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Federal Regulations Advisor Insight and Commentary on U.S. Government Regulatory Affairs

Third Circuit Upholds Labor H-2B Regulations & Confuses Agency Rulemaking Jurisdiction

Posted in Agency Authority, Regulatory Process

The United States Court of Appeals for the Third Circuit recently upheld the Department of Labor (DOL) promulgation of regulations governing the calculation of the minimum wage a United States employer must offer to recruit non-agricultural foreign workers under the Department of Homeland Security (DHS) “H-2B” visa program in Louisiana Forestry Association v. Secretary United States Department of Labor.  The decision fails to answer the core question:  can an agency delegate rulemaking authority to another agency.  The decision conceptually and potentially directly conflicts with the Eleventh Circuit decision in Bayou Lawn and Landscaping Services v. Secretary of Labor, and adds further confusion to a complicated inter-agency rulemaking jurisdiction problem.

Long History:  DOL has long been involved in immigration – originally DOL was the home of the components for immigration and naturalization.  Over time, the core immigration function shifted to the Department of Justice (DOJ) and then to the Department of Homeland Security (DHS).  At least since the 1960’s, immigration officials have been required to “consult” with DOL on the appropriate minimum level of compensation for foreign non-agricultural workers.  DHS authority to administer the H-2B program requires that DHS determine nonimmigrant alien petitions “after consultation with appropriate agencies of the Government” and DHS has, by regulation, designated DOL as the agency from which it seeks “advice” in determining whether to grant H-2B visa petitions.

The Case:  Plaintiffs alleged that DOL exceeded its authority in promulgating a regulation governing the calculation of the minimum wage a United States employer must offer in order to recruit non-agricultural foreign workers under the H-2B visa program.  The plaintiffs presented two primary challenges to DOL’s 2011 Rule: (1) DOL lacked statutory delegated authority to promulgate legislative rules concerning the H-2B program, and (2), even if the DOL had rulemaking authority, DOL’s violated certain procedural requirements of the Administrative Procedure Act (APA) and Regulatory Flexibility Act (RFA) requiring the court to set aside the rule.  The DOJ, on behalf of the United States and its subordinate agencies, argued that DOL was authorized to promulgate rules concerning the H-2B program because DHS lawfully conditioned DHS granting of H-2B petitions on obtaining a labor certification from the DOL and “permissibly endowed” DOL limited rulemaking authority to carry out its charge of issuing certifications.

Cross Delegation:  The Third Circuit skips past the fundamental question, noting only in a footnote, that “The DOL conceded that it lacks express statutory authority to engage in such rulemaking” citing to the district court decision under review.  Moreover, the court evades the issue:

Because we find that the 2011 Wage Rule was promulgated pursuant to a permissible conditioning of the DHS’s granting of H-2B petitions on a decision by the DOL and the limited rulemaking authority the DOL has to carry out that charge, we need not decide today whether, as the Departments contend and Appellants vigorously contest, the DOL has express or implied statutory authority under [statute] to promulgate rules concerning the H-2B program.

The court even noted in a footnote that “By contrast, Congress expressly granted DOL limited rulemaking authority over the H-2A program.”  The court, however, never examines the fundamental canons of interpretation that Congress’ inclusion of such an authority in both proximity and context indicates its intent to exclude authority when it has not provided that authority.

The court correctly notes that, as a general rule, when a statute delegates authority to a federal officer or agency, subdelegation to a subordinate federal officer or agency is presumptively permissible absent affirmative evidence of a contrary congressional intent.  On the other hand subdelegations to outside parties are assumed to be improper absent an affirmative showing of congressional authorization.  The Third Circuit even admits that “subdelegation of authority from the DHS to the DOL – an outside, non-subordinate agency – would be impermissible absent a clear statement from Congress authorizing such.  But the court goes on to decide DHS has not “delegated” because it retains final authority.  The problem with that logic is that a final decision by DHS is not being reviewed; the issue is the authority of DOL to promulgate legislative regulations with the force of law.

The Bootstrap:  The Third Circuit notes that “DHS has also by regulation endowed the DOL with the authority to create the procedures necessary to fulfill its charge of issuing labor certifications.”  With little explanation of how it relates to history, the Third Circuit relies on a 2013 DHS regulations that provides:

The Secretary of Labor shall separately establish for the temporary labor program under his or her jurisdiction, by regulation at 20 CFR 655, procedures for administering that temporary labor program under his or her jurisdiction, and shall determine the prevailing wage applicable to an application for temporary labor certification for that temporary labor program in accordance with the Secretary of Labor’s regulation at 20 CFR 655.10.

This “delegation” was not the basis for the 2008 or 2011 rules or any other rule, but is a bootstrap of authority to DOL by DHS after the fact and after the district court decision under review.  The Third Circuit appears to not appreciate or understand the post hoc action, or even that the post hoc rulemaking implies that DOL has statutory authority through its own purported promulgation of the rule – the Secretary of Labor signed its own delegation.

The court’s citation to a preambular justification from 1990 remains, according to the Third Circuit, “to be codified” nearly a quarter century later, but a regulation promulgated in 2013 is cited to the Code of Federal Regulations for 2013 in which it does not exist (the 2013 Code for the relevant provision of closed on January 1, 2013).  (Perhaps the court was confused by the “not an official legal edition” Electronic Code of Federal Regulations or a private publisher).  This structural confusion about the origin and promulgation of the “delegation” regulations ill serves the Third Circuit and all who read the decision.  Substantively, a 1990 rationale does not support a 2013 regulatory text.

Intercircuit Conflict:  The Third Circuit suggests only that its decision “may potentially create a split between” circuits, but focuses on the different procedural postures of the two cases.  The preliminary injunction in Bayou Lawn and Landscaping has not been reduced to a final judgment – cross-motions for summary judgment are pending in the Northern District of Florida – but the Eleventh Circuit’s decision will guide its district court, not the Third Circuit’s logic.  A direct conflict does not yet exist, but a conceptual conflict is clear.

Legal Danger:  The Third Circuit’s flawed analysis preserves the 2011 rule in the Third Circuit, but the potential for further litigation is heightened by the decision.  DOL’s authority remains very much in doubt in light the Third Circuit’s confusion.  At bottom, DHS attempted to “ratify” (using the term colloquially, not technically), post-hoc, a regulation adopted without statutory authority, and fundamental issues of statutory jurisdiction remain.