Federal Court Rejects DHS and DOL Interim Final Rules on H-1B Visa Classification and Prevailing Wage Structure

From USADNEWS Volume XIV, Issue 5

The U.S. District Court for the Northern District of California ruled in favor of the Plaintiffs on December 1, 2020, in a case that challenged two interim final rules (IFR) published by the Department of Homeland Security (DHS) and the Department of Labor (DOL). In Chamber of Commerce, et al., v. DHS, et al., the Court granted the Plaintiffs’ motion to set aside both IFRs: Strengthening the H-1B Nonimmigrant Visa Classification Program (DHS Rule) and Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States (DOL Rule).

The Plaintiffs argued that the Rules violated the Administrative Procedure Act (APA) by not providing an adequate notice and comment period. The Court noted that the APA’s notice and comment requirement is “designed to assure due deliberations of agency regulations.” The DOL and DHS argued for an emergency exemption under the APA’s good cause exception due to the constraints that the COVID-19 pandemic and subsequent lockdowns have placed on the economy.

In promulgating their new interim final rules, the Departments asserted that it would be impracticable to comply with the APA’s notice and comment procedures and the thirty-day waiting period because the “pandemic emergency’s economic impact” (including historic unemployment increases) required immediate action. The DHS Rule revised the regulatory definition of “specialty occupation” and reduced the validity period for H-1B workers employed at third-party job sites from three years to one year. The DOL Rule changed the prevailing wage structure by adjusting wage levels upward.

The Court determined that the agencies did not show good cause to support the emergency exemption from standard APA notice and comment procedures. In fact, the agencies themselves noted in their Rules that these changes ought to have been implemented long before, undercutting their argument that they were needed as emergency measures. The Court noted that “‘Good cause’ usually is invoked in the event of emergencies, where ‘delay would do real harm to life, property, or public safety,'” citing the decision in E. Bay Sanctuary Covenant v. Trump (9th Cir. 2018). The exemption cannot be used in an instance where the agencies themselves have delayed taking action.

The Court concluded that the “Defendants failed to show there was a good cause to dispense with the rational and thoughtful discourse that is provided by the APA’s notice and comments requirements” and consequently set aside both Rules on the basis that their promulgation violated 5 U.S.C. section 553(b). The Court did not address the Plaintiffs’ additional claims that the Rules are “arbitrary, capricious, or otherwise unsupported by law” and that they are designed to “substantially restrict, if not outright eliminate, the H-1B visa category.”