504 F.Supp.3d 1077
N.D. Cal.2020Background
- Plaintiffs challenged two interim final rules issued Oct. 8, 2020: DOL’s rule changing prevailing-wage percentiles for H-1B/PERM and DHS’s rule revising "specialty occupation"/employer-employee definitions and shortening third-party H-1B validity.
- Defendants invoked the APA’s "good cause" exception to dispense with notice-and-comment (both agencies) and with the 30-day waiting period (DOL), citing the COVID-19 pandemic and elevated unemployment as exigent circumstances.
- Plaintiffs moved to set aside the Rules under the APA for failure to follow required procedures; the preliminary-injunction motion was consolidated with the merits.
- The agencies argued immediate action was necessary to protect U.S. workers (DHS) and to prevent employers from "locking in" lower wages or otherwise evading new wage rates (DOL).
- The Court applied de novo review to the agencies’ good-cause determinations, analyzed delay and the pandemic’s impact specifically on occupations where H-1B workers are employed, and examined whether notice would have frustrated the public interest.
- Ruling: the Court held Defendants failed to show good cause to bypass notice-and-comment (and to make DOL’s rule immediately effective), granted Plaintiffs’ partial summary judgment on the first two APA claims, set aside the Rules, and denied Defendants’ cross-motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DHS had good cause to bypass APA notice-and-comment for its H-1B rule | DHS lacked emergency justification; pandemic impacts do not show a direct, immediate threat to the specific occupations H-1B targets | Pandemic-created unemployment constituted an obvious, compelling emergency requiring immediate regulatory action | Court: No good cause; DHS failed to show narrow, occupation-specific emergency; DHS Rule set aside |
| Whether DOL had good cause to bypass APA notice-and-comment for its prevailing-wage rule | DOL delayed and did not show that notice would be impracticable; DOL’s predictive claims (employers would rush filings) were unsupported | Notice would enable employers to "lock in" lower prevailing wages for years, frustrating the rule’s purpose and harming U.S. workers | Court: No good cause; predictive evidence too thin, prior notice/public statements and agency delay undercut urgency; DOL Rule set aside |
| Whether DOL had good cause to dispense with the APA 30-day waiting period (make rule immediately effective) | Immediate effect was unnecessary and prejudicial; normal waiting period protects reliance interests | Immediate effect needed to prevent harm to U.S. workers and evasion by employers | Court: No good cause for immediate effectiveness; DOL failed to justify bypassing 30-day waiting period |
Key Cases Cited
- E. Bay Sanctuary Covenant v. Trump, 932 F.3d 742 (9th Cir. 2018) (describing APA notice-and-comment purpose and limits on good-cause usage)
- E. Bay Sanctuary Covenant v. Trump, 950 F.3d 1259 (9th Cir. 2020) (reiterating narrow construction of good-cause and requiring evidence for predictive claims)
- United States v. Valverde, 628 F.3d 1159 (9th Cir. 2010) (examining agency good-cause findings and delay; court applied de novo review)
- Mobil Oil Corp. v. Dep’t of Energy, 728 F.2d 1477 (Temp. Emer. Ct. App. 1984) (upholding good cause where announcement would predictably cause market harms)
- Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479 (9th Cir. 1992) (distinguishing notice-and-comment from immediate-effect/30-day waiting-period exceptions)
- Reno-Sparks Indian Colony v. EPA, 336 F.3d 899 (9th Cir. 2003) (agency not entitled to deference on procedural compliance with APA)
- Sorenson Commc’ns, Inc. v. FCC, 755 F.3d 702 (D.C. Cir. 2014) (de novo review of good-cause with deference to factual/expert findings unless arbitrary)
- Tenn. Gas Pipeline Co. v. FERC, 969 F.2d 1141 (D.C. Cir. 1992) (rejecting good cause where speculative harm and planning timelines undercut emergency rationale)
- Am. Fed’n of Gov’t Emps. v. Block, 655 F.2d 1153 (D.C. Cir. 1981) (temporary measures without notice may be justified by judicial directives, but substantive long-term rules require public procedures)