ITSERVE ALLIANCE, INC., Plaintiff, v. DEPARTMENT OF HOMELAND SECURITY, Defendant.
Case No. 1:20-cv-03855 (TNM)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
Under federal law, an employer must file a new or amended H-1B visa petition on behalf of a U.S.-based foreign national employee whenever that employee experiences a “material change” in employment. In Simeio Solutions, LLC, 26 I&N Dec. 542 (AAO 2015), the Administrative Appeals Office (AAO) of the U.S. Citizenship and Immigration Services (USCIS) altered USCIS‘s interpretation of the phrase “material change.” Before Simeio, a change of location within the United States was not material. So an employer did not have to file an amended H-1B visa petition when it moved a foreign employee from one domestic location to another. That changed after Simeio, which defined a “material change” to include changes in work location.
Plaintiff ITServe Alliance, Inc. challenges Simeio on summary judgment. ITServe is a trade association that represents information technology companies whose employees provide services at client sites. Employees of ITServe‘s members often change location. Simeio requires those members to file amended H-1B petitions—and pay filing fees—each time a foreign employee moves to a new geographic area.
The Court finds ITServe has standing because Simeio‘s ruling harms its members. The Court rejects ITServe‘s first argument because USCIS is not regulating workers’ employment conditions. ITServe‘s second argument is unpersuasive because the Secretary‘s delegate designated Simeio as precedential. Simeio was an adjudication, not a legislative rule, so ITServe‘s third argument fails. And ITServe‘s fourth argument is unconvincing because USCIS can issue binding interpretive rules. For these reasons, the Court will deny ITServe‘s motion for summary judgment and will largely grant DHS‘s cross-motion.
I.
Some background on the H-1B visa petition process illuminates the parties’ arguments. Obtaining one of these visas is a two-step procedure. First, an employer, or “petitioner,” must obtain a Labor Condition Application (LCA) from the U.S. Department of Labor (Labor). See
Once the petitioner has an LCA, it can file an H-1B petition with USCIS. See
If the conditions of employment change during this time, the petitioner must notify USCIS. See
Appeals of decisions on H-1B petitions go to the AAO. See
AAO decisions—including those the DHS Secretary designates as precedential—are “informal adjudications” under the Administrative Procedure Act (APA). Fogo De Chao, Inc. v. DHS, 769 F.3d 1127, 1136 (D.C. Cir. 2014). “[A]gencies may use informal adjudications when they are not statutorily required to engage in the notice and comment process or to hold proceedings on the record.” Neustar, Inc. v. Fed. Commc‘ns Comm‘n, 857 F.3d 886, 893 (D.C. Cir. 2017) (cleaned up). Often used in “highly fact-specific contexts,” informal adjudications lack “the hallmarks of legislative rulemaking” but “still must comply with the familiar APA standard banning arbitrary and capricious actions.” Id. (cleaned up).
II.
Simeio involved a petitioner, Simeio Solutions, LLC, that sought an H-1B visa for one of its employees. Simeio, 26 I&N Dec. at 542. The employee was working on an F-1 student visa. Id. at 542-43. Simeio submitted a Form I-129 with an LCA to USCIS‘s California Service Center Director (Director) seeking to re-classify the employee into H-1B status. Id. The LCA stated that the employee would work in Long Beach, California. Id. at 543. The petitioner requested no other worksites for the employee. Id. The Director approved the petition. Id.
Simeio responded and confirmed that the employee no longer worked on the project or at the location specified in the original petition. Id. at 544. Simeio then submitted an LCA that provided two new worksites: Camarillo, California, and Hoboken, New Jersey. Id. The Director concluded that employing the employee at these new worksites constituted a “material change to the terms and conditions of employment” specified in the original petition. Id. Citing
The AAO affirmed the Director‘s decision. Id. at 549. It began by citing
The petitioner shall file an amended or new petition, with fee, with the Service Center where the original petition was filed to reflect any material changes in the terms and conditions of employment or training or the alien‘s eligibility as specified in the original approved petition. An amended or new H-1C, H-1B, H-2A, or H-2B petition must be accompanied by a current or new Department of Labor determination. In the case of an H-1B petition, this requirement includes a new labor condition application.
Applying this conclusion to Simeio‘s situation, the AAO noted that the Long Beach address in the original LCA was different from the Camarillo and Hoboken addresses. Id. More, the salary listed on the H-1B petition was $9,000 less than would be required in either Camarillo or Hoboken. Id. “Such changes in the terms and conditions of the beneficiary‘s employment may, and in this case did, affect eligibility under [
After ITServe sued to overturn the Simeio decision and USCIS‘s guidance, both parties sought summary judgment. See Joint Status Report at 1, ECF No. 11. At the completion of summary judgment briefing, the Court ordered supplemental briefing on certain issues related to ITServe‘s Article III standing. See Order, ECF No. 29. The parties have now submitted the supplemental briefing. The Court begins there and, finding that ITServe has standing, then considers the merits arguments raised in the summary judgment briefing.
III.
Under
Under the APA, a court must “hold unlawful and set aside agency action” that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
IV.
To prove Article III standing, a litigant must suffer an actual or imminent injury that is fairly traceable to the defendant‘s action and that a favorable ruling could redress. See Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 149-150 (2010). An association must meet additional requirements. To show associational standing, ITServe must establish that “(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization‘s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.” Nat‘l Ass‘n of Home Builders v. EPA, 667 F.3d 6, 12 (D.C. Cir. 2011) (cleaned up).
There are two categories of standing arguments before the Court. First, DHS argues that ITServe failed to allege that any of its members faces an imminent risk of harm. Second, the Court asked for supplemental briefing about whether a non-party has standing to challenge an agency adjudication. The Court considers each set of arguments in turn.
A.
DHS focuses on the first element of associational standing. It claims that “ITServe has not presented specific facts to show that its members are currently affected by the AAO‘s decision in Simeio.” Def.‘s Cross-Mot. for Summ. J. and Opp‘n to Pl.‘s Mot. for Summ. J. (Def.‘s Mem.) at 34, ECF No. 22-1. In other words, DHS claims that because ITServe‘s members must have standing to sue in their own right, see Nat‘l Ass‘n of Home Builders, 667 F.3d at 12, and because no member company suing in its own right can show the required actual or imminent injury, see Monsanto, 561 U.S. at 149-50, ITServe lacks standing.
DHS acknowledges that ITServe submitted a declaration from its president testifying that its members have been—and will continue to be—affected by Simeio. Def.‘s Mem. at 34; see also Decl. of Amareswararo Varada (Varada Decl.), ECF No. 1-1. But DHS claims this declaration lacks sufficient specificity. Def.‘s Mem. at 34. It likens this case to Humane Society v. Perdue, 935 F.3d 598 (D.C. Cir. 2019).
The Court disagrees with DHS‘s comparison. Start with the argument that this case is like Humane Society. At issue in that case was the Pork Promotion, Research, and Consumer Information Act, which required pork farmers to pay assessments to the National Pork Board (Board) for the promotion of the industry. See id. at 600. For a marketing campaign, the Board entered a 20-year contract for trademarks owned by the National Pork Producers Council (Council). Id. at 601. After a few years, the Board stopped using the trademarks but kept paying the Council. Id. A pork farmer, the Humane Society, and one associational plaintiff sued the U.S. Department of Agriculture, the Board‘s parent organization. Id. The farmer argued that the Board was misusing the assessments. Id. at 603. He claimed that this deprived him of “the direct economic benefit of the lawful and effective promotions to which he [was] entitled as a statutory beneficiary.” Id. (cleaned up). The Circuit determined this was insufficient for standing because the farmer showed no “harm to his bottom line.” Id. at 604.
To “resolve any possible doubt,” ITServe submitted with its reply brief a declaration from the president of Saxon Global, Inc., an ITServe member company. Pl.‘s Opp‘n to Def.‘s Mot. for Summ. J. and Reply in Supp. of Pl.‘s Mot. for Summ. J. (Pl.‘s Reply) at 10, ECF No. 25; Decl. of Gopi Kandukuri (Kandukuri Decl.), ECF No. 25-1. Kandukuri says that Saxon Global “regularly employs foreign nationals in H-1B status in computer-related occupations to provide information technology services.” Kandukuri Decl. ¶ 8. He adds that Saxon Global is “often required to move H-1B employees during the timeframe of their authorized employment to new customer locations in Metropolitan Statistical Areas not included in the initial Labor Condition Application filed in support of the company‘s approved H-1B petitions.”
But neither case suggests that a plaintiff that addresses standing in its first brief but fails to identify a specifically harmed member in that brief has failed to show standing—provided it later identifies a particular, harmed member. More, both cases are distinguishable. In American Chemistry Council, petitioners submitted no declarations or citations to the record—despite two opportunities—to establish standing. Am. Chem. Council, 468 F.3d at 820. That left the court with a host of unanswered questions about the link between the defendant‘s actions and the plaintiff‘s harm. See id. Not so here.
In Sierra Club, the D.C. Circuit reviewed a rulemaking on direct appeal. See Sierra Club, 292 F.3d at 897. Defendant EPA challenged standing in its brief, leading Sierra Club to
But unlike Sierra Club, because DHS cross-moved for summary judgment, it got the last word and the opportunity to rebut the Kandukuri Declaration. The Court thus has the benefit of the “adversarial procedure.” Id. And unlike Grant—where the plaintiff challenged an argument for the first time in her reply brief—Kandukuri‘s declaration was not a new argument. See Grant, 197 F.3d at 543 n.6. It was more evidence for standing, which ITServe first addressed in its Complaint with the Varada declaration.
DHS tries one last argument. It contends that the Court should reject Kandukuri‘s declaration because ITServe filed it nearly a year after its Complaint. See Compl. (filed Dec. 31, 2020); Kandukuri Decl. (filed Sept. 29, 2021). DHS cites Lujan v. Defenders of Wildlife, 504 U.S. 555, 570 n.4 (1992), for the proposition that standing must be determined as of the time the suit begins. See Def.‘s Reply at 11. So the Court can consider facts in the Kandukuri Declaration that pre-date the Complaint, but not facts that post-date it. Id. And if the Court focuses on events pre-dating the Complaint, DHS argues Kandukuri‘s declaration is insufficient because it “says nothing about any employee transfers that might provide [Saxon Global] (as a member of ITServe) with any certainly impending future injury.” Id. at 12.
The Court can draw conclusions from Kandukuri‘s declaration even if it rejects the two sections DHS finds most troublesome: Kandukuri‘s reference to fees paid “this year” (which presumably refers to 2021, not 2020), and Kandukuri‘s reference to the 63 H-1B petitions Saxon
The Kandukuri Declaration thus identifies a specific member company harmed by Simeio in just the way the Varada Declaration describes. It would have been prudent—and helpful to DHS and the Court—for ITServe to have filed the Kandukuri Declaration with its Complaint. Either declaration, standing alone, might not have been enough. But taking the Varada and Kandukuri Declarations together, ITServe overcomes DHS‘s standing argument.
B.
The Court requested supplemental briefing about whether a non-party like ITServe has standing to challenge an agency adjudication. See Order, ECF No. 29. In Conference Group, LLC v. FCC, 720 F.3d 957 (D.C. Cir. 2013), the Circuit held that “the mere fact that an adjudication creates a precedent that could harm a non-party does not create the injury-in-fact
ITServe submits two arguments about why Conference Group should not control here. First, ITServe argues that Simeio “does not qualify as an adjudication” but is instead “a spurious rule masquerading as an adjudication.” See Pl.‘s Resp. to Order to Show Cause (Pl.‘s Resp.) at 3, ECF No. 30. Because the Court determines below that Simeio was an adjudication, see Section V.C, the Court does not address this argument here. Second, ITServe argues that Conference Group relied on “a line of cases holding that the mere precedential effect of an agency‘s decision is not enough in itself to establish an injury in fact.”
DHS counters that Simeio is an adjudication and that a “bystander” lacks standing to challenge “the precedential effect of an agency action.” Def.‘s Resp. to Order to Show Cause (Def.‘s Resp.) at 2, ECF No. 31 (quoting Conf. Grp., 720 F.3d at 963). DHS distinguishes Teva because there the plaintiff could show an “impending application of an agency‘s statutory interpretation, the firmness of which [was] not in dispute, on a fast-arriving date certain.”
The Court agrees with ITServe that this case is more like Teva than Conference Group. In Teva, the Circuit explained that “[f]or the purpose of the classic constitutional standing analysis, it makes no difference to the ‘injury’ inquiry whether the agency adopted the policy at issue in an adjudication, a rulemaking, a guidance document, or indeed by ouija board; provided the projected sequence of events is sufficiently certain, the prospective injury flows from what the agency is going to do, not how it decided to do it.” 595 F.3d at 1312. Teva then reviewed a handful of cases suggesting that a bystander cannot challenge an agency adjudication. Id. at 1313. It concluded that “[i]n each instance ... the failure to demonstrate standing is more naturally understood as arising from the lack of a sufficiently imminent and concrete injury than from some sort of ad hoc exception to otherwise-universally applicable constitutional doctrine.” Id. The court synthesized the cases suggesting a bystander cannot challenge an adjudication as follows: “merely foreseeable future litigation resulting from a statutory interpretation that an agency has adopted in an adjudication is, alone—i.e., without more—too speculative to satisfy Article III‘s injury-in-fact requirement. An agency‘s imminent application of its established interpretation of a statute, at the potential cost of hundreds of millions of dollars to the regulated firm [which was the alleged harm in Teva], remains, by contrast ... sufficient for standing purposes.” Id. at 1314-15 (cleaned up).
Conference Group—which followed several years later—did not overrule Teva. Instead, the Circuit distinguished the controversy before it and the one in Teva on three bases. First,
On two of the distinctions between Teva and Conference Group, this case is more like Teva. The final distinction suggests this case is more like Conference Group. ITServe challenges Simeio in district court, unlike Conference Group, which sought direct review of the FCC‘s decision in the Circuit. See Conf. Grp., 720 F.3d at 962 (stating that Conference Group invoked jurisdiction under
Although a close call, the Court finds this case is more like Teva. The Teva court stressed the imminence of the injury as the primary reason that Teva had standing to challenge an agency adjudication. See Teva, 595 F.3d at 1312. And here, ITServe‘s members face injury
The Court holds that ITServe has standing.
V.
The Court moves now to ITServe‘s arguments about the merits.
A.
ITServe‘s first merits argument is that USCIS lacks the authority to regulate the employment conditions of H-1B workers. See Mem. of P. & A. in Supp. of Pl.s’ Mot. for Summ. J. (Pl.‘s Mem.) at 31, ECF No. 16-1. ITServe claims that a tapestry of five statutory provisions splits enforcement authority between Labor and DHS and that DHS is trying to encroach on Labor‘s statutory authority.
A description of the statutory text helps explain ITServe‘s argument. The first statute outlining Labor‘s authority is
The first two statutes describing DHS‘s authority are
Now to ITServe‘s arguments. First, it maintains that
ITServe analogizes the AAO‘s action to Bayou Lawn v. Secretary of Labor, 713 F.3d 1080 (11th Cir. 2013). In that case, it was Labor, not DHS, whose rules were under review. The Eleventh Circuit, reviewing the grant of a motion for preliminary injunction, found plaintiffs had showed a likelihood of success on the merits that Labor overstepped its statutory authority when it promulgated rules for the H-2B visa program. See Bayou Lawn, 713 F.3d at 1085. It noted that Congress had explicitly granted rulemaking authority to Labor over the H-2A program, and
ITServe is mistaken. None of these statutes support ITServe‘s position because DHS is not conducting initial reviews of LCAs or investigating complaints about or violations of LCAs—responsibilities given to Labor. See
Second, ITServe argues that Simeio‘s requirement that its members file a new or amended petition with each LCA conflicts with the interaction of
ITServe says that DHS‘s “consultation” with Labor under
Instead, the statutory scheme puts Labor in a gatekeeper function as the first part of a two-step petition process. More, as Simeio noted, federal regulations require DHS to check that the petition matches the LCA. See Simeio, 26 I&N Dec. at 546 n.6 (citing
Simeio thus never inserts USCIS into the LCA process. It only allows USCIS to consider the LCA when adjudicating a petition. That is within USCIS‘s authority.6
ITServe next argues that the Secretary never designated Simeio as a precedential decision. See Pl.‘s Mem. at 36–38. Recall that “the Secretary of DHS may, with the Attorney General‘s approval, designate AAO decisions to serve as precedents in all future proceedings involving the same issue(s).” AAO Practice Manual § 1.5; see also
ITServe overlooks that the Secretary delegated his authority to designate precedential decisions to the DHS general counsel who designated Simeio as precedential. This is evident from two documents provided by DHS. First, a letter from Janet Napolitano and Eric Holder, then the Secretary of Homeland Security and Attorney General, respectively, “designat[ing] the General Counsel as the official within the Department of Homeland Security who may file precedential decisions with the Attorney General.” Let. from Janet Napolitano and Eric Holder (July 29, 2009) at 2, ECF No. 22-2. Second, a letter from Stevan E. Bunnell, then the general counsel of DHS, requesting that DOJ designate Simeio as precedential. See Let. from Stevan E. Bunnell to Juan P. Osuna (Nov. 7, 2014), ECF No. 21-3.
ITServe argues that the Court cannot consider these documents because they were not “before” the AAO when it made its decision. See Pl.‘s Reply at 23–24. To be sure, the Court adjudication. See Def.‘s Mem. at 37–39 (arguing
The letter from Secretary Napolitano and Attorney General Holder was not “evidence” in the case. It had nothing to do with the merits but instead describes a delegation of authority to designate cases as precedential. This delegation applies to all AAO cases, not just Simeio. And the letter from Bunnell designating Simeio as precedential is similarly unrelated to Simeio‘s merits indeed, the letter did not even exist until after the AAO‘s decision. Finally, in the APA context, the Court may “consider documents in the public record of which the court may take judicial notice.” Moghaddam v. Pompeo, 424 F. Supp. 3d 104, 112 (D.D.C. 2020) (citing Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007)). So the Court may consider these letters.
More, because Simeio was published in the Immigration and Naturalization Reporter, DHS is entitled to a presumption of regularity. See Sussman v. U.S. Marshals Serv., 494 F.3d 1106, 1117 (D.C. Cir. 2007) (“The presumption of regularity supports the official acts of public officers and, in the absence of clear evidence to the contrary, courts presume that they have properly discharged their official duties.“) (quoting United States v. Chem. Found., Inc., 272 U.S. 1, 14–15 (1926)). That presumption shifts the burden onto ITServe to present credible evidence that the decision was not properly designated. See Latif v. Obama, 677 F.3d 1175, 1179 (D.C. Cir. 2011). Because ITServe has not shown there was any irregularity in the designation, the Court presumes DHS properly designated Simeio.
The Court finds that DHS properly designated Simeio as precedential.
ITServe‘s next argument is that Simeio is not an adjudication at all but a procedurally defective legislative rule. See Pl.‘s Mem. at 38–50. The APA distinguishes between a rulemaking, see
The D.C. Circuit recognizes two principles that distinguish between rules and adjudications. “First, most legislative rules are generally applicable.” Safari Club Int‘l v. Zinke, 878 F.3d 316, 332 (D.C. Cir. 2017). “Second, rules generally have only ‘future effect’ while adjudications immediately bind parties by retroactively applying law to their past actions.” Id. at 333.
ITServe marshals three arguments for its position. First, it argues that the AAO‘s decision applied “to the regulated public at large” and thus violated Safari Club‘s first principle. Pl.‘s Mem. at 38. ITServe alleges that the Immigration and Naturalization Service (INS), USCIS‘s predecessor agency, had proposed a rule that would have required a new H-1B petition each time a petitioner obtained a new LCA. Id. at 42–43. “By reviving and imposing the INS‘s
ITServe analogizes this case to Ford Motor Co. v. FTC, 673 F.2d 1008 (9th Cir. 1981). Pl.‘s Mem. at 43. There, the Federal Trade Commission began a rulemaking to eliminate a certain industry practice before beginning an adjudication against Ford for engaging in a similar practice. See Ford Motor Co., 673 F.2d at 1008–1010. The FTC affirmed an administrative law judge‘s decision finding that Ford had violated the FTC Act by engaging in the similar industry practice. Id. at 1009. Relying mainly on the fact that the adjudication announced a rule with “general application,” the Ninth Circuit concluded that the FTC had exceeded its authority by proceeding by adjudication rather than by rulemaking. Id. at 1010. The Ford Motor court doubted that the FTC could proceed by rulemaking about one industry practice only to turn around and announce a rule of general applicability using an adjudication in a very similar practice. Id. Ford Motor is like this case, ITServe contends, because in both cases an agency signaled that it thought a rule was appropriate before changing its mind and proceeding by adjudication. Pl.‘s Mem. at 43–44.
But although Safari Club states that “most legislative rules are generally applicable,” that is a statement about rules, not adjudications. Safari Club Int‘l, 878 F.3d at 332. Safari Club does not say that adjudications cannot also have generally applicable effect. Nor could it have—firmly established law makes clear that an adjudication can have binding effect beyond the parties involved. See NLRB v. Bell Aerospace Co., 416 U.S. 267, 294 (1974) (holding that an agency is “not precluded from announcing new principles in an adjudicative proceeding“); Conf. Grp., 720 F.3d at 965 (“The fact that an order rendered in an adjudication may affect agency
True, Ford Motor casts doubt on whether an agency that considers proceeding by rulemaking can then change its mind and proceed by adjudication. But Ford Motor is not binding here. More, the D.C. Circuit has cited that case only once—in a concurrence where the author said this circuit‘s law is “emphatically to the contrary.” Gen. Am. Transp. Corp. v. ICC, 883 F.2d 1029, 1031 (D.C. Cir. 1989) (Silberman, J., concurring).
Second, ITServe argues Simeio had “no retroactive effect.” Pl.‘s Mem. at 44. ITServe claims that Simeio withdrew its H-1B petition long before the AAO issued its decision. See id. In other words, USCIS used a moot case to announce a new rule. ITServe cites a 2016 letter from USCIS in the administrative record. Id.; see also JA at 63. The letter, addressed to Simeio, says that “USCIS received your request to withdraw the petition.” JA at 63. It then states that “[a] letter of withdrawal or revocation was ordered on September 23, 2011” and that the petition is “automatically revoked” under
Under
Start with mootness. According to ITServe, “when an issue no longer has any bearing on the petitioner or foreign national at issue pending on appeal, the AAO normally dismisses the case as moot.” Id. at 45 (citing Exhibit G, ECF No. 16-9, which collects AAO decisions
Now consider Safari Club‘s requirement that adjudications must have retroactive effect or else they are rulemakings. This presents a trickier question. ITServe is correct that the administrative record is sparse. ITServe is also correct that the 2016 letter suggests that at some point ITServe withdrew its petition. But the letter also leaves many unanswered questions. It does not say when USCIS received the withdrawal request. It does not say whether the letter of withdrawal USCIS ordered in September 2011 responded to Simeio‘s withdrawal request. And it does not explain why USCIS is sending the letter to Simeio years after both the petition was purportedly revoked and the AAO had made its decision. Indeed, the whole purpose and cause of the letter is unclear.
ITServe could have done more to discredit the letter. It could have, for example, sought a declaration from Simeio that it withdrew its petition before the AAO‘s decision. Or it could
That is not enough. Agency decisions are entitled to a presumption of regularity. See Morris v. Sullivan, 897 F.2d 553, 560 (D.C. Cir. 1990). Nowhere in Simeio did the AAO state—or even suggest—that the petitioner had withdrawn the petition before the AAO issued its decision. The lack of any filing by Simeio‘s attorney before the AAO is not dispositive, because the attorney may have simply decided no filing was needed or worthwhile. See
Third, ITServe argues that the AAO‘s decision is defective because it “contains only legislative, not adjudicative, facts.” Pl.‘s Mem. at 46 (citing Ass‘n of Nat. Advertisers, Inc. v. FTC, 627 F.2d 1151, 1161 (D.C. Cir. 1979) (“The factual predicate of adjudication depends on ascertainment of facts concerning the immediate parties who did what, where, when, how, and with what motive or intent. By contrast, the nature of legislative fact is ordinarily general, without reference to specific parties.” (cleaned up))). ITServe says that the AAO‘s opinion is “divorced from the actual facts pertaining to the employer in [the] case” and “takes the form of a policy-type discussion.” Id. at 47. “Without any adjudicative facts having particularized relevance to the material change rule . . . Simeio resulted in a legislative policy improperly promulgated through an adjudicative order.” Id. at 48.
The Court holds that Simeio was an adjudication.
D.
ITServe‘s final argument is that USCIS cannot issue binding interpretive rules.7 It grounds this argument in two contentions. For starters, ITServe says that DHS draws its adjudicatory authority from
The Court disagrees. Federal regulations make precedential decisions like Simeio binding. Nowhere in either its memorandum in support of its motion for summary judgment or
The regulation also states that designated decisions “are to serve as precedents in all proceedings involving the same issue(s) . . . [T]hey are binding on all [USCIS] employees in the administration of the Act.”
Rather than explain why a decision designated under
At bottom, ITServe misunderstands Simeio‘s effects. ITServe argues that “USCIS treats the requirements stated in Simeio as a legislative rule compelling compliance [by third parties] without exception.” Pl.‘s Reply at 21. That is wrong. Simeio does not directly regulate third parties. Rather, it directly regulates the activities of USCIS employees adjudicating H-1B petitions. This distinction, while technical, is crucial. That third parties will be affected by these new USCIS policies does not invalidate Simeio, as Neustar and Conference Group make clear.
ITServe counters that these cases do not directly address its claim that an agency proceeding by informal adjudication cannot create binding precedents. Id. at 22. But ITServe‘s position cannot square with
VI.
ITServe‘s arguments that Simeio executes an end-run around the APA are nonfrivolous. Simeio expanded USCIS‘s already broad regulatory authority without the hassle of notice-and-comment rulemaking. Perhaps it would be better for USCIS to announce such an important change through a regulation.
But as the APA binds agencies, so precedent binds this Court. And here precedent favors USCIS. The Court thus will deny ITServe‘s motion for summary judgment and will grant DHS‘s cross-motion for summary judgment except as to standing. A separate Order will issue.
Dated: February 17, 2022
2022.02.17 14:11:52 -05‘00’
TREVOR N. McFADDEN, U.S.D.J.