A federal judge has declared the current US administration violated the law when it published two regulations in October to restrict H-1B visas. The plaintiffs – businesses and universities led by the U.S. Chamber of Commerce – argued economic data, the administration’s long delay and other factors showed “good cause” did not exist for Trump officials to bypass standard rulemaking procedures. A judge agreed.

“Defendants failed to show there was good cause to dispense with the rational and thoughtful discourse that is provided by the APA’s [Administrative Procedure Act] notice and comment requirements,” wrote U.S. District Judge Jeffrey S. White in an order on December 1, 2020. “Accordingly, the Court concludes that Plaintiffs are entitled to judgment in their favor on their first two claims for relief, and the Court sets aside the Rules on the basis that they were promulgated in violation of [the law].”

What does the judge’s decision mean? First, the opinion is binding nationwide and not limited to one geographic region or group of plaintiffs, said Paul Hughes of McDermott Will & Emery, the lead counsel for plaintiffs in the Chamber lawsuit. He made the comments in a Facebook Live session hosted by attorney Greg Siskind.

Second, the ruling is for summary judgment. “That means we have a final judgment that sets aside these two rules, both the Department of Homeland Security (DHS) and Department of Labor (DOL) rules in their entirety are now set aside by order of Judge White,” said Hughes. He noted the administration could choose to appeal or ask for a stay, but he was confident in the “power of the ruling.”

He and others will watch how the Department of Labor addresses the issue of wage determinations for H-1B visa holders and employment-based immigrants. Companies have been required to use the much higher wage requirements contained in the DOL regulation since it was issued. Greg Siskind expects the Department of Labor quickly to “flip the switch” and return to the prevailing wage determinations in effect before the new wage rule.

The DOL rule took effect on October 8, 2020, and the DHS rule would have been effective December 7, 2020. Judge White’s ruling vacates both regulations.

During the November 23rd hearing, Paul Hughes said of the regulations: “We think this is an overt attempt to destroy the H-1B program.” In declarations, company executives and university personnel said the DHS rule would cause data scientists, software engineers, medical personnel and others to leave the United States. Many international students would not qualify under the DHS rule or would be priced out of the labor market by the DOL regulation, argued attorneys and employers.

The oral arguments on November 23, 2020, before Judge White foreshadowed the victory for businesses and universities. Plaintiffs’ attorney Paul Hughes drove home the high number of vacancies and the low unemployment rate in computer occupations (in research from the National Foundation for American Policy), the 6-month delay for publishing the regulations since the height of national unemployment in April 2020, and the administration’s questionable justifications for publishing the DHS and DOL H-1B regulations without allowing for public comment.

An analysis of the oral arguments concluded businesses had a good chance of prevailing: “On behalf of the plaintiffs, Paul Hughes appeared to make the stronger legal and factual arguments.” Judge White shared that belief.

“Plaintiffs . . . argue the Court must consider how the COVID-19 pandemic is affecting unemployment in the type of jobs held by H-1B workers and contend Defendants’ analysis is too broad,” wrote Judge White in his decision. “The Court finds Plaintiffs have the better argument. The good cause exception is to be narrowly construed, and, in light of that standard, the Court concludes it is appropriate to focus on how the pandemic is impacting domestic unemployment for the types of positions held by H-1B workers.”

Hughes argued at the hearing that DHS and DOL failed in their rules to connect the H-1B visa category to the coronavirus-related economic problems. He cited a National Foundation for American Policy (NFAP) analysis, which found, “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.).”

Judge White wrote, “The 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 Rules: computer operations which require high-skilled workers.” During his oral argument and in a declaration, Hughes pointed to an NFAP analysis that found over 655,000 active job vacancy postings advertised online in computer occupations in the United States as of October 2, 2020.

At the November 23, 2020, hearing, the best response the Trump administration attorney could offer is that the DHS rule showed the unemployment rate was higher in the Professional and Business Services sector. Hughes countered that argument as well. Judge White wrote: “Plaintiffs also proffer evidence that suggests DHS’s reference to rates of unemployment within the Business Services and Professional sectors does not account for the fact that ‘approximately 10% of the jobs (computer occupations with a B.S. or higher) in these sectors are in occupations similar to professionals in the H-1B category[.]’ (Hughes Decl., ¶ 17, Ex 17 (National Foundation for American Policy, NFAP Policy Brief October 2020, Employment Data for Computer Occupations for January to September 2020, at 8-9).) DHS did not counter that evidence.”

Another argument Hughes made in filings and during the November 23rd hearing the judge found persuasive: The administration’s lengthy delay in publishing the regulations belied claims the two regulations were issued to address an emergency. “Plaintiffs argue that Defendants unduly delayed in taking action and forfeited the ability to rely on the good cause exception,” wrote Judge White. “‘Good cause cannot arise as a result of the agency’s own delay’ [precedents cited] . . . Although both agencies cited to ‘skyrocketing’ and ‘widespread’ unemployment rates as a basis to find ‘immediate’ action was necessary, they did not do so for over six months.”

Judge White noted that “some semblance of the DHS Rule has been on DHS’s regulatory agenda since 2017.” He also pointed out the administration previewed the Department of Labor “adjust[ing] the wage scale” for H-1B visa holders during an April 2017 briefing on its “Buy American and Hire American” executive order. The judge affirmed the plaintiffs’ argument in another area: The administration “issued a number of proposed rules unrelated to the Covid-19 pandemic” between March and October 2020. “From that, it is reasonable to conclude Defendants are not entitled to a presumption of urgency,” wrote Judge White.

He cited in his opinion another area where the administration’s rhetoric and actions did not match: “The Court also finds it significant that, although each Rule allows for post-promulgation comments, Defendants did not suggest in the Rules – or at oral argument – that they are intended to be a temporary solution until the ‘emergency situation has been eased by [their] promulgation[.]’ Without any consultation with interested parties about the impact on American employers, DHS and DOL made changes to policies on which Plaintiffs and their members have relied for years and which are creating uncertainty in their planning and budgeting.” Judge White was also not persuaded the Department of Labor needed to publish its wage rule immediately to prevent employers from filing labor condition applications to get a lower wage determination.

The decision in U.S. Chamber of Commerce et al. v. DHS et al. has far-reaching consequences, the most important of which may be its impact on future administrations. Analysts note the Trump administration has been hostile toward high-skilled immigration for the past four years. The failure to make these H-1B regulations permanent means it will be much easier for future administrations to adopt more neutral or even welcoming policies toward high-skilled foreign nationals, including international students.

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