Labor & Employment Law Daily DOL, DHS H-1B rule changes made without notice and comment set aside
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Friday, December 4, 2020

DOL, DHS H-1B rule changes made without notice and comment set aside

By Brandi O. Brown, J.D.

DHS and DOL had determined that pandemic was “good cause” to dispense with due deliberation.

A federal district court in California set aside changes to H-1B rules made without notice and comment by the Departments of Labor and Homeland Security in October. Although the agencies argued that the COVID-19 pandemic provided a “good cause” exception to the notice and comment requirement, the court found that they failed to overcome the high bar that applied. The defendants did not show that it was impracticable to allow for notice and comment and the evidence did not show a “dire” emergency. Also, the record indicated that defendants delayed in responding to a problem they had been aware of for years. The court granted the plaintiffs’ motion for partial summary judgment (Chamber of Commerce of the United State of America v. United States Department of Homeland Security, December 1, 2020, White, J.).

Proclamation enjoined. In April 2020, the President signed a proclamation instructing the Secretary of Labor and the Secretary of Homeland Security to review nonimmigrant programs and recommend “measures appropriate to stimulate the United States economy and ensure the prioritization, hiring, and employment of United States workers.” In June, he issued another proclamation, Proclamation 10052, which suspended entire visa categories for four sets of nonimmigrant work visas, including the H-1B visa, until the end of the year, with discretion for continuation “as necessary.” That proclamation also directed the same secretaries to consider other regulations regarding H-1B visas to ensure that U.S. workers are not disadvantaged in violation of the INA. In early October, the Court enjoined implementation and enforcement of that proclamation against the U.S. Chamber, one of the plaintiffs in this lawsuit, and others.

Rules published without notice, comment. Just one week later, on October 8, the DOL and DHS published the rules at issue in this lawsuit, a response the court described as the “embodiment of the adage ‘if at first you don’t succeed, try, try again.’” The DHS Rule made several changes to the H-1B visa program, including changes to certain regulatory definitions, as well as the validity period for certain H-1B workers. The DOL Rule changed the manner in which the agency would calculate the prevailing wage rates. Citing the on-going pandemic and its economic consequences, the agencies invoked the Act’s good cause exception and issued the new rules without notice or comment.

One has immediate effect. The DOL also invoked the good cause exception for dispensing with the Act’s 30-day waiting period, thus allowing its new rule to go into effect immediately. The DHS Rule was, prior to this decision, scheduled to take effect on December 7, 2020. In mid-October, a group of plaintiffs brought claims against the U.S. Departments of Homeland Security and Labor under the Administrative Procedure Act and asked the court to set aside two interim final rules they had promulgated earlier that month.

Too delayed for good cause. Applying a de novo standard of review to the agencies’ determination of good cause, the court concluded that they failed to show good cause to excuse notice and comment. The good cause exception to those requirements, the court explained, is “narrowly construed” and “reluctantly countenanced.” The defendants had to “overcome a high bar” to dispense with notice and comment. That bar was not overcome, for several reasons. First, the plaintiffs argued, and the court agreed, that the agencies unduly delayed in taking action. Although they cited “skyrocketing” and “widespread” unemployment justifying immediate action, they did not take that action for over six months, a period of time other courts have deemed too long to justify reliance on the exception. In this case, the problems the agencies purported to solve with the rules were not new problems, even if they were exacerbated by the pandemic. They had been noted as far back as 2017.

Could have foreseen. The court also found implausible the argument, made by DOL, that it could not foresee the potential consequences of the pandemic’s impact on domestic unemployment. DOL is the agency responsible for tracking unemployment, the court noted, and it was not unreasonable to infer that it could have foreseen the need for action in October to deal with the consequences of long-term unemployment. Indeed, the court noted, it was a matter of public record that in the months between March and October, the agencies had issued several proposed rules unrelated to the pandemic, at least one of which requested input regarding the impact of the pandemic on the proposed rule. Therefore, it was reasonable to conclude that they were not entitled to a presumption of urgency.

Not impracticable. The court also rejected the argument that the ongoing impact of the pandemic on the domestic labor market and, in turn, the agencies’ execution of their statutory duties, made it “impracticable” to allow for notice and comment. The agencies’ analysis was too broad and the evidence regarding unemployment rates most relevant to H-1B visas did not show a “dire” emergency. Moreover, the court found it important to note that the agencies never suggested, either in the rules or in argument, that the rules were intended to be a temporary solution. The court therefore could not “countenance” the agencies’ reliance on the pandemic to invoke the good cause exception.

The court also rejected the DOL’s argument that notice and comment would not serve the public interest in this case because it would allow employers to take action that would exacerbate and prolong the problems it was trying to address. And it explained, again, that its evaluation was influenced by the fact that the DOL had delayed in responding to a problem it had been aware of for several years.

Because the court concluded that the agencies failed to show good cause for dispensing with notice and comment requirements, it set aside the rules for having been promulgated in violation of 5 U.S.C. sec. 553(b) and it entered partial judgment on those claims.

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