US proposes ending the 60-day grace period for treaty investors

The Department of Homeland Security proposed on 11 September 2026 to delete the regulation that protects a treaty investor from being treated as out of status for up to 60 days solely because the activity supporting that status has ceased. If it is adopted as drafted, an E-2 investor and their dependants would be treated as failing to maintain status the day after the activity ends. Written comments close on 10 November 2026.

What the proposal would change

The notice of proposed rulemaking begins at page 57807 of that day’s Federal Register. Its operative change is short: it amends 8 CFR 214.1 by removing paragraph (l)(2) and renumbering paragraph (l)(3) to take its place. A second, conforming amendment strikes a cross-reference to the deleted paragraph out of the rule on work authorisation in compelling circumstances, which serves certain beneficiaries of approved immigrant petitions. That rule names E-3, H-1B, H-1B1, O-1 and L-1 status and has never reached E-2, so it takes nothing from a treaty investor.

The neighbouring provisions survive. Paragraph (l)(1) still covers the validity period itself plus up to 10 days before it begins and 10 days after it ends, and the renumbered provision still lets a person inside any authorised period described in that paragraph file for an extension of stay or a change of status. But none of what would survive does the work the deleted paragraph does. An admission stays valid on its own terms while status depends on continuing the activity it was granted for — so, were the paragraph removed, an investor whose enterprise closed in month nine of a two-year admission would still be inside the validity period and, on the department’s reading, out of status the following day regardless. As the Code stands today, that investor keeps the 60 days.

The paragraph marked for deletion is nine years old. It entered the Code through the final rule on retaining employment-based immigrant workers and improving programmes affecting high-skilled nonimmigrant workers, effective 17 January 2017, and was made under the nonimmigrant half of it, to ease movement between employers. Before 2017, the department writes, a nonimmigrant in these categories was generally treated as having failed to maintain status from the day after the employment or activity ended. That is the position the proposal would restore.

What the paragraph actually says

Read from the Code rather than from the proposal’s summary of it, the provision is narrower than the shorthand “60-day grace period” suggests:

An alien admitted or otherwise provided status in E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1 or TN classification and his or her dependents shall not be considered to have failed to maintain nonimmigrant status solely on the basis of a cessation of the employment on which the alien’s classification was based, for up to 60 consecutive days or until the end of the authorized validity period, whichever is shorter, once during each authorized validity period.

Three limits sit inside that single sentence. The period runs for the shorter of 60 days and whatever remains of the authorised validity period, so an investor whose enterprise closes six weeks before a two-year admission expires has at most six weeks, not 60 days. It is available once per validity period. And it protects against one finding only — that status lapsed solely because the qualifying activity stopped. The two sentences that follow it in the Code add two further constraints: DHS may already eliminate or shorten the period at its discretion, and the holder may not work during it unless separately authorised to do so.

The value is not the extra weeks of residence

The worth of the paragraph is not the extra weeks in the country. It is that it keeps the investor on the right side of a test that governs what can still be filed from inside the United States. A change of status is available only to a person continuing to maintain nonimmigrant status. An extension of stay may not be approved for a person who has failed to maintain it, although the Code preserves certain circumstances in which it still may be. Remove the paragraph and an investor whose enterprise has ceased is, from the following day, shut out of a change of status altogether, and left needing one of those preserved circumstances before an extension can even be approved.

Who it reaches, and when an investor’s activity ends

The paragraph names eight classifications, and only two of them are built on a business the holder runs rather than on a job: E-1 requires the national of a treaty country to carry on substantial trade, principally between that country and the United States, and E-2 requires invested capital. The other six — E-3, H-1B, H-1B1, L-1, O-1 and TN — turn on employment, several of them under trade agreements of their own. Each of the treaty classifications covers the principal and certain employees of the qualifying business.

To qualify for E-2 an investor must be a national of a country with which the United States maintains a qualifying treaty, must have invested or be actively investing a substantial amount of capital in a bona fide enterprise in the United States, and must seek entry solely to develop and direct that enterprise. Status runs for up to two years at a time and may be renewed indefinitely, in increments of up to two years, while the qualifications continue to be met.

That third element is where the proposal becomes hardest to apply. For someone holding E-2 status as an employee the trigger is straightforward: the job ends. For the principal investor the activity is the running of their own enterprise rather than a post with a third party, so there may be no dismissal date to point at. The Code speaks of a cessation of the employment on which the classification was based; the department’s discussion speaks of employment or activity. Neither fixes a date for a business winding down rather than closed on a particular day, and on the face of the documents read for this article the question is unresolved.

The proposal governs the exit rather than the entry. It leaves the qualifying conditions alone and changes only the consequence of cessation. The provision it would delete is drawn by classification and says nothing about how a person came by the nationality that qualified them, which is the angle that matters to anyone holding E-2 status through a second passport — a route examined here in the case of Grenada.

What follows, on the department’s own account

Failing to maintain status makes a person removable under section 237(a)(1)(C) of the Immigration and Nationality Act. DHS adds that, depending on when the person departs, unlawful presence — time in the country counted as unauthorised under immigration law — may begin to accrue, which can carry inadmissibility under section 212(a)(9)(B) for either three or ten years; and that where USCIS or an immigration judge later determines that a status violation occurred, accrual is treated as starting on the date of that determination if it falls before the expiry recorded on the I-94, the record of admission and of how long the holder may stay. Those consequences are set out as risks that may follow, not as automatic results.

What the department does not estimate

DHS says it cannot estimate how many people in these classifications would leave the United States if the rule is finalised as proposed, and that its data cannot support a reliable estimate of the dependants who would have used the grace period. The figures that do appear are aggregates across all eight classifications: for the 2025 fiscal year the department estimates that about 2,886 entities filed change-of-employer petitions for roughly 5,178 workers whose earlier petition had been revoked when the petitioner withdrew it. Nothing is broken out for E-1 or E-2.

What to watch

The comment period on docket USCIS-2026-0364 runs to 10 November 2026, after which DHS may issue a final rule, revise the proposal or leave it. Two points are worth following. The first is transition: the proposed text is a bare removal, and no provision for a person already inside a grace period appears in it — which is not the same as knowing a final rule would omit one. The second is scope: the department considered removing the period for only some classifications, and considered shortening rather than deleting it, and rejected both.

Until a final rule takes effect the existing paragraph stands, on the terms the Code already sets, discretion included. The gap between publication and effect can be months — the paragraph now marked for deletion was published in November 2016 and took effect the following January. What changed on 11 September is the risk carried by a treaty-investor structure whose enterprise stops trading mid-validity: the margin that currently allows a filing from inside the country is the subject of a rulemaking with a date on it. An investor holding that margin as a fallback has until 10 November to say so on the record.