Trump administration has plan to scrap ‘startup visa’ rule

The Trump administration plans to delay and ultimately scrap a rule that would allow some foreign entrepreneurs to stay in the U.S. and build their companies, according to an administration official citing a final draft of a Federal Register notice.

The International Entrepreneur Rule, the closest the United States has come to the “startup visa” Silicon Valley has long sought, was approved by the Department of Homeland Security in January during President Barack Obama’s waning hours in office. It was supposed to go into effect July 17.

According to the notice, the department plans to push back the rule’s effective date to March. During this time, the department will pursue steps — which include a public notice and comment period — to rescind the rule altogether.

Many in Silicon Valley were looking forward to the rule because currently no straightforward path exists for a foreign entrepreneur to reside in the U.S. while building a company.

The point of the rule was to give entrepreneurs who do not qualify for existing visa programs a chance to stay in the U.S. and grow their businesses. The visas that currently exist, like the H-1B and L-1 programs, also under scrutiny by the Trump administration, are more suited for companies hiring employees or transferring executives from abroad.

Sharoon Thomas until recently ran his e-commerce software startup, Fulfil.io, from an office on Castro Street in Mountain View. The international entrepreneur rule — or any visa tailored toward entrepreneurs — would have helped him stay in the U.S., he said. Instead, Thomas is moving the company to Canada, which he said has more relaxed visa rules.

“We would have preferred to stay in the U.S., but we started looking for alternatives,” said Thomas, 29, who is from India.

The news comes as the administration holds a “tech week” in the White House. President Trump met with tech heavyweights, including Microsoft CEO Satya Nadella and Apple CEO Tim Cook, in an attempt to mend a strained relationship between Silicon Valley and Washington.

But word that the Trump administration is working to undo this rule may deepen that chasm. While large tech companies seek traditional work visas for their employees, they also see a benefit in fostering the growth of startups, which can serve as customers, partners or acquisition targets.

“If they want to continue to have the kind of innovation we’ve had over past two decades — like solve the world’s biggest technological challenges — they need to bring (entrepreneurs) here rather than abroad,” said Jeff Farrah, vice president of government affairs for the National Venture Capital Association.

The benchmarks to qualify for this rule are high: A foreigner must demonstrate that he or she will contribute to economic growth or job creation and show that a reputable investor has put at least $250,000 into the company. The rule lets the individual stay in the U.S. for 30 months, with the possibility of a 30-month extension. The person cannot apply for a green card during this period.

“It surprises me that the administration would not see this as an opportunity to grow more jobs in places that desperately need it,” Farrah said.

But critics say the rule’s use of so-called “parole” authority with respect to visitors from abroad is problematic. In this case, the term parole means that individuals are not formally admitted into the U.S. — as they would be with a work visa such as an H-1B — but legally can stay for a temporary period.

A foreigner can remain in the country under U.S. parole if he or she presents a “humanitarian or significant public benefit.” The Obama administration argued that the jobs created and capital attracted by entrepreneurs constitute a “significant public benefit.” But critics of the rule say it is an abuse of the government’s parole power.

“Parole is supposed to be reserved for short term and emergency purposes,” said Mark Krikorian of the Center for Immigration Studies, which supports tighter immigration policies. “Previous administrations have pushed the envelope on parole, and the Obama administration kicked right through the envelope and claimed that the existence of the parole authority meant that the president could admit anyone.”

The administration official, who read the draft to a reporter, declined to provide his name because he was not authorized to speak to the media. The draft will likely be published in the Federal Register in the coming days, the official said.

A spokesman for the U.S. Citizenship and Immigration Services said the department is “currently reviewing the rule.”

“We cannot speculate on the outcome of the (department) review of the rule,” the spokesman said. “When the review is final, we will make the decision public.”

While leaked orders and notices do not always turn into policy, experts have been skeptical that the rule would see the light of day since Trump took office.

According to the draft notice, the rule is being delayed for reconsideration in light of a Jan. 25 executive order on immigration and border security. The order declared that the secretary of Homeland Security “shall take appropriate action to ensure that parole authority … is exercised in all circumstances only when an individual demonstrates urgent humanitarian reasons or a significant public benefit derived from such parole.”

On Tuesday, four Republican senators — Jerry Moran of Kansas, Orrin Hatch of Utah, and Jeff Flake and John McCain of Arizona — wrote to the Department of Homeland Security expressing support for the rule.

“There is little benefit to losing any ground in attracting entrepreneurs and their investments,” according to a copy of their letter obtained by The Chronicle. The rule “will help the United States remain globally competitive with other countries that are implementing immigration policies to attract entrepreneurs, such as Canada and France.”

Ann Cun, an Bay Area immigration attorney for Accel Visa, said she cautioned her clients against relying on the rule because it has many drawbacks.

Still, she said, it is better than nothing.

“If you look at the very barren landscape of startup visa land, and compare us to Canada, the U.K. and Australia — we have nothing,” Cun said. “There is a disconnect, where (the administration) is talking about creating jobs, and here is a policy and a program that endeavors to do exactly that — albeit the people are foreign founders.”