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District Court for the Northern District of California Strikes Down H-1B Regulations for Violating APA

Strikes Down H-1B Nonimmigrant Visa Program

Written by Taher Kameli & Chathan Vemuri

As noted before on this blog site, on October 8, 2020, the Department of Homeland Security issued an interim final rule that was meant to revamp the H-1B Nonimmigrant Visa program.[1] Called Strengthening the H-1B Nonimmigrant Visa Classification Program, this interim final rule changed the definition requirements for “specialty occupations,” among other aspects, in order to make applications for the H-1B Nonimmigrant Visa more challenging.[2]

 

The overall purpose behind the changes was to decrease reliance on the H-1B program and encourage employers to look more to American citizens to build their workforce rather than non-immigrant applicants.[3] By looking for more than just a college degree, it was believed the applicant pool for the H-1B Nonimmigrant Visa Program would be narrowed considerably.[4]

 

In addition, an interim final rule passed by the Department of Labor in conjunction with this one, sought to recalibrate the wages so that the wages paid to these type of employees would be much higher than on average, effectively discouraging employers from hiring H-1B visa applicants to these jobs.[5] That these were implemented as “interim final rules” despite only being at a proposed stage and without going through the requisite notice and comment stage under the Administrative Procedures Act (APA) was what proved most controversial.[6]

 

Two days ago, on December 1, 2020, groups opposed to these two interim final rules restricting the H-1B visa program got their wish when the U.S. District Court for the Northern District of California made a decision in a case where the US Chamber of Commerce (among other plaintiffs) filed a series of suits (later combined) against the Department of Homeland Security challenging the Department of Labor’s prevailing wage interim final rule and the Department of Homeland Security’s specialty occupation rule.[7]

 

Therefore, the District Court granted the Plaintiff’s motion for summary judgment and set aside the two interim final rules for bypassing the traditional notice and comment rulemaking process under the Administrative Procedures Act (APA).[1] Under the APA, the requirements of publishing the notice and getting public comment prior to enacting a final rule can be excused “ ‘when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefore in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.’”[2] This exception, however, must be “narrowly construed” and “reluctantly countenanced.”[3]

 

Applying the de novo standard of review while also being mindful of the specificity of the facts of this case as per their own precedent, the District Court found that the Department of Homeland Security and the Department of Labor did not show good cause for bypassing the APA’s notice and comment requirements.[4] Arguing that parties bypassing said notice and comment requirements had to “’overcome a high bar’ to show good cause exists for dispensing with [them],”[5] the District Court found several factors which they felt justified granting summary judgment against Defendants.[6]

 

For one, the Court found that the Defendants argument that skyrocketing unemployment among American citizens justified immediate action bypassing the APA requirements was implausible and unconvincing given that they delayed doing so for several months, even when these justifications for these rules were announced before the COVID-19 pandemic took place.[7]

 

Secondly, the District Court found that the Defendant’s assertion that the pandemic’s effects on the job market made the APA procedures impracticable was unconvincing.[8] The Court noted that impracticability only existed when an agency could not follow both the APA and its executory duties.[9] Examples of this among the different circuits included notice and comment being “impracticable” in relation to rules and regulations for air travel safety measures, as well as rules that would save lives of mine workers if a mine explosion took place, as well as a hypothetical fiscal calamity to third parties.[10]

 

In this case, however, the alleged unemployment crisis cited by the Department of Homeland Security and the Department of Labor was found to be nonexistent as evidence from both the plaintiffs and elsewhere showed that the unemployment rates in the positions affected by H-1B visa applications did not suffer such dire unemployment rates that would warrant rules that would bypass the APA procedures.[1]

 

Plaintiffs showed that even with the Defendants’ cited figures, unemployment levels in the positions in question had already declined steadily as well as referred to the fact that unemployment rates in the Business Services and Professional sectors “do[] not account for the fact that ‘approximately 10% of the jobs (computer occupations with a B.S. or higher) in these sectors are in occupations similar to professionals in the H-1B category[.]’”[2] As such, the Court found that the defendants could not demonstrate that an urgent unemployment situation existed in the H-1B-affected industries that warranted interim final rules passed in such a manner.[3]

 

Finally, with regards to the Department of Labor’s new wage hikes in relation to the H-1B program changes, the Court found that the Department of Labor’s failure to observe the APA’s notice and comment procedure was not justified by any successful showing of such dire social consequences from doing so.[4] The good cause exception has a public interest component, established by precedent, where the agency seeking excuse from the notice and comment provision must show that announcement of the proposed rule would lead to activity by the affected by parties “that would harm the public welfare.”[5]

 

Moreover, the District Court granted that, in isolation, the Department of Labor’s stated concerns about employers taking advantage of lower wages paid to H-1B visa job applicants had some validity justifying a possible non-announcement of  this rule as a proposal.[6]

 

Yet when analyzed in combination with other factors such as the delay in acting on a situation it seemed to be aware of since well before the pandemic (2017), its announcement of President Trump’s intention to change prevailing wage calculation for H-1B employees and the fact that the scope of these wage changes were disproportionate to the actual Pandemic impact on domestic unemployment in the areas where H-1B workers were most likely to be employed, the District Court found that the Department of Labor failed to meet its burden of showing that issuing its proposed rule in line with the APA’s notice and comment procedure would have failed the public interest.[7]

 

In the end, the U.S. District Court of Northern District of California’s decision to set aside the interim final rules issued by the Department of Homeland Security and the Department of Labor represents a significant blow to the Trump administration’s efforts to restrict current immigration policies in relation to employment during the last months of Trump’s presidency.

 

Furthermore, whether the Departments of Homeland Security and Labor will appeal the District Court’s decision remains to be seen. Yet as of now, it seems employers of H-1B visa applicants can continue their employment and wage payment practices in line with the previous regulations and standards, for now at least.[1]

 

Please fill out the form below or give us a call at +1 (312)-233-1000 if you have any questions about the District Court for the Northern District of California’s decision in Chamber of Commerce et al. v. DHS et al.

[1] Bumgardner, Brian D., Koski, Ceridwen J., Wolfe, Samantha D., and Manna Melissa, District Court Invalidates New DOL and DHS H-1B Regulations, Nat’l Law Rev. Vol. 10 No. 337 (Dec. 2, 2020) available at https://www.natlawreview.com/article/district-court-invalidates-new-dol-and-dhs-h-1b-regulations

[1] Id. at 16-17.

[2] Id. at 17.

[3] Id. at 17-18.

[4] Id. at 22.

[5] Id. at 19. (citing Mobil Oil Corp. v. Dep’t of Energy, 728 F.2d 1477, 1492 (Temp. Emer. Ct. App. 1983)).

[6] Id. at 21.

[7] Id. at 21-22

[1] Id.

[2] Chamber of Commerce et al. v. DHS et al., Case No. 4:20-CV-7331, 10 (N.D. Ca., Oct. 19, 2020) (citing 5 U.S.C. §553(b)(B)).

[3] Id. at 11. (citing California v. Azar, 911 F.3d 558, 575 (9th Cir. 2018) in turn citing Alcaraz v. Block, 746, F.2d 593, 612 (9th Cir. 1984)).

[4] Id.

[5] Id. at 12. (citing United States v. Valverde, 628 F.2d 1159, 1164 (9th Cir. 2010)).

[6] Id. at 12-23.

[7] Id. at 12 -15.

[8] Id. at 15-16.

[9] Id. at 15.

[10] Id.

[1] H-1B Interim Final Rule on Strengthening the H-1B Nonimmigrant Visa Classification Program, NAFSA (Dec. 1, 2020) available at https://www.nafsa.org/regulatory-information/h-1b-interim-final-rule-strengthening-h-1b-nonimmigrant-visa-classification

[2] Id.

[3] Zolan Kanno-Youngs and Miriam Jordan, Trump Moves to Tighten Visa Access for High-Skilled Foreign Workers, N.Y. Times (Oct. 6, 2020) available at https://www.nytimes.com/2020/10/06/us/politics/h1b-visas-foreign-workers-trump.html

[4] Id.

[5] Id.

[6] Chamber of Commerce et al. v. DHS et al., Case No. 4:20-CV-7331, 1-2 (N.D. Ca., Oct. 19, 2020)

[7] Bumgardner, Brian D., Koski, Ceridwen J., Wolfe, Samantha D., and Manna Melissa, District Court Invalidates New DOL and DHS H-1B Regulations, Nat’l Law Rev. Vol. 10 No. 337  (Dec. 2, 2020) available at https://www.natlawreview.com/article/district-court-invalidates-new-dol-and-dhs-h-1b-regulations