Judge Jeffrey S. White of the District Court for the Northern District of California on December 1, 2020, set aside two new rules promulgated by the Trump Administration aimed at significantly curtailing the H-1B visa program for highly skilled workers. In Chamber of Commerce, et al. v. DHS, et al., the court concluded that the administration violated procedural requirements for imposing new rules by eschewing proper notice and comment periods, though the court did not ultimately rule on the legal merits of the rules themselves. The administration had argued that notice and comment were excused for “good cause” pursuant to the Administrative Procedure Act (APA), largely because of the economic impact of the COVID-19 pandemic.
I. Trump Administration’s H-1B Rules
The first rule, which was promulgated by the Department of Homeland Security (DHS) and titled Strengthening the H-1B Nonimmigrant Visa Classification Program, 85 Fed. Reg. 63,918, narrowed the definition of “specialty occupations” eligible for H-1B visas, shortened visa terms from three years to one year, and enhanced DHS’s enforcement abilities, among other changes. According to DHS, the purpose of the rule was to protect American jobs, as “[d]ata shows that the more than a half million H-1B nonimmigrants in the United States have been used to displace U.S. workers.” The second rule, which was promulgated by the Department of Labor (DOL) and titled Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States, 85 Fed. Reg. 63,872, increased the prevailing wage levels that are required to be paid to H-1B visa holders. The court noted that Kenneth T. Cuccinelli, the acting Deputy Secretary of Homeland Security, was quoted in the media as saying the changes would likely reduce the number of H-1B petitions filed each year by one-third.
II. The Administration’s “Good Cause” Arguments
Both rules were published in the Federal Register on October 8, 2020, and were characterized as interim final rules because they did not go through the typical notice and comment procedures. DHS concluded it had “good cause” under the APA to bypass the notice and comment requirements, though it delayed the effective date of the rule by 60 days to December 7, 2020, to ensure the public had advanced notice of the changes. DHS concluded that “the pandemic emergency’s economic impact is an ‘obvious and compelling fact’ that justifies good cause to forgo regular notice and comment.” DOL similarly cited the “good cause” exception but put its rule into effect immediately. It found it had “good cause” to forgo a comment period before issuance because “the shock to the labor market caused by the widespread unemployment resulting from the coronavirus public health emergency has created exigent circumstances that threaten immediate harm to the wages and job prospects of U.S. workers” and because “providing the public an opportunity to comment before the adjustments to the wage levels take effect is contrary to the public interest insofar as it would impede the Department’s ability to solve the problems this interim final rule is meant to address[,]” as “[a]dvance notice of the intended changes would create an opportunity, and the incentives to use it, for employers to attempt to evade the adjusted wage requirements.”
III. The Court Blocks the H-1B Rules
The court ruled that DHS’s and DOL’s justifications to avoid notice and comment did not fit within the meaning of “good cause,” which is generally limited to emergencies in which “delay would do real harm to life, property, or public safety.” The court noted that a “good cause” emergency may not “arise as a result of the agency’s own delay.” To that point, the court found that “some semblance of the DHS Rule has been on DHS’s regulatory agenda since 2017,” and “[t]here also are statements in the Rules that corrective measures should have been taken long ago.” The court similarly found “DOL’s argument that it could not foresee the potential consequences of the pandemic’s impact on domestic unemployment particularly implausible.” The court concluded that DOL could have recognized long before October that the pandemic would cause a substantial increase in unemployment. “The COVID-19 pandemic is an event beyond Defendants’ control, yet it was within Defendants’ control to take action earlier than they did,” the court stated.
a. The Court’s Order Regarding the DHS Rule
The court further ruled that DHS’s stated concerns about overall economic calamity were drawn too broadly and should have focused instead “on how the pandemic is impacting domestic unemployment for the types of positions held by H-1B workers.” According to the court, there is not a “dire” emergency with respect to domestic unemployment for the jobs most relevant to H-1B visa holders. The court further found that “[t]he statistics presented regarding pandemic-related unemployment still indicate that unemployment is concentrated in service occupations and that a large number of job vacancies remain in the areas most affected by [the] Rules: computer operations which require high-skilled workers.” Moreover, the court concluded that DHS’s rule created significant uncertainties for American employers without allowing for any consultation. In setting aside the DHS rule, the court concluded that “[t]he pandemic’s impact on the economy is the only reason DHS proffered as good cause, and Defendants do not dispute that the failure to provide notice and comment was prejudicial.”
b. The Court’s Order Regarding the DOL Rule
With respect to the DOL rule, the court described as “sparse” the factual basis DOL put forth to support its position that providing notice and comment would create an opportunity “for employers to attempt to evade the adjusted wage requirements.” The court found it “difficult to give credence to the argument that non-disclosure was required when, in June 2020, Administration officials announced to the public that DOL had been ‘instructed by the President to change the prevailing wage calculation’” and “[t]he Administration also strongly suggested there would be a hefty increase in the prevailing wage rate floor.” As with the DHS rule, the court concluded the DOL rule should be set aside in part because it did not show the effect COVID-19 had on unemployment for jobs relevant to H-1B visa holders. In sum, the court concluded that DHS and DOL “failed to show there was good cause to dispense with the rational and thoughtful discourse that is provided by the APA’s notice and comment requirements.”
This was the second high-profile H-1B-related case to come before this court recently. In October, Jude White issued a preliminary injunction prohibiting the Trump Administration from enforcing a June 2020 Proclamation that suspended the H, J and L nonimmigrant visa programs. The Court enjoined the government from enforcing the visa prohibitions against only the named plaintiffs in that case, which included the National Association of Manufacturers, the US Chamber of Commerce, and the National Retail Federation, all of which are also plaintiffs in the current case. The government has appealed that preliminary injunction to the Ninth Circuit, where arguments are scheduled to take place on January 12, 2021.