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National Venture Capital Association v. Duke

United States District Court, District of Columbia

December 1, 2017

ELAINE DUKE, Acting Secretary, U.S. DEPARTMENT OF HOMELAND SECURITY, et al., Defendants.


          JAMES E. BOASBERG, United States District Judge.

         Elections have consequences. But when it comes to federal agencies, the Administrative Procedure Act shapes the contours of those consequences. This case involves the Department of Homeland Security's decision to delay the implementation of an Obama-era immigration rule, the International Entrepreneur Rule, 82 Fed. Reg. 5, 238 (Jan. 17, 2017). The Rule would have allowed certain foreign entrepreneurs to obtain immigration “parole” - that is, to temporarily enter the United States despite lacking a visa or green card. It was finalized in the waning hours of the Obama administration and was set to take effect 180 days later, on July 17, 2017. On the eve of that date, however, the Department issued a new rule (“the Delay Rule”) delaying the effective date of the original one for another eight months, until March 14, 2018. The agency did so, however, without providing notice or soliciting comment from the public, as the APA generally requires. Plaintiffs brought suit, alleging that the agency lacked good cause to dispense with the APA's strictures and that the Delay Rule was therefore invalid. Having now reviewed both sides' Motions for Summary Judgment, the Court agrees and will vacate the Delay Rule.

         I. Background

         The controversy boils down to two competing rules. The first would have allowed certain foreign entrepreneurs to temporarily enter the United States. The second, promulgated six months later, delayed that rule from taking effect. The Court discusses each in turn and then briefly recounts this suit's procedural history.

         A. The International Entrepreneur Rule

         The Department of Homeland Security promulgated the International Entrepreneur Rule (“IE Final Rule”) to “encourage international entrepreneurs to create and develop start-up entities with high growth potential in the United States.” 82 Fed. Reg. at 5238. The Department believed that attracting foreign entrepreneurs would “benefit the U.S. economy through increased business activity, innovation, and dynamism.” International Entrepreneur Rule, 81 Fed. Reg. 60, 129, 60, 131 (Aug. 31, 2016) (Notice of Proposed Rulemaking). Before the issuance of the regulation, foreign entrepreneurs lacked a clear-cut avenue for entry into this country. Id. at 60, 151-52 & n.52 (citing Nina Roberts, For Foreign Tech Entrepreneurs, Getting a Visa to Work in the U.S. is a Struggle, The Guardian (Sept. 14, 2014)). The United States had no dedicated visa category for foreign entrepreneurs, and other visa options were frequently unavailable to that group. Id.

         The executive branch, however, cannot unilaterally create a new visa category, see 8 U.S.C. § 1101(a)(15), so it turned to a more temporary solution for immigrant entrepreneurs: parole. See 82 Fed. Reg. at 5, 244. “Parole” - the French source of which term derives from giving one's word - allows a foreign national to be physically present in the United States for a specific, temporary period, ranging from days to years. See, e.g., Leng May Ma v. Barber, 357 U.S. 185, 190 (1958). Unlike visas, parole is not an admission to the United States and gives a recipient no formal immigration status. See 8 U.S.C. §§ 1101(a)(13)(B), 1182(d)(5)(A). The Immigration and Nationality Act (INA) instead grants the Secretary of Homeland Security the discretionary authority to parole individuals into the United States on a case-by-case basis. Id. § 1182(d)(5)(A). DHS views that power as “expansive.” 82 Fed. Reg. at 5243. Although it may grant parole only for urgent humanitarian reasons or in cases of “significant public benefit, ” Congress has defined neither term. Id. at 5, 242-43; see also 8 U.S.C. § 1182(d)(5)(A).

         In promulgating the IE Final Rule, DHS latched onto the latter criterion. It sought to provide guidance for its line-level adjudicators as to when parole for foreign entrepreneurs would provide a “significant public benefit” to the country. See 82 Fed. Reg. at 5, 239. As the agency explained, adjudicating applications for that group often proved complex, so it “decided to establish by regulation the criteria for the case-by-case evaluation” of their applications. Id. at 5, 238. The agency also established “application requirements that are specifically tailored to capture the necessary information for processing parole requests on this basis.” Id. In so doing, DHS expected “to facilitate the use of parole” for foreign entrepreneurs and provide a “transparent framework” by which it would exercise its discretion. Id.

         To be “considered for a discretionary grant of parole” under the Rule, an entrepreneur “would generally need to demonstrate the following”:

1. The applicant must have formed a new start-up entity in the United States within 5 years of the application;
2. The applicant must a) possess at least a 10% ownership interest in the business; and b) “have an active and central role” in its operations and future growth; and
3. The applicant must validate the business's potential “for rapid growth and job creation” by showing a) it has received at least $250, 000 from established U.S. investors; or b) it has received at least $100, 000 in grants from government entities.

Id. at 5, 239. The Rule also created “alternative criteria” for meeting the final prong. Id. If an alien partially met one of the investment thresholds, she could provide “additional reliable and compelling evidence” of her company's potential for rapid growth and job creation. Id.

         Applicants who met the criteria (along with spouses and minor children) could be considered for discretionary parole of up to 30 months. Id. Those individuals could also apply for re-parole for up to 30 additional months if they met certain conditions. Id. at 5, 240. Importantly, however, satisfying the above criteria did not guarantee parole. Rather, the IE Final Rule streamlined the agency's treatment of entrepreneurs and guided how it would interpret the “significant public benefit” prong of the test. Agents would still need to assess applications on a case-by-case basis and retained the ultimate discretion as to whether to approve parole. Id. at 5, 239. In making such discretionary determinations, USCIS would consider all relevant information, including any criminal history or other serious adverse factors that could weigh against admission. Id. DHS, moreover, retained its authority to terminate parole at any time, consistent with existing regulations. Id. at 5, 243. In such cases, the individual would be “restored to the status that he or she had at the time of parole.” Id. (quoting 8 C.F.R. § 212.5(e)); see also 8 U.S.C. § 1182(d)(5)(A).

         The agency solicited and received 763 comments on its proposed rule. See 82 Fed. Reg. at 5, 244. In response, it meaningfully revised the final version, including changing the minimum investment amount, the definition of an entrepreneur, and the definition of a start-up entity. Id. at 5, 244-5, 273. This final rule was set to take effect July 17, 2017, 180 days from its publication in the Federal Register. Id. at 5, 242. DHS determined that this 180-day period would give USCIS “a reasonable period to ensure resources are in place to process and adjudicate Applications for Entrepreneur Parole filed . . . under this rule without sacrificing the quality of customer service for all USCIS stakeholders.” Id.

         B. The Delay Rule

         Of course, times change and so do administrations. On January 25, 2017, President Trump issued an Executive Order targeting current immigration practice. See Border Security and Immigration Enforcement Improvements, Exec. Order No. 13, 767, 82 Fed. Reg. 8, 793 (Jan. 25, 2017). As relevant here, the Order announced that it “is the policy of the executive branch to end the abuse of parole” of aliens in the United States. Id. at 8, 795. Section 11(d) of the Order required the Secretary of Homeland Security to “take appropriate action to ensure that parole authority under section 212(d)(5) of the INA (8 U.S.C. § 1182(d)(5)) is exercised only on a case-by-case basis in accordance with the plain language of the statute, and in all circumstances only when an individual demonstrates urgent humanitarian reasons or a significant public benefit derived from such parole.” Id. at 8, 796.

         For the next six months, the Department stayed silent. Six days before the IE Final Rule would take effect, however, USCIS issued a superseding “Delay Rule.” 82 Fed. Reg. 31, 887 (July 11, 2017). This latter Rule postponed the International Entrepreneur Rule's effective date by eight months, to March 14, 2018. Id. at 31, 887. DHS issued the Delay Rule, however, without offering the public advance notice or an opportunity to comment, claiming that there was good cause to jettison the APA's requirements on that score. Id. at 31, 887-88. Instead, it provided a short window for comments only after the Delay Rule took effect. Id. at 31, 887. DHS further indicated that, pursuant to the Executive Order, the agency was “highly likely” to rescind the IE Final Rule. Id. at 31, 888. Its new Delay Rule was designed to bridge the gap, such that the Obama-era Rule would never take effect. Id. (seeking “to delay the IE Final Rule while DHS considers rescinding the rule”).

         C. Procedural Background

         Plaintiffs include two foreign nationals (Atma and Anand Krishna), two U.S. businesses (Omni Labs, Inc. and Peak Labs L.L.C., d/b/a Occasion), and the National Venture Capital Association, which is an organization of individuals who “frequently invest in businesses founded by foreign entrepreneurs.” Pl. MSJ ...

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