Chamber of Commerce of the U.S. v. U.S. Dep't of Homeland Sec.

• Decision Date: 01 December 2020
• Docket Number: Case No. 20-cv-07331-JSW
• Court: U.S. District Court — Northern District of California
• Parties: CHAMBER OF COMMERCE OF the UNITED STATE of America, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF HOMELAND SECURITY, et al., Defendants.

504 F.Supp.3d 1077

CHAMBER OF COMMERCE OF the UNITED STATE of America, et al., Plaintiffs,

v.UNITED STATES DEPARTMENT OF HOMELAND SECURITY, et al., Defendants.

Case No. 20-cv-07331-JSW

United States District Court, N.D. California.

Signed December 1, 2020

Paul W. Hughes, III, Pro Hac Vice, McDermott Will and Emery LLP, Washington, DC, William G. Gaede, III, McDermott Will & Emery LLP, San Francisco, CA, for Plaintiffs.

Carol Federighi, Alexandra Rachel Saslaw, Laurel H. Lum, U.S. Department of Justice, Washington, DC, for Defendants.

ORDER GRANTING PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING DEFENDANTS’ CROSS-MOTION

Re: Dkt. Nos. 31, 54

JEFFREY S. WHITE, United States District Judge

The Court once again confronts a challenge to the Administration's assertion that the H-1B visa program adversely affects American workers to such a degree that it must take immediate action. See Nat'l Ass'n of Manufacturers v. Dep't of Homeland Sec. , No. 20-cv-4887-JSW, 491 F.Supp.3d 549 (N.D. Cal. Oct. 1, 2020) (" NAM"). Here, Plaintiffs bring claims under the Administrative Procedure Act ("APA") and ask the Court to set aside two interim final rules promulgated by the Department of Labor ("DOL") and by the Department of Homeland Security ("DHS"): Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States , 85 Fed. Reg. 63,872 (Oct. 8, 2020) ("DOL Rule"); Strengthening the H-1B Nonimmigrant Visa Classification Program , 85 Fed. Reg. 63,918 (Oct. 8, 2020) ("DHS Rule") (collectively, the "Rules").

Citing the on-going COVID-19 pandemic and the economic consequences of the pandemic, and in particular the rates of domestic unemployment, DOL and DHS invoked the APA's good cause exception and issued the rules without notice and comment. DOL also invoked the good cause exception to dispense with the APA's normal thirty-day waiting period, and the DOL Rule went into effect immediately. The DHS Rule is scheduled to take effect on December 7, 2020.

The APA's requirement of notice and comment is " ‘designed to assure due deliberation of agency regulations’ and ‘foster the fairness and deliberation of a pronouncement of such force.’ " E. Bay Sanctuary Covenant v. Trump , 932 F.3d 742, 745 (9th Cir. 2018) (" EBSC I ") (quoting United States v. Mead Corp. , 533 U.S. 218, 230, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001), quoting Smiley v. Citibank (S.D.), N.A. , 517 U.S. 735, 741, 116 S.Ct. 1730, 135 L.Ed.2d 25 (1996) ). The good cause exception, in turn, "is essentially an emergency procedure[.]" United States v. Valverde , 628 F.3d 1159, 1165 (9th Cir. 2010) (quoting Buschmann v. Schweiker , 676 F.2d 352, 357 (9th Cir. 1982) ). The exception also is "narrowly construed" and "reluctantly countenanced." California v. Azar , 911 F.3d 558, 575 (9th Cir. 2018) (quoting Alcaraz v. Block , 746 F.2d 593, 612 (9th Cir. 1984) ).

It is beyond question that the COVID-19 pandemic is unprecedented in its scope and its impact, and qualifies as an emergency. See HHS, Determination of Public Health Emergency , 85 Fed. Reg. 7,316 (Feb. 7, 2020) ; Proclamation 994 of March 13, 2020, Declaring a National Emergency Concerning the Coronavirus Disease (COVID-19) Outbreak , 85 Fed. Reg. 15,337 (Mar. 18, 2020). For reasons set forth later in this opinion, the Court is not tasked with evaluating the emergent nature of the COVID-19 pandemic writ large; nor is it called upon to consider whether the Rules reflect good public policy. Rather, the Court must decide whether Defendants have demonstrated that the impact of the COVID-19 pandemic on domestic unemployment justified dispensing with the "due deliberation" that normally accompanies rulemaking to make changes to the H-1B visa program that even Defendants acknowledge are significant. See DOL Rule, 85 Fed. Reg. at 63,901 (noting "scale of the wage changes achieved by this rule"), 63,908 ("estimating transfer payment from employers to employees of $198.29 billion over a ten year period"); Michelle Hackman, Trump Administration Announces Overhaul of H-1B Visa Program , www.wsj.com (Oct. 6, 2020) (citing statement by Ken Cuccinelli, Senior Official Performing the Duties of Deputy DHS Secretary, that "about one-third of H-1B applications would be rejected under the new set of rules").

For the reasons that follow, the Court concludes they have not, and the Court GRANTS Plaintiffs’ motion for partial summary judgment and DENIES Defendants’ cross motion.¹

BACKGROUND

A. Procedural History.

Plaintiffs filed their complaint on October 19, 2020, and asserted four claims for relief under the APA, only two of which are at issue here. Plaintiffs allege the Rules were issued "without observance of procedure required by law" because there was neither good cause to excuse the APA's notice and comment period nor to make the DOL Rule effective immediately.²

On October 23, 2020, Plaintiffs filed their motion for a preliminary injunction and, in the alternative, for partial summary judgment on those claims. On November 4, 2020, the Court approved the parties’ stipulation (the "Stipulation") to consolidate Plaintiffs’ motion for a preliminary injunction with the merits of Plaintiffs’ first two claims for relief. See Fed. R. Civ. P. 65(a)(2) ("Before or after beginning the hearing on a motion for a preliminary injunction, the court may advance the trial on the merits and consolidate it with the hearing."). The parties also agreed to "rely upon the [interim final rules ("IFR")] and the materials cited in the IFR as the Administrative Record." (Stipulation, ¶ 3.)

Defendants filed their opposition on November 6, 2020, and Plaintiffs filed their reply on November 13, 2020.³

B. COVID-19 Related Proclamations Regarding Foreign Workers.

On April 22, 2020, the President signed Presidential Proclamation 10014 ("Proclamation 10014"), Suspension of Entry of Immigrants Who Present a Risk to the United States Labor Market During the Economic Recovery Following the 2019 Novel Coronavirus Outbreak , 85 Fed. Reg. 23,441 (Apr. 27, 2020). Pursuant to Proclamation 10014, the entry of all immigrants into the United States was suspended for 60 days unless an immigrant qualified for an exception to the Proclamation. The President also directed that "[w]ithin 30 days of the effective date of this proclamation, the Secretary of Labor and the Secretary of Homeland Security, in consultation with the Secretary of State, shall review nonimmigrant programs and shall recommend ... other measures appropriate to stimulate the United States economy and ensure the prioritization, hiring, and employment of United States workers." Id. at 23,442.

On June 22, 2020, the President issued Presidential Proclamation 10052 ("Proclamation 10052"), Suspension of Entry of Immigrants and Nonimmigrants Who Present a Risk to the United States Labor Market During the Economic Recovery Following the 2019 Novel Coronavirus Outbreak , 85 Fed. Reg. 38,263 (June 25, 2020). By Proclamation 10052, the President suspended entire visa categories for four sets of nonimmigrant work visas, including the H-1B visa, for a period lasting until December 31, 2020, with discretion to be continued "as necessary." Id. at 38,264. The stated purpose of that Proclamation was to eliminate the threat of taking jobs from American citizens who may find themselves without employment during the "extraordinary economic disruptions caused by the COVID-19 outbreak." Id.

The President also directed the Secretaries of Labor and Homeland Security to:

as soon as practicable, and consistent with applicable law, consider promulgating regulations or take other appropriate action to ensure that the presence in the United States of aliens who have been admitted or otherwise provided a benefit, or who are seeking admission or a benefit, pursuant to an EB-2 or EB-3 immigrant visa or an H-1B nonimmigrant visa does not disadvantage United States workers in violation [of provisions of the Immigration and Nationality Act ("INA")].

Id. at 38,266.

On October 1, 2020, the Court enjoined implementation and enforcement of Proclamation 10052 against the U.S. Chamber, NAM, NRF, and their members. NAM , 491 F.Supp.3d at 571. On October 8, 2020, DOL and DHS published the Rules. Defendants’ response to this Court's ruling on the validity of Proclamation 10052 in the NAM case appears to be the embodiment of the adage "if at first you don't succeed, try, try again." Appearances can be deceiving.

On April 18, 2017, the President issued Executive Order 13788 ("E.O. 13788"), Buy American and Hire American , 82 Fed. Reg. 18,837 (Apr. 18, 2017). In Section 5 of E.O. 13788, the President instructed the Secretaries of Labor and Homeland Security to:

(a) as soon as practicable, and consistent with applicable law, propose new rules and issue new guidance, to supersede or revise previous rules and guidance if appropriate, to protect the interests of United States workers in the administration of our immigration system, including through the prevention of fraud or abuse.

(b) ... as soon as practicable, suggest reforms to help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.

E.O. 13788, 82 Fed. Reg. at 18,838 -39.

By the fall of 2017, DHS's Statement of Regulatory Priorities included a regulation entitled Strengthening the H-1B Nonimmigrant Visa Classification Program . (Hughes Decl., ¶ 7, Ex. 7 (2017 Statement at 3).) That regulation was described as "a proposed rule that would revise the definition of specialty occupation to increase focus on truly obtaining the best and brightest foreign nationals via the H-1B program and would revise the definition of employment and employer-employee relationship to help better protect U.S. workers and wages...." (Id. )

On June 22, 2020, Administration officials announced that DOL "has also been instructed by the President to change the prevailing wage calculation and clean it up with respect to H-1B wages. ... [DOL] is going to...