The National Venture Capital Association (NVCA) is filing a lawsuit with startups and entrepreneurs claiming it is illegal for President Donald Trump to delay implementation of a rule that would make it easier for foreign-born founders to build companies in the U.S.
In July, the Trump administration delayed the launch of the International Entrepreneur Rule, which would have allowed foreign entrepreneurs to spend several years in the U.S. building their startups.
The rule dates back to the Obama administration, when the former president instructed the Department of Homeland Security (DHS) to create a way for entrepreneurs whose startups met certain benchmarks of success to legally build those companies in the U.S. The rule is sometimes called a “startup visa,” though it is actually a temporary parole period of two to five years. It was supposed to take effect in July but DHS delayed its start date to March 14, 2018, at Trump’s behest.
The NVCA claims that DHS “violated clear requirements of the Administrative Procedure Act” by delaying the rule without first soliciting public comment. The American Immigration Council filed the lawsuit in federal court in Washington, D.C., on behalf of the NVCA and other plaintiffs.
“A global race is underway to attract and retain talented entrepreneurs and we should be doing all we can to win,” NVCA CEO Bobby Franklin said in a statement. “If we want to maintain our foothold as the global leader in innovation, the International Entrepreneur Rule must be allowed to proceed and we are committed to standing shoulder to shoulder with entrepreneurs and startups to seeing that through.”
The plaintiffs are asking the court to compel DHS to implement the rule and allow international entrepreneurs to submit applications. The NVCA has long advocated for the benefits of allowing international talent to live and work in the U.S. In 2013, the group released a study revealing that one-third of U.S. venture-backed companies that went public between 2006 and 2012 had at least one immigrant founder.
DHS is using the delay period to collect public comments on a proposal to rescind the International Entrepreneur Rule, an outcome the agency says is “highly likely” in documents announcing the delay.
The Obama administration proposed the rule as a workaround for foreign entrepreneurs because there isn’t currently a good avenue for startup founders from other countries to build their companies in the U.S. Work visas, like the H-1B, only apply to skilled employees, not founders.
“The United States economy as a whole thrives because this country has long been regarded as the world’s leading incubator of new, innovative companies,” said Melissa Crow, of the American Immigration Council, in a statement. “The International Entrepreneur Rule is essential to ensuring that America remains at the forefront of emerging enterprise. Our lawsuit is intended to get this important initiative back on track.”
Read the full complaint below: