Bar News - September 17, 2010
Immigration Law: Law, Rule or Policy Memorandum? How Administrative Law is Made in the Immigration Arena
By: Lorne Fienberg
Not surprisingly, the hottest topic in the "Hot Topics" session at the recent American Immigration Lawyers Association (AILA) conference was Arizona SB 1070 and its radiating impact on the lives of millions of undocumented foreign nationals in the United States (see Ron Abramson’s article). Much more surprising was the attention devoted to a January 8, 2010 internal CIS memorandum titled, "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)," now known simply as the "Neufeld Memo," or "the Memo."
Originally sent to the Directors of the CIS Service Centers and released on the AILA Infonet five days later, the Neufeld Memo was never formally "published" and as of the date of this article cannot be located on the USCIS website. Now the Memo is the subject of a lawsuit testing whether the Immigration Service exceeded the rule-making authority accorded to all federal administrative agencies under the Administrative Procedure Act.
The Neufeld Memo calls itself a guidance memo to service-center adjudicators, and states as its purpose the clarification of the Immigration Service’s definition of the "employer-employee" relationship, a pivotal element in the adjudication of several visa categories, but primarily the H-1B specialty worker classification. For immigration practitioners, however, the clarification, which focuses on an employer’s right to "control" the work of the H-1B employee, amounts to a definition of this relationship that differs markedly from the version already in the Regulations and from the common law factors articulated in the Supreme Court cases of Nationwide Mutual Ins. Co. v. Darden.
The guidance was expressly intended to limit, or shut down entirely, the use by technology staffing agencies (referred to inelegantly in the Memo as "job shops") of H-1B foreign nationals. It has had a host of unintended consequences, including the shutting off of the H-1B option for foreign entrepreneurs or business owners, and also for physicians in states that prohibit the corporate practice of medicine. (While New Hampshire does not have such a doctrine, most physicians follow the convention that they may only practice as a professional corporation or as an employee, member or contractor to a private health organization.) The resulting new definition of the employer-employee relationship has also created a "blueprint" for the service centers to issue burdensome requests for additional evidence, resulting in new expense and loss of time in getting skilled foreign workers in place.
For the much larger group of attorneys in New Hampshire whose daily work involves practice before federal or state administrative agencies, the Neufeld Memo raises critical practice issues about the way rules are made in the agency context. Few laws have a greater impact on the daily practice of attorneys, and yet are less well-known, than the Administrative Procedures Act, 5 U.S.C. §511-599, enacted into law in 1946, and recodified in 1966, but never amended. (The New Hampshire Administrative Procedure Act is found in Title LV, chapter 541-A of Revised Statutes of New Hampshire.)
According to the Attorney General’s Manual on the Administrative Procedure Act (1947), drafted after the 1946 enactment of the APA, the basic purposes of the APA are: (1) to require agencies to keep the public informed of their organization, procedures and rules; (2) to provide for public participation in the rulemaking process; (3) to establish uniform standards for the conduct of formal rulemaking and adjudication; (4) to define the scope of judicial review. The Neufeld Memo appears to fly in the face of the rule-making principles and procedure of the APA.
Challenges to the Memo
The challenges to the Neufeld Memo are targeting alleged violations of the APA in a manner that may set all administrative agencies to re-evaluating their own rule-making procedures and the impact of internal policy memoranda on the public.
In the challenge case, Broadgate Inc. et al. v. USCIS et al., (U.S. District Court for District of D.C.), filed on June 8, 2010, the Plaintiffs, three temporary staffing agencies and two not-for-profit advocacy groups, argue that the Neufeld Memo substantively changes a legislative rule by compressing the factors set forth in the regulation and inserting wholly new factors. Prior to the Neufeld Memo, the employee-employer relationship was determined based on five factors (" hire,  pay,  fire,  supervise, or  otherwise control the work of any such employee") articulated in a legislative rule published by the agency’s predecessor following notice-and-comment rulemaking. 8 C.F.R. § 214.2(h)(4).
The Neufeld Memorandum replaces the five factors with 11 factors and, the Plaintiffs argue, these new factors bind agency personnel while affecting those outside of government, two primary indicia of a legislative rule. The Government responds that the Memo is merely "supplying crisper and more detailed guidelines" to assist its adjudicative personnel. It further contends in its reply brief that it has not engaged in rule-making because the Memo does not affect the agency’s ability to conduct its business and has no substantive impact on how the agency adjudicates H-1B visa applications.
The Broadgate case is still in the motions stage, although Associate Director Neufeld has already conceded publicly that some informal "town meeting" procedure prior to the issuance of the Memo might have been a preferable course of action. However, if the contents of the Memo are finally deemed to be substantive rule-making, a series of town meetings would have fallen far short of the statutory notice and comment procedure mandated by the APA.
The lesson for attorneys who practice regularly before administrative agencies, either federal or state: study the Administrative Procedure Act that applies to your agency; know the rule-making procedure that is prescribed for your agency and participate actively during the notice and comment period. Finally, understand exactly when the negative consequences of a faulty rule-making process on your agency’s part entitle your clients to submit their claims to judicial review.
Lorne M. Fienberg practices immigration law in Amherst, NH. He has been a Bar member since 1994 and serves on the Bar News Editorial Board.