DHS Offers a Foreign Entrepreneur Program with No Congressional Input

The Bush II administration, with no explicit congressional input, created the Optional Practical Training (OPT) program and added something like 200,000 more legal workers to our over-stuffed work force.

The Obama administration, with a similar lack of explicit congressional input, gave us Deferred Action for Childhood Arrivals (DACA), creating a kind of temporary amnesty for more than 600,000 illegal aliens.

Now the Biden administration, again with no explicit congressional approval, has similarly created the International Entrepreneur (IE) program using the parole mechanism; it is just as much a thumb in the eye to our legislators, but probably will generate much smaller numbers than either OPT or DACA.

It also offers a screaming bargain to aliens with a little money and with an ability to fill out USCIS forms.

The May 10 DHS announcement was a bit convoluted, so let’s have a little background.

On January 17, 2017, on the third-to-the-last-day of the Obama administration, DHS issued what is now called “the initial IE final rule”, a wonderful bit of bureaucratic terminology. This created the program. This was a little late in the game for making up a new venture out of whole cloth, one that takes 198 pages of explanation.

The Trump administration, moving slowly, issued an order to delay its implementation to March 14, 2018, but in the meantime a federal court ruled (in December 2017) that DHS must accept applications for the program, which, according to the government’s press release, “has been up and running”.

The recent announcement was that DHS has now formally withdrawn Trump’s (moot) ruling that related to the March 14, 2018, date. This is hardly news, but as they say in the public relations business, it's a “news peg”, an excuse for a press release.

The IE Program Compared to the EB-5 and Treaty Investor Programs. One might think, just from reading the DHS statement, that our innovative government has just opened the way for foreign entrepreneurs to come to the U.S., a major event.

Far from it. The U.S. has had two other programs for a long time that could be used by entrepreneurs, and perhaps a third. These, of course, were not mentioned, but we will identify them.

One is the EB-5 immigrant investor program, which provides a family-sized set of green cards for those with $1.8 million to invest in a new or existing business (or alternatively, $900,000 for an investment in a "targeted employment area"). The new enterprise must create (or sometimes preserve) 10 jobs for U.S. citizens. This is a USCIS operation.

Then there is the E-2 Treaty Investor program, run by the Department of State. It provides a lesser reward for aliens opening a business in the U.S. — easy-to-renew nonimmigrant visas for the parents and their under-21 children. It has no statutory minimum investment, so one can spend much less to get this benefit. Buy a dry-cleaning establishment for $250,000, for example, and you get visas for the whole family.

The third option, which probably will be available under the Biden administration, is for an alien to create a company and then for the company to file for several H-1B visas, get one, and use it to hire that alien as an H-1B. To pull this off would require some real moxie, some luck in the H-1B lottery, some money, and a really skilled immigration lawyer. (Someone working this out just might be the kind of migrant we could use.)

So how is the International Entrepreneur program similar to, and different from, the existing ways to buy one’s admission to the States?

From a technical point of view, it involves an imaginative use of the long-existing parole program. If someone needs a medical procedure that is only available in the U.S., one might be paroled in for the operation and the recovery. If an alien is overseas, and the U.S. government wants that person’s testimony in a criminal trial, a parole can be arranged.

One routinely thinks of parole as a way out of jail; it also can be used to bring an alien into this country.

The IE program calls for an initial 30-month parole, and a possible extension for the same period if the business seems to be working. After that, unlike the Treaty Investor scheme, no additional paroles can be arranged, but there are other ways that the alien can stay in the States.

Who Qualifies for IE Status? The basic requirement, which may turn out to be quite flexible, is that the program is for those who can “create and develop start-up entities with a high growth potential in the U.S.”

The specifics are almost laughably meager. You can have as many as three entrepreneurs for each project. In EB-5, it is one family per investment.

Then there are the dollars to be invested. Unlike EB-5, where the minimums are either $900,000 or $1.8 million, each investor must put up 10 percent of $250,000, or $25,000. The rest of the $250,000 can be from U.S. investors.

Finally, there is a nominal requirement that five citizen jobs must be produced, as opposed to 10 in the EB-5 program.

Putting this all together, and assuming each alien brings 1.5 dependents with the investor (as is the case with EB-5), we have the following contrasts if three entrepreneurs are involved in the specific IE proposal:

To return to the concept of the screaming bargain, the IE program can require as little as 1/12th the alien capital of the EB-5 program, produces half the number of citizen jobs per project, and can cause the admission of three times as many aliens. This is not an attractive bit of math.

My sense is that this is a needless program. A talented alien entrepreneur should be able to manipulate our financial and immigration programs without these extremely cheap requirements; entrepreneurs are supposed to overcome hurdles — they do not need to be babied.

Numbers of IEs. How many alien beneficiaries does this program produce? The press release does not mention any numbers; the ongoing USCIS statistical reporting system produces no data on the numbers of specific types of parolees; and an inquiry, now several days old, of the USCIS press office did not get a reply.

Is this a fanciful program with few or no takers? Are there hordes of paroled alien entrepreneurs?

If we find out, we will publish the numbers.