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National Venture Capital Ass'n sues Trump over entrepreneur rule

The National Venture Capital Association and several tech startups filed suit against the Trump administration this week, claiming that its end to the international entrepreneur rule was handled improperly. The rule, which was created under the Obama administration, was meant to allow international entrepreneurs who were not themselves investors to remain in the United States while they built their businesses. It was set to go into effect this July.

As we discussed on this blog at the time, a Trump administration executive order limited Homeland Security's authority to use a legal rule called "parole authority." This is the authority to determine, on a case-by-case basis, that an immigrant without an appropriate visa should be allowed to stay in the U.S. because they have demonstrated an urgent humanitarian reason or offer a significant public benefit.

The rule had been highly anticipated by the tech industry and venture capitalists. It was seen as a sort of "startup visa" which would benefit both the entrepreneurs and the U.S. Most visas that offer work authorization require either a job offer or a significant personal investment. Young startup entrepreneurs often have neither but stand to provide jobs for others, if their startups are successful.

When promoting the rule, the Obama administration estimated that less than 3,000 entrepreneurs would be eligible for the program annually. To qualify, the entrepreneur would need to own a large portion of their startups and to have already received substantial investment from government grants or U.S. investors.

The National Venture Capital Association and the other plaintiffs say that voiding the rule via executive order was unlawful. Instead, the rule should have been subjected to the requirements of the Administrative Procedures Act.

The Administrative Procedures Act is meant to ensure that federal regulatory authority is used in a deliberative process and in line with Congress's intent. It requires there to be advance notice of any new rules, along with a period of public commentary. Final rules are only to be put in place once the comments are received and integrated into the rule, as appropriate.

"The process followed by DHS in deciding to delay the effective date of the rule was the polar opposite of the careful, deliberative process DHS used to formulate the rule itself," reads the lawsuit.

The plaintiffs have asked for the rule to be reinstated while the Administrative Procedures Act process moves forward. They want the government to start accepting applications from international entrepreneurs right away. The DHS did not reply to Reuters in time to make a comment.

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