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Rami Fakhoury on IT Immigration

The Fight Back Book: Introduction: Part C, D

Rating: 64 votes, 5.00 average.

Rami Fakhoury and Mark Levey

Copyright@2010 Fakhoury Law Group/ Rami Fakhoury


*1. **Why Sue, and on What Basis?

If an affected firm or industry group decides to litigate administrative restrictions on H-1B, L-1 visas or PERM labor certifications, what are the legal bases for the complaints that might support such a law suit?

USCIS, along with USDOL, has effectively barred the doors to business immigration of selected categories of foreign firms and the dual-tier business model through a shifting set of informal rules and practices that do not appear in The Federal Register.* Without waiting for a change in law (which has been repeatedly frustrated), and instead of publishing regulations (which might prompt a successful industry court challenge), the agencies instead resorted to knocking off petitioners one at a time, employing informal rules of adjudication, which have been branded as "paralaw":[1]

The problem is that the "law" adjudicators sometimes apply cannot be found in the Code or Regulations. Instead, the law used is an informal law--what could be called a paralaw--circulating at a district office or service center. These paralaws can be learned by talking to information officers, the ombudsman, or by attending service center or district office liaison meetings. Paralaws may differ by INS office, or even between groups of adjudicators at the same office.* The fundamental rules for qualifying for H-1B status, for example, are printed in the Code and Regulations, but the really important rules can only be learned by attending liaison meetings, calling colleagues, and trying to have a friend or two on the inside who can tell you what the current paralaw is.

Challenging paralaw in court can be difficult. While the Administrative Procedure Act (APA) creates a generic cause of action for persons "aggrieved by agency action," it does not always convey subject matter jurisdiction.[2]* The most frequently invoked basis for federal jurisdiction in nonstatutory cases is 28 U.S.C. § 1331, the general "federal question" provision.* Despite the general "presumption of reviewability" of administrative action, the courts have developed elaborate and effective jurisdictional and procedural hurdles to close the doors to review of most discretionary agency decisions and policies.* That is as it should be.* In limited application, paralaw, or "informal rulemaking", is a normal and necessary part of agency operations.* Indeed, "interpretive rules" that implement published USCIS regulation are exempt from APA review under §553(b)(3), as are "inspections" exempted at §554(b)(3) from APA rules governing Adjudications.* *

*The federal agencies could not function if every rule, decision and inspection were subject to being second-guessed by judges.* That is particularly true for a contemporary federal department, such as USCIS, that processes a complex system of forms and millions of petitions involving a wide variety of benefits-seekers.* Indeed, no agency can operate without its own internal policies and informal rules for adjudicators; given the complexity and novelty of some cases, it would be impractical to publish all the rules.* Also, given the vast size of modern agencies, such as USCIS, and the number of adjudications, and follow-up inspections not every flawed decision or the conduct of every audit can or should be reviewed by a federal judge. **The circuits have therefore constructed variations on the DC Circuit's "definitive interpretation" rule.* Normally, interpretive rules are exempt from challenge.* An exception is restricted to an interpretative rule that disturbs a "definitive interpretation", an unpublished guidance policy or advisory document that is long-standing, settled, consistent, and little changed for a number of years. Creosote Council v. Johnson, 555 F. Supp. 2d 36 (D.D.C. 2008); ASSOCIATION OF AMERICAN R.RS. v. DOT, 198 F.3d 944, 945 (D.C. Cir. 1999); Mercy Med. Skilled Nursing Facility v. Thompson.** Similar rules limiting the scope of review and jurisdiction apply to agency audits and inspection regimes, as interpreted by US Chamber of Commerce v. USDOL OSHA, 174 F.3d 206 (D.C. Cir. Apr. 9, 1999), a DC Circuit Court of Appeals injunction against a USDOL Directive that imposed a "safety and health compliance" rule and "voluntary" system of inspections without "notice-and-comment" publication. [See, discussion at PERM (1)(b)] ***

Therefore, by design, mere policy shifts and inconsistencies in the quality of examinations cannot be challenged under the APA.* *However, the sort of systematic agency rulemaking by adjudications and unpublished "voluntary" inspections we have seen in H-1B may become impermissible when informal agency policy is imposed as a uniform, generalized rule to deny benefits to an identifiable category of applicants. **Then, the new rule becomes an impermissible "de facto rule or agency norm", which may be challenged.* [Center for Auto Safety v. NHTSA, 452 F.3d 798 , 806 (D.C. Cir., 2006)]* *Under the APA "notice-and-comment" requirement, § 553, agencies must publish their rules giving the affected public notice and the opportunity to comment (or to lobby, or to seek the protection of the federal courts to guard their interests). Exemptions to notice-and-comment are to be "narrowly construed and only reluctantly countenanced." [Am. Fed'n Gov't Employees v. Block, 655 F.2d 1153, 1156 (D.C. Cir. 1981)] **

One of the steepest barriers the APA poses to potential litigation is the exemption to the Sec. 553 "publish-and-comment" requirement for interpretative rulemaking and adjudications.* An "interpretive" or "adjudicative" rule is generally defined as a mere agency explanation or clarification of an existing statute made to address specific and narrow facts that arise in a single, isolated adjudicative proceeding.* An interpretive rule may be issued without notice and comment only if such rule: (1) is not inconsistent with any prior rule, policy or interpretation; (2) does not affect the rights or obligations of parties; (3) does not alter or add to existing rules or interpretations; (4) does not have binding future effect of general or particular applicability; and (5) does not add to the legal norm by creating new rights or duties. [Syncor Int'l Corp. v. Shalala, 127 F.3d 90, 93-96 (D.C. Cir. 1997); Ford Motor Co. v. FTC, 673 F.2d 1008, 1009-10 (9th Cir. 1981). ; Patel v INS, 638 F.2d at 1199 (9th Cir. 1980); Ruangswang v. Immigration & Naturalization Service, 591 F.2d (9th Cir., 1978) at 39 ; NLRB v. Wyman-Gordon, 394 U.S. at 764-65]

Interpretative ("informal") rules held to be in conflict with or without support in existing law or regulation are normally invalid. **Those that appear to be in conflict with "definitive interpretation" may be reviewed and overturned.* Unless they are published, agency rules do not have "force of law".* Informal rulemaking that is not published may be reviewed according to the Skidmore test for "(1) the thoroughness of the agency's investigation; (2) the validity of its reasoning; (3) the consistency of its interpretation over time; and (4) other persuasive powers of the agency."[3]* An agency action or decision that is deficient according to these factors will be held to be arbitrary and capricious. [UNITED STATES V. MEAD CORP., 533 U.S. 218 (2001) 185 F.3d 1304; Skidmore v. Swift & Co., 323 U.S. 134 (1944)]

*By contrast, any statement, explanation, clarification, or interpretation is deemed to be a "substantive" (or "legislative") rule, which requires notice-and-comment rulemaking, if it constitutes an agency statement of binding and general or particular applicability and future effect, alters, changes or adds to existing rules, policies, or interpretations, affects the rights and obligations of parties, adds to the legal norm by creating new rights or duties, has widespread application, and/or is inconsistent with a prior rule, policy, practice or interpretation.* Substantive rules are held to have "force of law" and may, if lawful and valid, be accorded Chevron-style deference. [UNITED STATES V. MEAD CORP., 533 U.S. 218 (2001) 185 F.3d 1304; Croplife America v. Environmental Protection Agency 329 F3d 876 (D.C.Cir.2003);* Alaska Professional Hunters ***'n, Inc. v. FAA, 177 F.3d 1030, 1035 (D.C. Cir. 1999); Syncor Int'l Corp. v. Shalala, 127 F.3d 90, 93-96; Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984); Ford Motor Co. v. FTC, 673 F.2d 1008, 1009-10 (9th Cir. 1981).]


Furthermore, when targeted consistently against some particular group, as are the Defensor dicta, paralaw (or interpretative law) is synonymous with what the D.C. Circuit identifies as "de facto rules or binding agency norms."[4]* *The courts hold that these practices become a violation of the APA when informal agency rules contradict previously published regulations[5] or become a binding practice that is uniformly imposed through adjudications to unfairly deny, discriminate, or delay benefits to an identifiable category of aggrieved applicants.* *[Center for Auto Safety v. NHTSA, 452 F.3d 798 , 806 (D.C. Cir., 2006)]

Such de facto rules or binding norms, the D.C. Circuit further states, may "not properly be promulgated absent the notice-and-comment rulemaking required by § 553 of the APA."[6]* That decision identified two lines of inquiry in distinguishing "de facto rules or binding norms" from general statements of agency policy, which are non-reviewable:

In determining whether an agency has issued a binding norm or merely an unreviewable "statement of policy", we are guided by two lines of inquiry. *See Wilderness Soc'y v. Norton, 434 F.3d 584, 595 (D.C.Cir.2006). One line of analysis considers the effects of an agency's action, inquiring whether the agency has "(1) impose[d] any rights and obligations, or (2) genuinely [left] the agency and its decisionmakers free to exercise discretion." CropLife Am. v. EPA, 329 F.3d 876, 883 (D.C.Cir.2003) (citation and internal quotation marks omitted). The language used by an agency is an important consideration in such determinations. See Cmty. Nutrition Inst. v. Young, 818 F.2d 943, 946 (D.C.Cir.1987) (per curiam). The second line of analysis looks to the agency's expressed intentions. CropLife Am., 329 F.3d at 883. This entails a consideration of three factors: "(1) the [a]gency's own characterization of the action; (2) whether the action was published in the Federal Register or the Code of Federal Regulations; and (3) whether the action has binding effects on private parties or on the agency." Molycorp, Inc. v. EPA, 197 F.3d 543, 545 (D.C.Cir.1999).

When paralaw has the effect of unlawful denial or unreasonable delay of administrative benefits owed by right or awardable by statute, review may be sought under §§ 704, 706 of the Administrative Procedure Act.* The APA supplies "a generic cause of action in favor of persons aggrieved by agency action." [7] *The Center for Auto Safety decision nicely illustrates the APA requirements under which a "reviewing court shall ... compel agency action unlawfully withheld or unreasonably delayed" in H-1B and similar business immigration cases that might be brought before the circuit courts. Any individual or similarly-situated group with a cognizable cause of action has standing under the APA.* The next question is whether the agency action or ruling challenged is merely interpretative or substantive (shown to be binding and general or particular applicability and with future effect, alters, changes or adds to existing rules, policies, or interpretations, etc.). *If the underlying cause of action is found to be substantial, the court will then rule on the merits of the question of law or constitutional claim presented.


Neufeld is Not a "Definitive Interpretation" of the "Common Law Doctrine of Control", and Itself Substantially Deviates from Definitive Interpretation on the Same Subject

There does not appear to be any specific reference in the APA immigration-related case law or literature to the "definitive interpretation" standard referenced in Alaska Prof'l Hunters ***'n v. FAA, 177 F.3d 1030 (D.C. Cir. 1999), [the D.C. Circuit].* That decision is particularly significant since it associates an agency's "definitive interpretation" of its own regulations with "administrative common law", which USCIS invokes as authority to impose the doctrine of "control" in order to justify its de facto imposition of an elevated burden of proof upon petitioners that place H-1B workers at third-party client sites.* That makes this a potential matter of first impression for the courts.

A Lexis-Shepard's search reveals a number of non-immigration cases decided within the DC Circuit that employ the "definitive interpretation" standard to vacate or affirm decisions made by various federal agencies where plaintiffs alleged the agency issued a decision substantially differing from definitive interpretation but failed to publish a new regulation.* These cases included the following sample that illustrate the sort of issues, defenses, and outcomes one might expect in this type of APA action, as well as the deferential approach that now Chief Justice Roberts took in rendering a related decision at the DC Circuit. **Note: Some of these cases involve a situation where the head of an agency or unit has provided advisory opinion letter, taken to be a "definitive interpretation."* Others involve changes in agency rules through means that did not involve individual notice or publication of formal regulation [Emphases added]:

  • Creosote Council v. Johnson, 555 F. Supp. 2d 36 (D.D.C. 2008) : Plaintiffs alleged that the EPA previously gave the articles exemption of 40 C.F.R. § 372.38(b) a definitive interpretation, exempting stored finished wood from reporting requirements of 42 U.S.C.S. § 11023. A later letter from the EPA stated that the stored wood was not exempt. Plaintiffs alleged that the change violated the notice and comment requirements of the Administrative Procedure Act, 5 U.S.C.S. § 553(c), and sought an injunction to relieve reporting of storage yard emissions in 2007 TRI reports. The court granted the motion for an injunction. The court found no doubt that from 1989 to 2001, the Form R instructions took a definitive position that emission from stored product did not have to be reported. That position was later abandoned when the EPA letter took the position that the storage yard emissions had to be reported. Because the letter marked a significant change in the EPA's understanding of the scope and applicability of the articles exemption, plaintiffs made a strong showing that they were likely to prevail on their notice and comment challenge. Thus, an injunction was proper even though the claim of irreparable injury was not particularly substantial.

  • **
    ASSOCIATION OF AMERICAN R.RS. v. DOT, 198 F.3d 944, 945 (D.C. Cir. 1999) : *[*945]* TATEL, Circuit Judge: Acting without notice and comment, the Federal Railroad Administration issued a technical bulletin interpreting a safety regulation the agency had issued through formal rulemaking just two years earlier. Petitioner claims that the technical bulletin abruptly departed from the agency's previous interpretation of the regulation and that it therefore required notice and comment rulemaking. We disagree. Reviewing the random and conflicting agency letters and other documents relied on by petitioner, *[**2]* we find no evidence of a definitive agency interpretation that could be changed only through notice and comment. We therefore deny the petition for review.

  • Mercy Med. Skilled Nursing Facility v. Thompson,*C.A. 99-2765 (TPJ), C.A. 01-2014 (TPJ), C.A. 02-2252 (TPJ), C.A. 02-2253 (TPJ) ,*UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA,*2004 U.S. Dist. LEXIS 27365,*May 14, 2004, Decided

    OVERVIEW: Secretary of the U.S. Department of Health and Human Services's abrupt shift in policy regarding reimbursement for all atypical service costs constituted substantial departure in interpretation and Secretary's failure to follow APA's, specifically 5 U.S.C.S. § 553, notice and comment procedures in making change constituted a violation of the APA.* [. . .]* For a 10 year period prior to the issuance of [Medicare Provider Reimbursement Manual] PRM § 2534.5 the Secretary operated under a policy that consistently resulted in the hospitals being granted full reimbursement for all atypical service costs above the RCL. PRM § 2534.5, however, altered the calculus to the hospitals disadvantage, in effect leaving a "gap" between the applicable RCL (reimbursable) and 112 percent of the mean per diem cost for peer group SNFs (reimbursable at the discretion of the secretary). Costs falling in the gap were, according to PRM § 2534.5, conclusively deemed non-reimbursable. The court held that even if PRM § 2534.5 was deemed the Secretary's interpretation of HHS's own regulation, namely 42 C.F.R. § 413.30(f), and granted substantial deference, it nevertheless violated the Administrative Procedures Act, specifically 5 U.S.C.S. § 553, as it constituted a change in the Secretary's definitive interpretation made without following the required notice and comment procedures.*


  • Umatilla Waterquality Protective ***'n v. Smith Frozen Foods,*Civil No. 96-657-JO,*UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON,*1997 U.S. Dist. LEXIS 16458; 28 ELR 20272,*September 23, 1997, Decided ,*September 24, 1997, Filed; September 25, 1997, Entered

    OVERVIEW: Plaintiff argued that the EPA's recent interpretations formally interpreted the Act so that the NPDES permit requirement applied to discharges to groundwater that were hydrologically connected to surface water. The court disagreed. The legislative history of the Act and the 24-year history of state regulation indicated that the NPDES permit requirement did not apply to any discharges to groundwater. The EPA had not made any formal efforts to universally enforce its alleged change in interpretation. The court refused to defer to a recent, limited interpretation. The court looked at the structure and language of the Act as a whole and found that Congress intended that the NPDES permit requirement would not apply to discharges of groundwater. The court was not bound by an agency interpretation that had no foundation in the statute or its legislative history. As such, plaintiff's motion for reconsideration was denied. Regarding defendant's motion to vacate a stay for interlocutory appeal, the Ninth Circuit had denied permission to appeal. Therefore, the purpose of the stay was fulfilled. The court should issue its opinion within 60 days.

    OUTCOME: The court denied plaintiff's motion to reconsider and granted defendant's motion to vacate the stay. The court set a ruling schedule.

  • Torch Operating Co. v. Babbitt,*Civil Action No. 8-884 (EGS), Civil Action No. 8-1388 (EGS), Civil Action No. 8-138 (EGS), Civil Action No. 8-1444 (EGS), Civil Action No. 8-2125 (EGS) Consolidated Cases [42-1] [45-1] ,*UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA,*172 F. Supp. 2d 113; 2001 U.S. Dist. LEXIS 18417; 159 Oil & Gas Rep. 896,*October 24, 2001, Decided.* [Caution: possible negative treatment]

    OVERVIEW: The Minerals Management Service (MMS), a subdivision of the DOI, carved out an exception to the actual cost requirement that allowed federal lessees shipping oil via affiliated pipelines to base transportation allowances on tariffs filed with the Federal Energy Regulatory Commission (FERC). This provision, known as the "FERC tariff exception," provided that the MMS would grant an exception only if the lessee had a tariff for the transportation system approved by FERC. Under the prior scheme, the only action a lessee had to take to satisfy the requirement of 30 C.F.R. § 206.105(b)(5) that a tariff be "approved by FERC" was to show proof of a tariff on file with FERC. However, the DOI later made clear that "approved by FERC" meant that no applicant would be granted the exception without an additional affirmative statement of jurisdiction by FERC. The court held that DOI's interpretation stretched the meaning of "approved by" too far. Because this new interpretation fundamentally modified DOI's long-standing interpretation and was relied upon without the notice and comment procedures required for rule amendments, DOI's action with respect to plaintiffs violated the APA.

    OUTCOME: The lessees' joint motion for summary judgment was granted. The department's motion for summary judgment was denied. Final judgment was entered in favor of the lessees and against the department.

  • Visiting Nurse ***'n v. Thompson,*99-CV-7564 (NGG)(CLP) ,*UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK,*378 F. Supp. 2d 75; 2004 U.S. Dist. LEXIS 28468,*December 3, 2004, Decided ,*December 7, 2004, Filed

    OVERVIEW: Medicare Provider Reimbursement Manual § 3205, interpreting the cost-reporting regulations of 42 C.F.R. § 413.53, was not subject to the notice and comment provisions of 5 U.S.C.S. §*553(b) because it was an interpretive rule that simply restated that providers were required to adhere to the Medicare regulations in preparing their cost reports.

  • Devon Energy Corp. v. Norton,*Civil Action No. 04-CV-0821 (GK),*UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA,*2007 U.S. Dist. LEXIS 61709,*August 23, 2007, Decided,*Affirmed by Devon Energy Corp. v. Kempthorne, 2008 U.S. App. LEXIS 25857 (D.C. Cir., Dec. 23, 2008): Plaintiff Devon Energy Corporation ("Devon"), a natural gas producer, seeks review of a decision by the Department of the Interior ("Interior"). 1 Interior held that Devon could not deduct certain costs when it calculated the royalties owed to the government pursuant to its lease to extract natural gas from federally-owned land. Devon principally argues that Interior's decision violates the notice and comment provisions of the Administrative Procedure Act ("APA"), 5 U.S.C. § 553, because it reinterprets Interior regulations in a manner fundamentally different from the agency's prior interpretation of the same regulations. The following analysis establishes that Interior did not reinterpret *[*2]*a prior authoritative interpretation of its regulations in violation of the APA, and hence was not required to conform to the APA's notice and comment provisions.

[. . .]* the policy statements or informal interpretations in the Guidelines and Letter are not binding on Interior, unless Interior affirmatively adopted *[*11]*them, by way of complying with them in a longstanding practice. See Alaska Professional Hunters ***'n v. FAA, 336 U.S. App. D.C. 197, 177 F.3d 1030, 1035 (D.C. Cir. 1999).

Interior's paradigm is quite different. Interior views the 1995-96 Guidelines and Letter as an anomaly or error in a long line of Interior policy statements and interpretations that have consistently interpreted, for decades, the marketable condition rule in accordance the view taken by the 2003 decision rejecting Devon's interpretation.

A. Statutory and Regulatory Background 2

2 Much of the following statutory and regulatory background has been taken, without attribution for ease of readability, from then-Judge Roberts' opinion in Amoco Production Co. v. Watson, 366 U.S. App. D.C. 215, 410 F.3d 722 (D.C. Cir. 2005), and the Supreme Court's opinion in Amoco Production Co. v. Southern Ute Indian Tribe, 526 U.S. 865, 119 S. Ct. 1719, 144 L. Ed. 2d 22 (1999).* From that decision:* B. The producers also contend that the Assistant Secretary acted arbitrarily and capriciously by misinterpreting the MLA regulations and departing from agency precedent. HN6 Although we will not allow an agency to "rewrite regulations under the guise of interpreting them," Fina Oil, 332 F.3d at 676,*[***15]* we nevertheless owe "substantial deference to an agency's interpretation of its own regulations," giving that interpretation "controlling weight unless it is plainly erroneous or inconsistent with the regulation," Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 129 L. Ed. 2d 405, 114 S. Ct. 2381 (1994)*[*729]* *[**222]* (internal quotation marks omitted). Such deference is particularly appropriate in the context of "'a complex and highly technical regulatory program,' in which the identification and classification of relevant 'criteria necessarily require significant expertise and entail the exercise of judgment grounded in policy concerns.'" Id. (quoting Pauley v. BethEnergy Mines, Inc., 501 U.S. 680, 697, 115 L. Ed. 2d 604, 111 S. Ct. 2524 (1991)).

  • Air Transp. ***'n of Am. v. Faa, No. 01-1027, No. 01-1303, No. 01-1306 ,*UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT,*291 F.3d 49; 351 U.S. App. D.C. 399; 2002 U.S. App. LEXIS 10270; 7 Wage & Hour Cas. 2d (BNA) 1484,*January 18, 2002, Argued ,*May 31, 2002, Decided

The FAA promulgated 14 C.F.R. § 121.471, which required airlines to provide mandatory rest times to crewmembers based upon the amount of flight time. The FAA subsequently issued a letter, through its deputy counsel, which required the airlines to calculate the mandatory rest period based upon the actual time that the flight took as opposed to the amount of time that was scheduled for the flight. Petitioners contended that the letter violated the APA by making a substantive change in the regulation without providing an opportunity for notice and comment. The court disagreed and denied the petitions. The court held that the FAA's interpretation of 14 C.F.R. § 121.471 was reasonable and was not inconsistent with the purposes of the regulations. The court held that the letter was an interpretative ruling, as opposed to a substantive ruling, and a notice and comment period was not required. The letter did not impose any new rights or duties and did not require notice and comment rulemaking. The court reviewed earlier rulings from the FAA and did not find the letter to be so inconsistent with earlier interpretative decisions that a notice and comment period was required.

"[W]e defer to the FAA's view unless "an alternative reading is compelled by the regulation's plain language or by other indications of the [agency's] intent at the time of the regulation's promulgation." Thomas Jefferson Univ., 512 U.S. at 512 (quoting Gardebring v. Jenkins, 485 U.S. 415, 430, 99 L. Ed. 2d 515, 108 S. Ct. 1306 (1988))"

[ . . .]

"The interpretation contained in the Whitlow Letter is "fairly encompassed" within the regulation it purports to construe and, therefore, under our circuit precedent is an interpretative rule exempt*[**15]* from notice-and-comment rulemaking. Moreover, none of the FAA's earlier interpretations of FAR 121.471 addresses precisely the issues addressed in the Whitlow Letter. Accordingly, the Whitlow Letter does not mark a departure from the past."

Referencing Alaska Hunters:* "The long-standing advice, we held, had become "an authoritative departmental interpretation, an administrative common law applicable to Alaskan guide pilots"; hence, the Notice changing that interpretation had to comply with notice-and-comment rulemaking. 177 Fed. 3d 1030, 1035."** NOTE:* This statement might be taken too far and misconstrued so as to require that that prior "authoritative interpretation" be so long established that it amounts to or have the effect of "administrative common law," whatever that might be.

OUTCOME: The court denied the petitioner's request for review of an interpretative letter issued by the Federal Aviation Administration concerning the manner in which crew members' mandatory rest periods should be calculated.



  • Commodity Carriers, Inc. v. Fed. Motor Carrier Safety Admin., 434 F.3d 604, 607 (D.C. Cir. 2006)* PROCEDURAL POSTURE: Respondent Federal Motor Carrier Safety Administration, a United States Department of Transportation agency, assigned petitioner carrier a "conditional" safety rating. Seeking review, the carrier argued 49 C.F.R. § 395.8(k)(1) did not require independent owner/operator drivers to obtain and retain toll receipts, and that the agency had not engaged in the notice and comment rulemaking on that issue required by 5 U.S.C.S. § 553(c).

    OVERVIEW: Without the toll receipts, the agency investigator could not verify the accuracy of the owner/operators' logs. One prior case had found that a different carrier was wrongly assigned a conditional rating because it had reasonable grounds to believe it was not required to collect and maintain owner/operator toll receipts based on agency "guidance" documents. But that case did not give an opinion on the meaning of the regulation itself and was almost immediately contradicted by another case involving that same carrier, finding that the carrier had reasonable grounds to believe that it was required to maintain all supporting owner/operator documents. The express language of 49 C.F.R. § 395.8(k)(1) directed that a carrier maintain supporting materials for each driver it employed, and employee was expressly defined in 49 C.F.R. § 390.5 to include an independent contractor operating a commercial motor vehicle. The petitioner carrier was not a party to the prior case and thus, issue preclusion did not foreclose a conditional safety rating. The carrier had been on individual notice from previous enforcement actions that the agency required a carrier to maintain owner/operator toll receipts.

    OUTCOME: the petition for review is denied.

CCI contends Ace Doran I represents a "definitive interpretation" of section 395.8(k)(1) as not requiring a carrier to maintain owner operator toll receipts and that the FMCSA therefore could not permissibly revise the interpretation without notice and comment. See Alaska Prof'l Hunters ***'n, Inc. v. FAA, 336 U.S. App. D.C. 197, 177 F.3d 1030, 1034 (D.C. Cir. 1999) ("When an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish without notice and comment." (citing Paralyzed Veterans of Am. v. D.C. Arena, 326 U.S. App. D.C. 25, 117 F.3d 579, 586 (D.C. Cir. 1997)). We find this argument unpersuasive. First, we do not read Ace Doran I as offering any interpretation of section 395.8(k)(1), definitive or otherwise. That decision concluded the FMCSA had wrongly assigned Ace Doran a conditional rating because the carrier "had reasonable grounds to believe it was not required to collect and maintain toll receipts from its owner operator drivers" based on agency "guidance" documents. *[***10]* Ace Doran I at 15 (emphasis added). No opinion was given on the meaning of the regulation itself. 5 Moreover, the interpretation of section 395.8(k)(1) in Ace Doran I was not definitive; it was almost immediately contradicted by Ace Doran Hauling & Rigging Co. (FMCSA July 11, 2000) (Ace Doran II), in which the Acting Chief Safety Officer, citing the definition of "employee" in FMCSA's regulations, concluded that "Ace Doran had reasonable grounds to believe that it was required to maintain all supporting documents from its owner operator drivers." Ace Doran II at 12 (emphasis added). 6 Further, the interpretation CCI advances--that section 395.8(k)(1)'s requirement that carriers maintain drivers' toll receipts does not apply to owner operator *[*608]* *[**189]* drivers--is, as noted in both Ace Doran II and the FMSCA decision here, directly at odds with HN7 the express language of FMSCA regulations directing that a carrier maintain supporting materials "for each driver it employs," 49 C.F.R. § 395.8(k)(1), and defining an employee as "any individual, other than an employer, who is employed by an employer and who in the course of his or her employment*[***11]* directly affects commercial motor vehicle safety, "expressly "including an independent contractor while in the course of operating a commercial motor vehicle," id. § 390.5. 7


  • Air Brake Sys. v. Mineta, 202 F. Supp. 2d 705, 2002 U.S. Dist. LEXIS 7722 ( E.D. Mich., 2002)PROCEDURAL POSTURE: Plaintiff brake manufacturer appealed the summary judgment granted to defendants Secretary of Transportation and National Highway Traffic Safety Administration by the United States District Court for the Eastern District of Michigan, challenging the agency's Chief Counsel's conclusion and authority to issue letters on non-compliance with regulations, arguing the letters were "final agency action" under the Administrative Procedure Act (APA).

    OVERVIEW: The letters explained why the manufacturer's product did not comply but were tentative in nature. They were not final agency actions under § 10 (5 U.S.C.S. § 704) of the APA, 5 U.S.C.S. § 701 et seq. The agency acknowledged the conclusions were neither binding on the industry nor entitled to any administrative deference. Having no direct, binding effect and no legal consequences, the letters were not final agency action. Under 49 C.F.R. § 552.3(a), the manufacturer could petition for an alteration of the standard under the agency's rulemaking powers. But, the letters did reflect final agency action as to the authority to issue them, because the practice did not lend itself to further review at the agency level and had legal consequences. Yet, the practice of permitting the Chief Counsel to issue advisory opinions in response to inquiries from the public did not exceed his authority. 49 U.S.C.S. § 30118's process for determining that a vehicle did not comply with a safety standard required a vehicle that was already built, and said nothing about how the agency might inform curious manufacturers and suppliers about what hypothetically would not comply with regulations.

    OUTCOME: The judgment of the district court was affirmed.*


LEXIS and Google reveals nothing relevant or recent that specifically links USCIS or INS with the legal issue of "definitive interpretation."* The closest item found by Google is a Concurring Opinion in a 1993 BIA decision related to the BIA's consideration of the Marriage Fraud Amendment to 1990 IRCA:

"An example contained in the legislative history is not a definitive interpretation of the scope of a statute and does not suggest a clear congressional intent. Pension Benefit Guaranty Corp. v. LTV Corp. , 496 U.S. 633 (1990). The legislative history relied upon by the majority does not establish any congressional intent, much less an intent that is clear enough to restrict the plain language of the statute." [Matter of Isber, 20 I&N 626, Int. Dec. 3203 (BIA, 1993)(Concurring Opinion, James P. Morris)][8][Also, see, Matter Of Isber,*No. A-28485883,*3203,*DEPARTMENT OF JUSTICE,* BOARD OF IMMIGRATION APPEALS,*1993 BIA LEXIS 19; 20 I. & N. Dec. 676,*August 10, 1993, Decided by Board]

Finally, LEXIS turned up a 1979 BIA decision, dealing with a question of eligibility to petition for an illegitimate child, which disagreed with the findings of a Circuit Judge and reserved its effect to the area of that court's jurisdiction:

There are several principles regarding prerequisites for challenges to "definitive interpretations" that can be identified from these cases:


Recent Successful APA Actions in the Immigration Context

Crossing that procedural hurdle, the courts grant jurisdiction to hear cases of denials or delay in processing immigration petitions in a number of instances. A useful resource on the issues of jurisdiction and reviewability of immigration decisions is Mary Kenney's American Immigration Law Foundation (AILF) Practice Advisory series.* With regard to the types of immigration cases that have received review, she cites the following as "successful APA challenges"[9]:

o USCIS denial of an adjustment of status reversed where the agency erred in

finding the plaintiff ineligible for adjustment, Pinho v. Gonzales, 432 F.3d 193

(3d Cir. 2005);

o INS denial of a religious worker visa petition reversed where it was based upon

the improper application of a regulation, Camphill Soltane v. USDOJ, 381 F.3d

143 (3d Cir. 2004);

o Preliminary injunction granted where there was a reasonable question whether

EOIR's directives to immigration judges violated the APA, Baharona-Gomez v.

EOIR, 167 F.3d 1228 (9th Cir. 1999);

o USCIS denial of specific consent to pursue special immigrant juvenile status

(SIJS) in state court reversed, Young Zheng v. Pogash, 416 F. Supp. 2d 550 (S.D.

Tex. 2006);

o USCIS denial of an H-1B visa reversed where the Administrative Appeals Office

(AAO) made findings that were not based on evidence in the record and ignored

contrary evidence that was in the record, Fred 26 Importers v. U.S. DHS, 445 F.

Supp. 2d 1174 (C.D. Cal. 2006);

o Motion to dismiss denied where court found that plaintiffs adequately stated an

APA claim against USCIS and the FBI over delays in processing adjustment and

naturalization applications, Kaplan v. Chertoff, No. 06-5304, 2007 U.S. Dist.

LEXIS 22935, *71-72 (E.D. Pa. Mar. 29, 2007).


A paralaw, or "de facto rule or binding agency norm," is reviewable whether or not the agency has publicly stated it is binding.* It may merely treat it as a consistent rule of adjudications.[10] *Causes for action under the APA involving unannounced binding agency norms, nonetheless, are more difficult to establish.[11] *For several years, USCIS cited the Defensor decision, an otherwise obscure 2000 decision of the Fifth Circuit Court of Appeals, as authority to impose a binding norm to restrict H-1B outsourcing cases.* While it was cited with approval by USCIS in hundreds of RFEs and denials, the case was never adopted or cited approvingly by the Fifth Circuit.* It has not been formally referenced by USCIS as a rule or cited as a policy statement or directive released to the public.* As nebulous dicta it was more difficult to challenge than the Neufeld memo's open statement of USCIS procedures which covers much of the same ground and adopts the Defensor dicta of "control," albeit citing a common law source for the same doctrine.* The decision served its purpose, however, and USCIS continues to cite Defensor in individual Service Center decisions. *USCIS decisions that cite either Defensor or the successor Neufeld memo may be contested as parts of the same APA action. *As interpreted by USCIS, Defensor held several things that still apply in Neufeld:

  • that outsourcing firms are to be presumptively treated as employment agencies;

  • firms that place workers are "token" employers that do not control their workers - the third-party client where the H-1B worker is assigned is assumed to be the "true" employer;

  • USCIS imposes a higher burden of proof on employment agencies than on employers, *requiring agencies to document that they, in fact, control and supervise their H-1B workers assigned at client sites;

  • The job qualifications imposed by agencies do not matter - the petitioner must document that the position at all third-party sites are actually professional in nature;

  • Additional documentation of the H-1B nature of work performed at client sites must also be submitted, including contracts between the H-1B petitioner and those clients, even though third-parties often refuse to allow such documents to be provided because of concerns for their own exposure to compliance and litigation risks.

  • Employment agencies must submit complete itineraries for all work to be performed, even if that is practically impossible to schedule specific assignments some six or more months in advance, as the H-1B filing process entails - H-1B visas will not be approved without a complete itinerary, even though the existing regulations do not require one.

  • If the additional documentation specified in an RFE is not submitted, even if the petitioner responds to the issues raised with meaningful and substantive alternative information, the petition will be denied under Matter of Treasure Craft of California, 14 I&N Dec. 190. (Reg. Comm. 1972).

As will be shown at length, below, the Defensor dicta are still, in fact, alive and carried over as *de facto rules incorporated in the Neufeld memo,[12] and both are inconsistent with law and regulation. **That memo makes manifest certain de facto rules binding upon USCIS adjudicators and petitioners, alike.* The Neufeld memo incorporates the Defensor dicta and USCIS's more recently announced "common law" basis for the control doctrine.* The memo lays out an elaborate demand list of thirty-eight types of documentation in eight categories that must now be provided by petitioners at the time of initial filings and a second, different set demanded at the time of visa renewals in order to establish the element of "control".* This escalation of the burden of evidence is a substantive change in agency practice and procedures from that which was applied by regulation in the previous years.

*USCIS has now openly stated its dicta, and acknowledged its sources, purpose and rationale for this change. **That doctrine is indeed binding upon both USCIS adjudicators and petitioners, alike, making this a matter that is now facially suitable for review as an APA action.* For fully adjudicated cases that involve USCIS Service Center denials of H-1B petitions, or even unreasonable delays, there can now be no doubt (as in some previous litigation[13]) about whether the USCIS action challenged is based in a "final agency action" ripe for litigation.*

Having established APA §704 subject matter jurisdiction extends over matters springing from the Neufeld memo, the same court may also consider the validity of the Defensor dicta as "a preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action." [APA § 704]* In the alternative, a court may rule that the final decision of the USCIS or AAO denying the visa petition is the sole reviewable action, while the Neufeld memo and Defensor dicta are underlying policy.* The court would, nevertheless, still grant APA jurisdiction pursuant to the "final action" requirement with consideration of whether the decision rendered was "arbitrary or capricious" under APA § 706(2)(A).* That determination would, of course, necessarily involve consideration of the same factors of whether the agency's rules, announced and unannounced, considered in adjudication were consistent with statute and regulation.

The next step the court would follow would be consideration of the standard of review.* The mainstream view in the federal courts in recent years has been to apply the Skidmore test, a less deferential standard of review, as mandated by Mead.** The Skidmore test exams an agency rule for four factors focusing on the persuasiveness and consistency of the agency's interpretation of its own regulations.* If the reviewing court were to take the alternative view that a highly deferential standard applied, jurisdiction and standing for the complaint would nonetheless still be granted, but plaintiffs would need to establish that the action taken pursuant to a de facto rule was on its merits "plainly erroneous or inconsistent with the regulation." [Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945)]* . *

With procedural issues, jurisdiction, and the standard of review disposed of, litigation would turn on the substantive issues, including a showing the Neufeld memo impermissibly deviates from existing regulations by imposing a "novel substantive or procedural standard"( Kazarian v. USCIS) that imposes an improper burden of evidence contrary to regulation. **

Having established that the burden of evidence imposed on petitioners is inconsistent with statute and/or regulations, plaintiff need not show that the intention was discriminatory, merely that the rule in effect is inconsistent with proper authority.* The standard applied in APA actions is that the plaintiff has been "adversely affected or aggrieved" by an agency decision that was "arbitrary, capricious, or otherwise inconsistent with law."* In addition, there is an opportunity presented in an APA action to establish constitutional claims, and an imperative under REAL-ID that it establish either a "question or law or a constitutional claim." **Some courts have imposed a strict standard for "pure questions of law" in deciding what agency decisions they will review, [see, e.g., Stepanovic v Filip, 554 F.3d 673, 680 (7th Cir., 2009)] and that is discussed in the L-1 Chapter.* But, that is a decidedly anomalous view, and most courts will apply a simple Chevron "two-step" analysis that does not distinguish pure questions from "mixed questions" of law and fact.** There would be an advantage in such a case to make a showing of both factors, establishing that application of the rule is both contrary to law and had the effect of denial of due process.* One might also further show in establishing a class action that the rule, in application, invidiously discriminates against an identifiable group. *It could be shown that USCIS has aggrieved a specific class of benefits seekers by imposing a higher burden of documentary proof upon consulting firms that seek to place H-1B employees at client sites than other petitioners.* That showing of violation of law, denial of due process, and invidious discrimination would be based upon the following factors:*

1)***** First, the applicable regulation [8 CFR 214.2(h)(4)(ii)] states that the H-1B employer must show that it will "supervise, or otherwise control" its workers, but the Neufeld memo requires documentation amounting to a prospective showing of actual control from outsourcing firms - including a demand for production of third-party documentation -- but does not impose that burden upon otherwise similar petitioners.* That is one of three ways that the memo improperly elevates the burden of proof in a discriminatory fashion upon outsourcing firms that is inconsistent with applicable regulation.

2)***** Second, USCIS imposes a burden of evidence for "complete itineraries" on outsourcing employers as first contained within a 1998 Proposed Regulation, but this requirement was never formalized in Final Regulations. [14]**

3)***** Third, in effect, the Service is treating companies that place H-1B workers at client sites as employment agents rather than employers, for which there are two different regulations governing documentation requirements for itineraries.* USCIS improperly imposes the higher burden of evidence for "agents" [8 CFR 214.2(h)(2)(i)(F)] on virtually all companies that outsource - even those that clearly establish through production of binding employment contracts that they maintain the right to supervise and, in fact, supervise the H-1B workers they employ -- disadvantaging them relative to other H-1B employers who keep workers on-site, which can far more easily meet the documentation requirements for "employers" under 8 CFR 214.2(h)(2)(I)(B).

In fact, other H-1B petitioners that do not outsource still retain the lower burden of evidence that is consistent with the actual regulation, even though the memo states that all must document the element of control.* Release of that memo makes the job of establishing APA standing and subject matter jurisdiction considerably easier.* In support of this disadvantageous distinction, USCIS now openly claims in the Neufeld memo that documentation amounting to a showing of actual control[15] is mandated by common law principles, an elevated standard previously given nationwide application by citation of a panel decision of the 5th Circuit, the oft-cited Defensor v Meissner[16] case which has been invoked ultra vires to deny many hundreds of H-1B (and L-1B) cases across the country in recent years.**

We should point out here that release of the Neufeld memo does not amount to publication of a new agency regulation.* Instead, it is a restatement of informal but binding policy norms USCIS has in fact adopted and imposed on petitioners for several years.* The discriminatory aspect of this USCIS practice going backwards several years also encompasses constitutional issues affecting a group claim of potential litigants that is quite large, arguing in favor of recognition of a class action and consolidation of these matters into an industry-led suit.* **


  1. 1.***** Unlawfully Withheld and Unreasonably Delayed H-1B Petitions Reviewable Under the APA *

As this section details, below, all the essential prerequisites for successful litigation under the APA are in place for a cause of action against DHS:


The Administrative Procedure Act (APA) (P.L. 79-404), 5 U.S.C.A. et seq., *§ 702, provides all persons "suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute" a generic cause of action in the federal courts.

A prerequisite to standing under the APA is that the agency action is finality of the decision. A "final agency action [is one] for which there is no other adequate remedy in a court are subject to judicial review." **[APA § 704]

As the decision of either the Administrative Appeals Office (AAO) or of the USCIS Center Director denying an I-129 visa petition in the B-1, H-1, L-1, O-1, P-1 statuses or an I-140 is a "final agency action," visa petition decisions are administratively final, ripe for court challenge under the APA.[17]* There is no need for an appellant prior to seeking review to file an appeal with AAO of the final decision of the Center Director. **


General jurisdiction for the federal courts to hear suits against the government resides in the "federal question" provision of the Federal Code of Civil Procedures, §§1331 and 1337.


Furthermore, the Administrative Procedures Act (APA) provides for judicial review of final government agency actions[18] that are not made reviewable by any other statute. 5 U.S.C.A. §704 .* As the INA does not offer a suitable remedy[19], and the decision of either the AAO or a USCIS Center Director is a "final agency action," these matters are ripe for court challenge under the APA.[20]*

Sec. 702 of the Administrative Procedure Act does not create subject-matter jurisdiction, but it does supply a generic cause of action "in favor of persons aggrieved by agency action." *R.I. Dep't of Envtl. Mgmt. v. United States, 304 F.3d 31, 40 (1st Cir.2002), op cit. Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977), withdrawing it only to the extent a relevant statute "preclude[s] judicial review," 5 U.S.C. §*701(a)(1); see, also, Block, 467 U.S. at 345, 104 S.Ct. 2450. Rather, § 704 permits causes of action under the APA, as does, for example, § 706(1) ("reviewing court shall ... compel agency action unlawfully withheld or unreasonably delayed"), see Telecomm. Research & Action Ctr. v. FCC, 750 F.2d 70, 76-77 (D.C.Cir.1984).


3.Jurisdiction Retained for Review of Constitutional Claims or Questions of Law

Jurisdiction over subject matter USCIS denial or delays in adjudication of non-immigrant visa petitions is reserved to the U.S. Circuit Court of Appeals pursuant to jurisdiction-stripping provisions of IRRIRA of 1996, adding INA § 242(a)(2)(B), entitled "Denials of Discretionary Relief." *That provision states that the courts no longer have jurisdiction to challenge discretionary decisions rendered by the agency under § 1252 , a section of the Act entitled "judicial review of orders of removal".*

The circuits are split over whether IIRIRA effectively barred review of all petitions, as well as orders of removal.* The Fifth Circuit held that, despite the fact that § 1252 is entitled "judicial review of orders of removal", the plain-language of 8 U.S.C. section 1252 (a)(2)(B)(ii) is not limited in its scope by its title and constitutes a divestment of jurisdiction for all discretionary decisions under Subchapter II of Chapter 12 of Title 8, covering §§ 1151-1378.** That includes initial grants and renewals of B, E, H and L nonimmigrant visa petitions, as well as I-140s - pretty much, the full-spectrum of business immigration petitions.

The 2005 REAL ID Act[21] reinforced and clarified the extent of jurisdictional barriers. **Habeas relief appears to have been altogether barred[22]:

*Subsec. (b)(9). Pub. L. 109-13, §*106(a)(2), inserted at end "Except as otherwise provided in this section, no court shall have jurisdiction, by habeas corpus under section 2241 of title 28 or any other habeas corpus provision, by section 1361 or 1651 of such title, or by any other provision of law (statutory or nonstatutory), to review such an order or such questions of law or fact." *

The second subpart of* section 1252 (a)(2)(B)(ii) restricts federal court jurisdiction over "any other decision or action ... the authority for which is specified under this title [Title II] to be in the discretion or the Attorney General or the Secretary of Homeland Security." It amended the scope of 8 U.S.C. § 242(a)(2)(B) so that it now applies "regardless of whether the [discretionary] judgment, decision, or action is made in removal proceedings."*

Even in the case of removal proceedings falling under the REAL ID Act, in which Congress expressly imposed its desire that discretionary decisions pertaining to certain categories of aliens be held as unreviewable, REAL ID stipulated that Courts of Appeal may continue to hold jurisdiction for "review of constitutional claims or questions of law raised upon a petition for review filed with an appropriate court of appeals in accordance with this section." See, 8 U.S.C. §§ 1252(a)(1) and (b)(9).** Pursuant to subparagraph (B) of §1252(a)(2), Denials of Discretionary Relief, an exception is carved out at Subparagraph (D) for jurisdiction by the courts of appeals[23]:*


(D) Judicial review of certain legal claims

Nothing in subparagraph (B) or (C), or in any other provision of this chapter (other than this section) which limits or eliminates judicial review, shall be construed as precluding review of constitutional claims or questions of law raised upon a petition for review filed with an appropriate court of appeals in accordance with this section.


The statutory restriction on subject matter jurisdiction may be construed more liberally.* Despite the apparent reservation at §1252(a)(2)(D) to circuit court jurisdiction over such matters, in some cases the lower courts still grant jurisdiction to hear these issues.* For instance, in the 2009 IQ Systems case, the U.S. District Court for the District of Columbia held in an I-140 matter[24]:

Because USCIS's denial of the visa petition was based on a question of law and not on the exercise of discretion, this Court has jurisdiction to review the denial pursuant to federal question jurisdiction, 28 U.S.C. § 1331, and the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-706.



While it eventually ruled against the plaintiffs on the issue of substitutions in the I-140 matter, that court found that it had federal question jurisdiction under 28 U.S.C.* § 1331, which this decision took to include the U.S. District Court, over questions of law and non-discretionary issues:

Although the D.C. Circuit has yet to decide the question, other federal courts of appeal have held that § 1252(a)(2)(B) does not strip courts of jurisdiction to review nondiscretionary decisions regarding visa petitions and adjustment of status petitions. See e.g., Sepulveda v. Gonzales, 407 F.3d 59, 62-63 (2d Cir. 2005) (§ 1252(a)(2)(B) does not bar jurisdiction over nondiscretionary legal decisions); see also, e.g., Succar v. Ashcroft, 394 F.3d 8, 19 (1st Cir. 2005) ("Both the Supreme Court and this court have consistently rejected arguments that Congress has eliminated judicial review of the legal question of interpretation of the statute as to whether an alien is eligible for consideration of relief."); Iddir v. INS, 301 F.3d 492, 497 (7th Cir. 2002) ("we find section 1252(a)(2)(B)(i) . . . only bars review of actual discretionary decisions to grant or deny relief"). Federal courts have jurisdiction to review a "predicate legal question that amounts to a nondiscretionary determination underlying the denial of relief." El-Baz Abdelwahab v. Frazier, 578 F.3d 817, 821 (8th Cir. 2009). Thus, the jurisdiction-stripping statute does not deprive the Court of jurisdiction to review USCIS's decision because the visa denial was based on USCIS's predicate legal conclusion that the new regulation barred IQ Systems from substituting a beneficiary. Final agency action such as USCIS's decision is subject to judicial review under the APA when there is no other adequate remedy and federal question jurisdiction under 28 U.S.C.* § 1331 applies. See Califano v. Sanders, 430 U.S. 99, 107 (1977).


Bottom-line is that potential litigants should be aware that this potential issue is unsettled.** In a case filed before the US District Court, where jurisdiction is granted in spite of the statutory limitation at §1252(a)(2)(D), this might provide a pivotal appeal point for the government.* In the event of a government appeal of such a ruling, the Court of Appeals would have to rule on the jurisdiction issue, and if it held that original jurisdiction was its own, could vacate and carry out de novo review.* *Nonetheless, one needs to consider the risk of a Circuit ruling that jurisdiction is, indeed, for all purposes reserved to the courts of appeal.



In its review of an agency action for compliance with statute, the court must review an agency's construction of a statute which it administers, the court must consider first whether Congress has directly addressed the issue. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842 (1984)(hereafter "Chevron"). "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. At 842-43. If the court determines that the statute is ambiguous, the court must then determine whether the agency's construction of the statute as incorporated in a regulation is reasonable. Id. If the construction is a reasonable one, then the court should accord the agency deference unless it appears from the statute or its legislative history that the agency's construction is contrary to clear Congressional intent." Id. at 845; INS v. Cardoza-Fonsenca, 480 U.S. 421, 447-48 (1987).*

In this case, the agency has conceded that its interpretation of the term "control" is not vested in statute, but is instead derived from a reading by USCIS of common law doctrine.* Donald Neufeld, Associate Director, Service Center Operations, DHS, USCIS, HQ 70/6.2.8, AD10.24,* Memorandum for Service Center Directors, "Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements", p. 2.; Additions to Officer's Field Manual (AFM) Chapter 31.3(g)(15)(AFM Update AD 10-24)(Jan. 08, 2010) (hereafter, "Neufeld memo").

With the stipulation that there is no statutory basis for this particular issue, and no formal regulation to consider, the default standard of review shifts to consideration of the agency interpretation of its own regulation.** There are two standards of review that might potentially be applied.*

The first will hold that an agency interpretation of its regulation is to be examined closely for "(1) the thoroughness of the agency's investigation; (2) the validity of its reasoning; (3) the consistency of its interpretation over time; and (4) other persuasive powers of the agency."[25]* An agency action that is deficient according to these factors will be held to be arbitrary and capricious. *5 U.S.C.A. § 706(2)(A)-(F); UNITED STATES V. MEAD CORP., 533 U.S. 218 (2001) 185 F.3d 1304; cites, Skidmore v. Swift & Co., 323 U.S. 134 (1944)

There is a second, more deferential standard that has been less commonly applied to informal agency decision-making.* The arbitrary and capricious standard under the Administrative Procedure Act (APA) directs the reviewing court to determine whether the decision was based on a consideration of the relevant factors and whether there has been a "clear error" of judgment. 5 U.S.C.A. § 706(2)(E). *"We will reverse agency action if it is 'arbitrary, capricious, [or] an abuse of discretion,' or 'unsupported by substantial evidence.' 5 U.S.C. § 706; Spencer Enterprises, 345 F.3d at 693. We defer to both formal and informal agency interpretations of an ambiguous regulation unless those interpretations are "plainly erroneous or inconsistent with the regulation." Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945)" [Camphill Soltane v. INS, 381 F3d 143 (3rd Cir., 2003)]* NOTE: Citation of Seminole , particularly so as to apply to both formal and informal agency decisions, is the decidedly minority view after Mead.
Under the Administrative Procedure Act (APA), normally, an agency decision would be held to be arbitrary and capricious if the agency has relied on factors which Congress had 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. 5 U.S.C.A. § 706(2)(A).*
Although the scope of judicial review is narrow, under the Administrative Procedure Act (APA), the government agency must nevertheless explain the evidence which is available, and must offer a rational connection between the facts found and the choice made. 5 U.S.C.A. § 706(2)(A).*[Bowen v. Am. Hosp. ***'n, 476 U.S. 610, 626 (1986); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 414, 91 S.Ct. 814, 822, 28 L.Ed.2d 136 (1971)]


  1. 1.***** Imposition of Novel Substantive or Procedural Standards Forbidden


Imposition of novel substantive or procedural standards beyond those contained in regulation is an abuse of discretion.** In the context of EB-1 Extraordinary Ability First Preference immigrant visa petitions, the 9th Circuit has recently ruled,* "Neither USCIS nor AAO may unilaterally impose novel substantive or evidentiary requirements beyond those set forth at 8 C.F.R. § 204.5."* Kazarian v USCIS, No. 07-56774 (9th Cir., March 4, 2010); op. cit., Love Korean Church v. Chertoff, 549 F.3d 749, 758 (9th Cir. 2008); see, also, Grace United Methodist Church v Chertoff, 437 F. Supp. 2d 1174, 1179. (D. Ore. 2005)(USCIS denial of EB-3 petition an abuse of discretion.) *This follows similar decisions in other jurisdictions.* See, Gülen v. Chertoff, Civil Action No. 07-2148, 2008 WL 2779001 (E.D. Pa. July 16, 2008), at *4 ("Because Gülen has met the requirements of three of the subcategories of 8 C.F.R. § 204.5(h)(3), the AAO's determination that he has not demonstrated extraordinary ability is contrary to applicable law and must be reversed"); also, see, Buletini v. INS, 860 F. Supp. 1222 (E.D. Mich. 1994)(criticizing the circular reasoning of the INS requirement that "plaintiff must prove he is a doctor of extraordinary ability in order to prove that he is a doctor of extraordinary ability").* The same principle would apply equally to nonimmigrant visa petitions, there being no meaningful legal distinction between the two categories with regard to its application.


5.* Agency Rulemaking Without Publication Violates APA *

Agency Rulemaking is subject to APA requirements.* Under § 553, (b),(c),(d), USCIS is required to make substantive rules according to a three-part "publish-and-comment" process involving publication in the Federal Register of a Proposed Rule followed by an opportunity for public comment of at least 30 days prior to publication of a Final Rule in the Federal Register.**

Public release of the Neufeld memo did not meet or preempt the Administrative Procedure Act (APA) requirement that the Secretary publish a rule incorporating a statement of basis and purpose in the Federal Register.** The APA requires that the rules of the Department of Homeland Security (DHS) be published in the Federal Register. DHS must publish its substantive rules under the Department's own regulations. **5 U.S.C.A. §§ 701(a)(1), 704; 5 U.S.C.A. 556, 557; US Department of Homeland Security, Directive 0490.1, Federal *Register Notices and Rules.

*As an unpublished binding rule, release of the Neufeld memo constituted de facto "rulemaking" for purposes of judicial review under the Administrative Procedure Act (APA); rulemaking within the meaning of the APA was not limited to formal promulgation of national standards, and issuance of the rule failed to followed the three-step rulemaking process under the APA. 5 U.S.C.A. § 551(4, 5); *

  1. 1.** USCIS Usurps Compliance Powers Reserved by Law to USDOL in Order to Carry Out an Impermissible Purpose

Agencies may not encroach upon the jurisdiction of other agencies, or otherwise act outside of the range of enforcement activities delegated to them.* They are not bound by the regulations of other agencies.* Courts would have no reason to defer to an agency's construction of another agency's regulation, see Martin v. OSHRC, 499 U.S. 144 (1991); Director, OWCP v. General Dynamics Corp., 982 F.2d 790, 795 (2d Cir. 1992).* Therefore, the courts would likely not defer to the* USCIS interpretation of USDOL regulations as a warrant to enforce wage and hour provisions related to LCA compliance for most H-1B filers, with the possible exception of willful violators and H-1B dependent employers.*

There being no prohibition under the Act to such H-1B outsourcing, agency action pursuant to a de facto rule to block and delay such applications on the basis that outsourcing may occur subsequent to visa petition approval amounts to unfavorable treatment contrary to law. *In order to carry out this illegitimate purpose, USCIS has applied powers reserved by law to the USDOL Wage and Hour (WH) division to enforce limitations on the assignment of H-1B workers to third-party client sites. [See, Intro., Sec. (E)(7), below] This has the effect of favoring U.S. firms and workers performing the same functions in the U.S. market. *Such discrimination is unlawful under U.S. law and the World Trade Organization General Agreement on Trade In Services (GATS); and, as the INA does not offer a suitable remedy[26], and the subsequent decision of either the AAO or a USCIS Center Director is a "final agency action," these matters are ripe for court challenge under the APA.* **A statement of agency policy, in itself, may not be challenged under the APA[27], but petitioners who have suffered unlawful denials and unreasonable delays as a result of application of a de facto agency rule or binding norm to adjudications during the previous six years[28] have standing and causes of action that are ripe for APA litigation.

The issuance of Requests For Evidence (RFEs) and denials of petitions involving H-1B outsourcing have led to unlawful denials and unreasonable delays in thousands of cases during the last four years.** That is part of a broader USCIS and AAO pattern of discriminatory denial and delay of adjudications of I-129 petitions submitted by IT firms that place H-1B employees at third-party client sites.* There is no rational basis or legitimate governmental interest for application of such a restriction with prejudice.



Venue for business immigration "federal issues" under the APA is normally vested with the U.S. District Court with jurisdiction over the USCIS Service Center or the AAO, or in the alternative the place of business of the petitioner.* **

However, the court-stripping provisions of REAL ID and previous related amendments almost certainly vests jurisdiction in the courts of appeal.* Review of unlawful denial or delay of nonimmigrant petitions and I-140s is now normally restricted to the U.S. Circuit Court of Appeals. *While judicial review of discretionary determinations in non-immigrant visa applications has been limited by law, an exception was carved out by statute that explicitly allows the U.S. Circuit Courts of Appeal jurisdiction to review such matters raising "questions of law or constitutional claims."[29]* Some District Courts continue to hear these matters under limited circumstances of review of questions of law and constitutional claims.* Various judges and circuits apply a varying spectrum of judgment and standards over what questions of law the District Court may review, as well the related question of what constitutes a non-reviewable discretionary agency action or interpretation.* Appellants may find that proving they are aggrieved parties who have standing to raise reviewable questions of law and constitutional claims will involve briefing a very broad spectrum of related issues.

Therefore, current USCIS practices present the opportunity for well-prepared plaintiffs to bring before the US Circuit Courts, and possibly the District Courts, for judicial review and reversal the issue of unlawful delays and denials of H-1B applications.* The courts may also review questions of law bearing on procedural defects that spring from violation of the APA's "publish-and-comment" requirements, and USCIS usurpation of powers reserved by law to USDOL, along with constitutional issues, including denial of due process rights to certain classes of applicants in business immigration cases.*



As detailed below, a large percentage of USCIS denials of H-1B and L-1 run clearly counter to statute, regulation and Congressional intent.** Following the failure of repeated efforts by Senator Grassley to restrict H-1B outsourcing by law in recent years[30], the agency imposed its own ad hoc measures to effectively withhold H-1B visas from beneficiaries who might be assigned to client sites. This was not a legitimate exercise of the agency's policymaking authority consistent with law. **Persistent efforts to extend the 2005 ban on outsourcing of L-1Bs to the separate H-1B category have thus far failed in Congress.* *USCIS has gone far beyond the requirements of the law in restricting L-1 visas, as well, imposing qualification standards for "specialized knowledge" that are contrary to statute and regulation, and which violate the agency's own "definitive interpretation".* [See, L-1 Section]* Meanwhile, USDOL mismanagement of the PERM labor certification process is equally notorious for its regulatory inconsistency and results-driven approach to adjudications which have imposed a de facto ban on approvals of PERM for non-brick and mortar businesses, such as IT consulting firms. [See, PERM Section] Singly, and in combination, these agency abuses have aggrieved several large classes of potential litigants, with a substantial economic impact on hundreds of foreign-based and domestic firms attempting to operate in the U.S. *This violates both domestic law and international trade treaties, and has blocked the entry of some tens of thousands of highly-qualified foreign engineers, software developers, and other professionals, particularly in the information technology sector.


8.USCIS Interpretation of Defensor Dicta Not Owed Chevron-level Deference

Under the Administrative Procedure Act, federal agencies and departments have flexibility in the way they can regulate.* They can make rules either through publication of binding regulations or by a case-by-case adjudications method.* Both approaches to rule-making are perfectly acceptable pursuant to the Supreme Court's seminal *1947 Chenery II decision; that case sets out the original ground rules for such matters, allowing agencies a choice, but the decision also imposed general limits on how rule-making may be done. For instance, the agency may not issue case-by-case rulings that violate a previously published rule, and rulemaking by adjudication is only permitted to affect a small, specific class of applicants.*

APA "Publish-and Comment" Requirement

Any rule that deviates from established agency practice with more general application must be published as a final agency regulation.** Unless and until the agency eventually publishes its final rule in The Federal Register it does not have force of law.* Even the highly deferential standard embodied in the Chevron decision mandates that agency decisions are not entitled to a high level of deference by the courts unless they hold the "force of law."[31]** The burden in cases involving informal rulemaking and adjudications is therefore on the agency to establish the rationality of action under an older Skidmore standard, "according to its persuasiveness."[32]


No Clear Delegation to AAO to Do Interpretative Rulemaking

The Department of Homeland Security, as most other federal agencies, was granted delegated power by statute to issue rules and regulations.* These "agency-made" laws have much of the force and effect of law ("quasi-legislative" effect).* DHS was also granted authority to delegate power to decide administrative cases (a "quasi-judicial" power). This Congressional delegation is expressed in the agency's enabling legislation, which was carried out after the 2003 break-up of legacy INS by issuance of DHS delegation Number 0150.1 that enabled USCIS adjudications, including the Administrative Appeals Office (AAO).[33] **The Administrative Appeals Office (AAO) adjudicates appeals under authority delegated to the*USCIS by the Secretary of the Department of Homeland Security.* Prior to the formation of the AAO, denied petitions and applications were appealed to one of four INS regional commissioners.[34]* According to the USCIS Ombudsman[35]:


The AAO has jurisdiction over approximately 55 petitions and applications filed with

USCIS. 8 CFR §103.1(f)(3)(iii). The authority to adjudicate appeals is delegated to the AAO by

the Secretary of the Department of Homeland Security (DHS) pursuant to the Homeland Security Act of 2002, Pub. L. 107-296. See DHS Delegation Number 0150.1 (effective March 1, 2003); see also 8 C.F.R. § 2.1 (2003). *The AAO exercises appellate jurisdiction over the matters described in 8 C.F.R. §103.1(f)(3)(iii) (as in effect on February 28, 2003)


Since 2003, the AAO has operated through a DHS delegation, but it was originally organized as part of INS, which has been broken up.* The authority for and scope of AAO jurisdiction remains unclear, as USCIS acknowledges[36]:


What is the scope of the AAO's jurisdiction?


8 C.F.R. § 103.3(a)(1)(ii) states that the AAO has jurisdiction over "[d]ecisions under the

appellate jurisdiction of the Associate Commissioner, Examinations," listed in 8 C.F.R. §

103.1(f)(2). The regulation at 8 C.F.R. 103.1(f)(2) no longer exists. Moreover, the regulatory cite may be in error, as the jurisdiction of the Associate Commissioner, Examinations was found in 8 C.F.R. § 103.1(f)(3)(iii) (as in effect on February 28, 2003). (See .)


It is clear from reading the statute that, while Congress intended to delegate power to DHS to transfer such functions from legacy INS to USCIS, there is no explicit reference to the AAO or reference to authorization of its continued operations in the Homeland Security Act, beyond reference to "other adjudications" at Section E, Part 451(5)(b)[37]:


"Transfer of Functions from Commissioner:

[ . . .]

(5) All other adjudications performed by the Immigration & Naturalization Service immediately before the effective date specified at section 455."*


It is not at all clear, therefore, that Congress intended to vest sole authority to interpret law to the AAO.* Instead, from the plain-language of the statute, DHS was given power to delegate "other adjudications" as it saw fit in its own organization of USCIS.* Thus, the AAO does not have any sole or exclusive delegation of power under current law to make rules over adjudications.* Indeed, under the regulations, it appears that delegation may actually still rest with the Associate Commissioner for Examinations.* Thus, it cannot be assumed that the decisions of the AAO carry any more delegated power to interpret rules than do the policy pronouncements of the Associate Commissioner for Service Centers.* The USCIS Office of Examinations is responsible for all District and Service Center examinations. **According to USCIS regulations, CHAPTER I--DEPARTMENT OF HOMELAND SECURITY, PART 100 STATEMENT OF ORGANIZATION, 8 CFR 100.2(c)(3), the AAO and the Service Centers are both subordinate components of the Office of Examinations, headed by the Associate Commisioner for Examinations:


(3) Office of Examinations. Headed by the Associate Commissioner for Examinations, the office is responsible for the planning, oversight, and advancement of examinations programs engaged in interpretation of the immigration and nationality laws, and the development of Service policies to assist examinations activities. The Office of Examinations is also responsible for all district and service center records and all records operations, except records policy. The Associate Commissioner for Examinations directly supervises the Headquarters:


(i)*********************** Adjudications and Nationality Division;

(ii)********************* Inspections Division;

(iii)******************* Service Center Operations Division;

(iv)******************** Records Division; and

(v)********************** (v) Administrative Appeals Office.



Therefore, the Neufeld memo may be considered as much rulemaking as are the decisions of the AAO, and may actually carry more weight in "other adjudications" of visa petitions by the agency.*** ***


In addition to these "quasi-legislative" bodies, there is a superior line of authority within DHS vested in the Director to override AAO decisions or to independently issue regulations and rulings.* Previously, that overriding authority was vested with and occasionally exercised by the INS Commissioner.* The USCIS is a subservient bureau within DHS, and the heads of various departments, including the Associate Commissioners for Examinations and Service Center Operations, along with the Chief of the AAO, report through the USCIS Director to the DHS Director.** The DHS Director is the ultimate decision maker with substantive rulemaking authority.* The decisions made by her subordinates - the USCIS Commissioner, the Associate Commissioners, and the AAO Chief -- are merely delegations of that power. *The distinction between substantive and interpretative rulemaking power between and among these subordinates is probably meaningless.* Only the Director of DHS can formally make substantive rules by means of issuance of formal regulations published in the Federal Register.* These regulations carry the "force of law," and may be accorded Chevron-style deference.** However, as with the Neufeld memo, her subordinates make de facto rules, substantive rules which should have been published as regulation, but for the sake of expedience or an effort to avoid challenge attendant to formal rulemaking, prefer to avoid notice-and-comment by interpretative rulemaking.* As the courts have found, that is a violation of APA 553.


Regardless of its chain of command, the DHS, like other agencies, must comply with the procedures in the Administrative Procedure Act (APA). APA 553 requires all agencies to give notice of proposed substantive rules in the Federal Register, to allow a minimum of 30 days for public comment, to consider comments presented, and when adopted, to publish them with a concise statement of their bases and purposes. *This "notice-and-comment" requirement was intended as a procedural safeguard to ensure that unelected officials, who are not directly accountable to the public, are required to justify their exercise of quasi-legislative authority, and to give the public an opportunity to otherwise respond to substantive rulemaking.* However, "interpretative" rules - those developed either through individual adjudications by the AAO or BIA or by issuance of administrative "ukase" by agencies -- are presumed exempt from notice-and-comment procedures. **As the courts have repeatedly demonstrated that is merely a rebuttable presumption of exemption to APA Sec. 553 requirements.* Any substantive change in an agency rule, by law, requires formal rulemaking.


The AAO and BIA have the authority to interpret statutes and USCIS regulations via adjudicative

decisions. The USCIS Associate Commissioners have the authority to issue notices and directives interpreting the current state of law, and to incorporate these interpretations into USCIS policy and practice. The reviewing courts extend interpretative rules less deference, but are less inclined to review them. *In contrast, courts are bound by the legislative effects of validly promulgated and reasonable substantive rules or "formal rulemaking", which must be published.* *The question of which rules or rulings issued by the agency carry legal effect, and to what extent, depends on the degree of deference actually accorded by the reviewing courts.* That will depend upon the inherent reasonableness and relationship to the statute and other regulations of the newly-formulated rule. *Whether an agency characterizes its own ruling as a substantive or interpretative rule does not by itself determine the deference question. *As Ryan DeMotte notes on this subject[38]:*


Because of the strong incentive to avoid notice-and-comment through interpretive rulemaking, courts have attempted to establish clear limits on the use of the interpretive rule exemption. One of these limitations is that an interpretive rule cannot amend a prior legislative rule. An agency must use notice-and-comment rulemaking to amend or reverse a legislative rule.

However, there is disagreement among circuits about whether to extend this limitation to interpretive rules that amend or reverse a definitive interpretation of a legislative rule. In this context, the legislative rule is subject to various reasonable interpretations: the interpretive rule does not amend or reverse the text of the legislative rule; rather, it amends or reverses an agency's definitively established interpretation of the ambiguous text of the legislative

rule. Therefore, interpretive rules are of two types: those that amend or reverse definitive interpretations and those that merely clarify an ambiguity in the legislative rule.


Many circuits follow the approach to interpretive rulemaking developed by the D.C. Circuit in 1993 in American Mining Congress v. Mine Safety & Health Administration, which does not require notice-and-comment for interpretive rules that amend or reverse a definitive interpretation. *Other circuits, including the D.C. Circuit itself, have modified the American Mining test to require notice-and-comment for interpretive rules that amend or reverse

definitive interpretations. [Shell Offshore Inc. v. Babbitt, 238 F.3d 622, 629 (5th Cir. 2001); Alaska Prof'l Hunters ***'n v. FAA, 177 F.3d 1030, 1035-36 (D.C. Cir. 1999).]


This doctrine was first articulated by the D.C. Circuit in dicta in Paralyzed Veterans of America v. D.C. Arena L.P. and first applied to a decision in Alaska Professional Hunters ***'n v. FAA.

Both regulated parties and agencies have a considerable stake in the resolution of this issue. [Some ftns omitted]



APA Procedural Requirements

The APA distinguishes rulemaking (Sec. 553, 556, 557) and adjudication (Secs. 554).* Both categories are, in turn, subdivided into formal and informal proceedings.* Rulemaking in an adjudication proceeding is considered "formal" when the proceeding is required by an agency's enabling statute to be "on the record after opportunity for an agency hearing."* When the DHS Secretary publishes a regulation, this is formal rulemaking.* *These categories may overlap, as in the case of rulemaking by adjudications, which in a more formal setting is carried out by the BIA, and as less formal rulemaking by adjudications by the AAO, which employs a paper process and normally does not conduct open hearings or hear pleadings governed by formal hearing rules.[39] *In addition to this, there is distinction discussed immediately above between "substantive" and "interpretative" rulemaking." *The designated precedent decisions of the BIA are considered by most courts to be substantive rulemaking, while AAO decisions are generally accorded less deference as interpretative rulemaking.* The memos, agency policy manuals, and policy pronouncements of various officials, such as the Associate Commissioners, are presumed to be interpretative rulemaking, a presumption that may be rebutted if shown to substantially depart from statute, regulation or "definitive interpretation." **Such interpretative actions that meaningfully diverge from accepted authority have been termed "de facto" rules or "binding agency norms" subject to APA review. [Center for Auto Safety v. NHTSA, 452 F.3d 798 , 806 (D.C. Cir., 2006)]

The APA prescribes complex procedures for hearings by agency officials in both formal rule making (Sec. 553(b),(c)) (a rarely used procedure, not applicable to matters under the INA) and formal adjudication (Sec. 554) (which encompasses "on the record" proceedings, such as those of the Administrative Law judges in removal proceedings (EOIR) and in LCA compliance and enforcement matters.* *Decisions by the AAO are "paper processes" that normally do not involve formal hearings, the personal appearance of witnesses or attorneys, and the adjudication of which are handled by staff attorneys not by ALJs. *It is not clear whether the conduct of AAO proceedings are covered by Sec. 554, however AAO decisions have been contested on numerous occasions in the federal courts as final agency actions.

Informal rulemaking is normally exempt from Sec. 553 procedural requirements; "interpretative" rules and "general statements of agency policy", along with informal rules of procedure and practice are exempt from the "publication and comment" requirement that applies to more formal rulemaking.* The APA section that applies to informal rulemaking through adjudications, Sec. 553(b)(3) states[40]:

Except when notice or hearing is required by statute, this subsection does not apply -

  • (A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice

BIA decisions are normally accorded some deference by the courts, but are often deemed reviewable, particularly where bona fide questions of law or constitutional claims are raised. Relatively minimal procedures are also required under the APA for informal adjudications, such as the decisions of USCIS Service Center Directors and USDOL Regional Directors.* Informal adjudications are the most common form of governmental action, but many courts will aver to review them unless they involve substantial issues beyond the individualized outcome.

However, under Center for Auto Safety, "de facto rules or binding agency norms" may be reviewed as if they had been formally adopted by publication if they should have been published as regulations. [See, Sec. (C)(1), above]* The question of whether the APA requires that the rules contained in the Neufeld memo should have been adopted by publication is central to this case.* Plaintiff must show that the rules are binding, at least on the agency, and they are applied broadly, and are substantive rather than interpretative in nature inasmuch as they substantially modify previous agency rules.* *This importance of binding agency norms, and the circumstances under which a rule might be binding even though unpublished, is further developed in Appalachian Power v EPA, another DC Circuit decision[41]:

It is worth pausing a minute to consider what is meant by "binding" in this context. Only "legislative rules" have the force and effect of law. See Chrysler Corp. v. Brown, 441 U.S. 281, 302-03 & n. 31, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979). A "legislative rule" is one the agency has duly promulgated in compliance with the procedures laid down in the statute or in the Administrative Procedure Act.[11] If this were all that "binding" meant, EPA's 1021 Periodic Monitoring Guidance could not possibly qualify: it was not the product of notice and comment rulemaking in accordance with the Clean Air Act, 42 U.S.C. § 7607(d), and it has not been published in the Federal Register.[12] But we have also recognized that an agency's other pronouncements can, as a practical matter, have a binding effect. See, e.g., McLouth Steel Prods. Corp. v. Thomas, 838 F.2d 1317, 1321 (D.C.Cir.1988). If an agency acts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative rule, if it bases enforcement actions on the policies or interpretations formulated in the document, if it leads private parties or State permitting authorities to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency's document is for all practical purposes "binding." See Robert A. Anthony, Interpretative Rules, Policy Statements, Guidances, Manuals, and the Like--Should Federal Agencies Use Them to Bind the Public?, 41 DUKE L.J. 1311, 1328-29 (1992), and cases there cited.

[. . .]

The short of the matter is that the Guidance, insofar as relevant here, is final agency action, reflecting a settled agency position which has legal consequences both for State agencies administering their permit programs and for companies like those represented by petitioners who must obtain Title V permits in order to continue operating.

[. . .]

It is well-established that an agency may not escape the notice and comment requirements (here, of 42 U.S.C. § 7607(d)) by labeling a major substantive legal addition to a rule a mere interpretation. See Paralyzed Veterans v. D.C. Arena L.P., 117 F.3d 579, 588 (D.C.Cir.1997); American Mining Congress v. MSHA, 995 F.2d 1106, 1109-10 (D.C.Cir.1993). ****

In almost precisely the same manner, the Neufeld memo is substantive rulemaking that is binding upon the agency and the petitioner.* Any determination made pursuant to the Neufeld memo has legal consequences upon the agency and the petitioners, and in effect is a final agency action. Section 553 governs the procedures for formal rule making.* *If formal rulemaking applies, an agency must place a notice of proposed rulemaking in the Federal Register, followed by an opportunity for written comment by interested persons. The rule must then be published, in most instances at least thirty days before it becomes effective. This process is often referred to as "notice-and-comment" rule making.* That requirement has not been met. The actions taken pursuant to the memo that substantially deviate from existing law, published regulations and definitive interpretation are unlawful.*

Substantive Versus Interpretative Rulemaking

The reasoning applied by the US Supreme Court and the Circuits instructs us that the Neufeld memo contains substantive rulemaking rather than mere interpretation of existing USCIS regulation.* The Ninth Circuit, for instance, observes[42]:

In Shalala v. Guernsey Mem'l Hosp., 514 U.S. 87, 88, 115 S.Ct. 1232, 131 L.Ed.2d 106 (1995), the Supreme Court described an interpretive rule as one "issued by an agency to advise the public of the agency's construction of the statutes and rules which it administers." The Ninth Circuit has put it this way: "In general terms, interpretive rules merely explain, but do not add to, the substantive law that already exists in the form of a statute or legislative rule. Legislative rules, on the other hand, create rights, impose obligations, or effect a change in existing law pursuant to authority delegated by Congress." Hemp Industries, 333 F.3d at 1087 (9th Cir.2003) (internal citations omitted).

Hemp Industries cites with approval the D.C. Circuit's framework for distinguishing between interpretive and legislative rules set out in American Mining Congress v. Mine Safety & Health Admin. ["American Mining"], 995 F.2d 1106, 1109 (D.C.Cir.1993). Hemp Industries, 333 F.3d at 1087. Specifically, the Ninth Circuit agreed that legislative rules have the "force of law," while interpretive rules do not, and adopted a three-part test for determining whether a rule has the "force of law":

(1) when, in the absence of the rule, there would not be an adequate legislative basis for enforcement action;

(2) when the agency has explicitly invoked its general legislative authority; or

(3) when the rule effectively amends a prior legislative rule.

By this three-part test, the Neufeld memo is a legislative as opposed to interpretative rule.* Because it has not been published, however, it does have "force of law" and is not owed Chevron-style deference.

The Fifth Circuit notes with approval the reasoning followed by the DC Circuit in this area.* In Shell Offshore v Babbitt (2001) [43], the 5th Circuit cites the Paralyzed Veterans of America ruling to describe when an agency has, "in effect amended its rule" without meeting the notice and comment requirement:

The court, relying on Paralyzed Veterans of America v. D.C. Arena, 117 F.3d 579 (D.C. Cir. 1997), stated: "When an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish without notice and comment." Alaska, 177 F.3d at 1034. We agree with the reasoning of the D.C. Circuit; the APA requires an agency to provide an opportunity for notice and comment before substantially altering a well established regulatory interpretation.

The Fifth Circuit ruling further found on that basis that the agency must publish a new regulation where the practice changed by the agency is 1) "a significant departure" from 2) "long-established and consistent practice" and 3) "substantially affects the regulated industry."

An agency that, as a practical matter, has enacted a new substantive rule cannot evade the notice and comment requirements of the APA by avoiding written statements or other "official" interpretations of a given regulation. If a new agency policy represents a significant departure from long established and consistent practice that substantially affects the regulated industry, the new policy is a new substantive rule and the agency is obliged, under the APA, to submit the change for notice and comment.

The practices changed by the Neufeld memo/Defensor dicta meet the Fifth Circuit's three-part test requiring publication.* The regulation requiring the production of an "itinerary", in effect changed to a "complete itinerary" for outsourcing firms, dates to 1990 with a Proposed Rule published in 1998, but never followed by a Final Regulation.* In 1995, there were two memos issued, the Aytes and Crocetti memos, that effectively set the evidentiary standards that would be required for itineraries until the de facto rules and binding agency norms associated with Defensor were put into effect nationwide a decade later. [See H-1B Timeline, below] In addition, the basic regulatory definition of an H-1B "U.S. employer", that requires "supervision, or control" goes back to the 1991 regulations until it was simultaneously changed with widespread and devastating effect by the same de facto rules and binding norms.


APA Standards for Rulemaking and Adjudications

While APA procedural requirements are relatively minimal, such informal rule-making and adjudications are nonetheless subject to varying degrees of scrutiny by the courts.** APA judicial review is described under Sections 701 -706.[44]* Taken together, those sections provide that any "final agency action", formal or informal, that "adversely affects or aggrieves" the public may be reviewed.

U.S. Code Title 5, Part 1, Chapter 7--Judicial Review

Section 701 states that judicial review of agency action is available unless a statute prevents such review or the action is committed by law to agency discretion. Preliminary or intermediate actions are normally reviewable only on review of the final agency action. *Section 702 conveys standing to challenge agency action.* It provides a general cause of action to any person who suffers a legal wrong or who is "negatively affected or aggrieved" by agency action. Section 703 deals with venue, judicial procedures, and the form of the judicial review proceeding in which it is brought. Section 704 mandates that judicial review is available only for "final agency action". Section 705 is a stop-clock and injunctive provision that allows a court to postpone the date on which an agency action will take effect or preserve the status or rights affected by an agency's order until completion of judicial review proceedings. Section 706 sets forth the scope of judicial review of agency actions. In general, the scope of review depends on the nature of the agency action under challenge. For example, that action may be a question of law, an exercise of discretion, or a determination of fact.

Section 553 governs the procedures for informal rule making.* *An agency must place a notice of proposed rulemaking in the Federal Register, followed by an opportunity for written comment by interested persons. The rule must then be published, in most instances at least thirty days before it becomes effective. This process is often referred to as notice-and-comment rule making.

Agency rules developed out of informal, individualized adjudications carry less weight for most reviewing courts than do published formal rules developed by "quasi-legislative" formal agency rulemaking.* Decisions interpreting the degree of judicial deference shown agency interpretation of their own regulations limit "Chevron deference" to agency rulings derived by APA §553 formal "notice-and-comment" process, and withhold it from more informal, "interpretative" agency decision-making.* Agency rules developed out of individual adjudications, "rulemaking by adjudications", carry less weight (do not carry "force of law") for most reviewing courts than do published formal rules developed by "quasi-legislative" agency rulemaking.* *As Justice Souter wrote for the 8-1 majority in the 2001 Mead decision:*

We agree that a tariff classification has no claim to judicial deference under Chevron, there being no indication that Congress intended such a ruling to carry the force of law, but we hold that under Skidmore v. Swift & Co., 323 U.S. 134 (1944), the ruling is eligible to claim respect according to its persuasiveness.

Justice Scalia was the lone dissent.* Furthermore, the agency's construction of its H-1B and L-1 rules likely would also fail the older Skidmore standard of deference test articulated as a four-factor test (which echoes Chenery II), examining: "(1) the thoroughness of the agency's investigation; (2) the validity of its reasoning; (3) the consistency of its interpretation over time; and (4) other persuasive powers of the agency."[45]

Nonetheless, the vast majority of DHS rulemaking in recent years has been "de facto rules and binding norms" developed through adjudications, not as published regulation.* For support of its practice of imposing a higher evidentiary burden on outsourcing firms, USCIS has not published formal regulations, instead it operates according to informal dicta.* To impose a veneer of authority, the agency often references the Defensor decision in its decisions, and more recently has more broadly adopted a "common law" basis expressed in the Neufeld memo.

This course of action suggests that DHS knows that there is no support in either the INA or existing regulation to publish these dicta as regulations. *DHS may also believe the courts are more likely to show deference to its interpretation of ambiguous regulations than they would if presented with a Final Rule which would be clearly without basis in the Act.** Because USCIS informal rules are only infrequently challenged, DHS has generally preferred to take a course of expedience rather than administrative regularity.* With few exceptions, DHS has failed in recent years to publish regulations in the area of H-1B and L-1 when there has been a change in substantive agency procedure and practice.* The AAO has also ceased publishing precedent decisions. *A primary reason behind the agency's refusal to publish proper regulations is the fact, now conceded, that there is no statutory basis for demanding evidence related to the factor of "control" in the "employer-employee" relationship.*


Common Law Insufficient Basis for Rule Regarding "Control"

Regulations must state a specific basis in "legal authority."* [APA 553(b)(2)]* A regulation must be based in the agency's enabling statute or modify an existing regulation; there is no provision under the APA for citation of common law or unpublished agency-made law as sole legal authority.* Under the Federal Registry Act (1935), Sec. 4, only "documents" of the Executive Department may be published in the Federal Register, the Acts of Congress and decisions of the Judiciary are expressly excluded.[46] *Court decisions may not be carried over directly into regulations without being written as agency interpretation consistent with statute and the constitution. *Further, under the doctrine of Erie Railroad Co. v. Tompkins (1938), there is no general federal common law to apply. *Although federal courts create federal common law in the form of case law, and the rulings of the courts may have binding effect on agencies as well as other courts, such law must be directed at a specific agency action or procedure and issued as an order or injunction.* There is no general federal common law that has binding effect on either the states or other branches of the federal government. *As Justice Brandeis wrote:

Congress has no power to declare substantive rules of common law applicable in a state whether they be local in their nature or "general," be they commercial law or a part of the law of torts. And no clause in the Constitution purports to confer such a power upon the federal courts.


Furthermore, there can be no reliance upon common law alone for legal authority under APA 553(b)(2).* In a case dealing with whether newsboys were employees or independent contractors, the Court ruled in NLRB v. Hearst that common law interpretation of "employee" is not dispositive.* This overruled the Court of Appeals application of the common law principle of respondeant superior to interpret a new collective bargaining statute. *The Court found that there is no single, unitary common law principle that might be applied to determine the existence of a employer-employee relationship[47]:

The meaning of the term "employee" in the National Labor Relations Act is to be determined not exclusively by reference to common law standards, local law, or legal classifications made for other purposes, but with regard also to the history, context and purposes. *[Page 322 U. S. 112]

[. . .]

The principal question is whether the newsboys are "employees." Because Congress did not explicitly define the term, respondents say its meaning must be determined by reference to common law standards. In their view, "common law standards" are those the courts have applied in distinguishing between "employees" and "independent contractors" when working out various problems unrelated to the Wagner Act's purposes and provisions.

The argument assumes that there is some simple, uniform and easily applicable test which the courts have used, in dealing with such problems, to determine whether persons doing work for others fall in one class or the other. Unfortunately this is not true. Only by a long and tortuous history was the simple formulation worked out which has been stated most frequently as "the test" for deciding whether one who hires another is responsible in tort for his wrongdoing. [Footnote 19] But this formula has been by no means exclusively controlling in the solution of other problems.

More recently, in 1995 the Court further demarcated the range of agency application of common law doctrine in the interpretation of the definition of employee[48].**

In some cases, there may be a question about whether the Board's departure from the common law of agency with respect to particular questions and in a particular statutory context, renders its interpretation unreasonable. See NLRB v. United Ins. Co., supra, at 256, 88 S.Ct., at 989-990 ("independent contractor" exclusion).

In the 1968 NLRB v. United Ins. Co. decision, cited above, the Supreme Court laid down the general rule that must guide all agency determinations of ambiguous employer-employee relationships.* In determining whether the person is an employee or an independent contractor, common law doctrine of agency may be applied, but all factors must be weighed with no "magic phrase" or formula that is dispositive:

There are innumerable situations which arise in the common law where it is difficult to say whether a particular individual is an employee or an independent contractor, [Footnote 3] and these cases present such a situation. On the one hand, these debit agents perform their work primarily away from the company's offices and fix their own hours of work and work days, and clearly they are not as obviously employees as are production workers in a factory. On the other hand, however, they do not have the independence, nor are they allowed the initiative and decisionmaking authority, normally associated with an independent contractor. In such a situation as this, there is no shorthand formula or magic phrase that can be applied to find the answer, but all of the incidents of the relationship must be assessed and weighed, with no one factor being decisive. What is important is that the total factual context is assessed in light of the pertinent common law agency principles.

The common law doctrine of "control" which USCIS finds in Darden and Clackamas, cited as authority for Neufeld, is only one of six factors mentioned in the current USCIS regulation defining "U.S. employer."* Contrary to the Court's instruction, USCIS has improperly distilled the issue of what constitutes a valid H-1B "employer-employee relationship" down to a single-issue test focused on "control" of the H-1B worker.* The pertinent regulation actually states:*

Pursuant to 8 C.F.R. §214.2(h)(4)(ii), United States employer means a person, firm, corporation, contractor, or other association, or organization in the United States which:

(1)************** Engages a person to work within the United States;*

(2)************** Has an employer- employee relationship with respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee; and

(3)************** Has an Internal Revenue Service Tax identification number.


In addition, contrary to the Defensor doctrine, a contractor is explicitly included among the six categories of employers -- a person, firm, corporation, contractor, or other association, or organization in the United States -- that are allowed to petition for H-1B workers.* The Neufeld memo and the dicta it incorporates are clearly contrary to the plain-language meaning of the regulation, in addition they have no basis in statute.* Invocation of common law doctrine does not cure that defect.

A common law doctrine is not equivalent to a regulation.* There being no general federal common law to apply, *a common law doctrine of control,* in itself, is inadequate "legal authority" [APA 553(b)(2)] to support a regulation, as would be an amendment to relevant federal statute or a *judicial order directed at the agency by a federal court.* Common law doctrine may not alone form the basis for a regulation. *Such law must be linked in some way to the interpretation of a particular federal constitutional provision, statute, or regulation.** Furthermore, as the Supreme Court instructs, where an agency interprets common law, that rulemaking must: 1) be in compliance with existing statute or lawful regulation; 2) be consistent with the broader context of how such issues have been traditionally interpreted; and 3) all of the factors considered must be assessed and weighed, with no one factor being decisive. When there is an apparent conflict, statutory and regulatory authorities trump common law, not the other way around, and common law is not a substitute for either.


Neufeld Memo Does Not Carry "Force of Law," But It Substantively Affects the Interests of Petitioners

Therefore, the bulk of recent USCIS informal rules, including the Neufeld memo, do not carry "force of law" and under the Mead ruling should not receive Chevron deference. **Under Mead, the courts may closely examine the agency's unpublished rules and decisions for the Skidmore factors of thoroughness, rationality, consistency, and persuasiveness.* If these essential elements are found lacking, a court will find an abuse of discretion and may order USCIS to remand cases rendered for new decisions by USCIS.* *In effect, that means that the reviewing court will look for compliance with APA 553 where the agency has imposed a new inspections or compliance regime, even when the regime itself cannot directly assess a penalty. *As the DC Circuit stressed in US Chamber of Commerce, any substantive change in compliance that manifestly impacts the "interests" of the petitioner -- even when it does not carry "force of law"-- *is a substantive change that must be in compliance with APA requirements:

we examine how the rule affects not only the "rights" of aggrieved parties, but their "interests" as well. Batterton, 648 F.2d at 707; see also Bowen, 834 F.2d at 1045 ("Substantive rules are ones which grant rights, impose obligations, or produce other significant effects on private interests"). Of course, whether a rule has the force of law often will bear upon its proper classification as substantive or procedural. See, e.g., Chrysler Corp. v. Brown, 441 U.S. 281, 301-02, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979) (that agency rule is backed by the force of law suggests it is substantive).** It will not necessarily be controlling, however. Here, for example, the Directive will affect employers' interests in the same way that a plainly substantive rule mandating a comprehensive safety program would affect their rights; that it so operates without having the force of law is therefore of little, if any, significance. In practical terms, the Directive places the burden of inspection upon those employers that fail to adopt a CSHP, and will have a substantial impact upon all employers within its purview--including those that acquiesce in the agency's use of "leverage" against them. Consequently, we conclude that the Directive is a substantive rather than a procedural rule.


Deference to Unpublished Agency Rules and Subsequent Actions Is Limited Under Mead

Under Mead, the courts may closely examine the agency's unpublished rules and decisions for the Skidmore factors of thoroughness, rationality, consistency, and persuasiveness.* If these essential elements are found lacking, a court will find an abuse of discretion and may order USCIS to remand cases rendered for new decisions by USCIS.** In effect, that means that where the rights or interests of the public are adversely effected, the reviewing court will look for compliance with APA 553 and other procedural requirements in agency informal rulemaking, such as the Neufeld memo requirements for evidence and where USCIS has imposed a new inspections or compliance regime, the FDNS, even when the regime itself cannot directly assess a penalty.

The Mead decision is not without its detractors on both sides.* Some in the Federalist Society believe virtually all agency decisions -- formal and informal, alike -- whether based in statute or regulation, should receive Chevron-level deference, as contrasted to civil libertarians who see Mead as allowing too much leeway to the agencies while withholding too much supervisory power from the federal bench.[49] **As has been pointed out, the courts have not been consistent in how they have applied Mead, which limited the Chevron standard to formal agency decision-making, and revived the less deferential Skidmore test in cases of informal agency decisions based in agency interpretation of their own regulations. *


Heightened Deference:* The Seminole Rock Standard

There is a small minority of courts that do not embrace Mead; they cite an older, more deferential standard that rivaled the contemporary Skidmore (1944) decision.* That alternative test states that agency actions will be upheld unless they are "plainly erroneous or inconsistent with the regulation." [Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945)]* It may be noted that both cases predate the passage of the APA, enacted in 1946.*

The Seminole Rock standard is viewed as holding an even greater level of deference than Chevron. *The operative doctrine in Seminole is expressed in one short sentence, "[T]he ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation."[50]* This has set up a long-term tension in Administrative law, one which Chevron did not resolve, as Chevron established the standard for judicial deference to be shown agency interpretation of their own enabling statutes, not regulations agencies had created themselves.*

Merely as a digression, it is axiomatic that in the event of any conflict between Constitution, statutes, regulations, definitive interpretations, and informal agency rules, the order of priority will be Constitution, Statute, Regulation, Definitive Interpretations and finally, at the bottom of the rank-order, any Interpretive Rule.* In practice, review of agency rules can be complex and difficult, as there may be a conflict among statutes, as well as among conflicting regulations, and the courts may have to sort out complex issues of jurisdiction between agencies with overlapping jurisdiction.* In such a complex case, Cathedral Candle Co. v. U.S. Int'l Trade Comm., 400 F.3d 1352, (Fed. Cir., 2005), the federal Circuit Court of Appeals considered the issue of a suit to compel the Bureau of Customs and Border Protection ("CBP") to distribute payments pursuant to the Continued Dumping and Subsidy Offset Act of 2000, which is known as the Byrd Amendment.* In addition to CBP, the anti-dumping process is also administered by the Int'l Trade Commission and the Department of Commerce.* The Byrd Amendment, in turn, appeared to conflict with section 777 of the Tariff Act of 1930 that governs the actions of the Commission.

In that case, which may have informed the DHS understanding of how it would approach similar issues, that panel of the federal circuit held that when an agency interprets its own regulation it should receive broader deference than when it interprets statute.* Attendant to that part of its determination, the court cited Seminole Rock.* As the US Court of Appeals for the Federal Circuit found in Cathedral Candle:

Deference to an agency's interpretation of its own regulations is broader than deference to the agency's construction of a statute, because in the latter case the agency is addressing Congress's intentions, while in the former it is addressing its own. See Am. Express Co. v. United States, 262 F.3d 1376, 1382-83 (Fed.Cir.2001). Thus, as the Supreme Court has explained, the agency's construction of its own regulations is "of controlling weight unless it is plainly erroneous or inconsistent with the regulation." Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 89 L.Ed. 1700 (1945)***

But, this does not resolve the issue of standard of review.* In a complex case such as this involving multiple statutes, along with a statute that is administered by multiple agencies, a reviewing court would have to engage in a multipart analysis considering the validity of the agency's interpretation of rules to regulations cited, the impact of conflicting regulations, and the validity of the regulations cited relative to the controlling statutes.* The federal circuit employed multiple standards, and also cites Skidmore for another part of its analysis. **Review of the Neufeld memo matter would be very similar in its complexity and general approach to the Cathedral Candle Co. case which involved review of a complex variety of issues related to conflicting statutory instructions and agency interpretation.* The resulting analysis could, as in this case, employ multiple standards for different issues.* As the federal circuit observes:

The deference question in this case is complicated because it involves multiple statutory provisions, multiple agencies with responsibility for administering the statutory scheme, multiple pertinent regulations, and multiple forms of informal agency action that bear on the questions before us. Thus, the Commission, Customs, and the Commerce Department all have roles to play either under the antidumping and countervailing duty statutes or under the Byrd Amendment or both; the Commission and Commerce both have formal regulations that bear on the proper interpretation of section 777 [section 777 of the Tariff Act of 1930, 19 U.S.C. § 1677f, "prohibits the Commission from disclosing business proprietary information"]; and in addition to the formal regulations, the Commission points to various informal indications of agency policy regarding the interpretation of the statutes at issue, including the letter from its chairman that was sent to Customs and posted on Customs' website. [This letter advises applicants that they must apply for an exemption of the Commission's confidentiality rule in order to qualify for a share of money distributed under an anti-dumping judgment.] Finally, the case requires us to address two separate but related deference issues: the proper construction of section 777; and the proper interpretation of the Byrd Amendment in light of section 777, as properly construed.

As we see, the Federal Circuit in Cathedral Candle, employs the highly deferential Seminole Rock "plainly erroneous" standard to the Int'l Trade Commission's analysis of Section 777, upholding that decades-old standing regulation that allowed the Commission to exempt publication on the basis of privacy, even though publication of the names of eligible companies was required by the 2000 Byrd Amendment.* Based upon that standard of review, the court upheld the interpretation and procedures employed by the agency related to:

the confidentiality requirement of section 777, as construed by the Commission and the Department of Commerce through published regulations and longstanding practice. The Commission argues that it acted reasonably in attempting to accommodate the two statutory directives by construing the Byrd Amendment not to require disclosure of information protected by section 777.

It also applies the "Skidmore" test to conclude that the agency complied with the law in its interpretation of its duties under the Byrd Act and section 777.* The result is instructive because it rested on a finding that the Commission had, in fact, complied with its requirements under the Byrd Amendment to publish a list of applicants in the Federal Register along with the apparently conflicting statute which includes a longstanding provision that requires the agency to protect "business confidentiality."* Companies that wish to receive a share of distributions must register, effectively waiving confidentiality.* The plaintiffs had not registered in the years in question and did not receive distributions. **Plaintiffs had argued that they should nonetheless receive a benefit - money distributed from an anti-dumping judgment - without timely filing an application for an exemption of confidentiality that would entitle them to their share.* Plaintiffs argued they were exempted from such a filing because the Commission had not published the names of other registrants, as the statute appeared to require. **In considering the agency's compliance with statute, the Federal Circuit applied the multi-factor Skidmore-level test, and gave a lesser degree of deference to CBP's overall decision to not award distributions to the plaintiff company which had failed to file exemption applications. *In large part, that was because the Commission was carrying out a longstanding statutory mandate to protect confidentiality, but the waiver process was of recent vintage. *This was a situation where the agency found itself bound by two apparently conflicting statutes, and had promulgated a procedure in an effort to reconcile them.* The procedure chosen, an informal procedure to allow applicants for distributions to exempt themselves by application from section 777 privacy requirements, was not unreasonable under the circumstances, the court found.*

This is, of course, a very different situation than a case involving the Neufeld memo where the agency has no longstanding statutory mandate to establish the element of "control", an element which the agency has merely imputed from a common law principle.* Plaintiffs would further argue that denial of their I-129 petitions was due to misapplication of informal binding rules DHS was required to, but did not, publish in The Federal Register.* Without statutory basis, unpublished rules would not be accorded Seminole Rock deference, much less deference under the Skidmore standards.* Plaintiffs would also argue that the agency's rule furthermore is not consistent with the statute, and would not meet either Chevron or Skidmore standards, and would further be so inconsistent with regulation so as to not receive deference under Seminole Rock.* The USCIS failure to publish its regulations related to "control" is thus not analogous to the situation in Cathedral Candle where the informal procedure for exemptions was found to be in compliance with both statutes and the several agencies' published regulations. **

Under a traditional separation of powers analysis, the court would ultimately hold that it need not show deference to any rule, formal or informal, it determines to conflict with either an enabling statute or another regulation of the same agency.* The greater deference shown to agency interpretation of its own regulation is conditional, even in extremely complex cases decided according to the most deferential possible standard of review. *

Therefore, even if a court were to review the Neufeld memo applying the highly deferential Seminole Rock standard to USCIS interpretation of its own regulation, plaintiff petitioners would still likely prevail.* The Neufeld "control" dicta is "plainly erroneous" in its broad imposition of a heightened burden of evidence (the evidentiary requirement that applies strictly to an employment agency under 8 CFR 214.2(h)(2)(i)(F)),* and that excessive burden of evidence is "inconsistent with" the existing regulatory standard at 8 CFR 214.2(h)(4)(ii).* **Furthermore, USCIS would likely also fail to meet Chevron or Skidmore standards if it were to promulgate and publish the de facto control rule as formal regulations, as thus do not conform with the statutory separation of jurisdictional power over wage and hour compliance reserved by* the Act to the USDOL. The functions ceded to Labor Department jurisdiction are at INA 8 U.S.C. § 1182(n) while USCIS authority over adjudication of H-1B petitions is specified at INA sec. 101(a)(15)(H), 8 U.S.C. 1101(a)(15)(H); 8 CFR 214.2(h)(4).* As is explained below, the INA clearly reserved such compliance and enforcement powers to USDOL and withheld them from legacy INS.* The Homeland Security Act gave DHS no statutory authority over the area of LCA wage and hour compliance.* In addition the Neufeld rules that require a showing of control for the full duration of a petition (as long as three years) also plainly conflict with the agency's own published regulations and long-established procedures that instead require the application demonstrate: 1) eligibility "at the time of filing"; and 2, allow ongoing H-1B reassignments to customer sites through the expedient of filing of a new LCA and/or amendment of a petition.

There is more than one way to rule against an agency's action.* Even a highly deferential standard of review does not guarantee that the agency's interpretations will stand on their merits. *This is illustrated by a 2003 precedential Third Circuit decision written by Justice Samuel Alito while he was still sitting on that circuit.* [Camphill Soltane v. INS, 381 F3d 143 (3rd Cir., 2003)] That decision is instructive about how a more deferential approach to visa eligibility issues would proceed to the same conclusion without Mead.* In Camphill Soltane, the circuit found that legacy INS had violated APA standards by erroneously misinterpreting its regulations to deny a Special Immigrant Religious Worker visa to an employee of a religious order working as a residential aide at a facility for mentally handicapped children.* *It looked at the facts and the regulations and applied the more deferential "unsupported by substantial evidence" standard to rule the INS decision was "plainly erroneous or inconsistent with the regulation", citing Seminole Rock. *

Alito's decision cites a string of pre-Mead cases[51] in that ruling against INS:


We now turn to the merits of the appeal. Under the Administrative Procedure Act, we will reverse agency action if it is "arbitrary, capricious, [or] an abuse of discretion," or "unsupported by substantial evidence." 5 U.S.C. § 706; Spencer Enterprises, 345 F.3d at 693. We defer to both formal and informal agency interpretations of an ambiguous regulation unless those interpretations are "plainly erroneous or inconsistent with the regulation." Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945); Thomas Jefferson University v. Shalala, 512 U.S. 504, 512 (1994); Auer v. Robbins, 519 U.S. 452 (1997)


We need not decide whether the AAO adjudication in this case is best characterized as "formal" or "informal," since the outcome in terms of deference is the same. See Caruso v. Blockbuster-SonyMusic Entertainment Ctr., 193 F.3d 730,733 (3rd Cir. 1999); Scott H. Angstreich, Shoring Up Chevron: A Defense of Seminole Rock Deference to Agency Regulatory Interpretations, 34 U.C. Davis L. Rev. 49, 56 (2000) ("[A]n interpretation of a regulation in a format lacking the force of law warrants Chevron-style deference, but such an interpretation of a statute does not."); Note, 114 Harv. L. Rev. 359, 377-78 (2000) ("The Auer Court. . . held that agencies can issue authoritative interpretations of their own ambiguous regulations outside [the procedural] strictures [of the APA]."); cf. U.S. v. Mead Corp., 533 U.S. 218, 227-29).


Alito's rejection of Mead's formal distinction between formal and informal decisions is notable, but he has been shown in the Camphill Soltane decision that it is not necessarily determinative of the outcome of the case.* *This suggests an instrumentalist dynamic that, in the end, various courts confronted with uncertainty in the law and regulation will apply whatever standard that they want to achieve the results they think "makes the most sense."[52]***

A third view, expressed below by an ABA study, has reconciled the differences between the Chevron and Seminole Rock, concluding that in practical application, these standards of deference are likely to converge[53]:

Exactly how Seminole Rock deference compares to Chevron deference is difficult to say with great confidence.* The usual judicial formulations of Seminole Rock deference certainly sound (even) more deferential than Chevron.* For example, in Thomas Jefferson University v. Shalala, the Supreme Court stated that it "must give substantial deference to an agency's interpretation of its own regulations." 512 U.S. at 512 (citations omitted).* Explaining further, the Court wrote: "Our task is not to decide which among several competing interpretations best serves the regulatory purpose. . . .* In other words, we must defer to the Secretary's interpretation unless an alternative reading is compelled by the regulation's plain language or by other indications of the Secretary's intent at the time of the regulation's promulgation."* Id. (quoting Gardebring v. Jenkins, 485 U.S. 415, 430 (1988)).* The Court added that this broad deference is warranted especially where the regulation concerns a complex, technical regulatory program.* Id.* Perhaps the Court was convinced that agencies are better situated to understand their own ambiguous regulations as opposed to open-ended terms passed by Congress.* Thus, Seminole Rock might be understood as Chevron plus deference, whereas Skidmore can be understood as Chevron minus deference. **

******Nonetheless, despite the theoretical difference in strength of deference, the Seminole Rock and Chevron formulations likely converge in practice.** As the D.C. Circuit noted in Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d 579, 584-85 (D.C. Cir. 1997), [i]n the aftermath of Chevron, it may be that our deference to agency interpretations of ambiguous regulations is not different than that which we afford to interpretations of ambiguous statutes.* It would seem that there are few, if any, cases in which the standard applicable under Chevron would yield a different result than the "plainly erroneous or inconsistent" standard set forth in Bowles.* Similarly, the Supreme Court in Martin v. OHSRC, 499 U.S. 144, 180 (1991), directed courts to defer to agency interpretations of regulations "if the Secretary's interpretation is reasonable.* The Secretary's interpretation of an ambiguous regulation is subject to the same standard of substantive review as any other exercise of delegated lawmaking power."*

******Some have criticized Seminole Rock deference, however,*on the ground that agencies should not have the power to both make and interpret the law.*[citation omitted] Fusing the power to fashion rules and then interpret them might endanger civil liberties.* Moreover, if agencies can both promulgate regulations and then interpret them, they might have the incentive to issue overly vague rules, knowing that they could then flesh out the rules through interpretations that would avoid stringent review. [citation omitted]* Agencies can avoid procedures such as notice-and-comment rulemaking merely by reinterpreting their own regulations in an enforcement action.*

That last line, indeed, seems to be the strategy that DHS has pursued with regard to informal H-1B and L-1 rulemaking since Cathedral Candle. **Further, Camphill Soltane appears to be an example of such convergence of standards of review in practice.

It has been suggested that the convergence view may be the way the APA was originally designed by its architects in 1946.* One commentator sees this tension as built-in to in the very structure of the APA, which contains two disparate standards, the Sec. 706(2)(A) "arbitrary and capricious" language and the seemingly more deferential "substantial evidence" standard at (E).* Sec. 706 states in its entirety:

§ Section 706. - Scope of review

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall -

(1) compel agency action unlawfully withheld or unreasonably delayed; and

(2) hold unlawful and set aside agency action, findings, and conclusions found to be -

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;

(D) without observance of procedure required by law;

(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or

(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.


* Sec 556(d) states with regard to the conduct of hearings:

(d) Except as otherwise provided by statute, the proponent of a rule or order has the burden of proof. Any oral or documentary evidence may be received, but the agency as a matter of policy shall provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence. *A sanction may not be imposed or rule or order issued except on consideration of the whole record or those parts thereof cited by a party and supported by and in accordance with the reliable, probative, and substantial evidence.


Some have concluded that by creating two separate standards within the same section, and two sections that employ the same standard, Congress was ambivalent about the standard to be used, and intended to leave judges free to pick and choose between them according to their own lights[54]:

The final form of the APA . . . owes language both to opponents and supporters of the administrative agencies. *As with many pieces of legislation, ambiguous language was incorporated into the statute so that courts ultimately would have to sort out what was meant.[...] The final language of Sec. 10, the "judicial review" section, provided:

"[the agency shall] hold unlawful and set aside agency action, findings, and conclusions found to be (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law....(5) unsupported by substantial evidence in any case subject to the requirements of sections 7 and 8 [relating to hearings]..."

It appears at first that this is an example of the final effort at compromise, since it seemingly maintains both the administration and the APA-type language, but a quick glance at the 1947 Attorney General's manual tells us the following: "The provisions of section 10 constitute a general restatement of the principles of judicial review embodied in many statutes and judicial decisions.." In other words, even though the language of section 10 can be read to incorporate two rather contrary standards (arbitrary and capricious; substantial evidence), the AG's conclusion that the new law merely restates old law suggests that a highly deferential review is envisioned.

The different purposes of these two sections, however, and their placement in separate sections of the act, instead makes it clear that these standards are not meant to be interchangeable. *Congress knew exactly what it was doing when it crafted the APA. *A plain-language reading of Section 704 indicates that both standards, the "arbitrary or capricious" standard [Sec. 704.2(A)] and the "substantial evidence" standard at Sec. 704.2(E), *apply to "review" of all agency actions, whether they be formal or informal adjudications.** The prohibitions listed at subsections (A) through (F) of that section apply to judicial review of all agency actions and rulemaking. **Subsection (E), meanwhile, applies to the agency conduct of administrative hearings, as further clarified at Secs. 556 and 557. *The reference to "unsupported by substantial evidence" at subsection (E) refers specifically to a prohibition of the reliance upon secret evidence or hearsay in any decision made during agency hearings.* *It does not say that agency hearings may be otherwise "arbitrary, capricious", etc. **The purpose of Sec. 556 is, arguably, to expressly protect the public from any unsupported agency sanctions that are not fully based on the record, not to protect agency decisions and rules from the close scrutiny of judges.** Hence, the admonition at 556(d), "[a] sanction may not be imposed or rule or order issued [by an agency] except on consideration of the whole record or those parts thereof cited by a party and supported by and in accordance with the reliable, probative, and substantial evidence." ***There is nothing in the language of the Act, itself, that states that a different standard of review should be applied by the courts to formal rulemaking than actions that arise from individualized adjudications.* That distinction has been read into the Act by various courts that have subsequently interpreted the statute along with the agencies, themselves.*

In actual application, however, the two standards have been interpreted to apply to judicial review of different agency functions.* In another Third Circuit case, York Bank & Trust v. FSLIC[55], illustrates how the "arbitrary or capricious" standard of Sec. 704(A) is applied to informal review of individual adjudications, while the "substantial evidence" test applies to more formal proceedings and rulemaking.** This interpretation is drawn from Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 414, 91 S.Ct. 814, 822, 28 L.Ed.2d 136 (1971). "In that case the Supreme Court found that when a district court reviews federal agency action subject to the provisions of the APA, the arbitrary and capricious standard applies. When agency action is taken pursuant to a rule-making provision of the APA or when agency action is based on a public adjudicatory hearing, the reviewing court utilizes the more deferential substantial evidence test. De novo review is authorized for review of an adjudicatory action in which the agency fact-finding procedures are inadequate." [York Bank & Trust v. FSLIC, 851 F.2d 637 (3rd Cir., 1988)]

*Under this view, an adjudicated decision of the Service Center Director or the AAO is reviewed as "arbitrary or capricious" under Sec. 706(2)(A), meanwhile the courts will review USCIS rulemaking according to the "substantial evidence" standard [Sec. 706(2)(E)]. *In Overton Park the decision of the DOT Secretary was an informal one, to which the substantial evidence standard was held not to apply, but the reviewing court may still conduct a "substantial inquiry"[56]:

Although, under § 706 of the Act, de novo review is not required here [because the record was complete], and the Secretary's approval of the route need not meet the substantial evidence test, the reviewing court must conduct a substantial inquiry and determine whether the Secretary acted within the scope of his authority, whether his decision was within the small range of available choices, and whether he could have reasonably believed that there were no feasible alternatives. The court must find that the actual choice was not "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," and that the Secretary followed the necessary procedural requirements. Pp. 401 U. S. 413-416.

The Overton Park decision overturned a decision by the US Secretary of Transportation, made pursuant to an informal procedure without a public hearing, to permit the use of federal highway funds to construct a six-lane Interstate highway through a designated public park.* A close reading of Overton Park reveals that the standard of review applied compels a court to examine four factors.* Under that decision, the agency's rule-making is subject to a four-part test: (1) was the decision rendered pursuant to a formal hearing with a decision on the record; (2) the reviewing court must conduct a "substantial inquiry" to determine whether the agency's decision was supported by the record; (3) the actual decision of the Secretary may not be arbitrary or capricious or any of the six factors enunciated in 704(2) subsections (A) through (F);[57] and, (4) that the agency must follow procedural requirements established by law and regulation in rendering its decision, and accord due process to the affected parties.* The Overton Park decision concluded:

In all cases, agency action must be set aside if the action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" or if the action failed to meet statutory, procedural, or constitutional requirements. 5 U.S.C. §§ 706(2)(A), (B), (C), (D) (1964 ed., Supp. V). In certain narrow, specifically limited situations, the agency action is to be set aside if the action was not supported by "substantial evidence." And in other equally narrow circumstances, the reviewing court is to engage in a de novo review of the action and set it aside if it was "unwarranted by the facts." 5 U.S.C. §§ 706(2)(E), (F) (1964 ed., Supp. V).

The decision, therefore, was held to entail the principle that formal agency determinations will be subjected to the "substantial evidence" test (706)(2)(E) while a reviewing court will overturn any agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law or if the action failed to meet statutory, procedural, or constitutional requirements" (706)(2)(A), (B), (C), (D),(F).* Since Overton Park (1971), the federal courts have refined the APA standards of review they will employ to reverse and remand various types of agency actions.* The 1978 Chevron decision further defines that distinction between formal and informal actions, so that a heightened deference applies only to formal agency determinations that carry the "force of law".* The courts have since generally held that formal agency decisions are subject to Chevron deference while informal determinations receive some lesser degree of deference. *In the Chevron opinion by Justice John Paul Stevens, the Court imposed a two-part analysis (called the "Chevron two-step test"), where a reviewing court determines:

(1) Whether the statute is ambiguous or there is a gap that Congress intended the agency to fill. (If the statute is unambiguous, and the interpretation runs contrary to the statute, then the interpretation is considered unreasonable as the text of the statute prevails.)

(2) If so, whether the agency's interpretation of a statute is reasonable or permissible. If an agency's interpretation is reasonable, then the court will defer to the agency's reading of the statute.

Less formal decisions, meanwhile, receive lesser deference according to the quality of the decision, the transparency of the process, the adequacy of the record, and the procedural safeguards afforded those affected by the decision.* The 2001 Mead decision expresses the Court's most recent restatement on the subject, which is cited with approval in several subsequent Supreme Court decisions.* By an 8-1 majority, authored by Justice Souter, the sole dissent by Scalia, the court announced that informal agency decisions are to be reviewed according to the four-factor Skidmore test.* As we have seen, some lower courts have failed to follow Mead, and a few, such as the Third Circuit decision written by Samuel Alito, instead embrace the Seminole Rock standard that predates the Administrative Procedure Act. *The Supreme Court's Clackamas decision, along with several other post-2001 SCOTUS decisions, cite Skidmore.** Since 2001, Mead is cited as positive analyses in 229 federal cases, Skidmore in 20 cases, and Seminole Rock in only 5.

A LEXIS-Shepard's search for Mead reveals the following information regarding its reference in other decisions:* United States v. Mead Corp., 533 U.S. 218


Cautionary Analyses:

Distinguished (28)



Positive Analyses:

Followed (218), Concurring Opinion (21)



Neutral Analyses:

Criticized (2), Conflict.Authority (1), Dissenting Op. (49), Explained (7), Harmonized (3), Interim Decision (1)



Other Sources:

Law Reviews (886), Secondary Sources (1), Statutes (6), Treatises (35),

By comparison, a search for Skidmore v. Swift & Co., 323 U.S. 134 reveals:

Citing References:


Cautionary Analyses:

Criticized (3), Distinguished (47)



Positive Analyses:

Followed (315), 2001 or later (20)



Neutral Analyses:

Concurring Opinion (19), Conflict.Authority (2), Dissenting Op. (84), Explained (22), Harmonized (1), Interim Decision (1), Quest. Precedent (1)



Other Sources:

Law Reviews (1008), Secondary Sources (1), Statutes (34), Treatises (66), Annotations (1), Other Citations (19), Court Documents (1300)

And finally, "Seminole Rock": Bowles v. Seminole Rock & Sand Co., 325 U.S. 410

Citing References:


Cautionary Analyses:

Distinguished (10)



Positive Analyses:

Followed (77) , 2001 or later (5)



Neutral Analyses:

Concurring Opinion (4), Dissenting Op. (41), Explained (3)



Other Sources:

Law Reviews (204), Treatises (61), Other Citations (3), Court Documents (317)

We can therefore make several conclusions from the judicial record and how the federal courts have dealt with the issue of deference, and how they would likely deal with Neufeld.

Only by the most deferential possible legal standard, Seminole Rock, might a court hold that USCIS dicta in the Neufeld memo[58] carry "the force of law" and thus might be owed Chevron-style deference.* However, even a deferential judge, such as Samuel Alito, might still rule on the merits against the government finding that dicta "plainly erroneous or inconsistent with the regulation" or that the decision rendered was "arbitrary or capricious", inconsistent with law or ignored constitutional requirements. **The memo would certainly fail to pass procedural, substantial, and constitutional muster under stricter standards of deference contained in the four-part Skidmore test, and they do not appear to be viable even under Seminole Rock deference. **

In fact, it is hard to imagine how any federal judge, no matter how deferential, might construe current USCIS practice as deserving of Chevron deference.* The Neufeld dicta simply stray too far from the agency's own regulations, and as USCIS acknowledges, also have no grounding in statute. These de facto rules are recent inventions and the agency does not have clear jurisdiction over the subject matter.* Indeed, the legislative record indicates the intention of Congress was to withhold such jurisdiction from legacy INS, which is also the stated position of the Department of Labor. *The same statutes that create agencies also limit their authority to actions within their own jurisdiction. Because agencies are created through delegations of power, they are not permitted to exceed the scope of their delegated authority. Agency actions must follow the contours of the statutes that create them and that they administer.* An encroachment on another agency's jurisdiction is an abuse of discretion.

At their bottom, these rules are contrary to the intent of Congress.* *As Justice Alito has shown in Camphill Soltane, even the deferential "substantial evidence" and "plainly erroneous" standards of review do not necessarily support USCIS interpretations of its own regulations.* Highly deferent jurists, such as Alito, will not uphold USCIS dicta that veer too far from regulation or decisions that ignore objective evidence on the record.**

DHS, therefore, cannot count on the courts to uphold the agency's interpretation or to allow application of such rules to adjudications.* Rules that do not pass the "arbitrary and capricious" standard when applied to individual adjudications will likely also flunk the "substantial evidence" or "plainly erroneous" tests for rulemaking. **Again quoting Alito here, "We need not decide whether the AAO adjudication in this case is best characterized as "formal" or "informal," since the outcome in terms of deference is the same. "

USCIS is apparently aware of its vulnerability to litigation, and in early 2010 with the Neufeld memo and amendment to relevant sections of the USCIS Examiner's Handbook searched for new rationale.** The Service does not cite Defensor, instead the memo invokes a pair of Supreme Court decisions, Darden and Clackamas for a common law basis for the same policy.* But, this is not persuasive. *Those decisions simply say that where the statute is ambiguous about the definition of a term, a common law definition may be applied.* Clackamas furthermore cites Skidmore for this principle, which entails the least deferential standard possible.* One has to wonder whether anyone at USCIS even bothered to research the case law in developing its doctrine of "control."* We see at ftn. 8 of Clackamas [p. 449] that the Supreme Court says:

We are persuaded by the EEOC's focus on the common-law touchstone of control, see Skidmore v. Swift & Co., 323 U.S. 134, 140, 89 L. Ed. 124, 65 S. Ct. 161 (1944), 9 and specifically by its submission that HN7 each of the following six factors is relevant to the inquiry whether a shareholder-director is an employee [...]

If the Supreme Court applied the Skidmore four-factor test cited in Clackamas to this case, by what possible logic could DHS now argue that a court of review should apply a more deferential standard to its own interpretation of "control"?* Here, the ambiguous term is "employer" with the operative term "control."** USCIS has pieced together a rather unlikely assemblage of authority to justify its dicta that H-1B employers must supply a prohibitively high burden of proof to establish their control over workers assigned at third-party client sites.* The agency's actual purpose is to limit outsourcing - a purpose that has no basis in statute or regulation.* *Perhaps, USCIS believes that a reviewing court would limit itself to an examination of regulation, without looking at how the de facto rule apparently conflicts with the statutory scheme? *In any event, USCIS has again overreached, and a close examination of administrative law and administrative common law do not support the interpretation the agency has taken with regard to the common law principle of "control". *

Finally, as is shown below, it is the APA not common law standards that would apply, and the agency's decision-making process and substance of its policy are plainly inconsistent with APA standards as interpreted by the courts and applied by other agencies.* It doesn't help the USCIS case that it had to borrow its common law definition from the Labor Department, as it also absconded with DOL's legislative mandate to police this compliance area. *Therefore, even by the most deferential standard possible, as we show, interpretation contained in the Neufeld memo is still plainly "inconsistent with regulation" and not "in accordance with law."


  1. 1.** USCIS "Neufeld Memo" Interpretation of Common Law Doctrine of "Control" Contrary to APA Principles and Other Federal Administrative Interpretation of Common Law *

The U.S. Supreme Court holds that where there is an apparent conflict between APA standards and agency standards based in common law, APA standards trump common law standards.[59] *Furthermore, judicial interpretation of the common law principles of liability in torts, and the common law principle of Privity of Contract hold that a valid employment contract would forestall any third-party interests, and thus continued "control" over the H-1B worker by the employer at third-party work sites is normally presumed. [See, H-1B Legal Issues, below]*

In addition, the USCIS analysis of the doctrine of agency is idiosyncratic and goes against a long list of accepted administrative law practices, principles and findings, also reviewed in sections, below. *Some of the most important of these are IRS tests, including a 20-Factor Test for determining whether a filer is an employee or an independent contractor.* As discussed below, by the normal standards of the Law of Agency, and the tests of whether a business indeed employs a worker or is instead acting as the worker's agent, would hold in the vast majority of H-1B cases that the beneficiary, in fact, is actually the employee of the petitioner.*

Nonetheless, USCIS prefers its own narrow test of "control" that focuses upon contracts with third-party clients. **The USCIS has totally failed to address why it has chosen to ignore the multitude of factors that other agencies consider as essential to common law determination of the employer-employee relationship - particularly contract and liability -- and invocation of common law by USCIS may have been a serious legal error. This and other issues related to inadequate USCIS interpretation of doctrines of control and agency are dealt with at length in the Sections that follow.

Indeed, so long as Congress continues to decline to restrict H-1B outsourcing by law, USCIS finds itself edging further out toward the end of a long, fragile legal limb.* Moving from Defensor, to the Neufeld memo, to an assumed common law basis for interpreting ambiguities in the Act, USCIS dicta is increasingly divorced from statutory support, and the agency now acknowledges that its demand for heightened burden of evidence in H-1B cases, such as its now routine requirement for end-user contracts, has no basis in statute.* Instead, USCIS now justifies this and other discriminatory forms of treatment of H-1B outsourcing firms in a most peculiar cherry-picking of common law; that is a truly extraordinary position for an agency that has only limited authority to interpret law outside its own enabling legislation.* USCIS has taken positions that are not legally sustainable if seriously tested.

Therefore, the courts do not owe USCIS interpretation of common law Chevron-level judicial deference, and the agency's interpretation of common law to require additional third-party documents from outsourcing firms is unreasonable, serves no valid public policy purpose, and is inconsistent with the manner in which issues of common-law employment relationships are otherwise interpreted by the courts and other federal agencies. **


  1. 2.** USCIS Disregards Its Own Regulations

Furthermore, the agency is in direct violation of federal rulings in the manner that it has adopted elements of discarded or defunct regulations to support its present policy of discriminatory denial and delay of H-1B petitions.*

USCIS enforces a policy of requiring an improperly elevated standard of evidence on any petitioner that has a known history of outplacement of H-1B workers.* This is inconsistent with existing USCIS regulations, and discriminates in three ways against most international IT consulting firms, as outlined above at Sec. C(1). **Another fatal USCIS error is the fundamental misapplication and misrepresentation of regulation requiring, improperly, a "complete itinerary" of H-1B employees that might be placed at third-party sites.* The regulation that actually pertains to the H-1B employer's requirement for documentation of "service or training at more than one location" appears at 8 CFR 214.2(h)(2)(I)(B)[60]:

(B) Service or training in more than one location . A petition which requires services to be performed or training to be received in more than one location must include an itinerary with the dates and locations of the services or training and must be filed with the Service office which has jurisdiction over I-129H petitions in the area where the petitioner is located. The address which the petitioner specifies as its location on the I-129H petition shall be where the petitioner is located for purposes of this paragraph. [emphasis added]

However, the current directive to Service Center Adjudicators, pursuant to the January 8, 2010 Neufeld Memo, has altered that regulatory requirement, and is imposing the requirement for a "complete itinerary" expressed in the moribund Proposed regulation of 1998.* The Neufeld memo at page 10 directs adjudicators:

Compliance with 8 C.F.R. 214.2(h)(2)(i)(B)

Not only must a petitioner establish that a valid employer-employee relationship exists and will

continue to exist throughout the validity period of the H-IB petition, the petitioner must continue to comply with 8 C.F.R. 214.2(h)(2)(i)(B) when a beneficiary is to be placed at more than one work location to perform services. To satisfy the requirements of 8 C.F.R. 214.2(h)(2)(i)(B), the petitioner must submit a complete itinerary of services or engagements that specifies the dates of each service or engagement, the names and addresses of the actual employers, and the names and addresses of the establishment, venues, or locations where the services will be performed for the period of time requested. Compliance with 8 C.F.R. 214.2(h)(2)(i)(B) assists USCIS in determining that the petitioner has concrete plans in place for a particular beneficiary, that the beneficiary is performing duties in a specialty occupation, and that the beneficiary is not being "benched" without pay between assignments. [emphasis added]


  1. 3.** Line of APA Cases Bar Similar Legacy INS Practice of Applying Defunct Regulations

This is not the first time the agency has been misapplied cast-off rules without meeting its APA publication requirements. **In the Raungswang[61] and Patel[62] decisions of the 1980s, the Ninth Circuit held that legacy INS had abused its discretion in denying investor visa petitions by adding requirements without publishing final regulations.* Raungswang specifically found abuse of discretion under the APA when BIA imposed rules promulgated through adjudications without providing notice upon a petitioner whose application was reliant upon the published rules.* **Patel extended that principle to find that INS could not enforce rules adopted from discarded regulation that was never published as Final Regulations. *

Shepard's reveals that there is an extensive line of cases in all Circuits that cite and uphold the APA law principles established in the above-cited pair of 9th Circuit cases.* That line of cases holds without exception that informal INS/USCIS rulemaking, as well as that of other agencies, is impermissible where agency dicta made through adjudication contradicts previously published regulation.** That issue is explored at length in the sections dealing with H-1B Legal Issues. **There is no legitimate doctrinal reason why the courts should or would choose to defer to such an unlawful and procedurally defective application of regulations by USCIS. *


  1. 4.** Doctrine of "Control" Found In Common Law Not Consistent With APA Standards *

Finally, we pass out of the plethora of USCIS procedural errors and into substantive issues of law. **As the sections H-1B Legal Issues, below, make clear, the agency's interpretation of common law and use of it as justification to require complete itineraries and third-party contracts from H-1B outsourcing firms has absolutely no basis in the body of common law jurisprudence, employment law, torts liability, tax law, or any parallel area of administrative law.* The great weight of federal court and federal agency interpretation goes against the invidious distinction that USCIS is trying to make against H-1B outsourcing firms.

Indeed, what USCIS appears to be doing is an effort to employ a doctrine of administrative common law, itself an area of law in decline, in order to rescue a policy that the agency has finally had to admit has no basis in statute; and just as clearly, as we show, these USCIS practices in many ways contravene the APA's requirements.** A tension between administrative common law and the APA has been observed, with the latter in ascendancy since the mid-1970s[63]:

Moreover, even the differences between Darby and Zurko show a continuing erosion in administrative common law. For in Zurko, the circuit court at least tried to reconcile its standard with the APA [. . .]Though more accommodating to common law than the Supreme Court would allow, the Federal Circuit's reasoning nonetheless showed far more attention to the APA than, for example, that shown by the lower court in Darby, which ignored the APA entirely even though the party trying to avoid the common law exhaustion doctrine made the statute as his lead argument in briefing. The Zurko litigation demonstrates that even defenses of administrative common law are now litigated within the terms of the APA.

The USCIS appears to have floundered too far from its enabling statute, and it is unlikely that any Circuit Court will uphold the agency's interpretation on common law issues so distant from its area of particular expertise, particularly within the context of an APA action.


  1. 5.** No Chevron-style Deference For USCIS "Control" Dicta and Related Doctrine Employed in the Neufeld Memo

There is simply nothing of substance - no statute or regulation -- upon which USCIS has anchored its interpretation of "employee" and the requirement imposed for documentation of "control." ***The definitions it applied are entirely dicta based in de facto rules without statutory or regulatory basis borrowed from another agency that has actual legal jurisdiction over the subject - the denials rendered as a result are arbitrary and capricious.

The agency appears to have become recently aware that its adjudications have been operating without sound legal authority.* In mid -January, 2010, USCIS publicly released a policy memorandum that is of importance to companies that utilize the H-1B program, particularly firms that may place non-immigrant workers at client sites.* The Memo was written by Donald Neufeld, Associate Director Service Center Operations.[64] **Attached to that memo was a revision to the USCIS Adjudicators Handbook, which is an authoritative source binding on USCIS examiners.

The Neufeld memo outlines new guidance to adjudicators at USCIS Service Centers processing H-1B applications, and also signals H-1B employers of a renewed focus for the agency's efforts to regulate outsourcing and so-called Job Shops.* The Neufeld memo is important to all H-1B employers because it lays out an expanded list of documents in several categories that companies will now have to provide with initial petitions for H-1B workers.

*Significantly, the Neufeld Memo identifies a number of categories of outsourcing applications that the Service will approve and specifies a list of documents that will be required.* It also describes several scenarios involving types of cases Service Center examiners may not approve, and provides what USCIS suggests to be a more solid legal rationale for how it makes these decisions. *The memo is written with precise, commanding language, and is binding upon both Service Centers and the public. **It is not a mere statement of policy.

While some of these requirements are not new - they reflect dicta of control that were first developed several years earlier and justified by the Defensor decision --* *the memo is a significant statement of how USCIS will treat certain categories of applications, and notice that the agency will be requiring all applicants to address and document issues related to control at the time of filing, along with a separate list of documents to be produced at the time of petition renewal and extension of stay.* Finally, it communicates that USCIS will also be enforcing rules against the self-employment of investors, the hiring of independent contractors, and will be looking at certain indicators that H-1B petitioners are actually employment agencies, and will deny those determined to be operating outside the traditional "employer- employee relationship."*

The memo signals that new filings of H-1B petitions will have to attest to, and where applicable, be accompanied by the following eight categories of documents:

  • A complete itinerary of engagements that specifies the dates of each service or engagement, the names and addresses of the actual employers, and the names and addresses of the establishment, venues, or locations where the services will be performed for the period of time requested;

  • Copy of signed Employment Agreement between the petitioner and beneficiary detailing the terms and conditions of employment;

  • Copy of an employment offer letter that clearly describes the nature of the employer-employee relationship and the services to be performed by the beneficiary;

  • Copy of relevant portions of valid contracts between the petitioner and a client (in which the petitioner has entered into a business arrangement for which the petitioner's employees will be utilized) that establishes that while the petitioner's employees are placed at the third-party worksite, the petitioner will continue to have the right to control its employees;

  • Copies of signed contractual agreements, statements of work, work orders, service agreements, and letters between the petitioner and the authorized officials of the ultimate end-client companies where the work will actually be performed by the beneficiary, which provides information such as a detailed description of the duties the beneficiary will perform, the qualifications that are required to perform the job duties, salary or wages paid, hours worked, benefits, a brief description of who will supervise the beneficiary and their duties, and any related evidence;

  • Copy of position description or any other relevant documentation that describes the skills required to perform the job offered, the source of the instrumentalities and tools needed to perform the job*, the product to be developed or the service to be provided, the location where the beneficiary will perform the duties, the duration of the relationship between the petitioner and the beneficiary, whether the petitioner has the right to perform additional duties, the extent of petitioner's discretion over when and how long the beneficiary will work, the method of payment, the petitioner's role in paying and hiring assistants to be utilized by the beneficiary, whether the work to be performed is part of the regular business of the petitioner, the provision of employee benefits*, and the tax treatment of the beneficiary in relationship to the petitioner*;

  • A description of the performance review process*; and/or

  • Copy of petitioner's organization chart, demonstrating beneficiary's supervisory chain.

The above requirements stated in the Neufeld memo are similar to the demand-list of documents attached to a typical USCIS Request For Evidence (RFE) that Immigration Attorneys and clients have been receiving for a couple years.[65]

This is a long list, amounting to some 38 separate items and continues an unduly burdensome requirement for additional documentation of "control" from H-1B employers with client site placements.* Bear in mind that all these are in addition to those items that are, by existing regulation, required to establish eligibility.* Most of these additional items have been demanded by RFEs in recent years; an asterisk (*) denotes documents that were not commonly called for or routinely provided until now.* With the Neufeld memo, the Service has articulated a requirement that all these specified items be documented up front with initial H-1B filings, and is putting filers on notice that omission of any of the listed elements will likely result in an RFE and a denial.

In addition, the Neufeld memo acknowledges that it has a problem locating authority for its requirement of control, and has had to find it in the common law as applied by another agency.* As the memo states at pp. 2-3:

In support of an H-1B petition, a petitioner must not only establish that the beneficiary is coming to the United States temporarily to work in a specialty occupation but the petitioner must also satisfy the requirement of being a U.S. employer by establishing that a valid employer-employee relationship exists between the U.S. employer and the beneficiary throughout the requested H-IB validity period. To date, USCIS has relied on common law principles [ftn. 1] and two leading Supreme Court cases in determining what constitutes an employer-employee relationship. [ftn. 2]

The lack of guidance clearly defining what constitutes a valid employer-employee relationship as required by 8 C.F.R. 214.2(h)(4)(ii) has raised problems, in particular, with independent contractors, self-employed beneficiaries, and beneficiaries placed at third-party worksites. The placement of the beneficiary/employee at a work site that is not operated by the petitioner/employer (third-party placement), which is common in some industries, generally makes it more difficult to assess whether the requisite employer-employee relationship exists and will continue to exist.

While some third-party placement arrangements meet the employer-employee relationship criteria, there are instances where the employer and beneficiary do not maintain such a relationship. Petitioner control over the beneficiary must be established when the beneficiary is placed into another employer's business, and expected to become a part of that business's regular operations. The requisite control may not exist in certain instances when the petitioner's business is to provide its employees to fill vacancies in businesses that contract with the petitioner for personnel needs. Such placements are likely to require close review in order to determine if the required relationship exists.

Furthermore, USCIS must ensure that the employer is in compliance with the Department of Labor regulations requiring that a petitioner file an LCA specific to each location where the USCIS has also relied on the Department of Labor definition found at 20 C.F.R. 655.715 which states:

*Employed, employed by the employer, or employment relationship means the employment relationship as determined under the common law, under which the key determinant is the putative employer's right to control the means and manner in which the work is performed.

Under the common law, "no shorthand formula or magic phrase *** can be applied to find the answer * * *. All of the incidents of the relationship must be assessed and weighed with no one factor being decisive."

[ftn. 1]NLRB v. United Ins. Co. ofAmerica, 390 U.S. 254,258 (1968).

[ftn. 2] *Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318, 322-323 (1992) (hereinafter Darden) and Clackamas* Gastroenterology Assoc. v. Wells, 538 U.S.A40 (2003) (hereinafter Clackamas).*

Contemporaneous with issuance of the Neufeld memo, decisions by the AAO and USCIS Service Centers started to cite a new common law basis for the "control" issue identified in a pair of Supreme Court decisions, Darden and Clackamas. *But, this has not "cured" the problems related to discriminatory treatment of consulting firms.* The issue is the agency's misapplication of that common law doctrine to carry out an improper rules and results-driven system of adjudications, not the doctrine itself.


  1. 6.** USCIS Assumes Investigative and Compliance Powers Reserved by Statute to the Sole Jurisdiction of Another Agency

One of the major reasons that USCIS has had such problems locating authority for its definition of "control" is the peculiar bifurcated authority over H-1B and the Labor Condition Attestation (LCA) provisions.* Authority for enforcement of wage and hour violations is an LCA function lodged by statute with the US Department of Labor, not DHS.* Bear that fact in mind in considering the representation made in the Neufeld memo, quoted above, "USCIS must ensure that the employer is in compliance with the Department of Labor regulations requiring that a petitioner file an LCA specific to each location . . . "* **It appears that USCIS has not only borrowed another agency's common law definition, it has also assumed powers it does not have under law to enforce LCA provisions related to workplace "control" of the beneficiary at multiple locations.

Congress enacted separate sections of the INA that controls H-1B and the system of Labor Condition Attestations [LCAs], a program that was originally intended to be administered by USDOL, with sole authority for enforcement of compliance with LCA requirements reserved to the USDOL.* The functions ceded exclusively to Labor Department jurisdiction are at INA 8 U.S.C. § 1182(n) while USCIS authority over adjudication of H-1B petitions is specified at INA sec. 101(a)(15)(H), 8 U.S.C. 1101(a)(15)(H); 8 CFR 214.2(h)(4).

While DHS and USDOL share authority to jointly administer the INA in some areas, the Act reserves specific functions - including initiation of investigations into LCA wage and hour violations* -- to the sole jurisdiction of USDOL.* By statute, therefore, the roles of the two agencies with regard to the H-1B and LCA processes are distinct. **In case the statute was not clear enough, USDOL promulgated regulations over LCA enforcement that assert the ownership of its Wage and Hour (WH) division over that function in the clearest terms possible.* 20 CFR § 655.705 was revised to read, as follows[66]:

The Immigration and Nationality Act (INA) as amended by the Immigration Act of 1990 (IMMACT) and various subsections (e.g., § 212(n) and § 214) of the INA (8 U.S.C. § 1182(n); § 1184)) among other things, created the H-1B classification [...]The H-1B program responsibilities are divided among various agencies: the Department of Labor's (DOL) Employment Training Administration (ETA), the Department of Homeland Security's U.S. Citizenship and Immigration Service (USCIS), U.S. Department of State (DOS), and the DOL Employment Standards Administration's Wage and Hour Division (WH). Under the law, ETA certifies the conditions that an employer must attest to on the Labor Condition Application (LCA). Once ETA has certified the LCA, the employer must provide it, along with the "Petition for Nonimmigrant Worker," to the USCIS. The petition includes some of the same information as the LCA, and as part of its review, the USCIS reviews information on both documents to determine whether the job meets the requirements of a specialty occupation and whether the petition indicates that the qualifications of the prospective H-1B worker meet the statutory requirements in that specialty. The DOS is responsible for providing foreign workers located outside the United States with a visa to work in the United States with a specific employer for a designated calendar period of time. If the foreign worker is already in the United States, the USCIS provides the nonimmigrant an "Employment Authorization Document," which supplements the nonimmigrant's existing visa. Once an employer obtains the certified LCA and approved petition, WH enforces the attestations within the LCA, which include the material facts and labor condition statements.

Under the H-1B program, when authorized to investigate, WH is responsible for ensuring that workers are receiving the wages promised on the LCA and are working in the occupation and at the location specified. WH can only initiate H-1B-related investigations as a result of one of four factors:

  • WH receives a complaint from an aggrieved person or organization;

  • WH receives specific credible information from a reliable source (other than a complainant) that the employer has failed to meet certain LCA conditions, has engaged in a pattern or practice of failures to meet such conditions, or has committed a substantial failure to meet such conditions that affects multiple employees;

  • The Secretary of Labor has found, on a case-by-case basis, that an employer (within the last five years) has committed a willful failure to meet a condition specified in the LCA or willfully misrepresented a material fact in the LCA. In such cases, a random investigation may be conducted; or

  • The Secretary of Labor has reasonable cause to believe that the employer is not in compliance. In such cases, the Secretary may certify that an investigation be conducted.

When violations are found, WH may assess civil money penalties with maximums ranging from $1,000 to $35,000 per violation, depending on the type and severity of the violation. WH may also impose other remedies, including the payment of back wages. *[emphases added]


  1. 7.** USCIS Violates Statutory Prohibition Against DHS Initiation of LCA Enforcement - DOL Barred From Enforcement Action Pursuant to Information Received by USCIS as Part of the I-129 Petition *

The INA vests the Secretary of Labor with sole and exclusive authority under 8 USC 1182(n)(1)(G) to initiate an investigation of an H-1B petitioner pursuant to reasonable cause to believe that the employer has committed a "willful failure" or "pattern and practice" violation of provisions and attestations related to the LCA:


(G)(i) The Secretary of Labor may initiate an investigation of

any employer that employs nonimmigrants described in section

1101(a)(15)(H)(i)(b) of this title if the Secretary of Labor has

reasonable cause to believe that the employer is not in compliance

with this subsection. In the case of an investigation under this

clause, the Secretary of Labor (or the acting Secretary in the case

of the absence of (!8) disability of the Secretary of Labor) shall

personally certify that reasonable cause exists and shall approve

commencement of the investigation. The investigation may be

initiated for reasons other than completeness and obvious

inaccuracies by the employer in complying with this subsection.

(ii) If the Secretary of Labor receives specific credible

information from a source who is likely to have knowledge of an

employer's practices or employment conditions, or an employer's

compliance with the employer's labor condition application under

paragraph (1), and whose identity is known to the Secretary of

Labor, and such information provides reasonable cause to believe

that the employer has committed a willful failure to meet a

condition of paragraph (1)(A), (1)(B), (1)(C), (1)(E), (1)(F), or

(1)(G)(i)(I), has engaged in a pattern or practice of failures to

meet such a condition, or has committed a substantial failure to

meet such a condition that affects multiple employees, the

Secretary of Labor may conduct an investigation into the alleged

failure or failures.


Furthermore, as USDOL interprets the Act, USCIS does not have authority over LCA compliance after issuance of the visa petition, except under the limited, specified circumstance that a complaint has been received, or as otherwise determined, that US workers have been displaced by "H-1B dependent" employers and "willful violators"[67].* The role of USCIS, according to the Department, is otherwise restricted to reviewing the LCA prior to petition approval to "determine whether the job meets the requirements of a specialty occupation and whether the petition indicates that the qualifications of the prospective H-1B worker meet the statutory requirements in that specialty." **The role of USCIS ends at the point that an I-129 petition is issued, in most cases, after which it is the sole authority of USDOL to assure LCA compliance. **That is at loggerheads with the role claimed by the Neufeld memo: "USCIS must ensure that the employer is in compliance with the Department of Labor regulations requiring that a petitioner file an LCA specific to each location."* *In fact, the statute expressly forbids the initiation of LCA enforcement activity pursuant to information received by USCIS as part of an H-1B filing.* 8 USC 1182(E)(v) states:


(v) The receipt by the Secretary of Labor of information

submitted by an employer to the Attorney General or the Secretary

of Labor for purposes of securing the employment of a nonimmigrant

described in section 1101(a)(15)(H)(i)(b) of this title shall not

be considered a receipt of information for purposes of clause (ii).

USCIS does not have the concurrent or joint LCA enforcement power under the Act claimed by the Neufeld memo - nowhere in INA is there reference to any role for USCIS with regard to LCA compliance for most H-1B petitioners, except for supervision pursuant to receipt of a complaint from USDOL of a violation by an "H-1B dependent" employer or "willful violator employer" which knowingly displaced US workers by outplacement to third-party sites.* Subclause (v) furthermore expressly forbids any investigative data-sharing by DHS with USDOL pursuant to the sort of data-mining of H-1B petitions that USCIS carries out routinely through its FDNS-DS system. *[See, below]

Thus, USCIS has arrogated to itself an investigative function over most H-1B petition filers that is reserved by law to USDOL.* Neither USCIS nor USDOL have any statutory authority to investigate LCA filers, except employers found to be H-1B dependent or willful violators who are found by USDOL to have displaced US workers at third-party sites.* 8 USC § 1182, subsections (E) through (G), specify further limitations on DOL's own LCA investigative activities, including a requirement the Secretary of Labor personally sign any referral to the US Department of Justice, as well as limiting the initiation of investigations in the LCA enforcement process to complaints made to USDOL received from outside the Department or as part of another lawful DOL investigation, but not from the US Department of Justice (now, DHS).* Subsection (F) further limits "random" inspections to companies that have been found by the Secretary to be willful violators.* Nonetheless, the FDNS-DS system has imposed a system of "random" post-filing inspections on all I-129/LCA filers.* *8 USC § 1182 subsections E through G state in full as follows[68]:


(E) If an H-1B-dependent employer places a nonexempt H-1B

nonimmigrant with another employer as provided under paragraph

(1)(F) and the other employer has displaced or displaces a United

States worker employed by such other employer during the period

described in such paragraph, such displacement shall be considered

for purposes of this paragraph a failure, by the placing employer,

to meet a condition specified in an application submitted under

paragraph (1); except that the Attorney General may impose a

sanction described in subclause (II) of subparagraph (C)(i),

(C)(ii), or (C)(iii) only if the Secretary of Labor found that such

placing employer -

(i) knew or had reason to know of such displacement at the time

of the placement of the nonimmigrant with the other employer; or

(ii) has been subject to a sanction under this subparagraph

based upon a previous placement of an H-1B nonimmigrant with the

same other employer.

(F) The Secretary may, on a case-by-case basis, subject an

employer to random investigations for a period of up to 5 years,

beginning on the date (on or after October 21, 1998) on which the

employer is found by the Secretary to have committed a willful

failure to meet a condition of paragraph (1) (or has been found

under paragraph (5) to have committed a willful failure to meet the

condition of paragraph (1)(G)(i)(II)) or to have made a willful

misrepresentation of material fact in an application. The preceding

sentence shall apply to an employer regardless of whether or not

the employer is an H-1B-dependent employer. The authority of the

Secretary under this subparagraph shall not be construed to be

subject to, or limited by, the requirements of subparagraph (A).

(G)(i) The Secretary of Labor may initiate an investigation of

any employer that employs nonimmigrants described in section

1101(a)(15)(H)(i)(b) of this title if the Secretary of Labor has

reasonable cause to believe that the employer is not in compliance

with this subsection. In the case of an investigation under this

clause, the Secretary of Labor (or the acting Secretary in the case

of the absence of (!8) disability of the Secretary of Labor) shall

personally certify that reasonable cause exists and shall approve

commencement of the investigation. The investigation may be

initiated for reasons other than completeness and obvious

inaccuracies by the employer in complying with this subsection.

(ii) If the Secretary of Labor receives specific credible

information from a source who is likely to have knowledge of an

employer's practices or employment conditions, or an employer's

compliance with the employer's labor condition application under

paragraph (1), and whose identity is known to the Secretary of

Labor, and such information provides reasonable cause to believe

that the employer has committed a willful failure to meet a

condition of paragraph (1)(A), (1)(B), (1)(C), (1)(E), (1)(F), or

(1)(G)(i)(I), has engaged in a pattern or practice of failures to

meet such a condition, or has committed a substantial failure to

meet such a condition that affects multiple employees, the

Secretary of Labor may conduct an investigation into the alleged

failure or failures. The Secretary of Labor may withhold the

identity of the source from the employer, and the source's identity

shall not be subject to disclosure under section 552 of title 5.

(iii) The Secretary of Labor shall establish a procedure for any

person desiring to provide to the Secretary of Labor information

described in clause (ii) that may be used, in whole or in part, as

the basis for the commencement of an investigation described in

such clause, to provide the information in writing on a form

developed and provided by the Secretary of Labor and completed by

or on behalf of the person. The person may not be an officer or

employee of the Department of Labor, unless the information

satisfies the requirement of clause (iv)(II) (although an officer

or employee of the Department of Labor may complete the form on

behalf of the person).

(iv) Any investigation initiated or approved by the Secretary of

Labor under clause (ii) shall be based on information that

satisfies the requirements of such clause and that -

(I) originates from a source other than an officer or employee

of the Department of Labor; or

(II) was lawfully obtained by the Secretary of Labor in the

course of lawfully conducting another Department of Labor

investigation under this chapter of (!8) any other Act.

(v) The receipt by the Secretary of Labor of information

submitted by an employer to the Attorney General or the Secretary

of Labor for purposes of securing the employment of a nonimmigrant

described in section 1101(a)(15)(H)(i)(b) of this title shall not

be considered a receipt of information for purposes of clause (ii).

(vi) No investigation described in clause (ii) (or hearing

described in clause (viii) based on such investigation) may be

conducted with respect to information about a failure to meet a

condition described in clause (ii), unless the Secretary of Labor

receives the information not later than 12 months after the date of

the alleged failure.

(vii) The Secretary of Labor shall provide notice to an employer

with respect to whom there is reasonable cause to initiate an

investigation described in clauses (!9) (i) or (ii), prior to the

commencement of an investigation under such clauses, of the intent

to conduct an investigation. The notice shall be provided in such a

manner, and shall contain sufficient detail, to permit the employer

to respond to the allegations before an investigation is commenced.

The Secretary of Labor is not required to comply with this clause

if the Secretary of Labor determines that to do so would interfere

with an effort by the Secretary of Labor to secure compliance by

the employer with the requirements of this subsection. There shall

be no judicial review of a determination by the Secretary of Labor

under this clause.


There is yet another area where the Neufeld memo does not describe USCIS lawful procedures.* There is no requirement that USCIS concern itself with an LCA filed at separate locations, nor any statutory authorization for such a USCIS inquiry.* Once the initial petition is approved, the employer may reassign the H-1B worker to subsequent locations by the expedient of filing a new LCA. **That issue of short-term assignments and the procedure for filing amended petitions is described by regulation, as follows, below, at Subsection F of this Chapter.* Given the ability of an employer to file new LCAs and amend an I-129 petition - and the fact that USCIS has technical means to detect violations of worksite assignment rules -- there is absolutely no need for production of the sort of third-party documents demanded by USCIS at the time of the petition filing to enable USCIS to carry out a post-issuance investigations and compliance role. *****

That presupposes a USCIS investigative authority, yet the bureau has no statutory enforcement powers over LCA compliance.* USCIS cannot initiate criminal investigations or arrest people. In fact, it does not even have authority to subpoena, fine or penalize anyone administratively. It has no statutory jurisdiction over LCA wage and hour compliance, which is reserved by law to the Department of Labor Wage and Hour Division. The sole power given by statute to USCIS in this area is to deny a petition or revoke one that has already been granted pursuant to notice from USDOL of a willful violation of an LCA provision. Otherwise, it can only refer information in its possession about a suspected violation to ICE for follow-on investigation and potential prosecution.* In this respect, USCIS is also encroaching upon the investigative role with DHS reserved to ICE under the Homeland Security Act.* ICE has authority with USDOL WD to conduct joint "random audits" of employers found to be "willful violators." *Otherwise, it is up to other agencies to investigate LCA violations, impose any administrative penalties, or to refer a case for prosecution to the US attorney.

In effect, Congress set up a system of limited powers and divided responsibility between legacy INS and USDOL.* Pursuant to the creation of DHS, and the splitting of USCIS and ICE, there is a further division of authority.* Under that statutory schema, no agency has statutory power to initiate investigations over all H-1B employers, and no agency is authorized to initiate on its own initiative an investigation into wage and hour compliance issues without first receiving a complaint from an "aggrieved party". The powers of DOL to "look behind" the validity of any LCA filed is indeed circumscribed, and the statutory powers of USCIS to, itself, investigate fraud are non-existent, as it has no law enforcement powers, which are reserved under the Homeland Security Act to ICE.** The statutory scheme controlling LCA enforcement is strictly a complaints-driven process, as laid out at INA § 212(n), *8 U.S.C. § 1182(n) : US Code - Section 1182 , with USDOL authorized to investigate complaints, hold hearings, and impose sanctions for violations found, as follows:


(C) The Secretary of Labor shall review an attestation filed

under this subsection only for completeness and obvious

inaccuracies. Unless the Secretary of Labor finds that an

attestation is incomplete or obviously inaccurate, the Secretary of

Labor shall provide the certification described in section

1101(a)(15)(H)(i)(b1) of this title or section 1101(a)(15)(E)(iii)

of this title within 7 days of the date of the filing of the


(3)(A) The Secretary of Labor shall establish a process for the

receipt, investigation, and disposition of complaints respecting

the failure of an employer to meet a condition specified in an

attestation submitted under this subsection or misrepresentation by

the employer of material facts in such an attestation. Complaints

may be filed by any aggrieved person or organization (including

bargaining representatives). No investigation or hearing shall be

conducted on a complaint concerning such a failure or

misrepresentation unless the complaint was filed not later than 12

months after the date of the failure or misrepresentation,

respectively. The Secretary of Labor shall conduct an investigation

under this paragraph if there is reasonable cause to believe that

such a failure or misrepresentation has occurred.

(B) Under the process described in subparagraph (A), the

Secretary of Labor shall provide, within 30 days after the date a

complaint is filed, for a determination as to whether or not a

reasonable basis exists to make a finding described in subparagraph

(C). If the Secretary of Labor determines that such a reasonable

basis exists, the Secretary of Labor shall provide for notice of

such determination to the interested parties and an opportunity for

a hearing on the complaint, in accordance with section 556 of title

5, within 60 days after the date of the determination. If such a

hearing is requested, the Secretary of Labor shall make a finding

concerning the matter by not later than 60 days after the date of

the hearing. In the case of similar complaints respecting the same

applicant, the Secretary of Labor may consolidate the hearings

under this subparagraph on such complaints.

(C)(i) If the Secretary of Labor finds, after notice and

opportunity for a hearing, a failure to meet a condition of

paragraph (1)(B), a substantial failure to meet a condition of

paragraph (1)(C) or (1)(D), or a misrepresentation of material fact

in an attestation -

(I) the Secretary of Labor shall notify the Secretary of State

and the Secretary of Homeland Security of such finding and may,

in addition, impose such other administrative remedies (including

civil monetary penalties in an amount not to exceed $1,000 per

violation) as the Secretary of Labor determines to be

appropriate; and

(II) the Secretary of State or the Secretary of Homeland

Security, as appropriate, shall not approve petitions or

applications filed with respect to that employer under section

1154, 1184(c), 1101(a)(15)(H)(i)(b1), or 1101(a)(15)(E)(iii) of

this title during a period of at least 1 year for aliens to be

employed by the employer.

(ii) If the Secretary of Labor finds, after notice and

opportunity for a hearing, a willful failure to meet a condition of

paragraph (1), a willful misrepresentation of material fact in an

attestation, or a violation of clause (iv) -

(I) the Secretary of Labor shall notify the Secretary of State

and the Secretary of Homeland Security of such finding and may,

in addition, impose such other administrative remedies (including

civil monetary penalties in an amount not to exceed $5,000 per

violation) as the Secretary of Labor determines to be

appropriate; and

(II) the Secretary of State or the Secretary of Homeland

Security, as appropriate, shall not approve petitions or

applications filed with respect to that employer under section

1154, 1184(c), 1101(a)(15)(H)(i)(b1), or 1101(a)(15)(E)(iii) of

this title during a period of at least 2 years for aliens to be

employed by the employer.


Recall, as well, that one of the provisions of law that the Durbin-Grassley Bill and 2009 House CIR Bill would change is to allow USDOL to initiate its own investigations, something that it cannot now do except under limited circumstances where it receives "specific credible information" that provides reasonable cause to believe that the employer has committed a willful failure to meet conditions of the H-1B program.


  1. 8.** Plain-Language and Legislative History Indicates Congress Intended LCA Enforcement Limited to DOL "Random" Investigations of H-1B Dependent Employers and Sanctions of "Willful Violators"

The requirement for a Labor Condition Application (LCA) as part of the H-1B application was first introduced by the Immigration Act of 1990, P.L. 101-649, 104 Stat. 4978 (1990)(herein "1990 Act" or "IMMACT90").** *****

Under a compromise provision in the 1998 Amendment, which the House rejected a measure to ban H-1B outsourcing, so-called "Job Shops"; the authority to police LCAs was split - USDOL gained power to investigate the new category of "H-1B dependent" and "willful violators", while legacy INS was not delegated specific powers to enforce LCA-related wage and hour violations. **Only limited enforcement powers were authorized by statute, pursuant to the intent of Congress in its original construction of the statute. ***

The American Competitiveness and Workforce Improvement Act of 1998 (Title IV of P.L. 105-277) added new attestation requirements for recruitment and layoff* protections, but only for firms that are "H-1B dependent" (in general, at least 15% of workforce, but the definition varies according to a range by the size of the employer).* These attestations sunsetted at the end of FY 2001 (but were re-imposed in 2004 as part of P.L. 108-447).* H-1B filers found to be "Willful Violators" are another group subject to these additional attestation requirements, and are subject to random audits by USDOL. The House version of the 1998 bill coming out of the Judiciary Committee contained a provision that would have further restricted so-called job-shops, but that was removed before the bill came to a vote.[69]

Under regulations published in 2000, USDOL specified that it had authority to investigate violations of LCA provisions. [70] 

The powers of legacy INS in this area were further defined and limited by the creation of DHS in 2003 and the split of INS into two components.* ICE is a law enforcement agency, while USCIS is supposed to deal strictly with the adjudication of benefits.* USCIS is not an investigative body, and has no law enforcement powers.* It cannot initiate criminal investigations or arrest people. In fact, it does not even have authority to subpoena, fine or penalize anyone administratively. ****

Today, the Labor Department has sole legal power to enforce all aspects of the attestation program impacted H-1 dependent and willful violators except in instances where an American worker claims that a job should have been offered to him or her instead of an H-1B nonimmigrant working for that discrete and limited set of H-1B employers. In such cases, an arbitrator appointed by the Federal Mediation and Conciliation Service will decide the issue. [ACWIA Sec. 413(b), Ftn. 107 (codified at INA sec. 212(n)(5)).][71]

The Labor Department is able to investigate an employer using the H-1B program without having received a complaint from an aggrieved party under certain limited circumstances where it receives specific credible information that provides reasonable cause to believe that the employer has committed a willful failure to meet conditions of the H-1B program, has shown a pattern or practice of failing to meet the conditions, or has substantially failed to meet the conditions of an LCA in a way that affects multiple employees.* DOL has interpreted these provisions as authorizing investigations based upon profiling.* The actual practice of USCIS with regard to LCA compliance - particularly, the operation of the FDNS-DS data-mining and field investigations unit to detect LCA violations post-issuance of petitions -- is clearly inconsistent with statute.

  1. 9.** FDNS-DS Justified by Skewed H-1B Compliance Assessment

In September of 2008 USCIS issued a report alleging a pattern of alleged systematic fraud in the H-1B program and a high rate of willful and technical violations in petitions audited.[72]* This has led to heightened scrutiny of H-1B petitions adjudications, in general, and changes in processes and forms that will facilitate data mining and surveillance of preparers and employers, but without statutory authorization.* That report has been shown to be highly flawed in methodology and its conclusions about an allegedly high rate of "fraud" among H-1B employers.* It appears to be based upon data from 246 ongoing FDNS investigations files rather than a truly random sample larger population of normal H-1B petitions received at the Service Centers, which skewed the results. *The predictable results of the "audit" was due to the peculiar categorization of many normal characteristics of H-1B employers, particularly in the IT consulting field - recent start-ups, small size firms, and low initial revenues, with third-party contracts -- as "articulable fraud indicators."

*Shortly after the USCIS report appeared, word leaked out that USCIS would make various changes in the way that H-1B petitions are examined, including[73]:

the use of "independent open-source data" to obtain information about visa seekers or the companies that file the petitions on their behalf. For instance, USCIS officials could check petitioning companies against commercially available records to make sure that they are legitimate businesses.


In its 2008 audit of 246 "randomly selected" H-1B filings, USCIS allegedly found that 21 percent of the filings contained either willful or technical violations. *The agency characterized some of these as criminal frauds, such as forged documents, fake degrees and shell companies.* In addition to false information in filings, USCIS acknowledged that it was indeed investigating compliance related to wages and hours:

USCIS investigators discovered on visits to work sites that some employers weren't paying prevailing wages to H-1B holders. In other cases, the report said, companies had "benched" visa holders when work wasn't available for them, or had them doing different jobs than the ones that were listed on their H-1B applications.[Id.]

The FDNS-DS system works by aggregating data from filings and field investigations, creating algorithms to profile potential "risk" categories for fraud and then assigns a value based on mathematical models to each application, profiling employers, foreign workers and counsel as potential criminals.

The agency has taken this a step further, of course, from the realm of anonymous data mining into that of targeted analysis, a "verification based approach", of the individuals and specific companies involved in an application that meet internal criteria* for "fraud". [74]** These profiling risks are now extended to virtually all H-1 and L-1 petitions filed with USCIS.* On September 28, 2008 DHS issued dual announcements that it would be conducting "random" fraud and benefits audits of non-immigrant employment-based applications. *Recall, that under the INA, USDOL has sole jurisdiction to conduct random fraud investigations, but that these are restricted by law to H-1B "willful violators", not the wider population of H-1B filers.* *Second, the agency announced the formation of fraud and benefits task forces that involves sharing data and investigative resources with other federal agencies.** Thirdly, USCIS published a study dated September, 2008 of random audits it had performed that alleged a high percentage of fraud and technical violations in the H-1B renewal applications it audited.

Of course, ICE already maintains the ability to do full-spectrum data analysis through two systems, NETLEADS and ICEPIC, discussed in the previous book.* These systems allow investigators access to a wide spectrum of government and open source databases and provides analysts automated tools to detect, analyze and visualize subtle patterns and relationships indicating criminal activities such as fraud, as well as terrorism.

While USCIS examiners do not have direct access to NETLEADS and ICEPIC[75], once an application is flagged as having fraud or other criminal indicators, the case is transferred to ICE investigators, who will run the file for leads.* The new LCA system and revisions to application forms, in combination with stepped up DOL Wage & Hour Division field operations, are designed to broaden the amount of data entering the system, and make the system more sensitive, triggering investigation at the front-end of the application process.* As a result, once a company is profiled, all of its petitions are treated as fraud-related, and approved petitions revoked without any specific credible evidence of actual fraud in the case. [See, Sec. (J)(9), below]*


11.* LCA ENFORCEMENT:* DOL Changed Its LCA Procedures in Anticipation of Change in Law that Did Not Materialize

In a near-simultaneous announcement as the FDNS-DS "random audits", DOL announced a change in procedures meant that the H-1B Labor Condition Attestation (LCA) would no longer be instantly valid upon electronic filing, and there would henceforth be a delay of seven days prior to approval.** While it was not immediately stated, the purpose of such a delay would be to allow DOL time for further investigation of the LCA and its filers.* Recall that the LCA compliance system in place by law is complaints driven, and the current statutory scheme allows only review for "completeness and accuracy", not investigation for fraud without good cause.* This has in fact led to additional delays in filings and potential risk involving disputed prevailing wage rates and data sources, as well as intensified efforts to deter or block H-1B filings by groups opposed to the H-1B program.

Indeed, USCIS announced on March 10, 2010, that it will not extend the period in which it temporarily accepted H-1B petitions filed with uncertified Labor Condition Applications (LCAs). USCIS explained that processing delays associated with the Department of Labor's (DOL) "iCERT" online filing system, USCIS had responded to requests from the public by temporarily allowing H-1B petitions to be filed with uncertified LCAs. This accomodation went into effect on November 5, 2009, and expired on March 9, 2010. USCIS said that as of March 10, 2010, it is rejecting any H-1B petition filed without an LCA certified by the DOL.* That measure gravely complicated a number of H-1B cap filings that had to be submitted with approved LCAs during the five-day filing window following the initial day of the annual H-1B lottery, April 1.

The old LCA form and attestation system dates back to December 20, 2000.* DOL regulations then went into effect imposing an attestation procedure whereby employers sign off to certain stipulated facts in addition to prevailing wages, including so-called H-1B dependency, and that the H-1B employee is paid the same or greater wage than American workers in the same job category employed by the same company at the specified location.* The employer is also required to document these items in a Public Access File (PAF).

In a new USDOL enforcement twist that may negatively impact petitioners, an Administrative Law Judge has ruled that payment of more than the wage indicated on the LCA is a technical violation that can lead to payment of back wages[76]: *

"[T]he Prosecuting Party was not paid at the wage identified on the LCA, which was derived from a survey, but rather was paid an actual rate of thousands of dollars more. The regulations require employers to pay H-1B non-immigrants a required wage rate, which is the greater of the "actual wage" or the "prevailing wage". 8 U.S.C. §1182(n)(1)(A)(I) and (II). Since the amount paid to the Prosecuting Party was more than the prevailing wage reported on the LCA, he would have been required to be paid that actual wage."

The requirements upon employers related to filing an LCA -- to post the LCA for ten business days, notify any union bargaining representative, and maintain a PAF -- provide a wealth of unwanted compliance exposure, short and long term, to companies.* A DOL investigation and possible DHS task force action, can be triggered in several ways: 1), anyone who claims to be "adversely affected" by alleged LCA violations; 2), an investigation can result from DOL routine monitoring based upon profiling or ongoing investigation; or 3), the request for investigation can come from another agency, such as ICE, FBI, or DOS-DSS which has detected a pattern of suspicious activity related to an H-1B matter.

During a field investigation, DOL investigators typically demand to see the following categories of documents that should be maintained as part of the PAF:

  • Payroll records;

  • List of similarly-situated workers and their wages;

  • Copies of LCAs and H-1B petitions;

  • Job descriptions and summaries of duties that may differ between H-1B employees and non-H-1B employees;

  • Accountings of benefits and deductions for H-1B employees and non-H-1B employees.

Furthermore, if the petitioning company has been found to be a willful violator or is classifiable as H-1B dependent, the employer is also required to have made "good faith" efforts to recruit U.S. workers for the position offered.* This, also, must be documented in such cases.

The administrative consequences of an adverse finding by DOL can range from fines,*repayment of back wages, and debarment from filing new LCAs for a period of up to three years, and random audits for five years following the determination.* But, this pales in comparison to the indirect consequences of having derogatory information about one's person or company splashed around in multi-agency databases.* This consequence is rivaled only by the potential criminal liabilities that can be imposed against the employer, the beneficiary, and to counsel if there is a finding of fraud and the case is referred for prosecution by the U.S. Attorney.

12.* **H-1B FRAUD ASSESSMENT NOT RANDOM SAMPLE - Results Based Upon FDNS-DS Investigative Files of Suspected H-1B Dependent Firms and Willful Violators

*Firms tagged as willful violators[77] or to be H-1B dependent by the formula provided by DOL regulation and guidance must be even more vigilant about compliance, particularly with the "good faith" recruitment requirement and the displacement of U.S. workers provisions.[78]* The DOL Compliance Assistance Employment Law Guide advises[79]:

Additional rules apply to H-1B dependent employers and willful violators of the H-1B rules. These rules sunsetted for H-1B employment under LCAs filed after September 30, 2003 but were restored effective March 8, 2005 by the H-1B Visa Reform Act of 2004. An H-1B dependent employer is, roughly, one whose H-1B workers comprise 15% or more of the employer's total workforce. (Different thresholds apply to smaller employers.) H-1B dependent employers who wish to hire only H-1B workers who are paid at least $60,000 per year or have a master's degree or higher in a specialty related to the employment can be exempted from these additional rules.

H-1B dependent employers and willful violator employers must attest to the following three elements addressing non-displacement and recruitment of U.S. workers:

  • The employer will not displace any similarly employed U.S. worker within 90 days before or after applying for H-1B status, or an extension of status for any H-1B worker;

  • The employer will not place any H-1B worker employed pursuant to the LCA* at the worksite of another employer unless the employer first makes a bona fide inquiry as to whether the other employer has displaced or intends to displace a similarly employed U.S. worker within 90 days before or after the placement of the H-1B worker; and

  • The employer, before applying for H-1B status for any alien worker pursuant to an H-1B LCA, took good faith steps to recruit U.S. workers for the job for which the alien worker is sought, at wages at least equal to those offered to the H-1B worker. Also, the employer will offer the job to any U.S. worker who applies and is equally or better qualified than the H-1B worker. This attestation does not apply if the H-1B worker is a "priority worker" within the meaning of Section 203(b)(1)(A), (B), or (C) of the INA.

In its 2008 audit of 246 randomly selected H-1B filings, USCIS allegedly found that 21 percent of the filings contained either willful or technical violations.* The agency characterized some of these as criminal frauds, such as forged documents, fake degrees and shell companies.* In addition to false information in filings:

USCIS investigators discovered on visits to work sites that some employers weren't paying prevailing wages to H-1B holders. In other cases, the report said, companies had "benched" visa holders when work wasn't available for them, or had them doing different jobs than the ones that were listed on their H-1B applications.[Id.]

While it characterizes its activities as part of the examination process, FDNS-DS has clearly been conducting investigations of H-1B wage and hour matters outside the USCIS legislative mandate.** *The sample pool of H-1B employers upon which the "fraud assessment" was based was not random, but instead drawn from the FDNS-DS investigative files containing some cases the study acknowledges were already been processed and referred for ICE investigation.** The assessment, if not itself fraudulent, was based upon a methodology that skewed the results in a predictable fashion.** The USCIS is operating an unlawful investigations program is based in misleading data that encroaches upon another agency's enforcement mandate. **While the consequences of litigation to enjoin the unit's operations should be carefully thought out, as this raises the stakes in litigation for the government, DHS is out of compliance with current law.*


21.* DHS CRIMINALIZES LAWFUL PRACTICES: Temporary Assignment of H-1B Employees to Client Work Sites

There is nothing in existing law or regulation that states that an H-1B worker may not be temporarily assigned for a prolonged period of one year to a client work site.* Temporary assignments at client sites are permitted provided that certain conditions are met.

In order to avoid violation of the terms of status as specified in the original H-1B petition and LCA, however, the original petitioning employer may have to take additional steps to either 1) amend the petition and file a new LCA or 2) a second H-1B petition may have be filed by the end client for the worker.* The need for approval of amended or subsequent petitions prior to visa renewal is an important prerequisite prior to visa renewals.

The second approach is more likely to succeed without USCIS challenge (and attendant delays).* The end client may file a new H-1B petition for the worker, and directly employ that worker.* Payment of salary may be provided out of funds in the existing contractual or other provider-client relationship with the worker's current H-1B employer.* However, at the end of the period of petition validity, the original employer would be required to again petition for the worker, if the beneficiary is to continue H-1B employment.* An H-1B employee who returns to the original employer at the completion of an assignment at a client site may raise red flags that the original petitioner is operating a "job shop", a practice that has been increasingly discouraged.

If the overarching factor in the decision is to establish precedent for future hires with prolonged client site assignment, then the original petitioner may wish to submit an amended petition with a new LCA.* However, that course may result in issuance of a Request For Evidence (RFE), requiring significant legal work to address, and further appeal on the issue may be required.

*In March, 2010, USCIS announced that it will be issuing a revised I-129 with new sections for the basis of filing an amended petition. *The current Adjudicator's Field Manual and advisory letters state that H1B petitions do not always need to be amended when there is simply a change in the location of employment. It is necessary to have a valid labor condition application (LCA) for any new work location beyond a short-term placement.

Under the Neufeld interpretation, USCIS will require amending the H1B petition whenever a new LCA is filed because the employee's job location changes, which present additional burdens to consulting companies and other companies with roving or traveling employees. The H1B amendment is not simply a brief update or shortened filing.* Under the Neufeld memo, the update or amendment will need to be accompanied by a significant amount of additional documentation, which could make compliance additionally burdensome and costly for these employers.

Generally, a new LCA is required if the petitioner fails to post the LCA before the H1B employee commences work at the new location.* USCIS has also stated that a new LCA triggers a requirement to file an amendment, and that failure to do so may be a violation of status leading to revocation.* This raises several issues that involve a new USCIS interpretation of rules that were not previously published and there is no concensus agreement as to their meaning.* Where there was no proper posting at the customer worksite, USCIS may retroactively enforce the posting and amendment requirements.

The wording of the Neufeld memo* appears to state that a new job location triggers a requirement to obtain a new certified LCA (pp. 2-3) and* file an amendment to the Form I-129 and submission of a '"complete itinerary"(p. 8).* Failure to do so, even for short-term assignments of less than 30/60 days, may be construed under a literal reading to be a violation of status leading to revocation.*

This new interpretation of rules was not previously published as a regulation, and there has been no consensus agreement that the regulations actually require this.* However, where there was no LCA posting at the customer worksite, USCIS has retroactively enforced the posting and amendment requirements, leading to NOIRs.*

On October 23, 2003, INS issued an advisory letter that no amended Form I-129 would have to be filed, just a new LCA.* Just as importantly, the Shotwell letter stated, the LCA must be posted even if the new worksite is within the same geographic area (metropolitan area or commuting area) of the original LCA.* In other words, LCA filing and "posting" both seem to be a requirement of a legal authorization to work and of maintenance of status.* This is not the way that many others have always interpreted the regulations.*

The issue is further complicated by the often misunderstood DOL rule that if the employer has an approved LCA with an open slot valid for the same occupation within the same MSA, that LCA must be used and posted, and a copy put in that employee's Public Access File, even for short-term or roving employees.* If the employer has a valid, approved LCA for that location, but there are no open slots, the employer must file a new LCA even though the assignment is short-term.

The Neufeld memo indicates that USCIS has made a strict reinterpretation and may move to enforce it for past violations.* However, if USCIS does exercise jurisdiction over this matter, it may be challenged on the same grounds that USCIS is attempting to enforce DOL jurisdiction more generally in the area of investigating and sanctioning LCA violations related to unauthorized third-party assignments. [See, Introduction, Secs. 13-16]
Many attorneys previously read the regulations, and the October 23, 2003 Shotwell letter confirmed, that no new I-129 need be filed if the H1B worker moves to a new geographic location covered by an existing (i.e., effective) LCA.* So, if the worker stays within the same Metropolitan Statistical Area (MSA), the USCIS should not be claiming that such moves constitute a visa violation.* *However, those who commence longer-term work at a location that is not within the same MSA as that stated on the LCA would be working in violation of the terms of the original I-129, unless that too is amended.
USCIS may now take action against an H1B worker who is working at a customer worksite where the LCA was not posted or a PAF not kept for the requisite three years after the start of work or one year after termination, treating the worker as one who has been working legally and without authorization -- and may have his/her visa revoked and that worker will be ordered removed from the United States, likely leading to significant problems for other petitions filed by the company.


Under the existing regulations, the issue of whether filing an amended petition is required by the original employer is required depends upon the period of time the worker will be assigned off-site.

The general rule is as follows:

Short Term Placement--20 C.F.R. §655.735(c). An H-1B in the U.S. under an LCA may be sent to a new worksite which is not covered by an LCA in the occupation but only up to a maximum of 30 days each year and up to 60 days each year if the H-1B spends substantial time at a permanent worksite, if s/he continues to maintain an office or work station at the permanent worksite and if her U.S. residence or place of abode is located in the area of the permanent worksite.*


That section imposes further conditions on such short-term assignments, as follows:

(2) The employer shall not place, assign, lease, or otherwise contract out any H-1B nonimmigrant(s) to any worksite where there is a strike or lockout in the course of a labor dispute in the same occupational classification(s) as that of the H-1B nonimmigrant(s).

(3) For every day the H-1B nonimmigrant(s) is placed or assigned outside the area(s) of employment listed on the approved LCA(s) for such worker(s), the employer shall:

(i) Continue to pay such worker(s) the required wage (based on the prevailing wage at such worker's(s') permanent worksite, or the employer's actual wage, whichever is higher);

(ii) Pay such worker(s) the actual cost of lodging (for both workdays and non-workdays); and

(iii) Pay such worker(s) the actual cost of travel, meals and incidental or miscellaneous expenses (for both workdays and non-workdays).


ROVING EMPLOYEE - The regulations define a new type of H-1B employee whose work is "peripatetic" (roving) in nature, in that the normal duties of the occupation require frequent travel.

20 CFR §655.17. "Peripatetic" is included under the definition of "place of employment."

Peripatetic workers may travel constantly, but may not spend more than five days in one place. For such peripatetic workers, a new location is not considered a new "worksite," and therefore does not require a new LCA.

Similarly, H-1B workers who travel occasionally on a casual short-term basis (not exceeding 10 days) to a new location are not considered to have a new worksite with new LCA requirements.


Id. This type of situation is also covered under the "place of employment" definition.

Although, in these cases the employer is not required to take one of the three steps above to maintain compliance, the employer is required to pay travel expenses for each day the H-1B employee is traveling (both weekdays and weekends).


20 CFR §655.735(b)(3).

The short-term placement rules permit an H-1B worker to travel up to 30 or 60 days per year to another "place of employment." NOTE: However, the employer may not use the short-term placement rules in any area of employment for which the employer has a certified LCA for the occupational classification.* If the employer has such a certified LCA with an open slot, then the employer must use that and add a copy of that LCA to the employee's public access file. If the employer has a certified LCA, but it doesn't have any open slots, then the employer must file a new LCA. *

20 CFR §655.735(e) and (f).

The regulations specifically prohibit employers from continuously rotating H-1B employees to short-term placements in a manner that would defeat the stated purpose of these rules to give employers flexibility and enough time to file a new LCA.

Consult the regulations for a detailed description of this rule.

20 CFR §655.735.

Also note that the filing of a new LCA may still require the filing of an amended H petition due to material change in employment.


LONG-TERM ASSIGNMENTS: A Question of Control


Any external assignment presupposes that the original H-1B employer continues to maintain control over the employment of the H-1B worker while (s)he is assigned at the client site.* In general, the definition of control over employment for this purpose is contained in the following definition [8 CRF Sec. 214(h)(4)(ii)]:

United States employer means a person, firm, corporation, contractor, or other association, or organization in the United States which:

( 1 ) Engages a person to work within the United States;

( 2 ) Has an employer-employee relationship with respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee; and

( 3 ) Has an Internal Revenue Service Tax identification number.

According to the regulation above, there are six factors that go to establishing the requisite "employer-employee relationship."* The issue for litigation is two-fold.* First, may the definition employed by USCIS focus upon the issue of "control" to the exclusion of the other five?* And, second, without a statutory definition of "control" - or any other authority -- is the agency free to apply a common law definition to, as a de facto rule, to deny benefits to a category of applicants who can clearly establish the other four elements?* *In an alternative reading, in which control subsumes hire, fire, supervise, may USCIS read this to exclude all other considerations?

Pre-litigation Strategies - Responding to RFEs

In responding to Neufeld memo RFEs, in a case that is within the "approvable" scenarios, but the petitioner is unable to provide full range of evidence required, one may argue:

  • In cases where all available evidence was provided but an RFE is received,* explain why the requested evidence is unavailable, or must be withheld or redacted for business confidentiality reasons) - the Neufeld memo requires (p 8): "relevant portions of valid contracts between the petitioner and a client* . . .", rather than complete disclosure.

  • The memo (p 4) admonishes examiners to take a flexible approach: "The common law is flexible about how these factors are to be weighed. The petitioner will have met the relationship test, if, in the totality of the circumstances, a petitioner is able to present evidence to establish its right to control the beneficiary's employment. In assessing the requisite degree of control, the officer should be mindful of the nature of the petitioner's business and the type of work of the beneficiary . . . These scenarios are meant to be illustrative examples and are not exhaustive. Officers may see a variety of situations and factors when reviewing an H-1B petition."

  • *The "preponderance of the evidence" rule still applies.** The memo further states (p 3), echoing Clackamas: "The petitioner must be able to establish that it has the right to control over when, where, and how the beneficiary performs the job and USCIS will consider the following to make such a determination (with no one factor being decisive)"

  • If the case does not clearly fit within one of the approvable scenarios, the respondent may offer a technical argument as to why it should nonetheless be approved:


-******* *Demonstrate "right of control" by other means:* cite (p4), "These scenarios are meant to be illustrative examples and are not exhaustive. Officers may see a variety of situations and factors when reviewing an H-1B petition."

-******* One may always argue the element of control has been firmly established by the no-compete clause of a valid employment contract which is binding upon the petitioner and the beneficiary to the exclusion of the interest and control of any third parties. [such a contract is now MANDATORY for all H-1B submissions]* There is a presumption under the common law doctrine of Privity of Contract that third parties can have no control over either signatory to a valid employment contract . The element of control is specified within the four corners of a valid employment contract.* In this approach, the petitioner must demonstrate the validity of contract and a history of actual control.


-******* Fundamental legal Argument to USCIS:** Preponderance Of The Evidence Standard.* The regulation, 8 C.F.R. 214.2(h)(4)(ii) , defines the H-1B "employer-employee relationship" (the essential element)* defined by the "right to hire, pay, fire, supervise, or otherwise control the work of any such employee."* Demonstration of four of the five specified elements meets the regulatory definition, under POTE; control is not the legally essential element, only one optional factor out of many possible factors. [cite Clackamas, Darden, NLRB v. United Ins. Co. of America, 390 U.S. 254, 258 (1968)]


In any filing of an amended petition or second petition, USCIS will look for evidence that the terms of control over the employment and activities of the H-1B employee are clearly spelled out in an agreement between the original employer and the end client. If a copy of a contract or other binding agreement is not included, the Service will likely issue a Request For Evidence (RFE).* *The USCIS approach taken to justify this has varied over time.* Many RFEs have included boilerplate language stating "[t]his Service accepts that you are the employer, not an agent, and that you retain control over the beneficiary's employment. A copy of the agreement(s) are needed to establish that the employment of the beneficiary is not speculative in nature, and that the beneficiary will be employed in fact. Service regulations specify that aliens admitted to the United States as nonimmigrant workers must have services to perform...."

In 2007, AAO first issued a line of denials that cited two Supreme Court cases, Clackamas (2003) and Darden (1989) in denying L-1 for managing directors.* Cases cited held that where statute is ambiguous about definition of employment, agency may "fill" in common law meaning of term, which implies "control".* Under the 1990 Act, non-immigrants in H-1, L-1 beneficiaries must be employees of the petitioner. **The conclusion drawn by some bright bulb at USCIS seeking to deny an employee-owner in spite of the precedent decision, Matter of Aphrodite Investments Limited, 17 I&N Dec. 530 (Comm.1980) and several decades of previous AAO precedent to the contrary[80] - an owner is not controlled, thus not an employee, therefore not eligible for H or L.* That "control" dicta, which actually emerged several years earlier with Service Center decision citation of the Defensor decision, soon spread to other types of cases.

In common-law terms, the question of the "control" over the employment of an H-1B worker is actually circular.* The answer comes down to which entity, the original H-1B petitioner or end client, actually hires, pays, supervises and maintains the power to fire the worker.* While a client may order the worker to cease work and leave the premises, it is ultimately the party that pays the wage that determines whether the H-1B employment continues. *Since the H-1B employee may be reassigned by the employer, the question of termination is critical.* Even if *third-party client orders an H-1B worker to stop work on a project and even to leave the premises, that is not a "firing."* The petitioner may reassign that worker to another work site the next day, and if that assignment continues, can under the regulations file a new LCA and/or amend the petition. *

The circumstances under which the third-party client may assess the work being performed and even order the H-1B beneficiary to stop work would normally be spelled out in the third-party contract, but it is not really relevant to determining whether the client "controls" the employment.* Issues related to hiring, firing, payment and assignments are spelled out in the employment agreement, which MUST contain a non-compete clause, or similar language that clearly spells out that the beneficiary is to accept no employment by a third-party that competes with the petitioner during the duration of the contract. **The Neufeld memo imposes additional burden of documentation, including a showing of "control" and related factors as tax treatment of the beneficiary, payment of benefits, means of supervision, employee evaluations, who provides tools, etc [See, Sec. 1., above].* But, again, these factors are not dispositive of the issue of establishing the employer-employee relationship.

Questions may also arise as to which entity controls day-to-day supervision of the work product.* While the client may have significant input into that product, and the work that went into it, ultimate control over the terms and conditions of the H-1B employee's work - hours worked, performance review standards, specification of the job duties - ultimately rests with the employer, in fact, as specified in the contract between the H-1B petitioner and its client.* The relevant terms of the contract for services between the H-1B petitioner and its client should not contradict those specified in any employment contract with the worker, but provided that there is no conflict, the assumption should be that the question is determined by the employment contract, which is presumed valid and binding in employment law.

*The Neufeld memo raised other related issues for litigation, which also presumably hinge upon the agency's common law interpretation, and are likely to receive Skidmore or lesser scrutiny.* The Neufeld memo communicated USCIS will be more strictly enforcing its interpretation of contested rules against the self-employment of investors as sole proprietors and small group practices, will bar the H-1B hiring of persons it identifies as independent contractors, and will be looking to label H-1B petitioners which outsource workers as employment agencies.

The Neufeld memo also signals that USCIS will also begin cracking down on self-employment of executives and independent contractors running their own consulting firms.** This is legally problematic, given that the courts have recognized that there is a legal distinction between the proprietor and the company that he runs.***

It is significant that the Neufeld memo also contains the agency's open admission that the doctrine of "control" underlying these new enforcement effort is found in the common law rather than in statute:

The lack of guidance clearly defining what constitutes a valid employer-employee relationship as required by 8 C.F.R. 214.2(h)(4)(ii) has raised problems, in particular, with independent contractors, self-employed beneficiaries, and beneficiaries placed at third-party worksites. The placement of the beneficiary/employee at a work site that is not operated by the petitioner/employer (third-party placement), which is common in some industries, generally makes it more difficult to assess whether the requisite employer-employee relationship exists and will continue to exist.

The Neufeld memo almost seems to invite litigation of these issues. **That may have potential unintended legal consequence, as without a statutory authority or any solid attachment to existing regulations, USCIS interpretation of the issue of "control" over H-1B has only limited sway over reviewing courts.**

The courts need pay the agency no particular deference to USCIS in the following areas:

  • Agency interpretation of law outside its own enabling statute[81];

  • unpublished rules, "de facto rules or binding norms",* do not have "force of law" and thus are not owed Chevron-style deference;

  • *and, more generally, agencies are traditionally not viewed as having any particular authority in interpretation of common law issues - in questions of the law absent clear statutory mandate for agency interpretation, "questions of law are for the courts rather than agencies to decide".[82]** The USCIS invocation of common law creates another significant legal vulnerability for the agency in which judges are likely to hold against the agency's interpretation.* Where there is an apparent conflict between the standards and definitions found in "administrative common law" and the APA, the standards found in the APA trump those employed in common law, even long-standing standards that have guided agency deliberations for decades.[83]** The first sentence of Section 706 of the APA requires a reviewing court to "decide all relevant questions of law" and to "interpret constitutional and statutory provisions." In the years after enactment of the APA, courts read this as an "explicit" statutory command in all APA actions that "questions of law are for the courts rather than agencies to decide."* Even after Chevron, federal appellate courts that focus on the APA rather than on administrative common law continue to read Section 706 as requiring de novo review on issues of law.** The courts are the final arbitrator of these issues, and Mead made clear, informal agency interpretation may be closely reviewed and is owed little deference.* As reviewed by Justice Souter, the degree of deference given agency interpretation of such matters may . **

  • The above APA principle carries over into REAL ID, the statute that clarified that although the Circuit Courts have no jurisdiction over USCIS discretionary determinations in non-immigrant visa petitions, the Courts of Appeal may still carry out de novo review of questions of law and constitutional issues.

  • Furthermore, Congress declined to delegate to USCIS how it is to interpret the terms "employee" and "control" for H-1B purposes, as indeed the statute itself is conspicuously silent in this regard.[84]** Given that the agency has not even promulgated its definitions by regulation, its interpretation of "employee" and "control" are owed nothing more than "Skidmore" deference, or a lesser level of deference, and the meaning of these terms should be interpreted consistently as possible with how they have been treated in other APA cases.* *In keeping with traditional APA standards, the intent of Congress is clear that the meaning of the terms "employee" and "control" in this context is a question of law the courts not the agency should decide, and that the meaning of that term should be consistent with that which is commonly accepted by the courts and other agencies in APA matters.* USCIS is not free to read into the common law any power to apply its own exceptional results-driven interpretation to this term; and, the dicta it applies from Defensor that companies that outsource their employees are "token employers" is not a reasonable interpretation.* That decision is idiosyncratic, as detailed elsewhere in this chapter, and cannot be taken as sufficient authority for that doctrine.



22. DHS POLICY IS DISCRIMINATORY: Selectively Targets Business Immigration, Particularly Indian and Chinese IT Firms


Business immigration cases, and those who practice in this area, are systematically probed and analyzed for all manner of factors, only some of which have anything to do with* serious crime.* USCIS scans all non-immigrant business petitions and documents.* Personal and corporate documents are data-mined and information pooled and made available for use by at least 16 Intelligence Community agencies, and shared with law enforcement, and even with foreign governments with which the US has signed information-sharing agreements.*

Terrorism and national security concerns continue to justify much of the spending for these programs, but document and benefits fraud has become associated as a matter of doctrine as a threat to national security.* Since 2004, business petitions have been fed through a largely automated data mining and analysis process called the Fraud Detection and National Security Data System (FDNS-DS) that searches cases for what the designers believe are indicators of "articulable fraud."* Follow-up site visits by FDNS inspectors are now routine, and USCIS has announced it intends to carry out 25,000 of them in 2010.* The priority target of these audits is firms that operate in "vital national infrastructure", such as telecommunications and data systems with have some bearing on national security or public safety.* That means that IT consulting firms with parents or affiliates in India or China are the first targeted for FDNS inspections.

Some of the "articulable fraud" criteria that trigger a FDNS-DS analysis are almost laughably overly-general and clearly targeted toward certain types of employers, specifically foreign-based IT consulting firms, which have been targeted for criticism by some in Congress.* A copy of an internal H-1B fraud referral sheet used at Service Centers was inadvertently released that shows a clear pattern of discrimination against some types of H-1B employers.*

The H-1B referral sheet list, for instance, starts with small and recently established firms:

  • (Petitioner)Gross annual income less that $10 million.

  • Company claims less than 25 employees.

  • Company established for less than 10 years.

It then goes on to single-out consulting firms:

  • Contracts for consultants or staffing agency show no end-client (no work description or itinerary).

*** **

In November 2009 , a ranking FDNS official in late 2009 confirmed that there are three types of H-1B site visits that are currently being conducted[85]:

1. Risk Assessment Program fraud study (random audits).* A joint USCIS and ICE program audits all types of benefit programs, including family and employment-based. Applications and petitions are chosen at random, usually on a post-approval basis, for site visits as part of a program to design profiles of potential fraud.

2. Targeted site visits. These audits are directed at businesses where fraud is suspected, and consist of a visit by inspectors to ask questions, inspect, and photograph workplaces. Advance notice, including notice to counsel, is supposed to be provided.

3. Administrative site visits. These audits currently involve H-1B and R-1 (religious worker) petitions. They generally are conducted by private sector contractors with limited knowledge of immigration law who may appear without prior notice. For H-1B site visits, the contractors have a work sheet that contains a list of specific questions, primarily focusing on issues of whether the petitioner is a legitimate business enterprise with actual facilities and employees, whether the employer knows it filed the petition, and whether the beneficiary is doing the same work and receiving the wage indicated on the petition. [See, analysis and reproduced worksheet, below]

USCIS has termed this program the Administrative Site Visit and Verification Program (ASVVP). The stated purpose is to verify that the information provided in H-1B petitions conforms with actually employer practice.* The agency has hired a large number of private contractors to conduct thousands of site visits to augment the enforcement efforts of ICE officers.* Reportedly, contracting companies include ICF and Kroll Associates, investigations firms which have backgrounds in national security and intelligence-related collections.

Terrorism and national security remain overarching priorities in DHS enforcement and programs under President Obama and Secretary Napolitano.* White House, Congress, and the courts tend to be deferential to established approaches and authorities in these matters, the understanding about which is tightly held within the agencies and contracting communities.* Besides, many details remain classified so it is difficult to argue the specifics, such as privacy issues, in terms of public policy.* Basic issues, such as program budgets, are secret or withheld under agency privilege.* While concerns for privacy and constitutional rights are heard, actual policies have changed little under the new Administration.

[1]* See, Sean Olender, "The Mess at I.N.S.: The Coming Reorganization Raises Questions About Immigrants' Civil Rights" , SAN FRANCISCO ATT'Y, 50 (June/July 2002)

[2] See, Califano v. Sanders, 430 U.S. 99, 97 S Ct, 51 L Ed. 2d 192 (1977)

[3]*** See, CHRISTENSEN V. HARRIS COUNTY, 529 U.S. 576 (2000); cited by Mead, Ibid..

[4] See, Center for Auto Safety v. NHTSA, 452 F.3d 798 , 806 (D.C. Cir. 2006).

[5] See,* Ruangswang v. Immigration & Naturalization Service, 591 F.2d 39, 1978 U.S. App. LEXIS 8025 (9th Cir. 1978)

[6] Ibid., citing Bennett v. Spear, 520 U.S. 154 (1997) at 177-78, 117 S.Ct. 1154 (citations omitted). See 5 U.S.C. § 704; Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 882, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990) ("When ... review is sought not pursuant to specific authorization in the substantive statute, but only under the general review provisions of the APA, the `agency action' in question must be `final agency action.' See 5 U.S.C. § 704."); Reliable Automatic Sprinkler, 324 F.3d at 731 ("If there was no final agency action here, there is no doubt that appellant would lack a cause of action under the APA.").

[7] Ibid.

[9]* See, Mary Kenney, AILF Practice Advisory, Immigration Law Suits and the APA: The Basics of a District Court Action, at 3, (May 9, 2007),

[10] See,* 329 F3d 876 Croplife America v. Environmental Protection Agency (D.C.Cir.2003) That decision explains and illustrates what the D.C. Circuit considers a binding norm: "The disputed directive constitutes a binding regulation that is directly aimed at and enforceable against petitioners. It provides that 'the Agency will not consider or rely on any [third-party] human studies in its regulatory decision making.' This clear and unequivocal language, which reflects an obvious change in established agency practice, creates a "`binding norm'" that is "`finally determinative of the issues or rights to which it is addressed.'" Chamber of Commerce v. United States Dep't of Labor, 174 F.3d 206, 212 (D.C.Cir.1999) (quoting Pacific Gas & Elec. Co. v. FPC, 506 F.2d 33, 38 (D.C.Cir.1974)); see also Gen. Elec. Co. v. EPA, 290 F.3d 377, 383 (D.C.Cir.2002) ("[A]n agency pronouncement will be considered binding as a practical matter if it either appears on its face to be binding, or is applied by the agency in a way that indicates it is binding.") (citations omitted). EPA's stated rule is binding on petitioners, who are now barred from relying on third-party human studies (even in cases where such studies formerly were approved), and is binding on the agency because EPA has made it clear that it simply "will not consider" human studies."

[11] See, e.g., RCM Technologies v DHS, D.C. Cir., Civil Case No. 09cv0650 (JDB), (April 8, 2009), , discussed below in H-1B Litigation Issues, under Ripeness.

[12] See, Donald Neufeld, Associate Director, Service Center Operations, DHS, USCIS, HQ 70/6.2.8, AD10.24,* Memorandum for Service Center Directors, "Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements", Additions to Officer's Field Manual (AFM) Chapter 31.3(g)(15)(AFM Update AD 10-24)(Jan. 08, 2010), linked at:

[13]* See, RCM, Ibid.

[14] See, Federal Register/Vol. 63, No. 107/Thursday, June 4, 1998/Proposed Rules/pp. 30419-23,

[15] The Neufeld Memo states that the policy requires a showing of a "right to control," rather than "actual control", but the documentation demanded, such as third-party contracts, go to proof of actual control, as will be discussed at length in the sections of this book below dealing with the supremacy of contract law within the common law of torts and invidious liability that are at the heart of employment law.

[17] See, e.g.. IQ Solutions v. Mayorkas, Civil Action No. 09-890 (RMC)(DC Dist. Ct., Nov. 4, 2009) , ; also, see, Darby v. Cisneros, 509 U.S. 137 (1993)

[18] A final agency action "(1) marks the consummation of the agency's decision making

process -- it must not be of a merely tentative or interlocutory nature; and (2) the action must be one by which rights or obligations have been determined or from which legal consequences will flow." Domestic Secs., Inc. v. SEC, 333 F.3d. 239, 246 (D.C. Cir. 2003) (internal quotation marks omitted).

[19] Under the APA, "[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review." 5 U.S.C. § 704 (emphasis added).

[21]* See, [H.R.1268.ENR], Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005 (Enrolled as Agreed to or Passed by Both House and Senate, became P.L. 109-113 on 05/11/2003), SEC. 106, . JUDICIAL REVIEW OF ORDERS OF REMOVAL, amending Section 242(a) of the Immigration and Nationality Act (8 U.S.C. 1252), http://, HR 418 - Search Results - THOMAS (Library of Congress)

[25]* **See, CHRISTENSEN V. HARRIS COUNTY, 529 U.S. 576 (2000); cited by Mead, Ibid..

[26] Under the APA, "[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review." 5 U.S.C. § 704 (emphasis added).

[27] See, Wilderness Soc'y v. Norton, Ibid.

[28] No specific APA statute of limitation.* However, "general six-year statute of limitations for civil actions brought against the United States" applies. See, Mary Kenney, AILF Practice Advisory, "Immigration Lawsuits and the APA: The Basics of a District Court Action", p. 4,; also, see, 28 USC §2401(a).* However, 4-year limit may apply for causes of action that include reference to separate violation of another statute enacted after December 1, 1990.* [28 USC § 1658]

[29] See, 8 USC § 1252(a)(2)(D); 8 U.S.C. §§ 1252(a)(1) and (b)(9).

[30] Among the H-1B restriction bills defeated in the 108th Congress, H.R. 2688, Amendment to Immigration and Nationality Act, a bill introduced on 7/9/03 to repeal H1-B visas and related authorities.* Several 2003-4 bills (S. 2094, H.R. 3820, H.R. 3888, H.R. 3911) would have banned companies that engage in certain off-shoring activities from receiving some federal assistance or federal and state contracts. Yet another bill that year, H.R. 2849, a companion bill to Grassley-Durbin, was intended to impose a labor market test on H-1B and L-1 visas.* A Senate Bill, S. 31, introduced but failed to pass in the 110th Congress, would have, inter alia, banned H-1B outsourcing across state lines and permitted USCIS to initiate and lodge a noncompliance complaint with DOL.*

[31]*** See, CHEVRON U.S.A., INC. V. NRDC, 467 U. S. 837, 842-45 (1984) . *

[32]*** See, UNITED STATES V. MEAD CORP., 533 U.S. 218 (2001) 185 F.3d 1304, op. cit. , Skidmore v. Swift & Co., 323 U.S. 134 (1944).

[33]** Prior to the break-up of legacy INS and establishment of DHS, the AAO and the Board of Immigration Appeals (BIA) were both under the authority of the INS Commissioner, who would on occasion overrule the BIA and substitute her own judgment on matters before the Board.* After DHS was established, BIA, along with the lower Immigration Courts (EOIR) were retained within the DOJ, while the AAO and the legacy INS Service Centers were incorporated into USCIS, a subsidiary of DHS.* See, EOIR Organization,**

[34] *The AAO is divided into nine branches.* Branch 1 is responsible for appeals of denials of I-129 H, L, O, P and Q non-immigrant petitions and N-470 petitions. Branches 5 and 6 adjudicate denials of various types of employment-based I-140s.* See, USCIS - Administrative Appeals Office (AAO)

[35] See, Recommendation from the CIS Ombudsman to the Director, USCIS (Dec. 6, 2005),*

[36] See, USCIS Administrative Appeals Office FAQs, (March 10, 2009), pp.* 1-2,

[38] See, Ryan DeMotte, "Interpretative Rulemaking and the ALASKA HUNTERS Doctrine:* A Necessary Limitation on Agency Discretion" U. Pitt. Law Rev., Vol. 66: 357, 358-59,

[39] An exception to that rule occurred in 2008 when the AAO heard the personal pleadings of counsel in Matter of GSTechnical Services, discussed at length in the L-1 Chapter.**

[40]* See, Administrative Procedure Act,

[42] See, Erringer v Thompson, 371 F.3d 625, (9th Cir., 2004),*

[43] See, Shell Offshore v Babbitt, 238 F.3d 622, (5th Cir., 2001),*

[45]*** See, CHRISTENSEN V. HARRIS COUNTY, 529 U.S. 576 (2000); op cit., Ibid..

[49]** See, Thomas Moore, Abandoning Mead: Why Informal Adjudications Should Only Receive Minimal Deference in Federal Courts*, Utah L. Rev. 719 (2008),

[51]* In its citations of previous authority instead of Mead, the Camphill Soltane decision helped to establish that Alito was not, himself, so deferential that he would be unwilling to to strike down the sort of "super stare decisis" decisions that Judge Posner has criticized.

[52] See, Brian Z. Tamanaha, Law as a Means to an End, Cambridge Univ. Press, 2007, a critique of Judge Richard Posner's pragmatic (or "instrumentalist') view that ambiguity in law is whatever judges conclude by their own best judgment conclude it to mean.* When faced with an issue that is not clearly resolved by the existing law, Posner holds the judge should resolve the issue in the way that he or she thinks "makes the most sense", all things considered, for the parties and society.

[53] See, ABA Section on Administrative Law, Working Paper, "Standards of Review: Non-statutory Legal Issues",

[55]* York Bank & Trust v. FSLIC, 851 F.2d 637 (3rd Cir., 1988)

[56]* See, Overton Park, *Ibid., Page 401 U. S. 403,

[57] Id.,Page 401 U. S. 414.

[59] *Agencies evolve their own standards for eligibility, definitions, and sometimes review.* For instance, the US Trade Commission Patents and Trademarks Office applied a "clear error" standard based in traditional common law to judicial review.* However, that was found to be in conflict with the "arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with the law" standard found in the APA, which the Supreme Court ruled applies in APA actions despite the separate, traditional agency standard based in common law.** The primacy of APA standards has also been found to apply to the availability of appeals to the federal courts despite an agency regulation specifying that an administrative appeal must first be exhausted. See, DICKINSON V. ZURKO, 119 S.Ct. 1816 (1999); op cit., Darby v. Cisneros, 509 U.S. 137 (1993).

[61]** See, *Ruangswang v. Immigration & Naturalization Service, 591 F.2d 39, 1978 U.S. App. LEXIS 8025 (9th Cir. 1978)

[63] See, John F. Duffy, Fed. Soc. Admin, L. News, (Vol. 3, Issue 2, Summer, 1999),"Administrative Common Law and the Original Meaning of Judicial Review Under the APA"*

[64]* See, Neufeld memo, supra.

[65] Immigration attorneys began commenting at the AILA site about an observed pattern of RFEs demanding a copy of third-party contracts in early 2009.* *That pattern became ubiquitous with outsourcing cases later that year.


[66]* See, Federal Register: December 20, 2000 (Volume 65, Number 245), Rules and Regulations, Pages 80209-80254,;also, see, USDOL Wage & Hour Division revised Fact Sheet #62U: What is the Wage and Hour Division's enforcement authority under the H-1B program? (revised July, 2008),

[69] See, Search Results - THOMAS (Library of Congress) , The American Competitiveness and Workforce Improvement Act of 1998 (`ACWIA') 99, See, comment of Chairman Lamar Smith regarding* "workers contained in ACWIA focused on `job contractors' or `job shops'", *Cached

[70] See,* [Federal Register: December 20, 2000 (Volume 65, Number 245), Rules and Regulations, Pages 80209-80254],

[71] *THOMAS, ACWIA, Ibid.

[72]**** U.S. Citizenship & Immigration Services,* H-1B Benefits Fraud and Compliance Assessment (September 2008)

[73] Patrick Thibodeau, ComputerWorld, USCIS weighs H-1B reforms after finding fraud, 'technical violations' in 21% of reviewed cases, October 10, 2008,

[74] See, 2007 Data Mining Report, DHS Privacy Office Response to House Report 109-699, (July 6, 2007), pp. 7-8,

[75] The 2007 DHS Privacy Report, p. 27, states: "NETLEADS is used for investigative and intelligence purposes only. No application within the tools suite is used to grant benefits or make unevaluated automated decisions."


[76]* See, Matter of Baiju, 2009-LCA-00045, Mar. 8, 2010,

[77] The DOL posts a list of companies found to be LCA willful violators going back to 1999 at:

[78] See, Sections 101(a)(15)(H)(i)(b) and (b1); 212(n) and (t), and 214(g) of the Immigration and Nationality Act (INA) as amended, (8 USC §1101(a)(15)(H)(i)(b) and (b1), 1182(n) and (t), 1184(g);
20 CFR Part 655 Subparts H and I,)

[79] See, Law Guide, Workers in Professional and Specialty Occupations (H-1B and H-1B1 Visas),

[80] Application of Neufeld memo a substantial departure from precedent decision and other "definitive interpretation." See, e.g., Matter of Aphrodite Investments Limited, 17 I&N Dec. 530 (Comm.1980), Matter of Tessel, 17 I&N Dec. 631 (Act. Assoc. Comm. 1980), Matter of Allan Gee, Inc., 17 I & N Dec. 296 (Acting Reg. Comm. 1979) and Matter of M--, 8 I&N Dec. 24 (BIA 1958, AG 1958) ; see, related, Letter to Roxanna Bacon, USCIS General Counsel from AILA, 01/26/2010, Re: Recent USCIS application of Nationwide Mutual Insurance Company v. Darden, 503 U.S. 318 (1992) and Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440* (2003) to nonimmigrant and immigrant visa petitions, AILA InfoNet Doc. No. 10012760. (Posted 01/27/10).


[81] Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. 467 U.S. 837 (1984) is the touchstone case for presumption of deference to agency interpretation of ambiguous statute.* However, Chevron has limited application to an agency's published rules based in the same agency's own enabling statute. *In Chevron, Justice Stevens, writing for a unanimous Court, enunciated the following standard, which amounts to a two-part test, allowing for limited judicial deference in the federal arena:

When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; [...]* If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute. Sometimes the legislative delegation to an agency on a particular question is implicit, rather than explicit. In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency. *

We have long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer . . .[citations omitted][emphasis added]

[82] See, SEC v. Cogan, 201 F.2d 78, 87 (9th Cir. 1951).*

[83] See, Dickinson v. Zurko, 119 S.Ct. 1816 (1999). In Zurko, the Supreme Court rejected the Federal Circuit's traditional "clear error" standard of review of decisions of the Patent and Trademark Office, which, the Federal Circuit concluded, was a "common law" standard. As in Darby, the Supreme Court confronted an entrenched common law rule and rejected it in favor of the APA.

[84] Unlike Chevron, the INA does not define the term in question.* See, Justice Stewart's decision at 846.* See,* There is simply nothing of substance - no statute or regulation -- upon which USCIS has anchored its interpretation of "employee."** The definition applied is entirely dicta based in de facto rule without statutory or regulatory basis - the denials rendered as a result are arbitrary and capricious.

[85] See,* Department of Homeland Security, public affairs event, "2009 Government and Employers: Working Together to Ensure a Legal Workforce," statement by Ronald Atkinson, Chief of Staff of USCIS' Fraud Detection and National Security (FDNS) office, (November 19, 2009).


Incoming Agency Leadership Signals Some Positive Change in Business Immigration, Worksite Inspection Policies - But, Overly-Restrictive Policy Remains*

The Immigration Policy Center issued a DHS "report card" stating, "[W]hile there is a policy shift at the top of DHS, it remains to be seen whether that shift will translate into a cultural shift throughout the agency."

Ten months after the Obama Administration arrived in Washington, the long-awaited change in leadership and policy at USCIS seemed to be finally emerging.* At an October stakeholder's meeting between American Immigration Lawyers Association (AILA) and the newly-appointed USCIS General Counsel, Roxanna Bacon, the outlines of reform in USCIS program management and some long overdue changes in policies were described in a Questions and Answers session.[1]

Before we relate the substance of these announcements, an introduction to Ms. Bacon and her top management team is in order.* Roxanna Bacon is a former General Counsel for AILA, was President of the Arizona Bar Association, and headed an immigration law firm in Phoenix, AZ[2] before signing on to lead USCIS under DHS Director Janet Napolitano.*


Ms. Bacon is clearly a knowledgeable advocate of business immigration, well aware of the serious problems that have been created in recent years for firms which employ foreign workers.* In a 2004 article she wrote for Arizona Attorney magazine, Ms. Bacon criticized the restrictionist agenda pursued by the former Administration and some in Congress and the agencies[3]:

"I am not blind to the hostility against immigration that has always accompanied our new arrivals. I have studied it all my professional life and I think I understand it. It is ugly. It is fear-based. It springs from incuriosity, the cerebral cortex of ignorance. It is nurtured by the greed gene that says someone new takes from your share, while in truth someone new makes the pie bigger."


Key incoming policy-makers in the reorganized USCIS Headquarters include Perry Rhew as Chief of the Administrative Appeals Office (AAO).* At the time of his appointment in September, Mr. Rhew was Chief Administrative Law Judge at Department of Health & Human Services, where he was instrumental in reducing long delays in Medicare appeals.* A third newly-appointed USCIS official who appeared on the AILA panel was Hubert H. Humphrey, IV, Chief of Office of Communications.

This is a group of officials that the immigration bar and other stakeholders who may be able to work with in removing the tangled web of de facto rules and arbitrary legal standards imposed by USCIS under the Bush Administration.* However, the American economy and politics being in a continuing state of crisis and change, it is difficult to say how far the improvements in service will extend and if the Obama Administration will support renewed efforts to increase visa numbers for business, particularly for the embattled H-1B and L-1B categories.* *Likely, they won't, even if they wanted to.

With regard to the key issue of outsourcing, and removal of barriers in adjudications such as RFEs and denials without reference to precedent decision, one should expect that reforms will be made to make rules clearer and more rational, and the process less delayed, but not necessarily a return to the sort of wholesale license to off-shoring that became the norm some years ago before the economic downturn.


If it wishes to be an effective voice in administrative reform of business immigration, the global information services consulting industry must spearhead internal reforms and develop a set of generally-adopted best practices for compliance.** That may mean that key alliances have to be maintained, such as with the universities and the National Foreign Students Advisors (NAFSA) so as to safeguard and strengthen the traditional chain of progression from post-completion practical training to H-1B to sponsorship for PERM and an immigrant visa petition.* In addition, the industry should carefully consider supporting US Labor Department measures, such as a minimum Level II wage that will raise salaries among H-1B workers.* Endorsement of that step, while cutting into some margins, would have a huge impact in undermining a principal argument used by critics of the H-1B program that employers are underbidding domestic wages and that H-1B workers are not truly fully-qualified, quality specialty workers.* In the last analysis, this may not be giving up much, as lower-end positions are increasingly offshored, anyway, and it would be best for the global consulting industry to lead rather than resist movement toward reform that is likely to be adopted.

Finally, the last thing that the industry should push to implement is any sort of legislative "fix", as any business immigration Bill that reaches the floor of the U.S. House of Representatives can be expected to contain painfully restrictive measures, and the industry should resist any effort to include business immigration as part of Comprehensive Immigration Reform in the current political and economic environment.*****


Significant news that emerged from the USCIS-AILA conference included the following points:

  • In response to questions about the often burdensome and intrusive demands for information including voluminous documentation for established companies, extensive employee withholding records, lists of all employees within a company, and other potentially sensitive documentation attending RFEs for L-1 cases, USCIS responded that it was working with AILA to define specific areas of concern and agency HQ will distribute this to the Service Centers in an effort to stop the worst practices of excessive demands for evidence by adjudicators.*

  • USCIS responded to issues raised by AILA about requirements for L-1B end-user contracts or other proprietary documents to establish control and supervision over L-1B workers at client sites by stating that if the documentation submitted, such as a Scope of Work, is not adequate to establish employee control and supervision, the petitioner should and may present alternative documentation or otherwise clearly establish how that requirement will be met.* The agency acknowledges that some documents are proprietary and that examiners are supposed to be trained to respect such privacy issues to avoid demands for "inappropriate disclosures."

  • *USCIS indicated that it was working with AILA to come up with more specific and rational documentation requirements to establish essential elements of the employer-employee relationship often referenced in RFEs, such as adequate facilities, finances, ability to pay, identity of the petitioning employer, and proof of possession of specialized knowledge by the beneficiary


Another major area of AILA concern is the use of unpublished AAO decisions to support denials of petitions.* In response, USCIS specifically addressed the following concerns:


  • ***AILA protested the use of the unpublished "GST" decision of 2008 which threw out the bulk of recent published agency guidance regarding specialized knowledge for L-1B cases.* USCIS stated that it was reconsidering all such general policy decisions based on unpublished authorities, and was going to resume issuing precedent decisions, and will be posting them on-line.* It should be noted that USCIS did not commit itself to withdrawing from GST dicta which impose high evidentiary burdens regarding employee knowledge and its rarity both within the US labor market and within the petitioning company.

  • **AILA also raised several H-1B related issues, including lack of guidance on the meaning of "affiliated" for cap determination of educational institutions, and the abuses related to overuse of the Matter of Treasure Craft decision to deny cases where attorneys have provided substantive responses to Service Center RFEs but without providing the specific document demanded.* USCIS said it was close to issuing policy directives in a revised version of the Adjudicators Field Manual (AFM) that would address those problems concerning probative evidence.* [Those amendments were, in fact, made at the time the Neufeld memo was released in January, but the results are far from satisfactory, as discussed above in the Introduction.]

  • **USCIS reaffirmed the principle that a period in authorized stay with a US affiliate or subsidiary of a foreign L-1 employer does not restart the clock for the normal one year employment abroad in the last three eligibility requirement.

Finally, and perhaps most significant news is the response by USCIS to questions about right to counsel by companies that experience unannounced Audit visits by the new USCIS Fraud Detection & National Security (FDNS) worksite audit teams.* To cut through to the heart of the issue, the USCIS announced that employer cooperation with FDNS auditors is "voluntary", and that counsel could be both present and cut off lines of questioning -- at least for the time-being -- and that USCIS was putting together new forms advising the benefits-seeking public about its obligations under the FDNS regime.** [The new forms I-129 instructions merely advise applicants that they would be subject to ongoing examination, including site visits, and that those with approved petitions found out of compliance with regulations would be revoked.]

This confirms that FDNS auditors do not have be admitted to employer workplaces or client sites without a warrant, and if they are admitted, remain subject to the control of the company or owner with regard to access within the facility or residence, who they may interview, the records they may examine, and the terms of any interview permitted with management or employees.* Furthermore, any line of examination may be denied or cut-off by either the employer or the employee at any point.* Bottom-line, the Fourth and Fifth Amendment requirements for a warrant or subpoena, and the right to counsel, still applies to H-1B and L-1 employers, their employees, and attorneys upon encounter with USCIS worksite examiners.

Of course, the degree of cooperation shown government inspectors, even unannounced, should be a matter of company policy rather than improvisation, to be worked out in advance with the aid of qualified immigration counsel.* As a subject of litigation, this raises many of the same legal issues of "voluntary" inspections considered in the 1999 US Chamber of Commerce v USDOL OSHA case, in which the DC Circuit found USDOL had failed to meet APA Sec. 553 "publish-and-comment" requirements. **That subject is dealt with at length, below, at Introduction, Sec. A7.

[2] According to news reports, the firm's clients have included Motorola Inc., ON Semiconductor and Microchip Technology.

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