NVCA Sues Trump Administration for Delaying “Startup Visa” Program

Add another item to the list of tech industry beefs with the new crew in the White House.

An organization representing venture capital firms filed a federal suit in Washington, DC, on Tuesday accusing Trump Administration officials of unlawfully delaying a program that would have allowed international entrepreneurs to work at companies they founded within the United States.

The suit by the National Venture Capital Association is another attempt to stop the new administration from overturning immigration policies upheld during former President Barack Obama’s tenure. Under Obama, the federal government developed a program, nicknamed the “Startup Visa” plan, that would have permitted a select segment of foreign-born entrepreneurs to reside in the United States for 30 months or more while they helped grow their U.S.-based businesses.

That program, created under the International Entrepreneur Rule, was slated to begin taking applications on July 17 of this year. But on July 11, the launch was delayed until mid-March of 2018 by the U.S. Department of Homeland Security, which may also cancel the program entirely, according to the NVCA complaint.

The federal department, in announcing the delay, said it will propose rescinding the final rule that set up the international entrepreneurs program. Therefore, implementing the policy now might end up wasting the limited financial resources of U.S. Citizenship and Immigration Services (USCIS), the agency said.  “Those resources are otherwise needed for USCIS to effectively and efficiently carry out its many existing immigration benefit programs facilitating lawful migration into United States,” the Homeland Security department document states.

Immigration policy was also the root cause of the tech community’s earliest clash with Trump, whose proposed visa restrictions for travelers from certain predominantly Muslim countries were met with widespread protests from businesses such as Amazon and Expedia when they were announced in January. Successful court challenges forced the administration to pare back those restrictions.

Like many tech industry opponents of the travel ban, who maintained that it would deprive American companies of highly skilled workers, the NVCA is justifying its stance in favor of admitting international entrepreneurs on grounds that they also will strengthen the U.S. economy.

Tech companies sounded that economic benefit note as well as they tried to persuade Trump not to limit the H-1 B visas that allow them to hire international engineering talent, and also when they reacted to Trump’s recent decision to end the Dreamers program, which protects 800,000 young immigrants from deportation. Facebook founder Mark Zuckerberg and Uber’s new CEO, Dara Khosrowshahi, were among the tech executives who protested the possible reversal of the act formally known as the Deferred Action for Childhood Arrivals (DACA) program, which was created during the Obama years. The program allows undocumented young people, brought to the United States as children, to continue to work and attend school here. Trump, in an ambiguous signal about his stance, has urged Congress to take the next six months to consider ways to revive the program.

As for the International Entrepreneur Rule, the NVCA argues in its lawsuit that foreign-born innovators who form new U.S. companies also create jobs for American citizens and bolster U.S. competitiveness in a global economy.

The organization cites research finding that immigrants form companies at a greater rate than the general U.S. population, and that they are particularly active in engineering and other technology fields. Among the immigrants who have founded or co-founded tech companies are Google’s Sergey Brin, eBay’s Pierre Omidyar, Facebook’s Eduardo Saverin, Intel’s Andy Grove, and Tesla’s Elon Musk, the NVCA points out.

Venture capital firms have standing to bring the suit because they could lose opportunities to invest in outstanding startups if the company founders are unable to work on site in the United States and shepherd their firms to success, the NVCA says. But the plaintiffs in the civil suit also include a number of companies and their foreign-born co-founders. Among them are two brothers, Atma and Anand Krishna, whose digital payments company LotusPay was part of the 2017 summer class at the influential startup accelerator Y Combinator. The Krishnas, citizens of the United Kingdom, haven’t been able to secure U.S. visas by routes other than the International Entrepreneur Rule. The same goes for key co-founders of two other plaintiff companies, Omni Labs and Peak Labs, which operates under the name Occasion.

While the NVCA offers many practical reasons why the United States would benefit by encouraging international entrepreneurs to develop their innovative companies here, the group’s legal challenge to the government’s action rests on a procedural argument. The group claims that the Department of Homeland Security delayed the implementation of the International Entrepreneur Rule a week before it was to take effect without giving the public and interested parties the required notice and opportunity to comment on its action. This is a violation of standard rulemaking processes codified under the federal Administrative Procedure Act, the NVCA argues.

The group is asking the U.S. District Court for the District of Columbia to affirm that a violation of that act did occur, and to issue an injunction directing the Department of Homeland Security to begin accepting applications from international entrepreneurs who want to come to the United States.

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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