27904 Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Rules and Regulations 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

20 CFR Part 656 

RIN 1205–AB42 

Labor Certification for the Permanent 

Employment of Aliens in the United 

States; Reducing the Incentives and 

Opportunities for Fraud and Abuse and 

Enhancing Program Integrity 

AGENCY: Employment and Training 

Administration, Department of Labor. 

ACTION: Final Rule. 

SUMMARY: The Department of Labor 

(DOL or Department) is amending its 

regulations to enhance program integrity 

and reduce the incentives and 

opportunities for fraud and abuse 

related to the permanent employment of 

aliens in the United States. 

This Final Rule includes several 

major provisions. It prohibits the 

substitution of alien beneficiaries on 

permanent labor certification 

applications and resulting certifications. 

The Final Rule provides a 180-day 

validity period for approved labor 

certifications; employers will have 180 

calendar days within which to file an 

approved permanent labor certification 

in support of a Form I–140 Immigrant 

Petition for Alien Worker (Form I–140 

hereafter) with the Department of 

Homeland Security (DHS). The rule 

prohibits the sale, barter or purchase of 

permanent labor certifications and 

applications. In addition, this rule 

requires employers to pay the costs of 

preparing, filing and obtaining 

certification. An employer’s transfer to 

the alien beneficiary of the employer’s 

costs incurred in the labor certification 

or application process is strictly 

prohibited. The rule makes clear an 

alien may pay his or her own legitimate 

costs in the permanent labor 

certification process, including 

attorneys’ fees for representation of the 

alien. The rule also reinforces existing 

law pertaining to the submission of 

fraudulent or false information and 

clarifies current DOL procedures for 

responding to incidents of possible 

fraud. Finally, the rule establishes 

procedures for debarment from the 

permanent labor certification program. 

Consistent with the proposed rule, the 

provisions in this Final Rule apply to 

permanent labor certification 

applications and approved certifications 

filed under both the Program Electronic 

Review Management (PERM) program 

regulation effective March 28, 2005, and 

prior regulations implementing the 

permanent labor certification program. 

This rule also clarifies the Department’s 

‘‘no modifications’’ policy for 

applications filed on or after March 28, 

2005, under the new, streamlined PERM 

process. 

DATES: This Final Rule is effective July 

16, 2007. 

FOR FURTHER INFORMATION CONTACT: 

William L. Carlson, Administrator, 

Office of Foreign Labor Certification, 

Employment and Training 

Administration, 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 (800) 877–8339 (this is a tollfree number). 

SUPPLEMENTARY INFORMATION

I. Background 

The purpose of this Final Rule is to 

impose clear limitations on the 

acquisition and use of permanent labor 

certification applications and 

permanent labor certifications in order 

to reduce incentives and opportunities 

for fraud and abuse in the permanent 

labor certification program. It also 

promulgates key measures to enhance 

the integrity of the permanent labor 

certification program. This Final Rule 

continues efforts the Department 

initiated several years ago to construct 

a deliberate, coordinated fraud 

reduction and prevention framework 

within the permanent labor certification 

program. The Department laid the 

groundwork for greater integrity and 

security during the planning and 

promulgation of the 2004 Final Rule to 

implement the re-engineered PERM 

system. While fraud prevention has 

always been a goal of the Department’s 

labor certification programs, our 

continuing program experience and that 

of other Federal agencies has 

demonstrated the need to focus on the 

specific opportunities for fraud and 

abuse addressed in this rule. 

A. Statutory Standard and Current 

Department of Labor Regulations 

Under section 212(a)(5)(A) of the 

Immigration and Nationality Act (INA 

or Act) (8 U.S.C. 1182(a)(5)(A)), before 

the Department of Homeland Security 

(DHS) may approve petition requests 

and the Department of State (DOS) may 

issue visas and admit certain immigrant 

aliens to work permanently in the 

United States (U.S.), the Secretary of 

Labor (Secretary) must certify to the 

Secretary of Homeland Security and the 

Secretary of State that: 

(a) There are not sufficient U.S. 

workers who are able, willing, qualified, 

and available at the time of the 

application for a visa and admission 

into the United States and at the place 

where the alien is to perform the work; 

and 

(b) The employment of the alien will 

not adversely affect the wages and 

working conditions of similarly 

employed U.S. workers. 

If the Secretary of Labor, through the 

Employment and Training 

Administration (ETA), is satisfied in his 

or her review of a sponsoring 

employer’s application for certification 

that these two requirements have been 

met, he or she so certifies by granting a 

permanent labor certification. If DOL 

cannot make both of the above findings, 

the application for permanent labor 

certification is denied. The Department 

of Labor’s regulation at 20 CFR part 656 

governs the labor certification process 

for the permanent employment of 

immigrant aliens and sets forth the 

responsibilities of employers who wish 

to employ immigrant aliens 

permanently in the United States. 

The INA does not specifically address 

substitution of aliens in the permanent 

labor certification process. Similarly, 

the Department of Labor’s regulations 

are silent on the question of 

substitution. 

On May 6, 2002, the Department 

published a Notice of Proposed 

Rulemaking (NPRM) to streamline the 

permanent labor certification program. 

67 FR 30466 (May 6, 2002). A Final Rule 

implementing the streamlined 

permanent labor certification program 

through revisions to 20 CFR part 656 

was published on December 27, 2004, 

and took effect on March 28, 2005. 69 

FR 77326 (Dec. 27, 2004). The prior 20 

CFR part 656 (2004) governs processing 

of permanent labor certification 

applications filed prior to March 28, 

2005, except where certain provisions of 

this Final Rule will impact such 

applications. Previously filed 

applications may be refiled under the 

new PERM rule. 

B. General Immigration Process 

Involving Permanent Labor 

Certifications 

To obtain permanent alien workers, 

U.S. employers generally must engage in 

a multi-step process that involves DOL 

and DHS and, in some instances, DOS. 

The INA classifies employment-based 

(EB) immigrant workers into categories, 

e.g., EB–2 and EB–3, based on the 

general job requirements and the 

perceived benefit to American society. 


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1The 1991 Interim Final Rule included a 

provision prohibiting substitution. That provision 

was overturned by the U.S. Court of Appeals for the 

D.C. Circuit on Administrative Procedure Act 

procedural grounds. Kooritzky v. Reich, 17 F.3d 

1509 (D.C. Cir. 1994). DOL addressed the court’s 

concern through publication of the NPRM for notice 

and comment on February 13, 2006, consideration 

of comments received and development of this 

Final Rule. 71 FR 7656 (Feb. 13, 2006). It is of no 

small significance that the plaintiff in that suit, an 

attorney, was later convicted for the criminal sale 

of fraudulent labor certifications used for 

substitution. U.S. v. Kooritzky, No. 02–502–A (E.D. 

Va. 2003). 

U.S. employers must demonstrate that 

the requested job requirements, and in 

some cases the alien, fit into one of 

these classifications. The first step in 

the process for the EB–2 and EB–3 

classifications, further described below, 

generally begins with the U.S. employer 

filing a labor certification application 

with DOL in accordance with 20 CFR 

part 656. The U.S. employer must 

demonstrate to DOL, through a test of 

the labor market, that there are no U.S. 

workers able, willing, qualified, and 

available at the time of the application 

for a visa and admission to the United 

States and at the place where the alien 

is to perform the work. The employer 

must also demonstrate that the 

employment of the alien will not 

adversely affect the wages and working 

conditions of similarly employed U.S. 

workers. Following review of the 

permanent labor certification 

application, DOL will either certify or 

deny the application. 

The Immigrant Petition for Alien 

Worker (Form I–140) is a petition filed 

with the United States Citizenship and 

Immigration Services (USCIS), within 

DHS, by a U.S. employer for a 

prospective permanent alien employee. 

Most Form I–140 petitions filed under 

section 203(b)(2) and (3) of the Act, the 

EB–2 and EB–3 classifications, must be 

accompanied by an approved labor 

certification issued by DOL. DHS has 

established procedures for filing Form 

I–140 petitions under 8 CFR 204.5. 

DHS reviews the approved labor 

certification in conjunction with the 

Form I–140 petition and other 

supporting documents to evaluate 

whether the position being offered to 

the alien named in the petition is the 

same as the position specified on the 

labor certification and whether the 

employment qualifies for the immigrant 

classification requested by the 

employer. In addition, DHS evaluates 

the alien’s education, training, and work 

experience to determine whether the 

particular alien meets the job 

requirements specified on the labor 

certification. The approved labor 

certification is also used to establish the 

priority date for which an immigrant 

visa will be made available to the alien, 

based on the date the labor certification 

application was originally filed. 

C. Current ETA Practices Involving 

Permanent Labor Certifications 

Although not mentioned in 20 CFR 

part 656, ETA has for years informally 

allowed employers to substitute an alien 

named on a pending or approved labor 

certification with another prospective 

alien employee. Labor certification 

substitution has occurred either while 

the permanent labor certification 

application is pending at DOL or—by 

DOL’s delegation to DHS—while a Form 

I–140 petition, filed with an approved 

labor certification, is pending with DHS. 

Historically, this substitution practice 

was permitted as an accommodation to 

U.S. employers due to the length of time 

it took to obtain a permanent labor 

certification or receive approval of the 

Form I–140 petition. 

Currently, the regulations do not set 

any validity period on a permanent 

labor certification and, thus, permanent 

labor certifications are valid 

indefinitely. Also, DOL regulations do 

not address payments related to the 

permanent labor certification program 

or debarment authority. In this Final 

Rule, the Department addresses 

problems that have arisen related to 

substitution, lack of a validity period for 

certifications, and financial transactions 

related to the permanent labor 

certification program. 

D. Issues Arising From Current Practices 

For more than 15 years, the 

Department has expressed concern that 

various immigration practices, 

including substitution, were subject to a 

high degree of fraud and abuse. See, e.g., 

Interim Final Rule, 56 FR 54920 

(October 23, 1991).1 This concern was 

heightened by a number of recent 

criminal prosecutions by the 

Department of Justice (DOJ) as well as 

recommendations from the Department 

of Justice and the Department of Labor’s 

Office of Inspector General (OIG), and 

public comments concerning fraud 

received in response to the May 6, 2002, 

NPRM on PERM. See, e.g., 69 FR at 

77328, 77329, 77363, and 77364 (Dec. 

27, 2004). 

The Department’s review of recent 

prosecutions by DOJ, in particular, 

revealed that the ability to substitute 

alien beneficiaries has turned labor 

certifications into commodities which 

can be sold by unscrupulous employers, 

attorneys, or agents to those seeking a 

‘‘green card.’’ Similarly, the ability to 

sell labor certifications has been greatly 

enhanced by their current open-ended 

validity, providing a lengthy period 

during which a certification may be 

marketed. In many of these applications, 

the job offer was fictitious. In others, the 

job in question existed but was never 

truly open to U.S. workers. Rather, the 

job was steered to a specific alien in 

return for a substantial fee or 

‘‘kickback.’’ The Federal Government 

has prosecuted a number of cases 

resulting from employers, agents, or 

attorneys seeking to fraudulently profit 

from the substitution of aliens on 

approved labor certifications and 

applications. One attorney filed 

approximately 2,700 fraudulent 

applications with DOL for fees of up to 

$20,000 per application. Many of these 

applications were filed for the sole 

purpose of later being sold to aliens who 

would be substituted for named 

beneficiaries on the approved labor 

certifications. See U.S. v. Kooritzky, No. 

02–502–A (E.D. Va. 2003). Additional 

prosecutions have also involved the sale 

of fraudulent applications or 

certifications. See, e.g., U.S. v. 

Ivanchukov, et al., No. 04–421 (E.D. Va. 

2005); U.S. v. Mir, No. 8:03–CR–00156–

AW–ALL (D. Md. 2003); U.S. v. 

Fredman, et al., No. WMN–05–198 (D. 

Md.); U.S. v. Lee, No. 03–947–M (E.D. 

Va.); U.S. v. Mederos, No. 04–314–A 

(E.D. Va.); U.S. v. Yum (E.D. Va. 2006); 

U.S. v. Mandalapa, No. 205–NJ–03117–

PS (D. N.J. 2006); U.S. v. Heguman, No. 

CR 04–1635(A)–RSWL (C.D. Cal. 2007). 

Our program experience confirms that 

such fraudulent activity adds to the cost 

of foreign labor certification programs—

for example, resources spent processing 

fraudulent applications, anticipating 

and combating unscrupulous conduct, 

and assisting debarments or 

prosecutions after the fact. 

The Final Rule implementing the 

streamlined permanent labor 

certification program also discussed 

DOL’s and others’ concerns about fraud 

in the program and the steps the 

Department would be taking to 

minimize the filing of fraudulent or 

non-meritorious applications. 69 FR at 

77328, 77329, and 77363 (Dec. 27, 

2004). As implemented, the basic labor 

certification process under the new 

PERM system incorporates fraud 

detection measures targeting areas that 

have historically shown vulnerability. 

These measures include system and 

manual checks in key areas, as well as 

the use of auditing triggers and 

techniques, both targeted and random, 

which can be adjusted as appropriate to 

maintain security and integrity in the 

process. 

Personal Identification Numbers 

(PINs) and passwords for registration 

into the automated filing system are 

assigned to accounts issued to 


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sponsoring employers, who may then 

create sub-accounts for attorneys or 

agents who represent the employer. The 

initial stages of registration and 

application include system checks to 

verify the employer-applicant is a bona 

fide business entity. Once DOL’s initial 

review of a filed application shows it to 

be technically acceptable for processing, 

the application transfers to a substantive 

review queue, where it may be selected 

for audit either randomly or based on 

specific criteria that tie closely to 

program requirements. Staff at ETA’s 

National Processing Centers, where 

PERM applications are processed, also 

confirm information directly with 

employers, for example, to ensure each 

employer is aware an application has 

been filed on its behalf and is, in fact, 

sponsoring the alien named on the 

application. 

While these measures are targeted 

based on our program experience, they 

focus largely on discrete activities 

(employer verification, sponsorship, 

etc.) or on program requirements as 

reflected in questions throughout the 

application, and do not address broader 

labor certification policies historically 

of concern to the Department. For 

example, in the Final Rule to implement 

the PERM program, the Department 

noted the practice of allowing the 

substitution of alien beneficiaries may 

provide an incentive for fraudulent 

applications to be filed. 69 FR at 77363 

(Dec. 27, 2004). The Department also 

concluded in that Final Rule that the 

emerging ‘‘black market’’ for purchase 

and sale of approved labor certifications 

is not consistent with the purpose of the 

labor certification statute at section 

212(a)(5)(A) of the INA. While DOL was 

not able to address many of these fraud 

issues in the PERM Final Rule because 

they arguably went beyond the scope of 

the proposals contained in the PERM 

NPRM, the Department clearly indicated 

it would be exploring regulatory 

solutions to address these issues. 69 FR 

at 77328, 77329, and 77363 (Dec. 27, 

2004). 

Similarly, the Department determined 

that additional regulatory action was 

required to reinforce and clarify core 

program components, both to strengthen 

fraud prevention and enhance program 

integrity. For example, a prohibition on 

modifications to applications was an 

original assumption of the PERM 

program and having such a clear, 

enforceable prohibition is critical to its 

long-term efficiency and effectiveness. 

A prohibition against the transfer of 

labor certification costs from sponsoring 

employers to alien beneficiaries keeps 

legitimate business costs with the 

employer, minimizes improper financial 

involvement by aliens in the labor 

certification process, and strengthens 

the enforceability of the bona fide job 

opportunity requirement. 

Accordingly, on February 13, 2006, 

the Department published in the 

Federal Register a Notice of Proposed 

Rulemaking to amend its regulations 

governing the permanent labor 

certification process to curb fraud and 

abuse and strengthen program integrity. 

71 FR 7656. As proposed, the rule 

prohibited substitution of aliens not 

originally named on applications for 

permanent labor certification; limited 

the period of validity of a permanent 

labor certification to 45 calendar days; 

prohibited certain financial transactions 

or activities related to permanent labor 

certifications; and took other steps to 

enhance program integrity and reduce 

or avert fraud. 

This Final Rule builds on the 

foundation laid in the 2004 Final Rule 

implementing the streamlined 

permanent program and follows through 

on the strong commitment reflected in 

the NPRM for this rulemaking, 

culminating a multi-year effort to 

enhance integrity and fraud prevention 

mechanisms in the permanent labor 

certification program. 

To assist compliance and enforcement 

under this rule, the Department is 

reviewing available resources to 

determine its ability to establish a new 

toll-free telephone number, or to 

develop other means, to receive reports 

of potential violations. Calls would be 

screened by DOL staff, who would refer 

calls or inquiries to appropriate agencies 

within or outside the Department. 

II. Overview of the Regulation 

In order to protect the integrity of the 

permanent labor certification program, 

reduce the incentives for fraud and 

abuse, and comply with the 

Department’s statutory obligation to 

protect the wages and working 

conditions of U.S. workers, the 

Department proposed in the NPRM a 

number of regulatory changes. As stated 

in the NPRM, the revisions were 

proposed in part in response to 

concerns raised historically by 

stakeholder agencies and individual 

program users. They also responded to 

the numerous substantive comments 

received to the May 6, 2002 NPRM. At 

its essence, each change was motivated 

by our program experience and desire 

and responsibility under the authorizing 

statute to restore and maintain the 

integrity of the labor market test. The 

Department’s regulations at 20 CFR part 

656 establish the fact-finding process 

designed to develop information 

sufficient to support the Secretary of 

Labor’s determination, required under 

the statute, of the availability of or 

adverse impact to U.S. workers. The 

labor market test forms the basis for 

notice to U.S. workers of the job 

vacancy, for the recruitment process 

through which U.S. workers have the 

opportunity to apply and be considered 

for each job, and for employer 

attestations related to key terms and 

conditions of employment. While we 

remain sensitive to concerns raised by 

employers and others over the impact of 

these changes, we nonetheless have 

concluded, after careful review of 

comments on each proposal, that the 

identification and deterrence of fraud 

and the broader integrity of the program 

require a strong, comprehensive 

approach to which these regulatory 

reforms are critical. Accordingly, in this 

Final Rule the Department amends part 

656 to add fraud prevention and 

redressive measures in the key areas 

identified in the proposed rule, as 

follows. 

Substitution—Consistent with the 

proposed rule, this Final Rule adds a 

new § 656.11 to prohibit the substitution 

of alien beneficiaries as of the effective 

date of the Final Rule. This prohibition 

will apply to all pending permanent 

labor certification applications and to 

approved permanent labor 

certifications, whether the application 

was filed under the provisions of 20 

CFR part 656 in effect before March 28, 

2005, or on or after March 28, 2005. 

Additionally, as proposed, the Final 

Rule revises § 656.30(c) to provide that 

a certification resulting from an 

application filed under 20 CFR part 656 

in effect before March 28, 2005, or on 

or after March 28, 2005, is only valid for 

the alien named on the original 

permanent labor certification 

application. These regulatory changes 

do not affect substitutions approved by 

the Department or DHS under either 

regulation prior to this Final Rule’s 

effective date. They also do not affect 

substitution requests in progress as of 

this rule’s effective date. Due to the 

considerable evidence of past and 

continuing fraud in the permanent labor 

certification process, DOL through this 

Final Rule, among other measures, is 

eliminating the practice of substitution. 

The Department will work with the 

Departments of Justice and Homeland 

Security to explore appropriate 

circumstances under which substitution 

could be reinstated. We anticipate that 

there may come a time when all affected 

agencies are satisfied that there are 

sufficient anti-fraud protections to 

alleviate the concerns motivating this 

rule. 


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Modifications to applications—This 

Final Rule finalizes with minor changes 

the provision in the proposed rule 

prohibiting modifications to permanent 

labor certification applications once 

such applications are filed with the 

Department. The Department has 

implemented technological changes in 

the PERM program to alert applicants to 

technical grounds for deniability, thus 

eliminating the need for many 

modifications. Section 656.11(b) 

clarifies that requests for modifications 

to an application, where the application 

was filed after this Final Rule’s effective 

date, will not be accepted. To comport 

with this clarification while ensuring 

due process, the Final Rule revises 

§ 656.24(g) to more precisely define 

what evidence may be submitted with 

an employer’s request for 

reconsideration. 

Validity period—Although the 

Department had originally proposed 

permanent labor certifications be filed 

with DHS within 45 calendar days, this 

Final Rule extends that period to 180 

calendar days. Accordingly, all 

permanent labor certifications approved 

on or after the effective date of this Final 

Rule will expire 180 calendar days after 

certification, whether the original 

application was filed under 20 CFR part 

656 in effect prior to or after March 28, 

2005, unless filed prior to expiration in 

support of a Form I–140 petition with 

DHS. Likewise, all certifications 

approved prior to this Final Rule’s 

effective date will expire 180 calendar 

days after the Final Rule’s effective date 

unless filed in support of a Form I–140 

petition with DHS prior to the 

expiration date. 

Ban on sale, barter, purchase, and 

certain payments—This Final Rule 

prohibits the sale, barter, and purchase 

of applications and approved labor 

certifications, as well as certain 

payments to employers in compensation 

or reimbursement for the employer’s 

costs incurred to obtain labor 

certification. This ban will apply to all 

such transactions on or after the 

effective date of This Final Rule 

regardless of whether the labor 

certification application involved was 

filed under 20 CFR part 656 in effect 

before March 28, 2005, or on or after 

March 28, 2005. In consideration of 

comments, the Final Rule more 

precisely describes the payments being 

prohibited. Proposed § 656.12(b), now 

§ 656.12(b) and (c), has been revised to 

reflect this approach and definitions 

have been added to § 656.3. 

Debarment and program integrity—

Finally, the Final Rule institutes several 

enforcement mechanisms as described 

in the proposed rule, with revisions to 

clarify procedures and address 

comments received in response to the 

NPRM. On or after the effective date of 

this Final Rule, the Department may 

debar an employer, attorney or agent 

based upon certain enumerated actions 

such as fraud, willful provision of false 

statements, or a pattern or practice of 

noncompliance with PERM 

requirements, regardless of whether the 

labor certification application involved 

was filed under the prior or current 

regulation. In addition, other provisions 

related to all applications filed under 20 

CFR part 656 in effect before March 28, 

2005, or on or after March 28, 2005, 

highlight existing law pertaining to 

submission of fraudulent or false 

information and clarify our procedures 

for responding to possible fraud. 

As proposed, this Final Rule extends 

from 90 to 180 days the period during 

which the Department may suspend 

processing of applications under 

criminal investigation. In addition, in 

response to comments requesting a 

materiality standard for the various 

debarment provisions, the Final Rule 

adds an intent requirement (‘‘willful’’) 

to the false information section; to be 

actionable, the employer must willfully 

provide false or inaccurate information 

to the Department. The Final Rule also 

raises the standard for debarment based 

on failure to comply with the terms of 

Forms ETA 9089 or 750, failure to 

comply with the permanent labor 

certification program’s audit process, or 

failure to comply with the program’s 

supervised recruitment requirements, to 

require there must be a pattern or 

practice of noncompliance in each case. 

These changes in the standard for 

debarment at § 656.31(f) work in tandem 

with the revision to § 656.26(a)(1). The 

new §  ́656.26(a)(1) expands the existing 

provision for a right to review the 

Department’s denial of an application or 

revocation of a certification, to 

encompass a right to review of a 

debarment action. The request for 

review would be made to, and in 

appropriate cases a concomitant hearing 

would be held by, the Board of Alien 

Labor Certification Appeals (BALCA). 

III. Discussion of Comments on 

Proposed Rule 

The Department received a total of 

489 comments from attorneys, 

educational institutions, trade 

associations, individuals, and 

businesses. Many of the comments were 

duplicative in nature and have been 

grouped together for discussion 

purposes. Although most of the 

commenters were critical of one or more 

of the proposed changes, they also 

supported the Department’s efforts to 

deter fraud in the permanent labor 

certification program. Several 

commenters suggested alternatives for 

improving the fraud rule, while some 

suggested abandonment of the proposed 

rule entirely. 

A. Prohibition of Substitution or Change 

to the Identity of Alien Beneficiaries on 

Permanent Labor Certifications and 

Applications 

The proposed rule prohibited the 

substitution of alien beneficiaries on 

pending applications for permanent 

labor certification and on approved 

labor certifications. The comments we 

received on the prohibition of 

substitution raised concerns in a 

number of key areas: the Department’s 

authority to make the rule change; the 

nexus between the proposed ban and 

the incidence and types of fraud that 

have occurred; the Department’s 

premise that substitution is no longer 

needed, both because the new, 

automated system has significantly 

reduced processing time and because 

the backlog of permanent labor 

certification applications filed prior to 

March 28, 2005, will be eliminated by 

September 30, 2007; the application of 

the ban to all pending applications and 

approved certifications; and the 

hardships that employers would suffer 

and costs they would incur as a result 

of such a ban. 

We address the comments bearing on 

each of these issues below. However, 

after thoughtfully reviewing and 

deliberating over the concerns raised, 

we continue to find that the public 

benefit of eliminating substitution on 

permanent labor certifications and 

applications outweighs any potential 

disadvantages to individual program 

users. Consequently, as originally 

proposed in the NPRM, the Final Rule 

includes a new § 656.11 providing that, 

as of the effective date of the Final Rule, 

substitution of alien beneficiaries will 

be prohibited: (1) On all pending 

permanent labor certification 

applications; and (2) on certifications, 

regardless of whether the application 

was filed under 20 CFR part 656 in 

effect before or on or after March 28, 

2005. Likewise, once this Final Rule 

takes effect, the revised § 656.30(c) 

makes a certification valid only for the 

alien named on the original application. 

As explained in the NPRM, this 

regulatory change has no retroactive 

effect on substitutions approved by the 

Department or DHS prior to this Final 

Rule’s effective date. As made implicit 

by the new § 656.11(a), this Final Rule 

also has no retroactive effect on 

substitution requests in progress 

(submitted) prior to this rule taking 


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effect. These and the other regulatory 

changes promulgated in this Final Rule 

modify the statement in the preamble to 

the December 27, 2004, PERM Final 

Rule that applications filed before that 

Final Rule’s effective date would 

continue to be processed and governed 

by the then-current regulation. 69 FR 

77326 (Dec. 27, 2004). 

1. Statutory Authority 

Several commenters questioned the 

Department’s authority under the INA to 

eliminate substitution of aliens on 

certifications and applications. 

Statutory authority relative to 

qualifications and identity of alien—

Many commenters opposed the ban on 

substitution as being overbroad and 

overreaching. Commenters referred to 

the plain language of the authorizing 

statute and opposed the elimination of 

substitution on grounds that DOL’s 

jurisdiction, based on 8 U.S.C. 

1182(a)(5), stops with determining 

worker unavailability and adverse 

impact and does not extend to activities 

related to worker identity or 

qualifications. Commenters stated that 

the authority to scrutinize the 

qualifications of the alien named on the 

petition rests solely with USCIS. 

More specifically, commenters 

questioned the Department’s authority 

to join the labor certification application 

to a specific alien, asserting labor 

certifications are related to the job 

opportunity, not the employee. They 

argued that the identity of the specific 

alien employee, whether the original 

beneficiary or a substituted beneficiary, 

is not relevant to a good faith labor 

market test. One commenter stated that 

the elimination of substitution, 

requiring a second labor market test for 

the position, contravenes what it 

believes is the legislative intent that the 

labor certification process require only a 

single labor market test. 

With respect to the statutory 

requirement that U.S. workers be 

unavailable, one commenter stated that 

the identity of the alien is not relevant 

to the labor market test, as long as he or 

she qualified for the job opportunity 

when the labor certification application 

was filed. With respect to the 

requirement of no adverse impact, the 

commenter stated that the alien’s 

identity is also not relevant as long as 

the qualified alien is offered the 

appropriate wages and working 

conditions. The commenter raised 

concern that this rule would refocus 

labor certification from the job 

opportunity to the identity of the 

sponsored alien, and would do so 

without statutory change, evidence of 

fraud, or analysis of the increased costs 

to the employer. In fact, this commenter 

stated that given the automated, largely 

attestation-based nature of PERM, DOL 

is clearly unprepared and lacking in 

resources to evaluate evidence bearing 

on whether the alien is qualified for the 

job. 

The Department’s authority to 

regulate and ban the substitution of 

aliens on labor certifications and 

applications is clear. The INA treats 

each alien individually and, for 

employment-based immigration 

requiring labor certification, makes 

every alien inadmissible, absent the 

Secretary of Labor’s determination on 

U.S. worker availability and adverse 

impact. The trigger for such a 

determination has always been, at its 

core, the existence of a vacancy that an 

employer wishes to fill with an alien, 

and the burden of proof is always upon 

the petitioning employer to overcome 

the presumption of the inadmissibility 

of an individual intended immigrant 

employee through a test of the labor 

market. 

The statute itself could not be clearer 

that the labor certification process is 

alien specific. In defining the 

Department’s role in the admission of an 

alien for employment-based permanent 

residence, INA section 212(a)(5)(i) ties 

the required certification to ‘‘the place 

where the (emphasis added) alien is to 

perform such skilled or unskilled 

labor[,]’’ and the necessity of certifying 

that ‘‘the employment of such (emphasis 

added) alien will not adversely affect 

the wages * * *.’’ The plain language of 

these provisions (i.e., the use of terms 

such as ‘‘the alien’’ and ‘‘such alien’’) is 

meant to focus not on the process but 

solely on its use to admit one, specific 

alien. 

It is this Department’s responsibility 

to judge how and under what 

circumstances a labor market 

determination should be made, and 

what constitutes the employer’s actual 

minimum requirements for performance 

of the job. It is appropriate and 

consistent with the broader statutory 

and programmatic intent to apply these 

requirements any time a position that is 

the subject of a labor certification 

application is or becomes vacant, 

regardless of whether the application 

covering it was previously in process 

and for how long. The labor market 

changes rapidly, and it is consistent 

with the Department’s obligation to 

protect the jobs, wages and working 

conditions of U.S. workers to require 

that there be another labor market test 

when the job opportunity effectively 

changes through the unavailability of 

the original alien worker. 

The Department’s regulations 

authorize it to closely review the 

information provided on the application 

with respect to the named alien. Our 

authority to examine the stated 

qualifications of the alien named on the 

application also extends to our 

determination of whether an employer 

has accurately stated the minimum 

qualifications necessary to perform the 

job, or has inflated or misstated job 

requirements. 56 FR 54920 (Oct. 23, 

1991); see 20 CFR 656.17(i). 

Nevertheless, the Department does 

not undertake in this Final Rule to 

determine the visa eligibility of 

individual aliens. This rule governs the 

processing of labor certification 

applications, the validity of approved 

certifications, and other Department of 

Labor activities implementing relevant 

INA provisions and 20 CFR part 656; it 

does not speak to activities by the 

Departments of Homeland Security or 

State conducted under their respective 

authorities and jurisdiction. Further, the 

Department’s focus is not on the 

identity of the individual alien but on 

the employer’s failure to conduct a 

second labor market test for available 

U.S. workers when the original alien 

beneficiary becomes unavailable and, 

subsequently, when an employer seeks 

substitution. As stated in the NPRM, if 

the original alien beneficiary is no 

longer available, then the employer 

must use some means to fill that job 

opportunity. Clearly, the employer used 

some recruitment tool to find the new 

foreign worker for that newly opened 

job opportunity. Prohibiting substitution 

will ensure the employer again makes 

the reopened employment opportunity 

available to U.S. workers. In the event 

another alien is again the only qualified 

person available, then it is consistent 

with this program’s purpose and the 

statute’s plain language to require that 

the employer file a new application 

reflecting the new recruitment 

undertaken. 

The Medellin decision—A number of 

commenters cited the decision in 

Medellin v. Bustos, 854 F.2d 795 (5th 

Cir. 1988) in support of the argument 

that the Department lacks authority to 

prohibit substitution. The commenters 

argue that in Medellin, the Fifth Circuit 

held that the Department’s 

administrative decision (based on 

operational guidance to program staff) to 

revoke a permanent labor certification 

based on the employer’s substitution of 

another alien in place of the named 

alien more than six months after the 

certification was granted was not in 

accordance with applicable law. The 

commenters further argued that limiting 

a labor certification to ‘‘the alien for 


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whom the certification was granted’’ ran 

contrary to both the INA provisions 

(now at INA section 212(a)(5)) stating 

the Secretary of Labor’s authority to 

determine worker availability and 

adverse impact, and the Department of 

Labor’s own regulations, which 

provided that a labor certification was 

valid indefinitely, hence disconnecting 

validity and any time limitations. 

We carefully considered the Fifth 

Circuit’s opinion in Medellin prior to 

the issuance of the NPRM and 

concluded that the dictum relied upon 

by commenters in the decision was not 

so compelling as to overcome the strong 

argument, based on the Department’s 

authority and experience, that supports 

the elimination of substitution. We have 

reviewed that matter again as a result of 

comments and reach the same 

conclusion for a number of reasons. 

First, the ultimate basis for the 

Medellin decision was an administrative 

law issue not relevant to this 

rulemaking. Medellin involved a 

challenge to provisions in an ETA 

Technical Assistance Guide (TAG) that 

permitted the substitution of an alien on 

an approved labor certification only for 

the first six months after issuance. As 

the Medellin court correctly noted, the 

TAG was not published using notice 

and comment rulemaking procedures. 

Further, the six-month limitation was 

inconsistent with the then regulation at 

20 CFR 656.30(a) that made labor 

certifications valid indefinitely. This 

rulemaking directly addresses the 

administrative law problem identified 

in Medellin by clarifying, after noticeand-public comment rulemaking, that a 

labor certification is valid only for the 

alien who was the beneficiary of the 

original application and only for a 

limited time, 180 days. 

The discussion in the Medellin 

decision about the relative 

responsibilities of DOL and INS in the 

labor certification process is dictum and 

clearly is not the legal grounds for the 

court’s decision. Further, the reasoning 

in that dictum is not compelling and 

reflects an overly narrow view of the 

Department’s role in the immigration 

process. Under the INA, the Department 

is responsible for requiring a labor 

market test that is the statutory 

prerequisite to the granting of a labor 

certification. Banning substitution 

enhances protections for U.S. workers 

by offering U.S. workers another chance 

when a job that was the subject of a 

labor certification once again becomes 

available through the departure of the 

alien employee. 

Section 212(a)(5) of the INA makes a 

foreign worker inadmissible unless, as 

one condition precedent, the 

Department determines there is no able, 

willing, and qualified domestic worker 

available to fill the position for which 

the foreign worker’s admission is 

sought. Judicial interpretation of the 

word ‘‘willing’’ led to the creation of the 

process that has been in place since 

1978, whereby the certification approval 

is predicated on an employer’s 

demonstrated unsuccessful efforts to 

recruit a domestic worker. See 

Production Tool Corporation v. 

Employment and Training 

Administration, 688 F. 2d 1161 (7th Cir. 

1982). The position that the job 

opportunity for which certification is 

being sought must be a job that a 

domestic worker can actually fill has 

been affirmed by two appellate courts 

subsequent to the Medellin decision. 

Bulk Farms v. Martin, 963 F. 2d 1286 

(9th Cir. 1992); Hall v. McLaughlin, 864 

F. 2d 868 (D.C. Cir. 1989). 

Given these considerations, it is 

perfectly reasonable for the Department 

to require the employer to conduct a 

new test of the labor market, and file a 

new labor certification application, 

every time the job opportunity becomes 

vacant. The Medellin litigation simply 

did not take place in a context that 

allowed the Department’s concerns 

regarding the new test of the labor 

market to be adequately addressed. 

Relationship to DHS regulations—One 

commenter supported the ban on 

substitution but expressed concern that 

the impact of the change may be quite 

limited until DHS adopts corresponding 

regulations to prohibit the substitution 

of aliens. Another commenter argued 

that the public should not be placed in 

the position of dealing with competing 

and possibly inconsistent regulations 

issued by different agencies and 

suggested that DOL should withdraw its 

proposal until DHS signals its 

equivalent concern. 

DOL disagrees that there is a 

likelihood of competing or inconsistent 

regulations between DOL and DHS. No 

DHS regulations address or authorize 

substitution of alien beneficiaries on 

labor certifications. Rather, at present, 

DHS permits substitution on permanent 

labor certifications through a delegation 

of authority from DOL. See March 7, 

1996 Memorandum of Understanding 

between the Immigration and 

Naturalization Service (INS) and 

Employment and Training 

Administration (signed by Louis D. 

Crocetti, Jr., Associate Commissioner, 

Examinations, and Raymond Uhalde, 

Deputy Assistant Secretary for 

Employment and Training). INS (the 

portion of that agency that provided 

immigration benefits) later became U.S. 

Citizenship and Immigration Services 

(USCIS) at the Department of Homeland 

Security. Pursuant to that 1996 MOU, 

when substitution is requested, DHS 

requires employers to submit a new 

(employer-completed but not processed) 

DOL permanent labor certification 

application form with the name of the 

substituted alien, along with the 

approved labor certification in the name 

of the original alien beneficiary. See 

USCIS Adjudicator’s Field Manual, Sec. 

22.2(b)(6) (Sept. 12, 2006). This Final 

Rule alters the current practice by 

providing that labor certifications, once 

approved, are valid only for the alien 

named in the original application and 

that substitution of alien names on the 

certification is prohibited. DOL and 

DHS have agreed that DOL will rescind 

the delegation of authority contained in 

the 1996 MOU consistent with the terms 

of this Final Rule and effective on the 

same date as this Final Rule. Because 

substitution of aliens on labor 

certifications has occurred pursuant to 

DOL authority, regulatory action by 

DHS is not necessary to implement a 

termination of its delegated authority 

with respect to DOL permanent labor 

certifications. 

Thus, following the effective date of 

this rule, employers will face a 

consistent approach to labor 

certifications: Substitution of the alien 

beneficiary on a permanent labor 

certification application or on the 

resulting certification is prohibited. As 

reflected throughout this Final Rule, the 

Department has determined that this 

prohibition on substitution is consistent 

with its statutory responsibilities and is 

necessary to achieve important 

objectives. DOL is responsible for 

administering the labor certification 

process and is authorized and 

accountable for improvements to the 

program, independent of employmentbased immigration programs overseen 

by other Federal agencies. Therefore, 

although we have closely coordinated 

with DHS, DOL OIG, DOJ, and other 

appropriate agencies in this rulemaking 

and other fraud prevention efforts, DOL 

has determined, in light of the evidence 

of fraud and the continued concerns 

about fraud and program integrity raised 

by many sources, and the Department’s 

statutory responsibility to U.S. workers, 

that it is appropriate to issue this 

regulation governing the part of the 

employment-based immigration process 

for which we are responsible. The 

Department has authority to administer, 

enforce, and reform programs under its 

jurisdiction, including to regulate the 

meaning and nature of a permanent 

labor certification issued under 20 CFR 

part 656. Nothing in this Final Rule in 


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any fashion interferes with DHS’

authority or its ability to address fraud 

issues through a rulemaking process of 

its own. 

Entitlement to substitution—Many 

commenters asserted that since the 

practice of substitution has been 

permitted by DOL for several decades, 

the statute and regulations provide 

entitlement to substitution. One 

commenter asserted that the 

Department, under its current 

regulations at 20 CFR 656.30(c)(2), 

effectively provides that the labor 

certification application can be valid for 

any qualified worker, which the 

commenter interpreted to include a 

substituted worker. 20 CFR 656.30(c)(2). 

Another commenter opined that the 

absence of statutory entitlement to 

substitution is irrelevant to the clear 

value of substitution, which in its view 

far outweighs the perceived or potential 

benefits from reducing incentives for 

fraud. 

The Department disagrees with these 

comments. While substitution has been 

a long-standing practice at the 

Department and by delegation to DHS, 

the statutory framework to allow the 

permanent admission of foreign 

nationals to perform work was 

deliberately protective of U.S. workers 

and contains nothing approaching an 

entitlement to substitution. It is 

consistent with the statute’s 

presumption of alien inadmissibility 

that admissibility must be demonstrated 

by each employer for each alien and that 

the statute does not provide for 

substitution of individual aliens on 

labor certifications or applications. This 

regulatory action is also consistent with 

the Congressional intent to grant the 

Secretary of Labor broad discretion in 

implementation of the permanent labor 

certification program. Nor is it 

surprising that the practice of 

substitution has not been authorized or 

addressed in DOL’s regulations. 

Substitution has been permitted simply 

as a procedural accommodation to 

employer-applicants. The Department 

recognizes that this accommodation has 

had a distinct benefit to employers and 

applicants in allowing them to retain an 

earlier priority date and apply the 

results of a completed labor market test. 

However, as discussed later in this 

Preamble, the equities do not support 

retention of the earlier priority date. 

Accordingly, in light of the evidence 

that substitution is an important 

contributor to fraud in the labor 

certification program and of DOL’s 

statutory interest in protecting U.S. 

workers by reestablishing worker 

unavailability whenever a position once 

again becomes vacant, the demonstrated 

‘‘black market’’ in labor certifications, 

and the significant number of 

prosecutions for fraudulent activity 

related to the program, we conclude the 

benefits to elimination outweigh the 

potential disadvantages. As stated 

previously, the Department will 

continue to work with other Federal 

agencies with an interest in the 

employment-based immigration system 

to explore, under appropriate 

circumstances, potential alternatives to 

the current practice. 

2. Evidence of Fraud 

Several commenters mentioned that 

the Department has not provided 

evidence of or statistics on widespread 

labor certification fraud or abuse and 

needs to consider the benefits of 

substitution against relatively few 

abuses. One commenter opined that 

elimination is appropriate only when a 

policy is commonly or largely misused. 

It stated the burden is on the 

Department to show the connection 

between fraud and substitution, and to 

establish that its elimination will not 

impede legitimate business practices. 

Some commenters questioned the 

effectiveness of eliminating substitution; 

they were concerned the rule does not 

target the most common sources of 

abuse or deter persons with intent to 

defraud. One commenter suggested that 

persons intending to engage in these 

abuses will find the substitution 

prohibition does not provide a 

significant obstacle to their endeavors. It 

stated such persons will remain free to 

file fraudulent applications naming the 

intended beneficiary and that 

substitution elimination will only 

succeed in moving the initiation of the 

fraudulent transaction with the foreign 

national back to a point in time before 

the filing of the application. The 

commenter asserted it is highly 

questionable whether such a minor 

achievement justifies the harm done to 

legitimate employers by the prohibition 

of substitution. Some commenters 

claimed the substitution prohibition 

will do little to eliminate the filing of 

applications without the knowledge of 

the employer, and the filing of 

applications by employers who are paid 

to engage in a fraudulent scheme and 

who have no intention of filling the job 

opportunity described in the 

application. Citing U.S. v. Kooritzky, 

No. 02–502–A (E.D. Va. 2003), they 

observed those who are determined to 

commit fraud will find a way to commit 

fraud. 

The NPRM detailed the reasons for 

our proposal to eliminate the practice of 

substitution. Our experience with the 

failures of this practice is longstanding 

and shared by other Federal agencies. 

The Department disagrees that 

eliminating substitution contributes 

only a ‘‘minor’’ achievement to 

addressing the realm of abuses over 

which the Department has control. The 

fraud cases prosecuted even within the 

recent past indicate a significant 

number of instances where substitution 

played a role in fraudulent activity in 

obtaining an immigrant benefit. See, 

e.g., U.S. v. Yum (E.D. Va. 2006); U.S. 

v. Mandalapa, No. 205–NJ–03117–PS 

(D.N.J. 2006). 

The Department continues to believe, 

based on the activity in these and other 

cases, that fraudulent substitution is a 

core contributor to the marketability of 

labor certifications because it is only if 

one can substitute that one can benefit 

from a certified application naming 

another individual. This marketability 

results in the use of labor certifications 

for fraudulent purposes—by aliens and 

employers with no intent to have a 

legitimate employment relationship. 

We agree there are numerous sources 

of fraud in employment-based 

immigration programs governmentwide, and individuals intent on 

committing fraud and abusing the 

system may still find a way to do so. 

However, the existence of other types of 

fraud, separate from that generated by 

the practice of substitution, does not 

obviate the need to address the 

documented fraud related to alien 

substitution. As described earlier, the 

Department has instituted specific 

checks and balances in the PERM 

process to address and prevent the filing 

of applications without the employer’s 

knowledge. For example, the National 

Processing Centers contact the employer 

directly to confirm it is aware of the 

application and is sponsoring the alien, 

and the ETA Form 9089 requires 

distinct contact information for the 

employer and the attorney or agent 

filing the application. The substitution 

prohibition enhances and supplements 

existing anti-fraud and program 

integrity measures. 

Alternatives to a regulatory ban on 

substitution, including limiting or 

tailoring the option to substitute—One 

commenter asserted the elimination of 

substitution in no way facilitates the 

identification of fraudulent labor 

certification applications, and this rule 

instead takes a ‘‘shotgun’’ approach at 

the expense of legitimate program users. 

The comment stated the goal of reduced 

fraud is better achieved by heightened 

enforcement measures, which it states 

the Department has already put in place 

in the PERM program. The commenter 

also pointed to traditional law 

enforcement measures, like the 


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discernment of patterns in groups of 

applications filed by a given employer 

or attorney, to ferret out fraud and 

abuse. One commenter argued existing 

regulations provide a sufficient basis to 

prosecute employers, employees, and 

attorneys alike who engage in 

fraudulent activity associated with the 

permanent labor certification process. 

Others also suggested there is no need 

to ban substitution because of the 

additional provisions prohibiting the 

sale, barter, or purchase of labor 

certifications at § 656.12; the safeguards 

already in place at the Backlog 

Processing Centers to confirm the bona 

fide nature of applications; and the 

PERM program’s strict employer 

registration requirements. Another 

commenter stated it is concerned about 

the elimination of substitution in small 

town or rural areas where employers 

have great difficulty finding qualified 

engineers, and requested the 

Department relax its requirements for 

rural or small town situations. 

One commenter suggested that in 

order to limit occurrences of fraud, DOL 

should limit the prohibition on 

substitutions to filings made under 

section 245(i) of the INA. As an 

alternative, the commenter suggested 

the establishment of an exception to the 

rule for large corporations. The 

commenter also suggested the 

Department could establish appropriate 

criteria to allow employers who, for 

example, have a demonstrated record of 

filing appropriate labor certification 

applications to use substitutions. 

The Department disagrees with these 

comments. The heightened enforcement 

measures in the PERM program are 

designed to catch fraud ‘‘in process’’

and do not address fraudulent activity 

that transpires thereafter, as the new 

substitution policy will. Further, the 

prohibition on substitution is not 

designed as a fraud detection 

mechanism, but rather as one of several 

protective measures to altogether 

prevent fraud related to this activity by 

preventing the commodification of labor 

certifications. The prohibition will be 

more effective because it will cover 

applications filed under 20 CFR part 

656 in effect before and after March 28, 

2005. Further, while we agree that other 

fraud prevention and detection methods 

may be available, the effectiveness of 

those other methods does not remove 

the need for additional, targeted 

techniques like those instituted in this 

Final Rule. For example, we are well 

aware of other laws, such as those 

governing perjury, that support 

detection and prosecution of fraud. 

However, such statutes are not always 

sufficient to prevent, deter and/or 

redress unlawful conduct. By removing 

the opportunity to engage in the 

fraudulent activity, this rule permits 

existing investigative and prosecutorial 

resources to be better focused, and frees 

resources across government agencies 

for other pressing needs. 

We have no programmatic evidence 

that applications filed under section 

245(i) are particular sources of fraud. In 

addition, this suggested alternative 

would result in a one-time solution, 

since the INA section 245(i) cases have 

already been filed and are being 

processed in the Department’s Backlog 

Processing Centers. Further, such a 

policy would establish unequal rules for 

employers based upon the unsupported 

assumption that applications filed 

under section 245(i) are the only ones in 

which substitution fraud occurs. Labor 

certifications issued for 245(i) cases are 

indistinguishable from others and 

require the same steps of employers; 

absent a strong rationale, they should 

not be subject to different conditions or 

limitations than the limitations that 

attach to other labor certifications. 

We also do not agree that exceptions 

for large corporations or for rural areas 

are warranted. Exceptions for certain 

categories of employers, as suggested by 

commenters, do not further the 

Department’s obligation to ensure a 

sufficient test of the labor market for the 

admission of each alien each time a job 

opportunity opens. We also have 

determined that it is not wise to 

establish a list of pre-approved 

employers, in part because the types of 

fraud we are targeting by this Final Rule 

are in some cases committed by 

attorneys and agents without the 

knowledge of the employer named on 

the application. 

3. Change in Conditions That Originally 

Warranted Allowance of the Practice 

Various organizations provided 

comments concerning current 

processing times and the Department’s 

remaining backlog of permanent labor 

certification applications in relation to 

the proposed ban on substitution. These 

commenters generally took issue with 

the Department’s premise that 

substitutions are no longer needed to 

accommodate application processing 

delays. Some commenters questioned 

the premise based on the number of 

applications pending at the 

Department’s Backlog Processing 

Centers and experiences to date with 

applications filed under the PERM 

system. They stated even if the Backlog 

Processing Centers meet what appears to 

be an unrealistic backlog elimination 

goal, the premise is quite obviously 

false. 

For example, one commenter stated it 

has 1,100 pending, unadjudicated labor 

certification applications and that, in 

many cases, because of the multi-year 

adjudication times for these 

applications, the original alien 

beneficiary has already moved on to a 

new position and the employee 

currently in the position has become the 

new intended beneficiary of the 

application. Another commenter 

referred to over 1,000 Reduction-inRecruitment applications pending at the 

Department’s Backlog Processing 

Centers, and stated about half of all of 

its PERM applications still remain 

pending for up to five months from date 

of submission. Both commenters 

suggested the Department should 

continue its efforts to eliminate the 

backlog and to speed up the PERM 

process prior to considering changes to 

the practice of substitution. 

The Department disagrees. The 

agency operating conditions under 

which alien substitution was initially 

permitted have noticeably changed. The 

Department acknowledged in the 

preamble of the proposed rule that the 

strongest historical argument in support 

of substitution has been the length of 

time it once took to obtain a permanent 

labor certification. 71 FR at 7656, 7659 

(February 13, 2006). However, the 

Department also noted the streamlined 

process introduced by the PERM 

regulation has significantly reduced the 

labor certification processing time for 

applications filed under the new 

system. Since the PERM program began 

accepting applications on March 28, 

2005, 68 percent of the certified 

applications have been processed in less 

than 60 days. And in FY 2006 alone, 

approximately 75 percent of the 

certified applications were approved in 

60 days or less. In addition, the PERM 

system will continue to improve as we 

gather baseline information from which 

to implement process improvements. In 

other words, we expect applications to 

be adjudicated at least as quickly in the 

future as the system builds upon its 

knowledge base. 

With respect to the pending 

applications at our Backlog Processing 

Centers, we have significantly reduced 

the number of backlogged applications 

from an estimated 365,000 to less than 

half that number. This effort places us 

on target to meet our goal of eliminating 

the backlog by September 30, 2007. 

Thus, the argument in support of 

allowing substitutions to continue 

because of long processing delays has 

been appropriately addressed by both 

the new, streamlined PERM process and 

the large reduction in backlogged 

applications. In light of these changes, 


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we believe it is imprudent to wait to 

adopt this rule, as some commenters 

suggest, until all backlogs are 

completely eliminated, thus giving 

those who wish to fraudulently use 

substitutions additional time to do so. 

4. Extending Regulation to Pending 

Applications for Permanent Labor 

Certification and to Approved 

Certifications 

The Department received a number of 

comments opposing the application of 

the substitution ban to applications filed 

under 20 CFR part 656 in effect either 

before March 28, 2005, or on or after 

March 28, 2005, and to certifications 

already granted. These commenters 

urged the prohibition on substitution 

should be limited to only those 

applications filed under the current 

streamlined regulation and should not 

encompass any applications filed under 

the 20 CFR part 656 in effect before 

March 28, 2005. 

Commenters stated employers and 

employees across the country have 

made critical hiring and transfer 

decisions in reliance on the availability 

of substitution. They stated that by 

applying the rule change to all 

substitutions except those approved by 

the effective date of the Final Rule, the 

Department would be setting itself up 

for further challenges and pressures. 

The commenters cited Bowen v. 

Georgetown Univ. Hospital, 488 U.S. 

204 (1988), asserting it supported their 

contention that a Federal agency lacks 

the power to issue retroactive rules 

absent a statutory grant of authority. 

They contended it is unfair, and most 

likely unlawful, for the Department to 

change the rules midstream, and that 

any change in the rules governing 

substitution should only be prospective 

in effect. 

Others commented that the 

Department’s proposed regulation 

constitutes a retroactive ban that raises 

legal questions. Some stated the 

proposed rule improperly seeks to 

retroactively invalidate approved labor 

certification applications, when such 

approval was obtained under the 

current rule that such certifications are 

‘‘valid indefinitely.’’ Others stated the 

proposed application is contrary to the 

prohibition on retroactive agency rules 

as found in the Administrative 

Procedure Act (APA). They noted that, 

under the APA, a rule is defined as the 

whole or part of an ‘‘agency statement 

of general or particular applicability and 

future [emphasis added] effect designed 

to implement, interpret, or prescribe law 

or policy.’’ Commenters stated the 

Department would need specific 

authority from the Congress to 

promulgate retroactive regulations. 

Several commenters referenced Health 

Ins. Assn. of America, Inc. v. Shalala, 23 

F.3d 412, 423 (D.C. Cir. 1994) for the 

proposition that, under the APA, rules 

may only have future effect. The court 

cited Justice Scalia’s concurrence in 

Bowen v. Georgetown Univ. Hosp., 488 

U.S. 204, 216–23 (1988), which 

interpreted the APA to mean that a rule 

is a statement that has legal 

consequences only for the future and 

found that a rule that alters a future 

regulation in a manner that makes 

worthless substantial past investment 

incurred in reliance upon the prior rule 

may for that reason be found ‘‘arbitrary’’

or ‘‘capricious.’’ One commenter 

asserted the proposed provisions 

eliminating substitution would be 

illegal retroactive rulemaking because 

employers have filed applications with 

the expectation of substitution as a 

potentially significant benefit should 

the original beneficiary drop out, and 

this benefit is a form of a property right. 

One commenter argued the 

application of the rule prohibiting 

substitution to backlogged applications 

under the pre-PERM regulation was 

retroactive in nature and could be read 

as an attempt to force the time and 

expense of the new application under 

the PERM process on employers who 

already have an investment in 

applications in the backlog. The 

commenter said this would amount to a 

taking of a business investment without 

just compensation. Similarly, another 

commenter asserted the elimination of 

substitution constitutes a ‘‘taking 

without compensation’’ of an 

employer’s significant investment in the 

preparation and filing of pending and 

approved labor certification 

applications. The commenter stated the 

prevention of an unknown and possibly 

insignificant level of fraud and abuse 

does not justify this devaluation of a 

company’s investment. The commenter 

went on to observe that eliminating 

substitution would disproportionately 

impact large high-tech employers, 

which file large numbers of 

applications. Finally, this commenter 

stated years of processing delays have 

spurred employers to build substitution 

into a business practice as part of their 

respective programs. 

In a similar vein, other commenters 

stated the prohibition of substitution is 

detrimental to parties who have relied 

on the current practice. Estoppel, they 

said, warrants that a person who has 

rightfully relied on a practice should get 

the benefit of that reliance. Employers 

and beneficiaries have depended on the 

ability to substitute and have foregone 

filing new applications because they 

planned to use an application for a 

previous employee for a current 

employee. 

One commenter argued that due 

process considerations of fair notice, 

reasonable reliance, and settled 

expectations, affirmed in Immigration 

and Naturalization Service v. St. Cyr, 

533 U.S. 289 (2001), should compel the 

Department to strip from the rule any 

provision applying the ban on 

substitution retroactively. This 

commenter asserted that, based on that 

case law, the 1996 Memorandum of 

Understanding between the Department 

and the Immigration and Naturalization 

Service delegating to INS responsibility 

for substituting a named beneficiary on 

a labor certification, and longstanding 

agency practice, the Labor Department 

may not now retroactively divest USCIS 

and employers with pending labor 

certification applications of the legal 

right to engage in the practice of 

substituting alien beneficiaries. This 

commenter further stated that if a case 

has not yet been adjudicated, it is 

difficult to imagine any harm resulting 

from a legitimate employer substituting 

a new beneficiary on the pending 

application. 

Other commenters also pointed out 

the hardship that the ban on 

substitution would cause to certain 

aliens. They stated prohibiting 

substitution on applications pending 

prior to the effective date of the rule will 

render countless beneficiaries who are 

subject to the American 

Competitiveness in the Twenty-First 

Century Act (AC21), Public Law 106–

313 (October 17, 2000), stranded and 

unable to extend their current stays, 

since such extensions depend on the 

existence of either a permanent labor 

certification application that has been 

pending for 365 days or more or a 

pending Form I–140 petition. 

As an alternative to the proposal, one 

commenter recommended that 

substitution remain available for all 

cases currently pending at a Backlog 

Processing Center. The commenter also 

recommended substitution remain 

available for all cases as long as the 

employer can demonstrate it has 

engaged in some additional recruitment 

and can document there are no qualified 

U.S. workers available. One commenter 

recommended the substituted 

beneficiary should be assigned the 

priority date of the date of substitution 

or, in the event substitution is 

prohibited, that the prohibition start 

with the effective date of the rule, and 

not be applied retroactively. One 

commenter suggested a grace period 

prior to the ban becoming effective. 


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We have carefully reviewed these 

comments and find they do not present 

sufficient grounds to overcome the 

rationale reflected in the NPRM to 

prohibit the practice of substitution on 

all labor certifications issued after the 

effective date of this Final Rule. 

Assertions that the prospective ban on 

substitution of aliens is, instead, a 

retrospective ban are misplaced. Past 

substitution requests that already have 

been approved are unaffected by this 

rule. Current substitution requests 

pending on the effective date of this rule 

will continue to be processed. Even 

though substitution will not be 

permitted with respect to labor 

certifications granted prior to this rule’s 

effective date and may upset 

expectations based on part 656 as it 

previously read, that does not make the 

ban retrospective. 

The question of whether a rulemaking 

activity has a ‘‘retroactive’’ impact that 

renders that rule invalid is more 

complex than the commenters suggest. 

The United States Supreme Court has 

ruled that ‘‘[a] statute does not operate 

‘retroactively’ merely because it is 

applied in case arising from conduct 

antedating the statute’s enactment.’’

Landgraf v. USI Film Products, 511 U.S. 

244, 269 (1994). The Court went on to 

note that determining whether a statute 

is improperly retroactive requires the 

application of ‘‘familiar considerations 

of fair notice, reasonable reliance, and 

settled expectations. * * *’’ Id. at 270. 

Application of the Landgraf principles 

led the Court to reject a retroactivity 

challenge to the application of the 

Foreign Sovereign Immunities Act to 

wrongdoing that occurred prior to that 

law’s enactment. Republic of Austria v. 

Altman, 541 U.S. 677 (2004). These 

same principles recently led an en banc 

Sixth Circuit to uphold the application 

of a change in Social Security 

Administration disability regulations to 

pending cases. Combs v. Commissioner 

of Social Security, 459 F.3d 640 (6th Cir. 

2006). The Sixth Circuit followed the 

same approach in finding that there was 

no impermissible retroactive effect in 

applying certain amendments to the 

INA relating to the discretionary 

removal of relatives to aliens in the U.S. 

who sought to invoke the prior 

procedure. Patel v. Gonzales, 432 F.3d 

685 (6th Cir. 2005). After applying these 

principles to the current rulemaking, the 

Department has determined its proposal 

is appropriate. 

An application for permanent alien 

labor certification is filed at DOL with 

the employer-applicant’s expectation 

that it will satisfy the exclusionary 

provision in 8 U.S.C. 1182(a)(5)(A), so 

as to support a petition to DHS to 

import the alien beneficiary of the 

certification. That remains unchanged 

by this rule. 

The Department has provided ample 

notice of its intention to eliminate 

substitution, sufficient for employers 

and their representatives to reduce or 

eliminate continued reliance on the 

practice. As early as 1991, we indicated 

our intention to discontinue the 

practice. 59 FR at 54920, 54925–54926 

(Oct. 23, 1991). When the PERM Final 

Rule was published in 2004, its 

preamble discussed at some length 

questions relating to the practice of 

substitution, the Department’s findings 

of an emerging market for fraudulent 

sale of labor certifications, and DOL’s 

intent to examine the practice and 

‘‘explor[e] in the near future regulatory 

solutions to address this issue.’’ 69 FR 

at 77363 (Dec. 27, 2004). In the NPRM 

to this Final Rule, the Department again 

announced its intent to eliminate 

substitution. Thus, we are confident 

public notice and comment has been 

fair, open, and consistent with the 

Administrative Procedure Act. Any 

employer who has an application 

pending but who is either unable or 

unwilling to continue to sponsor the 

original alien has had more than 

sufficient opportunity to identify a new 

alien and take advantage of the past 

procedures. 

We have determined that employers 

cannot demonstrate they reasonably 

relied on the prior practice. In filing an 

application for permanent labor 

certification, an employer is expressing 

its intent to and expectation that it will 

hire the alien named on that document 

if the application is approved. An 

employer’s hypothetical need to 

substitute, should the first alien no 

longer be available, is not tantamount to 

detrimental reliance on an ability to do 

so. Commenters offered no explanation 

of how an employer’s initial filing can 

be made in reliance on a future ability 

to ́substitute. The risk any employer 

sponsoring an alien takes is that the 

alien will not remain an employee 

through the entire permanent residence 

process, or at the end of that process, 

and the option of simply inserting 

another alien has never been an 

entitlement. The INA’s rule of 

inadmissibility of immigrant workers 

without a test of the labor market for 

available U.S. workers, the statute’s 

requirement that admissibility be 

determined for each alien individually, 

and the statute’s overall protection of 

employment rights of U.S. workers, each 

further supports the Department’s 

position. 

With respect to the claim of employer 

expectations of an option to substitute, 

the statute makes clear that an employer 

has no absolute right to a labor 

certification, and certainly no property 

interest in one. Employers, particularly 

regular users of the system, have known 

about the Department’s intent to end the 

practice of substitution since the 

publication of the PERM regulations in 

2004. No employer could after that date 

have had any reasonable expectation 

that the practice would be indefinitely 

available. Several commenters appear to 

argue that once they have applied for or 

secured a labor certification for a 

particular alien in a particular job, they 

have a right to bring in any alien they 

choose for that job. The statutory 

scheme, with its focus on individual 

aliens and presumption of each alien’s 

inadmissibility, belies that argument. 

Further, it is appropriate to apply the 

prohibition on substitution to the cases 

in our Backlog Processing Centers to 

ensure these needed fraud protections 

are applied throughout all permanent 

labor certification cases, regardless of 

where they reside in terms of 

processing. Accordingly, the 

Department has determined that, 

following the effective date of this Final 

Rule, the elimination of alien 

substitution will apply to all permanent 

labor certification applications pending 

with the Department and to all 

permanent labor certifications issued 

under the current or prior regulation. 

This Final Rule does not nullify 

substitutions already made or in 

progress, whether by the Department or 

DHS, but rather prohibits substitutions 

in the future, substitutions which 

employers presumably do not anticipate 

and are not planned and, hence, to 

which there is no right or reasonable 

expectation. No labor certification may 

be the subject of a substitution request 

submitted on or after the effective date 

of this rule. 

This rule places no additional 

responsibilities on recipients of labor 

certifications approved prior to the 

effective date. At the time of 

certification a benefit was granted; none 

was waived. The required wage rate 

remains unchanged for employers. No 

further recruitment for U.S. workers is 

required of the employers under 

approved labor certifications. Once the 

certification is filed with DHS in 

support of a visa petition, and if the 

employer and alien comply with all 

other applicable provisions of the 

immigration laws, the alien beneficiary 

will be admitted as a permanent 

resident. 

All that is changed is that the 

employer now will be encouraged to 

retain its original alien beneficiary 

(perhaps to that alien’s benefit) or will 


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27914 Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Rules and Regulations 

have to file a new application on behalf 

of a new alien. An employer seeking to 

substitute, in fact, always has had to 

engage in a limited test of the labor 

market. When the original alien 

beneficiary no longer is available for the 

job opportunity, the employer has had 

to recruit the substitute alien, either 

domestically among nonimmigrants, or 

abroad to import a new foreign worker. 

This rule would make that labor market 

test include not just foreign workers, but 

also U.S. workers, at prevailing wages 

and working conditions. 

The standards in 8 U.S.C. 

1182(a)(5)(A) ‘‘are quite broad. The 

Secretary must decide whether there are 

sufficient U.S. workers who are ‘able, 

willing, qualified, and available,’ and 

whether the alien’s employment would 

‘adversely affect the wages and working 

conditions’ of these workers. The statute 

leaves to the Department a broad area 

for the exercise of its discretion in 

issuing labor certificates.’’ Industrial 

Holographics, Inc. v. Donovan, 722 F.2d 

1362, 1365–1366 (7th Cir 1983). In the 

exercise of her discretion to issue labor 

certifications, the Secretary is within the 

extensive bounds created by the INA. Id. 

If the employer files a new application, 

it will be considered fairly and on its 

own merits. If approved, the new labor 

certification will be for a more current 

wage rate and subject to a more current 

labor market test, to the benefit of the 

new alien and/or U.S. workers similarly 

employed. This is within the intent of 

the statute, and is an appropriate 

preventative measure given the 

deleterious effect caused by substitution 

in the past. Given the Department’s 

expressed concerns about fraud in the 

labor certification process, particularly 

with respect to substitution, and the 

emerging ‘‘black market’’ in status as a 

beneficiary of a labor certification, DOL 

sees a compelling need to protect the 

program’s integrity regardless of the 

processing status of a certification on 

the effective date of the final rule. The 

Department’s duty also to protect job 

opportunities for U.S. workers, and the 

welfare of both U.S. and foreign 

workers, makes it necessary to end the 

process of substitution after the effective 

date. See section I.D of this preamble, 

above. 

Effect on aliens who are H–1Bs and 

not entitled to benefit from substitution 

after the fifth year—The Department 

also received comments regarding the 

effect of the substitution ban on 

nonimmigrant aliens on whose behalf 

viable labor certifications have not been 

filed by the end of their fifth year in H–

1B status, and specifically on these 

aliens’ ability to adjust their status to 

that of immigrants. Under current law, 

nonimmigrant H–1B visa holders in 

their sixth year of H–1B status who are 

named on permanent labor certification 

applications that have been pending for 

365 days or more qualify—upon petition 

to USCIS—for extension of their H–1B 

status in one-year increments. AC21, 

section 106(a). Currently, USCIS allows 

visa holders in H–1B status who are 

substituted into labor certification 

applications by the end of their fifth 

year to extend their nonimmigrant 

status beyond the normal six-year 

maximum. Commenters argued H–1B 

visa holders who are unable either to 

have a permanent labor certification 

application filed on their behalf or to be 

substituted into an existing application 

by that time will lose the opportunity 

for additional extensions of H–1B status. 

The Department understands 

concerns that, as a result of this rule, H–

1B nonimmigrant aliens who, after five 

years of employment in the United 

States, are not yet the beneficiary of a 

permanent labor certification 

application might not be permitted by 

USCIS to further extend their H–1B 

status prior to obtaining U.S. permanent 

resident status. However, the 

Department finds that continuing 

substitution as an accommodation to 

this small group of individuals, a group 

whose numbers and participation in the 

program are both speculative, is 

disproportionate to the adverse 

consequences of continuing the 

substitution practice which creates both 

an incentive and opportunity for fraud, 

and which deprives U.S. workers of job 

opportunities. 

Some commenters have suggested that 

since AC21 increased the portability of 

H–1B visas, allowing such 

nonimmigrants to change employers, 

substitution by these foreign workers 

should continue to be allowed. Public 

Law 106–313, sec. 105. The Department 

sees no reason, as a general matter, to 

permit one type of nonimmigrant to 

continue benefiting from the practice of 

substitution over other nonimmigrants. 

The portability provision seeks to 

increase flexibility for a specific group 

of nonimmigrants—H–1B aliens—under 

a specific set of circumstances; it 

governs transfers between positions 

which aliens fill on a temporary basis, 

and is triggered by the filing of a new 

LCA and petition. It does not address, 

and does not extend to, substitution, 

which is a function of the permanent 

residence process. The statutory 

permission to move from one employer 

to another as a procedural 

accommodation does not in turn 

mandate increased flexibility through 

substitution in the permanent residence 

process. 

These commenters’ analysis 

incorrectly pairs portability with the 

extension beyond the six-year H–1B 

employment limit allowed by section 

106(a) of AC21. The Department finds 

that analysis flawed. The INA dictates 

that after six years, H–1B status must 

terminate. The specific exceptions to 

that termination are linked by AC21 to 

harm resulting from permanent 

residence backlogs, including backlogs 

in the permanent labor certification 

program. The extension beyond six 

years is intended by the statute to 

benefit an H–1B worker when 365 days 

or more have elapsed since the filing of 

a permanent labor certification 

application ‘‘on the alien’s behalf (if 

such certification is required for the 

alien to obtain status under such [INA] 

section 203(b)) * * *.’’ Public Law 106–

313 section 106(a)(1). Clearly, the alien 

intended to be helped by this provision 

is the alien who may have been 

prejudiced by the backlog in processing 

labor certification applications under 

DOL’s pre-PERM regulations. An H–1B 

worker seeking substitution may have 

benefited by working in the U.S. for six 

or more years, but has not necessarily 

been affected by the backlog at all. It is 

not inconsistent with the statutory 

intent of AC21 to limit the ability of that 

alien to continue his or her 

nonimmigrant status to a labor 

certification filed on his or her behalf 

rather than on someone else’s behalf. 

The Department recognizes that those 

aliens who fall outside the five-year 

mark will potentially be unable to 

extend beyond the sixth year of H–1B 

status and otherwise might have been 

able to do so through substitution. This 

small group of affected individuals, 

however, does not present sufficient 

equities to persuade the Department to 

carve out an exception to the 

prohibition on substitution, since 

employers in such situations have had 

upwards of five years in which to 

initiate permanent resident status on 

their behalf. 

Further, extension of an alien’s 

nonimmigrant visa status is the 

province of USCIS, not the Department 

of Labor. The Department’s mandate is 

not to preserve the opportunity or 

further the potential opportunity in all 

circumstances for an employer to hire 

an immigrant worker, nor is it a process 

driven by the interests of any or all 

aliens who may wish to enter the U.S. 

through employment-based 

immigration. The Department’s 

mandate, rather, is to design and 

implement a secure framework within 

which an employer with legitimate 

business needs may determine the 

availability of U.S. workers and, if such 


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workers are not found, bring in a foreign 

worker. Moreover, because the Final 

Rule prohibits only substitutions which 

have not yet been made, aliens who 

have not otherwise begun the 

permanent residence process before the 

end of the fifth year of H–1B status 

presumably do not anticipate and 

therefore cannot claim a reasonable 

expectation of benefiting from 

substitution. 

5. Effect of the Elimination of 

Substitution on Employers 

The Department received many 

comments addressing the perceived 

hardships employers would suffer if 

substitution were prohibited. 

Added cost and burden—Employers 

were concerned about loss of their 

investment in the first application; the 

loss of an important employee retention 

and recruitment tool; added cost and 

burden from a new application, 

including advertising and recruiting 

costs, staff time, legal fees; inherent 

delays to getting a new worker in place, 

and potential processing delays with the 

Department or other agencies; 

additional costs from other parts of the 

petitioning and visa application process; 

loss of place in the queue given visa 

retrogression; and retardation of 

business growth and loss of 

competitiveness from potential delays 

in getting products to market. Some 

pointed to the potential negative impact 

on special groups, such as high-tech 

employers, nonprofits, or businesses 

located in rural areas. One commenter 

stated that each set of costs should not 

be viewed in isolation, but rather 

multiplied by the number of 

applications for each employer, and the 

large number of employers that must 

respond to labor mobility and 

unforeseen business changes. 

Despite a lack of consistent 

information from commenters on the 

additional costs associated with new 

filings, the Department is aware of and 

sensitive to the time and expense 

employers absorb to recruit and retain a 

qualified workforce. However, the costs 

associated with the employment-based 

immigration process, including the costs 

incurred by employers requesting 

permanent labor certification, have been 

an accepted part of the labor 

certification process for almost 30 years 

and are not unanticipated by the statute. 

The INA presumes inadmissibility of 

each alien, and requires the 

presumption be overcome for each 

foreign worker through, in part, the 

Secretary of Labor’s determination. A 

demonstration of worker unavailability 

is inherent to the process of filing a 

labor certification application, and it is 

not unreasonable or inconsistent with 

the INA to require recruitment every 

time an employer seeks to bring in a 

new foreign worker. Recruitment 

activities and the costs associated with 

them are equally as appropriate for the 

would-be substituted foreign worker as 

they were for the originally named 

alien. Accordingly, while we are 

sensitive to employers’ concerns, we 

must nevertheless conclude that 

elimination of the current substitution 

practice is amply justified 

notwithstanding. 

In addition, the Department fully 

recognizes that substitution has become 

a tool to address visa retrogression. 

However, the Department is not 

convinced it should retain a policy on 

substitution that gives rise to significant 

fraud and may adversely affect U.S. 

workers as a means to cope with the 

visa cap issue, or to support any 

unintended cost savings for employers 

that may have resulted from this 

practice. 

Loss of priority date—Many 

commenters expressed concern over the 

loss of the visa priority date when a new 

application is required to hire a new 

alien. Our program experience indicates 

that the priority date plays a defining 

role in the commoditization of labor 

certifications; substitution enhances the 

labor certification’s marketability. 

Commoditization stems from the ability 

to substitute aliens on labor 

certifications, which are valid 

indefinitely, while maintaining the 

priority date of the original filing. 

Indeed, the priority date is often a prime 

motivator for the marketability and 

added value of labor certifications. It is 

also not necessarily true that the 

availability of substitution is beneficial 

to aliens as a class. As stated in the 

NPRM, under the substitution process 

currently in place, the new alien 

beneficiary is inserted into an in-process 

application or certification initially filed 

for a different alien and with a filing 

date that is often years earlier than the 

substituted alien would have received if 

named in a newly filed application. 

We are aware of concerns that these 

practices make substitution 

fundamentally unfair to other aliens 

(and their petitioning employers) 

seeking to immigrate to the U.S. who 

remain below the substituted worker in 

the visa priority date queue, as well as 

to U.S. workers. See 71 FR 7656 (Feb. 

13, 2006) and 56 FR 54920 (Oct. 23, 

1991). The need for a new labor market 

test and the Department’s interest in 

removing aspects of the current process 

creating incentives for fraud, combined 

with the inequity to other aliens waiting 

in the visa queue who have not been 

substituted in, outweigh the harm to an 

individual employer and alien from the 

loss of a priority date on a given 

application. In addition, the reasoning 

that the employer suffers a hardship 

from the inability to apply an earlier 

priority date to a subsequent application 

rests on an unsupported assumption 

that another test of the labor market 

would not yield a qualified and willing 

U.S. worker. We do not agree with this 

reasoning and find it contrary to our 

statutory responsibility to protect U.S. 

workers, as well as virtually impossible 

to legitimately accommodate in the 

administration of the permanent labor 

certification program. 

B. Prohibition of Modifications to 

Applications 

The proposed rule sought to clarify 

procedures for modifying applications 

filed under the new permanent labor 

certification regulation and, in 

particular, to prohibit modifications to 

applications once filed with the 

Department. We received numerous 

comments raising concern over this new 

provision. After careful consideration of 

these comments and for the reasons set 

forth below, this Final Rule codifies the 

new provision at § 656.11(b) with slight 

changes from the NPRM, clarifying that 

requests for modifications to an 

application submitted under the PERM 

regulation will not be accepted where 

the application was filed after this Final 

Rule’s effective date. In considering how 

to implement the ‘‘no modification’’

provision, while ensuring due process 

to applicants for labor certification, we 

have determined that it is advisable to 

revise the language of § 656.24(g) to 

more precisely define what 

documentation may be submitted with a 

request for reconsideration. 

Codifying the ‘‘no amendments’’

requirement through notice and 

comment—As explained in the NPRM, 

the clarification made by this Final Rule 

is consistent with the streamlined labor 

certification procedures governed by the 

regulation that went into effect March 

28, 2005. Nothing in the regulation 

contemplates permitting employers to 

make changes to applications after 

filing. That practice was one the 

Department specifically sought to 

change through the Final Rule 

implementing the re-engineered PERM 

program. The re-engineered program is 

designed to streamline the process, and 

an open amendment process that either 

freely allows changes on applications or 

results in continual back and forth 

exchange between the employer and the 

Department regarding amendment 

requests is inconsistent with that goal. 

Further, the re-engineered certification 


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process has eliminated the need for 

changes. 

The Department has instituted 

screening and guideposts for electronic 

permanent labor certification 

applications. The online application 

system, especially in light of the 

technological enhancements described 

below, allows the user to proofread, 

revise, and save the application prior to 

submission, and the Department expects 

users will do so. ETA has received 

frequent, positive feedback from 

stakeholders on what they have found to 

be the time and cost-saving nature of 

this review. 

Moreover, in signing the application, 

the employer declares under penalty of 

perjury that it has read and reviewed the 

application and the submitted 

information is true and accurate to the 

best of its knowledge. In the event of an 

inadvertent error or any other need to 

refile, an employer can withdraw an 

application, make the corrections and 

file again immediately. Similarly, if an 

employer receives a denial under the 

new system, it can choose to correct the 

application and file again immediately 

if it does not seek reconsideration or 

appeal. 

Immediate feedback on deficiencies or 

deniability prior to submission of an 

application—Prohibiting the 

modification of applications will allow 

the Department to process employer 

applications more quickly and support 

greater uniformity and consistency in 

their adjudication. However, as part of 

our continuing upgrades to PERM 

processing capabilities, as well as in 

response to comments on the NPRM and 

the suggestion by the BALCA in its 

decision in In the Matter of 

HealthAmerica, No. 2006–PER–1 (July 

18, 2006), we have dramatically 

increased the nature and number of 

system ‘‘prompts’’ and warnings in an 

effort to provide employers and others 

with additional opportunities for 

correction prior to submission of an 

application. 

The Department has added system 

capabilities in the form of ‘‘pop-up’’ edit 

alerts to notify each applicant when a 

response to a question is technically in 

conflict with either the PERM regulation 

or certain of the formal instructions for 

completion of the form. The applicant is 

allowed to continue, but with full 

warning of possible deniability. The 

system permits submission of the 

application, but the applicant assumes 

the risk that the application will be 

denied based on the failure to fully 

comply with the technical requirements 

and alerts of the program. This 

electronic advisory system is much 

more detailed and more robust than 

anything available previously to online 

users, and it is continuing to reduce the 

type of automated denials that gave rise 

to HealthAmerica. 

The majority of form preparation 

errors that have occurred to date will 

now generate an automated prompt, 

warning the filer that it may have 

entered erroneous information that may 

cause a denial of the application. As 

described above, similar manual 

mechanisms are in place to detect and 

correct errors on mailed applications. 

The Department reiterates, however, the 

fundamental responsibility to submit an 

application which does not contain 

typographical or similar errors remains 

with program users. 

Under the system upgrades now in 

place, applications containing errors in 

contravention of system alerts are 

denied. Consistent with the ‘‘no 

modifications’’ policy codified by this 

rule and the evidentiary parameters of 

the revised § 656.24(g) described below, 

requests for reconsideration based on 

such denials will not be granted, where 

an application filed after this rule’s 

effective date is at issue. Requests for 

reconsideration based on such denials 

involving applications filed prior to this 

rule’s effective date will be reviewed on 

a case-by-case basis; they will be placed 

in the appropriate queue and reviewed 

on a ‘‘first in, first out’’ basis and as 

workload permits. 

Evidence in support of requests for 

reconsideration and amendment of 

§ 656.24(g)—We have made one change 

from the NPRM in this Final Rule based 

on the BALCA’s decision in 

HealthAmerica. Among other issues, the 

Board addressed the meaning of the 

current § 656.24(g) governing requests 

for reconsideration. That section 

provides that reconsideration requests 

‘‘may not include evidence not 

previously submitted.’’ The Board 

concluded that evidence ‘‘previously 

submitted’’ encompassed material in the 

possession of the employer at the time 

of filing. That reasoning was the basis 

for the Board’s decision that allowed the 

employer to modify its application to 

correct a mistake. To the extent the 

BALCA favored allowing the employer 

in HealthAmerica to present evidence 

that effectively changed the response to 

a question on the application, the 

BALCA’s approach is inconsistent with 

the Department’s objective and the 

NPRM proposal that applications cannot 

be changed or modified after 

submission. 

However, the Department recognizes 

that there will be situations where—

although an employer will not be 

permitted to amend its response to a 

question as it did in HealthAmerica—it 

may nonetheless be appropriate to 

consider information not previously in 

the Certifying Officer’s (CO’s) physical 

possession in order to provide 

appropriate evaluation of the employer’s 

request for reconsideration. The 

Department has determined an 

approach that allows for submission 

with a motion to reconsider of 

documentation in existence at the time 

of filing and held by an employer as part 

of its compliance responsibilities under 

the PERM recordkeeping requirements 

is appropriate. Accordingly, we have 

adopted a modified approach to that 

proposed in the NPRM, continuing to 

prohibit application modifications but 

recognizing the appropriateness of an 

opportunity to present and consider 

evidence that was generated to comply 

with record retention requirements of 

the PERM program. 

Accordingly, the Department is 

including as part of this Final Rule a 

revised § 656.24(g) setting the new 

standard for applications filed on or 

after the effective date of this Final Rule. 

The new § 656.24(g) describes the 

evidence that can be submitted with a 

motion to reconsider and clarifies the 

interplay with the no-modification 

provision of § 656.11(b). The revised 

§ 656.24(g) limits evidence submitted at 

reconsideration to documentation that 

the Department actually received from 

the employer in response to a request 

from the Certifying Officer to the 

employer; or documentation that the 

employer did not have an opportunity 

to present to the Certifying Officer, but 

that existed at the time the application 

was filed, and was maintained by the 

employer to support the application for 

permanent labor certification to meet 

the documentation requirements of 

§ 656.10(f). Revised § 656.24(g) also 

provides that the Department will not 

grant motions to reconsider where the 

deficiency that caused denial resulted 

from the applicant’s disregard of a 

system prompt or other direct 

instruction. These changes together 

adequately ensure that employers and 

others have sufficient opportunity to 

present evidence on salient points, even 

if denied that opportunity during the 

application’s consideration, while 

enabling the PERM program to function 

in its intended streamlined manner. 

1. Issues Raised by Public Comments 

Authority to limit modifications to an 

Application for Permanent Employment 

Certification—Many commenters 

questioned the Department’s authority 

to limit and prohibit an employer’s 

ability to modify a Form ETA 9089, 

Application for Permanent Employment 

Certification. We disagree. Federal 


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agencies have the authority, and 

sometimes the necessity, to write strict 

procedural rules in order to manage 

their respective responsibilities. 

HealthAmerica, slip op. at 17. Our past 

practice and program experience led us 

to make regulatory changes in the nature 

of the permanent labor certification 

program, changes that were publicized 

through extensive stakeholder outreach 

and during numerous public meetings 

across the country. The resulting 

efficiency and effectiveness measures 

have contributed to overall program 

productivity increases and have 

reinforced, among other factors, the 

critical need to discontinue what has 

historically been continual, unduly 

time-consuming communication 

between ETA Certifying Officers and 

employers or their representatives. 

The Department recognizes that the 

accountability-based standard it put in 

place in PERM was, at least for purposes 

of the modifications issue, not made 

sufficiently clear in the text or preamble 

to the original December 27, 2004 Final 

Rule. The BALCA pointed out in its 

HealthAmerica decision that a 

requirement for precise filing can be 

imposed with proper notice, citing 

Glaser v. FCC, 20 F.3d 1184, 1186 (D.C. 

Cir. 1994); Salzer v. FCC, 778 F.2d 869, 

875 (D.C. Cir. 1985); JEM Broadcasting 

Co., Inc. v. FCC, 22 F.3d 320 (D.C. Cir. 

1994); Florida Cellular Mobil 

Communications Corp. v. FCC, 28 F.3d 

191 (D.C. Cir. 1994). In these cases, the 

D.C. Circuit found the FCC could 

appropriately and legitimately write 

regulations requiring certain license 

applications be ‘‘letter-perfect’’ (i.e., 

complete and sufficient) when 

submitted because the requirement was 

provided for in agency regulations that 

had been subject to notice and 

comment. The BALCA noted the 

issuance of the NPRM as evidence that 

such a ‘‘letter-perfect’’ requirement did 

not exist under the PERM regulations as 

initially issued. This rulemaking 

satisfies public notice and comment 

objectives. 

Relationship to fraud—One 

commenter suggested the Department is 

insinuating that any request for 

modification is grounded in fraud. We 

disagree. As we have stated, the ‘‘no 

amendments’’ clarification in this rule 

simply codifies a policy the Department 

assumed was part and parcel of the reengineered program, and which was an 

(albeit unstated) assumption of the 

PERM Final Rule. The ‘‘no 

modifications’’ policy furthers 

administrative efficiency. In addition, it 

protects against certain program abuses, 

such as the submission of a form with 

incomplete or inaccurate information 

simply to save the priority date. Thus, 

the policy serves a number of purposes 

not limited to fraud prevention. 

Need for modifications—Many 

commenters stated modifications to 

applications were necessary because 

alleged errors made by the Department 

in reviewing mailed-in applications led 

to erroneous case denials. For example, 

the Department issued denials for 

failure to include the language that the 

employer would accept ‘‘any suitable 

combination of education, training, or 

experience,’’ when, in fact, the language 

was included in the application. 

Further, commenters stated other 

applications have been denied because 

the Department allegedly stated the 

alien did not possess the required 

academic credentials when, in fact, he 

or she did, and those credentials were 

clearly noted in the application in the 

appropriate place. 

Commenters suggested in the event of 

an inadvertent error, there are many 

reasons why refiling is not usually a 

viable alternative, thus making 

modifications necessary. For instance, 

they stated that often an application 

preparer is not aware an error has been 

made at the time the employer submits 

the electronic Form ETA 9089. Even if 

the mistake comes to light before the 

Department issues a denial, it may be 

too late to re-file because the 

recruitment may have become stale. 

Further, certain post-filing, precertification events, including but not 

limited to changes in corporate structure 

resulting in a change of employer name, 

tax identification number, or address, 

may require the amendment of the 

application. One commenter suggested 

the inability to modify inadvertent 

mistakes could have serious 

ramifications as such a mistake may 

result in an inability to refile the 

application, cause a denial of the 

application, or be construed as a false 

statement. 

The Department disagrees that these 

comments require alteration of the nomodifications policy reflected in the 

NPRM. As outlined above, going 

forward, electronic system prompts will 

most often alert the employer or its 

agent to the grounds for deniability, so 

a filer will be able to learn prior to 

submitting the application if the system 

would deny the application as currently 

completed. Further, as always, an 

employer has the right to seek 

reconsideration and beyond that, appeal 

to the BALCA, when it believes a denial 

was unjustified, without loss of the 

priority date which attached to the 

application. Hence, the ‘‘no 

modifications’’ policy does not institute 

a standard not previously envisioned, 

and does nothing to limit or undermine 

employer due process rights. 

When filing the Application for 

Permanent Employment Certification, 

the employer certifies and declares 

under penalty of perjury that it has read 

and reviewed the application, and the 

information provided therein is true and 

accurate to the best of its knowledge. 

The Department understands that 

human error occurs in limited 

circumstances, which is why we have 

elected to increase our system 

‘‘prompts’’ to help avoid such errors. 

These additions sufficiently address 

commenter concerns. Further, the 

Department believes it is capable of 

distinguishing between typographical or 

inadvertent errors and willful false 

statements. 

Tailoring the ‘‘no modifications’’

policy—One commenter suggested the 

current regulations governing PERM 

should permit a single opportunity to 

the employer or agent to correct minor 

technical deficiencies. According to this 

commenter, applications should be 

decided based on their substantive 

merits instead of on non-material 

technical errors. The Department agrees 

that applications should be adjudicated 

upon their respective merits. However, 

typographical or similar errors are not 

immaterial if they cause an application 

to be denied based on regulatory 

requirements. The Department 

encourages those who submit 

applications to carefully review all 

information for completeness and 

accuracy and has modified the online 

application system to assist them to do 

so. Attentive filers will accrue the 

benefits of the new streamlined system, 

as ‘‘clean’’ applications are usually 

processed and adjudicated within 60 

days of filing. 

Many commenters suggested it is 

highly unlikely that employers will 

need more than one opportunity to 

correct any minor technical deficiencies 

and the nature and number of technical 

errors is highly unlikely to have a 

significant detrimental impact on the 

overall efficiency of the PERM process. 

Commenters suggested the new system 

has, in fact, had a dramatic impact on 

the processing of applications for 

permanent labor certification through, 

among other things, centralization and 

implementation of new technology. 

According to these commenters, 

permitting a single opportunity to 

amend an application to overcome a 

non-substantive technical error will 

neither require substantial Department 

resources nor render the PERM system 

ineffective or inefficient. 

We disagree with the commenters’’

premise that permitting modifications 


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will not negatively impact the 

processing and review of applications. 

The processing of requests for 

reconsideration of denials poses a 

significant, costly resource drain on the 

PERM case management system and 

staff. The opportunity cost and inequity 

to other employers are also high, as 

resources must be transferred from 

review of applications that do meet 

technical requirements to those that 

may not. Moreover, as we have 

discussed above, the alerts and prompts 

that we have built into the system will 

provide employers the opportunity to 

correct minor technical deficiencies 

before they ever submit their 

applications. This is a reasonable 

balancing of available resources. 

Therefore, the Department is finalizing 

the standard noted in the NPRM of not 

allowing modifications to an 

application. The revisions to § 656.24(g) 

will enable employers to present 

evidence in a request for 

reconsideration that will permit filers 

the opportunity, if necessary, to present 

evidence outside the four corners of the 

application. 

Many commenters suggested it is 

reasonable to request that the 

modification prohibition, if adopted, 

should only apply to applications filed 

after publication of the Final Rule. We 

have adopted this suggestion. The 

changes to §§ 656.11 and 656.24 

contained in this rule apply only to 

applications filed after the effective date 

of the rule; they do not impact the 

processing of motions for 

reconsideration filed with respect to 

applications filed prior to that date. 

Concern prohibiting modifications 

will generate backlogs—One commenter 

suggested prohibiting modifications 

under proposed § 656.11(b) would be an 

open invitation to intractable increases 

in backlogged applications, rather than 

the radical reduction in pending 

applications and processing times 

contemplated by the PERM reforms. The 

efficiencies created by the new system 

prompts, which are proving to be an 

effective screen for program users 

against system-generated denials for 

technical errors, as well as the ‘‘no 

modifications’’ policy put in place by 

this rule, will allow us to significantly 

reduce the pending queues of denied 

applications and, consequently, to 

process all other applications more 

quickly and effectively. 

Distinguishing policies for backlog 

and PERM—One commenter suggested 

the Department should clarify its 

position on modifications under the 

new PERM streamlined system, relative 

to applications filed with the Backlog 

Processing Centers, by clearly 

explaining the difference in treatment in 

the regulatory text. As proposed in the 

NPRM, the ‘‘no modifications’’ policy in 

this Final Rule will apply only to the 

PERM program since only the PERM 

regulation is amended in this Final 

Rule. In addition, this preamble 

describes more fully the process the 

Department will follow in its review of 

applications filed up to the effective 

date of the rule. This information 

provides sufficient notice of the 

expectations for employers and their 

representatives regarding the treatment 

of technical and other modifications 

going forward. 

C. Prohibition on the Sale, Barter, or 

Purchase of Applications for Permanent 

Labor Certifications and of Approved 

Permanent Labor Certifications, and 

Prohibition on Related Payments 

The proposed rule, at § 656.12, 

prohibited the sale, barter, and purchase 

of applications and approved labor 

certifications, as well as other related 

payments. The Department received 

numerous comments on this proposal. 

Commenters overwhelmingly opposed 

§ 656.12(b), which would prohibit 

employers from seeking or receiving 

payment of any kind for any activity 

related to obtaining a permanent labor 

certification. 

After carefully considering comments 

received, the Department has decided to 

move forward on all provisions, but in 

response to comments has clarified the 

types of prohibited payments, as further 

described below. The prohibitions in 

this section will apply to all such 

transactions on or after the effective date 

of this Final Rule, regardless of whether 

the labor certification application 

involved was filed under the prior or 

current regulation implementing the 

permanent labor certification program. 

1. Improper Commerce 

The proposed rule provided, at 

§ 656.12(a), that permanent labor 

certification applications and 

certifications are not articles of 

commerce and they may not be sold, 

bartered, or purchased by individuals or 

entities. The majority of comments 

favored the proposal, and only a few 

were in opposition. Some comments 

were ambiguous; it was not clear 

whether the commenters were 

commenting primarily on § 656.12(a), 

prohibiting commerce in labor 

certification applications and 

certifications, or on § 656.12(b), which 

prohibits several types of payments 

related to labor certification 

applications and certifications. 

The Department’s extensive 

experience in the administration of this 

program leaves no doubt that some labor 

certifications are treated as commodities 

and sold at substantial gain by those 

who wish to engage in the existing 

secondary market. In one example from 

2005, a joint investigation with DHS’

Immigration and Customs Enforcement 

(ICE), the Federal Bureau of 

Investigation, the Department of State 

OIG and the Internal Revenue Service 

resulted in several employers, agents 

and attorneys being convicted of 

numerous visa fraud schemes. See U.S. 

v. Ivanchukov et. al. (No. 04–421, E.D. 

Va. 2005); see also DOL OIG 

Semiannual Report (October 1, 2005–

March 31, 2006) (available at http:// 

www.oig.dol.gov/public/semiannuals/ 

55.pdf). In the Ivanchukov case, labor 

certifications were being sold for as 

much as $120,000.00. As a reminder of 

how common this activity has become, 

one commenter to the NPRM for this 

rulemaking provided the Department 

with a website that advertises the sale 

of pre-approved labor certifications. The 

Department has reasonably concluded 

that there is a need to prohibit improper 

commerce in permanent labor 

certifications. 

Sale, barter or purchase—Two 

commenters indicated that prohibiting 

sale, barter, and purchase was one of the 

most effective amendments the 

Department could promulgate to reduce 

fraud in the permanent labor 

certification program, as it removes the 

economic incentive for unscrupulous 

behavior. Some commenters indicated 

the terms ‘‘sold,’’ ‘‘bartered,’’ and 

‘‘purchased’’ were impermissibly vague. 

Other commenters stated the proposed 

ban on sale, barter, purchase, and 

related payments was overbroad and did 

not take into account that both employer 

and employee benefit when an 

employee obtains permanent residence. 

The Department acknowledges these 

concerns by adding definitions of the 

terms sale, barter, and purchase to the 

definitions at § 656.3, and by specifying 

and clarifying what constitutes the ban 

on sale, barter, purchase, and related 

payments. A labor certification is a 

certification from the Department that 

there are no able, willing, and qualified 

U.S. workers available for the specific 

job opportunity stated on the employer’s 

application. Converting this labor 

certification into a commodity is an 

example of selling, bartering, or 

purchasing. 

Many commenters suggested that if 

DOL wants to make selling labor 

certifications illegal, it should make 

such sales illegal and prosecute those 

who break the law rather than 

punishing everyone. We disagree that 

the rule punishes everyone; this aspect 


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of the rule only impacts an individual 

or employer when there is an actual 

sale. Further, our program experience 

clearly indicates that not ‘‘everyone’’

uses the substitution accommodation or 

wishes to sell labor certifications. 

One commenter suggested we should 

remove institutions of higher education 

from the prohibition on barter, sale and 

purchase, suggesting that the 

prohibition be tailored to industries 

where the prohibited activity has been 

shown to occur. The Department’s 

rationale for prohibiting the sale of labor 

certifications is based upon a broader 

policy concern than the commenter 

implies. Any such activity is contrary to 

the statutory purpose of the program. 

There is no basis upon which to exempt 

one industry sector or type of employer. 

Further, as other commenters have 

stated, there is no legitimate reason for 

an employer to sell or barter permanent 

labor certifications. Further, if such 

activity is not occurring in a particular 

industry, then employers in that 

industry will not be affected by the 

prohibition. 

Attorneys’ fees for preparing and 

filing labor certification applications—

Two commenters supported the 

improper commerce provisions, 

contingent upon clarification that 

attorneys’ fees for preparing and filing 

an application would not be prohibited 

or deemed a sale or purchase. It is not 

the Department’s intent to prohibit 

attorneys from charging fees for 

preparing and filing labor certification 

applications for employers or to deem 

such fees by themselves to be a sale or 

purchase of the application or resulting 

certification. 

Corporate restructuring—One 

commenter was troubled that the 

proposed rule could be construed 

broadly to prohibit transfer of a labor 

certification that arises as the 

consequence of a merger, acquisition, 

spin-off or other type of corporate 

restructuring. The commenter went on 

to say the proposed rule could be 

construed to contradict the intent of the 

Congress in stating in AC21 that 

corporate restructuring should not have 

any adverse impact on the immigration 

process. According to the commenter, in 

cases where one company is acquired by 

another, the acquiring company often 

compensates the acquired entity for the 

cost of pending labor certifications and 

other types of applications. In other 

cases, the employer filing the labor 

certification application may spin off 

part of the company and wish to sell the 

pending labor certification to the spunoff entity so that it can be used to obtain 

a green card for the original beneficiary, 

who now works for that spun-off entity. 

According to the commenter, the 

proposed rule is ambiguous with respect 

to both of the above factual situations. 

The commenter requested the rule be 

clarified to state that the prohibition 

against sale, barter or purchase of labor 

certification applications and 

certifications does not apply to transfers 

stemming from legitimate corporate 

restructuring activities such as mergers 

acquisitions, or spin-offs. 

The Department did not intend this 

provision to govern corporate 

restructuring or internal corporate 

accounting and finance practices which 

exist independently of the permanent 

labor certification program. The 

Department has determined that further 

clarification on this question is not 

necessary. 

2. Prohibition on Employers Seeking or 

Receiving Certain Payments, Including 

Payment of Attorneys’ Fees 

As proposed, the rule would have 

added a new § 656.12(b) to prohibit 

employers from seeking or receiving 

payment of any kind, from any source, 

for filing a Form ETA 750 or a Form 

ETA 9089 or for other actions in 

connection with the permanent labor 

certification process. The Department 

proposed to include in this prohibition 

a ban on payment or reimbursement, 

directly or indirectly, of any employerincurred attorneys’ fees and other costs 

related to the preparing, filing, and 

obtaining of a labor certification, 

whether payment was by the alien or 

another individual or entity. The 

Department received numerous 

comments in response to this proposal, 

most in strong opposition to the 

proposal. 

Following careful review of comments 

and weighing our growing program 

experience with this issue, and for the 

reasons explained in detail below, the 

Department finds the need for program 

integrity outweighs any interest in the 

ability of the employer to receive 

payment or reimbursement from the 

alien or others in exchange for the filing 

of a labor certification application, 

especially when such payment or 

reimbursement has led to abuse of the 

process or exploitation of individual 

aliens. The Department’s unique 

responsibility to reduce the incentive 

for fraud in the permanent labor 

certification program while 

simultaneously protecting the rights and 

working conditions of U.S. workers 

requires us to focus on the nature of the 

payment that an employer would 

receive from an alien or others for costs 

or fees relating to the preparation and 

filing of the labor certification 

application or obtaining permanent 

labor certification. The Department’s 

concern, which is shared by other 

Federal agencies, is that such a payment 

undermines the labor certification 

process by potentially corrupting the 

search for qualified U.S. workers and 

creating serious doubt as to whether the 

employer is offering a bona fide job 

opportunity and making it available for 

U.S. workers. 

Accordingly, consistent with the 

proposed rule, the intent of this Final 

Rule is to make it clear that employers 

who submit applications for permanent 

labor certification do so with the full 

understanding that the costs they incur 

for the preparation and filing of the 

application and obtaining permanent 

labor certification are to be exclusively 

borne by the employer. Thus, the Final 

Rule prohibits an employer from 

receiving payment of any kind as an 

incentive or inducement to file, or in 

reimbursement of the costs of 

preparation or filing of, an application 

for labor certification, including 

covering the costs of the employer’s 

attorneys’ fees, except as specifically 

provided for certain third-party 

payments. The Final Rule also prohibits 

an employer filing an application for 

labor certification from reducing the 

wages, salary or benefits of an alien 

named on the application for any 

expense related to the preparation and 

filing of the application. This 

prohibition includes the payment by the 

alien of costs (for recruitment or other 

activities in furtherance of the labor 

certification) as well as the employer’s 

attorneys’ fees. 

In addition, this Final Rule prohibits 

employers engaged in the labor 

certification process from withholding 

from an alien’s wages, either in 

increments or in lump sum, any 

payment in reimbursement to the 

employer for costs associated with that 

process. 

As first described in the NPRM, 

prohibited payments include, but are 

not limited to: Employer fees for hiring 

the alien beneficiary; receipt of 

‘‘kickbacks’’ of part of the alien 

beneficiary’s pay, whether through a 

payroll deduction or otherwise; 

reducing the alien beneficiary’s pay for 

purposes of reimbursement or prepayment; goods and services or other 

wage or employment concessions; 

kickbacks, bribes or tributes; or receipt 

of payment from aliens, attorneys, or 

agents for allowing a permanent labor 

certification application to be filed on 

behalf of the employer. 

There are strong and ample grounds 

upon which to prohibit these payments 

or arrangements, including the payment 

by the alien of the employer’s attorneys’


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2Section ‘‘I. Recruitment Information,’’

Subsection ‘‘e. General Information,’’ Question 3. 

3 In the PERM regulation, the Department 

reserved the right to request any information the 

Certifying Officer deems relevant to a labor 

certification application. 20 CFR 656.20(d). The 

existence of a bona fide job opportunity and the 

disclosure of payments are always relevant to the 

application. 

fees. Permanent labor certification is an 

employer-driven process; employers, 

not aliens, must file permanent labor 

certification applications. To the extent 

the alien beneficiary who is the subject 

of the labor certification application 

and, later, the immigrant petition, is 

financially involved in the application 

process directly or indirectly, this 

involvement casts suspicion on the 

integrity of the process and the 

existence of a bona fide job opportunity. 

Payment by the alien of employer costs 

allows him or her some level of control 

over what must remain an employerdriven process. The degree of that 

control, at least at the labor certification 

stage, directly and unduly influences 

the legitimacy of the job opportunity 

and whether that opportunity has been 

and remains truly open to U.S. workers. 

In other words, as stated in the NPRM, 

alien subsidization of employerincurred costs adversely affects the 

likelihood that a U.S. worker will be 

offered the job when, for example, the 

alien is paying for the recruitment effort. 

The essence of this aspect of this 

Final Rule is that expenses that 

rightfully belong with an employer 

should not be transferred to an alien 

beneficiary or others. An alien is free to 

retain counsel to represent his or her 

interests in the labor certification 

process and also to assume 

responsibility for those costs. This Final 

Rule does not seek to regulate or control 

payments to, or the identity of, the 

alien’s attorney. However, to the extent 

that any attorney is preparing or filing 

a labor certification application and 

thus engaged by the employer as well as 

with the alien, the costs attributable to 

work for the employer must be paid by 

the employer. Costs for attorneys’ fees 

outside the labor certification process 

are not part of this rulemaking. 

The Department is aware of the 

import of its position—the implications 

are at the center of the reasons we find 

the prohibition a necessity. We 

recognize the vast majority of aliens for 

whom permanent labor certifications are 

filed are already employed by the 

employer. In initiating the permanent 

residence process, the employer 

demonstrates a desire to retain the alien 

on a more permanent basis than 

permitted by his or her nonimmigrant 

status. The pre-existing relationship 

provides the employer with significant 

incentive to conduct the recruitment 

process in a manner that favors the 

alien. The cost incurred in the labor 

certification recruitment process by the 

employer serves as an identifiable 

disincentive to that outcome. It serves at 

least to make the employer examine the 

value it places on retaining the alien. By 

requiring employers to bear their own 

costs and expenses, including the 

representation of the employer, the 

Department is ensuring that the 

disincentive to pre-qualify the alien in 

the job opportunity—keeping the job 

open and the recruitment real—remains 

in the process. This enables the 

Department to remain in its statutory 

role as the arbiter of the presence of 

otherwise-eligible U.S. workers in 

relation to the admissibility of the alien. 

The complexities associated with 

multiple-party financial involvement in 

the labor certification process are not 

new. The provisions in this section 

work in concert with other parts of the 

regulation and reflect the Department’s 

determination to keep the recruitment 

process open, fair and available to U.S. 

workers. For example, as stated in the 

preamble to the final PERM regulation, 

evidence that the employer, agent, or 

attorney required the alien to pay 

employer costs may be used under the 

regulation at § 656.10(c)(8) to determine 

whether the job has been and clearly is 

open to U.S. workers. The rule 

prohibiting the payment of an 

employer’s fees or costs by the alien and 

the rule requiring the presence of a bona 

fide job offer, in turn, are consistent 

with the prohibition on sale and barter 

in the Final Rule, as they support the 

Department’s desire to actively prevent 

and prohibit activities that directly 

commoditize permanent labor 

certifications. 

Under the authority of § 656.10(c)(8) 

of the current regulation, Form ETA 

9089 2 already requires employers to 

disclose and specify ‘‘payment[s] of any 

kind [emphasis added] for the 

submission of [the] application.’’ The 

decision to seek this disclosure as part 

of the information related specifically to 

recruitment reflects the Department’s 

concern that such payments may 

adversely impact the availability of the 

job opportunity to the U.S. workforce. 

The provisions added by this Final Rule 

are simply a logical extension and 

clarification of the type of information 

the Department considers relevant to 

this concern.3

This Final Rule clarifies the 

application of § 656.10(c)(8) to the issue 

of alien payment. It prohibits employer 

practices that require an alien to pay 

employer labor certification costs, 

including prohibiting practices that 

require the alien beneficiary to cover all 

labor certification costs, requirements 

that an alien cover specific activityrelated costs (all recruitment costs, all 

in-house legal expenses), and wage 

deductions to the alien’s paycheck as 

reimbursement for or in anticipation of 

such costs, regardless of the labor 

certification activity they cover. As with 

the modifications policy, this Final Rule 

reinforces the PERM rule’s policy; it 

also specifies in greater detail the 

specific activities the prohibition is 

meant to cover. 

As stated in the NPRM, the 

Department recognizes the possibility 

that legitimate employers may have a 

practice of seeking reimbursement from 

the aliens they hire for the expenses 

they incur in filing and obtaining the 

permanent labor certification. The 

Department has determined that any 

such reimbursement including, but not 

limited to, attorneys’ fees to prepare an 

employer’s application, recruitment 

expenses to determine whether 

domestic labor is available, or other 

such employer expenses, is contrary to 

the purpose of the labor certification 

program and such costs should be borne 

exclusively by the employer. An alien 

employee who reimburses his employer 

is effectively being paid a lower wage 

than agreed to by the employer on the 

labor certification, which undermines 

the Secretary’s finding that the wages 

and working conditions of the job will 

not adversely affect U.S. workers and 

the Secretary’s duty to protect U.S. 

workers. 

3. Issues Raised by Comments on 

Attorneys’ Fees 

The Department received a significant 

number of comments on the proposed 

prohibition on payment or 

reimbursement of the employer’s 

attorneys’ fees or other employer costs 

related to preparing and filing a 

permanent labor certification 

application and obtaining permanent 

labor certification. The overwhelming 

majority of the commenters were 

opposed to this proposal. 

Relationship of this prohibition to 

purpose of the rule—Commenters 

questioned the relationship between the 

prohibition against aliens paying or 

reimbursing the employer for expenses 

related to the labor certification 

application, including attorneys’ fees, 

and the Department’s efforts to limit the 

opportunities and incentives for fraud 

in the labor certification program. They 

believed the Department’s statements in 

the preamble to the NPRM were vague 

and did not establish a logical 

relationship between illegal 


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merchandising of labor certifications 

and such payments or reimbursements. 

Commenters also questioned the 

reasoning behind the Department’s 

statement in the NPRM at 71 FR at 7660, 

that an alien’s payment of the 

employer’s costs might indicate there is 

not a bona fide position and wage 

available to U.S. workers. 

The Department stands by its 

reasoning. An alien’s reimbursement or 

payment to an employer for filing a 

labor certification on his behalf turns 

labor certifications into commodities, 

increases the likelihood that a 

prejudicial arrangement exists which 

precludes any consideration of U.S. 

workers, and undermines the integrity 

of the labor market test required for 

certification under Section 212(a)(5)(A) 

of the INA. An alien employee who 

reimburses his employer via deductions 

from his paycheck or a lump payment 

is effectively being paid a lower wage 

than agreed to by the employer on the 

labor certification. A U.S. worker is noncompetitive with the alien worker 

unless he too accepts the actual lower 

wage. Therefore, the practice of aliens 

reimbursing employers for expenses the 

employer incurred in the labor 

certification process adversely affects 

the compensation of U.S. workers. 

Because the INA mandates that the 

Department may only approve a labor 

certification if there are not qualified 

U.S. workers for the position, and if the 

wages and working conditions of 

similarly employed U.S. workers are not 

adversely affected, the Department will 

not permit the practice of 

reimbursement of attorneys or other fees 

or costs associated with obtaining a 

labor certification. There is a direct 

correlation between an alien’s financial 

participation in the labor certification 

process and the likelihood that an 

arrangement exists which precludes 

legitimate consideration of U.S. 

workers, affecting the integrity of the 

labor market test required by INA 

section 212(a)(5)(A). The statute charges 

the Department to ensure an adequate, 

good faith test of the labor market—that 

an alien will not be admitted for a job 

for which a qualified U.S. worker is 

available. It is, therefore, the 

Department’s role and statutory 

responsibility to remove the potential 

for this undue influence. 

Authority—Many of the commenters 

questioned the Department’s authority 

to dictate who should not pay attorneys’

fees and other costs. They asserted that 

there is no statutory authority for such 

a rule and stated that had the Congress 

intended to give DOL the authority to 

regulate the attorney-client relationship 

and/or to set limits on the payment of 

attorneys’ fees, it would have done so 

explicitly and unambiguously as it has 

in other contexts. They cited the 

authority in INA section 212(n) for the 

H–1B program as an example. Many 

commenters opined the proposed rule 

would be restrictive of freedom to 

contract. 

In addition, many commenters 

expressed the belief the Department was 

intruding into the licensing and 

regulation of attorneys. They stated this 

issue has been left exclusively to the 

states, which prescribe the 

qualifications for admission to practice 

and the standards of professional 

conduct and are responsible for attorney 

discipline. These commenters believed 

the Department has neither statutory nor 

other authority to regulate payments to 

the attorneys that parties to proceedings 

before the Department are entitled to 

retain. They further stated any changes 

to this complex relationship should be 

left to the regulatory bodies that 

traditionally make them—states and 

their bar associations. 

The Department disagrees with those 

comments. This Final Rule’s prohibition 

on improper payments governs 

employers and aliens engaged in the 

labor certification process, not the 

attorneys retained by the employer. The 

rule prohibits employers from receiving 

financial incentives or reimbursement 

for filing labor certification applications 

and from withholding payments from 

workers for that purpose (among other 

things). These are activities that 

undermine the legitimacy of the labor 

market test that is required to be 

conducted by the law before the 

Department may approve a labor 

certification. The Department’s focus is 

not on attorneys’ fees, but rather on the 

actual wage paid to the alien employee 

and the effect that a lower wage or 

reimbursement of costs has on the 

wages and opportunities available to 

U.S. workers. The transfer of the 

responsibility for payment of attorneys’

fees or other costs associated with 

preparing, filing and obtaining labor 

certification from employer to alien (or 

others) signals preselection in the hiring 

decision, contrary to the requirement of 

an open recruitment process with full 

consideration of U.S. workers. The INA 

broadly empowers the Secretary to 

ensure that there is a bona fide job 

opportunity open to U.S. workers and 

that there is no adverse effect on the 

wages and working conditions of U.S. 

workers before approving a labor 

certification. As part of its statutory 

charge, the Department is responsible 

for eliminating factors which undermine 

the legitimacy of the job opening and of 

the recruitment process, including the 

improper allocation of costs and fees 

associated with labor certification. 

Prohibiting the alien, directly or 

indirectly, from paying the employer’s 

attorneys’ fees and other costs is a 

critical step toward ensuring employers 

or others do not degrade the validity of 

the labor market test. The fact that 

section 212(n)(2)(C)(vi)(II) of the INA 

prohibits an employer from accepting 

reimbursement from an alien employee 

for the fees for an H–1B nonimmigrant 

petition does not support the argument 

that the Department lacks authority to 

prohibit the reimbursement of attorneys’

fees and other costs associated with 

permanent labor certifications. To the 

contrary, that specific prohibition in the 

nonimmigrant context highlights 

Congress’ interest that the employer 

should bear the costs associated with 

hiring alien employees and not pass 

them onto the alien. 

It is well settled that an agency is 

empowered to take all reasonable 

actions, even if not particularly 

specified in the statute, to effect the 

objective and policy of the statute. The 

Department is charged with ensuring 

that an employer’s hiring of an alien 

employee does not displace U.S. 

workers or distort wages and working 

conditions in the U.S. labor market 

before approving permanent labor 

certifications, and this prohibition 

against the reimbursement of attorneys 

fees and other costs directly furthers 

that mandate. The Final Rule in no way 

precludes an employer from hiring and 

paying an attorney for the services 

provided to the employer or an alien 

from hiring and paying an attorney for 

the services provided to the alien, or for 

that matter an employer paying for an 

attorney who exclusively represents the 

alien employee. The rule does not speak 

to the qualifications of an attorney or 

the professional standards with which 

the attorney practices. The rule simply 

seeks to ensure the integrity of the labor 

certification process by removing an 

incentive to manipulate that process in 

favor of an alien worker and against the 

interests of U.S. workers. 

Right to counsel; attorney-client 

relationship—Commenters also asserted 

that because the labor certification 

application is signed by both the 

employer and the alien, both are parties 

to the proceeding and both are exposing 

themselves to sanctions under the law 

for any misrepresentations made on the 

application. They maintained that each 

is entitled to counsel of his or her 

choosing and the Department may not 

limit the choice and interfere in the 

attorney-client relationship by 

regulating who may pay attorneys’ fees. 

Some commenters included reasons as 


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to why the alien might want 

independent counsel and other 

commenters read the proposed rule to 

mean the alien could not have 

independent counsel. Some commenters 

also interpreted the proposed rule as 

prohibiting dual representation of both 

employer and alien by a single attorney. 

These commenters misconstrued the 

NPRM. The Department is not seeking 

to limit either party from choosing 

counsel. The act of seeking legal 

representation, the identity of legal 

counsel, and similar activities are all 

outside the scope of this regulation. As 

previously noted, the alien is free to 

retain counsel to represent his or her 

interests in the labor certification area or 

any other area in which the alien desires 

counsel. Nothing in this regulation 

prohibits the alien from hiring the same 

attorney as the employer. This 

regulation simply prohibits an employer 

from transferring his legal and other 

costs associated with procuring a 

permanent labor certification to the 

alien employee. 

Vagueness—Several commenters 

asserted the Department has not 

provided sufficient description of the 

conduct that it would deem to be a 

violation of this proposed rule. 

Commenters specifically identified the 

language in § 656.12(b) stating, ‘‘An 

employer shall not seek or receive 

payment of any kind for any activity 

related to obtaining a permanent labor 

certification’’ as vague. 

In response to this concern, the 

Department has clarified the prohibited 

behavior in this Final Rule. The rule 

provides specific examples of 

prohibited transactions, including 

kickbacks, improper wage withholdings, 

bribes, and lump sum reimbursements. 

It also prohibits non-monetary 

transactions, such as free labor. Further, 

it exempts certain third-party payments 

from the prohibition, as discussed 

below, allowing these payments to be 

made in connection with labor 

certifications. 

To whom labor certification benefits 

accrue—Many commenters disagreed 

with the Department’s premise that 

because the employer files the labor 

certification application, the employer 

should bear all of the costs. These 

commenters believed there is a benefit 

to both the employer and the alien from 

the labor certification and since both are 

interested parties, these parties should 

be free to negotiate payment 

arrangements. Some commenters also 

claimed that the permanent resident 

status is a benefit to the alien and only 

benefits the employer if the employee 

remains on the job beyond attaining 

permanent status. A significant number 

of commenters described agreements 

frequently used which require 

reimbursement if a foreign employee 

resigns upon being granted permanent 

residence or prior to a specified length 

of time after obtaining permanent 

residence status. They compared these 

reimbursement arrangements to widely 

used employer-employee agreements 

linking relocation costs or training and 

education costs incurred by an 

employer to an employee commitment 

to remain in a job for a specified period 

of time or otherwise reimburse a portion 

or all of the costs. Other commenters 

stated that, under section 204(j) of the 

INA, since the alien beneficiary now has 

the ability to move to another employer 

even before attaining permanent 

residence (as soon as 180 days after 

filing an adjustment application), the 

extent of the benefit realized has shifted 

even more substantially to the employee 

and increases the employer’s need for 

the agreement described above. 

Several commenters claimed the 

interest in the labor certification 

application is weighted to the alien even 

more strongly. To support this 

argument, one commenter referenced 

DerKevorkian v. Lionbridge 

Technologies, No. 04–cv–01160–LTB–

CBS, U.S. Dist. LEXIS 4191 (D. Colo. 

Jan. 26, 2006). In this unreported 

decision, the court held that an 

employer’s promise to sponsor an alien 

employee for permanent residence 

created claims for promissory estoppel 

and breach of fiduciary duty by the 

employee against the employer. Some 

commenters asserted that this decision 

supports the proposition that an 

employee has legal rights in the labor 

certification process, even when an 

application has yet to be filed with the 

Department. The commenters further 

asserted this case could stand for the 

proposition that an employer may limit 

its legal liability by requiring an alien to 

retain his own attorney. Additionally, 

commenters referenced various 

provisions for continued employment 

rights for H–1B nonimmigrants which 

purport to recognize the alien’s rights 

and interests in the labor certification 

process. 

Others believed the alien should 

rightfully participate in paying some or 

all of the costs related to the labor 

certification application because the 

recruitment process and completion of 

the application is, in reality, an 

‘‘artificial’’ recruitment being conducted 

solely to satisfy the Department’s 

requirements. They maintained the 

actual recruitment that was paid for by 

the employer is the recruitment which 

produced the non-U.S. worker, and 

therefore, the need for the recruitment 

used in the labor certification process is 

directly tied to the alien employee and 

the alien should be able to contribute to 

the payment of the employer’s costs. 

Further, many permanent alien workers 

are first hired by employers under H–1B 

or other nonimmigrant visas for which 

there is no requirement of a preemployment labor market test to 

determine whether U.S. workers are 

available. 

We disagree with the commenters’

assumption that an alien’s interest in 

labor certification warrants payment by 

the alien of the employer’s expenses. 

For purposes of employment-based 

visas requiring labor certification, the 

application to the Department of Labor 

and the Secretary of Labor’s 

determination initiate a much broader, 

multi-agency process whose function is 

to consider and complete a specified 

alien’s entry into the United States for 

the sole purpose of filling an employer’s 

job vacancy. First, the unreported 

DerKevorkian decision merely suggests 

that an alien may have a private right of 

action against an employer for failure to 

properly proceed after agreeing to 

sponsor an alien for permanent 

residence. The court did not hold that 

an alien has a legal interest against the 

Department in the approval of a labor 

certification. Second, an alien does not 

apply to the Department for approval of 

a labor certification, the employer does. 

Finally, the purpose of the labor 

certification is not to provide an alien 

with permanent residence, rather it is to 

certify that the alien’s admission into 

the United States to work in a particular 

position will neither displace a U.S. 

worker nor distort the U.S. labor market. 

The fact that aliens may leave 

employment early or change employers 

is a risk which is no different from the 

risk of hiring any U.S. worker and 

which should be duly considered by 

employers as they carefully consider 

whether to invest the resources they 

believe are required to pursue an 

employment-based immigration 

solution to their workforce shortage. 

This rule does not seek to govern the 

large majority of employment 

agreements between employers and 

alien workers—those that may require 

reimbursement to the employer for 

travel, moving expenses, loans and 

other expenditures that apply equally to 

both U.S. and foreign workers and can 

be shown were made directly for the 

benefit of that worker. The Department 

must weigh the undeniable benefit to 

the employer and the alien of sharing 

certification costs against the interests of 

U.S. workers who must, under the 

statute, be considered for that job 


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opportunity before it can be offered to 

the alien. 

Payment by the employer of the costs 

associated with the preparation, filing 

and obtaining a labor certification keeps 

the alien outside the process and 

insulates the process from financial 

relationships that would subvert the 

permanent labor certification process’

goal of protecting U.S. workers. The 

Department has decided its statutory 

mandate is best served by removing this 

incentive for a less-than-valid test of the 

labor market. Under the terms of the 

labor certification program, the 

protection of U.S. workers outweighs 

any employer interest in obtaining 

financial remuneration from alien 

employees for the costs associated with 

labor certifications. 

As stated, the Department is not 

seeking to prohibit, limit, or regulate 

dual legal representation of alien and 

employer in the permanent residence 

process. However, it is the Department’s 

expectation that in such situations 

attorneys’ fees and costs associated with 

the preparation, filing and obtaining of 

the labor certification are to be borne by 

the employer. Various Federal, state and 

local laws regulate payment of wages, 

prohibit or restrict deductions from 

wages, outlaw ‘‘kickbacks,’’ restrain 

assignments, and otherwise govern the 

frequency and manner of paying wages. 

In accord with the restrictions 

promulgated in this rule, any attempt by 

an employer to recover labor 

certification costs from an employee 

through deductions from wages, 

uncompensated additional work by the 

employee, or otherwise, would be 

considered an attempt to circumvent the 

rule and could result in the debarment 

of the employer from the program as 

provided in the rule, as well as subject 

the employer to appropriate 

enforcement actions for violations under 

other applicable authorities. 

Disparate treatment—Several 

commenters were concerned the 

proposed rule would result in disparate 

treatment of nonprofit organizations, 

hospitals, public universities, and small 

businesses. According to these 

commenters, these organizations may 

not have in-house counsel or the 

resources to hire counsel and have 

traditionally negotiated a cost-sharing 

agreement with the alien employee. 

Commenters also claimed the proposed 

rule would penalize those same 

institutions—nonprofit research 

organizations and institutions of higher 

education—that the Congress has 

expressly recognized as worthy of 

support. The different standard for 

prevailing wages and the exemption 

from training fees under the H–1B 

program were cited as examples of 

Congressional intent. These commenters 

believed the effect of the rule would be 

to move the program to the exclusive 

domain of highly profitable employers 

in the United States. 

Commenters also stated disparate 

treatment of workers could result. They 

asserted if employers were to be 

required to pay the fees for labor 

certification, the end result would be 

that the alien employees would receive 

a specific benefit and better treatment 

(i.e., payment of legal fees) than 

similarly situated U.S. workers. Other 

commenters were concerned the rule as 

proposed would have a disparate impact 

on alien workers, some of whom would 

be given access to employer funds for 

legal costs and some of whom would 

not, based on budgetary allocations, the 

type of benefit sought, or other factors. 

One commenter suggested that this 

would have a disparate effect on 

professors and researchers in 

universities that, for various reasons, 

require their in-house or outside 

counsel to file labor certifications, 

resulting in a different outcome than 

their colleagues who were considered 

‘‘outstanding’’ and thus able to bypass 

the labor certification process. 

The Department disagrees. The 

recruitment, legal, and other costs 

associated with labor certification are 

transaction costs necessary for or, in the 

case of legal fees, desired by the 

employer to complete the labor market 

test, allow the Department of Labor to 

make its determination, and enable the 

employer to move to the next step of the 

hiring process, a step it will complete 

with DHS. The employer’s 

responsibility to pay these costs exists 

separate and apart from any benefit to 

the alien from his or her eventual entry 

as an immigrant. Moreover, employers 

may legitimately offer benefits to 

employees on a selective basis in almost 

all areas—educational benefits offered 

to certain sectors of a workforce but not 

to others, relocation expenses offered to 

those at certain geographic distances but 

not others, training offered to managers 

but not to nonexempt employees, to 

name just a few examples. The costs 

involved in a labor certification are just 

one instance where benefits may be, at 

the employer’s option, extended to some 

employees or classes of employees but 

not to others. The same is true of those 

who bypass the labor certification 

process entirely and who are able to file 

an immigrant petition directly with 

DHS, such as the outstanding professors 

and researchers noted by the 

commenters. The Department reminds 

employers, especially those small 

employers and non-profits who 

commented on this issue, that there is 

no statutory or regulatory requirement 

that an application for permanent labor 

certification be prepared by and/or 

submitted by an attorney, nor is the 

Department setting any standards for 

what such costs should be. 

Third party situations—Commenters 

have raised questions about payments 

by third parties and asserted that, by 

deeming attorneys’ fees to be only the 

employer’s expense, the Department 

was forbidding the employer from 

passing the expense to another party. 

These commenters suggested the 

Department is also prohibiting third 

party payments directly to the attorney, 

even though such payment is not a 

reimbursement of the employer’s 

expenses. 

Commenters also described 

purportedly common situations that 

involve the payment of attorneys’ fees 

by entities other than ‘‘the employer.’’

As an example, one commenter stated 

physicians frequently have split 

appointments between a Veterans 

Affairs Medical Center (VAMC) and an 

affiliated institution of higher 

education. In these cases, although there 

is one ‘‘employer of record’’ who files 

the labor certification application, the 

university reimburses the VAMC for the 

proportion of the fees commensurate 

with the proportion of the work week 

spent at the university. 

The Department finds these 

comments largely meritorious and has 

revised the regulation at § 656.12(b) to 

recognize such situations. It is not our 

intent to look behind the employment 

that is the subject of the labor 

certification to ascertain the legitimacy 

of the employer vis-a ́-vis other entities 

with a legitimate interest in the alien. 

Where there is a legitimate third-party 

relationship in which the payment by 

the third party of the fees and costs that 

should be borne by the employer would 

not contravene the intent of the 

program, the payment does not 

adversely affect the fairness of the labor 

market test. In cases where there is a 

legitimate, pre-existing business 

relationship between the employer and 

the third party, and the work to be 

performed will benefit that third party, 

the employer is not influenced to the 

point of preselection of the alien worker 

in the labor market test. By requiring 

that the relationship be a business 

interest that predates the labor 

certification process, the Department is 

protecting against fraudulent 

relationships. 

The Department also received 

comments regarding money paid to a 

trust fund established by a union for 

defraying the costs of legal services for 


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employees, their families, and 

dependents. The proposed rule, the 

commenters maintained, would prohibit 

payment of attorneys’ fees and costs for 

an alien employee by such a union fund 

because payment would not be coming 

from the employer. These commenters 

believed the proposed rule may 

contravene Supreme Court cases 

confirming a union’s First and 

Fourteenth Amendment right to assert 

legal rights. This comment is misplaced. 

To the extent such a trust fund is 

reimbursing a worker for the worker’s 

legitimate costs and not for the 

employer’s costs, reimbursement is not 

prohibited by the Final Rule. 

The Department reiterates that this 

Final Rule seeks to require the employer 

to pay its own costs, including 

attorneys’ fees, for its own activities 

related to obtaining permanent labor 

certification, which is an employerdriven process. However, this rule does 

not regulate payment by an alien or 

others of their own costs, attorneys’ fees 

or other expenses. Nor does this rule 

regulate contract arrangements, cost 

allocation and financial transactions 

within a corporation or its affiliates, 

between an entity and its insurers or 

legal service providers, or between and 

among entities engaged in a joint 

enterprise. 

Employer paying alien’s attorney—

Another commenter described a 

scenario in which an alien retains his or 

her own attorney separately from 

counsel retained by his or her employer 

and the employer is willing to pay the 

attorneys’ fee, but the attorney may be 

prohibited from accepting such a 

payment under state bar rules. As 

previously noted, this rule does not 

regulate the attorney-client relationship 

or the alien’s retention of counsel. 

Neither does this rule prohibit payment 

by the employer of costs beyond those 

that are exclusively the employer’s—

payment, for example, of the alien’s 

attorneys’ fees or other costs attributed 

solely to the alien. Finally, nothing in 

this regulation regulates payment by an 

alien, or others, of their own attorneys’

fees or other expenses. 

D. Labor Certification Validity and 

Filing Period 

The Department received numerous 

comments about the proposed language 

at § 656.30(b) establishing a validity 

period of 45 calendar days for 

permanent labor certifications. 

Although some commenters asserted the 

Department lacks the authority to define 

a validity period, the majority of 

commenters focused instead on 

proposing alternative time periods 

ranging from ninety days to five years. 

Some cited possible delays in both DOL 

and DHS processes, which they claimed 

would make the filing of an immigrant 

visa petition with DHS within the 45- 

day time period impractical, if not 

impossible. 

Commenters provided very similar if 

not identical lists of reasons why a 

validity period of only 45 days would be 

inadequate. The reasons included: 

Untimely receipt of labor certifications 

from DOL; a prolonged absence of the 

individual, or individuals, necessary to 

the I–140 and I–485 filing processes; 

unavailability of documentation; and 

general, unforeseeable delays. 

Opportunities for delays 

notwithstanding, many commenters did 

not oppose a validity period and some 

expressly supported the concept of a 

labor certification being valid for only a 

finite length of time. Most, however, 

believed a longer time period was 

warranted. Others opposed a finite 

validity period but were willing to 

accept such a period only if it was for 

a time longer than 45 days. 

After reviewing the arguments, 

considering the reasons presented for 

needing a longer validity period, and 

weighing the merits of alternative time 

periods, the Department, in this Final 

Rule, increases the validity period for a 

permanent labor certification from 45 to 

180 days. The Department has 

determined that increasing the validity 

period to 180 calendar days is a 

reasonable alternative, in that it 

provides additional time to 

accommodate possible delays, while 

maintaining the integrity of the labor 

market test and the security of the labor 

certification. Labor market conditions 

are subject to rapid change, and it is 

consistent with DOL’s mandate under 

INA section 212(a)(5)(A) to require a 

retest of the market after the passage of 

that time. 

The question of the appropriate 

validity period directly addresses the 

reliability of the information that 

underlies and supports the Secretary’s 

determinations of the availability of U.S. 

workers and whether the job 

opportunity’s wages and working 

conditions will adversely affect the 

wages and working conditions of U.S. 

workers. The Department’s certification 

speaks to the unavailability of U.S. 

workers and, hence, extends only to the 

point (either because of the passage of 

time or because, as in the case of 

substitution, the circumstances 

surrounding the job opportunity have 

changed) at which point availability 

again comes into question. The PERM 

regulation reflects the determination, 

made by the Department when the new 

program was instituted, that 180 days is 

the maximum window for the viability 

of labor market information. Consistent 

with this determination, the current 

regulation, at § 656.17(1)(i) and (ii), 

requires that mandatory recruitment be 

conducted no more than 180 calendar 

days prior to filing. A 180-day validity 

period after certification aligns 

programmatically with this recruitment 

requirement and follows a similar 

rationale. 

The Department has determined that 

180 days provides sufficient time for an 

employer to move to the next step in the 

permanent residence process while 

minimizing the risk of potential changes 

in local economies. Taken together, the 

timeframe as currently conceived (i.e., 

recruitment within six months of 

submission of the application, PERM’s 

average processing time which is greatly 

improved and generally within 60 days, 

and a 180-day validity period) will all 

provide as valid and timely a picture of 

the labor market as current program 

parameters will allow while providing 

sufficient flexibility for contingencies in 

the employment-based immigration 

process. 

1. Statutory Authority 

Some commenters opposing 

imposition of a validity period claimed 

the Department is exceeding its 

statutory authority under INA section 

212(a)(5)(A) which requires the 

Secretary of Labor’s determination on 

U.S. worker availability and adverse 

impact on wages and working 

conditions. Most asserted that although 

the statute does not expressly provide 

for a validity period, it does refer to 

DOL’s determination being used ‘‘at the 

time of application for a visa.’’ The 

Department does not agree it lacks the 

authority. To the contrary, by limiting 

the period of validity of the labor market 

test that underlies the Secretary’s 

determination, the Department more 

closely adheres to the letter of the law. 

The statute requires the Secretary to 

make the certification as a function of 

evaluating the introduction of the alien 

immigrant into the workforce; the 

Secretary’s determination is to be made 

at the time of the application for 

admission. A validity period serves to 

forge a closer temporal link between the 

determination and the admission. 

One commenter argued that the INA 

limits the Department’s authority to an 

assessment of the employment 

opportunity, i.e., the test of the labor 

market, in order to make a 

determination of whether or not to 

certify. No such limiting language exists 

in the INA. The test of the labor market 

was instituted by the Department as a 

means by which to implement the 


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requirements of the statute. Procedures 

for the examination of the labor market 

and the larger labor certification process 

of which it is a part have varied, but the 

labor market test has always functioned 

as a prerequisite to the employmentbased admission of an alien. The 

imposition of a validity period is a 

logical mechanism by which the 

Department can ensure that the 

information upon which a 

determination was based remains 

legitimate. 

2. Delays in Processing of Applications 

and Receipt of Labor Certifications 

Some commenters attempted to 

establish a nexus between the long 

processing times at both DOL and DHS 

and a validity period. They contended 

the Department’s argument that a 

certification grows stale with the 

passage of time is disingenuous, given 

the extremely long processing times and 

resultant staleness of at least some 

information in applications submitted 

years earlier, and implied the 

Department’s argument is not justifiable. 

The Department disagrees. The Final 

Rule addresses the question of validity 

post-certification. While questions of 

wages and recruitment are adjudicated 

on an individual basis as applications 

come up for review in our Backlog 

Processing Centers—independent of 

how long each of those applications has 

been pending—the Department must 

determine how long it will stand behind 

those certifications once issued, and 

when it is appropriate to once again test 

the market. The question of a validity 

period addresses these broader 

concerns. 

We also note the PERM system was 

implemented in direct response to the 

long processing times experienced 

under the previous program model, and 

we have already significantly reduced 

processing times from years to months. 

The reduction in time provides the 

Department assurance that the 

information upon which a 

determination is based is current and 

valid. 

Commenters also complained of 

frequent and long delays in the receipt 

of granted labor certifications and 

suggested that another basis, other than 

the date of issuance, should be the 

starting point from which the time 

period begins to run. While it is true 

that delays in delivery, when they 

occur, negatively impact timely filing 

with DHS, these comments were based 

on the experiences at the outset of the 

new PERM program. Labor certifications 

are now being adjudicated in a more 

timely manner. Moreover, the longer 

validity period of 180 days serves to 

provide the time necessary to 

accommodate any delay that may occur 

in certification receipt. 

3. Relationship to Fraud 

Some comments in support of a 

validity period argued that indefinite 

validity allows some unscrupulous 

companies to stall the filing with DHS 

as a means of preventing the worker 

from leaving their employ, and that it 

also allows employers so disposed to 

prolong non-payment of the wage 

indicated on the application. One 

commenter opposed to a validity period 

hypothesized that an employer might 

not want to file the I–140 within an 

imposed validity period if it would be 

unable to demonstrate to DHS the 

ability to pay the wages attested to on 

the Form ETA 9089. We agree that 

indefinite validity may contribute to a 

variety of undesirable or unlawful 

behaviors and, further, that the longer 

the period of time the labor certification 

is in circulation, the greater the 

probability that the information on the 

application, not only that pertaining to 

recruiting, is stale or increasingly less 

relevant. 

Some commenters pointed to other 

provisions currently in place or 

proposed in the NPRM, including the 

elimination of substitution, which serve 

to protect against fraud and argued that 

more fraud protection is unnecessary 

and merely prejudices the honest 

employer. As stated above with respect 

to the elimination of substitution, while 

we do not doubt that other fraud 

prevention and detection methods are 

available, the appropriateness or 

effectiveness of those other methods 

does not obviate the need for additional, 

targeted techniques to address the 

problems generated by a specific issue, 

such as, in this case, the indefinite 

validity periods for labor certifications. 

It is difficult to see how a reasonable 

validity period prejudices honest 

employers who presumably wish to 

obtain the admission of the alien worker 

they have sponsored as quickly as 

possible. The revised validity period 

accommodates the need for a reasonable 

period of time in which to submit the 

I–140. 

4. Increased Burden at DOL Due to 

Untimely Filings and at DHS Due to 

Incomplete or Inaccurate I–140 Filings 

Several commenters argued that 

imposing the requirement that a Form 

I–140 petition be filed within a limited 

period of time will result in increased 

burdens for both DOL and DHS. That 

likelihood is overstated. Commenters 

posited that DOL will likely see an 

increase in filings due to the resubmission of applications to replace 

labor certifications that expire before the 

Form I–140 can be filed, which will, in 

turn, result in filing backlogs. This 

claim does not take into consideration 

the efficiency of the PERM system. 

Moreover, given the importance of the 

labor certification for both the employer 

and the alien, it is unlikely that a 

significant number of labor 

certifications will be allowed to expire. 

Similarly, the claim that a ‘‘rush to file’’

the Form I–140 will result in inaccurate 

and incomplete Form I–140 filings is 

also difficult to envision, given the 

significance of the filing. DOL expects 

that employers, attorneys and agents 

will be thoughtful and careful as they 

complete each labor certification 

application and immigrant petition and 

that at least some preparation for the 

entire permanent residence process 

would have taken place in advance of 

certification. Furthermore, the 

lengthening of the validity period from 

45 to 180 days will provide the 

employer a reasonable period of time in 

which to ensure that all documentation 

and information necessary are accurate 

and complete prior to filing. 

E. Program Integrity and Debarment 

The preamble to the PERM Final Rule 

indicated the Department would 

consider the imposition of stricter 

remedial measures in any future 

rulemaking involving the permanent 

program. Consistent with this intent, the 

NPRM to this Final Rule contained 

several provisions to promote the 

program’s integrity and assist the 

Department in obtaining compliance 

with the proposed amendments and 

existing program requirements. The 

Department proposed several revisions 

to § 656.31, the regulatory section 

governing the Department’s response to 

instances of potential fraud or 

misrepresentation, including extending 

the time for potential suspension of 

processing for applications filed by 

certain employers, attorneys, or agents. 

In addition, the NPRM made the section 

applicable to applications filed under 

the current regulation and the regulation 

in effect prior to March 28, 2005. This 

Final Rule adopts the provisions on 

suspension of applications and notice to 

employers largely as proposed in the 

NPRM. 

As stated in the proposed rule, given 

the breadth and increased sophistication 

of the immigration fraud that has been 

identified in the recent past, the 

Department requires added flexibility to 

respond to potential improprieties in 

permanent labor certification filings. 

While the Department already has the 

authority, this Final Rule clarifies 


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§ 656.31(a) to state the Department may 

deny any application for permanent 

labor certification which contains false 

statements, is fraudulent, or otherwise 

was submitted in violation of the 

permanent labor certification program 

regulations. 

The Department received a variety of 

comments on the proposed amendments 

to § 656.31. While we carefully 

considered these comments, we have 

elected to keep the provisions largely as 

proposed. However, in response to 

comments, the Final Rule amends the 

debarment provisions to clarify the 

intent requirements (‘‘willful’’) and 

other review standards applicable to 

debarment. 

1. When an Employer, Attorney, or 

Agent Is Involved in Possible Fraud or 

Willful Misrepresentation 

In § 656.31(b), the Final Rule revises 

what was § 656.31(a) in the NPRM and 

current regulation to clarify that if an 

employer, attorney, or agent connected 

to a permanent labor certification 

application is involved in either 

possible fraud or willful 

misrepresentation, the Department may, 

for up to 180 days, suspend the 

processing of any permanent labor 

certification application involving that 

employer, attorney, or agent. Thereafter, 

the Certifying Officer may either 

continue to process some or all of the 

applications or extend the suspension 

until completion of any investigation 

and/or judicial proceeding. 

‘‘Possible fraud’’ standard—One 

commenter maintained § 656.31(b) 

(§ 656.31(a) in the NPRM) proposed a 

new legal standard of ‘‘possible fraud.’’

The discovery of ‘‘possible fraud or 

willful misrepresentation’’ is not a new 

legal standard. This basic provision, 

allowing applications to be suspended 

for a period of time if the Department 

discovers possible fraud or willful 

misrepresentation involving a labor 

certification, has been in the permanent 

labor certification regulations since 

1977 (see 42 FR 3449 (January 18, 

1977)). The Final Rule continues the use 

of the language ‘‘discovers * * * 

possible fraud or willful 

misrepresentation.’’

Use of ‘‘knowing’’ instead of 

‘‘willful’’—One commenter suggested 

using ‘‘knowing’’ instead of ‘‘willful’’ in 

the phrase ‘‘willful misrepresentation’’

in § 656.31(b) (proposed as § 656.31(a)). 

The Department should be required to 

prove, the commenter continued, that 

the employer, attorney, or agent knew 

the nature of his acts, and that he or she 

knew his acts violated the regulation; 

and to promote fair notice and minimize 

risk of arbitrary enforcement, there 

should be an opportunity for persons to 

present an affirmative defense that they 

mistakenly believed their conduct was 

allowed. 

As always, applicants must remain 

aware of their responsibilities under the 

permanent labor certification process 

and of the consequences of submitting 

false or misleading information to a 

Federal agency. The application form 

makes it clear that the person signing 

the form is certifying, under penalty of 

perjury, to the accuracy of the 

information contained in the 

application. No one who signs an 

application should be confused about 

the capacity in which he or she signs it. 

After review of the comments, the 

Department has decided to retain the 

use of ‘‘willful’’ as the more appropriate 

terminology. Black’s Law Dictionary 

provides that a ‘‘[w]illful act may be 

described as one done intentionally, 

knowingly, and purposely’’ [emphasis 

supplied]. Hence, the phrase ‘‘willful 

misrepresentation’’ as used in the 

permanent labor certification program 

regulations means a person who 

intentionally and knowingly meant to 

make a misrepresentation. 

Suspension of case processing for 180 

days—The Department proposed to 

increase the initial suspension of case 

processing in § 656.31(b) (§ 656.31(a) in 

the proposed rule) from 90 to 180 days 

and to allow the suspension of any 

permanent labor certification 

application involving such employer, 

attorney, or agent until completion of 

any investigation and/or judicial 

proceeding. The Department also 

proposed to revise § 656.31(b) and (c) 

(§ 656.31(a) and (b) in the NPRM)) to 

clarify the Department may suspend 

processing of any permanent labor 

certification application if an employer, 

attorney or agent connected to the 

application is involved in either 

possible fraud or willful 

misrepresentation or is named in a 

criminal indictment or information 

related to the permanent labor 

certification program. Virtually all 

commenters objected to these proposals. 

The Department has concluded that, 

in view of the extensive history of fraud 

in the permanent labor certification 

program, the need to promulgate what 

are now paragraphs (b) and (c) of 

§ 656.31—concerning initially 

suspending applications for 180 days 

and clarifying the Department’s 

authority as to which permanent labor 

certification applications may be 

suspended—outweighs the concerns 

raised by the commenters. Our 

responsibility as a government agency to 

cooperate with law enforcement 

agencies in the investigation and 

prosecution of possible criminal activity 

supports this position. In addition, after 

due consideration, the Department has 

concluded the proposed provisions 

extending the suspension period are 

exempt from the notice and comment 

provision of the Administrative 

Procedure Act as matters of agency 

practice and procedure and as part of 

the agency’s inherent authority to 

effectuate the labor certification review 

process. See 5 U.S.C. 553(b). 

Accordingly, this Final Rule includes 

the provisions allowing the Department 

to suspend, initially for up to 180 days, 

the processing of any application 

relating to an employer, attorney, or 

agent involved in possible fraud or 

willful misrepresentation. 

Terms recommended for deletion 

and/or considered inappropriate in 

§ 656.31(a)—In this Final Rule, the 

Department has taken the last sentence 

of proposed § 656.31(a) and finalized it 

as the entirety of § 656.31(a), moving the 

remainder of the proposed text to 

§ 656.31(b). One commenter took issue 

with the portion of § 656.31(a) which 

reads: ‘‘A Certifying Officer may deny 

any application for permanent labor 

certification if the officer finds the 

application contains false statements, is 

fraudulent, or was otherwise submitted 

in violation of the DOL permanent labor 

certification regulations.’’ This 

commenter recommended the phrases 

‘‘false statements’’ and ‘‘or was 

otherwise submitted in violation of the 

regulations’’ should be deleted from 

§ 656.31(a). According to the 

commenter, the term ‘‘false statements’’

should be removed because attorneys, 

aliens, employers, or agents may 

inadvertently make mistakes on the 

labor certification application about 

minor details, or omit inconsequential 

information. The commenter believed it 

improper to equate such ‘‘innocent 

errors or omissions’’ with fraud, and 

insisted the section improperly imposed 

penalties for innocent errors. The phrase 

‘‘or was otherwise submitted in 

violation of the regulations,’’ according 

to the commenter, is overbroad and 

simply too vague to be understood or 

fairly applied. Because other sections of 

the regulations already explain when 

denial is appropriate, the commenter 

recommended that § 656.31 should only 

focus on fraud and willful 

misrepresentation. 

The technological enhancements to 

the PERM system discussed above make 

it difficult to have inadvertent errors or 

omissions, and those few that will be 

made despite these enhancements may 

still not rise to the level of a false 

statement. The provision is not designed 

to impose penalties for innocent errors 


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not in the control of the submitter but 

is applicable to any material inaccuracy. 

Although a false statement may not rise 

to the level of fraud, the statement may 

involve information or a subject matter 

that is material to the application. The 

phrase ‘‘or was otherwise submitted in 

violation of the regulations’’ is in large 

measure merely a restatement of the 

authority already provided in 

§ 656.24(b)(1) of the current permanent 

labor certification regulations. Section 

656.24(b)(1) provides, in relevant part, 

that one of the factors the Certifying 

Officer considers in making a 

determination to either grant or deny a 

certification is whether or not the 

employer has met the requirements of 

part 656. 

As stated in the NPRM, we have 

added the above sentence to clarify the 

Department’s authority. As a further 

clarification, the Department has 

removed the last sentence from 

§ 656.31(a) as published in the NPRM 

and has placed it alone as the first 

paragraph and designated it § 656.31(a). 

The other paragraphs are redesignated 

accordingly. 

2. When an Employer, Attorney, or 

Agent Is the Subject of a Criminal 

Indictment or Information 

With minor changes from the 

proposed rule, the Final Rule revises 

§ 656.31(c) (§ 656.31(b) in the NPRM) to 

clarify that, if the Department learns an 

employer, attorney, or agent is named in 

a criminal indictment or information in 

connection with the permanent labor 

certification program, it may suspend 

the processing of any applications 

related to that employer, attorney, or 

agent until the judicial process is 

completed. Further, the regulation 

provides that, unless the investigatory 

or prosecuting agency requests 

otherwise, the Department must provide 

written notification to the employer of 

the suspension in processing. 

Provision of notice—One commenter 

objected that, under this section as 

proposed, no notice of an investigation 

was to be provided to the employer, 

attorney or agent. As noted above, the 

Final Rule does provide for limited 

notice to employers whose applications 

are impacted by an investigation of an 

agent or attorney. Our program 

experience has shown that notifying 

parties under investigation can impede 

the effectiveness and outcome of 

investigations that are initiated or 

ongoing, and the rule accordingly 

provides that an investigating or 

prosecuting agency, which is in the best 

position to judge the adverse impact of 

notice, can request that notification not 

be made. 

Another commenter recommended 

that, when providing notice to 

employers not under investigation that 

processing of their applications has 

been suspended, the notice clarify for 

the employer receiving the notice that it 

is not under investigation. The 

Department will provide appropriate 

notice in cooperation with the 

investigatory and prosecuting agencies. 

Notification by employer within 30 

days when attorney or agent has 

committed fraud—In the case of a 

pending application involving a finding 

of fraud or willful misrepresentation by 

the employer’s attorney or agent, 

§ 656.31(e)(3) (§ 656.31(d)(3) in the 

NPRM) provides that the Department 

will notify the employer and allow 30 

days for the employer to notify the 

Department, in writing, that the 

employer will withdraw the application, 

designate a new attorney or agent, or 

continue the application without 

representation. If the employer elects to 

continue representation by the attorney 

or agent, the Department shall suspend 

processing of affected applications. 

One commenter maintained that 30 

days was not a reasonable timeframe for 

notification. The commenter noted the 

decisions are complex, it takes time just 

to receive DOL’s decisions, and time 

may be required to secure second 

opinions, decide whether to secure 

other representation, and provide the 

Department with a response. 

We disagree. The 30 days required for 

notification is the same as the time 

provided for employers to submit 

requests for reconsideration pursuant to 

§ 656.24(g) or review by the BALCA 

under § 656.26(a). Such requests for 

reconsideration or review involve 

making decisions similar to those 

involved in furnishing the notice 

required under the section now 

redesignated as § 656.31(e)(3). Like the 

§ 656.31(e)(3) notice, the BALCA 

requests also require complex decisions 

to be made; time elapses between the 

mailing of the denial and its receipt by 

the employer; second opinions may be 

sought; a request for review must be 

prepared and submitted; and the 

employer may prepare a detailed brief of 

the matter. Accordingly, the Department 

has concluded 30 days is sufficient time 

for the employer to provide the 

notification required by § 656.31(e). 

3. Determination of Fraud or Willful 

Misrepresentation 

As proposed, § 656.31(d) (§ 656.31(c) 

in the NPRM) continues to provide the 

Certifying Officer will decide each 

application on its merits where the 

employer, attorney, or agent is acquitted 

of wrongdoing or if criminal charges 

otherwise fail to result in a finding of 

fraud or willful misrepresentation. The 

Department did not receive comments 

on these provisions and, consequently, 

is implementing the language as noted 

above in this Final Rule. Where a court, 

DHS, DOS, or another body finds the 

employer, attorney, or agent did commit 

fraud or willful misrepresentation, 

redesignated § 656.31(e), as revised in 

the Final Rule, provides that any 

pending applications related to the 

employer, attorney, or agent will be 

decided on their respective merits and 

may be denied in accordance with 

§ 656.24 and § 656.31(a). 

4. Debarment Proceedings 

Commenters generally expressed 

concern that, as proposed, the 

debarment provisions of § 656.31(f)(1) 

(§ 656.31(e)(1) in the NPRM) failed to set 

a materiality standard and, hence, left 

employers and attorneys open to 

consequences that were inconsistent 

with the individual’s intent and 

disproportionate to the violation’s 

impact or importance. With respect to 

the various grounds for debarment, 

generally, commenters stated concern 

that the rule would impose a severe 

penalty for relatively minor and likely 

inadvertent offenses. 

After reviewing the comments, we 

have modified the proposed rule to add 

in this Final Rule an intent requirement 

(‘‘willfully’’). The Final Rule revises the 

provisions on failure to comply with the 

terms of the form, failure to comply 

with the audit process, and failure to 

comply with Certifying Officer-ordered 

supervised recruitment by adding a 

requirement that, for there to be a basis 

for debarment, there must be a pattern 

or practice of misconduct. As elsewhere 

in the Final Rule, the determination of 

when debarment is appropriate is made 

by the Administrator, Office of Foreign 

Labor Certification, a nomenclature 

change from the proposed rule, which 

named the Chief of the former Division. 

Improper or prohibited—One 

commenter maintained the term 

‘‘improper’’ is impermissibly vague in 

the portion of § 656.31(f)(1) 

(§ 656.31(e)(1) of the NPRM) that 

provides for debarment from the 

program based upon any action that was 

improper or prohibited at the time the 

action occurred. The term improper is a 

broad term and does not necessarily 

imply illegality or an action that was in 

violation of the permanent labor 

certification program regulations. 

Accordingly, the Department has 

removed the term from § 656.31(f)(1). 

Time limits to pursue debarment—A 

commenter maintained most punitive 

laws include a statute of limitations, 


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beyond which violations cannot be 

prosecuted or pursued. Further, 

according to this commenter, statutes of 

limitations are promulgated because 

evidence and recollections fade with 

time. Conceivably, DOL could pursue 

debarment 20 years after an application 

is filed. In this connection, the 

commenter noted the H–1B program 

imposes a one-year time limit to lodge 

a complaint. 

The Department has concluded it 

would be appropriate to include a 

provision limiting the time in which to 

initiate debarment actions against 

employers, attorneys or agents. We 

considered requiring initiation of an 

investigation any time within the five 

years the employer is required to retain 

copies of applications for permanent 

employment certification filed with the 

Department and all supporting 

documentation from the date of filing 

the labor certification application (see 

§ 656.10(f) at 69 FR 77390 (Dec. 27, 

2004)), or within a reasonable time 

thereafter. Since investigations can be 

time consuming, we have provided in 

§ 656.31(f)(1) of this Final Rule that 

debarment actions must be formally 

initiated within six years of the original 

filing date of the labor certification 

application on which the debarment 

action is based. For purposes of a 

pattern or practice, the statute of 

limitations will start to run with the last 

or most recent application that 

demonstrates or constitutes the pattern. 

Mandatory and permanent 

debarment—One commenter proposed 

that debarment be mandatory rather 

than permissive. After carefully 

considering this option, the Department 

has concluded it should retain 

discretion in the administration of the 

debarment provision. Debarment is a 

serious remedial measure not to be 

undertaken lightly. Discretion is also 

necessary to administer the debarment 

provision in the manner stated above 

and in the preamble to the proposed 

rule at 71 FR 7660 (Feb. 13, 2006). As 

a result, we conclude the debarment 

provision in the Final Rule should 

remain discretionary rather than 

mandatory. 

The same commenter proposed that 

repeat offenders should be permanently 

debarred from the program following a 

second offense. The Department has 

concluded that we should gain 

operational experience with the 

debarment provision in this Final Rule 

before considering a provision to make 

debarment permanent following a 

second or later offense. Further, the 

Department is of the opinion that notice 

and comment rulemaking should be 

undertaken before promulgating a 

regulation allowing for permanent 

debarment. 

Requested changes to debarment 

proceedings—More than one commenter 

maintained debarment proceedings 

should include the right to specifically 

articulated charges; the right to request 

a hearing before an Administrative Law 

Judge (ALJ); the ability to present and 

confront witnesses; a transcript; and a 

stay of debarment upon timely appeal. 

With respect to the request for clearly 

articulated charges, § 656.31(f)(2), as 

redesignated in this Final Rule, has been 

amended to provide that a notice of 

debarment must include a detailed 

explanation of how the employer, 

attorney, and/or agent has participated 

in or facilitated one or more of the bases 

for debarment listed in paragraphs 

(f)(1)(i) through (f)(1)(v) of § 656.31. 

With respect to the right to request a 

hearing before an ALJ, this Final Rule 

provides, at § 656.26(a)(1), for the right 

to a review by the BALCA upon filing 

a written request with the 

Administrator, Office of Foreign Labor 

Certification, within 30 days of the date 

of the debarment. Section 656.27(e) 

authorizes the BALCA to hold hearings 

governed by the Rules of Practice and 

Procedure for Administrative Hearings 

before the Office of Administrative Law 

Judges, found at 29 CFR part 18, 

encompassing both the right to present 

evidence and confront witnesses. While 

historically the ALJs have held very few 

hearings in permanent labor 

certification cases, we assume the 

BALCA will order hearings in 

appropriate cases. 

With respect to the ability to present 

and confront witnesses, the procedures 

outlined in 29 CFR part 18, which 

govern the Office of Administrative Law 

Judges and apply to the BALCA 

proceedings, establish the right to 

examine and cross-examine witnesses. 

29 CFR 18.34. With respect to the right 

to a transcript, the BALCA procedures 

already provide for a hearing transcript. 

With respect to the right of a stay of 

debarment upon a timely appeal, the 

regulation at § 656.26(a) of this Final 

Rule has been amended to provide that 

debarment is stayed upon receipt of the 

request for review. 

5. Debarment of Attorneys and Agents 

Many commenters maintained the 

Department lacks the statutory authority 

to debar attorneys or agents. They 

argued, for example, that INA section 

212(a)(5) relates solely to the 

admissibility of an alien coming to work 

in the United States and does not grant 

authority to legislate a system of 

penalties against an employer or its 

attorney or agent. Further, commenters 

suggested that, because the Congress did 

not explicitly establish debarment 

authority for the permanent labor 

certification program as it did in the H–

1B and H–2A programs, the Department 

has no authority to create debarment 

mechanisms by this rule. 

The Department has considered the 

comments and has decided to retain the 

proposed remedial measure of 

debarment for employers, attorneys and 

agents in the Final Rule. There is 

extensive case law establishing that 

Federal agencies have the authority to 

determine who can practice and 

participate in administrative 

proceedings before them. The general 

authority of an agency to prescribe its 

own rules of procedure is sufficient 

authority for an agency to determine 

who may practice and participate in 

administrative proceedings before it, 

even in the absence of an express 

statutory provision authorizing that 

agency to prescribe the qualifications of 

those individuals or entities. Koden v. 

United States Department of Justice, 546 

F.2d 228, 232–233 (7th Cir. 1977) (citing 

Goldsmith v. United States Board of Tax 

Appeals, 270 U.S. 117 (1926)). See also 

Schwebel v. Orrick, 153 F. Supp. 701, 

704 (D.D.C. 1957) (‘‘The Securities and 

Exchange Commission has implied 

authority under its general statutory 

power to make rules and regulations 

necessary for the execution of its 

functions[,] to establish qualifications 

for the attorneys practicing before it and 

to take disciplinary action against 

attorneys found guilty of unethical or 

improper professional conduct’’). In 

addition, an agency with the power to 

determine who may practice before it 

also has the authority to debar or 

discipline such individuals for 

unprofessional conduct. See Koden, 564 

F. 2d at 233. Further, as the Department 

has the authority to prescribe 

regulations for the performance of its 

business (as is the case with all 

executive departments under 5 U.S.C. 

301), it likewise has the authority to 

determine who may practice or 

participate in administrative 

proceedings before it and may debar or 

discipline those individuals engaging in 

unprofessional conduct. The 

Department has exercised such 

authority in the past in prescribing the 

qualifications, and procedures for 

denying the appearance, of attorneys 

and other representatives before the 

Department’s Office of Administrative 

Law Judges under 29 CFR 18.34(g). See 

also Smiley v. Director, Office of 

Workers’ Compensation Programs, 984 

F.2d 278, 283 (9th Cir. 1993). 


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4The Secretary of Labor shall provide, in the 

labor certification process under section 

212(a)(5)(A) of [the Act] that—

(2) any person may submit documentary evidence 

bearing on the application for certification (such as 

information on available workers, information on 

wages and working conditions, and information on 

the employer’s failure to meet terms and conditions 

with respect to the employment of alien workers 

and co-workers). [Pub. L. 101–619, sec. 122(b), Nov. 

29, 1990, 104 Stat. 4995.] 

6. Debarment of Employers 

At the time of the NPRM on the PERM 

program, some commenters 

recommended enhancing program 

integrity by establishing suspension and 

debarment procedures for employers 

that engage in fraudulent labor 

certification activities, prohibited 

transactions, or otherwise abuse the 

permanent certification process. In the 

NPRM to this rulemaking, the 

Department proposed establishing 

debarment procedures as an important 

part of efforts to avoid fraud, enhance 

and protect program integrity, and 

protect U.S. workers. 

Many comments on the NPRM 

expressed support for the Department’s 

effort to debar from the permanent alien 

labor certification program employers 

and others who defraud or abuse the 

system. However, similar to comments 

received on the debarment of attorneys 

and agents, some commenters 

questioned the Department’s authority 

to debar employers. 

The Department has carefully 

considered the comments on the 

proposal to debar employers and has 

determined that the availability of 

suspension of case processing and 

debarment mechanisms for employers, 

attorneys and agents is necessary to 

maintain program integrity. Therefore, 

these provisions are included in this 

Final Rule. The suspension and 

debarment of entities from participating 

in a Government program is an inherent 

part of an agency’s responsibility to 

maintain the integrity of that program. 

As the Second Circuit found in Janik 

Paving & Construction, Inc. v. Brock, 

828 F.2d 84 (2d Cir. 1987), the 

Department possesses an inherent 

authority to refuse to provide a benefit 

or lift a restriction for an employer that 

has acted contrary to the welfare of U.S. 

workers. In assessing DOL’s authority to 

debar violators, the court found that 

‘‘[t]he Secretary may * * * make such 

rules and regulations allowing 

reasonable variations, tolerances, and 

exemptions to and from any or all 

provisions * * * as [s]he may find 

necessary and proper in the public 

interest to prevent injustice or undue 

hardship or to avoid serious impairment 

of the conduct of Government 

business.’’ Id. at 89. In that case, the 

implied authority to debar existed even 

though the statute in question 

‘‘specifically provided civil and 

criminal sanctions for violations of 

overtime work requirements but failed 

to mention debarment.’’ Id. The court 

held that debarment may be necessary 

to ‘‘effective enforcement of a statute.’’

In order to encourage compliance, the 

regulatory scheme for PERM relies on 

attestations, audits and, through this 

Final Rule, the remedial measures of 

suspension and debarment proceedings 

to assure compliance. Use of debarment 

as a mechanism to encourage 

compliance has been endorsed in the 

INA for a number of foreign labor 

certification and attestation programs, 

e.g., the H–1A, H–1B, H–1C, H–2A and 

D visa programs. INA sections 

212(m)(2)(E)(iv) and (v), 212(n)(2)(C), 

218(b)(2), and 258(c)(4)(B). 

In those programs, the Congress has 

chosen to delineate and establish limits 

on the manner in which debarment is 

imposed. Consequently, the H–1A, H–

1B, and H–1C programs, under section 

212(m)(2)(E) and (n)(2)(D) of the INA, 

impose specific penalties on employers 

who willfully make a misrepresentation 

of a material fact in an application. See 

Immigration Act of 1990, Public Law 

101–649, 104 Stat. 104–4978 (1990); 

Immigration Nursing Relief Act of 1989, 

Public Law 101–238, 103 Stat. 2099 

(1989); Nursing Relief for Disadvantaged 

Areas Act of 1999, Public Law 106–95, 

113 Stat. 1312 (1999); and Nursing 

Relief for Disadvantaged Areas 

Reauthorization Act of 2005, Public Law 

109–423, 120 Stat. 2900 (2006); see also 

INA section 258 (regarding penalties in 

the program for nonimmigrant maritime 

crewmembers performing longshore 

work). In each of these programs, 

Congress took for granted the 

Department’s authority to debar, but 

acted to limit or expand that inherent 

authority to enforce compliance in the 

employment-based immigration 

programs under the Department’s 

jurisdiction. In the case of the H–2A 

program, the Congress elevated existing 

practice to express statutory status. 

Immigration Reform and Control Act of 

1986, Public Law 99–603, 100 Stat. 3359 

(1986). 

Beyond DOL’s inherent authority to 

ensure compliance with the permanent 

alien labor certification program, there 

is an implied grant of statutory authority 

in section 122(b) of the Immigration Act 

of 1990, which requires the Secretary to 

accept reports from the public on 

violations of the terms and conditions of 

a permanent alien labor certification.4

By specifically directing DOL to accept 

such reports, the Congress indicated its 

intent that DOL take action based on 

that information to address reported 

problems. 

Ensuring the integrity of a statutory 

program enacted to protect U.S. workers 

is an important part of the Department’s 

mission. The Department was 

established, ‘‘to foster, promote, and 

develop the welfare of the wage earners 

of the United States, to improve their 

working conditions, and to advance 

their opportunities for profitable 

employment [Act of Feb. 14, 1903, Pub. 

L. 62–426, sec. 1, 37 Stat. 736] * * *.’’

See also Janik Paving & Construction, 

Inc. v. Brock, supra. 

In December 2004, DOL changed, by 

regulation, the operation of the 

permanent labor certification program. 

Under the current regulation at 20 CFR 

part 656, employers may attest to 

compliance with requirements to recruit 

U.S. workers rather than engaging in all 

cases in supervised, post-filing 

recruitment. Essential to maintaining 

the integrity of the new, streamlined 

process is a need to audit compliance, 

already included in the regulations, and 

a remedial measure for continued and 

serious non-compliance, which is 

included in this Final Rule. A system of 

attestation and audit, relying heavily on 

the veracity of employer submissions, 

requires a system for ‘‘effective 

enforcement,’’ as described in the Janik 

Paving holding, supra. 

For the above reasons, the remedial 

measure of debarment, modified as 

discussed above, is retained in this 

Final Rule as it applies to employers. 

7. Provision of False or Inaccurate 

Information 

Consistent with complaints about the 

other terms for debarment, many 

commenters expressed concern the rule 

would impose a severe penalty for 

providing false information that was, all 

things considered, minor, immaterial, or 

not meaningful. Numerous commenters 

submitted identical comments listing 

specific circumstances they believed 

could lead to unjustified debarment and 

unfair punishment of attorneys, 

including: (1) Typographical errors in 

the application regarding the alien’s 

date of birth; (2) an inaccuracy in the 

foreign national’s job history due to 

someone’s faulty memory; (3) 

employer’s relationship to the alien; or 

(4) an inadvertent mistake in the 

number of workers or the Federal 

Employer Identification Number (FEIN). 

Some commenters opined that attorneys 

should be allowed to rely on 

information provided by clients unless 

there is a clear indication of fraud, and 

that ‘‘no conduct of any attorney in any 


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5The Department reminds users of the labor 

certification program of the importance of the audit 

process to maintaining the integrity of PERM. As 

the Department stated in the 2004 preamble to the 

Final Permanent Labor Certification Regulation, we 

will ‘‘minimize’’ the impact of non-meritorious 

applications by adjusting the audit mechanism in 

the new system as needed. We have the authority 

under the regulations to increase the number of 

random audits or change the criteria for targeted 

audits. As we gain program experience, we will 

adjust the audit mechanism as necessary to 

maintain program integrity. We note that under 

§ 656.21(a), the Certifying Officer has the authority 

to order supervised recruitment ‘‘when he or she 

determines it to be appropriate.’’ 69 FR 77329 (Dec. 

27, 2004). It should also be noted that § 656.10(f) 

requires employers to maintain copies of 

applications and supporting documentation for up 

to five years from the date of the submission of the 

application. 

setting is punishable without the 

elements of materiality and fraud.’’

Some commenters raised due process 

concerns. One commenter believed that 

existing mechanisms, e.g., denial of an 

application or imposition of supervised 

recruitment (but in future filings), were 

more viable options than what the 

commenter interpreted as indefinite 

suspension. 

The Department has concluded that 

§ 656.31(f)(1)(ii) (§ 656.31(e)(1)(ii) in the 

NPRM) should be modified to address 

the commenters’ concerns. Accordingly, 

the term ‘‘willful’’ has been added to 

this section so this Final Rule now 

applies to ‘‘the willful provision or 

willful assistance in the provision of 

false or inaccurate information in 

applying for permanent labor 

certification.’’ The Department wants to 

make clear it views debarment as an 

extraordinary remedy and does not 

intend to invoke it except under the 

most serious of circumstances. 

Authority to prohibit false or 

inaccurate information on an 

Application for Permanent Employment 

Certification—Commenters further 

argued the Department lacks the 

authority to regulate the information 

provided on an Application for 

Permanent Employment Certification. 

One commenter insisted the Department 

lacked the authority to prohibit an 

employer from providing false 

information on an application. As stated 

above, the authority given to the 

Department under the INA to approve 

applications carries with it the authority 

to regulate the program, debar abusers, 

and prohibit false or inaccurate 

information. 

8. Failure To Comply With the Terms of 

the Labor Certification Application 

Proposed § 656.31(f)(1)(iii) 

(§ 656.31(e)(1)(iii) in the NPRM) 

provided that failure to comply with the 

terms of the ETA 9089 or ETA 750 will 

be a factor in determining whether to 

issue a notice of debarment. Some 

commenters argued that such a rule 

would make the attorney the guarantor 

of the accuracy of the Application for 

Permanent Employment Certification. 

The Department disagrees. Section 

656.3(f)(1) provides that a notice of 

debarment from the permanent labor 

certification program may be provided 

to an employer, attorney, agent, or any 

combination thereof. As stated in the 

preamble to the proposed rule the 

Department acknowledges that not all 

debarment triggers should be treated 

equally and will, therefore, take steps to 

ensure that any debarment is reasonable 

and proportionate to the improper 

activity. 

Further, the attorney does not have to 

sign the application unless he or she is 

the ‘‘preparer’’ in Section M of the 

application. Presumably, the attorney 

will take reasonably prudent steps to 

apprise him or herself of the facts before 

signing the application. However, to 

allay any fears the regulated community 

may have concerning the Department’s 

possible use of the debarment provision, 

the Department has added the 

requirement that there must be a pattern 

or practice with respect to failure to 

comply with the terms of the labor 

certification application (either Form 

ETA 9089 or Form ETA 750). A similar 

requirement for a pattern or practice has 

been added to § 656.31(f)(1)(iv), failure 

to comply in the audit process, and to 

§ 656.31(f)(1)(v), failure to comply with 

the Certifying Officer-ordered 

supervised recruitment process. 

Commenters asserted the provision 

discussing the failure to comply with 

the terms of the Form ETA 9089 or Form 

ETA 750 is vague or needs further 

clarification. We disagree. The terms 

and areas the Department is interested 

in are best represented in the 

certification sections of the two 

application forms, specifically, Section 

N, Employer Certifications, on the Form 

ETA 9089, and item 23, Employer 

Certifications, on the Form ETA 750. 

More detailed information on the 

employer certifications listed on the 

Form ETA 9089 in Section N of the 

application can be found in § 656.10(c) 

of the current regulation and in the 

preamble thereto at 69 FR 77389 (Dec. 

27, 2004). Detailed information on the 

employer certifications listed in item 23, 

Form ETA 750, can be found in the 

former labor certification regulations at 

§ 656.20 (2004), ‘‘General filing 

instructions’’ and in Technical 

Assistance Guide No. 656 Labor 

Certifications. These resources provide 

ample guidance to the information 

sought in these sections and no further 

clarification is required. 

9. Failure To Comply in the Audit or 

Supervised Recruitment Process 

Some commenters sought clarification 

of the provisions at § 656.31(f)(1)(iv) and 

(v) (§ 656.31(e)(1)(iv) and (v) in the 

NPRM) that failure to comply with the 

audit and supervised recruitment 

processes may be a factor in issuing a 

debarment. Section 656.31(f)(1)(iv) and 

(v) will not normally apply to 

applications submitted under the former 

permanent labor certification 

regulations (20 CFR part 656 (2004)), 

because audit and supervised 

recruitment are not procedures 

currently in place under the backlog 

program. The Department has 

determined that these debarment 

provisions are appropriate to apply to 

conduct under the streamlined PERM 

processes because that system depends 

on ensuring employers furnish the 

required documentation within the 

required timeframes, as required by 

§§ 656.20 and 656.21 (69 FR 77396 (Dec. 

27, 2004)). Further, a repeated failure to 

comply with core program requirements 

signals not only disregard for the 

process, but an intentional abuse of 

valuable, limited administrative 

resources, a practice the Department 

cannot tolerate. 

Some commenters provided scenarios 

in which an employer might fail to 

comply with audit or supervised 

recruitment requirements because the 

employer no longer wishes to go 

forward with the application, for 

example: (1) The employer has 

terminated the alien and, therefore, does 

not wish to respond to the audit request; 

(2) after an employer is requested to 

engage in supervised recruitment, its 

human resources office decides to 

terminate the application process; or (3) 

the employer decides to terminate the 

process after an audit when the 

employee resigns. 

These comments do not warrant 

removal from this Final Rule of the 

(f)(1)(iv) and (f)(1)(v) bases for 

debarment. We recognize that there are 

legitimate reasons for terminating an 

application during the audit or 

supervised recruitment processes and 

do not intend that these reasons should 

provide a basis for debarment.5 There 

are, however, cases in which the 

persistent failure to cooperate in the 

audit or supervised recruitment 

processes is evidence of an intent to 

avoid the discovery of serious violations 

of the regulations. Thus, the fact 

patterns these commenters cite must be 

considered individually as they arise. 

The existence of legitimate reasons to 

discontinue an application does not 


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moot the need for these debarment 

provisions. 

F. Other Objections and Comments 

Investigation of past substitution 

cases—Another commenter suggested 

that DOL investigate all past 

substitution cases with the help of 

USCIS. DOL does not have primary 

responsibility for investigation of past 

substitutions that were made after 

certification. The Department has 

participated in investigations and 

criminal prosecutions in appropriate 

cases involving substitution, and we 

will continue to work with DHS, DOL 

OIG, and DOJ when there are 

indications of possible fraud. 

Adequacy of current fraud 

safeguards—According to one 

commenter, the PERM system’s 

vulnerability to fraud provides 

insufficient justification for DOL’s 

proposals as articulated in the proposed 

rule. A certain amount of fraud should 

be tolerated, the commenter insisted, 

citing Medicare, credit card systems, 

and the entire tax system as processes 

in which some level of fraud is simply 

accepted by society. This commenter 

invited DOL to ignore the PERM 

system’s vulnerability to fraud as the 

price to be paid for offering what the 

commenter characterized as a ‘‘benefit’’

to all. Having acknowledged fraud 

exists, the commenter next pointed to 

the design of the PERM system itself as 

containing built-in fraud protection 

mechanisms. As examples, the 

commenter cited built-in safeguards to 

detect fraud prior to filing such as: 

Initial establishment of the PERM 

account; verification of employer’s 

existence; establishment of PINs; and 

limiting changes to accounts and subaccounts. Finally, the commenter 

viewed Federal prosecutions as 

significant in preventing fraud or abuse. 

The Department declines the 

commenter’s suggestion to simply 

acquiesce in a certain amount of fraud 

by those seeking certification. No 

regulatory scheme can eliminate all 

possibilities of fraud, but, as a matter of 

good government, the Department must 

make every reasonable effort to 

eliminate fraud. DOL takes its role and 

its statutory authority under the INA 

quite seriously and will continue to look 

for ways to eliminate fraud and the 

enticements to fraud in the permanent 

labor certification system. This Final 

Rule’s elimination of substitution and of 

indefinite certification validity bolster 

fraud protection and reduce incentives 

and opportunities to commit fraud. The 

need to protect the system from fraud 

and eliminate vulnerabilities is clearly 

within DOL’s authority and furthers the 

INA’s statutory purpose. 

While fraud cases arising under the 

new PERM system were not described 

in the NPRM, this should not be taken 

as proof that fraud is not occurring 

under the system. The system is new 

and has not had the full opportunity for 

investigation and prosecution as has 

occurred under the previous regulation. 

In fact, the Department is aware of and 

has referred cases of possible fraud for 

investigation under the new PERM 

system. Further, we disagree that the 

issue of fraud in the permanent labor 

certification program lies solely in the 

Backlog Processing Centers or that the 

fraud detection examples provided by 

the Department indicate we are 

asserting that fraud cannot or will not 

occur under the new re-engineered 

PERM program. We disagree that not 

providing anecdotal evidence of fraud 

under the new PERM program is proof 

that no fraud is being conducted by 

some employers, agents or attorneys. 

PERM introduced many important 

safeguards that will help deter and 

detect fraud. However, these protections 

are insufficient to eliminate the 

incidence and incentives for fraud in 

the permanent labor certification 

program. The existence of some antifraud measures does not preclude the 

agency from initiating and establishing 

additional fraud detection and 

avoidance mechanisms, particularly 

when considering the value of such 

mechanisms against their relatively 

small costs. Our Federal partner 

agencies have demonstrated through 

investigations and prosecutions that the 

level of fraud today is far more 

advanced and sophisticated than it was 

10 years ago and that it continues to 

evolve and become even more 

sophisticated. It is incumbent upon the 

Department to remain aware of these 

trends and to strengthen the program to 

withstand the changing nature of fraud 

being committed against it. Because the 

Department has direct experience with 

how fraudulent behavior within the 

permanent labor certification process is 

pervasive throughout the process and 

detrimental to the purpose and intent of 

the process, we can assess what systems 

and/or procedures are adequately 

detecting fraud and where 

improvements are needed. 

Many commenters stated that because 

we currently possess the authority to 

invalidate an application for labor 

certification up to five years after it has 

been certified, we already have 

sufficient safeguards in the permanent 

labor certification program. We 

respectfully disagree. The invalidation 

of an application is what happens to an 

application once the Department has 

detected fraud and found the employer, 

agent or attorney willfully engaged in 

such fraudulent behavior. It remedies a 

particular instance of fraud, but it does 

not, in and of itself, deter or prevent the 

increasing fraud occurring in the 

program. 

For the reasons stated throughout this 

preamble, the measures instituted by 

this Final Rule—eliminating 

substitution, limiting the validity period 

of a permanent labor certification, 

prohibiting sale of labor certifications, 

prohibiting employers from recouping 

recruitment costs and attorney fees from 

aliens, and prohibiting violators from 

using the permanent labor certification 

program—will deter and redress fraud 

and abuse in the permanent labor 

certification program. For the same 

reasons, the rule also clarifies the 

Department’s authority to deny an 

Application for Permanent Employment 

Certification when we find an employer, 

agent or attorney has provided false 

information to us. 

G. Comments Outside the Scope of the 

Rule 

The Department received a number of 

comments not directly related to the 

issues raised by the NPRM. These 

comments generally addressed the 

following topic areas: 

• Lack of consistency between 

agencies, especially related to the need 

for labor certifications in light of USCIS 

policies limiting the availability of 

National Interest Waivers when the 

need for the individual stems from a 

labor shortage. 

• Suggestions of other measures the 

Department should consider related to 

the permanent labor certification 

program, including conducting more 

investigations of suspected fraud, 

eliminating the authority of agents to 

represent employers or aliens in labor 

certification cases, fixing problems in 

the PERM software, and revising current 

requirements for advertising. 

• Descriptions of personal 

experiences with the immigration 

process generally provided as examples 

of fraud and abuse. 

• Comments concerning delays in the 

processing centers and, specifically, 

delays resulting from the audit process. 

We do not respond here to these 

issues individually, as they fall outside 

the scope of this rulemaking. 

H. Other Amendments 

In addition to the specific revisions 

described above, the Department has 

made other minor, technical, and 

editorial changes to the regulatory text, 

as appropriate. 


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6Reserved. 

7The O*Net OnLine summary information on 

Human Resources Manager positions may be found 

at http://online.onetcenter.org/link/summary/11–

3040.00. 

IV. Required Administrative 

Information 

A. Regulatory Flexibility Act 

In crafting this Final Rule and 

reviewing public comments, the 

Department conferred with the Office of 

the Chief Counsel for Advocacy, Small 

Business Administration (SBA), as 

required by the Regulatory Flexibility 

Act (RFA), 5 U.S.C. 609(b). This impact 

analysis reflects those consultations and 

generally incorporates the Chief 

Counsel’s comments. Based on the 

analysis detailed below, the Department 

submits that this Final Rule will not 

have a significant economic impact on 

a substantial number of small entities. 

In this rule, the Department takes 

measures to enhance program integrity 

and reduce the incentives and 

opportunities for fraud and abuse in the 

permanent employment of aliens in the 

United States. The rule’s limitations on 

the acquisition and use of permanent 

labor certification applications and 

permanent labor certifications will have 

an economic effect on only those 

employers seeking DOL certification to 

hire foreign workers for permanent 

positions. The prohibition against 

substitution on the employer’s 

permanent labor certification 

application and the validity period of 

180 days on approved certifications 

each trigger a retest of the labor market 

(when original alien becomes 

unavailable a certification expires) to 

ensure that no U.S. workers are 

qualified and available to fill the job 

opportunity, carrying with it an 

economic cost. Employers’ compliance 

with the procedures set forth in the 

Final Rule will not require completion 

of additional preprinted forms or the 

collection of information beyond that 

already required by Form ETA 9089, 

Application for Permanent Employment 

Certification. 

In Program Year (PY) 2005 (July 1, 

2005—June 30, 2006), the Department 

received approximately 115,952 

applications from employers seeking 

labor certification under the PERM 

program. Because the Final Rule would 

also impact permanent labor 

certification applications being 

processed and certifications issued 

through ETA’s Backlog Processing 

Centers, the Department also included 

in its analysis 176,496 backlogged 

applications in process as of September 

7, 2006.6

To conduct its analysis, the 

Department looked to the major 

industries that PERM program data 

showed had applied for permanent 

labor certification in PY 2005, then 

applied a similar distribution (same 

industries and general percentages) to 

applications currently being processed 

through the Backlog Processing Centers. 

Although some, but not all, employers 

will file multiple applications with the 

Department in a given year, the 

Department’s analysis treated each 

application as a separate economic 

impact on the employer and, 

consequently, the estimated impacts of 

the Final Rule may be overstated. Based 

on anecdotal evidence, and in the 

absence of precise historical data to 

accurately track substitution requests, 

the analysis also assumed that 10 

percent of all employer applications 

will request substitution of the alien on 

the permanent labor certification 

application prior to implementation of 

this Final Rule, even though the 

historical practice of alien substitution 

by employers participating in the 

Department’s permanent labor 

certification process is far less. The 

analysis does not attempt to quantify 

lost productivity costs employers could 

potentially incur after the loss of an 

alien worker for whom a permanent 

labor certification application has been 

filed and for whom substitution is no 

longer permitted. In the Department’s 

experience, such costs are believed to be 

negligible, since the overwhelming 

majority of applications filed are for 

nonimmigrants already working in the 

United States and in the position that is 

the subject of the application. 

Under the Small Business 

Administration Act, a small business is 

one that is ‘‘independently owned and 

operated and which is not dominant in 

its field of operation.’’ The definition of 

small business varies from industry to 

industry to the extent necessary to 

properly reflect industry size 

differences. 

The Department conducted its size 

standard analysis based on 13 CFR part 

121, which describes the SBA’s size 

standards for businesses in various 

industries. To group employers by size, 

the Department relied on information 

submitted by each employer on the 

permanent labor certification 

application, which provides data on the 

total number of employees in the area of 

intended employment for each 

application. Because the Department 

does not collect information with 

respect to the annual receipts of 

employers, it used the average 

employment level of firms in each 

industry that predominates in the 

permanent labor certification program 

as the size standard for small businesses 

in each of those industries. 

To estimate the cost of the Final Rule 

on small businesses, the Department 

calculated each employer would likely 

pay in the range of $300 to $1,500 to 

meet the advertising and recruitment 

requirements for a job opportunity, and 

take one hour to prepare the recruitment 

report required for each application. 

The cost range for advertising and 

recruitment is taken from a recent 

(September 2006) sample of newspapers 

in various urban and rural U.S. cities, 

and reflects approximate costs for 

placing two 10-line advertisements in 

those newspapers. The cost to prepare 

the recruitment report is based on the 

median hourly wage rate for a Human 

Resources Manager ($36.52), as 

published by the U.S. Department of 

Labor’s Occupational Information 

Network, O*Net OnLine, and increased 

by a factor of 1.42 to account for 

employee benefits and other 

compensation.7

The Department determined the 

following industries predominate in the 

permanent labor certification program: 

(1) Professional, Scientific, and 

Technical Services; (2) Manufacturing; 

(3) Accommodation and Food Services; 

(4) Healthcare and Social Assistance; (5) 

Educational Services; and (6) 

Construction. The Department has 

reviewed the data from each of these 

industries as described below to 

determine there is no significant impact 

on small businesses. 

The U.S. Census Bureau’s 2002 

Economic Census reported that 

approximately 602,578 employer 

establishments were operating yearround in the Professional, Scientific, 

and Technical Services Industry, and 

96.7 percent of those employed less 

than 50 employees. In PY 2005, 13,286 

PERM applications were filed with the 

Department by employers who 

indicated they employed less than 50 

workers in the area of intended 

employment for positions in this 

industry. We estimate approximately 

20,223 of the backlogged applications 

currently in process were submitted by 

similarly sized employers in this 

industry sector. Assuming employers 

will attempt to substitute the alien on 10 

percent of applications filed with the 

Department, we estimate the annual 

number of employer applications in this 

industry that may be impacted by the 

Final Rule is 3,351 at a cost range of 

$1,346,597 to $5,200,161. 

The U.S. Census Bureau’s 2002 

Economic Census reported that 


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approximately 350,828 employer 

establishments were operating in the 

Manufacturing Industry, and 98.9 

percent of those employed less than 500 

employees. In PY 2005, 9,342 PERM 

applications were filed with the 

Department by employers who 

indicated they employed less than 500 

workers in the area of intended 

employment for positions in this 

industry. We estimate approximately 

14,220 of the backlogged applications 

currently in process were submitted by 

similarly sized employers in this 

industry sector. Assuming employers 

will attempt to substitute the alien on 10 

percent of applications filed with the 

Department, we estimate the annual 

number of employer applications in this 

industry that may be impacted by the 

Final Rule is 2,356 at a cost range of 

$946,855 to $3,656,473. 

The U.S. Census Bureau’s 2002 

Economic Census reported that 

approximately 456,856 employer 

establishments were operating yearround in the Accommodation and Food 

Services Industry, and 90.8 percent of 

those employed less than 50 employees. 

In PY 2005, 7,478 PERM applications 

were filed with the Department by 

employers who indicated they 

employed less than 50 workers in the 

area of intended employment for 

positions in this industry. We estimate 

approximately 11,383 of the backlogged 

applications currently in process were 

submitted by similarly sized employers 

in this industry sector. Assuming 

employers will attempt to substitute the 

alien on 10 percent of applications filed 

with the Department, we estimate the 

annual number of employer 

applications in this industry that may be 

impacted by the Final Rule is 1,886 at 

a cost range of $757,930 to $2,926,901. 

The U.S. Census Bureau’s 2002 

Economic Census reported that 

approximately 619,517 employer 

establishments were operating yearround in the Healthcare and Social 

Assistance Industry, and 93 percent of 

those employed less than 50 employees. 

In PY 2005, 4,216 PERM applications 

were filed with the Department by 

employers who indicated they 

employed less than 50 workers in the 

area of intended employment for 

positions in this industry. We estimate 

approximately 6,417 of the backlogged 

applications currently in process were 

submitted by similarly sized employers 

in this industry sector. Assuming 

employers will attempt to substitute the 

alien on 10 percent of applications filed 

with the Department, we estimate the 

annual number of employer 

applications in this industry that may be 

impacted by the Final Rule is 1,063 at 

a cost range of $427,311 to $1,650,149. 

The U.S. Census Bureau’s 2002 

Economic Census reported that 

approximately 38,293 employer 

establishments were operating yearround in the Educational Services 

Industry, and 98.9 percent of those 

employed less than 100 employees. In 

PY 2005, 1,336 PERM applications were 

filed with the Department by employers 

who indicated they employed less than 

100 workers in the area of intended 

employment for positions in this 

industry. We estimate approximately 

2,034 of the backlogged applications 

currently in process were submitted by 

similarly sized employers in this 

industry sector. Assuming employers 

will attempt to substitute the alien on 10 

percent of applications filed with the 

Department, we estimate the annual 

number of employer applications in this 

industry that may be impacted by the 

Final Rule is 337 at a cost range of 

$135,410 to $522,912. 

The U.S. Census Bureau’s 2002 

Economic Census reported that 

approximately 710,307 employer 

establishments were operating in the 

Construction Industry, and 99.9 percent 

of those employed less than 500 

employees. In PY 2005 PERM, 5,579 

PERM applications were filed with the 

Department by employers who 

indicated they employed less than 500 

workers in the area of intended 

employment for positions in this 

industry. We estimate approximately 

8,492 of the backlogged applications 

currently in process were submitted by 

similarly sized employers in this 

industry sector. Assuming employers 

will attempt to substitute the alien on 10 

percent of applications filed with the 

Department, we estimate the annual 

number of employer applications in this 

industry that may be impacted by the 

Final Rule is 1,407 at a cost range of 

$565,457 to $2,183,629. 

Several commenters maintained the 

rule would have a significant impact on 

a substantial number of small entities. 

One commenter challenged the analysis 

used by the Department to support its 

statement that the rule’s impact on 

small business will be immaterial. The 

commenter maintained that although 

less than one percent of all small 

businesses would be affected, the 

appropriate universe to consider would 

consist only of those small businesses 

that wish to hire a foreign worker using 

the labor certification process. 

According to the commenter, the rule 

would not affect those businesses that 

do not submit applications. The 

commenter also suggested other 

measures of materiality, including: (1) 

Comparing the number of small 

businesses that have applied under the 

PERM and prior programs to the total 

number of businesses that have applied 

under those programs; and (2) 

comparing the number of labor 

certification applications filed by small 

businesses to the number filed by all 

businesses. 

Several commenters focused on the 

impact on small businesses of the 

prohibitions on substitution and 

reimbursement as a subset of the costs 

incurred by small businesses in 

successfully obtaining labor 

certifications. One commenter described 

the steps employers take when 

submitting labor certification 

applications, including verifying the job 

skills and cultural fit of the worker, 

conducting labor market tests, and 

determining future needs based on 

demand. Another commenter described 

the requirement to advertise positions in 

print, along with other recruiting 

activities. One commenter estimated the 

cost for each application was 

approximately $10,000, based on 

informal conversations with others. The 

same commenter said the costs for 

applications were at least $1,000 each. 

Commenters claimed the costs to small 

businesses were substantial. 

As described above, the Department’s 

analysis focused only on those small 

businesses that filed or are likely to file 

applications for permanent labor 

certification, and accounts for costs of 

advertising and related recruitment 

activities. As stated in the section of the 

preamble addressing substitution, these 

are not costs unanticipated by the 

statute. Also, the Form ETA 9089 may 

be filed electronically and does not 

require a filing fee. The Department’s 

analysis does not estimate 

reimbursement amounts, as the 

Department has always assumed an 

employer is not entitled to 

reimbursement; as explained in the 

section governing payments, above, the 

costs of labor certification are generally 

the employer’s, and this rule simply 

codifies that responsibility. Our analysis 

leads us to conclude this rule’s 

economic impact will not be significant. 

B. Unfunded Mandates Reform Act of 

1995 

This Final 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 any one year, and it will not 

significantly or uniquely affect small 

governments. Therefore, no action is 

necessary under the provisions of the 

Unfunded Mandates Reform Act of 

1995. 


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8The Department’s analysis followed the 

guidelines provided by the Office of Management 

and Budget (OMB) in Circular A–4. This circular 

constitutes OMB’s guidance to Federal agencies 

governing regulatory analysis pursuant to Executive 

Order 12866 and other statutes and authorities. It 

is available online at http://www.whitehouse.gov/ 

omb/circulars/a004/a-4.pdf. 

9This Final Rule’s prohibition on substitution 

does not cover substitution requests submitted by 

the rule’s effective date. Separately, the rule 

establishes a 180-day validity period for labor 

certifications not filed with DHS. Although we 

anticipate there are employers who—prior to the 

effective date of the rule—may either request 

substitutions they already know to be required or 

seek to file old but unused labor certifications in 

support of I–140 petitions with DHS, this analysis 

does not quantify the number of employers or labor 

certifications in these categories. There is simply no 

information from which to draw conclusions, and 

any such estimate would be at best speculative. 

10This analysis assumes one substitution over the 

life of a labor certification application. 

One commenter stated this rule would 

amount to an unfunded mandate 

because it would be difficult to enforce 

and would require ETA to employ a 

large police force to monitor 

compliance. The Department disagrees 

with this comment. We do not 

anticipate significant additional costs to 

State, local, or tribal governments as a 

result of this rule. Although we do not 

speak here to any budgetary 

implications of the rule, additional 

costs, if any, to ETA as a result of this 

regulation are strictly Federal and 

attendant to the Department’s 

responsibility in administering the 

permanent labor certification program. 

The Unfunded Mandates Reform Act 

does not cover costs to Federal agencies. 

C. Executive Order 12866 

This Final Rule has been drafted and 

reviewed in accordance with Executive 

Order 12866, section 1(b), Principles of 

Regulation. The Department has 

determined, based on its benefit-cost 

analysis 8 of the key provisions of the 

regulation, that the rule is not an 

‘‘economically significant’’ regulatory 

action within the meaning of section 

3(f)(1) of the Executive Order. This rule 

will not have an annual effect on the 

economy of $100 million or more, nor 

will it 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. We estimate the Final 

Rule’s quantified benefits to be $64.3 

million per year and the quantified costs 

to be $39.8 million per year. The 

Department made every effort, where 

feasible, to quantify and monetize the 

benefits and costs of this Final Rule. 

Where we could not quantify them—for 

example, due to data limitations—we 

described benefits and costs 

qualitatively. In such cases, the 

Department has provided a 

comprehensive qualitative discussion of 

the impacts of the rule. Finally, the 

Department has concluded, after 

consideration of both the quantitative 

and qualitative impacts of the 

rulemaking, that the benefits of the rule 

justify the costs. 

Overall, the analysis estimated the 

benefits and costs associated with the 

Final Rule compared to the baseline, 

that is, the permanent labor certification 

application process before 

implementation of the rule. For a proper 

evaluation of the benefits and costs of 

the rule and its alternatives, we explain 

how the actions the rule requires of 

workers, employers, government 

agencies, and others are linked to the 

expected benefits. We also identify 

expected undesirable side effects of the 

Final Rule and the alternatives 

considered. 

Following OMB Circular A–4, this 

analysis focuses primarily on benefits 

and costs that accrue to citizens and 

permanent residents of the United 

States; it does not factor in benefits and 

costs to aliens who, for example, may be 

named on labor certification 

applications but are not yet U.S. citizens 

or lawful permanent residents. As 

explained in greater detail below, to the 

extent this Final Rule’s economic costs 

or benefits are affected by the existence 

of foreign workers who are already here 

in the United States and part of the 

economy, the analysis considers those 

costs or benefits to be transfers between 

U.S. and foreign workers and not 

measurably impacting the rule’s net 

economic impact. 

In most cases, this benefit-cost 

analysis covers 10 years to ensure it 

captures all major benefits and costs 

with respect to key entities and 

programmatic activities. For purposes of 

this analysis, the 10-year period starts in 

the next fiscal year on October 1, 2007. 

The analysis does not include 

permanent labor certification 

applications filed under the regulation 

in effect prior to March 28, 2005 and 

pending at the Department’s Backlog 

Processing Centers. As stated above, we 

expect to eliminate the backlog by 

September 30, 2007. In the unlikely 

even that the Department does not 

completely eliminate the backlog by 

September 30, 2007, the costs of the 

rulemaking may be slightly 

underestimated. 

With respect to immigrant worker 

petitions currently pending and open to 

substitution at the Department of 

Homeland Security, the analysis 

assumes a one-time impact (rather than 

recurring impact over 10 years) until 

those applications are adjudicated. As 

this preamble states earlier in response 

to commenter concerns about 

application of the rule to pending 

applications, program users have had 

sufficient notice of the Department’s 

intent to eliminate the practice of 

substitution; therefore, we believe that 

employers have had the opportunity to 

act on any substitution requests they 

know to be required but remain 

outstanding and not yet submitted to 

DOL or DHS,9 thus minimizing or 

eliminating impact of the prohibition on 

those employers for purposes of those 

applications.10 Nonetheless, in 

acknowledgment of the multi-agency 

process required for employment-based 

immigration, the analysis makes a good 

faith attempt to quantify the most 

salient (potential) costs and benefits to 

employers with substitutable petitions 

currently pending at DHS, regardless of 

when filed. For purposes of a cost 

estimate, this analysis assumes that any 

employer who may find itself in need of 

substitution after the prohibition is in 

place could, in order to fill the vacancy, 

incur certain additional costs not 

required if substitution were still an 

option. 

Because up-front, one-time costs 

associated with reading and 

understanding the Final Rule would not 

result in significant costs to employers 

or government agencies, we did not 

include them in our analysis. In 

addition, we assumed that annual costs 

would be the same each year. Following 

OMB guidance, we used discount rates 

of seven percent and three percent. 

The Department separately analyzed 

the benefits and costs of the major 

provisions of the Final Rule. The 

Department’s analysis (elimination of 

substitution, establishment of a validity 

period, etc.) and response to public 

comments are set forth below. The size 

of the net benefits, the absolute 

difference between the projected 

benefits and costs, indicates whether 

one policy is more efficient than 

another. We estimated that total 10-year 

discounted quantified and monetized 

benefits range from $445.0 to $540.4 

million and the total 10-year discounted 

quantified and monetized cost ranges 

from $279.5 to $339.4 million for a net 

present value of the benefits of $165.5 

to $201.0 million. 

1. Employer Costs and Burden Generally 

Some commenters maintained the 

proposed rule is a ‘‘significant’’

regulatory action within the meaning of 

Executive Order 12866 for several 

reasons, including its overall cost to 


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11As described above, the Department estimated 

the annual number of substitutions to be 

approximately 11,595 and estimated that 10 percent 

of these substitutions are fraudulent. Average DOL 

staff time per fraudulent substitution is estimated 

at 40 hours and their average hourly salary (staff 

with pay grade GS 14, step 5) is $42.24, which was 

increased by 1.42 to account for employee benefits. 

employers and its potential impact on 

the U.S. economy. These commenters 

based their concerns on the process they 

say employers generally undertake in 

successfully applying for a certification 

and their estimate of costs incurred by 

employers in pursuing those 

applications. One commenter pointed 

out the certification application is only 

one of several steps in hiring a foreign 

worker. In addition, according to the 

commenter, the employer must verify 

the job skills and cultural fit of the 

worker, conduct a labor market test, and 

determine its hiring and training needs 

based on demand. Another commenter 

made similar points, noting that it 

engages in required print advertising 

and other recruiting activities at a cost 

of more than $200,000 annually. It also 

reviews resumes, interviews candidates, 

and engages legal counsel to assist in 

preparing and reviewing materials 

required for the application. Although 

none of the commenters provided 

detailed figures for each of their 

activities, at least one commenter 

estimated, based largely on feedback it 

states it received from other companies, 

that the cost for each application was 

approximately $10,000. 

Several commenters made broad 

observations related to the general 

burdens that the proposed rule would 

impose. One commenter stated the 

proposed rule is burdensome because 

the labor certification process itself has 

numerous requirements and is difficult 

to understand. Two other commenters 

argued the proposed rule is likely to 

curb business growth, inhibit job 

creation, and encourage employers to 

move jobs and operations offshore. 

Another commenter stated its concern 

that the rule would punish nonprofit 

research institutions due to the costs of 

compliance. One commenter suggested 

the rule could result in a reduction of 

foreign workers, which in itself would 

have an impact on the economy because 

foreign workers themselves create 

demand in the economy for housing, 

food and other essentials. Finally, one 

commenter protested that the rule will 

impose significant additional costs on 

the many employers who are honest in 

their acquisition and use of 

certifications, based on the misdeeds of 

a small number of employers who have 

abused the process. 

The Department agrees with the 

commenters that this rule is a 

significant regulatory action under EO 

12866, and has been submitted to OMB 

for review. While the commenters 

express general concern over possible 

harm to employers, however, they failed 

to articulate how the rule itself will 

adversely affect the economy in a 

material way within the meaning of 

Executive Order 12866. Moreover, the 

commenters made little effort to explain 

how costs associated with the rule could 

result in an annual effect on the 

economy of $100 million or more. 

Instead, the commenters took issue with 

the individual, activity-based costs and 

economic impact of the labor 

certification process itself. 

The Department readily acknowledges 

that employers incur various costs 

associated with the decision to hire 

alien workers. The labor certification 

process, by its very nature, imposes 

costs to employers to establish, to the 

Secretary of Labor’s satisfaction, the 

unavailability of and no adverse impact 

on U.S. workers. Since the costs are 

standard to the labor certification 

process, we do not consider these costs 

as incremental to the rulemaking. 

Further, as detailed in each of the 

sections below, the Department’s 

analysis reveals the Final Rule’s 

quantified and monetized benefits 

outweigh costs, and will impose no 

significant economic impact or material 

adverse effect within the meaning of 

Section 3(f)(1) of Executive Order 

12866. 

2. Ban on Alien Substitution 

Before this Final Rule takes effect, 

employers may substitute a different 

alien on a permanent labor certification 

application if the original alien named 

on the certification application is no 

longer available. Under the Final Rule, 

employers may not substitute the alien 

named on the application. Separately, 

the rule prohibits employers from 

amending any information on the 

application once it is submitted to the 

Department. If an alien is no longer 

available for the job described on the 

application, an employer must conduct 

a new labor market test, and if this test 

indicates no qualified U.S. workers are 

available and the only qualified worker 

is an alien, then the employer must 

submit a new permanent labor 

certification application. 

We estimate the 10-year discounted 

quantified and monetized benefits 

associated with this provision of the 

Final Rule will be between $177.4 and 

$215.5 million, and total quantified and 

monetized costs will be between $147.0 

and $178.6 million. Thus, the quantified 

benefits exceed the quantified costs, and 

the net present value over a 10-year time 

horizon will range from $30.4 to $36.9 

million. 

Benefits 

The ban on alien substitution has 

several important benefits to society: 

improved program integrity, increased 

employment opportunities for U.S. 

workers, cost-savings to employers in 

the form of reduced staff time and 

incidental costs, cost savings to State 

governments in the form of reduced 

unemployment insurance benefits, and 

cost savings to the Federal Government 

in the form of reduced staff time 

resulting from a reduction in processing 

substitution requests. 

The current practice of allowing 

substitution of alien beneficiaries 

provides a strong incentive for the filing 

of fraudulent labor certification 

applications. If substitution is 

permitted, permanent labor certification 

applications or resulting certifications 

can be marketed to aliens who are 

willing to pay a considerable sum of 

money to be substituted for the named 

aliens on the applications or 

certifications. The substitution ban 

increases program integrity by reducing 

the incentives or opportunities for fraud 

through the lawful permanent resident 

process. Due to a lack of adequate data, 

however, we were not able to quantify 

or monetize this important benefit. 

Banning substitution will deter 

unscrupulous employers, attorneys, or 

agents from filing permanent labor 

certification applications simply to sell 

them later for profit, and reduce the 

number of fraudulent applications 

received by the Department. We 

estimate the cost savings achieved from 

recovery of processing resources by 

multiplying the number of fraudulent 

substitutions (assume a subset of the 

total number of substitution requests 

received) by the average number of 

hours spent by our staff on each 

fraudulent substitution, by the average 

compensation of our staff reviewing 

fraudulent substitutions. We estimate 

the annual cost saving to the 

Department at $2.8 million per year.11

This analysis captures savings 

specifically linked to applications we 

estimate involve fraudulent 

substitutions, rather than all fraudulent 

applications (that is, applications 

employing fraud, regardless of type). 

An important purpose of the 

substitution ban is to ensure that if an 

alien is no longer available, the 

employer will conduct a new labor 

market test to determine whether a 

suitable U.S. worker is available. Since 

labor market dynamics can change in a 

matter of months, it is possible that 


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12For purposes of this analysis, the Department 

assumed that U.S. workers favored by the new labor 

market tests were unemployed. However, a benefit 

to U.S. workers could still exist even if these 

workers were employed elsewhere: their departure 

from their old jobs would open up new 

employment opportunities for other U.S. workers 

and potentially result in higher wages being earned. 

13The Department estimated that of the 115,952 

PERM applications filed between July 1, 2005 and 

June 30, 2006, 10 percent requested a substitution. 

This is also the Department’s estimate of percentage 

of substitution requests in cases filed under the 

preceding regulations. This analysis estimates 15 

percent of labor market tests favor U.S. workers. 

The average annual wage on permanent labor 

certifications applications in the PERM database is 

$69,000 per year. The average wage was increased 

by 1.42 to account for employee benefits (source: 

Bureau of Labor Statistics). DOL assumed that 

workers would have been unemployed for an 

additional 1.5 months. There may be some portion 

of these jobs filled by U.S. workers already 

employed. For these employees the range of 

benefits may, as a result of their being employed 

when taking the new opportunity, be less than the 

full salary and benefits accounted for in this range 

found in this analysis. This analysis does not 

quantify that lesser amount. 

14The Department estimated that employers 

spend 10 staff hours on average preparing, filing, 

and tracking the labor certifications. As stated in 

the preamble to the PERM Final Rule, it takes on 

average one (1) hour for an employer to prepare a 

recruitment report for each application it files. We 

estimated that 10 percent of these applications are 

audited, which will require an additional hour for 

the employer to submit the report. We assumed that 

Human Resources Managers (or their equivalent) 

conduct this activity for the employer and that their 

median hourly wage is $36.52, which we increased 

by 1.42 to account for employee benefits (source: 

Bureau of Labor Statistics). The Department 

estimated that employers spend $100 in incidental 

costs per application. 

15 It is possible some employers would not have 

conducted any recruiting activities to locate a 

second applicant if substitution were allowed (e.g., 

if a qualified alien was already working for the 

employer under a temporary H1B visa). If an 

employer would normally hire another alien that is 

already employed by the employer, then most of the 

recruiting activities required by PERM would be 

additional cost. If the employer would normally 

conduct an extensive recruiting effort to find a new 

qualified employee, few of the PERM required 

recruiting activities would constitute an additional 

when the alien on a permanent labor 

certification is no longer available, and 

the employer conducts new recruiting 

efforts, qualified U.S. workers will be 

identified. Some U.S. workers hired 

would have otherwise remained 

unemployed. 

Without the ban on substitution and 

required labor market test, the employer 

may not be aware that U.S. workers 

became available since their original test 

of the labor market, and may have 

otherwise hired an alien.12 Therefore, 

the second labor market test required by 

the Final Rule should result in 

increased employment opportunities for 

U.S. workers. We estimate the monetary 

value of this benefit by examining the 

compensation earned by U.S. workers 

that would not have otherwise been 

hired. To estimate this benefit, we 

accounted for the number of U.S. 

workers that would be favored by 

requiring employers to conduct new 

labor market tests and the compensation 

of these workers, which includes both 

their salaries and benefits, and reflects 

the decrease in time that those workers 

would have stayed unemployed. We 

estimate this benefit to be $21.3 million 

per year.13

The analysis assumes the U.S. 

workers hired who were previously 

unemployed will no longer be required 

to seek unemployment insurance 

benefits. Therefore, other things being 

constant, as an added benefit we 

estimate the states will experience a 

reduction in unemployment insurance 

expenditures as a consequence of U.S. 

workers being hired after labor market 

tests are conducted. The Department, 

however, was not able to quantify this 

important benefit for lack of adequate 

data. 

Further, because the employer would 

have otherwise hired an alien if it had 

not conducted the labor market test, the 

employer will experience cost savings 

by not continuing with the permanent 

labor certification application process. 

We estimate this cost savings by 

calculating the monetary value of the 

decrease in employer staff time for 

preparing, filing, and tracking labor 

certification applications; preparing and 

maintaining the recruitment report and 

submitting the recruitment report (to 

comply with an audit, where requested). 

We estimate this cost savings by 

multiplying the staff time required to 

conduct such activities by the staff 

compensation, by the number of U.S. 

workers hired as a result of labor market 

tests. It is important to note that this 

cost savings to employers partially 

offsets the costs of compliance to 

employers discussed below. The cost of 

compliance to employers outweighs this 

partial cost-savings. We also account for 

the incidental costs (such as delivery, 

copying, and telephone charges) 

incurred by employers. We estimate the 

annual cost savings to employers to be 

$1.2 million.14

In addition, we anticipate other cost 

savings or benefits associated with the 

ban on substitution will have a ripple 

effect through the publicly administered 

immigration system. We believe cost 

savings could be realized in the 

following areas: reduction in the 

Department of Labor’s Office of 

Inspector General (OIG) staff time 

required to review or investigate 

potentially fraudulent substitutions; 

reduced DHS staff time to review I–140 

immigrant petitions; reduced DHS staff 

time to review I–485 applications; a 

reduction in DOS staff time resulting 

from a need to conduct fewer interviews 

with aliens seeking permanent 

residence; and less DOJ staff time spent 

on investigation and prosecution of 

fraudulent substitutions. We believe 

that deterring and preventing 

substitution-related fraud will have an 

important and visible impact on other 

Federal agencies involved in the 

immigration system. However, due to a 

lack of adequate data, we were not able 

to quantify or monetize these benefits to 

society. 

Costs 

The ban on substitution does impose 

several costs to society: additional job 

advertising and recruitment by 

employers, increased employer staff 

time for filing labor certification 

applications, and increased staff time in 

State Workforce Agencies (SWAs) and 

the Department, all described in greater 

detail below. We estimate the 10-year 

discounted cost to society to be between 

$147.0 and $178.6 million. 

If the employer’s second labor market 

test indicates that no qualified U.S. 

workers are available, then the employer 

must submit a new permanent labor 

certification application with the name 

of the new alien. However, to fill the 

position, employers who otherwise 

might have substituted must test the 

market for U.S. workers and incur 

recruitment costs, independent of 

whether they eventually file a 

permanent labor certification 

application. To the extent an employer 

finds a qualified U.S. worker to fill the 

position, it is inappropriate to attribute 

those costs to the labor certification 

process, as in those cases the need for 

labor certification has been removed. 

The main cost to employers 

associated with the substitution ban is 

the increase in employer staff time to 

prepare, file, and track labor 

certification applications. We estimate 

this cost by multiplying the number of 

substitutions leading to labor market 

tests not favoring U.S. workers by the 

number of employer staff hours to 

prepare, file, and track the labor 

certifications, by the compensation of 

the employer staff undertaking these 

activities. 

Another cost to employers of the 

substitution ban results from the 

additional recruiting efforts, in 

particular job advertising, as well as the 

increased employer staff time to arrange 

for and track recruiting efforts and for 

receiving, compiling, interviewing, 

analyzing, and reporting the results of 

the recruitment.15 The Department 


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cost. For the purposes of this analysis, DOL 

assumed that on average, an employer would place 

an ad in a Sunday paper and conduct other 

recruiting efforts, such as placing a notice on the 

organization’s website or attending a job fair. 

16The Department estimated that the cost of an 

advertisement in a Sunday paper is $750. DOL also 

estimated it would take an employer 0.5 hours to 

place the advertisement with the Sunday paper and 

0.5 hours to place a job order with the SWA. In 

addition, this analysis assumes an employer would 

spend 10 hours to arrange for and track recruiting 

efforts and an additional 10 hours for receiving, 

compiling, interviewing, analyzing, and reporting 

the results of the recruitment. 

17According to the preamble to the PERM Final 

Rule, it takes on average one (1) hour for an 

employer to prepare a recruitment report for each 

application it files. DOL estimated that 10 percent 

of these applications are audited, which will 

require an additional hour for the employer to 

submit the report. DOL assumed that Human 

Resources Managers (or their equivalent) conduct 

this activity for the employer. 

18As mentioned above, the Department estimated 

that employers spend 10 staff hours on average 

preparing, filing, and tracking the labor 

certifications. DOL assumed Human Resources 

Managers (or their equivalent) conduct this work for 

the employer and that the median hourly wage for 

Human Resource Managers is $36.52, which DOL 

increased by 1.42 to account for employee benefits. 

This analysis assumes 85 percent of the required 

labor market tests favor aliens, and that employers 

request substitutions on 10 percent of the 115,952 

applications submitted per year, resulting in 

approximately 9,856 additional permanent labor 

certification applications to be filed with DOL each 

year. 

19The Department estimated SWA staff spend 

one (1) hour on average to process job orders and 

determine the prevailing wage. We also estimated 

the hourly rate for SWA staff to be $34.94 per hour, 

which was increased by 1.42 to account for 

employee benefits (source: Bureau of Labor 

Statistics). 

20The Department estimated that 70 percent of 

applications are ‘‘clean’’ and do not raise any audit 

flags. ‘‘Clean’’ applications require 0.25 hours of 

DOL staff time. We assumed that the remaining 

applications raise audit flags and must be reviewed 

manually, requiring four (4) hours of DOL staff 

time. We estimated that the median hourly wage for 

DOL reviewers is $30.06 (GS 12, step 5, which was 

increased by 1.42 to account for employee benefits 

(source: Bureau of Labor Statistics). As explained 

above, DOL assumed that approximately 9,856 

additional permanent labor certification 

applications will be filed with DOL each year. 

21The Department assumed auditors spend two 

(2) hours to audit recruitment reports. We assumed 

the median hourly wage for DOL auditors is $30.06 

(GS 12, step 5; source: DOL), which DOL increased 

by 1.42 to account for employee benefits (source: 

Bureau of Labor Statistics). As explained above, 

DOL assumed that approximately 9,856 additional 

permanent labor certification applications will be 

filed with DOL each year. 

22The Department’s longstanding programmatic 

experience, both under the previous regulation and 

the more current PERM rule, is that a significant 

percentage of applications for permanent labor 

certification name aliens already here and 

participating in another visa program. Recent 

program data indicate approximately 80% name 

aliens on H–1B visas. 

included in its cost estimate the time 

spent to comply in excess of the time 

the employer would normally spend in 

recruiting efforts. We estimate the 

recruiting costs by examining what 

recruiting efforts were reported by 

employers filing PERM applications and 

by surveying local newspapers, 

websites, and SWAs to determine the 

costs associated with these activities.16

We estimate the costs for filing 

applications and preparing recruitment 

reports by multiplying the staff time 

required to conduct such activities by 

the staff’s compensation by the annual 

number of additional labor certification 

applications.17 We estimated the total 

annual cost to employers to process and 

track labor certification applications and 

conduct additional recruitment efforts 

to be $19.8 million per year.18

SWAs also experience an additional 

cost. The substitution ban may increase 

the number of applications filed by 

employers, which requires employers to 

place a job order with the SWA serving 

the area of intended employment for a 

period of 30 days. Employers must also 

obtain a prevailing wage determination 

from the SWA. SWAs will incur some 

additional costs associated with 

increased SWA staff time to process job 

orders and provide employers with 

prevailing wage determinations. We 

estimate this cost by multiplying the 

SWA staff time to process job orders and 

determine the prevailing wage by the 

compensation of the staff, by the annual 

number of substitution requests. We 

estimate the annual costs to SWAs to be 

$0.5 million per year.19

The primary cost government-wide is 

the increased staff time to review 

additional labor certification 

applications, immigrant petitions, etc., 

that may be submitted when a legitimate 

change in the alien beneficiary is 

necessary. If employers must resubmit 

labor certification applications when the 

original alien becomes unavailable, then 

Department of Labor staff will spend 

that much more time reviewing 

applications. We estimate this cost to 

the Department by multiplying the time 

spent reviewing each application by the 

compensation of our analysts, by the 

increased number of applications.20

Another related cost to the Federal 

Government is the increased 

Departmental staff time to audit an 

increased number of recruitment 

reports. We estimate this cost by 

multiplying the time spent auditing 

each recruitment report by the average 

compensation of one of our analysts, by 

the increased number of recruitment 

reports that will be audited.21 We 

estimated the total annual Departmental 

costs to be $0.7 million per year. 

In addition, the Department 

considered potential costs to employers 

associated with a later priority date and 

a longer wait for an alien who would 

otherwise be the beneficiary of a 

substitution. However, this analysis 

does not quantify such costs. As stated 

previously, to the extent such costs are 

quantifiable, they are potentially 

negligible since most substituted jobs 

are already held by the alien to be 

substituted. To the extent they stem 

from a longer wait, or backlogs at other 

Federal agencies, the number of factors 

bearing on such costs (variables 

determining time in respective queues, 

mitigating factors such as options for 

interim sources of labor, etc.), and the 

relative impact of each factor, are 

simply too speculative for the 

Department to be able to accurately 

measure. 

Impact of Prohibition Based on 

Availability of Alien 

As stated above, the analysis assumes 

10% of employers may require 

substitution at the labor certification 

stage (11,595 applications). The analysis 

assumes all of those applications will 

require a second market test, 15% (1,739 

applications) of which will favor U.S. 

workers. As stated, in that 15% of cases 

in which an employer finds a qualified 

U.S. worker, recruitment costs related to 

the labor certification process should 

not be attributed to this rulemaking. In 

the remaining 9,856 cases, the analysis 

already includes the costs of the second 

labor market test and other costs of the 

labor certification process, including 

average filing and application 

management expenditures (recruitment, 

staff time, etc.) for each employer. 

As a refinement on this estimate, it is 

possible to make some broad 

assumptions about impact on different 

categories of employers holding those 

remaining 9,856 applications. We may 

assume, broadly and based on our 

programmatic experience, that 

approximately 80% of employers (7,885 

applications) have replacements at the 

ready (at their own place of business or 

another U.S. establishment), and the 

remaining 20% (1,971 applications, or 

1.7% of total applications processed in 

the system) must reach outside the 

country when the original alien 

becomes unavailable.22

As a general proposition, an employer 

who now has the option to substitute 

but would normally have another alien 

at the ready (thereby incurring no need 

to advertise) would incur additional 

recruitment costs after the substitution 

prohibition to meet the requirement for 

a second labor market test. An employer 

who can now substitute but must 

generally look outside the country to fill 

vacancies may not necessarily incur 

additional costs specifically for 


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23For example, no discounting has been applied 

to remove labor certification applications from the 

calculation that are part of a filing which includes 

an adjustment application and for which a visa is 

immediately available, which would greatly reduce 

the chances that a substitution to benefit another 

alien would follow. 

recruitment as a result of the prohibition 

(assuming even with substitution, there 

would be similar costs associated with 

foreign recruiters and locating another 

worker abroad). For both groups of 

employers—those with ready candidates 

and without—the analysis assumes 

expenses associated with beginning the 

process anew, and builds in costs in 

addition to recruitment. Accordingly, as 

described in the main costs discussion 

above, the analysis already accounts for 

an average cost across employers for 

labor certification expenses in the 

absence of substitution (e.g., 

preparation, filing and tracking of a 

second labor certification). To the extent 

that potentially there is greater 

incremental impact at the labor 

certification stage to employers who, in 

the event they must substitute, must 

seek workers outside the country—over 

and above the diverse costs already 

included and explained above—there is 

insufficient data to quantify it. 

Additional impact to these employers 

may be captured in the discussion 

below, covering substitutable petitions 

pending at DHS. 

Application of the Prohibition to 

Pending Applications 

As explained above, this analysis 

considers the additional, one-time 

impact of this rulemaking on employers 

with substitutable immigrant worker 

petitions currently pending at DHS. As 

DHS is a separate Federal agency, and 

as employer decisionmaking, unique 

case circumstances, and agency 

processing dynamics at the I–140 stage 

are not within either the Department of 

Labor’s expertise or, even more 

importantly, its influence, this analysis 

can make only the broadest of 

assumptions. The Department cannot 

estimate with precision this rule’s 

benefits or costs to those employers or 

to DHS program activities. However, 

these data limitations notwithstanding, 

we have included in this analysis an 

estimate of the potential impact on 

employers. Noting that the rule does not 

impact labor certifications already filed 

with DHS, the prohibition on 

substitution will impact DHS processing 

at least to some extent going forward. 

The extensive benefits of the 

substitution prohibition described above 

apply equally to those labor certification 

applications currently in the immigrant 

petition backlog at DHS, and are also 

deemed part of this one-time impact. In 

addition to other benefits described 

above, DHS’s workload would benefit 

from a reduction, as some of those 

abandoned immigrant petitions would 

not be replaced with foreign workers but 

with U.S. workers. Potential costs 

specifically to employers with petitions 

pending with DHS are described in 

greater detail below. These benefits and 

costs are in addition to the overall 

regulatory impact estimates provided 

above. 

As of April 2007, a total of 

approximately 70,000 immigrant 

petitions were pending at USCIS in 

immigrant preferences categories that 

were identified by DHS as dependent 

upon a labor certification. The 

Department assumed the same 10 

percent substitution rate for labor 

certification applications now attached 

to a pending immigrant petition at DHS 

that would be prohibited from a future 

substitution. The analysis accordingly 

assumes all of the 7,000 applications 

identified will require a second test of 

the labor market. As above, the 

Department has assumed that 15% of 

these applications (1,050 applications) 

will favor U.S. workers, and thus 

recruitment costs are not attributable. 

The costs of the labor certification 

process leading to labor market tests not 

favoring U.S. workers, including average 

filing and application management 

expenditures (staff time as indicated by 

staff compensation, costs of additional 

recruitment, etc.) for each employer, are 

then attributed to the remaining 5,950 

applications for a total of $10.62 

million. The Department is mindful that 

amount represents a one-time expense 

for a discrete group of applications and 

is, moreover, not discounted by the 

likelihood that some percentage of these 

applications that would otherwise be 

substituted would be too far into the 

adjudicatory process at DHS to be the 

subject of a future substitution.23

Transfer 

To the extent the ban on substitution 

will have an economic impact on 

foreign labor—that impact could be a 

carve-out from the overall economic 

impact of the rule as measured in this 

analysis, and not an additive. The 

foreign worker who is substituted has by 

definition become unavailable for the 

position for reasons unrelated to this 

rulemaking, and therefore does not 

incur either a cost or benefit in this 

analysis. The vacancy created results in 

both costs and benefits for the employer, 

U.S. workers, and foreign workers. Costs 

are associated with recruitment; we 

assume the employer will take steps 

necessary to fill the vacancy, whether 

with a foreign or U.S. worker. Benefits 

result from long-term stability and 

productivity gains to the employer from 

filling the vacancy, and pay and 

satisfaction to a new worker from a 

permanent position. The potential 

benefit to the employer—and the 

economy—from filling the vacancy 

would not change significantly whether 

the new worker is a U.S. or foreign 

worker; assuming a qualified individual 

fills the slot, the worker is meeting the 

same legitimate business need, and the 

employer incurs similar costs for 

comparable fringe benefits and 

compensation. The analysis already 

discusses the potential impact and 

assumptions associated with filling the 

vacancy with a U.S. worker. If, 

alternatively, the vacancy is filled with 

a second foreign worker—and to the 

extent foreign workers physically in the 

country and working are deemed part of 

the U.S. economy—the potential benefit 

to U.S. workers would be decreased by 

that number of slots and transferred to 

foreign workers who now enter the 

stream for permanent residency. So 

although total economic benefits do not 

change, their relative allocation does 

transfer between foreign and domestic 

workers, depending on who is awarded 

the permanent position. And in fact, 

non-material benefits to foreign workers 

may even be higher than to U.S. 

workers, were the analysis to factor in 

the positive impact that comes with a 

permanent residency-bound 

immigration track. 

Issues Raised by Public Comment 

Several commenters argued the rule’s 

prohibition of substitution of alien 

beneficiaries will create significant 

economic impact. One commenter, 

presuming direct employer costs per 

application of $10,000, stated the 

impact would be at least $1 billion if 

employers could no longer substitute 

beneficiaries. Another commenter 

focused on the effect it believed the 

substitution prohibition could have on 

the recruitment of workers. Noting that 

backlogs have reached 4.5 to five years 

at times, the commenter claimed the 

application process, which he 

characterized as lengthy, makes it 

imperative that employers be permitted 

to use certifications that are 

‘‘abandoned.’’ One commenter stated 

the substitution prohibition would 

increase the likelihood that employers 

would take jobs offshore because they 

would be unable to recruit and obtain 

certification for foreign workers in a 

timely manner. The same commenter 

also suggested that a few plant closings 

or other business disruption could 


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easily result in an economic impact in 

excess of $100 million. 

One commenter focused on the costs 

and expenses of abandoning and 

reapplying for a labor certification due 

solely to the unavailability of a foreign 

worker. Noting the costs of advertising, 

market surveys, attorneys and 

recruitment, the commenter also 

pointed out the loss in productivity 

from delayed approval of applications, 

all of which it said results in thousands 

of dollars in employer expenses. The 

commenter argued that substitution is 

and should remain ‘‘perfectly 

legitimate’’ because it ‘‘mitigates the 

employer’s investment risk in an 

employment-based immigration visa 

process that still takes (and will likely 

continue to take) many years to 

complete.’’ In addition to claiming the 

economic impact was significant, the 

commenter asserted the rule’s 

substitution prohibition was an attempt 

to eliminate an unknown, but likely 

insignificant, quantum of fraud. Finally, 

the commenter stated that the impact on 

high technology industry employers 

would be substantial because such 

employers must recruit foreign 

nationals, often from U.S. universities, 

given the limited supply of U.S. citizens 

available for technical positions. 

The commenters have failed to 

explain how the elimination of the 

practice of substitution itself will result 

in material adverse impact, let alone 

economic impact exceeding $100 

million. While some commenters 

estimated the costs of obtaining a new 

certification at nearly $10,000, the 

Department finds no support for that 

claim, and has estimated the costs as 

much lower as noted above. 

As stated elsewhere, the INA’s 

treatment of employment-based 

immigration is designed to protect the 

wages and working conditions of U.S. 

workers. The Department meets the 

requirements of the statute through the 

labor certification process. As the 

administrator of that process, the 

Department has an obvious interest in 

and responsibility to identify, address 

and eliminate fraud, which is what the 

Final Rule will accomplish. The 

Department’s experience, as articulated 

and discussed herein, resulted in the 

PERM process, which increased fraud 

protection. The Department’s 

experience also shows the practice of 

substitution leaves the process 

susceptible to fraud. 

As discussed extensively throughout 

this Final Rule, the Department is 

concerned that various immigration 

practices, including the substitution of 

alien beneficiaries and the indefinite 

validity of permanent labor 

certifications, were subject to a 

significant degree of fraud and abuse. 

The purpose of this Final Rule is to 

impose clear limitations on the 

acquisition and use of permanent labor 

certifications in order to reduce 

incentives and opportunities for fraud 

and abuse, and enhance the integrity of 

the permanent labor certification 

program to the benefit of the U.S. 

workforce. 

The ban on substituting alien 

beneficiaries reduces the incentives and 

opportunities for fraud in important 

ways. First, absent this regulatory 

action, employers possess incomplete 

information about the current 

availability of qualified U.S. workers in 

the labor market. Because labor markets 

are inherently dynamic, even well 

informed employers may not keep 

abreast of changes in worker availability 

after their initial recruitment for a job 

opportunity. In addition, information 

may not always be accurate or widely 

available if it is costly to produce, 

analyze, or disseminate. Banning 

substitution ‘‘remedies’’ the problem of 

imperfect information, consistent with 

the statutory intent to protect U.S. 

workers, by requiring employers to go 

back to the labor market a second time 

when the original alien becomes 

unavailable. This measure improves 

employer decision-making with respect 

to filling critical job openings, and 

improves the probability that a qualified 

U.S. worker will be selected for the job. 

Second, the ban on alien substitution 

significantly reduces the incidence of 

‘‘overconsumption,’’ where 

unscrupulous employers, attorneys, or 

agents submit large numbers of 

applications for processing and, once 

certified, sell the certification to a 

different alien at prices that grossly 

exceed marginal costs. This 

overconsumption is driven by the 

exchangeability of the alien name on the 

certification, which in turn increases the 

document’s transferability. In the 

absence of this Final Rule, a 

certification that was granted to be used 

to benefit or name one alien and no one 

other than the parties originally named 

for purposes of filing with DHS (in 

economic terms, a ‘‘rivalrous and 

excludable good’’), can be used by 

another alien simply by exchanging the 

name (in economic terms, a ‘‘rivalrous 

and non-excludable good’’). 

These individuals or entities are not 

equating marginal social costs with 

marginal benefits, but rather marginal 

private costs with marginal benefits; 

hence, they overconsume from the 

permanent labor certification program. 

In other words, unscrupulous employers 

or attorneys have no incentive to 

consider the marginal social costs of 

filing the next fraudulent labor 

certification applications as long as the 

marginal private benefits (i.e., revenue 

from selling the labor certifications to a 

different alien) continue to exceed the 

marginal private costs (i.e., costs to 

process and track the labor certification) 

of the transaction. 

By eliminating alien substitution, this 

rule seeks to restore to certifications 

their rivalrous and excludable qualities, 

in that they may no longer be 

transferred, sold, bartered, or purchased; 

the employer, job opportunity, and alien 

beneficiary on the application are 

exclusive and cannot be transferred to a 

different alien beneficiary. By requiring 

appropriate, timely market tests; 

promoting better information on market 

conditions and worker availability; and 

restoring the exclusivity and integrity of 

labor certifications, we believe this 

regulatory action will more effectively 

align the marginal social costs of 

processing permanent labor 

certifications with the marginal benefits. 

3. Validity Period 

Permanent labor certifications have 

thus far been valid indefinitely, and 

employers have been free to submit a 

permanent labor certification to DHS at 

any time. At least one commenter 

argued that a 45-day proposed validity 

period such as that proposed in the 

NPRM would result in a significant 

impact. The Department disagrees with 

this conclusion. However, in response 

to other comments and our own 

analysis, we have lengthened the 

validity period to 180 days. Under this 

Final Rule, all permanent labor 

certifications will expire after 180 

calendar days of certification unless 

filed in support of an I–140 immigrant 

petition with DHS. 

The 180-day period in which a 

permanent labor certification can be 

filed in connection with the I–140 

petition to the DHS effectively limits the 

time in which certifications may be 

marketed. The ban on substitution and 

the establishment of a finite validity 

period, when taken together, effectively 

reduce the likelihood of validating stale 

recruitment while simultaneously 

eliminating ‘‘rent-seeking’’ behavior on 

the part of unscrupulous employers, 

attorneys, and agents in selling these 

certifications to uninformed alien 

beneficiaries. We estimate the cost 

impact of a 180-day validity period will 

be insignificant because sufficient time 

is provided to put the certification to 

use, since it is granted to the employer 

under the presumption that there is a 

critical need for the foreign worker and 

no qualified U.S. workers are available. 


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24For purposes of this analysis, the Department 

assumed that U.S. workers favored by the new labor 

market tests were unemployed. However, a benefit 

to U.S. workers could still exist even if these 

workers were employed elsewhere; their departure 

from their old jobs would open up new 

employment opportunities for other U.S. workers 

and a move to a new job may imply a higher wage 

for the U.S. worker. 

25The Department assumed that of the 115,952 

PERM applications filed between July 1, 2005 and 

June 30, 2006, five (5) percent would expire prior 

to filing with DHS within 180 days. As before, we 

assumed 15 percent of the labor market tests favor 

U.S. workers. The average annual wage on 

permanent labor certifications applications in the 

PERM database is $69,000. The average wage was 

increased by 1.42 to account for employee benefits 

(source: Bureau of Labor Statistics). We assumed 

workers would have been unemployed for an 

additional 1.5 months. 

26The 180-day validity period will help deter 

unscrupulous employers, attorneys, or agents filing 

permanent labor certification applications with 

DOL because there will be fewer opportunities to 

profit off of fraudulent applications. In addition, 

Department of Justice staff time can be expected to 

be reduced from avoided investigation and 

prosecution of fraudulent applications for positions 

filled by U.S. workers. 

This analysis does not quantify the 

marginal value of eliminating indefinite 

validity of labor certifications—that is, 

the value of establishing a limited 

validity period over and above the value 

gained from prohibiting substitution. 

The commoditization of labor 

certifications is a function of the 

availability of substitution and the 

absence of a finite expiration date. As 

this Final Rule eliminates both root 

causes, the analysis assumes most if not 

all quantifiable benefits are captured by 

the analysis above with respect to 

substitution. 

The analysis does measure two major 

benefits associated with a defined 

validity period. First, a validity period 

ensures labor market information is 

current, the prevailing wage recorded on 

the permanent labor certification is 

current and accurate, and the bona fide 

job opportunity exists as it appeared on 

the original application. When a 

certification becomes invalid, an 

employer must conduct new recruiting 

efforts that may indicate qualified U.S. 

workers are available and open that job 

opportunity for their consideration. 

Second, a validity period will slow the 

‘‘black market’’ in approved labor 

certifications. 

As discussed in the benefit-cost 

analysis below, enforcing a validity 

period will increase costs for employers 

that do not file with DHS prior to the 

end of the validity period. In these 

cases, the employer must conduct a new 

labor market test and submit a new 

permanent labor certification 

application to the Department. The 

Department’s costs will also increase, 

since it will review additional 

applications that are submitted because 

the original certification expired. 

The Department considered two 

periods of validity, 45 days and 180 

days. Both alternatives are discussed 

further below. 

3(A). Validity Period of 180 Days 

We estimate that the 10-year 

discounted quantified benefits 

associated with this provision of the 

Final Rule will be between $74.8 and 

$90.9 million, and total quantified costs 

will be between $132.4 and $160.8 

million. Thus, the net present value 

over a 10-year time horizon will range 

from ¥$57.6 to ¥$70 million. Due to a 

lack of adequate data, we were not able 

to quantify or monetize some important 

benefits of this provision of the Final 

Rule. 

Benefits 

The 180-day validity period has 

several important benefits to society: 

Increased employment opportunities for 

U.S. workers, improved program 

integrity, and cost savings to the Federal 

Government resulting from positions 

filled with U.S. workers. 

An important purpose of the 180-day 

validity is to ensure that the certified job 

opportunity still exists as described on 

the initial application. If an employer 

files with DHS 180 days or more after 

the certification was approved by the 

Department, the passage of time may 

have impacted worker availability for 

purposes of the job opportunity that is 

the subject of the certification. This 

provision requires employers to conduct 

new labor market tests and submit a 

new application to the Department once 

validity expires. 

As with the benefits discussed under 

the substitution section, above, the 

Department estimates that without the 

180-day validity period and required 

labor market test, the employer may not 

be aware that U.S. workers are available, 

and may have otherwise hired an 

alien.24 Therefore, the second labor 

market test required by the Final Rule 

may favor and result in increased 

employment opportunities for U.S. 

workers. As under the substitution 

section above, we estimated the 

monetary value of this benefit by 

examining the compensation earned by 

U.S. workers that would not have 

otherwise been hired. To estimate this 

benefit, we accounted for the number of 

U.S. workers that would be favored by 

requiring employers to conduct new 

labor market tests and the compensation 

of these workers, which includes both 

their salaries and benefits, and reflects 

the decrease in time that the U.S. 

workers favored by the 180-day validity 

period stay unemployed. We estimate 

this benefit to be $10.7 million per 

year.25

The 180-day validity period decreases 

the opportunity for fraud through the 

lawful permanent resident process. The 

current indefinite validity of approved 

permanent labor certifications has 

contributed, along with substitution, to 

the growth of a secondary market in 

approved labor certifications. A 180- 

validity period promotes more security 

in the labor market test conducted, 

adding significant protections for U.S. 

workers in the strength of the tests 

regarding availability and adverse 

effects of the test on wages and working 

conditions of the affected U.S. worker 

population. Having a defined validity 

period in combination with the 

elimination of substitution does not 

lessen fraud as much as it enhances the 

validity of the labor market test that was 

done. Due to a lack of adequate data, 

however, we were not able to quantify 

or monetize this important benefit. 

Enforcing a 180-day validity period 

will result in a small decrease in the 

number of applications dependent on a 

successful labor market test that are 

submitted to DHS and DOS. An 

employer that does not submit the 

permanent labor certification to DHS 

within 180 days will need to conduct a 

new labor market test and, if the test 

favors an alien, the employer must file 

a new application with the Department. 

If the test favors a U.S. worker, then the 

employer will not submit an application 

to the Department. Employers will 

submit fewer applications to DHS and 

DOS because after the original 

certifications expire, some of the new 

labor market tests will favor U.S. 

workers or may not be further pursued. 

In these cases, cost savings results from 

the reduced DHS staff time to review I–

140 immigrant petitions and I–485 

applications to adjust to permanent 

resident status. In addition, DOS will 

have fewer interviews to conduct with 

aliens seeking a lawful immigrant visa 

to obtain permanent residence. Because 

of data limitations, we are not able to 

provide a quantitative or monetary 

value of these benefits.26

Costs 

The 180-day validity period imposes 

several costs to society: Additional job 

advertising and recruiting from 

employers, increased employer staff 

time for filing labor certification 

applications, and increased staff time at 

the Department. In addition, a 180-day 

validity period requires employers to 

conduct labor market tests that will 

favor U.S. workers in some cases, which 


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27As mentioned above, the Department estimated 

that employers spend 10 staff hours on average 

preparing, filing, and tracking the labor 

certifications. We assumed that Human Resource 

Managers (or their equivalent) conduct this activity 

for the employer and that their media hourly wage 

is $36.52, which was increased by 1.42 to account 

for employee benefits (source: Bureau of Labor 

Statistics). We assumed that five (5) percent of all 

certifications will expire and that 85 percent of the 

required labor market tests favor aliens, resulting in 

an additional 4,928 permanent labor certification 

applications to be filed with DOL. 

28The Department estimated the cost of a Sunday 

paper advertisement is $750. We also estimated it 

would take an employer 0.5 hours to place the 

advertisement with the Sunday paper and 0.5 hours 

to place a job order with the SWA, and 1.5 hours 

to conduct additional recruiting, as required by 

PERM. In addition, DOL estimated that the 

employer would spend 25 hours to arrange for and 

track recruiting efforts and for receiving, compiling, 

interviewing, analyzing, and reporting the results of 

the recruitment. According to the preamble to the 

PERM Final Rule, it takes an average of one (1) hour 

for an employer to prepare a recruitment report for 

each application it files. For purposes of this 

analysis, we estimated that 10 percent of these 

applications are audited, which will require an 

additional hour for the employer to submit the 

report. We assumed that Human Resources 

Managers (or their equivalent) conduct this work for 

the employer and that their median hourly wage is 

$36.52, which was increased by 1.42 to account for 

benefits (source: Bureau of Labor Statistics). This 

analysis assumes five (5) percent of all certifications 

will expire and that 85 percent of the required labor 

market tests favor aliens, resulting in an additional 

4,928 permanent labor certification applications to 

be filed with DOL. 

29The Department estimated that 70 percent of 

applications are ‘‘clean’’ and do not raise any audit 

flags. ‘‘Clean’’ applications require 0.25 hours of our 

staff time. We assumed that the remaining 

applications raise audit flags and must be reviewed 

manually, requiring 4 hours of our staff time. We 

estimated that the median hourly wage for our staff 

analysts is $30.06 (GS 12, step 5, which was 

escalated by 1.42 to account for employee benefits 

(source: Bureau of Labor Statistics). As explained 

above, we estimated that approximately 4,928 

additional permanent labor certification 

applications will be filed with the Department each 

year as a result of this provision. 

30The Department assumed auditors spend two 

(2) hours to audit recruitment reports. We assumed 

the median hourly wage for DOL auditors is $30.06 

(GS 12, step 5), which was increased by 1.42 to 

account for employee benefits (source: Bureau of 

Labor Statistics). As explained above, we assumed 

approximately 4,928 additional permanent labor 

certification applications will be filed with DOL 

each year as a result of this provision. 

31At time of publication, the DHS form I–140 

immigrant petition filing fee is $195 and the 

immigrant visa application processing fee charged 

by DOS is $335 per person. 

32The Department estimated of the 115,952 

PERM applications filed between July 1, 2005 and 

Continued 

results in a small reduction in revenue 

to DHS from I–140 petitions and I–485 

applications and to DOS from 

immigrant visa applications. We 

estimate the 10-year discounted costs to 

society to range between $132.4 and 

$160.8 million. 

As described above, approved 

permanent labor certifications will 

expire if employers do not file the labor 

certification in support of an immigrant 

petition with DHS within 180 calendar 

days of the date the Department grants 

certification. If the certification expires, 

the employer must conduct a new labor 

market test if it chooses to pursue the 

foreign labor option. If the test favors a 

U.S. worker, then the employer will hire 

a U.S. worker. If the labor market test 

indicates that no qualified U.S. workers 

are available, then the employer must 

resubmit a permanent labor certification 

application. 

A significant cost to employers of the 

180-day validity period is the increase 

in employer staff time to prepare, file, 

and track labor certification 

applications. We estimate this cost by 

multiplying the number of expired 

certifications leading to labor market 

tests not favoring U.S. workers by the 

number of employer staff hours to 

prepare, file, and track the labor 

certifications, by the compensation of 

the employer staff undertaking these 

activities.27

Another significant cost to employers 

of the 180-day validity period is the 

additional recruitment efforts, in 

particular job advertising, as well as the 

increased employer staff time to arrange 

for and track recruitment efforts and for 

receiving, compiling, interviewing, 

analyzing, and reporting the results of 

the recruitment. We estimate the costs 

for preparing recruitment reports by 

multiplying the staff time required to 

conduct such activities by the staff’s 

compensation, by the annual number of 

additional labor certification 

applications.28 We estimated the total 

annual costs to employers for processing 

labor certifications and additional 

recruitment efforts to be $18.5 million 

per year. 

A small cost to the Federal 

Government resulting from the 180-day 

validity period is the increased time for 

Departmental staff time to review the 

relatively small number of applications 

that are resubmitted if the original 

certification expired and subsequent 

labor market tests favor an alien. If 

employers resubmit applications, then 

our staff must spend additional time 

reviewing an increased number of 

applications. We estimated this cost by 

multiplying the time spent reviewing 

each application by the compensation of 

a foreign labor certification analyst, by 

the increased number of applications.29

We also factored in the potential 

increase in our staff time to audit 

additional recruitment reports. We 

estimated this cost by multiplying the 

time spent auditing each recruitment 

report by the average compensation of a 

DOL auditor by the increased number of 

recruitment reports that will be 

audited.30 We estimated the total annual 

costs to the Federal government to be 

$0.3 million per year. 

Finally, DHS and DOS will 

experience small decreases in revenue 

from application fees. Since employers 

must conduct a labor market test after a 

certification expires and since some of 

the labor market tests will favor U.S. 

workers, there will be a slight decrease 

in the number of Forms I–140 and I–485 

that would have been submitted to DHS 

and immigrant visa applications that 

would have been submitted to DOS. 

Because these forms have application 

fees, DHS and DOS will experience a 

small decrease in revenue.31 Due to a 

lack of adequate data, we could not 

quantify or monetize these costs. 

3(B). Validity Period of 45 Days 

In the proposed rule, the Department 

proposed a validity period of 45 

calendar days. In response to public 

comments regarding the hardships 

associated with a 45-day validity period, 

we increased the validity period to 180 

calendar days. The most important 

benefit of the validity period is 

increased employment opportunities for 

U.S. workers, and the primary cost is to 

employers that must conduct new labor 

market tests and file new applications 

with the Department if approved 

certifications are not filed with DHS 

within the validity period and the labor 

market test favors an alien. 

In the section below, the Department 

analyzed the major benefits and costs. 

We assumed that twice as many 

certifications would expire before 

reaching DHS with a 45-day validity 

period as compared to a 180-day 

validity period. We estimated the 10- 

year discounted benefits associated with 

a 45-day validity period to be between 

$149.6 and $181.7 million, and the total 

costs to be between $264.9 and $321.7 

million. Thus, the net present value 

over a 10-year time horizon will range 

from ¥$115.2 to ¥$140.0 million. 

Benefits 

We estimate the monetary value of 

this benefit by examining the 

compensation earned by U.S. workers 

that would not have otherwise been 

hired. To estimate this benefit, we 

account for the number of U.S. workers 

that would be favored by requiring 

employers to conduct new labor market 

tests and the compensation of these 

workers, which includes both their 

salaries and benefits and reflects the 

decrease in time that those workers stay 

unemployed. We estimate this benefit to 

be $21.3 million per year.32


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June 30, 2006, 10 percent would expire prior to 

filing with DHS. In addition, we estimated 15 

percent of labor market tests favor U.S. workers. 

The average annual wage on permanent labor 

certifications applications in the PERM database is 

$69,000, which was increased by 1.42 to account for 

employee benefits (source: Bureau of Labor 

Statistics). We assumed workers would have been 

unemployed for an additional 1.5 months. 

33The Department estimated that 10 percent of 

applications are fraudulent and that half of these 

fraudulent applications involve businesses whose 

names are used without authorization. We also 

estimated that a Human Resources Manager or their 

equivalent staff spends on average eight (8) hours 

to discuss the findings and write a letter to DOL. 

This analysis assumes Human Resources Managers 

(or their equivalent) conduct this work for the 

employer and that their median hourly wage is 

$36.52, which we increased by 1.42 to account for 

employee benefits (source: Bureau of Labor 

Statistics). 

34The DHS form I–140 application fee is $195 per 

application and the immigrant visa application 

processing fee is $335 per person. The Department 

did not monetize the total estimated reduction in 

revenue to DHS and DOS due to data limitations. 

In addition, the costs may be offset by the cost 

savings, since staff at DHS and DOS will spend less 

time processing applications. 

Costs 

The Department assumed that twice 

as many applications would expire 

under a 45-day validity period as 

compared to the 180-day validity 

period. The Department estimated the 

costs for a 45-day validity period by 

assuming the cost per application would 

be the same but the number of 

applications submitted by employers 

would double. We estimate the annual 

cost to employers to be $37 million per 

year. This cost includes additional job 

advertising, and employer staff time to 

arrange for and track recruiting efforts, 

prepare and file certification 

applications, and prepare and maintain 

recruitment reports. 

The 45-day validity period imposes a 

cost to the Department resulting from 

the need for increased foreign labor 

certification staff time to review 

additional applications resulting from 

expired applications. We estimated this 

cost to be $0.7 million per year. Also, 

if employers rush to file the I–140 to 

satisfy a 45-day rule, this will slow 

processing at DHS and increase the 

number of requests for additional 

evidence issued by that agency. 

However, due to a lack of adequate data, 

we were unable to quantify or monetize 

this cost. 

4. Prohibition on the Sale, Barter, or 

Purchase of Applications for Permanent 

Labor Certification and of Approved 

Permanent Labor Certifications, and on 

Related Payments 

The Department is prohibiting 

improper commerce and certain 

payments related to permanent labor 

certification applications and 

certifications. We estimate that the 10- 

year discounted benefits associated with 

this provision of the Final Rule will be 

between $16.9 and $20.5 million. Due to 

a lack of adequate data, we were unable 

to specifically quantify the costs to this 

provision of the Final Rule. 

Benefits 

The prohibition on the sale, barter, or 

purchase of applications or 

certifications has several important 

benefits to society: Improved program 

integrity, a small cost savings to 

employers in the form of increased staff 

time to clear up their names when they 

are unknowingly used for fraudulent 

applications, and cost savings to the 

Federal Government in the form of 

reduced staff time resulting from the 

reduction in fraudulent applications. 

We estimate the cost savings to be $2.4 

million per year. 

On the ‘‘black market,’’ employers or 

agents agree to broker applications for 

permanent labor certification on behalf 

of aliens in exchange for payment. Such 

payments are not compatible with the 

purposes of the permanent labor 

certification program and may indicate 

a lack of a bona fide job opportunity that 

is and has been truly open to U.S. 

workers. The Department is instituting 

this ban because allowing the sale of a 

government benefit to continue is 

simply bad government. Due to a lack of 

adequate data, we were not able to 

quantify or monetize the benefits to 

society of increased program integrity as 

a result of this provision of the Final 

Rule. 

The Department of Justice, DHS and 

DOL OIG spend a significant amount of 

time and resources to investigate 

fraudulent applications. Some of these 

applications are submitted by 

unscrupulous attorneys or agents filing 

on behalf of an alien, although the 

business named on the application did 

not provide authorization and may not 

even have been aware that its name was 

being used. When the Federal 

Government determines the application 

is fraudulent, the employer is often 

placed in an uncomfortable, precarious 

position and required to explain to the 

Department that it did not authorize the 

use of its name in the application. 

We estimate this cost savings by 

calculating the monetary value of the 

increase in employer staff time to 

discuss the findings and write an 

explanation to the Department. We 

estimate this cost savings by 

multiplying the staff time required to 

conduct such activities by the staff 

compensation, by the number of 

fraudulent applications submitted to the 

Department. We estimate the annual 

cost savings to employers to be $2.4 

million per year.33

Enforcing a prohibition on the sale, 

barter, or purchase of applications of 

permanent labor certifications or 

approved permanent labor certifications 

will deter unscrupulous attorneys, 

employers, and agents from submitting 

fraudulent applications. Thus, all else 

being equal, the prohibition will result 

in fewer applications that are submitted 

to the Department, DHS, and DOS. Cost 

savings result from reduced OIG staff 

time to review and audit permanent 

labor certification applications and 

reduced DHS staff time to review I–140 

and I–485 applications. In addition, 

DOS will have fewer interviews to 

conduct with aliens seeking permanent 

residence. Finally, DOJ staff time can be 

expected to be reduced from avoided 

investigation and prosecution of 

fraudulent applications (for example, 

under existing racketeering laws). 

Because of data limitations, we were not 

able to quantify or monetize this 

important benefit. 

Costs 

The prohibition of the sale, barter, or 

purchase of permanent labor 

applications and certifications imposes 

several costs to the Federal Government 

in terms of increased DOJ staff time to 

prosecute unscrupulous agents, 

attorneys, or employers that submit 

fraudulent applications, and a small 

reduction in revenue to DHS from I–140 

petitions and I–485 applications and to 

DOS from immigrant visa applications. 

Due to a lack of adequate data, we were 

unable to quantify the costs to this 

provision of the Final Rule. 

The main cost to the Federal 

Government is the increased DOJ staff 

time to investigate and prosecute 

unscrupulous agents, attorneys, or 

employers suspected of violating this 

prohibition. In addition, DHS and DOS 

will experience small decreases in 

revenue from application fees. Since 

unscrupulous agents, employers, and 

attorneys will no longer submit 

fraudulent applications to the 

Department, there will be a slight 

decrease in the number of I–140 

petitions and I–485 applications that 

would have been submitted to DHS and 

an immigrant visa application that 

would have been submitted to DOS. 

Because both these forms have 

application fees, DHS and DOS will 

experience small decreases in 

revenue.34


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35The benefits estimated by the section of this 

analysis covering the elimination of substitution 

assume only the fraud associated with substitution 

and thereby eliminated by prohibiting the practice. 

The benefits estimated by this section—covering the 

institution of debarment—considers the benefits of 

eliminating non-substitution fraud as well as the 

benefits from the substitution analysis. The 

Department estimated that 10 percent of 

applications are fraudulent and would not be filed 

because the employer or attorney/agent would be 

debarred from filing applications. We estimated the 

cost savings by multiplying the number of 

fraudulent applications that were not fraudulent 

substitutions by the average review time per 

fraudulent application (40 hours). This estimate 

does not include cost savings from the decrease in 

fraudulent substitutions to avoid double counting 

the cost savings that are already accounted for in 

the first provision of this rule, the ban on 

substitution. The average compensation of DOL 

staff reviewing the fraudulent applications (staff 

with pay grade GS 14, step 5) is $42.24, which was 

increased by 1.42 to account for employee benefits. 

36The DHS Form I–140 immigrant petition filing 

fee is $195, and the Form I–485 filing fee is $395. 

The immigrant visa application processing fee 

charged by DOS is $335 per person. 

Issues Raised by Public Comment 

At least two commenters stated that a 

large financial impact would result from 

the proposed rule’s prohibition on 

payment or reimbursement of the 

employer’s attorneys’ fees or other 

employer costs. One of those 

commenting reported that it ‘‘heard 

[f]rom several large companies and 

universities’’ that the application 

process may cost as much as $15,000 to 

$20,000, including attorneys’ fees, 

although it conceded that the numbers 

were informal and not based on 

systematic research. 

The Department has considered 

comments from several sources 

regarding the prohibition on payment or 

reimbursement by alien workers of the 

employer’s expenses. We believe there 

are compelling reasons to maintain in 

substantial part the prohibitions 

proposed in the NPRM, including the 

prohibition against employers seeking 

reimbursement of employers’ attorneys’

fees. The Department has detailed these 

reasons above. We reiterate, in addition, 

that assistance of counsel is at the 

employer’s option, and not a 

requirement of the program. 

The ban on sale, barter, purchase and 

certain payments related to permanent 

labor certifications is also justified for 

its social purpose, which is to prevent 

labor certifications from becoming a 

commodity that can be sold by 

unscrupulous employers, attorneys, and 

agents to aliens seeking a ‘‘green card.’’

The public disclosure that permanent 

labor certifications cannot be sold, 

bartered, or purchased reduces 

information asymmetry in the sense that 

alien beneficiaries are now informed 

that they should no longer be 

purchasing these certifications under 

any circumstances. 

5. Debarment 

The Department may suspend 

processing of any permanent labor 

certification application if an employer, 

attorney, or agent connected to that 

application is involved in either 

possible fraud or willful 

misrepresentation or is named in a 

criminal indictment or information 

related to the permanent labor 

certification program. The Department 

has instituted a public debarment 

mechanism to effectively deter 

individuals or entities from engaging in 

fraudulent permanent labor certification 

activities or prohibited transactions, and 

provide employers who seek assistance 

from attorneys or agents with better 

information about which individuals or 

entities have committed fraud or abuse. 

In addition, this regulatory action will 

increase government efficiency in 

processing legitimate permanent labor 

certification applications as debarred 

employers, attorneys, or agents are 

prevented from participating in the 

program for a specified period of time 

(i.e., up to three years). 

We estimate that the 10-year 

discounted benefits associated with this 

provision of the Final Rule ranges from 

$175.9 to $213.6 million. Due to a lack 

of adequate data, we were unable to 

quantify the costs to this provision of 

the Final Rule. 

Benefits 

The debarment provision has several 

important benefits to society, including 

improved program integrity and cost 

savings to the Federal Government in 

the form of reduced staff time resulting 

from the reduction in fraudulent 

applications. 

We are implementing this provision 

to promote the program’s integrity and 

to assist the Department in obtaining 

compliance with existing program 

requirements and this rulemaking. 

Given the breadth and increased 

sophistication of the immigration fraud 

that has been identified in the recent 

past, the Department added this 

provision to attain the necessary 

flexibility to respond to potential 

improprieties in labor certification 

filings. 

Debarring unscrupulous employers, 

attorneys, or agents who willfully or 

repeatedly violate program requirements 

will prevent such conduct in the future. 

To the extent that these provisions 

deter, prevent, or forestall inaccurate, 

inappropriate, or fraudulent 

applications, debarment will reduce the 

number of applications received by the 

Department, all other factors being 

constant. We estimate this cost savings 

by multiplying the number of fraudulent 

applications submitted by the average 

number of hours spent by foreign labor 

certification staff on each fraudulent 

application, by the average 

compensation of staff reviewing 

fraudulent applications. We estimate the 

annual cost savings to the Federal 

Government associated with debarment 

to be $25 million per year.35

In addition, the Department 

anticipates that there will be other cost 

savings associated with the debarment 

provision but, because of data 

limitations, no quantitative or monetary 

values could be provided. One portion 

of cost savings results from reduced 

DHS staff time to review I–140 petitions 

and I–485 applications. In addition, 

DOS will have fewer interviews to 

conduct with aliens seeking lawful 

residence. 

Costs 

The debarment provision imposes a 

small cost to the Federal Government in 

the form of reduced revenue to DHS and 

DOS related to fewer I–140 petitions 

and I–485 applications and immigrant 

visa applications. We were unable to 

monetize these costs because of 

inadequate data. 

The cost to the Department associated 

with debarment can be expected to be 

low, since we have experience creating 

and implementing electronic tracking 

systems to prevent debarred individuals 

from filing applications with the 

Department. For example, the 

Department’s H–1B Labor Condition 

Application (LCA) System already 

includes a ‘‘debarment’’ table that is 

automatically updated with the names 

of debarred individuals. LCAs filed by 

individuals on the list are electronically 

flagged, and there is minimal staff time 

associated with this process. Although 

the Department does not possess data to 

estimate this cost, we do not believe that 

enforcing the debarment provisions in 

this rule will require a significant 

amount of resources. 

Finally, DHS and DOS will 

experience small decreases in revenue 

from application fees. Debarred 

individuals will not be able to submit 

applications to the Department, and 

thus will be unable to proceed to the 

next steps of the process in DHS and 

DOS. Because these forms have 

application fees, DHS and DOS will 

experience a small decrease in 

revenue.36 The Department does not 

have sufficient data to estimate this cost. 


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D. 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 

Fairness Act of 1996 (SBREFA). The 

standards for determining whether a 

rule is a major rule as defined by section 

804 of SBREFA are similar to those used 

to determine whether a rule is an 

‘‘economically significant rule under 

Executive Order 12866.’’ Because we 

certified that this is not a major rule 

under Executive Order 12866, we also 

certify it is not a major rule under 

SBREFA. The rule will not 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 and 

export markets. 

One commenter took the position that 

the rule would constitute a ‘‘major rule’’

within the meaning of SBREFA. The 

commenter assumed that employers 

must spend approximately $10,000 for 

each new application that must be 

submitted in light of the substitution 

prohibition. Based on that analysis, and 

noting that as many 100,000 

applications are filed each year, the 

commenter argues that the impact could 

amount to $1 billion. 

While we are aware of and sensitive 

to the costs employers incur as part of 

the labor certification process, our 

regulatory analysis, as detailed above, 

indicates the rule will not have a 

significant economic effect. Separately, 

as pointed out earlier in this preamble, 

the costs borne by employers are not 

unanticipated by the statute. Therefore, 

under SBREFA, the rule is not ‘‘major.’’

E. Executive Order 13132 

This Final Rule will not have a 

substantial direct effect on the states, on 

the relationship between the Federal 

Government and the states, or on the 

distribution of power and 

responsibilities among the various 

levels of government. Therefore, in 

accordance with Executive Order 13132, 

we have determined this rule does not 

have sufficient federalism implications 

to warrant the preparation of a summary 

impact statement. The Department 

received no comments that addressed 

Executive Order 13132. 

F. Executive Order 12988 

This regulation meets the applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988. The 

Department received no comments 

regarding this Executive Order. 

G. Paperwork Reduction Act 

The collection of information under 

part 656 is currently approved under 

OMB control number 1205–0015. This 

Final Rule does not include a 

substantive or material modification of 

that collection of information, because it 

will not add to or change paperwork 

requirements for employers applying for 

permanent labor certification. The only 

consequence of this amendment 

eliminating the current practice 

allowing substitution of alien 

beneficiaries on applications and 

approved permanent labor certifications 

is to require those relatively few 

employers that could have availed 

themselves of the substitution practice 

to file new applications on behalf of 

alien beneficiaries. The Department 

does not anticipate any paperwork 

burden resulting from the creation of a 

180-day validity period for approved 

certifications, the prohibition on sale, 

purchase, and barter of applications and 

labor certifications and on related 

payments, the ban on changes to 

applications filed under the new 

streamlined permanent labor 

certification procedures, nor the 

additional enforcement mechanisms in 

this Final Rule. The Department 

anticipates an insignificant increase in 

volume of permanent labor certification 

applications filed as a result of either 

employers withdrawing and then filing 

a corrected application or employers 

allowing a certification to expire and 

then filing a new application. In either 

situation, employers could avoid the 

need to file additional applications by 

proofreading and complying with 

regulatory requirements. The 

Department did not receive comments 

related to this section. 

H. Assessment of Federal Regulations 

and Policies on Families 

This Final Rule does not affect family 

well-being. The Department did not 

receive any comments related to this 

section. 

I. Administrative Procedure Act (APA) 

The Department has made this 

regulation available for notice and 

comment and, consequently, has 

complied with the relevant provisions 

of the Administrative Procedure Act. 

J. Catalog of Federal Domestic 

Assistance Number 

This program is listed in the Catalog 

of Federal Domestic Assistance at 

Number 17.203, ‘‘Certification for 

Immigrant Workers.’’

List of Subjects in 20 CFR Part 656 

Administrative practice and 

procedure, Aliens, Employment, 

Employment and training, Enforcement, 

Fraud, Health professions, Immigration, 

Labor, Passports and visas, Penalties, 

Reporting and recordkeeping 

requirements, Unemployment, Wages, 

Working conditions. 

■ Accordingly, for the reasons stated in 

the preamble, part 656 of Chapter V, 

Title 20, Code of Federal Regulations, is 

amended as follows: 

PART 656—LABOR CERTIFICATION 

PROCESS FOR PERMANENT 

EMPLOYMENT OF ALIENS IN THE 

UNITED STATES 

■ 1. The authority citation for part 656 

is revised to read as follows: 

Authority: 8 U.S.C. 1182(a)(5)(A), 

1189(p)(1); section 122, Pub. L. 101–649, 109 

Stat. 4978; and Title IV, Pub. L. 105–277, 112 

Stat. 2681. 

■ 2. Amend § 656.3 to add the following 

definitions: 

§ 656.3 Definitions, for purposes of this 

part, of terms used in this part. 

* * * * * 

Barter, for purposes of an Application 

for Permanent Employment Certification 

(Form ETA 9089) or an Application for 

Alien Labor Certification (Form ETA 

750), means the transfer of ownership of 

a labor certification application or 

certification from one person to another 

by voluntary act or agreement in 

exchange for a commodity, service, 

property or other valuable 

consideration. 

* * * * * 

Purchase, for purposes of an 

Application for Permanent Employment 

Certification (Form ETA 9089) or an 

Application for Alien Labor 

Certification (Form ETA 750), means the 

transfer of ownership of a labor 

certification application or certification 

from one person to another by voluntary 

act and agreement, based on a valuable 

consideration. 

Sale, for purposes of an Application 

for Permanent Employment Certification 

(Form ETA 9089) or an Application for 

Alien Labor Certification (Form ETA 

750), means an agreement between two 

parties, called, respectively, the seller 

(or vendor) and the buyer (or purchaser) 

by which the seller, in consideration of 

the payment or promise of payment of 

a certain price in money terms, transfers 

ownership of a labor certification 

application or certification to the buyer. 

* * * * * 

■ 3. Add § 656.11 to read as follows: 


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§ 656.11 Substitutions and modifications 

to applications. 

(a) Substitution or change to the 

identity of an alien beneficiary on any 

application for permanent labor 

certification, whether filed under this 

part or 20 CFR part 656 in effect prior 

to March 28, 2005, and on any resulting 

certification, is prohibited for any 

request to substitute submitted after July 

16, 2007. 

(b) Requests for modifications to an 

application will not be accepted for 

applications submitted after July 16, 

2007. 

■ 4. Add § 656.12 to read as follows: 

§ 656.12 Improper commerce and 

payment. 

The following provision applies to 

applications filed under both this part 

and 20 CFR part 656 in effect prior to 

March 28, 2005, and to any certification 

resulting from those applications: 

(a) Applications for permanent labor 

certification and approved labor 

certifications are not articles of 

commerce. They shall not be offered for 

sale, barter or purchase by individuals 

or entities. Any evidence that an 

application for permanent labor 

certification or an approved labor 

certification has been sold, bartered, or 

purchased shall be grounds for 

investigation under this part and may be 

grounds for denial under § 656.24, 

revocation under § 656.32, debarment 

under § 656.31(f), or any combination 

thereof. 

(b) An employer must not seek or 

receive payment of any kind for any 

activity related to obtaining permanent 

labor certification, including payment of 

the employer’s attorneys’ fees, whether 

as an incentive or inducement to filing, 

or as a reimbursement for costs incurred 

in preparing or filing a permanent labor 

certification application, except when 

work to be performed by the alien in 

connection with the job opportunity 

would benefit or accrue to the person or 

entity making the payment, based on 

that person’s or entity’s established 

business relationship with the 

employer. An alien may pay his or her 

own costs in connection with a labor 

certification, including attorneys’ fees 

for representation of the alien, except 

that where the same attorney represents 

both the alien and the employer, such 

costs shall be borne by the employer. 

For purposes of this paragraph (b), 

payment includes, but is not limited to, 

monetary payments; wage concessions, 

including deductions from wages, 

salary, or benefits; kickbacks, bribes, or 

tributes; in kind payments; and free 

labor. 

(c) Evidence that an employer has 

sought or received payment from any 

source in connection with an 

application for permanent labor 

certification or an approved labor 

certification, except for a third party to 

whose benefit work to be performed in 

connection with the job opportunity 

would accrue, based on that person’s or 

entity’s established business 

relationship with the employer, shall be 

grounds for investigation under this part 

or any appropriate Government agency’s 

procedures, and may be grounds for 

denial under § 656.32, revocation under 

§ 656.32, debarment under § 656.31(f), 

or any combination thereof. 

■ 5. Amend § 656.24 by revising 

paragraph (g) to read as follows: 

§ 656.24 Labor certification 

determinations. 

* * * * * 

(g)(1) The employer may request 

reconsideration within 30 days from the 

date of issuance of the denial. 

(2) For applications submitted after 

July 16, 2007, a request for 

reconsideration may include only: 

(i) Documentation that the 

Department actually received from the 

employer in response to a request from 

the Certifying Officer to the employer; 

or 

(ii) Documentation that the employer 

did not have an opportunity to present 

previously to the Certifying Officer, but 

that existed at the time the Application 

for Permanent Labor Certification was 

filed, and was maintained by the 

employer to support the application for 

permanent labor certification in 

compliance with the requirements of 

§ 656.10(f). 

(3) Paragraphs (g)(1) and (2) of this 

section notwithstanding, the Certifying 

Officer will not grant any request for 

reconsideration where the deficiency 

that caused denial resulted from the 

applicant’s disregard of a system prompt 

or other direct instruction. 

(4) The Certifying Officer may, in his 

or her discretion, reconsider the 

determination or treat it as a request for 

review under § 656.26(a). 

■ 6. Amend § 656.26 by revising 

paragraph (a) and adding a new 

paragraph (c), to read as follows: 

§ 656.26 Board of Alien Labor Certification 

Appeals review of denials of labor 

certification. 

(a) Request for review. (1) If a labor 

certification is denied, if a labor 

certification is revoked pursuant to 

§ 656.32, or if a debarment is issued 

under § 656.31(f), a request for review of 

the denial, revocation, or debarment 

may be made to the Board of Alien 

Labor Certification Appeals by the 

employer or debarred person or entity 

by making a request for such an 

administrative review in accordance 

with the procedures provided in 

paragraph (a) of this section. In the case 

of a finding of debarment, receipt by the 

Department of a request for review, if 

made in accordance with this section, 

shall stay the debarment until such time 

as the review has been completed and 

a decision rendered thereon. 

(2) A request for review of a denial or 

revocation: 

(i) Must be sent within 30 days of the 

date of the determination to the 

Certifying Officer who denied the 

application or revoked the certification; 

(ii) Must clearly identify the 

particular labor certification 

determination for which review is 

sought; 

(iii) Must set forth the particular 

grounds for the request; and 

(iv) Must include a copy of the Final 

Determination. 

(3) A request for review of debarment: 

(i) Must be sent to the Administrator, 

Office of Foreign Labor Certification, 

within 30 days of the date of the 

debarment determination; 

(ii) Must clearly identify the 

particular debarment determination for 

which review is sought; 

(iii) Must set forth the particular 

grounds for the request; and 

(iv) Must include a copy of the Notice 

of Debarment. 

(4)(i) With respect to a denial of the 

request for review, statements, briefs, 

and other submissions of the parties and 

amicus curiae must contain only legal 

argument and only such evidence that 

was within the record upon which the 

denial of labor certification was based. 

(ii) With respect to a revocation or a 

debarment determination, the BALCA 

proceeding may be de novo. 

* * * * * 

(c) Debarment Appeal File. Upon the 

receipt of a request for review of 

debarment, the Administrator, Office of 

Foreign Labor Certification, 

immediately must assemble an indexed 

Appeal File: 

(1) The Appeal File must be in 

chronological order, must have the 

index on top followed by the most 

recent document, and must have 

consecutively numbered pages. The 

Appeal File must contain the request for 

review, the complete application file(s), 

and copies of all written materials, such 

as pertinent parts and pages of surveys 

and/or reports or documents received 

from any court, DHS, or the Department 

of State, upon which the debarment was 

based. 


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27946 Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Rules and Regulations 

(2) The Administrator, Office of 

Foreign Labor Certification, must send 

the Appeal File to the Board of Alien 

Labor Certification Appeals, Office of 

Administrative Law Judges, 800 K St., 

NW., Suite 400–N, Washington, DC 

20001–8002. 

(3) The Administrator, Office of 

Foreign Labor Certification, must send a 

copy of the Appeal File to the debarred 

person or entity. The debarred person or 

entity may furnish or suggest directly to 

the Board of Alien Labor Certification 

Appeals the addition of any 

documentation that is not in the Appeal 

File. The debarred person or entity must 

submit such documentation in writing, 

and must send a copy to the Associate 

Solicitor for Employment and Training 

Legal Services, Office of the Solicitor, 

U.S. Department of Labor, 200 

Constitution Ave., NW., Washington, 

DC 20210. 

■ 7. Amend § 656.30 by: revising 

paragraphs (a), (b), and (c); and adding 

a new paragraph (e)(3), to read as 

follows: 

§ 656.30 Validity of and invalidation of 

labor certifications. 

(a) Priority Date. (1) The filing date for 

a Schedule A occupation or 

sheepherders is the date the application 

was dated by the Immigration Officer. 

(2) The filing date, established under 

§ 656.17(c), of an approved labor 

certification may be used as a priority 

date by the Department of Homeland 

Security and the Department of State, as 

appropriate. 

(b) Expiration of labor certifications. 

For certifications resulting from 

applications filed under this part and 20 

CFR part 656 in effect prior to March 28, 

2005, the following applies: 

(1) An approved permanent labor 

certification granted on or after July 16, 

2007 expires if not filed in support of a 

Form I–140 petition with the 

Department of Homeland Security 

within 180 calendar days of the date the 

Department of Labor granted the 

certification. 

(2) An approved permanent labor 

certification granted before July 16, 2007 

expires if not filed in support of a Form 

I–140 petition with the Department of 

Homeland Security within 180 calendar 

days of July 16, 2007. 

(c) Scope of validity. For certifications 

resulting from applications filed under 

this part or 20 CFR part 656 in effect 

prior to March 28, 2005, the following 

applies: 

(1) A permanent labor certification for 

a Schedule A occupation or 

sheepherders is valid only for the 

occupation set forth on the Application 

for Alien Employment Certification 

(Form ETA 750) or the Application for 

Permanent Employment Certification 

(Form ETA 9089) and only for the alien 

named on the original application, 

unless a substitution was approved 

prior to July 16, 2007. The certification 

is valid throughout the United States 

unless the certification contains a 

geographic limitation. 

(2) A permanent labor certification 

involving a specific job offer is valid 

only for the particular job opportunity, 

the alien named on the original 

application (unless a substitution was 

approved prior to July 16, 2007), and the 

area of intended employment stated on 

the Application for Alien Employment 

Certification (Form ETA 750) or the 

Application for Permanent Employment 

Certification (Form ETA 9089). 

* * * * * 

(e)* * * 

(3) A duplicate labor certification 

shall be issued by the Certifying Officer 

with the same filing and expiration 

dates, as described in paragraphs (a) and 

(b) of this section, as the original 

approved labor certification. 

■ 8. Revise § 656.31 to read as follows: 

§ 656.31 Labor certification applications 

involving fraud, willful misrepresentation, 

or violations of this part. 

The following provisions apply to 

applications filed under both this part 

and 20 CFR part 656 in effect prior to 

March 28, 2005, and to any 

certifications resulting from those 

applications. 

(a) Denial. A Certifying Officer may 

deny any application for permanent 

labor certification if the officer finds the 

application contains false statements, is 

fraudulent, or was otherwise submitted 

in violation of the Department’s 

permanent labor certification 

regulations. 

(b) Possible fraud or willful 

misrepresentation. (1) If the Department 

learns an employer, attorney, or agent is 

involved in possible fraud or willful 

misrepresentation in connection with 

the permanent labor certification 

program, the Department will refer the 

matter to the Department of Justice, 

Department of Homeland Security, or 

other government entity, as appropriate, 

for investigation, and send a copy of the 

referral to the Department of Labor’s 

Office of Inspector General (OIG). In 

these cases, or if the Department learns 

an employer, attorney, or agent is under 

investigation by the Department of 

Justice, Department of Homeland 

Security, or other government entity for 

possible fraud or willful 

misrepresentation in connection with 

the permanent labor certification 

program, the Department may suspend 

processing of any permanent labor 

certification application involving such 

employer, attorney, or agent until 

completion of any investigation and/or 

judicial proceedings. Unless the 

investigatory agency, in writing, 

requests the Department to do 

otherwise, the Department shall provide 

written notification to the employer of 

the suspension in processing. 

(2) A suspension pursuant to 

paragraph (b)(1) of this section may last 

initially for up to 180 days. No later 

than 180 days after the suspension 

began, if no criminal indictment or 

information has been issued, or judicial 

proceedings have not been concluded, 

the National Certifying Officer may 

resume processing some or all of the 

applications, or may extend the 

suspension in processing until 

completion of any investigation and/or 

judicial proceedings. 

(c) Criminal indictment or 

information. If the Department learns 

that an employer, attorney, or agent is 

named in a criminal indictment or 

information in connection with the 

permanent labor certification program, 

the processing of applications related to 

that employer, attorney, or agent may be 

suspended until the judicial process is 

completed. Unless the investigatory or 

prosecutorial agency, in writing, 

requests the Department to do 

otherwise, the Department shall provide 

written notification to the employer of 

the suspension in processing. 

(d) No finding of fraud or willful 

misrepresentation. If an employer, 

attorney, or agent is acquitted of fraud 

or willful misrepresentation charges, or 

if such criminal charges are withdrawn 

or otherwise fail to result in a finding of 

fraud or willful misrepresentation, the 

Certifying Officer shall decide each 

pending permanent labor certification 

application related to that employer, 

attorney, or agent on the merits of the 

application. 

(e) Finding of fraud or willful 

misrepresentation. If an employer, 

attorney, or agent is found to have 

committed fraud or willful 

misrepresentation involving the 

permanent labor certification program, 

whether by a court, the Department of 

State or DHS, as referenced in 

§ 656.30(d), or through other 

proceedings: 

(1) Any suspension of processing of 

pending applications related to that 

employer, attorney, or agent will 

terminate. 

(2) The Certifying Officer will decide 

each such application on its merits, and 

may deny any such application as 

provided in § 656.24 and in paragraph 

(a) of this section. 


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Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Rules and Regulations 27947 

(3) In the case of a pending 

application involving an attorney or 

agent found to have committed fraud or 

willful misrepresentation, DOL will 

notify the employer associated with that 

application of the finding and require 

the employer to notify DOL in writing, 

within 30 days of the notification, 

whether the employer will withdraw the 

application, designate a new attorney or 

agent, or continue the application 

without representation. Failure of the 

employer to respond within 30 days of 

the notification will result in a denial. 

If the employer elects to continue 

representation by the attorney or agent, 

DOL will suspend processing of affected 

applications while debarment 

proceedings are conducted under 

paragraph (f) of this section. 

(f) Debarment. (1) No later than six 

years after the date of filing of the labor 

certification application that is the basis 

for the finding, or, if such basis requires 

a pattern or practice as provided in 

paragraphs (f)(1)(iii), (iv), and (v) of this 

section, no later than six years after the 

date of filing of the last labor 

certification application which 

constitutes a part of the pattern or 

practice, the Administrator, Office of 

Foreign Labor Certification, may issue to 

an employer, attorney, agent, or any 

combination thereof a Notice of 

Debarment from the permanent labor 

certification program for a reasonable 

period of no more than three years, 

based upon any action that was 

prohibited at the time the action 

occurred, upon determining the 

employer, attorney, or agent has 

participated in or facilitated one or more 

of the following: 

(i) The sale, barter, or purchase of 

permanent labor applications or 

certifications, or any other action 

prohibited under § 656.12; 

(ii) The willful provision or willful 

assistance in the provision of false or 

inaccurate information in applying for 

permanent labor certification; 

(iii) A pattern or practice of a failure 

to comply with the terms of the Form 

ETA 9089 or Form ETA 750; 

(iv) A pattern or practice of failure to 

comply in the audit process pursuant to 

§ 656.20; 

(v) A pattern or practice of failure to 

comply in the supervised recruitment 

process pursuant to § 656.21; or 

(vi) Conduct resulting in a 

determination by a court, DHS or the 

Department of State of fraud or willful 

misrepresentation involving a 

permanent labor certification 

application, as referenced in § 656.31(e). 

(2) The Notice of Debarment shall be 

in writing; shall state the reason for the 

debarment finding, including a detailed 

explanation of how the employer, 

attorney or agent has participated in or 

facilitated one or more of the actions 

listed in paragraphs (f)(1)(i) through (v) 

of this section; shall state the start date 

and term of the debarment; and shall 

identify appeal opportunities under 

§ 656.26. The debarment shall take 

effect on the start date identified in the 

Notice of Debarment unless a request for 

review is filed within the time 

permitted by § 656.26. DOL will notify 

DHS and the Department of State 

regarding any Notice of Debarment. 

(g) False Statements. To knowingly 

and willfully furnish any false 

information in the preparation of the 

Application for Permanent Employment 

Certification (Form ETA 9089) or the 

Application for Alien Employment 

Certification (Form ETA 750) and any 

supporting documentation, or to aid, 

abet, or counsel another to do so is a 

Federal offense, punishable by fine or 

imprisonment up to five years, or both 

under 18 U.S.C. 2 and 1001. Other 

penalties apply as well to fraud or 

misuse of ETA immigration documents 

and to perjury with respect to such 

documents under 18 U.S.C. 1546 and 

1621. 

Signed in Washington, DC, this 1st day of 

May, 2007. 

Emily Stover DeRocco, 

Assistant Secretary, Employment and 

Training Administration. 

[FR Doc. E7–9250 Filed 5–16–07; 8:45 am] 

BILLING CODE 4510–FP–P 


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