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contains regulatory documents having general

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are keyed to and codified in the Code of

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Rules and Regulations Federal Register

51447 

Vol. 74, No. 193 

Wednesday, October 7, 2009 

DEPARTMENT OF HOMELAND 

SECURITY 

8 CFR Part 274a 

[ICE 2377–06; DHS Docket No. ICEB–2006– 

0004] 

RIN 1653–AA59 

Safe-Harbor Procedures for Employers 

Who Receive a No-Match Letter: 

Rescission 

AGENCY: U.S. Immigration and Customs 

Enforcement, DHS. 

ACTION: Final rule. 

SUMMARY: The Department of Homeland 

Security (DHS) is amending its 

regulations by rescinding the 

amendments promulgated on August 15, 

2007, and October 28, 2008, relating to 

procedures that employers may take to 

acquire a safe harbor from receipt of NoMatch letters. DHS is amending its 

regulations as proposed on August 19, 

2009, without change. Implementation 

of the 2007 final rule was preliminarily 

enjoined by the United States District 

Court for the Northern District of 

California on October 10, 2007. After 

further review, DHS has determined to 

focus its enforcement efforts relating to 

the employment of aliens not authorized 

to work in the United States on 

increased compliance through improved 

verification, including participation in 

E–Verify, ICE Mutual Agreement 

Between Government and Employers 

(IMAGE), and other programs. 

DATES: This final rule is effective 

November 6, 2009. 

FOR FURTHER INFORMATION CONTACT: 

National Program Manager Charles 

McClain, U.S. Immigration and Customs 

Enforcement, Office of Investigations— 

MS 5112, 500 12th Street, SW., 

Washington DC, 20536. Telephone: 

202–732–3988 (not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

I. Docket 

Public comments on this docket may 

be viewed online at http:// 

www.regulations.gov or in person at U.S 

Immigration and Customs Enforcement, 

Department of Homeland Security, 500 

12th Street, SW., Room 1000, 

Washington, DC 20024, by appointment. 

To make an appointment to review the 

docket, call 202–307–0071. 

II. Final Rule 

After considering the public 

comments, DHS has determined, for the 

reasons stated in the proposed rule and 

in this final rule, to promulgate the 

rescission of the 2007 and 2008 final 

rules (referred to collectively as the 

‘‘No-Match rules’’) without change. 

III. Background 

It is unlawful for a person or other 

entity to hire, or to recruit or refer for 

a fee, an alien for employment in the 

United States knowing the alien is not 

authorized to work in the United States. 

Immigration and Nationality Act of 

1952, as amended (INA), section 

274A(a)(1)(A), 8 U.S.C. 1324a(a)(1)(A). It 

is also unlawful for a person or other 

entity, after hiring an alien for 

employment, to continue to employ the 

alien in the United States knowing the 

alien is (or has become) an unauthorized 

alien with respect to such employment. 

INA section 274A(a)(2), 8 U.S.C. 

1324a(a)(2). 

All persons or entities that hire, or 

recruit or refer persons for a fee, for 

employment must verify the identity 

and employment eligibility of all 

employees hired to work in the United 

States. INA section 274A(a)(1)(B), (b)(1), 

(b)(2), 8 U.S.C. 1324a(a)(1)(B), (b)(1), 

(b)(2). Under the INA, this verification 

is performed by completing an 

Employment Eligibility Verification 

form (Form I–9) for all employees, 

including United States citizens. INA 

section 274A(b)(1), (b)(2), 8 U.S.C. 

1324a(b)(1), (b)(2); 8 CFR 274a.2. The 

INA provides, however, that an 

employer may not conduct this 

verification in a manner that treats 

employees differently based on their 

citizenship status or national origin. 

INA section 274B(a), 8 U.S.C. 1324b(a). 

An employer, or a recruiter or referrer 

for a fee, must retain the completed 

Form I–9 for three years after hiring, 

recruiting or referral, or, where the 

employment extends longer, for the life 

of the individual’s employment and for 

one year following the employee’s 

departure. INA section 274A(b)(3), 8 

U.S.C. 1324a(b)(3). These forms are not 

routinely filed with any Government 

agency; employers are responsible for 

maintaining these records, and they may 

be requested and reviewed by U.S. 

Immigration and Customs Enforcement 

(ICE). INA section 274A(b)(1)(E)(3); 8 

CFR 274a.2(b)(2), (c)(2); see 71 FR 34510 

(June 15, 2006) (Electronic Signature 

and Storage of Form I–9, Employment 

Eligibility Verification). 

Employers annually send the Social 

Security Administration (SSA) millions 

of earnings reports (W–2 Forms) in 

which the combination of employee 

name and social security number (SSN) 

does not match SSA records. In some of 

these cases, SSA sends a letter, such as 

an ‘‘Employer Correction Request,’’ that 

informs the employer of the mismatch. 

The letter is commonly referred to as an 

employer ‘‘No-Match letter.’’ No-Match 

letters may be caused by many things, 

including clerical error and name 

changes. One potential cause may be the 

submission of information for an alien 

who is not authorized to work in the 

United States and who may be using a 

false SSN or an SSN assigned to 

someone else. Such a letter may be one 

indicator to an employer that one of its 

employees may be an unauthorized 

alien; the letter itself, however, does not 

make any statement about an 

employee’s immigration status. ICE 

sends a similar letter (currently called a 

‘‘Notice of Suspect Documents’’) after it 

has inspected an employer’s 

Employment Eligibility Verification 

forms (Forms I–9) during an 

investigation audit and after 

unsuccessfully attempting to confirm, in 

agency records, that an immigration 

status document or employment 

authorization document presented or 

referenced by the employee in 

completing the Form I–9 was assigned 

to that person. After a Form I–9 is 

completed by an employer and 

employee, it is retained by the employer 

and made available to DHS investigators 

on request, such as during an audit. 

Over the years, employers have 

inquired of the former Immigration and 

Naturalization Service, and now DHS, 

whether receipt of a No-Match letter 

constitutes constructive knowledge on 

the part of the employer that he or she 

may have hired an alien who is not 


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51448 Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Rules and Regulations 

1A modest expansion of E–Verify will occur with 

the requirement that certain government contractors 

utilize E–Verify. See Executive Order 13,465, 73 FR 

33285 (June 11, 2008); Designation of the Electronic 

Employment Eligibility Verification System Under 

Executive Order 12,989, 73 FR 33837 (June 13, 

2008); Proposed Employment Eligibility Verification 

Rule, 73 FR 33,374 (June 12, 2008); Final 

Employment Eligibility Verification Rule, 73 FR 

67651 (Nov. 14, 2008); Chamber of Commerce of the 

United States v. Napolitano, 2009 WL 2632761, D. 

Md. No. 08–civ–3444 (AW), Memorandum Opinion, 

Dk. No. 51 (Aug. 26, 2009) (denying plaintiff’s 

motion for summary judgment and preliminary 

injunction; granting defendant’s motion for 

summary judgment), appeal filed No. 09–2006 

(Sept. 4, 2009. DHS also encourages States and 

other jurisdictions to utilize E–Verify. Cf., Chicanos 

por la Causa, Inc. v. Napolitano, 558 F.3d 856, 867 

(9th Cir. 2009) (amended on denial of petition for 

rehearing) (holding that ‘‘Congress could have, but 

did not, expressly forbid state laws from requiring 

E–Verify participation.’’), pet. for cert. filed sub 

nom. Chamber of Commerce v. Candelaria, U.S. No 

09–115 (filed May 28, 2009). 

authorized to work in the United States. 

On August 15, 2007, DHS issued a final 

rule describing the legal obligations of 

an employer following receipt of a NoMatch letter from SSA or a letter from 

DHS regarding employment verification 

forms. See 72 FR 45611. That final rule 

also established ‘‘safe-harbor’’ 

procedures for employers receiving NoMatch letters. 

The rule has never been implemented 

in light of a preliminary injunction 

issued by the United States District 

Court for the Northern District of 

California. AFL–CIO v. Chertoff, 552 F. 

Supp. 2d 999 (N.D. Cal. 2007) (order 

granting motion for preliminary 

injunction). As a result of that litigation, 

DHS also issued a supplemental 

proposed and final rule providing to 

address specific issues raised by the 

court. See, e.g., 73 FR 15944 (Mar. 26, 

2008) (supplemental proposed rule), 73 

FR 63843 (Oct. 28, 2008) (supplemental 

final rule). Neither the supplemental nor 

2008 final rules, however, changed any 

regulatory text. 

DHS proposed to rescind the NoMatch rules on August 19, 2009, 

explaining that a more appropriate 

utilization of DHS resources would be to 

focus enforcement/community outreach 

efforts on increased compliance through 

improved verification, including 

increased participation in the U.S. 

Citizenship and Immigration Services 

(USCIS) E–Verify employment 

eligibility verification system, the ICE 

Mutual Agreement Between 

Government and Employers (IMAGE), 

and other programs. The proposed 

rescission rule and this final rule are 

part of a Government-wide 

reexamination of regulatory processes. 

74 FR 41801, 41802 (Aug. 19, 2009); 

Docket ICEB–2006–0004–0923. DHS 

requested public comments on the 

proposed rescission of the No-Match 

rules and provided a 30-day public 

comment period. 

IV. Public Comments 

DHS received 22 comments during 

the 30-day comment period. DHS 

received comments from individuals, 

professional associations, unions, trade 

organizations, and advocacy 

organizations. DHS received comments 

from the litigants in AFL–CIO v. 

Chertoff, No. 07–cv–4472–CRB (N.D. 

Cal.). Many commenters supported the 

rescission of the 2007 final rule and 

provided arguments why the 2007 final 

rule should be rescinded. Other 

commenters argued in favor of retaining 

and implementing the 2007 final rule. 

The substantive comments are 

addressed below. 

A. Viability of the 2007 and 2008 Rules 

One commenter suggested that the 

guidance provided in the No-Match 

rules clarified and interpreted existing 

law. The commenter suggested that the 

safe harbor provision provided valuable 

guidance to employers that need 

guidance in this area. The commenter 

further argued that removal of the NoMatch rule will just create uncertainty 

and more room for unscrupulous 

employers to continue to hire and retain 

workers they know or should know are 

not authorized to work. Another 

commenter expressed concern that 

rescinding the No-Match rules will 

leave employers wanting to resolve 

discrepancies but having no guidance 

on what DHS would consider a good 

faith attempt to resolve the discrepancy 

to avoid a finding of constructive 

knowledge, as opposed to violating the 

anti-discrimination laws; and that E– 

Verify, IMAGE and other DHS programs 

identified in this rule do not provide 

guidance in dealing with No-Match 

letters or provide a safe harbor to 

employers. 

DHS does not disagree that additional 

guidance would be valuable to 

employers. DHS disagrees, however, 

with the suggestion that if the No-Match 

rules are rescinded, employers will have 

no guidance on compliance with the 

Immigration and Nationality Act’s 

employment verification requirements. 

As discussed in all of the proposed and 

final rules in this rulemaking, DHS and 

its predecessor agencies have provided 

guidance on the immigration 

implications and responding to NoMatch letters. Similarly, the Office of 

Special Counsel for Immigration Related 

Unfair Employment Practices, Civil 

Rights Division, Department of Justice, 

enforces the anti-discrimination 

provisions of INA section 274B, 8 U.S.C. 

1324b, and provides guidance to 

employers about responding to SSA nomatch letters in a manner consistent 

with the anti-discrimination provision 

of the INA. The No-Match rules set out 

that advice and provided a safe harbor 

if employers followed specified steps to 

resolve the discrepancy. The 

commenter, a professional association, 

has provided similar advice to its 

members. DHS, in considering all of its 

options, does not believe that the 

addition of a ‘‘safe-harbor’’ to that 

guidance is as effective as other tools to 

assist in compliance with the 

employment restrictions of the 

Immigration and Nationality Act. 

DHS continues to provide employer 

support through IMAGE. IMAGE is 

specifically designed to help the 

business community develop and 

implement hiring and employment 

verification best practices. 

As of September 2009, more than 

155,000 employers have signed an MOU 

with DHS to participate in E–Verify, 

representing more than 500,000 hiring 

sites; in fiscal year (FY) 2009, employers 

queried E–Verify nearly 8.6 million 

times. The Administration and DHS 

fully support the expansion of E–Verify 

and have taken steps to encourage use 

of E–Verify, including ensuring that 

federal contractors use E–Verify to 

ensure an employment eligible 

workforce.1 USCIS also recently 

updated the Handbook for Employers 

(M–274) to provide more 

comprehensive guidance and 

instructions for completing the 

Employment Eligibility Verification 

Form (Form I–9). http://www.uscis.gov/ 

files/nativedocuments/m-274.pdf. 

These tools focus on more universal 

compliance with the employment 

eligibility verification requirements of 

the Immigration and Nationality Act 

than a safe harbor procedure for a 

limited number of employers who 

receive a No-Match letter. A No-Match 

letter is reactive, either one specifically 

guided to the employment eligibility 

issue from ICE or one indirectly 

pointing to a potential employment 

eligibility issue through social security 

number record mismatches on tax 

filings through SSA. 

Furthermore, DHS has acknowledged 

that unscrupulous employers would 

continue to find ways to take advantage 

of the system, regardless of whether the 

No-Match rules were in place. DHS 

focuses criminal and civil enforcement 

against the most egregious violators: 

employers who use unauthorized 

workers in order to gain a competitive 

advantage or those who exploit the 

vulnerable, often engaging in human 

trafficking and smuggling, identity theft, 


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Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Rules and Regulations 51449 

and social security number and 

document fraud; and employers in the 

Nation’s critical infrastructure sites, 

including airports, seaports and power 

plants. 

B. Issues Raised in the 2007 and 2008 

Rules 

Other commenters repeated 

arguments previously made in the 2007 

and 2008 rulemaking, and in the 

subsequent litigation, that the No-Match 

rules created confusion among many 

small businesses, including farm 

businesses, and that the No-Match rules 

would have resulted in additional costs; 

and also that the process outlined in the 

No-Match rules would have resulted in 

additional labor, resource and personnel 

costs, which many small businesses 

would be unable to absorb. 

The 2007 and 2008 No-Match rules 

were intended to clarify the obligations 

of an employer following the receipt of 

a no-match letter from SSA or a letter 

from DHS regarding employment 

verification forms. Further, as 

explained, DHS does not believe the NoMatch rules imposed a mandate that 

forced employers to incur ‘‘compliance’’ 

costs. 73 FR 63863. Only small entities 

that choose to avail themselves of the 

safe harbor would incur direct costs as 

a result of the No-Match rules, and all 

entities are responsible for the wage 

statement (Form W–2) that creates a NoMatch letter. 

Commenters asserted that the NoMatch rules should be rescinded 

because the correction period allowed 

in the final rules is inadequate. SSA, 

according to the commenters, would be 

unable to resolve mismatches presented 

by authorized workers within the 

correction period. One commenter 

further alleged that the No-Match rules 

would disproportionately impact 

authorized workers of color, transgender 

workers, and those who appear or sound 

‘‘foreign;’’ the rules would lead to 

retaliatory firings. 

Although DHS agrees with the 

commenters’ suggestions that the rules 

should be rescinded, DHS disagrees 

with the suggestion that the No-Match 

rules would have generated additional 

costs or would have disproportionately 

impacted authorized workers or any 

discrete group. As stated above, the NoMatch rules were intended to clarify the 

obligations of an employer following the 

receipt of a No-Match letter from SSA or 

a letter from DHS regarding employment 

verification forms. 

Another commenter alleged that the 

No-Match rules were an unlawful 

expansion of the definition of 

‘‘constructive knowledge’’ because the 

No-Match letters are sent out for reasons 

unrelated to immigration status. 

Similarly, another commenter 

supported the rescission of the NoMatch rules arguing that the rules 

would have led to the termination of 

large numbers of United States citizens 

and other authorized workers because 

many of the ‘‘no-matches’’ in the SSA’s 

Earning Suspense File have nothing to 

do with immigration status. 

DHS disagrees. DHS has not changed 

its position as to the merits of the 2007 

and 2008 rules; DHS has decided to 

focus on more universal means of 

encouraging employer compliance than 

the narrowly focused and reactive 

process of granting a safe harbor for 

following specific steps in response to a 

no-match letter. DHS has determined 

that focusing on the management 

practices of employers would be more 

efficacious than focusing on a single 

element of evidence. Receipt of a NoMatch letter, when considered with 

other probative evidence, is a factor that 

may be considered in the totality of the 

circumstances and may in certain 

situations support a finding of 

‘‘constructive knowledge.’’ A reasonable 

employer would be prudent, upon 

receipt of a No-Match letter, to check 

their own records for errors, inform the 

employee of the no-match letter, and ask 

the employee to review the information. 

Employers would be prudent also to 

allow employees a reasonable period of 

time to resolve the no-match with SSA. 

Another commenter noted that 

employers are wrongly implementing 

the 2007 and 2008 final rules even 

though implementation of the 2007 rule 

was enjoined and that employees who 

receive no-match letters are being 

discriminated against and terminated if 

they are unable to resolve their 

discrepancies with SSA within ten days. 

DHS acknowledges that an employer 

who terminates an employee without 

attempting to resolve the issues raised 

in a No-Match letter, or who treats 

employees differently based upon 

national origin, perceived citizenship 

status, or other prohibited 

characteristics may be found to have 

engaged in unlawful discrimination 

under the anti-discrimination provision 

of the INA section 274B, 8 U.S.C. 1324b. 

That fact does not, however, warrant 

DHS changing its earlier position that 

receipt of a No-Match letter and an 

employer’s response to a No-Match 

letter, in the totality of the 

circumstances, may be used as evidence 

of a violation of the employment 

restrictions of the Immigration and 

Nationality Act. 73 FR at 63848, n.2; 74 

FR 41804, n.4. Employers should not 

use No-Match letters, without more, as 

a basis for firing employees without 

resolution of the mis-match, and DHS 

has never countenanced such a practice. 

DHS urges employers, employees, and 

other interested parties to contact the 

Office of Special Counsel for 

Immigration-Related Unfair 

Employment Practices, (800) 255–8155 

or http://www.usdoj.gov/crt/osc/, for 

additional information and guidance 

about the application of the antidiscrimination provisions. 

Another commenter alleges that the 

No-Match rules failed to address the 

concerns of the District Court that led to 

the injunction of the rules. This 

comment appears more attuned to the 

2008 supplemental proposed rule, 

rather than the rescission of the 2007 

final rule. Although DHS disagrees that 

the supplemental rule failed to address 

the District Court rationale in the order 

granting a motion for preliminary 

injunction, DHS is nonetheless 

rescinding the No-Match rule as the 

commenter urged. 

C. Scope of No-Match Letters as an 

Enforcement Tool 

Several commenters suggested that 

SSA discontinue issuing No-Match 

letters to employers and instead send 

them to affected employees. The 

commenters further recommend that, if 

sent to employers, DHS not use the nomatch letters for immigration 

compliance purposes or, if the letters 

are obtained through audits or 

investigations, that DHS inform 

employers that they will have safe 

harbor from wrongful termination and 

Privacy Act charges. Another 

commenter further noted that No-Match 

letters are issued for administrative 

purposes; that they were not designed as 

an immigration enforcement tool and 

are, in fact, ill-suited for this purpose. 

Whether the SSA will continue to 

provide employers and employees with 

written notice indicating that there is a 

discrepancy between the worker’s name 

and social security number is a decision 

to be made by SSA. DHS believes that 

SSA notification is beneficial to the 

employer and the employee, and that 

the different letters to employers and 

employees serve different purposes for 

SSA. Employers and employees are 

made aware of discrepancies in their 

filings and that the discrepancy may 

affect employees’ potential benefits, 

respectively, and the letters encourage 

corrective action to ensure that the 

employee’s earnings are properly 

credited for retirement, disability, 

survivor and other benefits. 

As discussed above, a finding of 

constructive knowledge of unauthorized 

employment may be based on the 

totality of the circumstances. Employers 


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51450 Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Rules and Regulations 

2Current statistics are available on the Internet at 

http://www.uscis.gov/portal/site/uscis/menuitem.

5af9bb95919f35e66f614176543f6d1a/?vgnextoid=

f82d8557a487a110VgnVCM1000004718190

aRCRD&vgnextchannel=a16988e60a405110Vgn

VCM1000004718190aRCRD. See Committee on 

Oversight and Government Reform, Subcommittee 

on Government Management, Organization and 

Procurement, E-Verify: Challenges and 

Opportunities, 111th Cong., 1st Sess. (July 23, 2009) 

(prepared statements available at http://

governmentmanagement.oversight.house.gov/

story.asp?ID=2552). 

remain liable where the totality of the 

circumstances establishes constructive 

knowledge that the employer knowingly 

hired or continued to employ 

unauthorized workers. An employer’s 

receipt of a No-Match letter and the 

nature of the employer’s response to the 

letter are only two factors that may be 

considered in determining the totality of 

the circumstances. 

Another commenter argued that the 

use of social security numbers for 

immigration enforcement through 

delivery of No-Match letters turns 

employers into de facto immigration 

agents, which goes beyond the scope of 

SSA’s mission. DHS strongly disagrees. 

DHS acknowledges that receipt of the 

No-Match letter, without more, does not 

mean that the employee is not 

authorized to work or that the employee 

provided a fraudulent name or social 

security number. The discrepancy may 

be based upon a number of reasons 

unrelated to immigration status, such as 

clerical errors or employees’ name 

changes that may not have been 

reported to SSA. However, a No-Match 

letter may also be generated because the 

individual is unauthorized to work in 

the United States and provided 

fraudulent information to the employer 

at the time of hire. 

With regard to the comment that DHS 

provide a safe harbor from wrongful 

termination and Privacy Act charges, 

such action is outside of DHS’s 

authority. DHS, therefore, declines to 

accept the recommendation. 

D. Viability of E-Verify and IMAGE 

Several commenters suggested that EVerify and IMAGE cannot replace the 

No-Match rules. One commenter argued 

that improvements in E-Verify and other 

DHS programs do not provide better 

tools for employers to reduce the 

incidence of unauthorized employment 

and to better detect and deter the use of 

fraudulent identity documents by 

employees, because IMAGE and EVerify are voluntary, and unscrupulous 

employers will not sign up for either. 

The commenter further argued that EVerify is deeply flawed and will confirm 

work authorization for individuals who 

claim to be a citizen and obtain identity 

documents using the citizen’s name and 

social security number. Some 

commenters expressed reservations 

about expansion of E-Verify without 

significant modifications because of 

alleged reliance on databases that are 

flawed or riddled with errors that would 

result in denial of employment to 

authorized workers, including United 

States citizens, and in discrimination 

against immigrant workers. Another 

commenter supported the rescission of 

the 2007 and 2008 No-Match Rules, but 

opposes mandated participation in EVerify or IMAGE. 

Another commenter suggested that a 

mandatory or vast expansion of the EVerify electronic employment 

verification system is not a solution to 

our nation’s immigration problems. 

Further, the commenter suggested that 

the degree of inaccuracy in the E-Verify 

underlying databases means that large 

numbers of Americans will be denied 

employment and paychecks, at least 

temporarily, while they attempt to 

resolve the problem with relevant 

government agencies. Finally, the 

commenter suggests that evidence 

coming from those who have used EVerify indicate that the current program 

is seriously flawed, ineffective, and 

could potentially cost thousands of 

United States citizens and legal 

residents their jobs due to database 

errors. 

Other commenters suggested that EVerify relies upon databases which are 

flawed or error-prone and have 

unacceptably high error rates that 

misidentify authorized workers; abuse 

of the program by employers is 

substantial and results in 

discrimination, profiling of a vulnerable 

segment of workers, and illegal 

employment practices by unscrupulous 

employers; the privacy and security 

concerns of the program have not been 

addressed; and expanded use of the 

program jeopardizes the labor rights and 

livelihoods of work-authorized 

immigrant and citizen workers. 

Other commenters similarly 

expressed reservations about expansion 

of E-Verify without significant 

modifications to the program, its timely 

implementation with added employer 

safeguards, and fair procedures to 

ensure the system’s accuracy and 

accountability. Another commenter 

supported the rescission of the 2007 and 

2008 final rules, but opposed mandated 

participation in E-Verify or IMAGE. 

DHS agrees that E-Verify and IMAGE 

do not replace the no-match rules per 

se—DHS never intended to suggest that 

its change in focus was a replacement 

for the No-Match rule. The E-Verify and 

IMAGE programs, and DHS enforcement 

priorities, are not a part of this rule and 

the proposed rule did not propose any 

action that would make E-Verify or 

IMAGE or any other program a 

replacement or mandatory. DHS stated 

only that it was changing enforcement 

priorities and focus. These comments 

address broader policy decisions, not 

the content of the rescission proposed 

rule. DHS continues to believe that EVerify provides the best available 

method for employers to verify the 

employment eligibility of employees. 

DHS strongly disagrees, however, 

with the commenters’ suggestion that EVerify contains a degree of inaccuracy 

that warrants not using E-Verify.2

Although outside the scope of the 

proposed rule, DHS notes that many of 

the statistics used by commenters are 

out of date and some do not establish 

the point suggested by the commenter. 

As discussed above, the Administration 

and DHS are expanding the use of EVerify because it is an accurate and 

effective tool for employers to verify 

employment eligibility. 

In addition, the IMAGE outreach 

program and other initiatives, such as 

requiring all government contractors to 

utilize E-Verify, positively influence 

United States employers to exercise 

proactive immigration compliance, thus 

restricting the competitive field in 

which unscrupulous employers operate. 

Several commenters suggested that 

relying solely on electronic verification 

of employment eligibility would 

disadvantage agricultural employers 

who are located in rural areas where 

modern internet capability is not readily 

available; these commenters further 

argued that the difficulty faced by these 

employers in using electronic 

verification may subject them to an 

imprecise interpretation of constructive 

knowledge. DHS has made clear that EVerify is not a requirement and is one 

of many means to assure compliance. 

An employer who decides to use EVerify, however, may choose, for 

example, to use an outside company or 

vendor to run E-Verify queries. 

Employers could also seek out other 

sources of internet access, such as 

public sites. Accordingly, DHS does not 

believe that it is impracticable for some 

employers to use electronic employment 

verification methods such as E-Verify in 

areas where internet capability may 

currently be limited. As discussed 

above, E-Verify is one of many tools 

available to employers, not the 

exclusive tool available or the exclusive 

focus of DHS’ assistance to employers. 

To the extent that agricultural 

employers are located in rural areas that 

are not well served with modern 


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Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Rules and Regulations 51451 

internet capability, employers may 

continue to complete the Employment 

Eligibility Verification Form I–9 in the 

paper format and comply with the 

employer verification requirements of 

the Immigration and Nationality Act by 

carefully examining the identification 

and employment eligibility documents 

presented by the employee at the time 

of hire. 

E. Other Issues 

A commenter suggested that the 

Employment Eligibility Verification 

Form I–9 process is flawed and that 

employers refer to it as the ‘‘ten foot 

rule’’—i.e. that if the documents 

presented look valid from ten feet away, 

then they are acceptable. DHS shares the 

commenter’s concern that the 

Employment Eligibility Verification 

process can be abused by fraudulent 

document holders. The standard 

implicated in this comment by which 

employers are held to account regarding 

document verification is fixed by 

statute. INA section 274A(b)(1)(A), 8 

U.S.C. 1324a(b)(1)(A) requires 

employers to verify an alien’s work 

eligibility where a work authorization 

document presented ‘‘reasonably 

appears on its face to be genuine.’’ 

Accordingly the comment treats matters 

outside the scope of this rule. DHS is 

making improvements in the 

Employment Eligibility Verification 

Form I–9 to assist employers and 

improve the integrity of employment 

verification. See, e.g., Documents 

Acceptable for Employment Eligibility 

Verification, 73 FR 76505 (Dec. 17, 

2008) (interim final rule with request for 

comments amending lists of acceptable 

documents); 74 FR 5899 (Feb. 3, 2009) 

(delayed effective date); 74 FR 10455 

(Mar. 11, 2009) (correction). 

A few commenters further suggested 

that this rescission rule should address 

guest worker programs. These 

comments are outside the scope of this 

rulemaking action and thus will not be 

addressed in this final rule. DHS may 

consider these issues separately. 

V. Statutory and Regulatory Reviews 

A. Regulatory Flexibility Act 

Under the Regulatory Flexibility Act, 

5 U.S.C. 601–612, we have considered 

whether this rule would have a 

significant economic impact on a 

substantial number of small entities. 

This rule would amend DHS regulations 

to rescind the amendments promulgated 

in the 2007 final rule and the 2008 

supplemental final rule relating to 

procedures that employers may take to 

acquire a safe harbor from evidentiary 

use of receipt of no-match letters. 

Implementation of the 2007 final rule 

was preliminarily enjoined by the 

United States District Court for the 

Northern District of California on 

October 10, 2007. This rule reinstates 

the language of 8 CFR 274.1(l) as it 

existed prior to the effective date of the 

2007 final rule. 

As explained at 73 FR 63863, DHS 

does not believe the safe-harbor offered 

by the 2007 final rule and the 2008 

supplemental final rule imposed a 

mandate that forced employers to incur 

‘‘compliance’’ costs for the purposes of 

the Regulatory Flexibility Act. Only 

small entities that choose to avail 

themselves of the safe harbor would 

incur direct costs as a result of the 2007 

final rule and the 2008 supplemental 

final rule. As this rulemaking proposes 

to rescind the offer of a safe harbor, this 

rule does not propose any compliance 

requirements and consequently would 

not impose any direct costs on small 

entities if promulgated as a final rule. 

Therefore, DHS certifies under 5 U.S.C. 

605(b) that this rule will not have a 

significant economic impact on a 

substantial number of small entities. 

B. Unfunded Mandates Reform Act of 

1995 

This rule will not result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in one year, and it would not 

significantly or uniquely affect small 

governments. Therefore, no actions were 

deemed necessary under the provisions 

of the Unfunded Mandates Reform Act 

of 1995, Public Law No. 104–4, 109 Stat. 

48 (1995), 2 U.S.C. 1501 et seq. 

C. Small Business Regulatory 

Enforcement Fairness Act of 1996 

This rule is not a major rule as 

defined by section 804 of the Small 

Business Regulatory Enforcement Act of 

1996, Public Law 104–121, 804, 110 

Stat. 847, 872 (1996), 5 U.S.C. 804(2). 

This rule has not been found to be likely 

to result in an annual effect on the 

economy of $100 million or more, a 

major increase in costs or prices; or 

significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or on the 

ability of United States-based 

companies to compete with foreignbased companies in domestic or foreign 

markets. 

D. Executive Order 12866 (Regulatory 

Planning and Review) 

This rule constitutes a ‘‘significant 

regulatory action’’ under Executive 

Order 12866, and therefore has been 

reviewed by the Office of Management 

and Budget. Under Executive Order 

12866, a significant regulatory action is 

subject to an Office of Management and 

Budget (OMB) review and to the 

requirements of the Executive Order. 

The Executive Order defines 

‘‘significant regulatory action’’ as one 

that is likely to result in a rule that may 

(1) Have an annual effect on the 

economy of $100 million or more or 

adversely affect in a material way the 

economy, a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local, or tribal governments or 

communities; (2) create a serious 

inconsistency or otherwise interfere 

with an action taken or planned by 

another agency; (3) materially alter the 

budgetary impact of entitlements, 

grants, user fees, or loan programs or the 

rights or obligations of recipients 

thereof; or (4) raise novel legal or policy 

issues arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

E. Executive Order 13132 (Federalism) 

This rule does not have substantial 

direct effects on the States, on the 

relationship between the National 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. Therefore, in 

accordance with section 6 of Executive 

Order No. 13132, 64 FR 43255 (Aug. 4, 

1999), this rule does not have sufficient 

federalism implications to warrant the 

preparation of a federalism summary 

impact statement. 

F. Executive Order 12988 (Civil Justice 

Reform) 

This rule meets the applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order No. 12988, 61 

FR 4729 (Feb. 5, 1996). 

G. Paperwork Reduction Act 

This rule calls for no new collection 

of information under the Paperwork 

Reduction Act of 1995, 44 U.S.C. 3501– 

3520. 

List of Subjects in 8 CFR Part 274a 

Administrative practice and 

procedure, Aliens, Employment, 

Penalties, Reporting and recordkeeping 

requirements. 

■ Accordingly, for the reasons set forth 

in the preamble, DHS amends part 274a 

of title 8 of the Code of Federal 

Regulations as follows: 


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51452 Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 / Rules and Regulations 

8 CFR CHAPTER 1—DEPARTMENT OF 

HOMELAND SECURITY 

PART 274a—CONTROL OF 

EMPLOYMENT OF ALIENS 

■ 1. The authority citation for part 274a 

continues to read as follows: 

Authority: 8 U.S.C. 1101, 1103, 1624a, 8 

CFR part 2, Public Law 101–410, 104 Stat. 

890, as amended by Public Law 104–134, 110 

Stat. 1321. 

■ 2. Section 274a.1 is amended by 

revising paragraph (l) to read as follows: 

§ 274a.1 Definitions. 

* * * * * 

(l)(1) The term knowing includes not 

only actual knowledge but also 

knowledge which may fairly be inferred 

through notice of certain facts and 

circumstances which would lead a 

person, through the exercise of 

reasonable care, to know about a certain 

condition. Constructive knowledge may 

include, but is not limited to, situations 

where an employer: 

(i) Fails to complete or improperly 

completes the Employment Eligibility 

Verification Form, I–9; 

(ii) Has information available to it that 

would indicate that the alien is not 

authorized to work, such as Labor 

Certification and/or an Application for 

Prospective Employer; or 

(iii) Acts with reckless and wanton 

disregard for the legal consequences of 

permitting another individual to 

introduce an unauthorized alien into its 

work force or to act on its behalf. 

(2) Knowledge that an employee is 

unauthorized may not be inferred from 

an employee’s foreign appearance or 

accent. Nothing in this definition 

should be interpreted as permitting an 

employer to request more or different 

documents than are required under 

section 274(b) of the Act or to refuse to 

honor documents tendered that on their 

face reasonably appear to be genuine 

and to relate to the individual. 

Janet Napolitano, 

Secretary. 

[FR Doc. E9–24200 Filed 10–6–09; 8:45 am] 

BILLING CODE 9111–28–P 

FEDERAL HOUSING FINANCE BOARD 

12 CFR Part 915 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1261 

RIN 2590–AA03 

Federal Home Loan Bank Boards of 

Directors: Eligibility and Elections 

AGENCY: Federal Housing Finance 

Board; Federal Housing Finance 

Agency. 

ACTION: Final rule. 

SUMMARY: The Federal Housing Finance 

Agency (FHFA) is adopting a final 

regulation on the eligibility and election 

of Federal Home Loan Bank (Bank) 

directors. The final rule implements 

section 1202 of the Housing and 

Economic Recovery Act of 2008, which 

amended section 7 of the Federal Home 

Loan Bank Act (Bank Act) as it relates 

to the eligibility and election of 

individuals to serve on the boards of 

directors of the Banks. 

DATES: This final rule will become 

effective on November 6, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Thomas P. Jennings, Senior Attorney 

Advisor, thomas.jennings@fhfa.gov, 

(202) 414–8948; or Patricia L. Sweeney, 

Management Analyst, 

pat.sweeney@fhfa.gov, (202) 408–2872. 

SUPPLEMENTARY INFORMATION: 

I. Statutory and Regulatory Background 

The Housing and Economic Recovery 

Act of 2008 (HERA), Public Law 110– 

289, 122 Stat. 2654 (2008), transferred 

the supervisory and oversight 

responsibilities over the Federal 

National Mortgage Association, the 

Federal Home Loan Mortgage 

Corporation (collectively, Enterprises), 

and the Banks to FHFA, which is 

responsible for ensuring that the 

Enterprises and the Banks operate in a 

safe and sound manner and carry out 

their public policy missions. The 

Enterprises and the Banks continue to 

operate under regulations promulgated 

by the Office of Federal Housing 

Enterprise Oversight and the Federal 

Housing Finance Board (Finance Board), 

respectively, until FHFA issues its own 

regulations. 

Section 1202 of HERA amended 

section 7 of the Bank Act, 12 U.S.C. 

1427, which governs the directorship 

structure of the Banks. The Finance 

Board regulation implementing section 

7 was codified at 12 CFR part 915. Part 

915 governed the nomination and 

election only of those directors who are 

chosen from among the officers and 

directors of members of the Banks, 

which this final rule refers to as member 

directors. Section 1202(1) of HERA 

amended section 7(a) of the Bank Act to 

give the members the additional right to 

elect all of the other directors on the 

boards of directors of the Banks, which 

this rule refers to as independent 

directors. 

On September 26, 2008, FHFA 

published an interim final rule (interim 

rule) to implement the amendments 

made by section 1202 of HERA. See 73 

FR 55710, September 26, 2008. FHFA 

retained the basic process of elections 

that existed in part 915 as applied to 

member directorships, making changes 

as necessary to comply with the 

amendments to section 7 of the Bank 

Act. FHFA also added new provisions to 

govern the process for nominating 

individuals for independent 

directorships and for conducting 

elections of independent directors in 

conjunction with the elections of the 

member directors. 

FHFA adopted the rule on an interim 

basis because there was insufficient 

time after the enactment of HERA for 

FHFA to conduct a full notice and 

comment rulemaking that would have 

allowed the Banks to conduct their 2008 

elections before the end of 2008. 

Nonetheless, the interim rule afforded 

interested persons the opportunity to 

participate in the rulemaking process by 

submitting written comments on the 

interim rule, which FHFA has 

considered in adopting this final rule. 

The comment period closed on 

November 25, 2008. 

Section 1201 of HERA (codified at 12 

U.S.C. 4513(f)) requires the Director of 

FHFA to consider the differences 

between the Banks and the Enterprises 

with respect to the Banks’ cooperative 

ownership structure, mission of 

providing liquidity to members, 

affordable housing and community 

development mission, capital structure, 

and joint and several liability, whenever 

promulgating regulations that affect the 

Banks. In preparing this final rule, the 

Director considered these factors and 

determined that the rule is appropriate, 

particularly because this final rule 

implements a statutory provision that 

applies only to the Banks. See 12 U.S.C. 

1427. 

II. Analysis of the Public Comments 

and Final Rule 

FHFA received 15 public comments 

on the interim rule. Eleven Banks and 

one Bank member submitted comments. 

Two trade associations and a member of 

the United States House of 


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