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[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75179-75184]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28823]

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DEPARTMENT OF LABOR

Office of the Secretary of Labor

Intent To Issue Declaratory Order

AGENCY: Office of the Secretary of Labor, Department of Labor.

ACTION: Notice of intent to issue declaratory order; request for 
comment.

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SUMMARY: The Secretary of Labor (Secretary) is considering issuing on 
his own motion a declaratory order confirming that he has exclusive 
authority to make legal and policy determinations based on his 
statutory and regulatory authority to administer and enforce the H-2B 
temporary labor certification program. Such a declaratory order would 
remove uncertainty about that authority created by a decision of the 
Board of Alien Labor Certification Appeals in Island Holdings LLC, 
2013-PWD-00002 (BALCA Dec. 3, 2013) (en banc). The Secretary issues 
this Notice pursuant to the authority granted in the Administrative 
Procedure Act (APA), 5 U.S.C. 554(e), to issue declaratory orders ``to 
terminate a controversy or remove uncertainty.'' The Secretary will 
accept comments from the public on this Notice for 30 days, and may 
issue a declaratory order after consideration of all comments received 
in that timeframe.

DATES: This Notice is effective December 17, 2014. Interested persons 
are invited to submit written comments on this Declaratory Order on or 
before January 16, 2015.

ADDRESSES: You may submit comments, identified by docket number ETA-
2014-0003, by any one of the following methods:
     Federal e-Rulemaking Portal www.regulations.gov. Follow 
the Web site instructions for submitting comments.
     Mail or Hand Delivery/Courier: Please submit all written 
comments (including disk and CD-ROM submissions) to Adele Gagliardi, 
Administrator, Office of Policy Development and Research, Employment 
and Training Administration, U.S. Department of Labor, 200 Constitution 
Avenue NW., Room N-5641, Washington, DC 20210.
    Please submit your comments by only one method. Comments received 
by means other than those listed above or received after the comment 
period has closed will not be reviewed. The Departments will post all 
comments received on http://www.regulations.gov without making any 
change to the comments, including any personal information provided. 
The http://www.regulations.gov Web site is the Federal e-rulemaking 
portal and all comments posted there are available and accessible to 
the public. The Departments caution commenters not to include personal 
information such as Social Security Numbers, personal addresses, 
telephone numbers, and email addresses in their comments as such 
information will become viewable by the public on the http://www.regulations.gov Web site. It is the commenter's responsibility to 
safeguard his or her information. Comments submitted through http://www.regulations.gov will not include the commenter's email address 
unless the commenter chooses to include that information as part of his 
or her comment.

[[Page 75180]]

    Postal delivery in Washington, DC, may be delayed due to security 
concerns. Therefore, the Departments encourage the public to submit 
comments through the http://www.regulations.gov Web site.
    Docket: For access to the docket to read background documents or 
comments received, go to the Federal eRulemaking portal at http://www.regulations.gov. The Departments will also make all the comments 
either Department receives available for public inspection during 
normal business hours at the Employment and Training Administration 
(ETA) Office of Policy Development and Research at the above address. 
If you need assistance to review the comments, DOL will provide you 
with appropriate aids such as readers or print magnifiers. DOL will 
make copies of the rule available, upon request, in large print and as 
an electronic file on computer disk. DOL will consider providing the 
interim final rule in other formats upon request. To schedule an 
appointment to review the comments and/or obtain the rule in an 
alternate format, contact the ETA Office of Policy Development and 
Research at (202) 693-3700 (VOICE) (this is not a toll-free number) or 
1-877-889-5627 (TTY/TDD).

FOR FURTHER INFORMATION CONTACT: For further information, contact 
William W. Thompson, Acting Administrator, Office of Foreign Labor 
Certification, ETA, U.S. Department of Labor, 200 Constitution Avenue 
NW., Room C-4312, Washington, DC 20210; Telephone (202) 693-3010 (this 
is not a toll-free number). Individuals with hearing or speech 
impairments may access the telephone number above via TTY by calling 
the toll-free Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

    The Immigration and Nationality Act (INA) establishes the H-2B visa 
classification for a non-agricultural temporary worker ``having a 
residence in a foreign country which he has no intention of abandoning 
who is coming temporarily to the United States to perform . . . 
temporary [non-agricultural] 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 further requires 
an importing employer (H-2B employer) to petition the Department of 
Homeland Security (DHS) for classification of the prospective temporary 
worker as an H-2B nonimmigrant, and the petition must be made and 
approved before the beneficiary (H-2B worker) can be considered 
eligible for an H-2B visa or H-2B status. 8 U.S.C. 1184(c)(1). In 
adjudicating an H-2B petition, the INA requires DHS to consult with 
``appropriate agencies of the Government[.]'' Id.
    DHS has determined that in order to administer the INA's H-2B visa 
program it must consult with the Department of Labor (DOL) to determine 
whether U.S. workers capable of performing the temporary services or 
labor are available and that the foreign worker's employment will not 
adversely affect the wages or working conditions of similarly employed 
U.S. workers. 8 CFR 214.2(h)(6)(iii)(A). DHS's regulation requires 
employers to obtain certification from DOL that these conditions are 
met prior to submitting a petition to DHS. Id. DHS requires DOL to 
``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.'' 8 CFR 214.2(h)(6)(iii)(D). DOL has 
rulemaking authority to carry out DHS's charge to establish rules 
governing the temporary labor certification process. Louisiana Forestry 
Ass'n v. Secretary, U.S. Department of Labor, 745 F.3d 653, 669, 672-
675 (3rd Cir. 2014). DOL's H-2B regulations require a determination 
whether a qualified U.S. worker is available to fill the petitioning H-
2B employer's job opportunity and whether a foreign worker's employment 
in the job opportunity will adversely affect the wages or working 
conditions of similarly employed U.S. workers. See 20 CFR part 655, 
subpart A. As part of DOL's labor certification process, DOL sets the 
wage that employers must offer and pay foreign workers entering the 
country on an H-2B visa. See 20 CFR 655.10.
    On April 24, 2013, DHS and DOL (the Departments) issued an interim 
final rule (IFR) that revised DOL's method of determining the 
prevailing wage in the H-2B program.\1\ Wage Methodology for the 
Temporary Non-Agricultural Employment H-2B Program, Part 2, 78 FR 
24,047 (Apr. 24, 2013). The IFR was a direct response to a court order 
vacating a portion of the DOL's prevailing wage methodology and 
requiring the agency to come into compliance within 30 days. Comite de 
Apoyo a los Trabajadores Agricolas (CATA) v. Solis, 933 F. Supp. 2d 700 
(E.D. Pa. 2013) (CATA II). The CATA II Court found that the 2008 
regulation then being implemented to set the H-2B prevailing wage, 
which required the issuance of prevailing wages based on four 
artificial skill levels that were wholly irrelevant to unskilled H-2B 
work, violated the INA by allowing employers to pay substandard wages 
that harm the domestic labor market.\2\ CATA II, 933 F. Supp. 2d at 
713.\3\ As a result, the IFR set a new,

[[Page 75181]]

legally valid prevailing wage standard to allow for an immediate 
adjustment of the wage rates for workers currently employed under the 
vacated 2008 wage rule. 78 FR at 24,056. In order to comply with the 
CATA II order, the preamble to the IFR notified the regulated community 
that the new prevailing wage rate under the IFR would apply to all 
employers currently employing H-2B workers in the U.S. upon individual 
notification to the employer of a new prevailing wage determination. 
Id. at 24,055.
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    \1\ The Departments issued the 2013 IFR jointly to dispel 
questions that arose contemporaneously with its promulgation 
regarding the respective roles of the two agencies and the validity 
of DOL's regulations as an appropriate way to implement the 
interagency consultation specified in section 214(c)(1) of the INA, 
8 U.S.C. 1184(c)(1). See Bayou Lawn & Landscape Servs. v. Sec'y of 
Labor, 713 F.3d 1080 (11th Cir. 2013) (concluding that plaintiffs 
are likely to prevail on their allegation that the Department of 
Labor lacks independent rulemaking authority under the INA to issue 
legislative regulations implementing its role in the H-2B program). 
However, the Eleventh Circuit in Bayou only reviewed the district 
court's entry of a preliminary injunction against implementation of 
DOL's H-2B rule issued before the joint IFR. Therefore, the Bayou 
decision only addressed the plaintiffs' likelihood of success on the 
merits, and was not a final judgment on the plaintiffs' claim that 
DOL is without authority to promulgate legislative rules in the H-2B 
program before the issuance of the joint IFR. The latter issue is 
currently before the district court awaiting decision on pending 
motions for summary judgment. As noted above and in sharp contrast 
to the Bayou case, in an APA challenge to the 2011 Wage Rule, which 
also tested DOL's authority to issue legislative rules in the H-2B 
program, the U.S. Court of Appeals for the Third Circuit held 
recently that ``DOL has authority to promulgate rules concerning the 
temporary labor certification process in the context of the H-2B 
program, and that the 2011 Wage Rule was validly promulgated 
pursuant to that authority.'' La. Forestry Ass'n v. Perez, 745 F.3d 
653, 669 (3d Cir. Feb. 5, 2014); see also G.H. Daniels & Assocs., 
Inc. v. Solis, 2013 WL 5216453, *4-5 (D. Colo. Sept. 17, 2013) (DOL 
has authority to issue H-2B legislative rules), appeal pending, No. 
13-1479 (10th Cir.).
    \2\ The CATA II order was the culmination of a years-long period 
of DOL rulemaking, challenges to that rulemaking, and Congressional 
riders that prevented the implementation of the agency's rules. In 
the preceding CATA I decision, Civ. No. 2:09-cv-240-LP, 2010 WL 
3431761 (E.D. Pa. 2010), the district court concluded that the four-
tiered skill levels in the 2008 prevailing wage rule were 
implemented without following the Administrative Procedure Act's 
notice-and-comment requirements. However, rather than vacate that 
methodology, the CATA I court left it in place and ordered DOL to 
issue a replacement rule that complied with the APA within 120 days. 
CATA I, slip op. at 27. DOL complied with the CATA I order by 
revising the H-2B wage regulation through notice and comment 
procedures (76 FR 3452, Jan. 19, 2011), but Congress, through 
appropriations riders, blocked its implementation. For a complete 
history of events leading up to the CATA II order and the IFR, see 
``Notification of Status of the 2011 H-2B Wage Rule,'' 79 FR 14450 
(March 14, 2014).
    \3\ As discussed further below in Sec. III, supra, the CATA 
orders anticipated that once DOL issued a valid regulatory method 
for determining the prevailing wage, the agency would also issue 
supplemental prevailing wage determinations to employers with 
current labor certifications to correct the unlawful wage issued 
with those extant certifications.
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    To implement the IFR, on April 25, 2013, DOL issued an ``FAQ'' on 
its Web site informing the public that ``[e]mployers who have H-2B 
workers performing work that is based on the [vacated 2008 regulation] 
on or after April 24, 2013, will receive a new prevailing wage 
determination in accordance with the Wage Methodology IFR.'' Employment 
and Training Administration, Frequently Asked Questions, Interim Final 
Rule, Wage Methodology for the Temporary Non-Agricultural Employment H-
2B Program, Part 2, at 1 (Apr. 25, 2013). DOL also advised the public, 
consistent with the statement in the preamble to the IFR, that 
``employers are required to offer and pay [the new IFR] wage for any 
work performed on or after the date the employer receives the 
supplemental determination.'' Id. In addition, DOL indicated that 
employers were permitted under the regulation to file an appeal of any 
supplemental prevailing wage determination, but not based on a 
challenge to the occupational classification, because employers should 
have already raised that issue when they received their original 
prevailing wage determinations. Id. at 2. Immediately following the 
publication of the IFR, DOL issued supplemental prevailing wage 
determinations to all H-2B employers subject to the IFR, including 
employers currently employing H-2B workers under the vacated 2008 wage 
regime. In each supplemental prevailing wage determination, DOL 
informed the employer of its ability to seek a redetermination of the 
supplemental prevailing wage determination, pursuant to 20 CFR 
655.10(g). On August 12, 2013, DOL completed the processing of new and 
supplemental prevailing wage determinations for all cases falling 
within the scope of the IFR.

II. The Island Holdings Challenge

    Island Holdings, LLC, filed applications for labor certification 
with DOL in early 2013 for multiple H-2B nonimmigrant workers with 
proposed dates of employment into November 2013. When filing its 
applications for H-2B certification, Island Holdings agreed to pay the 
wage rate that equals or exceeds the highest of the most recent 
prevailing wage rate that is or will be issued by DOL for the time 
period the H 2B workers perform work in the United States. See ETA Form 
9142--Appendix B.1. Before the publication of the IFR, DOL certified 
three Island Holdings' applications with prevailing wages based on the 
2008 wage methodology, and these prevailing wages were valid generally 
through the end of 2013. Shortly after DOL published the IFR, the 
agency issued to Island Holdings three supplemental prevailing wage 
determinations (SPWDs) informing the company that it was required to 
pay new prevailing wage rates, as applicable under the IFR.
    On May 23, 2013, Island Holdings filed an administrative appeal of 
DOL's supplemental prevailing wage determinations with the Board of 
Alien Labor Certification Appeals (BALCA), a group of Administrative 
Law Judges (ALJs) empowered to hear and decide appeals involving alien 
labor certification. 20 CFR 655.11(e); 655.33(e). The BALCA remanded 
the matter back to DOL to address Island Holdings' request for a 
redetermination under 20 CFR 655.10(g). Island Holdings subsequently 
sought a redetermination of DOL's supplemental prevailing wage 
determinations, but DOL determined that the agency's initial wage 
adjustments under the IFR were correct. Consistent with its statement 
in the IFR, DOL informed Island Holdings that the CATA II Court's 
vacatur order required the agency to replace the vacated 2008 
prevailing wage rates with the valid prevailing wage rates under the 
IFR. DOL also informed Island Holdings that by signing ETA Form 9142, 
Appendix B.1, the company agreed, as a condition for importing foreign 
workers, that it would pay the prevailing wage rate in effect at the 
time the company employed H-2B workers in the United States. Because 
the 2008 wage rates had been vacated and were no longer in effect, DOL 
informed Island Holdings that the new IFR wage rates controlled.
    Island Holdings again sought an administrative appeal of DOL's 
supplemental prevailing wage determinations under the IFR, which the 
BALCA docketed for en banc review. On December 3, 2013, the BALCA 
purportedly vacated DOL's supplemental prevailing wage determinations 
under the IFR. See Island Holdings LLC, 2013-PWD-00002 (BALCA Dec. 3, 
2013) (en banc). Contrary to the Secretary of Labor's interpretation of 
the IFR stated in the preamble, the BALCA determined that DOL lacks the 
authority to issue supplemental prevailing wage determinations in cases 
where DOL has already approved labor certification applications based 
on the vacated 2008 prevailing wage rule. The BALCA rejected DOL's 
position, as stated in the preamble to the IFR, that the CATA II 
Court's vacatur order requires DOL to issue supplemental prevailing 
wage determinations to replace the vacated 2008 prevailing wage rates 
for all work performed by H-2B nonimmigrant workers after the issuance 
of the IFR. In addition, the BALCA determined that DOL lacks authority 
to require employers to pay the highest of the most recent prevailing 
wage that is or will be issued by DOL to the employer for the time 
period H-2B workers perform labor or services in the United States, 
despite the employer's signed agreement on ETA Form 9142, Appendix B.1, 
to pay the adjusted prevailing wage rate.
    On December 11, 2013, CATA filed a civil action challenging the 
BALCA's Island Holdings decision as arbitrary, capricious, and in 
excess of law under the Administrative Procedure Act. CATA v. Perez,--
FRD.--,2014 WL 3629528 (E.D. Pa. 2014) (CATA III). On January 10, 2014, 
CATA moved for summary judgment, seeking an order vacating the BALCA's 
decision. CATA argued that the BALCA, as subordinate Administrative Law 
Judges, lacks the authority to overrule the Secretary of Labor on 
issues of law and policy. Even if the BALCA had such authority, CATA 
contended that the BALCA's decision is an unreasonable and substantive 
alteration of the agency's legislative rule under the IFR, which 
violates the requirements of notice and comment rulemaking. In its 
pleadings, the Department of Labor agreed that Island Holdings does not 
represent the legal or policy decision of the Secretary of Labor as 
reflected in the IFR. The Department stated that the ``BALCA's Island 
Holdings decision represents a resolution of that individual case which 
is not subject to further administrative review . . ., but the BALCA's 
decision does not represent the legal position of the Secretary of 
Labor.'' On December 20, 2013, while the CATA III case was pending, DOL 
stayed further action on all pending supplemental prevailing wage 
determinations (approximately 1050 SPWDs), and has not yet taken any 
further action on them.
    On July 23, 2014, the district court dismissed CATA's complaint, 
concluding that the plaintiffs were

[[Page 75182]]

without standing because there was no showing of agency action applying 
Island Holdings to CATA or its members. CATA III,--FRD.--,2014 WL 
3629528, *7-8, The district court also held that the case did not 
involve final agency action because ``it is . . . the Secretary of 
Labor, and not the BALCA, that ultimately makes the policies and rules 
governing H-2B prevailing wages.'' Id. at 8. Finally, the court 
concluded that because the DOL was presently engaged in rulemaking to 
revise the H-2B wage methodology, adjudication would be premature 
because the agency may address the issue in that context. Id. at 8-10.

III. Basis for Declaratory Order

    The BALCA's Island Holdings decision has created uncertainty about 
the Secretary of Labor's authority to set law and policy in the H-2B 
program generally, and about the immediate application of the revised 
wage regulation in the IFR to employers with H-2B workers employed at 
the time of the IFR but with prevailing wages set under the vacated 
2008 wage rule. The decision has further cast uncertainty on the legal 
status of the pending supplemental prevailing wage determinations that 
DOL stayed shortly after the BALCA's decision. DOL's expectation was 
that the CATA III litigation, which squarely framed the issue whether 
the BALCA's Island Holdings decision exceeded the scope of its 
authority, would dispose of the matter in the Secretary's favor and 
resolve the uncertainty created by the BALCA. However, the district 
court chose to stay its hand, and returned resolution of the issue to 
DOL. Although the agency is currently preparing rulemaking to address 
issues involving the methodology to set the H-2B prevailing wage, that 
rulemaking cannot address the determination of rights and obligations 
under a prior rule, Bowen v. Georgetown University Hosp., 488 U.S. 204, 
208-211 (1988), and in any event will not be finalized until 2015 at 
the earliest.
    The BALCA's Island Holdings decision does not reflect the legal 
position of the Secretary of Labor because the BALCA erroneously 
rejected the Secretary of Labor's own plain interpretation of the 
relevant regulatory provisions, as reflected in the preamble to the IFR 
and a separate notice amending ETA Form 9142, requiring H-2B employers 
to attest that they will pay at least the prevailing wage that ``is or 
will be issued by the Department'' during the course of the certified 
employment. See 78 FR at 24,055; 76 FR 21,036 (Apr. 14, 2011).\4\ In 
dismissing the Secretary's preamble discussions, the BALCA ignored the 
established principle that a preamble statement to a rule constitutes 
the best evidence of the agency's contemporaneous interpretation of a 
regulation, to which the courts owe substantial deference. See Public 
Citizen v. Carlin, 184 F.3d 900, 911 (D.C. Cir. 1999); cf. Dearborn 
Public Schools, 1991-INA-222 (BALCA Dec. 7, 1993) (en banc), (BALCA, as 
a non-Article III court, lacks inherent authority to rule on the 
validity of a regulation).
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    \4\ When it published the new ETA Form 9142 requiring employers 
seeking a labor certification to swear under penalty of perjury that 
they would pay at least the prevailing wage that ``is or will be 
issued by the Department'' during the course of the certified 
employment, the Department explained that when a new wage rate 
became effective as a result of a revision to the methodology to 
determine the prevailing wage, employers would be required to pay 
the prevailing wage rate in effect for the period of work 
encompassed by their application, which could result in two wage 
rates being applicable to a single application. 76 FR 21,036. 
Employers have been voluntarily signing this attestation for over 
three years.
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    Moreover, the BALCA's decision in Island Holdings that the 
Department is without authority to issue supplemental prevailing wage 
determinations is in direct opposition to the district court's orders 
in the CATA case, and potentially leaves the Department susceptible to 
conflicting legal obligations. CATA I ordered DOL to issue a new wage 
regulation that followed APA procedures. While DOL was drafting its new 
wage regulation to comply with CATA I, the district court concluded 
that it need not order DOL to issue conditional labor certifications to 
employers seeking to hire H-2B workers that would require employers to 
agree to pay a prevailing wage set by the new methodology as soon as 
that methodology became effective. Rather, the court specifically held 
that nothing in the existing H-2B regulations precluded DOL from 
issuing certifications conditioned on a promise to pay a new prevailing 
wage as soon as one became effective. CATA I, 2010 WL 4823236, at *2-3 
(Nov. 24, 2010). The agency complied with the CATA I order in 2011 by 
issuing a new wage rule. 76 FR 3452. Congress then barred that 2011 
wage rule from being implemented through a series of appropriations 
riders, causing the agency to continue applying the invalid 2008 wage 
rule. The court in CATA II then vacated the 2008 wage rule, concluding 
that prevailing wage determinations issued based upon the four-tiered 
wage rates in that rule resulted in adverse effect on U.S. workers' 
wages, and that the labor certifications based on such prevailing wages 
``exceed the bounds of DOL's delegated authority.'' 933 F. Supp. 2d at 
711-712. The court also found that the four-tiered wages required by 
the 2008 rule violated section 706(2)(A) of the APA, because it had 
consequences that ``plainly contradict congressional policy and render 
the 2008 Wage Rule invalid[.]'' Id. at 713. Once the court vacated the 
2008 wage rule, it ceased to exist and DOL was obligated to move 
quickly to issue a valid replacement rule to fill the void. Harper v. 
Virginia Dep't of Taxation, 509 U.S. 86, 97 (1993); Nat'l Fuel Gas 
Supply Corp. v. FERC, 59 F.3d 1281, 1289 (D.C. Cir. 1995).
    Taken together, these rulings make it clear that the CATA court 
expected that once DOL issued a valid regulatory method for determining 
the prevailing wage, the agency would also issue supplemental 
prevailing wage determinations to employers with current labor 
certifications to correct the unlawful wage issued with those extant 
certifications. The Secretary determined that the court's orders 
obliged the Department to issue the SPWDs, and that judgment is 
reflected in the IFR and its implementing guidance. The BALCA's Island 
Holdings decision directly controverts the CATA orders and, if abided, 
leaves the Department vulnerable to continuing legal challenges based 
on prevailing wage determinations invalidated by the IFR on April 24, 
2013.
    Even if DOL were not required under the CATA Court's decisions to 
adjust the prevailing wage obligations of H-2B employers under the IFR, 
the BALCA still erred in determining that DOL was not authorized to 
issue supplemental prevailing wage determinations. In 2011, DOL amended 
its ETA Form 9142, Appendix B.1, to require an agreement from all H-2B 
employers, as a condition for importing H-2B nonimmigrant workers, to 
pay the prevailing wage rate in effect for the pay period of work 
encompassed by the employer's labor certification application for H-2B 
nonimmigrant workers. 76 FR at 21,036-39. In the preamble to the 
Federal Register notice announcing the amendment to ETA Form 9142, 
Appendix B.1, the Assistant Secretary of Labor stated that DOL requires 
all employers who apply for an H-2B labor certification to agree, as a 
condition of receiving the H-2B labor certification, to pay the 
prevailing wage rate in effect for the period of work encompassed by 
the employers' labor certification applications. Id. at 21,036. When 
publishing the IFR, the Secretary of Labor again stated that all 
employers are required to comply with this condition after receiving a 
supplemental

[[Page 75183]]

prevailing wage determination under the IFR. 78 FR at 24,055. Thus, 
DOL's issuance of supplemental prevailing wage determinations under the 
IFR is authorized by the contractual conditions to which the employers 
agreed when signing ETA Form 9142, Appendix B.1, and the Secretary's 
interpretation of the scope of the IFR wage obligations for employers 
currently employing H-2B workers under wage rates that have been 
vacated or rendered legally erroneous.
    In the case under review, Island Holdings willingly agreed to the 
wage adjustment conditions when the company signed ETA Form 9142, 
Appendix B.1. Island Holdings agreed to pay the wage rate that equals 
or exceeds the highest of the most recent prevailing wage rate that is 
or will be issued by DOL for the time period the H-2B workers perform 
work in the United States. Because Island Holdings specifically agreed 
to contractual terms set by DOL as a condition for importing foreign 
workers, the company remains bound to those contractual terms. Woodside 
Village v. Secretary of Labor, 611 F.2d 312, 315 (9th Cir. 1980); 
Vulcan Arbor Hill Corp. v. Reich, 81 F.3d 1110, 1115-16 (D.C. Cir. 
1996). Island Holdings, and all similarly situated H-2B employers, 
remain bound by the voluntary and unconditional promise to pay the wage 
rate that equals or exceeds the highest of the most recent prevailing 
wage rate that is or will be issued by DOL for the time period the H-2B 
workers perform work in the United States, including the new IFR wage 
rates. Frederick County Fruit Growers v. Martin, 968 F.2d 1265, 1269 
(D.C. Cir. 1992). The Secretary's position on this issue was clearly 
stated in the preamble to the IFR, which indicated that employers are 
required to pay the higher IFR wage rates based on the employers' 
signed agreements under Appendix B.1 to ETA Form 9142. 78 FR at 24055. 
Therefore, the BALCA's determination that employers are not required to 
pay the adjusted wage rates under the supplemental prevailing wage 
determinations was a legal error issued contrary to the Secretary's 
clear direction on this precise issue under the IFR.
    Accordingly, pursuant to the authority granted to DOL under 5 
U.S.C. 554(e), the Secretary is now considering issuing on his own 
motion a declaratory order to clarify his authority to set law and 
policy in the H-2B labor certification program, and to resolve the 
controversy arising from the BALCA's legally erroneous decision. The 
BALCA's Island Holdings decision does not represent the legal or policy 
position of the Secretary of Labor. The Administrative Law Judges 
composing the BALCA are subordinate employees of the agency. See 5 
U.S.C. 3105; 52 FR at 11,217; Dep't of Justice, Legal Counsel Opinion, 
14 Op. O.L.C. 1, 2-3 (1990). It is a basic principle of administrative 
law that the agency makes law and policy, not subordinate ALJs. See Ho 
v. Donovan, 569 F.3d 677, 682 (7th Cir. 2009); Croplife v. EPA, 329 
F.3d 876, 882 (D.C. Cir. 2003); Iran Air v. Kugelman, 996 F.2d 1253, 
1260 (D.C. Cir. 1993); Nash v. Bowen, 869 F.2d 675, 680 (2d Cir. 1989); 
Admin. Conf. of the United States, Recommendation 92-7, 57 FR 61,759, 
61,763 (Dec. 29, 1992). The BALCA ALJs' authority is limited to non-
lawmaking functions, including determining issues of fact and applying 
undisputed law to the facts of an employer's particular case.
    Apart from the general principle of administrative law that the 
BALCA ALJs do not have authority to speak for the agency on questions 
of law and policy, under DOL's regulation the BALCA does not have 
delegated authority to speak for the agency. Unlike the Secretary's 
express delegation of his authority to the Administrative Review Board 
(ARB), see 77 FR 69378 (Secretary's Order 1-2012), the agency has never 
endowed the BALCA with authority to speak for the Secretary on legal 
issues, see 52 FR at 11,217-18. Courts have recognized that the ARB 
speaks for the agency because it has delegated authority, see Sasse v. 
DOL, 409 F.3d 773, 778-79 (6th Cir. 2005), but the BALCA lacks such 
delegation. Although the agency's administrative appellate regime may 
terminate with the BALCA's review because there is no procedure for 
appealing to a higher agency official, that termination does not create 
delegated authority in the BALCA to make law or policy for the agency. 
The lack of further administrative review simply means that the BALCA's 
decision is the final agency action for purposes of judicial review. 
See 5 U.S.C. 704; cf. Tom C. Clark, Attorney General's Manual on the 
Administrative Procedure Act 83 (1947). However, as a neutral fact 
finder and arbiter of an employer's complaint, the BALCA's decisions do 
not necessarily represent the agency's authoritative interpretation of 
the regulation. Cf. Martin v. Occupational Safety and Health Review 
Comm'n, 499 U.S. 144, 154-55 (1991).\5\ The Secretary establishes H-2B 
wage policy and any related, governing legal standards. If the 
Secretary determines that the BALCA's decision rests on a legal error 
or departs from the Secretary's announced legal interpretation or 
policy, the Secretary may issue in his discretion a declaratory order 
overruling the BALCA. 5 U.S.C. 554(e).
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    \5\ Even under a split enforcement regime where Congress 
delegates to a neutral adjudicatory board the authority to hear 
claims or sanctions brought by the agency with enforcement 
authority, the Supreme Court has held that the enforcement agency 
with authority to administer the statute has jurisdiction to issue 
binding interpretations of the agency's regulation. See Martin v. 
OSHRC, 499 U.S. 144, 154-55 (1991). A neutral adjudicatory board 
outside the agency does not have authority to issue binding 
interpretations of law because the purpose of the adjudicatory board 
is to determine whether the agency's action is consistent with the 
regulation, which the agency defines in the first instance. Id. 
Martin's principle that the enforcement agency has policy making 
authority has even more force in this case, where DOL does not 
operate under a split enforcement regime in H-2B context and a 
single agency has retained to itself all enforcement functions.
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    The Secretary proposes issuing a declaratory order to overrule the 
BALCA's decision and legal conclusions in Island Holdings, and to 
reaffirm the Secretary's interpretation of the regulations, as stated 
in the preamble to the IFR. The Secretary does not intend through the 
proposed declaratory order to create a new rule, but seeks to resolve 
and clarify the agency's prior interpretation of the H-2B regulation 
and apply this interpretation, as originally intended, to the 
undisputed facts in Island Holdings. Thus, the proposed declaratory 
order is limited to the concrete and narrow question of law about the 
scope of the IFR as applied to the factual scenario in Island Holdings, 
which order will eliminate confusion and uncertainty created by the 
Island Holdings decision related to the Secretary's authority to set 
law and policy in the H-2B program, and the related status of the 
supplemental prevailing determinations issued to the employer in Island 
Holdings under the IFR. In addition, a final declaratory order on this 
issue will also establish binding precedent for resolution of all 
supplemental prevailing wage determinations under the IFR involving 
similarly situated parties. Following the issuance of such an order, 
the supplemental prevailing wage determinations at issue in Island 
Holdings and any similar pending cases will be handled and finally 
resolved in accordance with the final declaratory order.
    Since the proposed declaratory order involves solely questions of 
law and the application of law to undisputed facts relating to the 
issuance of the supplemental prevailing wage determinations in Island 
Holdings, the Secretary seeks comment from the public in the nature of 
legal briefing related to the proposed legal

[[Page 75184]]

determinations stated in this notice. In order to establish the record 
for this adjudicatory proceeding, the Department will provide access to 
the following documents on the http://www.regulations.gov Web site 
under the docket number ETA-2014-0003: (1) The Department's April 24, 
2013 Interim Final Rule; (2) the CATA I and CATA II decisions; and (3) 
the Island Holdings decision.

    Signed: at Washington, DC, this 2nd of December 2014.
Thomas E. Perez,
Secretary of Labor.
[FR Doc. 2014-28823 Filed 12-16-14; 8:45 am]
BILLING CODE P
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