Courtesy of Klug Law Firm.

On November 23, 2020, U.S. District Judge Jeffrey S. White heard arguments focused on a single question: Did the Department of Homeland Security (DHS) and Department of Labor (DOL) have “good cause” to bypass standard rulemaking procedures and publish emergency regulations to restrict H-1B visas? The plaintiffs – businesses and universities led by the U.S. Chamber of Commerce – argued case law, economic data and the Trump administration’s actions show good cause did not exist. The DOL rule took effect on October 8, 2020, and the DHS rule is effective December 7, 2020, unless blocked. The plaintiffs are asking the court to vacate both regulations.

The Administrative Procedure Act (APA) requires federal agencies to provide notice and the opportunity to comment before a regulation goes into effect. The Trump administration published the DHS and DOL H-1B rules “interim final” and claimed “good cause” reasons existed that justified the agencies publishing the regulations (and allowing them to go into effect) before allowing the public to comment. This is the central dispute between businesses and universities and the Trump administration in U.S. Chamber of Commerce et al. v. DHS et al. – whether the economic situation created by the coronavirus pandemic provides DHS and DOL with a “good cause” exception for its actions.

Paul Hughes of McDermott Will & Emery, the lead counsel for plaintiffs in the Chamber lawsuit, emphasized the high stakes during the November 23rd hearing. “We think this is an overt attempt to destroy the H-1B program,” said Hughes, and several company executives and university leaders provided declarations to that effect. Zane Brown said, “Many of Amazon’s most tenured employees,” including data scientists and software engineers, would have to leave the United States. At the same time, Hughes cited the reliance issue for the University of Utah and its 350 H-1B visa holders, five hospitals and 12 clinics. The university’s attorney said the DHS rule would cause “substantial irreparable harm.”

Hughes also cited the Trump administration as a source. Ken Cuccinelli at the Department of Homeland Security said up to 200,000 H-1B professionals could lose their jobs under the rule. The Department of Labor estimated its rule, which inflates H-1B wage requirements by 40% or more, would cost employers $198 billion over 10 years, making it potentially the most expensive regulation imposed on businesses in modern U.S. history, based on an analysis by the U.S. Chamber of Commerce.

During the court hearing, held via Zoom, the Trump administration did not offer strong responses to arguments plaintiffs put forward in their reply brief or in court. Below are the arguments central to the case.

First, at the hearing, Paul Hughes noted the DHS and DOL rules failed to connect the H-1B visa category to the coronavirus-related economic problems. He pointed to a National Foundation for American Policy (NFAP) analysis of Bureau of Labor Statistics data that showed: “The U.S. unemployment rate for individuals in computer occupations stood at 3.5% in September 2020, not changed significantly from the 3% unemployment rate in January 2020 (before the pandemic spread in the U.S.).” Hughes also noted from the NFAP analysis that there were over 655,000 active job vacancy postings advertised online in computer occupations in the United States as of October 2, 2020.

The data cited by Hughes was available to DHS and DOL before issuing the rules, along with DHS statistics that show most H-1B visa holders work in computer occupations. Hughes successfully litigated for a preliminary injunction against the Trump administration’s June 2020 proclamation (which restricted the entry of H-1B, L-1 and other visa holders). In granting the preliminary injunction in October (NAM v. DHS), Judge White cited NFAP research and other evidence indicating Covid-19 unemployment problems were not focused in computer jobs. During the November 23rd hearing, Hughes noted the government had an even higher burden of proof to show a “good cause” exception for its two recent rules than the standard it used to defend (unsuccessfully) the president’s authority to issue the June 2020 proclamation.

Second, the Trump administration’s attorney offered a limited response to the plaintiffs’ point that DHS and DOL did not address the lack of connection to H-1B visas and coronavirus-related unemployment. The government’s attorney repeated the argument in the DHS rule that the unemployment rate had increased in the Information sector and the Professional and Business Services sector. Hughes responded, citing the National Foundation for American Policy report, that these “sectors” include all employees of a company – and only approximately 10% of the jobs (computer occupations with a B.S. or higher) in the sectors are in occupations similar to professionals in the H-1B category.

The Trump administration’s attorney argued DHS was focused on the “health of the sectors.” Yet that argument appeared weak in light of the impact of the DHS and DOL rules: How would imposing $198 billion in additional regulatory costs on companies in these sectors improve the “health of the sectors”?

Third, the administration also did not appear to successfully respond to the plaintiffs’ argument that DHS and DOL waited more than 6 months to issue rules after the national unemployment rate reached its height in April 2020. “Courts routinely reject claims of good cause when an agency delays promulgating a rule in the face of an emergency and then claims that that very emergency leaves no time for notice and comment – just as the agencies have done here,” the plaintiffs argued in a reply brief. (The plaintiffs cited Air Transp. Ass’n of Am. v. DOT.)

The administration’s attorney said the agency was looking at the pace of recovery and long-term unemployment. Hughes argued DHS did not cite long-term unemployment in its rule, and DOL would have known about long-term unemployment as a consequence months ago. Besides, plaintiffs argued, the unemployment rate has improved significantly since April.

Hughes argued the two rules were on the administration’s agenda for years, and the emergency was the 2020 election (i.e., not an acceptable reason for a “good cause” exception). He also noted to make its case on unemployment, the administration cited an article back on March 27, 2020, but that since that time, DHS and DOL had published several rules that had nothing to do with H-1B visas, further evidence of a lack of emergency that warrants a good cause exception.

Fourth, the Department of Labor stated in its rule that companies would rush to submit labor condition applications (LCAs) under the rules in place for the past 16 years if companies had “[a]dvance notice of the intended changes.” Alexandra Saslaw, representing the administration, argued, “This is a case where the agency [DOL] has significant expertise regulating businesses, and they’re using their predictive judgment to determine what those businesses might do in response to a very clear economic incentive.”

Hughes responded that precedent shows “predictive judgment alone” is not enough for an agency. There also has to be evidence. More pointedly, Hughes said, “We don’t think this argument advances the government’s position because it relies on the notion that they had to keep the DOL rule change a secret, but the government didn’t keep it a secret.” He pointed out not once, but twice, the Trump administration declared it intended the Department of Labor to impose a rule virtually identical to the rule it published. The first time came in a press call with reporters on June 22nd and the second time, on August 2nd, the president mentioned the upcoming regulation during an Oval Office media event.

It is never easy to block government regulations by convincing a court to vacate them. On behalf of the plaintiffs, Paul Hughes appeared to make the stronger legal and factual arguments. Judge White will decide if what plaintiffs describe as an “overt attempt to destroy the H-1B program” will be stopped.

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Sources: [1], [2]. Image sources: [1], [2].