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The Louisiana Forestry Association, Inc., et al v. Hilda Solis

August 20, 2012


The opinion of the court was delivered by: Legrome D. Davis, J.


On January 19, 2011, the Department of Labor ("DOL") issued a new regulation to govern the calculation of the minimum wage that a United States employer must offer in order to recruit foreign workers as part of the H-2B visa program ("the 2011 wage rule"). The H-2B visa program permits employers to recruit unskilled laborers from abroad to fill positions that no qualified United States worker will accept. The DOL predicts that the effect of the 2011 wage rule will be to raise the wages paid to H-2B workers and to United States workers recruited for the same jobs.

A group of associations representing employers in the logging and reforestation, hotel, carnival, sugar cane, and commercial crawfish industries (the "employer associations") brought this suit to challenge the 2011 wage rule. Members of the employer associations make use of the H-2B visa program and therefore may face higher labor costs as a result of the new rule. The employer associations contend that the DOL lacks authority to make any legislative rules, including the 2011 wage rule, with respect to the H-2B visa program, and that the 2011 wage rule was issued in violation of the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701 et seq., and the Regulatory Flexibility Act ("RFA"), id. §§ 601 et seq.

Presently before the Court are cross-motions for summary judgment filed by the employer associations and the defendants-comprising the DOL, the Department of Homeland Security ("DHS"), and the Secretaries of both agencies (collectively, "federal defendants"). (Doc. Nos. 43, 115.) For the reasons that follow, the federal defendants' motion (Doc. No. 43) will be granted and the employer associations' motion (Doc. No. 115) will be denied.

I. Factual Background and Procedural History*fn1

A. History of Rulemaking Related to the H-2B Visa Program A single program-called the H-2 visa program, after its statutory section-formerly encompassed the recruitment of unskilled foreign workers for both agricultural and non-agricultural jobs. See Immigration and Nationality Act ("INA"), Pub. L. No. 82-414, § 101(a)(15)(H)(ii), 66 Stat. 163, 168 (1952) (creating H-2 visa program). The H-2 visa program was administered jointly by the Attorney General and the Secretary of Labor. Id.; Certification of Temporary Foreign Labor for Industries Other than Agriculture or Logging, 33 Fed. Reg. 7570, 7570-71 (May 22, 1968).*fn2

During this period, the DOL issued regulations that governed the H-2 visa program, including its non-agricultural component. See 33 Fed. Reg. at 7570-71. The regulations provided that a regional administrator would consider labor certification applications for temporary workers and would "issue them if he finds that qualified persons in the United States are not available and that the terms of employment will not adversely affect the wages and working conditions of workers in the United States similarly employed." 20 C.F.R. § 621.3(a) (1968).

Congress bifurcated the H-2 visa program in 1986 into the H-2A program, for agricultural workers, and the H-2B program, for unskilled, non-agricultural workers. Immigration Reform and Control Act of 1986 ("IRCA"), Pub. L. No. 99-603, § 301(a), 100 Stat. 3359, 3411. The amended statute provided very little guidance as to the H-2B program. Its entire discussion of the program was, and remains, limited to altering the specialized definition of "nonimmigrant" alien to mean, in part, "an alien . . . having residence in a foreign country which he has no intention of abandoning who is coming temporarily to the United States to perform [non-agricultural] temporary service or labor if unemployed persons capable of performing such service or labor cannot be found in this country." Id. (codified as amended at 8 U.S.C. § 1101(a)(15)(H)(ii)(b)).

In the two decades following IRCA's enactment, the DOL issued, without notice and comment, a series of letters governing the determination of prevailing wages for H-2B labor certification purposes.*fn3 These letters charged the state workforce agencies that partner with the DOL with making prevailing wage determinations for H-2B occupations. Initially, the state workforce agencies used the methodologies of the Davis-Bacon Act ("DBA"), 40 U.S.C. §§ 276a et seq., and the McNamara-O'Hara Service Contract Act ("SCA"), 41 U.S.C. §§ 6701 et seq. (formerly 41 U.S.C. §§ 351-358), to determine prevailing wages if no collective bargaining agreement was in place. See Interim Prevailing Wage Policy for Nonagricultural Immigration Programs, Gen. Admin. Ltr. No. 4-95, at 1-2 (1995). When no DBA or SCA wage rate was available, the state workforce agencies used wage surveys conducted by state employment security agencies or other published wage surveys. See id. at 2.

By the mid-1990s, the DOL had begun to consider "skill levels" in determining the prevailing wages for H-2B occupations. Initially, the DOL classified H-2B employment opportunities as either "entry level"("Level I") or "experienced level" ("Level II"). Gen. Admin. Ltr. No. 4-95, supra, at 5-6. In 1998, the DOL began to use data from the Bureau of Labor Statistics' Occupational Employment Statistics ("OES") program to set prevailing wages if a DBA or SCA wage determination was not available. See Prevailing Wage Policy for Nonagricultural Immigration Programs, Gen. Admin. Ltr. No. 2-98, at 1 (1997). The DOL continued to break its prevailing wage determinations into two skill levels based on the job description provided by the employer. Id. at 5.

The H-1B Visa Reform Act of 2004 created a four-tier system to be used for determining prevailing wages in the "specialty occupations" covered by the H-1B visa program based on the skill level required for the job. Pub. L. No. 108-447, div. J, tit. IV, § 423, 118 Stat. 2809, 3353-54 (codified at 8 U.S.C. § 1182(p)(4)). In a 2005 letter, the DOL applied the four-tier system of the H-1B Visa Reform Act to the H-2B visa program. Mem. to SWA Adm'rs from Emily Stover DeRocco, Asst. Sec'y for Emp't & Training, Revised Prevailing Wage Determination Guidance (May 17, 2005). The 2005 letter also made the OES program the main source of data for establishing prevailing wages in the absence of a collective bargaining agreement. Id. Like its predecessors, the 2005 letter was issued without notice and comment.

In 2008, the DOL promulgated, through notice-and-comment rulemaking, regulations to govern the labor certification process for the H-2B visa program ("the 2008 wage rule"). See Labor Certification Process, 73 Fed. Reg 78,020 (Dec. 19, 2008) (codified at 20 C.F.R. part 655). These regulations codify various aspects of the 2005 guidance. The 2008 wage rule provides that, in the absence of a collective bargaining agreement, "the prevailing wage for labor certification purposes shall be the arithmetic mean . . . of the wages of workers similarly employed at the skill level in the area of intended employment" using OES data. 20 C.F.R. § 655.10(b)(2).*fn4 In applying the 2008 wage rule, the DOL uses the four-tier system set out in the 2005 guidance letter.

B. Legal Challenge to the 2008 Wage Rule Organizations representing foreign and United States workers impacted by the H-2B program filed a challenge in this Court in 2009 to various aspects of the 2008 wage regulation. See Comite de Apoyo a los Trabajadores Agricolas v. Solis ("CATA"), No. 09-240, 2010 WL 3431761 (E.D. Pa. Aug. 30, 2010). The case was assigned to Judge Louis H. Pollak.*fn5 In an opinion issued on August 30, 2010, Judge Pollak held that the DOL had violated the APA by importing into the H-2B program a skill-level methodology derived from the H-2A program without ever explaining its reasons for doing so. Id. at *25. Judge Pollak also concluded that the four-tier wage structure set out in the 2005 letter was itself a legislative rule, which had not been subject to notice and comment and was therefore invalid. Id. Out of concern that vacating the four-tier skill-level methodology would create a regulatory gap, Judge Pollak left the 2008 wage rule in place, but ordered the DOL to promulgate a replacement regulation within 120 days of the date of his opinion. Id. Almost two years later, the 2008 wage rule remains in effect.

C. The 2011 Wage Rule

The wage rule that is the subject of the present challenge was promulgated as a replacement for the invalidated 2008 wage rule. On October 5, 2010, the DOL issued a notice setting forth a proposed rule governing prevailing wage determinations related to the H-2B program. See Wage Methodology for the Temporary Non-Agricultural Employment H-2B Program, 75 Fed. Reg. 61,578 (Oct. 5, 2010) (hereinafter, "Proposed Rule"). In its notice, the DOL stated that it was concerned that the four-tier skill-level methodology did not produce "the appropriate wage necessary to ensure U.S. workers are not adversely affected by the employment of H-2B workers." Id. at 61,579. The proposed rule redefined the prevailing wage as the highest of: (1) the wage set forth in a collective bargaining agreement between the union and the employer, if one exists; (2) the applicable wage rate established under the DBA or the SCA, if such wage rate has been determined for the relevant occupation; or (3) the arithmetic mean of the wages of workers similarly employed in the occupation, as determined by the OES program. Id. at 61,579-80.

The DOL opined that the proposed rule "will best achieve the Department's policy objectives of ensuring that wages of U.S. workers are more adequately protected and, thus, that employers are only permitted to bring H-2B workers into the country where the wages and working conditions of U.S. workers will not be adversely affected." Proposed Rule, supra, 75 Fed. Reg. at 61,581. The DOL specifically requested "comments from the public on alternatives for calculating a prevailing wage that provides adequate protections to U.S. and H-2B workers." Id.

The DOL received more than 300 comments on the proposed rule, 251 of which it deemed to be original. Wage Methodology for the Temporary Non-Agricultural Employment H-2B Program, 76 Fed. Reg. 3452, 3453 (Jan. 19, 2011) (hereinafter, "Final 2011 Rule"). As explained in the preamble to its final rule, the DOL determined that, as a result of "[t]he predominance of Level I wages in the program, wages based on the mean of the bottom one-third of all reported wages" the skill-level methodology "artificially lowers the wage to a point that it no longer represents a market-based wage for the occupation." Id. at 3463, 3477. Based on this finding, the DOL chose to abandon the use of skill levels in the determination of prevailing wages for H-2B purposes. The final wage rule hewed closely to the proposed rule, but in response to comments, added a mechanism by which employers may request permission to submit their own wage surveys in limited circumstances. See id. at 3466-67, 3484.

The DOL projected that the revised rule would result in average hourly pay increases of $4.83 per hour for H-2B workers and U.S. workers recruited in conjunction with H-2B visa applications. Final 2011 Rule, supra, 76 Fed. Reg. at 3470-71. According to the DOL's estimate, the total annual "transfer cost" of the rule, defined as the total additional wages all employers participating in the H-2B program would be required to pay to H-2B workers as a result of the rule, would be $847.4 million. Id.

The 2011 wage rule was originally set to go into effect on January 1, 2012. Id. at 3452. The DOL later moved the effective date forward to September 30, 2011, to comply with a court order in the CATA litigation. Amendment of Effective Date of Wage Methodology, 76 Fed. Reg. 45,667 (Aug. 1, 2011); see CATA v. Solis, No. 09-240, 2011 WL 2414555 (E.D. Pa. June 16, 2011). The DOL has since postponed implementation of the 2011 wage rule three times in response to the present suit; a parallel suit in the United States District Court for the Northern District of Florida, seeBayou Lawn & Landscape Serv. v. Solis, No. 11-445 (N.D. Fla. filed Sept. 21, 2011); and provisions contained in appropriations legislation barring the expenditure of funds to implement the rule. See Postponement of Effective Date, 76 Fed. Reg. 59,896 (Sept. 28, 2011); Delay of Effective Date, 76 Fed. Reg. 73,508 (Nov. 29, 2011); Delay of Effective Date, 76 Fed. Reg. 82,116 (Dec. 30, 2011). The 2011 wage rule currently is set to go into effect on October 1, 2012. Id.

In the meantime, the DOL has essentially been forced to continue operating under the 2008 wage rule that Judge Pollak deemed invalid on August 30, 2010, almost two years ago. See 76 Fed. Reg. 82,116, 82,117 (commenting that Congress's explicit refusal to fund the 2011 wage rule in the Consolidated Appropriations Act of 2012 led to "the distinct possibility that [the DOL] would be unable to operate the H-2B program for the remainder of FY 2012 if the effective date of the Wage Rule were not postponed" once again). Yet the parties inform us that they see no end in sight. During oral argument, counsel for the federal defendants represented that he knew of nothing imminent in Congress with respect to this matter. Hr'g Tr. 3, June 28, 2012. And counsel for the employer associations similarly stated that "we are not anywhere close to a final resolution." Hr'g Tr. 5. In fact, the only congressional action we heard about involved preliminary efforts to extend the status quo (and presumably, the life of the remarkably persistent 2008 wage rule) through the end of fiscal year 2013. Hr'g Tr. 5-6.

D. The Louisiana Proceedings

The employer associations filed the present action on September 7, 2011, as Civil Action No. 11-1623 in the United States District Court for the Western District of Louisiana. The case was assigned to Judge Dee Drell. In their complaint, the employer associations challenge the validity of the 2011 wage rule under the APA and the RFA and request declaratory and injunctive relief. (Doc. No. 1, at 37-47.)*fn6

Shortly after the complaint was filed, the plaintiffs in CATA filed an unopposed motion to intervene as defendants in the Louisiana litigation, followed by a motion to transfer venue to this Court. (Doc. Nos. 10, 14.) On December 13, 2011, Judge Drell issued an order transferring venue and denying, without prejudice, the employer associations' motion for a preliminary injunction. See La. Forestry Ass'n, Inc. v. Solis, 814 F. Supp. 2d 655 (W.D. La. 2011).

After Judge Drell transferred the case to this Court, the parties filed the cross-motions for summary judgment that are currently pending. We heard oral argument on June 28, 2012, and the motions are now ripe for disposition.

II. Legal Analysis

This Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 5 U.S.C. §§ 611(a) and 704.

The employer associations have standing based on the economic harm that their members, as employers participating in the H-2B program, may suffer if the 2011 wage rule is permitted to take effect. See Hunt v. Wash. State Apple Advertising Comm'n, 432 U.S. 333, 342 (1977) (associational standing); Nat'l Credit Union Admin. v. First Nat'l Bank & Trust Co., 522 U.S. 479, 488 (1998) (APA standing).

In challenges to agency action brought under the APA, summary judgment is the "mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review." Sierra Club v. Mainella, 459 F. Supp. 2d 76, 90 (D.D.C. 2006) (citations omitted). "The task of the reviewing court is to apply the appropriate APA standard of review, 5 U.S.C. § 706, to the agency decision based on the [administrative] record." Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985).*fn7 Pursuant to 5 U.S.C. § 706, the reviewing court is to "hold unlawful and set aside agency action, findings, and conclusions" that are, inter alia, (1) "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;" (2) "without observance of procedure required by law;" or (3) "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A), (C) & (D).

The employer associations' claims fall into two categories: (1) a challenge to the DOL's authority to promulgate legislative rules with respect to the H-2B program; and (2) various challenges relating to the DOL's decision-making process in promulgating the 2011 wage rule.

Each category of claims will be considered in turn.

A. Challenge to the DOL's Authority to Make Rules The employer associations argue that the DOL lacks the authority to make legislative rules with respect to the H-2B program because the INA charges the DHS, not the DOL, with administering the program and because the DHS's power to make legislative rules related to the program is non-delegable and/or was not delegated. (Doc. No. 115, at 11-36.)*fn8

Before resolving these claims, it is helpful to review the statutory and regulatory framework governing the H-2B visa program. As noted above, the INA defines "nonimmigrant" to include "an alien having residence in a foreign country which he has no intention of abandoning who is coming temporarily to the United States to perform [non-agricultural] temporary service or labor if unemployed persons capable of performing such service or labor cannot be found in this country." 8 U.S.C. § 1101(a)(15)(H)(ii)(b). The INA also confers broad authority and discretion on the DHS to promulgate regulations regarding the issuance of nonimmigrant visas generally: 8 U.S.C. § 1184(a)(1) provides that "[t]he admission to the United States of any alien as a nonimmigrant shall be for such a time and under such conditions as [the DHS] may by regulations prescribe."*fn9 With regard to the H-2B program, the statute specifies, in relevant part, that:

The question of importing any alien as a nonimmigrant under subparagraph (H) . . . of section 1101(a)(15) of this title . . . in any specific case or specific cases shall be determined by [the DHS], after consultation with appropriate agencies of the Government, upon petition of the importing employer. Such petition, shall be made and approved before the visa is granted. ...

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