ROSEMARY M. COLLYER, United States District Judge.
By tradition and law, the United States has welcomed foreign workers with specialized training to work temporarily in this country as needed by U.S. employers. The workers in specialty occupations do not come as immigrants; they are given visas for three years to work here. Because non-immigrant H-1B visas are intentionally for a short term, the Immigration and Naturalization Service (INS), in accord with the law, simplified and streamlined the application and approval process in a way inapplicable to immigrants. These H-1B visas have allowed the growth of a business model whereby U.S. employers obtain H-1B visas for foreign workers who are trained in information technology (IT) and provide such persons as temporary workers to other U.S. companies that need IT assistance for a period.
In 2003, Congress established the Citizenship and Immigration Service (CIS) and transferred visa authority to it.
Approximately thirty-three cases have been filed in this District challenging the handling of H-1B visa applications by CIS, a constituent agency of the Department of Homeland Security (DHS). Although not "related" within the meaning of Local Civil Rule 40.5(a)(3), the cases have been consolidated
See 3/6/2019 Minute Order Referring Case for Limited Purpose (Consolidation Order), ERP Analysts v. Cissna, No. 19-cv-300. Question 2 concerns the employer-employee relationship, the availability of work for a temporary foreign worker, and the foreign worker's maintenance of status. Plaintiffs allege that CIS is applying new versions of these requirements, without engaging in rulemaking, to H-1B applicants that are IT consulting firms and not to other U.S. employers.
The Court finds, as discussed below, that:
Both Plaintiffs' and Defendant's motions for summary judgment will be granted in part and denied in part.
The Immigration and Nationality Act (INA), 8 U.S.C. § 1101 et seq., specifically allows U.S. employers to apply for visas for foreign workers to come to the United States to work permanently (immigrants) or to come to the United States for temporary employment (nonimmigrants). The differences are material in that the former are applying to remain in the United States and the latter are planning to work here on a temporary basis. This distinction has existed since November 1990, when Congress adopted the Immigration Act of 1990, which changed the INA's employment-based visa categories. See Pub. L. No. 101-649, 104 Stat. 4978 (1990). As a result, an employer seeking an employment-based immigrant visa in order to hire a foreign worker who plans to stay in this country has been required to submit much more information and undergo greater examination than that required for temporary nonimmigrant visas.
Critical to understanding the facts is a change in immigration-based enforcement adopted in 2003 when it was moved from INS to CIS. CIS initially adopted and followed pre-existing and long-standing INS guidance memos and regulations. It has recently superseded the INS guidance with its own guidance memos but issued no regulations. CIS defends its guidance and practices as consistent with the law and regulations.
It is useful to know that the Plaintiffs here are all petitioning employers that seek H-1B visas for foreign workers who have expertise in the IT industry. Most Plaintiffs are consulting firms that may place a visa holder with multiple clients over the course of a three-year visa.
H-1B
The first step when petitioning for an H-1B visa is for the U.S. employer to file a Labor Condition Application with the Department of Labor (DOL). In that application, the employer must attest that certain wages and working conditions for foreign workers will be similar to domestic employees. An employer petitioning for an H-1B visa to admit a nonimmigrant worker does not need to test the local employment market and first hire any qualified, willing, and able U.S. worker. Nor does the 1990 Act require the employer to provide documentary evidence in support of the Labor Condition Application when submitting it to DOL for approval. Rather, U.S. employers
Interim Final Rule, 56 Fed. Reg. 54720, 54720-21 (October 27, 1991); see also 20 C.F.R. §§ 655.731-655.735. The information required in a Labor Condition Application was also included in the statute. See 8 U.S.C. § 1182(n)(1)(A)(i)(I) and (II), (n)(1)(B), (n)(1)(C), and (n)(1)(D).
The Interim Final Rule quoted above was published by DOL in 1991 to provide a regulatory process to handle Labor Condition Applications authorized by Congress in 1990. See Interim Final Rule, 56 Fed. Reg. 54720. DOL recognized that the H-1B visa is temporary and that lengthy preapproval inquiries would consume this time. Id. at 54721 ("The Department believes that Congress ... intended to provide greater protection than under prior law for U.S. and foreign workers without interfering with an employer's ability to obtain the H-1B workers it needs on a timely basis. Accordingly, the Department is providing that a labor condition application be accepted if it is complete, ... thereby minimizing the time it takes to obtain approval of H-1B workers."). As a result, and directly in accord with the 1990 Act, DOL's regulations enforce the terms of Labor Condition Applications (wages, working conditions, etc.) in a post-facto complaint-driven system rather than by prior examination. See 8 U.S.C. § 1182(n)(2)(A) (requiring DOL to "establish a process for the receipt, investigation and disposition of complaints respecting a petitioner's failure to meet a condition specified in an application... or a petitioner's misrepresentation of material facts in such an application" filed by any aggrieved person or bargaining representative within 12 months of the failure or misrepresentation). The DOL enforcement process was adopted in elaborate detail by Congress and placed in the statute. See 8 U.S.C. § 1182(n)(2)(C); 20 C.F.R. § 655.800.
After an employer receives a certificate from DOL, it may apply for an H-1B visa, now with CIS, by submitting Form I-129 and supplemental documentation. 8 C.F.R. § 214.2(h)(2)(i)(A) ("A United States employer seeking to classify an alien as an H-1B... temporary employee must file a petition on Form I-129, Petition for Nonimmigrant Worker, as provided in the form instructions."). Form I-129 requires information about the foreign worker, as
Checklist of Required Initial Evidence for Form I-129, H-1B Specialty Occupation Worker, https://www.uscis.gov/i-129 Checklist (Oct. 9, 2018).
The INS 1991 Regulation regarding nonimmigrants has not been rescinded or modified by CIS. It specifies that the petition for an H-1B visa "must include an itinerary with the dates and locations of the services or training and must be filed with USCIS as provided in the form instructions" whenever service or training will occur in more than one location. 8 C.F.R. § 214.2(h)(2)(i)(B). CIS evaluates the visa petition and additional documental submitted and approves or denies each visa independently. See id. § 214.2(h)(9)(i) ("USCIS will consider all the evidence submitted and any other evidence independently required to assist in adjudication."). "An approved petition classified under section 101(a)(15)(H)(i)(b) of the Act for an alien in a specialty occupation shall be valid for a period of up to three years but may not exceed the validity period of the labor condition application." Id. § 214.2(h)(9)(iii)(A)(1).
INS issued a series of "guidance memos" in the mid-90s that addressed the nature of the evidence required in an H-1B visa application. The first INS guidance Memorandum was issued on June 6, 1995 and titled "Contracts Involving H-1B Petitioners." American Immigration Lawyers Association, INS on Contracts Involving H-1B Petitions (June 6, 1995), https://www.aila.org/infonet/ins-contracts-involving-h-1b-petitions. The INS June 1995 Memo permitted H-1B visa adjudicators to "request and consider any additional information deemed appropriate to adjudicate a petition," including specifically third-party contracts, on a case-by-case basis. Id.
On November 11, 1995, INS issued a second guidance memorandum regarding contract information, with the title "Supporting Documentation for H-1B Petitions." American Immigration Lawyers Association, INS on Supporting Documentation for H-1B Petitions (Nov. 13, 1995), https://www.aila.org/infonet/ins-supporting-documentation-for-h-1b-petitions. This Memo clarified that it "should not be a normal requirement" for applicants to submit third-party contracts. Id. Rather, the INS November 1995 Memo instructed that contracts should be requested "only in those cases where the officer can articulate a specific need for such documentation.
Finally, on December 29, 1995, INS issued a third guidance memorandum regarding H-1B visa applications, titled "Interpretation Of The Term `Itinerary' Found in 8 CFR 214.2(h)(2)(i)(B) As It Relates To The H-1B Nonimmigrant Classification." American Immigration Lawyers Association, Interpretation of Itinerary in H-1B Visas (Dec. 29, 1995), https://www.aila.org/infonet/ins-interpretation-of-itinerary-in-h-1b-petitions. The INS December 1995 Memo first explained that the purpose of the itinerary requirement "is to insure [sic] that alien beneficiaries accorded H status have an actual job offer and are not coming to the United States for speculative employment." Id. The INS December 1995 Memo also stated that "in the case of an H-1B petition filed by an employment contractor, a general statement of the alien's proposed or possible employment is applicable since the regulation does not require that the employer provide... the exact dates and places of employment." Id. (emphasis in original). Finally, the INS December 1995 memo cautioned employment contractor applicants that DOL requires employers to "pay the alien the appropriate wage even during periods of time when the alien is on travel or between assignments." Id. CIS initially followed all of these INS 1995 Memos.
In 2010, CIS issued its own guidance memorandum that set out eleven (11) factors to be considered in determining "whether a valid employer-employee relationship exists" between the U.S. employer and the foreign worker. CIS MSJ, Ex. 2, Mem. from Donald Neufeld (Jan. 8, 2010) (CIS 2010 Guidance Memo) [Dkt 15-2] at 3. It was titled "Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements." Id. at 1. The CIS 2010 Guidance Memo identified the following factors to consider when evaluating an employer-employee relationship:
Id. at 3-4. CIS adjudicators were instructed to evaluate these factors using a totality-of-the-circumstances test and to
The CIS 2010 Guidance Memo also stated that petitioning employers were required to provide itineraries when a foreign worker would be placed at more than one location. Judge Gladys Kessler of this Court decided that the CIS 2010 Guidance Memo constituted only guidance, which left discretion with the adjudicators; thus, it was not required to undergo notice-and-comment rulemaking. See Broadgate Inc. v. USCIS, 730 F.Supp.2d 240 (D.D.C. 2010). No appeal was filed.
In 2018, CIS issued a Policy Memorandum that "establishe[d] USCIS policy relating to H-1B petitions filed for workers who will be engaged at one or more third-party worksites." CIS MSJ, Ex. 3, 2018 Policy Memorandum (CIS 2018 Policy Memo) [Dkt. 15-3] at 1. It was titled "Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites." Id. (emphasis added). According to CIS, the CIS 2018 Policy Memo "addresse[d] the itinerary requirement ... and the types of evidence an employer typically submits to meet its statutory burden of demonstrating a specialty occupation in the context of placing workers at a third-party worksite." CIS MSJ at 14 (emphasis added).
The CIS 2018 Policy Memo replaced the three INS 1995 Memos that had not required petitioning employers to submit contracts or itineraries with exact dates and locations of employment. See CIS 2018 Policy Memo at 1-2.
Critically for present purposes, the CIS 2018 Policy Memo specifically targeted employer petitions that involve third-party worksites and required all such U.S. employer petitioners to establish "by a preponderance of the evidence" that:
Id. at 3 (emphases added). CIS stressed that "H-1B petitions do not establish a worker's eligibility for H-1B classification if they are based on speculative employment or do not establish the actual work." Id. at 4. Therefore, "uncorroborated statements describing the role" of the foreign worker at a third-party worksite "are often insufficient." Id. The 2018 Policy Memo
Thus, while the INS 1995 Guidance Memos had authorized general statements concerning the foreign worker's role at a third-party site, and not a detailed itinerary unless requested, the CIS 2018 Policy Memo emphasized "[t]here is no exemption from this regulatory requirement." Id. "An itinerary with the dates and locations of the services to be provided must be included in all petitions that require services to be performed in more than one location.... Adjudicators may deny the petition if the petitioner fails to provide an itinerary." Id.
The requirement of an itinerary is fulsome. "The itinerary should detail when and where the beneficiary will be performing services." Id. "Although the regulations only require that an itinerary contain the dates and locations of the services to be provided ... at multiple worksites, a more detailed itinerary can help to demonstrate that the petitioner has non-speculative employment." Id. "[I]t could help" CIS to determine "qualifying assignments," i.e., specific and non-speculative jobs, if a petitioning employer "specifies": the dates of each service; the "names and addresses of the ultimate employer(s)"; names, addresses, and telephone number at each work location; and "[c]orroborating evidence for all of the above." Id.
A non-speculative and detailed itinerary that provides work information for the entire duration of the requested visa is now critical because CIS "in its discretion, generally limit[s] the approval period to the length of time demonstrated that the beneficiary will be placed in non-speculative work and that the petitioner will maintain the requisite employer-employee relationship." Id. at 7. In other words, although the statute permits a three-year H-1B visa for foreign workers in specialty occupations (with one possible three-year extension), CIS now limits a visa's duration to the length of time the petitioning U.S. employer can show that definite work assignments exist.
CIS attempted to protect the CIS 2018 Policy Memo by limiting language:
Id.
Plaintiffs challenge CIS's current interpretation and application of three different criteria to receive an H-1B visa: the revised employer-employee relationship requirement, the new non-speculative work requirement, and the newly-interpreted itinerary requirement. CIS rejects the terms Plaintiffs use to identify these criteria and argues that its requirements have always been present in the statute and regulation, which have not changed.
Only employers may apply for H-1B nonimmigrant visas. See 8 U.S.C. § 1101(a)(15)(H)(i)(b) (requiring the "intending employer" to file the petition); 8 C.F.R. § 214.2(h)(1)(i) ("Under section 101(a)(15)(H) of the Act, an alien may be authorized to come to the United States temporarily to perform services or labor for, or to receive training from, an employer, if petitioned for by that employer."); id. § 214.2(h)(2)(i)(A) ("A United States employer seeking to classify an alien as an H-1B... temporary employee must file a petition on Form I-129, Petition for Nonimmigrant Worker, as provided in the form instructions."). In 1991, DOL engaged in formal rulemaking to define the nature of the "employer" who can apply for a Labor Condition Application. DOL Advanced Notice of Proposed Rulemaking, Alien Temporary Employment Labor Certification Process, 56 Fed. Reg. 11705-01 (March 20, 1991). After notice and comment, DOL adopted a Final Rule that defined the "employer" as:
Proposed Rule, Labor Condition Applications and Requirements for Employers Using Aliens on H-1B Visas in Specialty Occupations, 56 Fed. Reg. 37175-01, 37182 (Aug. 5, 1991) (DOL Proposed Rule) (emphasis added).
INS adopted the definition of "employer" used by DOL, see INS Final Rule, Temporary Alien Workers Seeking Classification Under the Immigration and Nationality Act, 56 Fed. Reg. 61111, 61121 (Dec. 2, 1991); see also 8 C.F.R. § 214.2(h)(4)(ii), and CIS has made no change to the definition. Neither the underlying statute nor the regulation has been amended in relevant part since 1991.
The CIS 2018 Policy Memo instructs adjudicators to look for "[c]ontracts as evidence to demonstrate the employer will maintain an employer-employee relationship" throughout the visa duration. CIS 2018 Policy Memo at 5. CIS advises that "the chain of contracts and/or legal agreements between the petitioner and the ultimate third-party worksite may help USCIS to determine whether the requisite employer-employee relationship exists and/or will exist." Id.
The CIS 2010 Guidance Memo plays a role here. Although framed as areas for review, that Memo focused its analysis on the putative employer's "right to control." CIS 2010 Guidance Memo at 3 ("In considering whether or not there is a valid `employer-employee relationship' for purposes of H-1B petition adjudication, USCIS must determine if the employer has a sufficient level of control over the employee. The petitioner must be able to establish that it has the right to control over when, where,
In recent H-1B visa denials, CIS has declared that "H-1B petitions do not establish a worker's eligibility for H-1B classification if they are based on speculative employment or do not establish the actual work the H-1B beneficiary will perform at the third-party worksite." Pls.' MSJ, App'x [Dkt. 14-2], Nov. 9, 2018 CIS Decision re ERP Analysts Inc. at 13.
The CIS 2018 Policy Memo bases its new requirement that the petitioning employer prove non-speculative work in a specialty occupation for the entirety of a visa on the requirement that an H-1B visa holder must be employed in a specialty occupation.
INS originally issued the 1991 Regulation that requires an "itinerary" for temporary foreign workers who work in multiple locations; it clarified in the December 1995 Memo that it "could accept a general statement of the alien's proposed or possible employment, since the regulation does not
Id. § 214.2(h)(2)(i)(B) (italics used to show where CIS replaced INS). What is new under the CIS 2018 Policy Memo is the CIS requirement that jobs in specialty occupations are proven by evidence submitted with the petition for the entire duration of the requested visa.
After experiencing what they believed to be improper denials, IT consulting agencies filed approximately thirty-three separate lawsuits in this District Court challenging the authority of CIS to deny petitions based on what Plaintiffs argue are improper interpretations and applications of the employer-employee relationship, non-speculative work assignment, and itinerary requirements. The Calendar Committee for the District Court consolidated the cases for a single decision on three overarching legal questions as identified above. As this Court has the first of the approximately thirty-three cases, the consolidated issues were briefed and argued under case number 18-cv-2350, Itserve Alliance, Inc. v. United States Citizenship and Immigration Services. The issues are ripe for review.
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "In a case involving review of a final agency action under the Administrative Procedures Act, 5 U.S.C. § 706, however, the standard set forth in Rule 56[] does not apply because of the limited role of a court in reviewing the administrative record." Sierra Club v. Mainella, 459 F.Supp.2d 76, 89 (D.D.C. 2006) (internal citation omitted), appeal dismissed, Nos. 06-5419 & 07-5004, 2007 WL 1125716 (D.C. Cir. Mar. 30, 2007); see also Charter Operators of Alaska v. Blank, 844 F.Supp.2d 122, 126-27 (D.D.C. 2012); Buckingham v. Mabus, 772 F.Supp.2d 295, 300 (D.D.C. 2011). The APA assigns to the agency the resolution of factual issues and ability to make decisions and issue rules supported by the administrative record, while "`the function of the district court is to determine whether or not as a matter of law the evidence in
The Administrative Procedure Act (APA), 5 U.S.C. § 500 et seq., authorizes federal courts to review federal agency actions and determine if they are arbitrary, capricious, or not in accord with law. 5 U.S.C. § 706(2)(A); see also Tourus Records, Inc. v. DEA, 259 F.3d 731, 736 (D.C. Cir. 2001).
There are time-tested principles behind this review. First, "an agency's power is no greater than that delegated to it by Congress." Lyng v. Payne, 476 U.S. 926, 937, 106 S.Ct. 2333, 90 L.Ed.2d 921 (1986); see also Transohio Sav. Bank v. Dir., Office of Thrift Supervision, 967 F.2d 598, 621 (D.C. Cir. 1992). Second, agency actions beyond delegated authority are ultra vires and should be invalidated. Transohio, 967 F.2d at 621. Third, courts look to an agency's enabling statute and subsequent legislation to determine whether the agency has acted within the bounds of its authority. Univ. of D.C. Faculty Ass'n/NEA v. D.C. Fin. Responsibility & Mgmt. Assistance Auth., 163 F.3d 616, 620-21 (D.C. Cir. 1998) (explaining that ultra vires claims require courts to review the relevant statutory materials to determine whether "Congress intended the [agency] to have the power that it exercised when it [acted]").
When reviewing an agency's interpretation of its enabling statute and the laws it administers, courts are generally guided by "the principles of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 ... (1984)." Mount Royal Joint Venture v. Kempthorne, 477 F.3d 745, 754 (D.C. Cir. 2007). Chevron's Step One requires a court to determine "[i]f Congress has directly spoken to [an] issue, [if so,] that is the end of the matter." Confederated Tribes of Grand Ronde Cmty. v. Jewell, 830 F.3d 552, 558 (D.C. Cir. 2016) (discussing Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778). When Congress's intent is unambiguous, both the agency and the Court must honor that intent. See Lubow v. Dep't of State, 783 F.3d 877, 884 (D.C. Cir. 2015) (quoting Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778). Chevron Step Two comes into play when the text is silent or ambiguous. If the text is silent or ambiguous, courts must "determine if the agency's interpretation is permissible, and if so, defer to it." Confederated Tribes, 830 F.3d at 558. A permissible interpretation need not be "the best interpretation, only a reasonable one." Van Hollen, Jr. v. FEC, 811 F.3d 486, 492 (D.C. Cir. 2016) (internal quotation marks omitted).
Even when an interpretation is reasonable under Chevron, "agency action is always subject to arbitrary and capricious review under the APA." Confederated Tribes, 830 F.3d at 559. An interpretation is arbitrary and capricious if the agency "relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Agape
If an agency action results in a change of its position, the agency must "display awareness" of the change, but the agency is not required to meet a "heightened standard for reasonableness." Mary V. Harris Found. v. FCC, 776 F.3d 21, 24 (D.C. Cir. 2015) (internal quotation marks omitted). "So long as any change is reasonably explained, it is not arbitrary and capricious for an agency to change its mind in light of experience, or in the face of new or additional evidence, or further analysis or other factors indicating that the agency's earlier decision should be altered or abandoned." New England Power Generators Ass'n v. FERC, 879 F.3d 1192, 1201 (D.C. Cir. 2018).
However, the Supreme Court has directed that "the scope of review under the `arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency." State Farm, 463 U.S. at 30, 103 S.Ct. 2856. Rather, agency action is normally "entitled to a presumption of regularity." Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977).
The Court has federal question jurisdiction, see 28 U.S.C. § 1331; 5 U.S.C. § 702, because this lawsuit arises under a federal statute. Venue is proper because CIS is a U.S. agency being sued for official action taken. See 28 U.S.C. § 1391(e)(1); see also Dehaemers v. Wynne, 522 F.Supp.2d 240, 248 (D.D.C. 2007); Hunter v. Johanns, 517 F.Supp.2d 340, 344 (D.D.C. 2007).
In a nutshell, Congress designed the H-1B visa in 1990 to permit speedy processing and temporary placement of foreign workers in specialty occupations as needed by U.S. employers. CIS has selected H-1B visa petitions from IT consulting businesses, which hire temporary foreign workers and place most of them with third parties for assignments of less than three years, for special treatment with the effect of dramatically slowing the processing of such visa petitions and reducing the accessibility by U.S. employers to such workers. These facts are not contested. The question is whether, in so doing, CIS actions were consistent with law and/or required formal rulemaking. The Court finds that CIS has exceeded the law and was required to engage in formal rulemaking. The CIS 2018 Policy Memo is, therefore, invalid, as are the new CIS interpretation and requirements concerning itineraries. Accordingly, the Court also finds that CIS cannot enforce the CIS 2010 Guidance Memo against Plaintiffs.
The government protests that Plaintiffs cannot challenge the INS 1991 Regulation because this lawsuit was filed long after the six-year statute of limitations for APA claims found in 28 U.S.C. § 2401. See Mendoza v. Perez, 754 F.3d 1002, 1018 (D.C. Cir. 2014). The APA limitations period begins to run "on the date of
There are two exceptions to this limitations period. First, if an agency issues "some new promulgation" and "creates the opportunity for renewed comment and objection," it has effectively reopened a rule and the statute of limitations does not bar a challenge. P & V Enters. v. Army Corps of Eng'rs, 516 F.3d 1021, 1024 (D.C. Cir. 2008). However, a general debate on a topic does not reopen all related aspects. See Nat'l Ass'n of Reversionary Prop. Owners v. Surface Transp. Bd., 158 F.3d 135, 142 (D.C. Cir. 1998) ("When an agency invites debate on some aspects of a broad subject ... it does not automatically reopen all related aspects including those already decided."). CIS argues that the CIS 2018 Policy Memo is not sufficient to reopen the 1991 Rule for further challenges. Plaintiffs argue that the CIS 2018 Policy Memo constituted a substantial review of the 1991 Rule and changed its requirements, thus reopening the Rule itself.
"[W]here an agency's actions show that it has not merely republished an existing rule in order to propose minor changes to it, but has reconsidered the rule and decided to keep it in effect, challenges to the rule are in order." Public Citizen v. Nuclear Regulatory Comm'n, 901 F.2d 147, 150 (D.C. Cir. 1990). Cases regarding the reopening doctrine traditionally discuss the ability of a notice of proposed rulemaking to "reopen" a prior rule but do not interpret a policy memo as doing so. To determine if a rule has been reopened, courts look to the language used by the agency.
Nat'l Ass'n of Reversionary Prop. Owners, 158 F.3d at 141-42. The CIS 2018 Policy Memo did not invite debate or any comment on the 1991 Rule. It did not request input on the interpretations announced by the Policy Memo itself, let alone the 1991 Rule, although it did state that the new requirements, if unsatisfied, might lead to denial of a petition. CIS 2018 Policy Memo at 4 ("If the petitioner does not submit corroborating evidence or otherwise demonstrate that there is a specific work assignment for the H-1B beneficiary, USCIS may deny the petition."); id. at 6 ("Adjudicators may deny the petition if the petitioner fails to provide an itinerary, either with the initial petition or in response to a Request for Evidence."). The reopening exception to the statute of limitations is not applicable to reopen the 1991 Rule.
However, a challenge to a rule as it is applied or enforced may be brought within six years of the enforcement action, without regard to when the rule was adopted. In this second exception to the APA statute of limitations, the affected party may challenge the enforcement action in an as-applied challenge and may raise the question of whether the agency lacked the statutory authority to adopt the rule in the first place. See Indep. Cmty. Bankers of Am. v. Bd. of Governors of Fed. Reserve Sys., 195 F.3d 28, 34 (D.C. Cir. 1999) (holding "that a party against whom a rule is applied may, at the time of application, pursue substantive objections to the rule, including claims that an agency lacked the statutory authority to adopt the rule"); see also NLRB Union v. Fed. Labor
Plaintiffs argue that each denial or partial approval of their H-1B visa applications constituted an application of the 1991 Rule against them that is subject to challenge. CIS responds that an as-applied challenge to a rule admits a narrow category of actions, which does not encompass denials of visa applications. While it is true, as CIS contends, that not every agency application of a rule supports an as-applied challenge, it is not accurate to argue that such challenges are limited to formal enforcement actions. See Weaver v. Fed. Motor Carrier Safety Admin., 744 F.3d 142, 145 (D.C. Cir. 2014) ("[T]he sort of `application' that opens a rule to such a challenge is not limited to formal `enforcement actions.'").
To support a challenge, an agency's application or enforcement of its rule must be specific to the challenging plaintiff. Examples of this limitation include when an agency relies on its rule to impose limitations on a broadcast licensee, Functional Music, Inc. v. FCC, 274 F.2d 543, 547-48 (D.C. Cir. 1958); when an agency applies its rule to dismiss a complaint, Am. Tel. & Tel. Co. v. FCC, 978 F.2d 727, 734 (D.C. Cir. 1992); and when an agency denies a lessee's claim for reimbursements under a rule, Murphy Expl. & Prod. Co. v. Dep't of Interior, 270 F.3d 957, 957-59 (D.C. Cir. 2001). CIS argues that this case is like Peri & Sons Farms, Inc. v. Acosta, where the court rejected an as-applied complaint because the challenged action was not aimed at the plaintiffs and did not affect them in a particular way. 374 F.Supp.3d 63, 76 (D.D.C. 2019). Peri challenged a general notice issued by the Department of Labor on updated annual wage rates; the notice was not directed to the plaintiffs and, therefore, was not susceptible to an as-applied challenge. Here, however, Plaintiffs are challenging the denials or partial approvals of individual visa petitions. Each denial or partial approval is based on an application of the 1991 Rule and its current interpretations by CIS. Therefore, as relevant to individual Plaintiffs, the Court concludes that they can raise as-applied challenges to the Rule itself and its enforced interpretations by CIS in their visa denials or partial approvals.
For the same reasons discussed above regarding the 1991 Rule, as-applied challenges to the CIS 2010 Guidance Memo will also be permitted as relevant to individual Plaintiffs.
Both parties spend significant time and energy arguing about whether Plaintiffs may properly challenge the CIS 2018 Policy Memo. Defendant argues that the CIS 2018 Policy Memo itself may not be challenged because it is an interpretive
CIS has done everything it might to cloak the CIS 2018 Policy Memo in unassailable interpretive language: it is titled a Policy Memorandum; it specifies that it affords no rights to anyone; CIS asserts it is directed only to agency adjudicators, not to petitioners; and it sprinkles conditional language (may, could, etc.) throughout.
Nonetheless, the CIS argument fails. Although ostensibly directed to agency adjudicators, the CIS 2018 Policy Memo "effects a substantive regulatory change to the statutory or regulatory regime." Elec. Privacy Info. Ctr. v. Dep't of Homeland Sec., 653 F.3d 1, 6-7 (D.C. Cir. 2011) (internal quotation marks omitted). A legislative rule supplements a statute, adopts a new position inconsistent with existing regulations, or otherwise effects a substantive change in existing law or policy. See Nat'l Mining Ass'n v. McCarthy, 758 F.3d 243, 251 (D.C. Cir. 2014) ("An agency action that purports to impose legally binding obligations or prohibitions on regulated parties—and that would be the basis for an enforcement action for violations of those obligations or requirements—is a legislative rule."). An agency interpretation is substantively invalid when "it conflict[s] with the text of the regulation the agency purported to interpret." Perez v. Mortgage Bankers Ass'n, 575 U.S. 92, 104-05, 135 S.Ct. 1199, 191 L.Ed.2d 186 (2015). Courts have "refused to give deference to an agency's interpretation of an unambiguous regulation, observing that to defer in such a case would allow the agency `to create de facto a new regulation.'" Id. at 104, 135 S.Ct. 1199 (quoting Christensen v. Harris Cty., 529 U.S. 576, 588, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000)).
There is no doubt that the CIS 2018 Policy Memo attempted to "impose legally binding obligations ... on regulated parties" that would be, and have been, "the basis for an enforcement action." Nat'l Mining Ass'n, 758 F.3d at 251. It has had an effect to which all of its parts combine: as discussed further, it cherry picks from the formal 1991 Regulation to create a new definition of employer, to which it grafts the CIS 2010 Guidance Memo; it adds substantive requirements to the nature of the petitioning employer's relationship to the H-1B visa recipient; it adds meaningful requirements to the descriptions of work to be performed by H-1B visa workers, with immediate corroborated evidence of such work for the duration of a visa; and it demands fulsome itineraries on pain of denial for failure to comply. The CIS 2018 Policy Memo is a legislative rule that may be directly challenged by the Plaintiffs.
Additionally, Plaintiffs may mount an as-applied challenge to the CIS 2018 Policy Memo by directly challenging the complete or partial denial of their visa petitions. CIS issued final agency decisions on these petitions and its actions are reviewable. See Broadgate, 730 F. Supp. 2d at 244 ("[T]he proper challenge would have been to a specific denial of a visa application by the agency.") (citing RCM Techs., Inc. v. Dep't of Homeland Sec., 614 F.Supp.2d 39, 45 (D.D.C. 2009)).
As described above, Plaintiffs challenge three aspects of the CIS 2018 Policy
Section 1184 of the INA states that "[t]he admission to the United States of any alien as a nonimmigrant shall be for such time and under such conditions as the Attorney General may by regulations prescribe...." 8 U.S.C. § 1184(a)(1). The statute continues:
Id. § 1184(c)(1). From the requirement that the petition must be submitted by "the importing employer" came the requirement of an employer-employee relationship between the petitioning employer and the foreign worker. As discussed above, DOL crafted a definition of employer and included it in its formal regulation concerning Labor Condition Applications. INS included, and CIS has maintained, the identical definition of employer in its final rule regarding the visa application process that DOL promulgated in its initial rule and subsequent changes to the definition by DOL have not been adopted by INS or CIS. The INS definition applied by CIS states:
8 C.F.R. § 214.2(h)(4)(ii) (emphasis added).
Following issuance of the CIS 2018 Policy Memo, which incorporated and reaffirmed the CIS 2010 Guidance Memo and added standards to evaluate an employer-employee relationship, CIS has repeatedly denied visa petitions for a failure to demonstrate an adequate employer-employee relationship. See, e.g., Pls.' MSJ, App'x, Dec. 19, 2018 CIS Decision re ERP Analysts Inc. at 1-4 (finding that there was insufficient evidence of an employer-employee relationship even though the record
Plaintiffs argue that the new focus on "control" by CIS eviscerates the INS 1991 Regulation that recognizes an employer-employer relationship whenever the U.S. employer "may hire, pay, fire, supervise, or otherwise control the work" of the employee. 8 C.F.R. § 214.2(h)(4)(ii) (emphasis added). Plaintiffs contend that CIS ignores the disjunctive in the word "or" in the INS 1991 Regulation and instead silently replaced it with an "and" that requires the employer to "otherwise control" the work of the foreign worker in all instances instead of recognizing that the necessary degree of "control" is fulfilled by each of the examples in the Regulation.
To begin its analysis, the Court must determine the degree of deference that is due to CIS in this instance. An agency's interpretation of its own regulations is "controlling unless plainly erroneous or inconsistent with the regulation." Auer v. Robbins, 519 U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997) (internal quotation marks and citation omitted); see also Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 359, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989) ("This interpretation of the agency's own regulation is not plainly erroneous or inconsistent with the regulation, and is thus controlling.") (internal quotation marks and citation omitted). The definition in the INS 1991 Regulation at issue—8 C.F.R. § 214.2(h)(4)(ii)—was drafted by DOL and then incorporated by INS as its own. Until 2018, the same definition had been used by CIS. Plaintiffs argue that because INS was not the original author of the definition of employer-employee relationship included in the INS 1991 Regulation, and thereafter used by CIS, no deference should be given to the CIS interpretation. The Court need not resolve this issue, because even evaluating
CIS argues that the term "employer-employee relationship" is undefined and that it merely interpreted the existing INS 1991 Regulation, adopted without change by CIS, but the argument fails. First, of course, the INS 1991 Regulation clearly articulated the criteria that define the employer-employee relationship in this context, see 8 C.F.R. § 214.2(h)(4)(ii) (part 2 of the definition of United States employer), and CIS cites only the "common law" to support its reliance on a single criterion while ignoring all others. The common law may be a useful touchstone but cannot contradict or limit a clear regulation that has been applied with no objection or correction for almost three decades. A new interpretation by CIS decades later that emphasizes one regulatory criterion to the derogation of others, without any relevant change in the underlying statute, is not worthy of deference. The singular emphasis given by CIS to "otherwise control" is revealed by its explanations and its reliance on common law. Because the Court finds that the limited meaning of "employer-employee relationship" as announced and implemented by the CIS 2018 Policy Memo is inconsistent with the longstanding INS 1991 Regulation, it required formal rulemaking and cannot be upheld. The combination of the CIS 2018 Policy Memo and the CIS 2010 Guidance Memo—to which the former gave strict and required reading—destroys any discretion left to CIS adjudicators and renders the 2010 Guidance Memo similarly invalid as applied to Plaintiffs.
The INS 1991 Regulation at issue specifies that the employer "may hire, pay, fire, supervise, or otherwise control the work of [the] employee." 8 C.F.R. § 214.2(h)(4)(ii). Therefore, an employer-employee relationship is evidenced by some aspect of "control" which may be shown in various ways, be it the ability to hire, to pay, to fire, to supervise, or to control in another fashion. The use of "or" distinctly informs regulated employers that a single listed factor can establish the requisite "control" to demonstrate an employer-employee relationship. This formulation makes evident that there are multiple ways to demonstrate employer control, that is, by hiring or paying or firing or supervising or "otherwise" showing control. In context, "otherwise" anticipates additional, not fewer, examples of employer control. INS borrowed the DOL definition and used it in the INS 1991 Regulation, which it then interpreted in the INS 1995 Guidance Memos that governed for over twenty years without congressional action. The CIS 2018 Policy Memo abandoned the regulation's examples of employer control and its expansive use of "otherwise." Instead CIS drilled down and now requires the assignment of day-to-day tasks to show the requisite control of an employer-employee relationship. This new interpretation was an erroneous effort to substitute the agency's understanding of common law for the unambiguous text of the INS 1991 Regulation and is inconsistent with it. The Court finds that CIS has improperly avoided the rulemaking process and, therefore, may not read any single criterion in § 214.2(h)(4)(ii) as mandatory to demonstrate an employer-employee relationship but must consider each sufficient to establish the relationship, including, but not limited to, "otherwise" showing control.
The second and third challenged reasons for visa denials are entwined as both relate to CIS's current requirement that a petitioning employer provide proof of non-speculative work assignments for the entire time of an H-1B visa (usually three years) at the time the petition is submitted. CIS has linked the requested evidence with both the need to be employed in a specialty occupation and the requirement that employers provide an itinerary when the H-1B worker will perform services in more than one location.
The statute defines specialty occupation. See 8 U.S.C. § 1184(i). INS included this same definition in the INS 1991 Regulation:
8 C.F.R. § 214.2(h)(4)(ii). INS also described the evidence that would demonstrate a qualifying position. See 8 C.F.R. § 214.2(h)(4)(ii) and (iii)(A). Recently CIS has denied H-1B visa petitions for failure to demonstrate that the H-1B worker would be employed in a specialty occupation because the petition did not include evidence of non-speculative work assignments for the entire duration of the visa. See, e.g., Dec. 19, 2018 CIS Decision re ERP Analysts Inc. at 6-7; Pls.' MSJ, App'x, Nov. 9, 2018 CIS Decision re ERP Analysts Inc. at 11-14; Pls.' MSJ, App'x, Dec. 26, 2018 CIS Decision re Mythri Consulting LLC at 27-30. Plaintiffs complain that CIS mis-uses the definition of a qualifying position—one that "requires theoretical and practical application of a body of highly specialized knowledge," 8 C.F.R. § 214.2(h)(4)(ii)—by requiring the petitioning U.S. employer to demonstrate that it has specific and non-speculative assignments for the entire time requested in the petition, that is, to present corroborated evidence of future IT assignments for the entire three-year period. Plaintiffs argue that the new requirement to prove non-speculative work assignments for a full three years is not supported by statute or regulation and exceeds the authority of CIS.
The Court again starts with the question of deference. When reviewing an agency's interpretation of its enabling statute and the laws it administers, courts are guided by "the principles of Chevron." Mount Royal Joint Venture, 477 F.3d at 754. Chevron established a two-step inquiry to guide the analysis. The initial question is "whether Congress has directly spoken to the precise question at issue." Chevron, 467 U.S. at 842, 104 S.Ct. 2778. If so, then "that is the end of the matter" because both courts and agencies "must give effect to the unambiguously expressed intent of Congress." Id. at 842-43, 104 S.Ct. 2778. To decide whether Congress has addressed the precise question at issue, a reviewing court applies "the `traditional tools of statutory construction.'" Fin. Planning Ass'n v. SEC, 482 F.3d 481, 487 (D.C. Cir. 2007) (quoting Chevron, 467 U.S. at 843 n.9, 104 S.Ct. 2778). It analyzes "the text, structure, and the overall statutory scheme, as well as the problem Congress sought to solve." Id. (citing PDK Labs. Inc. v. DEA, 362 F.3d 786, 796 (D.C. Cir. 2004); Sierra Club v. EPA, 294 F.3d 155,
The precise question at issue is: what is a specialty occupation? Congress provided clear guidance on the answer. It defined "specialty occupation" in the law. 8 U.S.C. § 1184(i). Importantly, Congress devised a definition for an "occupation," not a "job."
CIS cites the "[s]tandards for [a] specialty occupation position" set out by the INS 1991 Regulation adopted by CIS. See 8 C.F.R. § 214.2(h)(4)(iii)(A). The INS 1991 Regulation states:
Id. CIS argues that the fourth criterion justifies its requirement that employers identify non-speculative assignments in a specialty occupation for the term of the H-1B visa. As CIS is justifying its actions through an interpretation of its own regulation, Auer deference applies. See Auer, 519 U.S. at 461, 117 S.Ct. 905 (holding an agency's interpretation of its own regulations
However, CIS justifies its interpretation by reading the "or" in the INS 1991 Regulation as if it were "and." Under the regulation, an employer must "meet one of the following [four] criteria" to establish that the employee will be placed in a specialty occupation. 8 C.F.R. § 214.2(h)(4)(iii)(A). Criteria one, two, and three address various ways a baccalaureate or other degree may suffice. The fourth criterion does not erase the prior three; to the contrary, it offers an alternative by which a petitioning employer may submit evidence of "specialized and complex" duties that usually require a degree but which the foreign worker has the experience to perform without such studies. Obviously, an employer satisfies the regulation by demonstrating a specialty occupation through evidence that a degree is required to hold the position, without any consideration of the fourth criterion.
CIS appears to argue that the reference in the fourth criterion to "[t]he nature of the specific duties" being "specialized and complex" supports its new requirement of proof of a worker's day-to-day job assignments, rather than his occupation. There is no such requirement in the fourth criterion of the regulation, which recognizes a specialty occupation when "[t]he nature of the specific duties are so specialized and complex" that a baccalaureate or higher degree is usually required, id. § 214.2(h)(4)(iii)(A)(4), much less in criteria one, two, and three. The reference to the "nature of the specific duties" may seem to support the CIS position but it is a mirage. The regulation offers one way to demonstrate a specialty occupation when a foreign worker does not have a degree but can perform complex duties in an occupation that usually requires a degree. The general statement pertaining to such a demonstration does not apply to all H-1B visa holders. It cannot be expanded, under the guise of policy, to require advance notice of all assignments and work duties at the time of petition.
CIS has also denied, or partially denied, H-1B visas because the accompanying itinerary did not include descriptions of non-speculative work assignments for the duration of the requested visa. See, e.g., Dec. 26, 2018 CIS Decision re Mythri Consulting LLC at 25-26. Plaintiffs challenge the itinerary requirement in its entirety and also argue that the new CIS requirement of three years' worth of non-speculative work assignments is inconsistent with the statutory authorization of periods of paid
When INS issued the INS 1991 Regulation, it included an itinerary requirement which remains outstanding:
8 C.F.R. § 214.2(h)(2)(i)(B). Thus, the itinerary requirement is not in the statute. CIS tracks the genesis of the itinerary requirement to the statutory grant of authority provided to the Attorney General, noting that Congress provided that "admission to the United States of any alien as a nonimmigrant shall be for such time and under such conditions as the Attorney General may by regulation prescribe." 8 U.S.C. § 1184(a)(1); see also CIS MSJ at 33-34.
Here, too, CIS has misread the statute —which speaks of "specialty occupations" performed by educated persons—as meaning daily work assignments. Thus, while the INS 1991 Regulation seeks "dates and locations" of the services to be provided, 8 C.F.R. § 214.2(h)(2)(i)(B), it does not include work assignments or the identity of those making daily assignments. Indeed, INS interpreted its own INS 1991 Regulation broadly in the 1995 Guidance Memos which CIS has rescinded or superseded. Now, without rulemaking, CIS requires new details in an itinerary that are inconsistent with a professional "specialty occupation" as previously enforced for decades and inconsistent with the regulation.
The Court concludes that, as applied to these Plaintiffs in the IT consulting sector, it is irrational, that is, arbitrary and capricious, to impose the INS 1991 Regulation as does CIS, requiring contracts or other corroborated evidence of dates and locations of temporary work assignments for three future years; it is, in fact, a total contradiction of the Plaintiffs' business model of providing temporary IT expertise to U.S. businesses. Nothing more clearly illustrates the legislative nature of the CIS
Plaintiffs' final challenge to the itinerary requirement is that it is inconsistent with the ability of employers to place H-1B visa employees in "non-productive status" if suitable work is unavailable. Plaintiffs argue that Congress considered the possibility that at some point during a three-year visa period, an H-1B visa holder might not engage in qualifying work or qualifying work might not be available. In response, Congress enacted the ACWIA, to permit employers to place holders of H-1B visas in "non-productive status" as long as the employer continued to pay the approved fulltime wage. See 8 U.S.C. § 1182(n)(2)(C)(vii)(I) ("It is a failure ... for an employer, who has filed an application under this subsection and who places an H-1B nonimmigrant designated as a full-time employee ... in nonproductive status due to a decision by the employer (based on factors such as lack of work), or due to the nonimmigrant's lack of a permit or license, to fail to pay the nonimmigrant full-time wages ... for all such nonproductive time."). Obviously, in 1998 Congress anticipated non-working periods during the term of an H-1B visa and moved to avoid any negative impact on U.S. employees by making foreign workers cheaper to employ. See id.
The Court finds that the itinerary requirement, as imposed by the CIS interpretation of the INS 1991 Regulation and applied to Plaintiffs by the CIS 2018 Policy Memo, is incompatible with the 1998 ACWIA that addresses the same subject, in immediately-related administrative schemes, and authorizes employers to place H-1B visa holders in paid non-productive status.
The final consolidated question to be resolved is whether CIS has the authority to issue partial denials and grant H-1B visas for less than three years. It has traditionally been the practice of U.S. employers to petition for H-1B visas for the full three-year term. Until the CIS 2018 Policy Memo, both INS and CIS usually granted or denied visa petitions in their entirety without limiting the term by only granting in part. Plaintiffs contend that CIS must continue this practice, that is, that CIS may only grant or deny H-1B visas in their entirety.
The same statute that granted INS authority to regulate the new H-1B visas for nonimmigrants also permitted the Attorney General to determine applicable time limits. See 8 U.S.C. § 1184(a)(1) ("The admission to the United States of any alien as a nonimmigrant shall be for such time and under such conditions as the Attorney General may by regulation prescribe.") (emphasis added). The statute provided
8 C.F.R. § 214.2(h)(9)(iii) (emphasis added). Such a visa may be extended for an additional three years. See id. § 214.2(h)(15)(ii)(B)(1) ("An extension of stay may be authorized for a period of up to three years for a beneficiary of an H-1B petition in a specialty occupation or an alien of distinguished merit and ability. The alien's total period of stay may not exceed six years."). The plain language of the INS 1991 Regulation provides that CIS may issues visas "for up to three years." Id. §§ 214.2(h)(9)(iii), 214.2(h)(15)(ii)(B)(1). It did not require INS, and does not require CIS, to grant or deny a petition for the entire period requested, although that was the usual practice until 2018. The INS 1991 Regulation clearly allows petitions to be granted for "up to three years," which necessarily allows for lesser periods as well.
However, it is uncontested that both INS and CIS have almost uniformly granted a visa petition for three years until recently. The CIS 2018 Policy Memo introduced a practice of granting visa petitions from IT consultants for less than three years, which represents a change after decades of past practice on which petitioning U.S. employers have come to rely—and which, presumably, remains the practice for employers in other industries. In these circumstances, CIS must provide a legitimate reason for any decision to deny, in whole or in part, each petition for an H-1B visa. The agency must "set forth its reasons for decision; an agency's failure to do so constitutes arbitrary and capricious agency action." Tourus Records, 259 F.3d at 737 (internal quotation marks omitted); see also Amerijet Int'l, Inc. v. Pistole, 753 F.3d 1343, 1350 (D.C. Cir. 2014) ("At bottom, an agency must explain `why it chose to do what it did.'") (quoting Tourus Records, 259 F.3d at 737).
Insofar as CIS denied Plaintiffs' petitions for H-1B visas, in whole or in part, without setting forth legitimate reasons for its decisions, the agency actions were arbitrary and capricious in violation of the APA.
For the foregoing reasons, the Court will grant in part and deny in part Plaintiffs' Motion for Summary Judgment [Dkt. 14], grant in part and deny in part Defendant's Cross-Motion for Summary Judgment [Dkt. 16]. The subset of cases that are assigned to Judge Rosemary M. Collyer will be remanded to CIS for reconsideration consistent with this Opinion and the Court will order that such reconsideration shall be completed in no more than 60 days. This Opinion and accompanying Order will be filed on the dockets of all the cases consolidated for a limited purpose. The parties in those cases assigned to other judges will be ordered to file a joint status report regarding the effect of this decision on their specific cases no later than two weeks after the issuance of this Opinion. A memorializing Order accompanies this Opinion.
8 U.S.C. § 1184(i)(1). The 1991 Regulation also defines a specialty occupation as
8 C.F.R. § 214.2(h)(4)(ii). And the 1991 Regulation further clarified that:
Id. § 214.2(h)(4)(iii)(A).
