Foreign startup founders win ruling

A federal judge ruled in favor of a group of venture capitalists, entrepreneurs and companies that sued the federal government in September on the grounds that the Trump administration unlawfully delayed a rule meant to permit startup founders to stay in the country and build companies.

The International Entrepreneur Rule had been set to take effect July 17. But a week before that date, the Trump administration delayed the implementation of the rule with the intent to rescind it altogether.

That prompted the National Venture Capital Association to file a lawsuit in the U.S. Dis-

trict Court for the District of Columbia. The group argued that the administration’s decision to delay the rule was unlawful under the Administrative Procedure Act, which, the association contended, would have required a lengthy notice and comment period from the public before the administration could make any changes.

Judge James Boasberg granted the association’s request for summary judgment, which means the International Entrepreneur Rule must now take effect. Under this rule, foreign entrepreneurs who meet certain benchmarks may apply for “parole” — which, in this case, means that individuals are not formally admitted into the U.S. as they would be with a visa, but can temporarily stay in the country.

The Department of Homeland Security has discretion on whom it accepts under parole, and the rule was designed to make use of that discretion.

The court ruling comes a week after the administration officially began work to rescind the rule. A draft order to rescind the rule is currently being reviewed by the administration and likely will be published in the Federal Register in the coming weeks.

Though the administration can still go forward with those plans, it must accept applications for the rule in the meantime, said Paul Hughes, a lead attorney on the case. But, he added, there is currently no official application for foreigners to use.

The point of the rule was to give foreign entrepreneurs who do not qualify for existing visa programs a chance to stay in the U.S. and grow their businesses. (The H-1B visa, for example, is meant for use by established companies, and the L-1 visa is for intracompany transfers; neither is suitable for startups.) But critics took issue with the rule’s use of “parole” authority.

In his decision, Boasberg wrote that the reasoning behind the administration’s delay of the rule without a formal notice and comment period “remains vague.”

“As DHS waits to issue a new rule, its arguments in favor of delay leak water,” he wrote. “At least for now, the (rule) seems to have a solid hull.”