of principal filers to spouses, the total population of spouses
eligible to apply for work authorization is 2,940. To obtain work
authorization, the entrepreneur's spouse will be required to file an
Application for Employment Authorization (Form I-765), incurring a $410
filing fee and the opportunity costs of time associated with completing
the application. After monetizing the expected opportunity costs and
combining it with the filing fees, an eligible spouse will face a total
additional cost of $446 (rounded). DHS expects that applicants will
face the above costs, but does not anticipate that this rule will
generate significant additional costs and burdens to private entities,
or that the rule will generate additional processing costs to the
government to process applications. While applicants may face a number
of costs linked to their business or research endeavors, these costs
will be driven by the business and innovative activity that the
entrepreneur is engaged in and many other exogenous factors, not the
rule itself or any processes related to the rule. Thorough review of
academic, business, and policy research does not indicate that
significant expected costs or negative consequences linked to
attracting international entrepreneurs are likely to occur. As such,
DHS expects that the negative consequences, if any, will be greatly
exceeded by the positive effects of this rule.
---------------------------------------------------------------------------

\41\ The filing fees have been updated and reflect those
promulgated in the 2016 Fee Rule (1615-AC09, CIS No. 2577-15 DHS
Docket No. USCIS-2016-0001).
---------------------------------------------------------------------------

In each case in which an entrepreneur will be granted parole under
this rule, DHS will have made a determination that parole will yield a
significant public benefit and that the person requesting parole merits
a favorable exercise of discretion. Consistent with those decisions,
the rule is expected to produce broad economic benefits through the
creation of new business ventures that otherwise would not be formed in
the United States. These businesses are likely to create significant
additional innovation, productivity, and job creation. It is reasonable
to conclude that investment and research spending on new firms
associated with this rule will directly and indirectly benefit the U.S.
economy and create jobs for American workers. In addition, innovation
and research and development spending are likely to generate new
patents and new technologies, further enhancing innovation. Some
portion of the international entrepreneurs likely to be attracted to
this parole process may develop high-growth and high-impact firms that
can be expected to contribute disproportionately to U.S. job creation.
In summary, DHS anticipates that this rule will produce positive
effects that would greatly exceed any negative consequences.
Using an estimate of 2,940 annual applications for significant
public benefit entrepreneur parole as developed in the ensuing volume
projections section of this analysis, DHS anticipates the total cost of
this rule for principal filers who face a total per applicant cost of
$1,591 to be $4,678,336 (undiscounted) annually for any given year.
(These estimates focus only on principal initial filers, not
entrepreneurs who might be eligible for a re-parole period of up to 30
months, or their spouses.) Dependent spouses and children who must
submit the Form I-131 application and biometrics will face a per-
applicant cost of $765, for a total cost of $2,474,914 (undiscounted).
Dependent spouses who apply for employment authorization will face a
per applicant cost of $446, which DHS projects will total $1,311,830
(undiscounted). Adding together the costs for the principal filers and
family members--including filing costs, costs of submitting biometrics,
and monetized opportunity costs--yields a total cost of this rule for
the first year, 2017 and subsequently 2018, of $8,465,080
(undiscounted). The total annual cost of the rule of $8,465,080 can be
expected for each subsequent year in the ten-year period. The total
ten-year undiscounted cost is $84,650,081.
2. Background and Purpose of the Rule
Section 212(d)(5) of the Immigration and Nationality Act (INA), 8
U.S.C. 1182(d)(5), grants the Secretary of Homeland Security the
discretionary authority to parole applicants for admission into the
United States temporarily, on a case-by-case basis, for urgent
humanitarian reasons or significant public benefit. DHS is amending its
regulations implementing this authority to increase and enhance
entrepreneurship, research and development and other forms of
innovation, and job creation in the United States. The rule will
establish general criteria for the use of parole with respect to
individual entrepreneurs who operate start-up entities and who can
demonstrate through evidence of substantial and demonstrated potential
for rapid business growth and job creation that they would provide a
significant public benefit to the United States.
The purpose of the rule is to attract talented entrepreneurs to the
United States who might otherwise choose to pursue such innovative
activities abroad, or otherwise be significantly delayed in growing
their companies in the United States, given the barriers they presently
face. In addition to the benefits associated with entrepreneurial
innovation, including new products, business networks, and production
efficiencies that such activities are likely to generate, entrepreneurs
have been and remain vital to economic growth and job creation in the
United States and have generated a cohort of high-growth firms that
have driven a highly disproportionate share of net new job
creation.\42\
---------------------------------------------------------------------------

\42\ See Richard L. Clayton, Akbar Sadeghi, David M. Talan, and
James R. Spletzer, High-employment-growth firms: Defining and
counting them, Office of Industry Employment Statistics, Bureau of
Labor Statistics (BLS), Monthly Labor Review (June 2013), p. 1-2,
available at: http://www.bls.gov/opub/mlr/2013/article/pdf/clayton.pdf.
---------------------------------------------------------------------------

A body of research documents both the importance of entrepreneurial
activity to the U.S. economy and its link to immigration. In this
background section, DHS does not attempt to comprehensively summarize
this large body of work but instead focuses on specific aspects central
to the purpose of the rule and to its potential impacts.\43\ In
summary, DHS focuses on the role of new entrepreneurial firms in job
creation in the United States, and the role that immigrant
entrepreneurs have played in innovation and the high technology sector.
---------------------------------------------------------------------------

\43\ DHS notes that the body of research concerning immigration
in general and its impact on the labor market, most notably germane
to earnings and employment of domestic workers, is not addressed in
the present analysis.
---------------------------------------------------------------------------

The labor market of the United States is highly dynamic. DHS
analysis of data published by the U.S. Department of Labor's Bureau of
Labor Statistics (BLS) indicates that between 2004 and 2013, on average
about 847,000 firms were ``born'' each year and 784,000 ``died.'' \44\
To illustrate the extent of the labor market churn, since 1980 the
private sector has generated about 16.3 million gross jobs annually but
an average of only about 1.4 million net jobs annually. In both general
business cycle expansions and contractions, large numbers of jobs are
created and destroyed, comprising a key dynamic in the forces of
creative destruction.\45\

[[Page 5275]]

Research into the highly dynamic and volatile labor market in the
United States has evolved. Earlier focuses on small- and new-firm size
as the primary co-determinants of job creation has been reoriented to
focus on the role of a relatively small subset of entrepreneurial
firms.
---------------------------------------------------------------------------

\44\ Figures were obtained from the BLS, Business employment
Dynamics, Table 8, ``Private sector establishment births and deaths,
seasonally adjusted:'' available at http://www.bls.gov/news.release/cewbd.t08.htm. Firm ``births'' in these data only include new firms
and thus exclude new franchises and expansions of existing firms.
\45\ See Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier
Miranda, The Role of Entrepreneurship in U.S. Job Creation and
Economic Dynamism, Journal of Economic Perspectives--Vol. 28, Number
3 (Summer 2014), pp. 3-24, available at: http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.28.3.3.
---------------------------------------------------------------------------

This rule focuses on identifying entrepreneurs associated with
types of start-up firms that are more likely to experience high growth,
contribute to innovation, and create jobs in the United States. This
deliberate focus is critical to ensuring that parole in individual
cases is justified by significant public benefit. Research has shown
that the average start-up company does not survive long.\46\ Most new
firms do not add much net job creation either, as they are not focused
on achieving high growth. By some estimates, the vast majority--as much
as 95 percent--of all new firms are not substantial job creators or
innovators.\47\ About 95 percent of new firms start with fewer than 20
employees, and about the same percentage ultimately close with fewer
than 20 employees, indicating that business turnover is heavily
influenced by small firms.\48\
---------------------------------------------------------------------------

\46\ According to BLS findings, ``20 percent of newly created
establishments don't survive their first year in business, 32
percent don't survive their first two years, and 50 percent don't
survive their first 5 years.'' See Richard L. Clayton, Akbar
Sadeghi, David M. Talan, and James R. Spletzer, High-employment-
growth firms: Defining and counting them, Office of Industry
Employment Statistics, Bureau of Labor Statistics (BLS), Monthly
Labor Review (June 2013), p. 1, available at: http://www.bls.gov/opub/mlr/2013/article/pdf/clayton.pdf.
\47\ See Jason Wiens and Chris Jackson, The Importance of Young
Firms for Economic Growth, Ewing Marion Kauffman Foundation (2014),
pp. 1-2, available at: http://www.kauffman.org/~/media/kauffman_org/
resources/2014/entrepreneurship%20policy%20digest/september%202014/
entrepreneurship_policy_digest_september2014.pdf; see also Hurst,
Erik, and Benjamin Wild Pugsley. 2011; What Do Small Businesses Do?
Brookings Paper on Economic Activity, no. 2 (2011), pp. 73-142.
\48\ See Headd, Brian, An Analysis of Small Business and Jobs,
SBA Office of Advocacy (2010), p. 6, available at: https://www.sba.gov/sites/default/files/files/an%20analysis%20of%20small%20business%20and%20jobs(1).pdf.
---------------------------------------------------------------------------

There is significant research, however, demonstrating that a small
subset of new firms tends to be highly dynamic and to contribute
disproportionately to net job creation. The BLS has highlighted the
role of the small subset of high-growth firms that comprise about 2
percent of all firms but have accounted for 35 percent of gross job
gains in recent years. ``High-growth firms'' are defined by the BLS and
the Organization for Economic Cooperation (OECD) as those with at least
ten employees that grow by at least 20 percent for each of 3
consecutive years based on employment. As of 2012, there were 96,900
high-growth firms in the United States that had created about 4.2
million jobs.\49\ A key finding by the BLS is that high-growth firms
especially add jobs in their first ten years, though they generally
continue to add a diminishing number of new jobs even after that period
of time to the extent they survive. Job creation in the United States
for the last several decades has been driven primarily by high-growth
firms that tend to be young and new, and by a smaller number of
surviving high-growth firms that age for a decade or more.\50\
---------------------------------------------------------------------------

\49\ See R. Clayton et al. (June 2013), supra n. 50, p. 2-4. For
a description of the methodology utilized to measure high growth
firms, see OECD, OECD-Eurostat Manual on Business Demography
Statistics (2007), pp. 59-65, available at: http://www.oecd.org/std/39974460.pdf.
\50\ For specific detailed information on survival rates and
employment creation at various intervals along the HGF life span,
see R. Decker et al. (2014), supra n. 53, pp. 6-24. The BLS and
others use the term ``gazelles'' to differentiate the fastest
growing young HGFs.
---------------------------------------------------------------------------

This highly disproportionate, ``up or out'' dynamism of high-growth
firms has been substantiated by many researchers. The SBA reported that
about 350,000 ``high impact firms''--defined as enterprises whose sales
have at least doubled over a 4-year period and which have an employment
growth quantifier of 2 or more over the same period--generated almost
all net new jobs in the United States between 1994 and 2006.\51\ The
Kauffman Foundation, a leading institute on research, data collection,
and advocacy for entrepreneurial activity, reports that the top-
performing one percent of firms generates roughly 40 percent of new job
creation, and, the fastest of them all--the ``gazelles''--comprising
less than one percent of all companies, generated roughly ten percent
of new jobs.\52\ The same general result has been found
internationally; the OECD reports that between three percent and six
percent of all firms can be considered high-growth firms but about one
percent can be considered the even more high-performing ``gazelles.''
\53\
---------------------------------------------------------------------------

\51\ See Spencer Tracy, Jr., Accelerating Job Creation in
America: The Promise of High-Impact Companies, SBA Office of
Advocacy (2011), pp. 1-4, available at: https://www.sba.gov/sites/default/fi...actReport.pdf; see also Acs, Zoltan,
William Parsons, and Spencer L. Tracy, Jr, High-Impact Firms:
Gazelles Revisited; Study prepared for the SBA, Office of Advocacy
(2008), p. 1, available at: http://www.sba.gov/advo/research/rs328tot.pdf. The SBA high-impact cohort is about 6.3% of all firms,
which is higher than the 2% high-growth category found in the BLS
studies. The SBA cohort is larger because the criteria are slightly
less restrictive and it includes older firms.
\52\ See Dane Stangler, High-Growth Firms and the Future of the
American Economy, Kauffman Foundation Research Series: Firm
Formation and Economic Growth (2010), p. 2, available at: http://
www.kauffman.org/~/media/kauffman_org/
research%20reports%20and%20covers/2010/04/highgrowthfirmsstudy.pdf.
\53\ David B. Audretsch, Determinants of High-Growth
Entrepreneurship, report prepared for the OECD/DBA International
Workshop on High-growth firms: local policies and local
determinants, OECD, p. 2-5, available at: http://www.oecd.org/cfe/leed/Audretsch_determinants%20of%20high-growth%20firms.pdf.
---------------------------------------------------------------------------

Despite the finding across a large number of studies that small new
firms tend to exhibit an ``up or out'' dynamic in which a small number
survive to age five to become high-growth firms or ``gazelles,'' other
key findings that have emerged in the literature suggest that the
growth and performance of new firms, even high-growth firms, vary
substantially (as indicated by metrics that include labor productivity,
profitability, revenue, and research and development intensity).\54\
Models that can sort out various business characteristics and economic
conditions to predict high-growth probabilities are still in nascent
stages. Nevertheless, this rule includes threshold criteria for parole
consideration meant to identify entrepreneurs associated with the kinds
of promising start-up entities that appear more likely to contribute to
American innovation, economic development, and job creation. As
described in more detail below, businesses started and run by
immigrants have propelled these kinds of broadly shared economic
benefits for many years.
---------------------------------------------------------------------------

\54\ See R. Decker et al (2014), supra n. 53, pp. 5-7; see also
Davis, Steven J., R. Jason Faberman, John Haltiwanger, Ron Jarmin,
and Javier Miranda, Business Volatility, Job Destruction, and
Unemployment. American Economic Journal: Macroeconomics 2(2) (2010):
259-87. Research and development intensity is typically measured as
the ratio of research and development spending to revenue, net
income, or overall costs.
---------------------------------------------------------------------------

Broadly speaking, high-growth entrepreneurs engage in research and
development (R&D) in order to develop and commercialize new products
and technologies. Several studies have found that such entrepreneurs
tend to engage in R&D spending in the first year, tend to attract
patents and other forms of intellectual capital, and tend to attract
venture capital financing.\55\
---------------------------------------------------------------------------

\55\ See Shah, Sonali K. and Winston Smith, Sheryl and Reedy, E.
J., Who are User Entrepreneurs? Findings on Innovation, Founder
Characteristics, and Firm Characteristics, The Kauffman Firm Survey
(Feb. 2012), pp. 2-5, available at: http://www.kauffman.org/~/media/
kauffman_org/research%20reports%20and%20covers/2012/02/
whoareuserentrepreneurs.pdf.

---------------------------------------------------------------------------

[[Page 5276]]

Immigrants have been central contributors to business ownership and
entrepreneurship in the United States and abroad. According to OECD
data, self-employment rates for immigrants are higher than those of the
native-born populations in many counties, including in the United
States.\56\ Based on the most recent data available from the U.S.
Census Bureau, 12.9 percent of the United States population was
foreign-born. Their rate of self-employment is about 30 percent higher
than that of the native-born population (7.7 percent vs. 5.9 percent;
n=1.8 million). The Census Bureau's 2012 Survey of Business Owners
showed that 14.4 percent of U.S. firms were owned by at least one
person not born a citizen of the United States.\57\ Two studies based
on samples of U.S firms found slightly higher r foreign-born ownership
rates.\58\
---------------------------------------------------------------------------

\56\ OECD, Migrant Entrepreneurship in OECD Countries, prepared
by Maria Vincenza Desiderio (OECD) and Josep Mestres-Dom[egrave]nech
for the Working Party on Migration (2011), pp. 141-144, available
at: http://www.oecd.org/els/mig/Part%20I...neurs_engl.pdf.
This, and many other similar studies and analyses are based on self-
employment rates, which are a proxy, but not a perfect measure, of
business ownership, because some ownership structures such as
partnerships, that could involve a foreign-born owner, are generally
not considered to be proprietary.
\57\ The categorization of ``foreign-born'' does not
differentiate between lawful permanent residents and naturalized
citizens. It also does not provide details of the firm history,
implying that some firms owned by persons not born in the United
States could have been founded by U.S. citizens and sold to foreign-
born persons.
\58\ See David M. Hart, Zoltan J. Acs, and Spencer L. Tracy,
Jr., High-tech Immigrant Entrepreneurship in the United States.;
report developed under a contract with the Small Business
Administration, Office of Advocacy (2009), page 8, available at:
https://www.sba.gov/sites/default/fi...s349tot_0.pdf; see
also Robert W. Fairlie and Magnus Lofstrom, Immigration and
Entrepreneurship, Institute for the Study of Labor (2013), p. 1,
available at: http://ftp.iza.org/dp7669.pdf. The foreign born
ownership rates for U.S. firms reported in these papers is 16% and
18.2%, in order.
---------------------------------------------------------------------------

Many high-growth firms are involved in activities classified in the
STEM (science, technology, engineering, and math) fields. The high
concentration of immigrant entrepreneurs in these industries has
garnered much attention. Between 2006 and 2012, one-third of companies
financed with venture capital that made an initial public offering had
an immigrant founder, a sharp rise from seven percent in 1980. These
companies have generated 66,000 jobs and $17 billion in sales.\59\ A
survey of entrepreneurs in technology-oriented privately held companies
with venture backing also showed about one-third were foreign born, and
61 percent held at least one patent.\60\
---------------------------------------------------------------------------

\59\ This information is found from various sources and found in
Stuart Anderson, American Made 2.0. How Immigrant Entrepreneurs
Continue to Contribute to the United States Economy, National
Foundation for American Policy, sponsored by the National Venture
Capital Association (NVCA) (2013), pp. 3-7.
\60\ Id. at pp. 2-5.
---------------------------------------------------------------------------

Further evidence points to similar findings. Between 1995 and 2005,
25 percent of science and technology focused businesses founded in the
United States had a foreign-born chief executive or lead technologist.
In 2005, those companies generated $52 billion in sales revenue and
employed 450,000 workers. In Silicon Valley, the share of immigrant-
founded start-ups increased to 52 percent by 2005. In 2006, foreign
nationals residing in the United States were involved (as inventors or
co-inventors) in about 26 percent of patent applications filed that
year. Immigrant founders of Silicon Valley firms tend to be highly
educated, with 96 percent holding bachelor's degrees and 74 percent
holding advanced degrees, and with three-quarters of the latter in STEM
fields. As of 2010, according to one study, more than 40 percent of the
Fortune 500 companies had been founded by an immigrant or the child of
an immigrant.\61\
---------------------------------------------------------------------------

\61\ Vivek Wadhwa, Foreign-Born Entrepreneurs: An Underestimated
American Resource, Ewing Marion Kauffman Foundation (2008), pp. 2-6,
available at: http://www.kauffman.org/~/media/kauffman_org/
z_archive/article/2008/11/wadhwatbook09.pdf.
---------------------------------------------------------------------------

To reiterate, high-growth firms tend to be new and young, and one
of their primary contributions to the highly dynamic labor market of
the United States has been through job creation. High-growth firms tend
to innovate and focus on developing new products and services. The
intense involvement of immigrant entrepreneurs in successful
technology-driven activities suggests substantial economic
contributions. While measuring the precise value and impact of
innovation is difficult and still at a nascent stage in research, many
economists believe innovation creates positive externalities and
spillover effects that further drive economic growth.\62\
---------------------------------------------------------------------------

\62\ See SMEs, Entrepreneurship and Innovation, OECD (2010), pp
26-28, available at: http://www.oecd.org/berlin/45493007.pdf.
---------------------------------------------------------------------------

Notwithstanding the research on the positive effects of high-growth
entrepreneurship, there is some evidence of a long-term slowing in
start-up dynamism and entrepreneurial activity in the United States;
this trend began several decades ago, driving many economists to
advocate for policies that attract more entrepreneurs in general.\63\
Many business entrepreneurial advocacy centers have also advocated in
recent years for the United States to enact a formalized pathway for
immigrant entrepreneurs. DHS is aware of one estimate of the potential
benefits of a theoretical start-up visa (which, as an entirely new visa
classification, only Congress can create). A Kauffman Foundation study
(2013) estimated that, under certain conditions, the establishment of a
start-up visa program could lead to the creation of between 500,000 and
1.6 million new jobs after ten years.\64\ The potential benefits of
attracting immigrant entrepreneurs have not gone unnoticed
internationally. Thirteen of the thirty-five nations that are part of
the Organization of Economic Cooperation and Development (OECD) have
enacted special immigration programs for entrepreneurs, although the
eligibility criteria vary among them to a significant extent.\65\
---------------------------------------------------------------------------

\63\ See R. Decker et al. (2014), supra n. 53, p. 16-22.
\64\ See Dane Stangler and Jared Konczal, Give Me your
Entrepreneurs, Your innovators; Estimating the Employment Impact of
a Startup Visa, Ewing Marion Kauffman Foundation, (Feb. 2013), pp.
1-3, available at: http://www.kauffman.org/~/media/kauffman_org/
research%20reports%20and%20covers/2013/02/
startup_visa_impact_finalsada. The estimates are based on a fixed
pool of 75,000 startup visas for a 10-year period, in which firm
deaths each year cycle some of visa to new entrants.
\65\ Most programs have been enacted after 2010. A country list
and some descriptive data can be found at Jean-Christophe Dumont,
Investor Visas in OECD Countries, OECD Conference on Global High-
Skilled Immigration Policy, The National Academies Board on Science,
Technology and Economic Policy (2014), available at: http://sites.nationalacademies.org/c.../documents/Web page/
pga_152202.pdf.
---------------------------------------------------------------------------

3. Population of Entrepreneurs Potentially Eligible
DHS cannot precisely predict the volume of new businesses that will
start in the United States due to this rule. DHS has instead examined
available data to provide a broad estimate of the population of
individual entrepreneurs who may be eligible to request parole
consideration under this rule. Given limits on DHS's information about
such entrepreneurs, DHS does not know how many people within the
estimated eligible population will actually seek such consideration;
the estimates contained in this section represent an approximation to
the size of the eligible population. DHS has estimated the population
of entrepreneurs potentially eligible for parole under this rule based
on two sub-groups: (1) Foreign individuals who seek to come to the
United States to start a new business with financial backing from a
qualified U.S. investor; and (2) foreign individuals who seek to come
to the United States to start a new business as recipients of U.S.
funded and awarded

[[Page 5277]]

research grants and who intend to conduct the concomitant research in
the United States. DHS assumes that each member of the eligible
population will start a business and that the general criterion for
investment from a qualified investor (e.g., venture capital firms,
angel investors, or accelerators or incubators) be set at $250,000,
while for government grants or awards the general criterion will be
$100,000. Based on these amounts, DHS analyzed various past endeavors
for the potential sources of funds. DHS estimates that approximately
2,940 foreign nationals annually could be eligible to apply for parole
under this rule. Table 1 summarizes the analysis by source of funds.

Table 1--Number of Entrepreneurs Potentially Eligible
------------------------------------------------------------------------
Annual
Sub-group eligibility
------------------------------------------------------------------------
New firms funded with investment capital................ 2,105
New firms funded with U.S. grants or awards............. 835
---------------
Total............................................... 2,940
------------------------------------------------------------------------

DHS has no way of predicting with certainty the actual number of
foreign nationals who will seek parole under this rule over time, as
the size of the eligible population could change significantly. DHS
acknowledges that the estimate of eligible individuals annually is an
approximation based on past foreign ownership and start-up capital
amounts. The analysis utilized to estimate the potential eligible
population is also based implicitly on assumptions that: (1) The rule
will not significantly change the frequency of U.S. funded grant
applications from international researchers; and (2) that the rule will
not significantly affect the market for international entrepreneurs and
the market for the types of investment structures the rule will
involve. Based on these assumptions and the data limitations, DHS
projects that for the first full year that the rule will be effective,
annual eligibility will be approximately 2,940.\66\ DHS projects that
this number will hold steady for the second year as well. The next
section provides key data and analytical approaches utilized to arrive
at the estimates of eligible individuals. DHS first considers volume
estimates of eligible individuals based on official U.S. data. The
resulting estimates based on official data are those utilized for the
cost projections of the rule. Due to particular constraints in the
data, DHS follows with an alternative method of volume estimation of
eligible individuals that adds robustness to the official estimate.
---------------------------------------------------------------------------

\66\ DHS emphasizes that the total is a broad estimate, as the
Department has no means to determine the demand for entrepreneurial
parole, changes in the eligible population that the rule may cause,
time-variant possibilities, and application preferences. These
conditions could change, if, for example, some foreign researchers
see parole as attractive and apply for federally funded grants that
they otherwise might not have applied for in the absence of the
rule. In addition, volume estimates should be interpreted to apply
to only initial applications, not considerations for re-parole at
some future point in time. Lastly, the market for the types of
investments involved, such as venture capital, are fluid and
becoming more global in scope. DHS has no means to determine how the
evolution of these investment markets will affect, or be affected
by, the rule.
---------------------------------------------------------------------------

Volume Projections Data and Methodology
A. Grants
Because U.S.-funded research grants may be a qualifying investment
under this rule, DHS obtained publicly available data on federally
funded grants for fiscal years 2013-2015.\67\ Although numerous
agencies within the Federal Government award grants to foreign-born
individuals, most are humanitarian or development focused.\68\ For this
reason DHS parsed the very large data set comprising 1.7 million
records to obtain a viable analytical cohort. First, the records were
filtered to capture Federal Government agencies that award grants to
both United States and foreign-born recipients. Secondly, the records
were sorted to only include the Federal Government agencies that award
grants focused on ``projects,'' thereby excluding block and assistance
grants.\69\ The foreign-born cohort used for the eligibility
projections excluded grants made to recipients in U.S. territories, as
such recipients may be subject to special considerations outside the
parole parameters.\70\ DHS also excluded grant amounts recorded as
negative, zero, and trivial amounts of less than $1,000--such values
were recorded if grants were rescinded or for some other reason not
ultimately funded. On average, 138,447 grants comprised the annual
resulting analytical cohort derived from the above filtering
procedures. Of that total, a small portion, 2,043 grants, or 1.5
percent, were awarded to foreign-born individuals. Having determined a
reasonable eligibility threshold of $100,000, DHS proceeded to the next
step, to determine the potential annual eligible population of grant-
sourced researchers. Over the period of analysis, 41 percent of the
Federal grants awarded to foreign recipients equaled or surpassed the
$100,000 benchmark, for an average of 835 annually.
---------------------------------------------------------------------------

\67\ The data were obtained from USASpending.gov: https://www.usaspending.gov/Pages/Default.aspx. From the homepage, the data
can be accessed from the linked ``data download'' section. The files
were obtained on April 20, 2015.
\68\ It is certainly the case that U.S. State governments and
other governmental entities issue research grants that foreign
recipients could potentially utilize for parole eligibility.
However, DHS is not aware of any database that collects and provides
such data publicly.
\69\ The Federal entities that awarded scientific focused
research to foreign recipients were: Agricultural Resource Service,
National Institutes of Health, Centers for Disease Control and
Prevention, Food and Drug Administration, Department of Defense,
National Aeronautics and Space Administration, National Oceanic and
Atmospheric Administration, National Institute of Standards and
Technology, and National Science Foundation. The U.S. Department of
State and the Agency for International Development (USAID) were
excluded from the analysis.
\70\ There is a particular way in which the data germane to
foreign grants were parsed and analyzed. There are two possible
foreign indicators listed for each grant. One is the ``principal
place'' involving the research and the other is the ``recipient
country.'' The incumbent volume projections are based on the latter
because this indicator generally implies that the grant was made to
a person or institution outside the United States. The former is not
used because this indicator could apply to grants awarded to U.S. or
foreign persons in order to conduct the ensuing research outside the
United States. Implicit in this analysis is that persons awarded
U.S.-funded grants that are overseas could conduct their research
and innovation in the United States, and are not otherwise precluded
from doing so, even if the focus of such research is in a foreign
country.
---------------------------------------------------------------------------

B. Investment Capital
To estimate the number of potential new entrepreneurial start-ups,
DHS obtained and analyzed data from the BLS and the Census Bureau. From
the BLS Business Employment Dynamics (BED) data suite, DHS obtained the
number of private establishments aged 1 year or less for nine broad
sectors likely to be involved in innovative activity, in order to focus
on entrants.\71\ Although a reasonable proxy, the number of
establishments aged 1 year or less is not a perfect measure of firm
start-ups (births). The chosen metric may

[[Page 5278]]

overstate births, by including expansions and new franchises of
existing businesses. Conversely, it may understate the actual number of
start-ups, because some fraction of firms does not survive the first
year (the data are tabulated in March of the respective year such that
the establishments aged 1 year and less are those that opened within
the previous year but remained in business as of March of the following
year), and those that opened in the previous year and were still in
business but had not reached 2 years of age. DHS utilized the relevant
figure for March 2015, because the latter is the most recent figure
reported in the BED dataset.
---------------------------------------------------------------------------

\71\ The BLS data is found at http://www.bls.gov/bdm/bdmage.htm.
DHS utilized the ``Establishment age and survival BED data for
nation by major industry'' set and figures from Table 5, ``Number of
private sector establishments by age,'' for the nine major sectors
shown in Table 2. The BLS does provide figures on firm births that
could be used in the present analysis. However, DHS chose
establishment age data because it is broken down in a way that
corresponds precisely to the innovating sectors, discussed below.
The firm birth data is not categorized in the exact same manner. The
nine major sectors were chosen to envelope the approximately 430
individual activities that DHS considers to involve ``science,
technology, engineering, and math'' (STEM). The full list based on
the 2012 update can be found at: http://www.ice.gov/sites/default/files/documents/Document/2014/stem-list.pdf.
---------------------------------------------------------------------------

For each sector, DHS obtained the corresponding share of firms
owned by a person ``not born a citizen of the United States'' from the
Census Bureau's Survey of Business Owners data set.72 73 For
brevity, we utilize the term ``foreign'' here to describe such firms.
The foreign share was obtained by dividing the number of foreign-owned
private firms in a sector by the total number of reporting firms in the
same sector. This share applies to firms that have a least one owner
who was not born in the United States but does not differentiate
between various types of ownership structures. The figure for new firms
obtained from the BLS BED data was multiplied first by the foreign
share to generate an estimate of firms per sector started by a person
not born in the United States.
---------------------------------------------------------------------------

\72\ The Census SBO data are found at: http://www.census.gov/data/tables/20...teristics.html. The foreign
ownership figures per sector are found under ``Characteristics of
Business owners,'' Table SB1200CSBO11: ``Statistics for Owners of
Respondent Firms by Whether the Owner Was Born in the United States
by Gender, Ethnicity, Race, and Veteran Status for the U.S.'' and
the startup capital data are found under Characteristics of
Businesses, Table SB1200CSB16: ``Statistics for All United States
Firms by Total Amount of Capital Used to Start or Acquire the
Business by Industry, Gender, Ethnicity, Race, and Veteran Status
for the United States: 2007.'' The foreign ownership share of firms
is provided in the table and thus did not need to be calculated by
DHS. The SBO data are part of the 2012 survey for which data was
released publicly between February and June 2016.
\73\ A possible source of upward bias in the foreign ownership
share and hence the estimate of eligible entrepreneurs is that this
share does not differentiate between foreign owners who came to the
United States to open a business and those who acquired one after
being in the United States for some period of time (e.g., lawful
permanent residents or naturalized citizens). A general finding
among the literature on this topic is that many foreign-born
business owners were driven to start a business by ``push'' factors
in the labor market after arrival in the United States. DHS does not
have a means to parse out the ownership rate in a more granular way
to account for such differences.
---------------------------------------------------------------------------

Next, DHS attempted to calculate how many of the firms were started
with at least $250,000, the minimum investment threshold that the rule
sets. The SBO data provides ranges of such startup capital amounts but
DHS could not conduct a precise estimate because the data do not
provide a category bound by the threshold minimum. In fact, the
encompassing tranche is very large, from $249,500 to $1 million in
range. The SBO does not provide actual cohort data or other information
from which DHS could evaluate the distribution and, therefore, DHS has
no way of ascertaining how many firms in this large range will occupy
the $250,000 to $1 million segment. As a result, DHS relied on the
share of firms in this tranche and the additional tranches over
$1,000,000 relative to the share of all firms reporting for the sector,
and recognizes that the volume projection is likely larger than is
realistic. An additional assumption is that the startup threshold is
the same for businesses with native and foreign-born founders. The
relevant data and estimates per sector are shown in Table 2.

Table 2--Summary of Entrepreneur Estimates
----------------------------------------------------------------------------------------------------------------
Foreign share Start-up Annual
Sector New firms (%) threshold (%) eligible
----------------------------------------------------------------------------------------------------------------
Agriculture..................................... 10,182 4.9 2.5 12
Utilities....................................... 1,204 10.8 5.5 7
Manufacturing................................... 29,883 11.0 5.4 178
Information..................................... 22,855 11.9 2.0 55
Professional Services *......................... 165,425 12.8 1.2 248
Management...................................... 7,334 7.3 20.2 108
Waste Services.................................. 66,161 16.4 0.9 94
Education....................................... 15,226 11.9 0.7 13
Health Care..................................... 210,977 18.0 3.7 1,391
---------------------------------------------------------------
Total....................................... .............. .............. .............. 2,105
----------------------------------------------------------------------------------------------------------------
* Abbreviation for ``Professional, Scientific, and Technical Services''.

As is discussed in the preamble, DHS has revised two substantive
components of the eligibility criteria for this final rule. Foremost,
the general investment amount requirement has been lowered from
$345,000 to $250,000. DHS believes that the volume estimate of
entrepreneurs based on investment capital will be higher than the 2,105
presented above but cannot make a determination of exactly how much
higher. The reason is that the lower investment amount will allow some
firms to be created that otherwise would not at the higher amount
proposed initially, but the Census Bureau capital size bin relevant to
the level proposed is the $249,500 to $1 million in range, which
includes both figures. Because DHS does not have data on the
distribution of amounts within this range, the entire bin was included
in the proposed estimates and is retained in the final estimates.
However, as is described below, DHS has conducted an alternative method
of estimation--to include updates from the initial proposal based on
new information and data--that compares very closely to the estimated
total volume of 2,940. Specifically, an alternative estimate of total
volume annually is 2,920.
C. An Alternative Estimate of Entrepreneurs Based on Investment
Structures
DHS recognizes the imperfections in estimating the potential
population of eligible entrepreneurs based on extrapolating past
conditions of foreign ownership rates and capital thresholds. The main
benefit of this method is that it is based on official data. A main
limitation is that it assumes that the annual crop of firms created are
entrepreneurial and the types of firms covered by the parole process in
the rule. In practice, some, but not all, will

[[Page 5279]]

be innovators, even though the present analysis focuses on the sectors
of the economy linked to STEM activity (DHS is not aware of any methods
or data that can allocate a research-innovation share of firms to each
sector). A second limitation is that the DHS method of measuring new
firms in the context of the rule is imprecise. The final rule revised
the definition of ``start-up entity'' in 8 CFR 212.19(a)(2) to include
firms that were formed up to 5 years prior to the filing of the
application for parole, compared to three years as proposed in the
NPRM. However, the BLS cohort of new firms utilized for the volume
projections are 1 year of age or less, not five or even three years,
and is thus a smaller estimate of the number of new firms that could be
eligible. This limitation cannot be overcome because of the manner in
which the survival cohorts are presented.\74\ Because the volume
projections are derived from information obtained from official
sources--the BLS and Census Bureau--DHS retains them for purposes of
the costs and volume estimates of the rule. DHS believes, however, that
an alternative method of estimation will inform readers and strengthen
the regulatory analysis by providing a viable comparison to the
official projections. In this alternative approach, DHS focuses on
business accelerators and incubators (described together as
``accelerators'' for brevity). By analyzing the foreign component of
these structures, data permitting, an alternative estimate of
entrepreneurs can be obtained for comparison purposes.
---------------------------------------------------------------------------

\74\ Specifically, the BLS BED provides the number of firms
surviving to a specific age and below. For example, the five year
cohort includes all firms started within five years surviving up to
that point, and so on for younger cohorts. However, the data does
not count the number of firms within each survival cohort by their
true age. Hence, the five year survivals do not include firms that
started up and may have died after three years that could have been
eligible at one time. Therefore, the five year survival cohort
significantly undercounts the number of firms that will potentially
have been considered new in the context of the final rule.
Conversely, adding up the survival cohorts to a point, say year
five, will significantly over-count the number of firms considered
new in the context of the final rule. The reason is that a firm that
survived four years and went on to age five will be included in both
the five and four year cohort, not to mention the younger ones.
Thus, adding the two (age four and five) cohorts together would
double count the survivor. This problem is less onerous for firms
aged one or zero.
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DHS obtained publicly available information from Seed-DB, which
provides data on U.S. accelerators collected from industry associations
and fee-based data providers such as Crunchbase, which is a large data
provider for venture capital, angel investors, and accelerators.\75\
From the Seed-DB Web site DHS utilized the link to ``firms that have
exited'' to collect the cohort of firms that underwent accelerators and
then exited via an acquisition or public offering. Next, DHS parsed the
data to capture firms that reported total funding, exit value, and were
not recorded as ``dead'' (last accessed on Nov. 7, 2016). The parsing
described above yielded a cohort of 89 firms. DHS followed the Seed-DB
links to Crunchbase for each firm and extracted the seed round,
recording its value.\76\ Analysis of the investment rounds reveals that
the median is $250,000. Having determined a median seed round size from
the data, DHS next attempted to estimate a foreign share of accelerated
firms. The exit cohort from which the median was calculated did not
provide such information, hence DHS turned to the Seed-DB data suite
that lists the total number of companies incubated for each accelerator
and the countries that the companies were located in. Since there is
wide variation in the number of companies per incubator, ranging from 1
to over a thousand, DHS grouped the incubators by country and then
weighted each one for its share of total companies. The resulting
weighted average indicates that one quarter of incubated companies were
foreign.\77\ Having determined a median seed round and a foreign share
estimate, the final point required is the number of firms to apply
these figures to. Based on the most recent data from the Center for
Venture Research, the 2013-2015 annual average for angel financed firms
in the seed and startup phase was 33 percent, which equals 23,336 firms
annually. Multiplying this average number of firms by 0.25 to capture
the foreign share and then by 0.5 to reflect the median and also the
investment level DHS has set yields an annual estimate of 2,920.
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\75\ The Seed-DB information is found at www.seed-db.com/.
\76\ For most of the firms in the exit cohort, the initial round
of investment date-wise was also the smallest round in terms of
value and labeled as the ``seed'' or ``angel'' round. For about 10
percent of the firms however, determining which round to use for the
analysis was not straightforward and DHS had to utilize some
discretion. For example, for some firms the seed round was listed
after other rounds, such as venture capital or Series A rounds. For
others, the seed round was not the smallest round recorded. DHS does
not know why these anomalies are present but proceeded to choose the
``seed round'' regardless of its dating or amount. The only
exception was in the few cases in which the seed round post-dated
other rounds and was larger in amount. In these few cases the
initial round was chosen, regardless of what investment type it was.
\77\ This foreign share found by DHS in the analysis corresponds
strongly to a finding in a study of high technology firms that found
that 24 percent of such firms were founded by a foreign born person.
See America's New Immigrant Entrepreneurs, Vivek Wadhwa, AnnaLee
Saxenian, Ben Rissing, and Gary Gereffi, available at: http://
people.ischool.berkeley.edu/~anno/Papers/
Americas_new_immigrant_entrepreneurs_I.pdf.
---------------------------------------------------------------------------

This estimate compares well to the official total volume estimate
of 2,940. The accelerator data captures seed rounds that involve
venture capital, angel, accelerator investments, and grants, which is
why it is compared to the total volume estimate.
D. Potential Variability in the Volume Projections
This section discusses several potential cohorts involving
entrepreneurial activity that is difficult to estimate.
In light of the potential benefits to the U.S. economy and job
creation, DHS is proposing this rule to provide a mechanism that,
consistent with the requirements of the INA, encourages international
entrepreneurs described herein to form and create innovative firms in
the United States. In 2011, DHS began outreach and stood up the
Entrepreneurs in Residence initiative to try to encourage
entrepreneurship among foreign nationals.\78\ DHS began tracking the
number of foreign nationals who indicated interest in starting up an
entrepreneurial endeavor at some point during their admission as an H-
1B nonimmigrant. Over four fiscal years (FY 2010-2013), an average of
77 foreign nationals indicated such interest. In light of the
relatively small numbers of foreign nationals who indicated their
entrepreneurial intentions, DHS believes that considering parole
requests under this rule will promote further innovation and other
economic benefits in addition to those created by existing programs and
policies used by foreign nationals to pursue high-growth
entrepreneurial activity in the United States. When the rule is
effective, there could be some small substitution effects as some
portion of this cohort could switch to seeking parole instead of
relying on other existing nonimmigrant programs and policies. DHS,
however, does not believe such substitution will occur on a large scale
because the ability to be admitted to the United States as a
nonimmigrant offers materially more benefits and protections than
parole.
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\78\ Source: ``USCIS Announces `Entrepreneurs in Residence
Initiative,' '' available at: http://www.uscis.gov/news/public-rel...ce-initiative; see also http://www.uscis.gov/eir/visa-guide/entrepreneur-visa-guide.
---------------------------------------------------------------------------

In addition, the rule lists a number of ancillary conditions for
eligibility--and conversely a number of conditions that

[[Page 5280]]

will leave individuals unlikely or unable to be paroled into the United
States (or continue to be paroled in the country). Because ancillary
conditions can be considered for eligibility, the actual volume may be
smaller than the estimates herein. Two examples are that, under the
rule, applicants must maintain household income greater than 400
percent of the poverty line and that the qualifying start-up capital
cannot come from family members. The volume estimates presented in this
analysis assume all ancillary eligibility conditions are met.
Finally, two potential elements of the eligible population are
considered. First, as alluded to in the summary, the volume estimates
and ensuing cost estimates assume one individual owner for each new
firm; under the rule, DHS will allow up to three individuals per firm
to seek parole but does not attempt to estimate how many of the
startups could have more than one owner. Second, the volume estimate
for grants is based on Federal awards only. DHS will consider
eligibility based on State or local grants and awards, including those
from State or local Economic Development Corporations (EDCs). However,
unlike in the case of Federal awards, there is not a database capturing
State and local grants or the transmission mechanisms through which
some Federal grants are distributed to other entities, such as EDCs,
and as such DHS was unable to estimate the number of entrepreneurs
potentially eligible for parole as a result of receiving State and
local grants.
4. Costs
A. Principal Filer Costs
The rule will permit certain foreign nationals to apply for a 30-
month (2.5-year) initial period of parole into the United States
provided they meet the eligibility criteria. Those who seek such parole
into the United States will face the costs associated with the
application, which involve a $1,200 application fee plus other costs,
detailed below. The costs will stem from filing fees and the
opportunity costs of time associated with filing the Application for
Entrepreneur Parole (Form I-941).
The filing fee for the Form I-941 application is $1,200. The fee is
set at a level intended to recover the anticipated processing costs to
DHS.\79\ In addition, DHS is proposing that applicants for parole as an
entrepreneur submit biometrics and incur the $85 biometric services
fee. Because entrepreneurs could start firms in any number of
occupations, DHS believes it is appropriate to utilize the mean hourly
wage for all occupations, which is $22.71.\80\ In order to anticipate
the full opportunity cost to petitioners, DHS multiplied the average
hourly U.S. wage rate by 1.46 to account for the full cost of employee
benefits such as paid leave, insurance, and retirement, for a total of
$33.16 per hour.
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\79\ USCIS calculates its fees to recover the full cost of USCIS
operations, including meeting national security, customer service,
and adjudicative processing goals. As with other fees, USCIS uses
Activity Based Costing (ABC) to assign costs to specific benefit
requests. This model uses completion rates (actual or estimated
depending on whether the benefit type is already being adjudicated)
to calculate a fee or fee adjustment for a benefit type. A
completion rate reflects an average time an adjudicator spends
actually working on a case but does not include ``queue'' or wait
times. Because parole under this rule has not yet been implemented,
the completion rate used is based on a 4-hour estimate provided by
USCIS' subject matter experts. At this time, USCIS has estimated
that 30 additional staff will be required to satisfy the forecasted
workload associated with this rule. However, USCIS requires
adjudicators to report actual adjudication hours and case
completions by benefit type. This reporting will occur after this
rule is implemented. Adjudication hours will be divided by the
number of completions for the same time period to determine the
actual average completion rate. This rate will be used in future fee
adjustments and will help determine future staffing allocations
necessary to handle the projected workload for parole under this
rule.
\80\ Please see U.S. Department of Labor, Bureau of Labor
Statistics, Occupational Employment Statistics program, National
Occupational Employment and Wage Estimates, United States (May
2014), available at: http://www.bls.gov/oes/2014/may/oes_nat.htm.
---------------------------------------------------------------------------

DHS estimates that the application will take 4.7 hours to complete.
After DHS receives the application and fees, if the applicant is
physically present in the United States, USCIS will send the applicant
a notice scheduling him or her to visit a USCIS Application Support
Center (ASC) for biometrics collection. Along with the $85 biometric
services fee, the applicant will incur the following costs to comply
with the biometrics submission requirement: the opportunity cost of
traveling to an ASC, the mileage cost of traveling to an ASC, and the
opportunity cost of time for submitting his or her biometrics. While
travel times and distances vary, DHS estimates that an applicant's
average roundtrip distance to an ASC is 50 miles, and that the average
time for that trip is 2.5 hours. DHS estimates that an applicant waits
an average of 1.17 hours for service and to have his or her biometrics
collected at an ASC, adding up to a total biometrics-related time
burden of 3.67 hours.\81\ By applying the $33.16 hourly time value for
applicants to the total biometrics-related time burden, DHS finds that
the opportunity cost for a principal applicant to travel to and from an
ASC, and to submit biometrics, will total $121.68.\82\ In addition to
the opportunity cost of providing biometrics, applicants will
experience travel costs related to biometrics collection. The cost of
such travel will equal $28.75 per trip, based on the 50-mile roundtrip
distance to an ASC and the General Services Administration's (GSA)
travel rate of $0.575 per mile.\83\ DHS assumes that each individual
will travel independently to an ASC to submit his or her biometrics,
meaning that this rule will impose a time cost on each of these
applicants.
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\81\ Foreign nationals who submit their applications from
outside the United States will still be required to pay the $85
biometric processing fee and travel to a USCIS office abroad, if
available, or a U.S. embassy or consulate office for biometric
processing at the time of travel document issuance. Due to data
limitations, and to capture general impacts of the rule, DHS has
estimated costs of submitting biometrics under the assumption that
all applicants are traveling to an ASC in the United States.
\82\ Calculation: $33.16 * 3.67 hours = $121.68.
\83\ Calculation: 50 miles multiplied by $0.575 per mile equals
$28.75. See 79 FR 78437 (Dec. 30, 2014) for GSA mileage rate.
---------------------------------------------------------------------------

DHS estimates that each principal parole applicant will incur the
following costs: $1,285 in filing fees to cover the processing costs
for the application and biometrics; $306.27 after summing the monetized
cost of travel to submit biometrics, the total opportunity costs of
time of the initial applications, biometrics, and estimated travel
costs, resulting in a total cost of $1,591.27 per application, rounded
to $1,591.\84\ If DHS receives 2,940 applications from persons eligible
to apply, DHS anticipates that such applications will result in annual
filing fee transfers of $3,777,900 (undiscounted), which comprise the
application fee and cost of submitting biometrics, and opportunity and
other burden costs of $900,436 for a total annual cost of $4,678,366.
Any subsequent renewal of the parole period will result in costs
similar to those previously discussed, with the exceptions of travel
costs, since the applicant will not be required to depart the United
States and re-enter. Similarly, the same costs will result for material
changes requiring the filing of amended applications, with the
exception of the travel costs noted above and costs associated with
biometrics collections, including the time and travel to an ASC.
---------------------------------------------------------------------------

\84\ Calculation: $1,285 + 306; $1,285 is the sum of the direct
cost of the $1,200 filing fee and the $85 cost of biometrics. The
$306(rounded) figure is obtained by adding the cost of travel
($28.75) plus the total opportunity cost of $277, the latter of
which is the product of the total time burden (8.37 hours) and the
average burdened hourly wage ($33.16).

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[[Page 5281]]

B. Dependent Spouses and Children
The rule will require all dependent family members (spouses and
children) accompanying or joining the entrepreneur to file an
Application for Travel Document (Form I-131), and will require all
spouses and children 14 years of age through age 79 to submit
biometrics.\85\ Those spouses and children will face the costs
associated with filing the application and submitting biometrics. DHS
recognizes that many dependent spouses and children do not currently
participate in the U.S. labor market, and as a result, are not
represented in national average wage calculations. In order to provide
a reasonable proxy of time valuation, DHS has to assume some value of
time above zero and therefore uses an hourly cost burdened minimum wage
rate of $10.59 to estimate the opportunity cost of time for dependent
spouses. The value of $10.59 per hour represents the Federal minimum
wage with an upward adjustment for benefits.\86\ The value of $10.59
per hour is consistent with other DHS rulemakings when estimating time
burden costs for those who are not authorized to work.\87\
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\85\ Note: If a child under the age of 14 requires a travel
document, he or she will need to appear for biometrics by traveling
to an ASC, but will not be required to pay a biometrics fee.
\86\ U.S. Department of Labor, Wage and Hour Division. The
minimum wage in effect as of July 24, 2009. Available at http://www.dol.gov/dol/topic/wages/minimumwage.htm. The calculation for
total employer costs for employee compensation for dependent spouses
and children of principals with an approved Form I-140: $7.25 per
hour x 1.46 = $10.59 per hour.
\87\ See ``Employment Authorization for Certain H-4 Dependent
Spouses; Final rule,'' 80 FR 10284 (Feb. 25, 2015); and
``Provisional and Unlawful Presence Waivers of Inadmissibility for
Certain Immediate Relatives; Final Rule,'' 78 FR 536, 572 (Jan. 3,
2013).
---------------------------------------------------------------------------

DHS will require dependents of parole applicants (spouses and
children of the parole applicant) to file an Application for Travel
Document (Form I-131). There is a $575 filing fee associated with the
Form I-131 application, and DHS estimates it will take 3.56 hours to
complete each submission. In addition to filing the Form I-131
application, each dependent spouse and child 14 years of age and over
will be required to submit biometric information (fingerprints,
photograph, and signature) by attending a biometrics services
appointment at a designated USCIS Application Support Center (ASC). The
biometrics processing fee is $85.00 per applicant. In addition to the
$85 biometrics services fee, the applicant will incur the following
costs to comply with the biometrics submission requirement: the
opportunity and mileage costs of traveling to an ASC, and the
opportunity cost of submitting his or her biometrics. While travel
times and distances vary, DHS estimates that an applicant's average
roundtrip distance to an ASC is 50 miles, and that the average time for
that trip is 2.5 hours.\88\ DHS estimates that an applicant waits an
average of 1.17 hours for service and to have his or her biometrics
collected at an ASC, adding up to a total biometrics-related time
burden of 3.67 hours. In addition to the opportunity cost of providing
biometrics, applicants will experience travel costs related to
biometrics collection. The cost of such travel will equal $28.75 per
trip, based on the 50-mile roundtrip distance to an ASC and the General
Services Administration's (GSA) travel rate of $0.575 per mile.\89\ DHS
has assumed that each applicant will travel independently to an ASC to
submit his or her biometrics, meaning that this rule will impose a time
cost on each of these applicants. DHS also assumed all children were
over the age of 14 for the purposes of this analysis and, therefore,
this cost estimate may be slightly overestimated.
---------------------------------------------------------------------------

\88\ DHS has estimated travel distances and ensuing travel times
at 2.5 hours in prior rulemakings. See, e.g., ``Employment
Authorization for Certain H-4 Dependent Spouses; Final rule,'' 80 FR
10284 (Feb. 25, 2015); and ``Provisional and Unlawful Presence
Waivers of Inadmissibility for Certain Immediate Relatives; Final
Rule,'' 78 FR 536, 572 (Jan. 3, 2013).
\89\ See U.S. General Services Administration Web site for
Privately Owned Vehicle (POV) Mileage Reimbursement Rates, http://www.gsa.gov/portal/content/100715 (accessed Aug. 8, 2015).
---------------------------------------------------------------------------

DHS projects that approximately 3,234 dependents will be required
to file a Form I-131 application and submit biometrics, based on the
estimate of 2,940 principal applicants and using a multiplier for
expected family members of 1.1.\90\ The total cost for those spouses
and children requesting parole under this program includes the filing
fee, biometrics processing fee, travel costs associated with biometrics
processing, and the opportunity cost of filing the Form I-131
application and submitting biometrics. The total time burden is 7.23
hours. At the cost-burdened wage, the total opportunity cost is $76.53.
Adding the $28.75 cost of travel, the total non-filing cost is
estimated to be $105.28, and the total cost per applicant is $765.28.
At the projection of 3,234 applicants, the non-filing cost is $340,474
(undiscounted), and combined with filing costs of $2,134,440, the total
estimated cost for dependents germane to the Form I-131 application is
$2,474,914.
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\90\ The multiplier of 1.1 was obtained from DHS estimates of
the average historical ratio of principal versus dependent
recipients of lawful permanent resident status. DHS studies based on
statistics obtained from office of Immigration Statistics reveal
that multipliers for the employment preference categories EB-1, EB-
2, and EB-3 range from 2.04 to 2.27. DHS believes that 2.1. is a
reasonable multiplier for the estimates and utilized this multiplier
in regulatory assessments involved in American Competitiveness in
the Twenty-First Century Act, (AC21) provisions, specifically:
``Retention of EB-1, EB-2, and EB-3 Immigrant Workers and Program
Improvements Affecting High-Skilled Nonimmigrant Workers'' (RIN
1615-AC05), rule. Because the Form I-131 filings relevant to this
rule do not apply to principals, only spouses and dependent
children, DHS believes it is valid to subtract 1 from the 2.1
multiplier to yield the final multiplier of 1.1.
---------------------------------------------------------------------------

In addition, DHS is allowing independent employment authorization
for spouses of entrepreneurs granted parole under this rule. DHS will
permit these individuals to apply for employment authorization by
filing a Form I-765 application. To estimate the number of potential
persons applying for employment authorization, DHS used a simple one-
to-one mapping of entrepreneurs to spouses to obtain 2,940 spouses, the
same number as entrepreneur parolees.
The current filing fee for the Form I-765 application is $410.00.
The fee is set at a level to recover the processing costs to DHS. Based
on the projection of 2,940 applicants, the total filing cost is
$1,205,400 (undiscounted). DHS estimates the time burden of completing
the Form I-765 application is 3.42 hours.\91\ At the cost-burdened
wage, the total opportunity cost is $36.20. At the projection of 2,940
applicants, the non-filing cost is $106,430 (undiscounted) and combined
with filing costs of $1,205,400 the total estimated cost for spouses
germane to the Form I-765 application is $1,311,830.
---------------------------------------------------------------------------

\91\ Source: Paperwork Reduction Act (PRA) Supporting Statement
for Form I-765 (OMB control number 1615-0040). The PRA Supporting
Statement can be found at Question 13 on Reginfo.gov at http://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201502-1615-004.
---------------------------------------------------------------------------

In addition to the filing costs, applicants for parole may face
other costs associated with their entrepreneurial activities. These
could include the administrative costs of starting up a business,
applying for grants, obtaining various types of licenses and permits,
and pursuing qualified investments. However, these costs apply to the
entrepreneurial activity and the business activity that the applicant
has chosen to be involved in and are not driven by the parole process
or other governmental functions attributable to the rule itself. Hence,
DHS does not attempt to estimate, quantify, or monetize such costs.
Lastly, DHS recognizes that some individuals who were lawfully
admitted in the United States in certain nonimmigrant classifications
may seek

[[Page 5282]]

parole. Individuals who are present in the United States at the time
their parole application is approved, based on admission as a
nonimmigrant, will have to depart the United States and appear at a
U.S. port of entry in order to be granted parole since USCIS is unable
to grant parole to individuals who are not applicants for admission.
See INA section 212(d)(5), 8 U.S.C. 1182(d)(5). These individuals will
be ineligible for a change of status under section 248 of the INA, 8
U.S.C. 1258. Such applicants will therefore bear the travel costs of
exit and returning to a port of entry. However, because there are no
similar programs for comparison, DHS cannot determine the demand for
parole or substitution effects from other classifications and thus
cannot estimate, quantify, or monetize such potential travel costs.
Finally, because the program allows for re-parole under conditions that
DHS has set, entrepreneurs and their spouse and children, if
applicable, will likely face filing and opportunity costs associated
with applying for re-parole. However, DHS has no means of estimating
the share of the potential eligible population that will seek and be
eligible for re-parole, hence re-parole conditions are not included in
this analysis. In summary, DHS believes that it is possible that there
could be some substitution into the parole program from other programs
and such applicants and dependents will incur travel and possible other
costs related to exit and requesting a grant of parole at a U.S. port
of entry.
C. Potential for Negative U.S. Labor Market Impacts
DHS does not expect the rule to generate significant costs or
negative consequences. Extensive review of information relevant to
immigrant entrepreneurship indicates that while much about the impact
of such entrepreneurship is not known, there is no reason to expect
that substantial negative consequences, including adverse impact on
domestic workers, are likely. The possibility that immigrant
entrepreneurs may displace (``crowd-out'') native entrepreneurs has
been raised by a few researchers. One study indicated that a very small
number of native entrepreneurs were possibly displaced by immigrant
entrepreneurs.\92\ However, because of difficulties in controlling for
a large amount of variables related to entrepreneurship, other
researchers have noted that this finding only raises the possibility
that displacement could not be ruled out completely, but did not
actually provide evidence that it had actually occurred.\93\ Another
study, conducted by the Brookings Institution, did not find
displacement but acknowledged that more research and refined control
techniques, along with longitudinal data, will need to be studied
before ruling out the possibility completely.\94\ In any event, the
purpose of the parole rule is to foster innovation and entrepreneurial
activities in new or very young endeavors, where the literature much
more decisively indicates a strong potential of creating new net jobs
for U.S. workers.
---------------------------------------------------------------------------

\92\ Fairlie, R.W., and B.D. Meyer, The effect of immigration on
native self-employment, Journal of Labor Economics 21:3 (2003): 619-
650, available at: http://people.ucsc.edu/~rfairlie/papers/
published/jole%202003%20-%20native%20se.pdf.
\93\ See Magnus Lofstrom, Immigrants and Entrepreneurship,
Public Policy Institute of California, USA, and IZA, Germany (2014),
p. 4, available at: http://wol.iza.org/articles/immigrants-and-entrepreneurship.pdf.
\94\ See Zoltan J. Acs and David M. Hart, Immigration and High-
Impact, High-Tech Entrepreneurship, Brookings, Issues in
Technological innovation (Feb. 2011), available at http://www.brookings.edu/research/papers/2011/02/immigration-hart-acs.
---------------------------------------------------------------------------

DHS recognizes that the potential inclusion of spouses can incur
labor market implications and possibly impact U.S. workers. As was
noted in previous sections of the regulatory impact analysis, DHS did
not attempt to assess or measure the labor market impact of the
estimated entrepreneurs potentially eligible for parole because as
founders of firms, these persons will not affect the labor market in
the same way as other workers. Although spouses could have labor market
impacts as new labor market entrants, DHS believes such potential
impacts will be negligible. The main reason is that the size of the
potential new cohort is very small. As of the end of 2015, there were
an estimated 157,130,000 people in the U.S. civilian labor force.\95\
Consequently, the estimated ``new'' available workers in the first year
will represent approximately 0.001 percent of the overall U.S. civilian
labor force.\96\ DHS believes this fraction is too small to have a
significant impact on the labor market.
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\95\ See News Release, United States Department of Labor, Bureau
of Labor Statistics, Local Area Unemployment Statistics, Regional
and State Unemployment-2015 Annual Averages, Table 1 ``Employment
status of the civilian non-institutional population 16 years of age
and over by region, division, and state, 2014-15 annual averages''
(Mar. 24, 2016), available at http://www.bls.gov/news.release/pdf/srgune.pdf.
\96\ Source: United States Department of Labor, Bureau of Labor
Statistics, Local Area Unemployment Statistic. Figure applies to
seasonally adjusted level for December 2014, available at: http://data.bls.gov/timeseries/LNS11000000. Calculation for new worker
labor force share: 1813/157,130,000.
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While the figures above apply to the general U.S. labor force, DHS
recognizes that concentration of new labor force entrants can impact
specific labor markets. DHS believes that any such potential impacts
linked to this rule will be insignificant. The NVCA and other sources
of information that DHS reviewed indicates that while the area of
California known as Silicon Valley has traditionally been, and
continues to be, the primary recipient geographically for technology
startup capital, other large urban centers on the East Coast and, even
more recently, parts of the Mid- and Mountain West have seen increased
technology startup activity. To provide just one example of a potential
area-specific impact, DHS considered the San Jose-San Francisco-Oakland
(CA) Combined Statistical Area (CSA) conjoining the seven Metropolitan
Statistical Areas (MSAs) and nine encompassed counties constituting the
economic linkages of Silicon Valley. Based on data from the BLS, the
population of this CSA is about 8.6 million (as of May 2014) and the
employed population (a narrower measure of the labor market than the
labor force) about 3.75 million. If the share of new entrants is based
on the proportion of venture capital to the area, which is 42 percent,
then 2,746 spousal entrants could impact the area.\97\ Assuming such
entrants gain employment, this cohort represents just 0.02 percent of
the employed population of the specific CSA.
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\97\ The employment figures are provided by the BLS,
Occupational Employment Statistics (OES), found at: http://www.bls.gov/oes/current/oes_42100.htm. The population data is
provided by the Census Bureau, which tabulates CSAs: ``Combined
Statistical Area Totals Dataset: Population and Estimated Components
of Change: April 1, 2010 to July 1, 2014'' (CSV), 2014 Population
Estimates. United States Census Bureau, Population Division. March
2015. The information on the venture capital share for the region is
found in the NVCA 2015 yearbook, and is found in figure 8, p. 14.
The calculation is as follows: (.42 x1813) = 761, which is then
divided by the CSA population of 3,750,000.
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D. Government Costs
The INA provides for the collection of fees at a level that will
ensure recovery of the full costs of providing services, including
administrative costs and services provided without charge to certain
applicants and petitioners. See INA section 286(m), 8 U.S.C. 1356(m).
DHS has established the fee for the adjudication of the Form I-941
application based on notional application filing volumes and estimated
resource commitments. During the biennial fee review, DHS

[[Page 5283]]

will examine whether the fee is sufficient to recover the full costs of
adjudication, as required by the INA.
5. Benefits
As referenced previously, evidence suggests that innovation-focused
start-ups contribute disproportionately to job creation. The rule will
reduce entry barriers, and thus support efforts by international
entrepreneurs to generate entrepreneurial activity in the United
States.
The rule is expected to generate important net benefits to the U.S.
economy. For one, expenditures on research and development by the
grant-based researchers that DHS has identified that could qualify for
entrepreneur parole will generate direct and indirect jobs. In
addition, this research-focused spending could potentially generate
patents, intellectual property, licensing, and other intangible assets
that can be expected to contribute to innovation and technological
advances and spill over into other sectors of the overall economy. DHS
acknowledges that it is extremely difficult to gauge the precise
economic value of such assets and that peer-reviewed research in this
area is still nascent. Despite the nascent stage of the research and
the difficulty of measuring quantitatively the benefit of innovation
driven by new high technology firms, a large body of research indicates
that the innovation driven by entrepreneurs contributes directly to
economic growth, generates important efficiencies and cost reductions
for firms that utilize such innovation, and increases productivity and
profitability for firms that benefit indirectly through new products
generated by such innovation.
Lastly, DHS believes that many of the start-up firms operated by
international entrepreneurs during the parole period could eventually
become high-growth firms that generate exceptionally high levels of
economic activity and contribute disproportionately to job creation in
the United States.

D. Regulatory Flexibility Act

In accordance with the Regulatory Flexibility Act (RFA), 5 U.S.C.
601(6), DHS examined the impact of this rule on small entities. A small
entity may be a small business (defined as any independently owned and
operated business not dominant in its field that qualifies as a small
business per the Small Business Act, 15 U.S.C. 632), a small not-for-
profit organization, or a small governmental jurisdiction (locality
with fewer than 50,000 people).
In the proposed rule, DHS certified that this rule would not have a
significant impact on a substantial number of small entities. DHS made
this determination based on the following facts: This is not a
mandatory rule; this rule only impacts those individual entrepreneurs
who make the voluntary decision to apply for parole; and this rule does
not regulate the business entities in any way. After reviewing public
comments, including the formal letter submitted on the record by the
U.S. Small Business Administration's Office of Advocacy (Advocacy), DHS
maintains its certification that the rule does impose a significant
impact on a substantial number of small entities. For a full discussion
of the DHS response to the letter submitted by Advocacy, please see
Section III.M.4 of this preamble.
Individuals are not defined as a ``small entity'' by the RFA. The
rule will not mandate that all individuals apply for parole. This rule
provides flexibilities and options that do not currently exist for
individuals who wish to establish or operate a start-up business in the
United States. Importantly, the rule does not require any individuals
or businesses, including those created by foreign nationals, to seek
parole--either generally or as a specific condition for establishing or
operating a business in the United States. Rather, as mentioned
previously, this rule is intended to provide an additional flexibility
for foreign individuals who are unable to obtain another appropriate
nonimmigrant or immigrant classification, in order to facilitate the
applicant's ability to oversee and grow the start-up entity. If any
individual believes this rule imposes a significant economic impact,
that individual could simply choose not to seek parole under the rule
and thus incur no economic impact. As discussed previously, this rule
imposes direct filing costs of $1,285 (which includes the $1,200
application fee and the $85 biometrics fee), plus $194 in time-related
opportunity costs for those individuals who do choose to apply for
parole as entrepreneurs under the rule. This cost is relatively minor
when considering the costs of starting up a new business and the
capital necessary to start a business.
Under the general term ``entrepreneur,'' DHS includes those who
desire to form firms with investment funds from certain U.S. investors.
For purposes of the RFA, the regulatory requirements place compliance
costs and establish eligibility criteria for the individual requesting
consideration for parole under this rule. DHS believes that the costs
of application for parole will burden the individual applicant, and not
the entrepreneurial venture (firm). This rule will not alter or change
the normal procedure for fundraising or other start-up administrative
costs that occur in forming a business entity. Such costs are not
direct costs of this rule and could include, but are not limited to,
business application fees, legal fees, and licensing that precede
significant infusions of investment, the latter of which are primarily
utilized for operational and capital expenses in order to produce goods
or services.
It is possible that some of the 2,940 estimated entrepreneurs who
could be eligible for parole annually could involve business structures
in which the filing fees are paid by a business entity. In the event
that small business entities are impacted by this rule because they
choose to pay the filing fees on behalf of an individual entrepreneur,
DHS believes that the filing cost of $1,285 per application will be
insignificant compared to such entities' annual gross revenues,
potential for revenue, and other economic activity.
For businesses that may pay the filing costs, the expected impact
to such businesses will be small. For businesses that utilize either
the minimum threshold of $100,000 for a qualifying government grant or
award or $250,000 in capital investment to source the filing costs,
such costs will constitute 1.3 percent and 0.4 percent, respectively,
of the total capital amount. These relatively low cost proportions
apply to those firms that only obtain the minimum investment amounts
and have no other source of funding or revenues. In addition, DHS
analyzed the cost impact relative to more typical RFA indices. DHS
analysis of Census Bureau data on the smallest firms found that the
average revenue based on sales receipts for firms with no paid
employees is $309,000, while the average for firms with one to four
paid employees is $411,000.\98\ The filing cost relative to these
averages is 0.42 percent and 0.31 percent, respectively.
---------------------------------------------------------------------------

\98\ The data utilized for the analysis are found in the SBO
Table SB1200CSA09, ``Statistics for All U.S. Firms with Paid
Employees by Industry, Gender, and Employment Size of Firm for the
U.S. and States: 2012, 2012 Survey of Business Owners: http://census.gov/library/publicatio.../2012-sbo.html. The file
location is: http://factfinder.census.gov/faces/t...prodType=table. The
figures are rounded from $309,279 and $410,900, respectively.
---------------------------------------------------------------------------

DHS also analyzed the average revenue for new firms. Since the rule
defines a new firm as one that is less than five years old at the time
the initial parole application is filed, DHS grouped private sector
firms for the 2012 survey as those responding that the year of

[[Page 5284]]

establishment was either 2012, 2011, 2010, 2009, or 2008. DHS obtained
the average revenue per firm and then weighted the average by the
yearly proportion of firms. Based on the resulting weighted average of
$162,000, such new firms will face a filing-cost burden of 0.8
percent.\99\ DHS notes that there is a large difference between the
revenue of new firms with paid employees and those without such
employees (i.e., sole proprietors). For the latter, average revenues
are about $34,000, and the cost burden will be 3.8 percent. However,
because a central component of this parole program requires a
demonstration of significant public benefit in the form of economic
activity and job growth, DHS does not anticipate that sole proprietors
will be eligible to participate in this program.
---------------------------------------------------------------------------

\99\ The data utilized for the analysis are found in the SBO
Table SB1200CSCB11, ``Statistics for All U.S. Firms by Year the
Business Was Originally Established or Self-Employment Activity
Begun by Industry, Gender, Ethnicity, Race, and Veteran Status for
the U.S.: 2012: 2012 Survey of Business Owners: http://census.gov/library/publicatio.../2012-sbo.html. The file location is:
http://factfinder.census.gov/faces/t...prodType=table. The average
revenue figure is rounded from $162,293.
---------------------------------------------------------------------------

In summary, DHS believes that per-applicant costs will be primarily
incurred by the individual (which is not covered by the RFA), any
direct cost due to this rule will be relatively minor, and these costs
will only be borne by those who voluntarily choose to apply for parole
under this rule. While the applicant for parole may be the owner of a
firm that could be considered small within the definition of small
entities established by 5 U.S.C. 601(6), DHS considers the applicants
to be individuals at the point in time they are applying for parole,
particularly since it is the individual and not the entity that files
the application and it is the individual whose parole must provide a
significant public benefit under this rule. Furthermore, even if firms
do voluntarily decide to incur the compliance costs on behalf of the
individual requesting consideration for parole under this rule, the
only compliance costs those businesses will be permitted to incur will
be the filing costs for the applications. As indicated previously,
based on the comparison metric used, those costs are expected to be
insignificant.
Based on the evidence presented in this RFA section and throughout
this preamble, DHS certifies that this rule will not have a significant
economic impact on a substantial number of small entities.

E. National Environmental Policy Act

DHS Directive (Dir) 023-01 Rev. 01 establishes the procedures that
DHS and its components use to comply with NEPA and the Council on
Environmental Quality (CEQ) regulations for implementing NEPA. 40 CFR
parts 1500 through 1508.
The CEQ regulations allow federal agencies to establish, with CEQ
review and concurrence, categories of actions (``categorical
exclusions'') which experience has shown do not individually or
cumulatively have a significant effect on the human environment and,
therefore, do not require an Environmental Assessment (EA) or
Environmental Impact Statement (EIS). 40 CFR 1507.3(b)(1)(iii), 1508.4.
DHS Directive 023-01 Rev. 01 establishes Categorical Exclusions that
DHS has found to have no such effect. Dir. 023-01 Rev. 01 Appendix A
Table 1. For an action to be categorically excluded, DHS Directive 023-
01 Rev. 01 requires the action to satisfy each of the following three
conditions: (1) The entire action clearly fits within one or more of
the Categorical Exclusions; (2) the action is not a piece of a larger
action; and (3) no extraordinary circumstances exist that create the
potential for a significant environmental effect. Dir. 023-01 Rev. 01
section V.B (1)-(3).
DHS analyzed this action and does not consider it to significantly
affect the quality of the human environment. This rule provides
criteria and procedures for applying the Secretary's existing statutory
parole authority to entrepreneurs in a manner to assure consistency in
case-by-case adjudications. DHS has determined that this rule does not
individually or cumulatively have a significant effect on the human
environment because it fits within two categorical exclusions under DHS
Directive 023- 01 Rev. 01, Appendix A, Table 1. Specifically, the rule
fits within Categorical Exclusion number A3(a) for rules strictly of an
administrative or procedural nature and A3(d) for rules that interpret
or amend an existing regulation without changing its environmental
effect.
This rule is not part of a larger action and presents no
extraordinary circumstances creating the potential for significant
environmental effects. Fewer than 3,000 individuals, an insignificant
number in the context of the population of the United States, are
projected to receive parole through this program. Furthermore, any
ventures will be governed by local, state and federal laws and
regulations, including those protecting the human health and the
environment. Therefore, this rule is categorically excluded from
further NEPA review.

F. Executive Order 13132

This rule will not have substantial direct effects on the States,
on the relationship between the National Government and the States, or
on the distribution of power and responsibilities among the various
levels of government. Therefore, in accordance with section 6 of
Executive Order 13132, it is determined that this rule does not have
sufficient federalism implications to warrant the preparation of a
federalism summary impact statement.

G. Executive Order 12988

This rule meets the applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988.

H. Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13,
all Departments are required to submit to the Office of Management and
Budget (OMB), for review and approval, any reporting requirements
inherent in a rule. See Public Law 104-13, 109 Stat. 163 (May 22,
1995). This final rule involves a new information collection and makes
revisions to the existing information collections as follows:
Overview of Information Collection, Application for Entrepreneur
Parole, Form I-941
This final rule requires that an applicant requesting entrepreneur
parole complete an Application for Entrepreneur Parole, Form I-941, and
is considered a new information collection under the PRA. USCIS did
receive one comment regarding the time burden of this form and, upon
review of the work involved to review the form, gather necessary
information to support the submission, and the time required to
complete and submit the form, USCIS has revised the estimated hour
burden per response to 4.7 hours.
a. Type of information collection: New information collection.
b. Abstract: This collection will be used by individuals who file
an application for entrepreneur parole under INA section 212(d)(5)(A)
(8 U.S.C. 1182(d)(5)(A)) and proposed new 8 CFR 212.19. Such
individuals, other than those filing an application on the basis of a
material change, are subject to biometric collection in connection with
the filing of the application.
c. Title of Form/Collection: Application for Entrepreneur Parole,
Form I-941.

[[Page 5285]]

d. Agency form number, if any, and the applicable component of the
Department of Homeland Security sponsoring the collection: Form I-941,
U.S. Citizenship and Immigration Services.
e. Affected public who will be asked or required to respond:
Businesses and other for profit; Not-for-profit Institutions.
f. An estimate of the total annual numbers of respondents: 2,940.
g. Hours per response: The estimated hour per response for Form I-
941 is 4.7 hours; the estimated hour burden per response for the
biometric processing is 1.17 hours.
h. Total Annual Reporting Burden: The total estimated annual hour
burden associated with this collection is 17,258 hours.
Overview of Information Collection, Application for Travel Document
Form I-131, OMB Control No. 1615-0013
DHS is revising this collection by including spouses and children
seeking parole on the basis of an entrepreneur parolee.
In addition to revising the form and form instructions, DHS is
revising the estimate of total burden hours has increased due to the
addition of this new population of Application for Travel Document,
Form I-131, filers, and the increase of burden hours associated with
the collection of biometrics from these applicants.
a. Type of information collection: Revised information collection.
b. Abstract: This collection will be used by dependents of
individuals who file an application for entrepreneur parole under INA
section 212(d)(5)(A) (8 U.S.C. 1182(d)(5)(A)) and proposed new 8 CFR
212.19. Such individuals are subject to biometric collection in
connection with the filing of the application.
c. Title of Form/Collection: Application for Travel Document, Form
I-131.
d. Agency form number, if any, and the applicable component of the
Department of Homeland Security sponsoring the collection: Application
for Travel Document, Form I-131, U.S. Citizenship and Immigration
Services.
e. Affected public who will be asked or required to respond:
Individuals or households.
f. An estimate of the total annual numbers of respondents: 594,324.
The total number of respondents includes the additional population
of 3,234 individuals as estimated previously in the analysis in Section
IV.C.
g. Hours per response: The estimated hour per response for Form I-
131 Supplement is 1.9 hours; the estimated hour burden per response for
the biometric processing is 1.17 hours; the estimated hour burden per
response for the passport-style photographs is .5 hours.
h. Total Annual Reporting Burden: The total estimated annual hour
burden associated with this collection is 1,372,928 hours.
Overview of Information Collection, Employment Eligibility
Verification, Form I-9, OMB Control No. 1615-0047
In accordance with new 8 CFR 274a.2(b)(1)(v)(A)(5), DHS is revising
the Employment Eligibility Verification, Form I-9, Lists of Acceptable
Documents, List A item 5 to replace ``nonimmigrant alien'' with
``individual,'' to replace ``alien's nonimmigrant'' with
``individual,'' and to add ``or parole'' after ``status'' in List A
item 5.b.(2). With these changes the acceptable List A document is
described as the following: For an individual authorized to work for a
specific employer because of his or her status or parole, a foreign
passport and Form I-94 (or Form I-94A) that has the same name as the
passport and has an endorsement by DHS indicating such employment-
authorized status or parole, as long as the period of endorsement has
not yet expired and the employment is not in conflict with the
individual's employment-authorized status or parole. DHS is also
updating the Lists of Acceptable Documents, List C so that the most
current version of the certification or report of birth issued by the
Department of State is acceptable for Form I-9.
a. Type of information collection: Revised information collection.
b. Abstract: This form was developed to facilitate compliance with
section 274A of the Immigration and Nationality Act, which prohibits
the knowing employment of unauthorized aliens. This information
collection is necessary for employers, agricultural recruiters and
referrers for a fee, and state employment agencies to verify the
identity and employment authorization of individuals hired (or
recruited or referred for a fee, if applicable) for employment in the
United States.
c. Title of Form/Collection: Employment Eligibility Verification.
d. Agency form number, if any, and the applicable component of the
Department of Homeland Security sponsoring the collection: Form I-9,
U.S. Citizenship and Immigration Services.
e. Affected public who will be asked or required to respond:
Business or other for-profit; Individuals or households; State, local
or Tribal Government.
f. An estimate of the total annual numbers of respondents: 78
million employers and 78 million individuals. (The total number of
responses will be only 78 million responses. Each response involves an
employer and an individual who is being hired.)
g. Hours per response:
Time Burden for Employees--20 minutes (.33 hours) total;
Time Burden for Employers--10 minutes (.17 hours) total;
Time Burden for Recordkeeping--5 minutes (.08 hours) total
h. Total Annual Reporting Burden: Approximately 40,600,000 total
annual burden hours.
Overview of Information Collection, Application for Employment
Authorization, Form I-765, OMB Control No. 1615-0040
DHS is making minor revisions to the form instructions to reflect
changes made by this final rule that allow spouses of an entrepreneur
parolee to request employment authorization.
a. Type of information collection: Revised information collection.
b. Abstract: This collection will be used by individuals who file
an application for entrepreneur parole under INA section 212(d)(5)(A)
(8 U.S.C. 1182(d)(5)(A)) and proposed new 8 CFR 212.19. Such
individuals are subject to biometric collection in connection with the
filing of the application.
This form was developed for individual aliens to request employment
authorization and evidence of that employment authorization. The form
is being amended to add a new class of aliens eligible to apply for
employment authorization, specifically a spouse of an entrepreneur
parolee described as eligible for employment authorization under this
rule. Supporting documentation demonstrating eligibility must be filed
with the application. The form lists examples of relevant
documentation.
c. Title of Form/Collection: Application for Employment
Authorization, Form I-765.
d. Agency form number, if any, and the applicable component of the
Department of Homeland Security sponsoring the collection: Form I-765,
U.S. Citizenship and Immigration Services.
e. Affected public who will be asked or required to respond:
Individuals or households.

[[Page 5286]]

f. An estimate of the total annual numbers of respondents:
2,139,523.
This total represents the aggregate estimate for this information
collection, to include the additional estimate of 2,940 respondents
under this rule.
g. Hours per response: The estimated hour per response for Form I-
765 is 3.42 hours; the estimated hour burden per response for biometric
processing is 1.17 hours; the estimated hour burden per response for
Form I-765 WS is .5 hours; the estimated hour burden per response for
passport-style photographs is .5 hours.
h. Total Annual Reporting Burden: The total estimated annual hour
burden associated with this collection is 8,985,859 hours.

Regulatory Amendments

DHS adopted most of the proposed regulatory amendments without
change.

List of Subjects

8 CFR Part 103

Administrative practice and procedure, Authority delegations
(Government agencies), Freedom of information, Immigration, Privacy,
Reporting and recordkeeping requirements.

8 CFR Part 212

Administrative practice and procedure, Aliens, Immigration,
Passports and visas, Reporting and recordkeeping requirements.

8 CFR Part 274a

Administrative practice and procedure, Aliens, Employment,
Penalties, Reporting and recordkeeping requirements.

Accordingly, DHS amends chapter I of title 8 of the Code of Federal
Regulations as follows:

PART 103--IMMIGRATION BENEFITS; BIOMETRIC REQUIREMENTS;
AVAILABILITY OF RECORDS

0
1. The authority citation for part 103 continues to read as follows:

Authority: 5 U.S.C. 301, 552, 552a; 8 U.S.C. 1101, 1103, 1304,
1356, 1365b; 31 U.S.C. 9701; Pub. L. 107-296, 116 Stat. 2135 (6
U.S.C. 1 et seq.); E.O. 12356, 47 FR 14874, 15557, 3 CFR, 1982
Comp., p.166; 8 CFR part 2; Pub. L. 112-54.

0
2. Section 103.7 is amended by adding paragraph (b)(1)(i)(KKK) to read
as follows:

Sec. 103.7 Fees.

* * * * *
(b) * * *
(1) * * *
(i) * * *
(KKK) Application for Entrepreneur Parole (Form I-941). For filing
an application for parole for entrepreneurs: $1200.
* * * * *

PART 212--DOCUMENTARY REQUIREMENTS: NONIMMIGRANTS; WAIVERS;
ADMISSION OF CERTAIN INADMISSIBLE ALIENS; PAROLE

0
3. The authority citation for part 212 is revised to read as follows:

Authority: 6 U.S.C. 111, 202(4) and 271; 8 U.S.C. 1101 and note,
1102, 1103, 1182 and note, 1184, 1185 note (section 7209 of Pub. L.
108-458), 1187, 1223, 1225, 1226, 1227, 1255, 1359; 8 CFR part 2.

Section 212.1(q) also issued under section 702, Pub. L. 110-229,
122 Stat. 754, 854.

0
4. Add Sec. 212.19 to read as follows:

Sec. 212.19 Parole for entrepreneurs.

(a) Definitions. For purposes of this section, the following
definitions apply:
(1) Entrepreneur means an alien who possesses a substantial
ownership interest in a start-up entity and has a central and active
role in the operations of that entity, such that the alien is well-
positioned, due to his or her knowledge, skills, or experience, to
substantially assist the entity with the growth and success of its
business. For purposes of this section, an alien may be considered to
possess a substantial ownership interest if he or she possesses at
least a 10 percent ownership interest in the start-up entity at the
time of adjudication of the initial grant of parole and possesses at
least a 5 percent ownership interest in the start-up entity at the time
of adjudication of a subsequent period of re-parole. During the period
of initial parole, the entrepreneur may continue to reduce his or her
ownership interest in the start-up entity, but must, at all times
during the period of initial parole, maintain at least a 5 percent
ownership interest in the entity. During the period of re-parole, the
entrepreneur may continue to reduce his or her ownership interest in
the start-up entity, but must, at all times during the period of
parole, maintain an ownership interest in the entity.
(2) Start-up entity means a U.S. business entity that was recently
formed, has lawfully done business during any period of operation since
its date of formation, and has substantial potential for rapid growth
and job creation. An entity that is the basis for a request for parole
under this section may be considered recently formed if it was created
within the 5 years immediately preceding the filing date of the alien's
initial parole request. For purposes of paragraphs (a)(3) and (5) of
this section, an entity may be considered recently formed if it was
created within the 5 years immediately preceding the receipt of the
relevant grant(s), award(s), or investment(s).
(3) Qualified government award or grant means an award or grant for
economic development, research and development, or job creation (or
other similar monetary award typically given to start-up entities) made
by a federal, state, or local government entity (not including foreign
government entities) that regularly provides such awards or grants to
start-up entities. This definition excludes any contractual commitment
for goods or services.
(4) Qualified investment means an investment made in good faith,
and that is not an attempt to circumvent any limitations imposed on
investments under this section, of lawfully derived capital in a start-
up entity that is a purchase from such entity of its equity,
convertible debt, or other security convertible into its equity
commonly used in financing transactions within such entity's industry.
Such an investment shall not include an investment, directly or
indirectly, from the entrepreneur; the parents, spouse, brother,
sister, son, or daughter of such entrepreneur; or any corporation,
limited liability company, partnership, or other entity in which such
entrepreneur or the parents, spouse, brother, sister, son, or daughter
of such entrepreneur directly or indirectly has any ownership interest.
(5) Qualified investor means an individual who is a U.S. citizen or
lawful permanent resident of the United States, or an organization that
is located in the United States and operates through a legal entity
organized under the laws of the United States or any state, that is
majority owned and controlled, directly and indirectly, by U.S.
citizens or lawful permanent residents of the United States, provided
such individual or organization regularly makes substantial investments
in start-up entities that subsequently exhibit substantial growth in
terms of revenue generation or job creation. The term ``qualified
investor'' shall not include an individual or organization that has
been permanently or temporarily enjoined from participating in the
offer or sale of a security or in the provision of services as an
investment adviser, broker, dealer, municipal securities dealer,
government securities broker, government securities dealer, bank,
transfer agent or credit rating agency, barred from association with
any entity involved in the offer or sale of securities or provision of
such

[[Page 5287]]

services, or otherwise found to have participated in the offer or sale
of securities or provision of such services in violation of law. For
purposes of this section, such an individual or organization may be
considered a qualified investor if, during the preceding 5 years:
(i) The individual or organization made investments in start-up
entities in exchange for equity, convertible debt or other security
convertible into equity commonly used in financing transactions within
their respective industries comprising a total in such 5-year period of
no less than $600,000; and
(ii) Subsequent to such investment by such individual or
organization, at least 2 such entities each created at least 5
qualified jobs or generated at least $500,000 in revenue with average
annualized revenue growth of at least 20 percent.
(6) Qualified job means full-time employment located in the United
States that has been filled for at least 1 year by one or more
qualifying employees.
(7) Qualifying employee means a U.S. citizen, a lawful permanent
resident, or other immigrant lawfully authorized to be employed in the
United States, who is not an entrepreneur of the relevant start-up
entity or the parent, spouse, brother, sister, son, or daughter of such
an entrepreneur. This definition shall not include independent
contractors.
(8) Full-time employment means paid employment in a position that
requires a minimum of 35 working hours per week. This definition does
not include combinations of part-time positions even if, when combined,
such positions meet the hourly requirement per week.
(9) U.S. business entity means any corporation, limited liability
company, partnership, or other entity that is organized under federal
law or the laws of any state, and that conducts business in the United
States, that is not an investment vehicle primarily engaged in the
offer, purchase, sale or trading of securities, futures contracts,
derivatives or similar instruments.
(10) Material change means any change in facts that could
reasonably affect the outcome of the determination whether the
entrepreneur provides, or continues to provide, a significant public
benefit to the United States. Such changes include, but are not limited
to, the following: Any criminal charge, conviction, plea of no contest,
or other judicial determination in a criminal case concerning the
entrepreneur or start-up entity; any complaint, settlement, judgment,
or other judicial or administrative determination concerning the
entrepreneur or start-up entity in a legal or administrative proceeding
brought by a government entity; any settlement, judgment, or other
legal determination concerning the entrepreneur or start-up entity in a
legal proceeding brought by a private individual or organization other
than proceedings primarily involving claims for damages not exceeding
10 percent of the current assets of the entrepreneur or start-up
entity; a sale or other disposition of all or substantially all of the
start-up entity's assets; the liquidation, dissolution or cessation of
operations of the start-up entity; the voluntary or involuntary filing
of a bankruptcy petition by or against the start-up entity; a
significant change with respect to ownership and control of the start-
up entity; and a cessation of the entrepreneur's qualifying ownership
interest in the start-up entity or the entrepreneur's central and
active role in the operations of that entity.
(b) Initial parole--(1) Filing of initial parole request form. An
alien seeking an initial grant of parole as an entrepreneur of a start-
up entity must file an Application for Entrepreneur Parole (Form I-941)
with USCIS, with the required fees (including biometric services fees),
and supporting documentary evidence in accordance with this section and
the form instructions, demonstrating eligibility as provided in
paragraph (b)(2) of this section.
(2) Criteria for consideration--(i) In general. An alien may be
considered for parole under this section if the alien demonstrates that
a grant of parole will provide a significant public benefit to the
United States based on his or her role as an entrepreneur of a start-up
entity.
(ii) General criteria. An alien may meet the standard described in
paragraph (b)(2)(i) of this section by providing a detailed
description, along with supporting evidence:
(A) Demonstrating that the alien is an entrepreneur as defined in
paragraph (a)(1) of this section and that his or her entity is a start-
up entity as defined in paragraph (a)(2) of this section; and
(B) Establishing that the alien's entity has:
(1) Received, within 18 months immediately preceding the filing of
an application for initial parole, a qualified investment amount of at
least $250,000 from one or more qualified investors; or
(2) Received, within 18 months immediately preceding the filing of
an application for initial parole, an amount of at least $100,000
through one or more qualified government awards or grants.
(iii) Alternative criteria. An alien who satisfies the criteria in
paragraph (b)(2)(ii)(A) of this section and partially meets one or both
of the criteria in paragraph (b)(2)(ii)(B) of this section may
alternatively meet the standard described in paragraph (b)(2)(i) of
this section by providing other reliable and compelling evidence of the
start-up entity's substantial potential for rapid growth and job
creation.
(c) Additional periods of parole--(1) Filing of re-parole request
form. Prior to the expiration of the initial period of parole, an
entrepreneur parolee may request an additional period of parole based
on the same start-up entity that formed the basis for his or her
initial period of parole granted under this section. To request such
parole, an entrepreneur parolee must timely file the Application for
Entrepreneur Parole (Form I-941) with USCIS, with the required fees
(including biometric services fees), and supporting documentation in
accordance with the form instructions, demonstrating eligibility as
provided in paragraph (c)(2) of this section.
(2) Criteria for consideration--(i) In general. An alien may be
considered for re-parole under this section if the alien demonstrates
that a grant of parole will continue to provide a significant public
benefit to the United States based on his or her role as an
entrepreneur of a start-up entity.
(ii) General criteria. An alien may meet the standard described in
paragraph (c)(2)(i) of this section by providing a detailed
description, along with supporting evidence:
(A) Demonstrating that the alien continues to be an entrepreneur as
defined in paragraph (a)(1) of this section and that his or her entity
continues to be a start-up entity as defined in paragraph (a)(2) of
this section; and
(B) Establishing that the alien's entity has:
(1) Received at least $500,000 in qualifying investments, qualified
government grants or awards, or a combination of such funding, during
the initial parole period;
(2) Created at least 5 qualified jobs with the start-up entity
during the initial parole period; or
(3) Reached at least $500,000 in annual revenue in the United
States and averaged 20 percent in annual revenue growth during the
initial parole period.
(iii) Alternative criteria. An alien who satisfies the criteria in
paragraph (c)(2)(ii)(A) of this section and partially meets one or more
of the criteria in paragraph (c)(2)(ii)(B) of this section may
alternatively meet the standard

[[Page 5288]]

described in paragraph (c)(2)(i) of this section by providing other
reliable and compelling evidence of the start-up entity's substantial
potential for rapid growth and job creation.
(d) Discretionary authority; decision; appeals and motions to
reopen--(1) Discretionary authority. DHS may grant parole under this
section in its sole discretion on a case-by-case basis if the
Department determines, based on the totality of the evidence, that an
applicant's presence in the United States will provide a significant
public benefit and that he or she otherwise merits a favorable exercise
of discretion. In determining whether an alien's presence in the United
States will provide a significant public benefit and whether the alien
warrants a favorable exercise of discretion, USCIS will consider and
weigh all evidence, including any derogatory evidence or information,
such as but not limited to, evidence of criminal activity or national
security concerns.
(2) Initial parole. DHS may grant an initial period of parole based
on the start-up entity listed in the request for parole for a period of
up to 30 months from the date the individual is initially paroled into
the United States. Approval by USCIS of such a request must be obtained
before the alien may appear at a port of entry to be granted parole, in
lieu of admission.
(3) Re-parole. DHS may re-parole an entrepreneur for one additional
period of up to 30 months from the date of the expiration of the
initial parole period. If the entrepreneur is in the United States at
the time that USCIS approves the request for re-parole, such approval
shall be considered a grant of re-parole. If the alien is outside the
United States at the time that USCIS approves the request for re-
parole, the alien must appear at a port of entry to be granted parole,
in lieu of admission.
(4) Appeals and motions to reopen. There is no appeal from a denial
of parole under this section. USCIS will not consider a motion to
reopen or reconsider a denial of parole under this section. On its own
motion, USCIS may reopen or reconsider a decision to deny the
Application for Entrepreneur Parole (Form I-941), in accordance with 8
CFR 103.5(a)(5).
(e) Payment of biometric services fee and collection of biometric
information. An alien seeking parole or re-parole under this section
will be required to pay the biometric services fee as prescribed by 8
CFR 103.7(b)(1)(i)(C). An alien seeking an initial grant of parole will
be required to submit biometric information. An alien seeking re-parole
may be required to submit biometric information.
(f) Limitations. No more than three entrepreneurs may be granted
parole under this section based on the same start-up entity. An alien
shall not receive more than one initial grant of entrepreneur parole or
more than one additional grant of entrepreneur re-parole based on the
same start-up entity, for a maximum period of parole of five years.
(g) Employment authorization. An entrepreneur who is paroled into
the United States pursuant to this section is authorized for employment
with the start-up entity incident to the conditions of his or her
parole.
(h) Spouse and children. (1) The entrepreneur's spouse and children
who are seeking parole as derivatives of such entrepreneur must
individually file an Application for Travel Document (Form I-131). Such
application must also include evidence that the derivative has a
qualifying relationship to the entrepreneur and otherwise merits a
grant of parole in the exercise of discretion. A biometric services fee
is required to be filed with the application. Such spouse or child will
be required to appear for collection of biometrics in accordance with
the form instructions or upon request.
(2) The spouse and children of an entrepreneur granted parole under
this section may be granted parole under this section for no longer
than the period of parole granted to such entrepreneur.
(3) The spouse of the entrepreneur parolee, after being paroled
into the United States, may be eligible for employment authorization on
the basis of parole under this section. To request employment
authorization, an eligible spouse paroled into the United States must
file an Application for Employment Authorization (Form I-765), in
accordance with 8 CFR 274a.13 and form instructions. An Application for
Employment Authorization must be accompanied by documentary evidence
establishing eligibility, including evidence of the spousal
relationship.
(4) Notwithstanding 8 CFR 274a.12(c)(11), a child of the
entrepreneur parolee may not be authorized for and may not accept
employment on the basis of parole under this section.
(i) Conditions on parole. As a condition of parole under this
section, a parolee must maintain household income that is greater than
400 percent of the federal poverty line for his or her household size
as defined by the Department of Health and Human Services. USCIS may
impose other such reasonable conditions in its sole discretion with
respect to any alien approved for parole under this section, and it may
request verification of the parolee's compliance with any such
condition at any time. Violation of any condition of parole may lead to
termination of the parole in accordance with paragraph (k) of this
section or denial of re-parole.
(j) Reporting of material changes. An alien granted parole under
this section must immediately report any material change(s) to USCIS.
If the entrepreneur will continue to be employed by the start-up entity
and maintain a qualifying ownership interest in the start-up entity,
the entrepreneur must submit a form prescribed by USCIS, with any
applicable fee (not including any biometric fees), in accordance with
the form instructions to notify USCIS of the material change(s). The
entrepreneur parolee must immediately notify USCIS in writing if he or
she will no longer be employed by the start-up entity or ceases to
possess a qualifying ownership stake in the start-up entity.
(k) Termination of parole--(1) In general. DHS, in its discretion,
may terminate parole granted under this section at any time and without
prior notice or opportunity to respond if it determines that the
alien's continued parole in the United States no longer provides a
significant public benefit. Alternatively, DHS, in its discretion, may
provide the alien notice and an opportunity to respond prior to
terminating the alien's parole under this section.
(2) Automatic termination. Parole granted under this section will
be automatically terminated without notice upon the expiration of the
time for which parole was authorized, unless the alien timely files a
non-frivolous application for re-parole. Parole granted under this
section may be automatically terminated when USCIS receives written
notice from the entrepreneur parolee that he or she will no longer be
employed by the start-up entity or ceases to possess a qualifying
ownership stake in the start-up entity in accordance with paragraph (j)
of this section. Additionally, parole of the spouse or child of the
entrepreneur will be automatically terminated without notice if the
parole of the entrepreneur has been terminated. If parole is
terminated, any employment authorization based on that parole is
automatically revoked.
(3) Termination on notice. USCIS may terminate on notice or provide
the entrepreneur or his or her spouse or children, as applicable,
written notice of

[[Page 5289]]

its intent to terminate parole if USCIS believes that:
(i) The facts or information contained in the request for parole
were not true and accurate;
(ii) The alien failed to timely file or otherwise comply with the
material change reporting requirements in this section;
(iii) The entrepreneur parolee is no longer employed in a central
and active role by the start-up entity or ceases to possess a
qualifying ownership stake in the start-up entity;
(iv) The alien otherwise violated the terms and conditions of
parole; or
(v) Parole was erroneously granted.
(4) Notice and decision. A notice of intent to terminate issued
under this paragraph should generally identify the grounds for
termination of the parole and provide a period of up to 30 days for the
alien's written rebuttal. The alien may submit additional evidence in
support of his or her rebuttal, when applicable, and USCIS will
consider all relevant evidence presented in deciding whether to
terminate the alien's parole. Failure to timely respond to a notice of
intent to terminate will result in termination of the parole. When a
charging document is served on the alien, the charging document will
constitute written notice of termination of parole (if parole has not
already been terminated), unless otherwise specified. Any further
immigration and removal actions will be conducted in accordance with
the Act and this chapter. The decision to terminate parole may not be
appealed. USCIS will not consider a motion to reopen or reconsider a
decision to terminate parole under this section. On its own motion,
USCIS may reopen or reconsider a decision to terminate.
(l) Increase of investment and revenue amount requirements. The
investment and revenue amounts in this section will be automatically
adjusted every 3 years by the Consumer Price Index and posted on the
USCIS Web site at www.uscis.gov. Investment and revenue amounts
adjusted under this paragraph will apply to all applications filed on
or after the beginning of the fiscal year for which the adjustment is
made.

PART 274a--CONTROL OF EMPLOYMENT OF ALIENS

0
5. The authority citation for part 274a continues to read as follows:

Authority: 8 U.S.C. 1101, 1103, 1324a; 48 U.S.C. 1806; 8 CFR
part 2; Pub. L. 101-410, 104 Stat. 890, as amended by Pub. L. 114-
74, 129 Stat. 599.

0
6. Section 274a.2 is amended by:
0
a. Revising paragraphs (b)(1)(v)(A)(5) and (b)(1)(v)(C)(2);
0
b. Removing paragraph (b)(1)(v)(C)(3); and
0
c. Redesignating paragraphs (b)(1)(v)(C)(4) through (8) as paragraphs
(b)(1)(v)(C)(3) through (7).
The revisions read as follows:

Sec. 274a.2 Verification of identity and employment authorization.

* * * * *
(b) * * *
(1) * * *
(v) * * *
(A) * * *
(5) In the case of an individual who is employment-authorized
incident to status or parole with a specific employer, a foreign
passport with an Arrival/Departure Record, Form I-94 (as defined in 8
CFR 1.4) or Form I-94A, bearing the same name as the passport and
containing an endorsement by DHS indicating such employment-authorized
status or parole, as long as the period of endorsement has not yet
expired and the employment is not in conflict with the individual's
employment-authorized status or parole;
* * * * *
(C) * * *
(2) Certification or report of birth issued by the Department of
State, including Forms FS-545, DS-1350, FS-240;
* * * * *

0
7. Section 274a.12 is amended by:
0
a. Revising paragraph (b) introductory text;
0
b. Removing the word ``or'' at the end of paragraph (b)(24);
0
c. Removing the period at the end of paragraph (b)(25) and adding ``;
or'' in its place;
0
d. Adding and reserving paragraphs (b)(26) through (36);
0
e. Adding paragraph (b)(37);
0
f. Revising paragraph (c)(11); and
0
g. Adding paragraph (c)(34).
The revisions and additions read as follows:

Sec. 274a.12 Classes of aliens authorized to accept employment.

* * * * *
(b) Aliens authorized for employment with a specific employer
incident to status or parole. The following classes of aliens are
authorized to be employed in the United States by the specific employer
and subject to any restrictions described in the section(s) of this
chapter indicated as a condition of their parole or of their admission
in, or subsequent change to, the designated nonimmigrant
classification. An alien in one of these classes is not issued an
employment authorization document by DHS:
* * * * *
(37) An alien paroled into the United States as an entrepreneur
pursuant to 8 CFR 212.19 for the period of authorized parole. An
entrepreneur who has timely filed a non-frivolous application
requesting re-parole with respect to the same start-up entity in
accordance with 8 CFR 212.19 prior to the expiration of his or her
parole, but whose authorized parole period expires during the pendency
of such application, is authorized to continue employment with the same
start-up entity for a period not to exceed 240 days beginning on the
date of expiration of parole. Such authorization shall be subject to
any conditions and limitations on such expired parole. If DHS
adjudicates the application prior to the expiration of this 240-day
period and denies the application for re-parole, the employment
authorization under this paragraph shall automatically terminate upon
notification to the alien of the denial decision.
(c) * * *
(11) Except as provided in paragraphs (b)(37) and (c)(34) of this
section and Sec. 212.19(h)(4) of this chapter, an alien paroled into
the United States temporarily for urgent humanitarian reasons or
significant public benefit pursuant to section 212(d)(5) of the Act.
* * * * *
(34) A spouse of an entrepreneur parolee described as eligible for
employment authorization in Sec. 212.19(h)(3) of this chapter.
* * * * *

Jeh Charles Johnson,
Secretary of Homeland Security.
[FR Doc. 2017-00481 Filed 1-13-17; 8:45 am]
BILLING CODE 9111-97-P