Federal Register / Vol. 76, No. 147 / Monday, August 1, 2011 / Rules and Regulations 45667 

1On August 30, 2010, the U.S. District Court for 

the Eastern District of Pennsylvania in CATA v. 

Solis, 2010 WL 3431761 (E.D. Pa.) ruled that the 

Department had violated the Administrative 

Procedure Act by failing to adequately explain its 

reasoning for using skill levels as part of the H–2B 

prevailing wage determinations, and failing to 

consider comments relating to the choice of 

appropriate data sets in deciding to rely on OES 

data rather than SCA and DBA in setting the 

prevailing wage rates. The court ordered the 

Department to ‘‘promulgate new rules concerning 

the calculation of the prevailing wage rate in the H– 

2B program that are in compliance with the 

Administrative Procedure Act no later than 120 

days from the date of this order.’’ The order was 

later amended to provide additional time, until 

January 18, 2011, to promulgate a final rule. 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

20 CFR Part 655 

RIN 1205–AB61 

Wage Methodology for the Temporary 

Non-Agricultural Employment H–2B 

Program; Amendment of Effective Date 

AGENCY: Employment and Training 

Administration, Labor. 

ACTION: Final rule. 

SUMMARY: The Department of Labor (we 

or us) is amending the effective date of 

Wage Methodology for the Temporary 

Non-agricultural Employment H–2B 

Program; Final Rule, 76 FR 3452, Jan. 

19, 2011 (the Wage Rule). The Wage 

Rule revised the methodology by which 

we calculate the prevailing wages to be 

paid to H–2B workers and United States 

(U.S.) workers recruited in connection 

with a temporary labor certification for 

use in petitioning the Department of 

Homeland Security to employ a 

nonimmigrant worker in H–2B status. 

The effective date of the Wage Rule was 

set at January 1, 2012. This Final Rule 

revises the effective date of the Wage 

Rule to 60 days after the publication 

date of this Final Rule. 

DATES: The effective date of the final 

regulations published in the Federal 

Register on January 19, 2011, at 76 FR 

3452, is September 30, 2011. 

FOR FURTHER INFORMATION CONTACT: 

William L. Carlson, Ph.D., 

Administrator, Office of Foreign Labor 

Certification, ETA, U.S. Department of 

Labor, 200 Constitution Avenue, NW., 

Room C–4312, Washington, DC 20210; 

Telephone (202) 693–3010 (this is not a 

toll-free number). Individuals with 

hearing or speech impairments may 

access the telephone number above via 

TTY by calling the toll-free Federal 

Information Relay Service at 1–877– 

889–5627 (TTY/TDD). 

SUPPLEMENTARY INFORMATION: 

I. Amendment of Effective Date of the 

Wage Rule 

A. The Prevailing Wage Final Rule 

We published the Wage Rule on 

January 19, 2011. Under the Wage Rule, 

the prevailing wage for the H–2B 

program is based on the highest of the 

following: The wage rate established 

under an agreed-upon collective 

bargaining agreement; the wage rate 

established under the Davis-Bacon Act 

(DBA) or the McNamara O’Hara Service 

Contract Act (SCA) for that occupation 

in the area of intended employment; or 

the arithmetic mean wage rate 

established by the Occupational 

Employment Statistics (OES) wage 

survey for that occupation in the area of 

intended employment. The Wage Rule 

also permits the use of private wage 

surveys in very limited circumstances. 

Lastly, the Wage Rule required the new 

wage methodology to apply to all work 

performed on or after January 1, 2012. 

We selected the January 1, 2012 

effective date because ‘‘many employers 

already may have planned for their 

labor needs and operations for this year 

in reliance on the existing prevailing 

wage methodology. In order to provide 

employers with sufficient time to plan 

for their labor needs for the next year 

and to minimize the disruption to their 

operations, the Department is delaying 

implementation of this Final Rule so 

that the prevailing wage methodology 

set forth in this Rule applies only to 

wages paid for work performed on or 

after January 1, 2012.’’ 76 FR 3462, Jan. 

19, 2011. 

On January 24, 2011, the plaintiffs in 

CATA v. Solis, Civil No. 2:09–cv–240– 

LP (E.D. Pa.), filed a motion for an order 

to require the Department to comply 

with the court’s August 30, 2010 order,1

arguing that the Wage Rule violated the 

Administrative Procedure Act (APA) 

because ‘‘it did not provide notice to 

Plaintiffs and the public that DOL was 

considering delaying implementation of 

the new regulation and because DOL’s 

reason for delaying implementation of 

the new regulation is arbitrary.’’ CATA 

v. Solis, Dkt. No. 103–1, Plaintiff’s 

Motion for an Order Enforcing the 

Judgment at 2 (Jan. 24, 2011). On June 

16, 2011, the court issued a ruling that 

invalidated the January 1, 2012 effective 

date of the Wage Rule and ordered us to 

announce a new effective date for the 

rule within 45 days from June 16. The 

basis for the court’s ruling was twofold: 

(1) That the almost one-year delay in the 

effective date was not a ‘‘logical 

outgrowth’’ of the proposed rule, and 

therefore violated the APA; and (2) that 

the Department violated the INA in 

considering hardship to employers 

when deciding to delay the effective 

date. The court held that ‘‘it is apparent 

that in this case the notice of proposed 

rulemaking was deficient.’’ CATA v. 

Solis, Dkt. No. 119, 2011 WL 2414555 at 

*4. The court noted that the NPRM said 

nothing about a delayed effective date, 

and accordingly ‘‘the public would 

* * * be justified in assuming that any 

delay in the effective date would mirror 

the minimal delays associated with the 

issuance of similar wage regulations 

over the past several decades.’’ Id. In 

finding a violation of the INA, the court 

relied extensively on the 1983 district 

court decision in NAACP v. Donovan, 

566 F. Supp. 1202 (D.D.C. 1983), which 

held that the Department could not 

phase in a wage regime based upon a 

desire to alleviate hardship on small 

businesses, because ‘‘ ‘[in] administering 

the labor certification program, DOL is 

charged with protection of workers.’ ’’ 

CATA v. Solis, Dkt. No. 119, 2011 WL 

2414555 at *4 (citing NAACP v. 

Donovan, 566 F. Supp. at 1206). 

In response to the court’s order, we 

issued a Notice of Proposed Rulemaking 

(NPRM) on June 28, 2011, which 

proposed that the Wage Rule take effect 

60 days from the date of publication of 

a final rule resulting from this 

rulemaking. Because we anticipated the 

date of publication of the final rule to 

be on or about August 1, 2011, we said 

in the NPRM that the effective date of 

the Wage Rule would be on or about 

October 1, 2011. The Wage Rule would 

be effective for wages paid to H–2B 

workers and U.S. workers recruited in 

connection with an H–2B labor 

certification for all work performed on 

or after the new effective date. 

II. Discussion of Comments 

A. Overview of Comments Received 

We received 59 comments in response 

to the NPRM. Forty-two of the 

comments were completely unique, one 

was a duplicate, and the remainder were 

a form letter or based on a form letter. 

Commenters represented individual 

employers, worker advocacy groups, 

business associations, agents, the Chief 

Counsel for the Office of Advocacy of 

the Small Business Administration 

(Chief Counsel for Advocacy, SBA), 

Members of Congress, and various 

interested members of the public. The 

comments are discussed in greater detail 

below. 

Some of the comments were outside 

the scope of the proposed rule. The 

NPRM proposed a new effective date for 

the Wage Rule and specifically provided 

that any comments relating to the merits 

of the Wage Rule would be deemed out 


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45668 Federal Register / Vol. 76, No. 147 / Monday, August 1, 2011 / Rules and Regulations 

of scope and would not be considered. 

Furthermore, the NPRM stated that 

under the court’s order, we cannot 

consider specific examples of employer 

hardship to delay the effective date of a 

new wage rule. See CATA v. Solis, Dkt. 

No. 119, 2011 WL 2414555 at *4. Many 

comments went well beyond the scope 

of amending the effective date of the 

Wage Rule. Among the comments that 

we deemed out of scope were comments 

that challenged the merits of the Wage 

Rule and asserted that the Wage Rule 

and/or the proposed effective date of the 

Wage Rule would result in employer 

hardship, including inadequate time to 

plan or prepare for the change in wages, 

cancellation of contracts, lower profits, 

and financial insolvency. Because the 

district court was clear that our 

consideration of hardship to employers 

when setting the January 1, 2012 

effective date was contrary to our 

responsibilities under the INA to protect 

the wages and working conditions of 

U.S. workers, we cannot consider these 

comments in this rulemaking. We also 

did not consider comments submitted 

before the comment period began or 

after the comment period closed. 

B. Adequacy of Comment Period 

Several commenters did not believe 

that the ten day comment period 

provided an adequate amount of time 

for the public to comment on the NPRM, 

and several specifically requested 

extending the deadline for submission 

of comments, including up to 120 days. 

An agency is only required to provide 

a ‘‘meaningful opportunity’’ for 

comments on a proposed rule. See 

Grand Canyon Air Tour Coalition v. 

FAA, 154 F.3d 455 (D.C. Cir. 1998). In 

Florida Power & Light Company v. NRC, 

846 F.2d 765 (D.C. Cir 1988), the court 

used a reasonableness standard to 

uphold the agency’s 15 day comment 

period. Although the agency in that case 

was attempting to meet a Congressional 

deadline, we are under an analogous 

constraint here given the judicial 

requirement of the CATA order that a 

new effective date be announced within 

45 days. As was true in Florida Power, 

despite the truncated comment period, 

we received more than 40 substantive 

comments addressing every aspect of 

the issue. We issued an NPRM that 

simply proposed to move up the 

effective date of the Wage Rule by 3 

months. Ten days is ample time for a 

member of the public to review the 

NPRM, which only consisted of 4 pages 

in the Federal Register, and formulate a 

meaningful response. The shorter 

timeframe is warranted here, given the 

limited scope of this rulemaking and the 

court’s June 16, 2011 order that we 

announce a new effective date within 45 

days. Because we had to draft an NPRM, 

review comments, draft a final rule and 

submit both the NPRM and the Final 

Rule for Executive Order 12866 review 

within the 45-day period ordered by the 

court, the ten-day comment period is 

the most generous period that we could 

provide. 

C. Authority of CATA Decision 

An employer expressed its 

disagreement with the June 16, 2011 

CATA decision, stating that the 

Department’s consideration of employer 

hardship was appropriate and that the 

court misunderstood the procedural 

requirements of the H–2B program. An 

employer association chided the 

Department for its ‘‘wholesale 

endorsement of the decision,’’ arguing 

that the court’s holding that the 

Department is not permitted to consider 

employer hardship was ‘‘meaningless 

dicta,’’ that the CATA case was not a 

legitimate case or controversy but more 

akin to an ‘‘advisory opinion’’ because 

both the plaintiffs’ and our interests 

were aligned, and that the INA does not 

make any reference good or bad to 

employer hardship. While we 

understand that there may not be 

agreement with the merits of the June 

16, 2011 CATA decision, it is binding 

on the Department and we must act in 

accordance with it. As to the 

commenter’s claim that the plaintiffs’ 

and our interests are aligned in the 

CATA litigation, we have vigorously 

defended our positions at all stages of 

the CATA case, including opposing the 

plaintiffs’ January 24, 2011 motion. See 

CATA v. Solis, Dkt. No.105, Defendants’ 

Opposition to Plaintiffs’ Motion for 

Order Enforcing the Judgment. 

D. Harm to H–2B and U.S. Workers 

Two employer associations asserted 

that employers and workers stand and 

fall together—specifically, that there is 

no distinction between the benefit of 

employers and the benefit of workers 

and that a negative impact on the 

employer has an immediate negative 

effect on the workers. In an effort to 

illustrate that point, a number of 

employers and employer associations 

stated that the accelerated effective date 

would result in having to lay off their 

H–2B workers because they simply 

would not be able to afford the increase 

in wages based on the Wage Rule’s new 

wage methodology. Additionally, some 

employers commented that as a result of 

their H–2B worker layoffs, they would 

be forced to lay off their U.S. workers 

who are in supervisory, support, and 

administrative positions. 

Our responsibilities in the H–2B labor 

certification program first and foremost 

are to ensure that U.S. workers are given 

priority for temporary non-agricultural 

job opportunities and to protect U.S. 

workers’ wages and working conditions 

from being adversely affected by the 

employment of foreign workers in such 

job opportunities. See 8 U.S.C. 

1101(a)(15)(H)(ii)(b). Only when we 

certify that U.S. workers capable of 

performing the services or labor are not 

available and that the employment of 

the foreign worker(s) will not adversely 

affect the wages and working conditions 

of similarly employed U.S. workers (see 

8 CFR 214.2(h)(6)) may an employer file 

an H–2B visa petition to bring in 

temporary foreign workers. The court 

was quite clear that ‘‘[d]elaying the 

implementation of the Wage Rule 

requires, by necessity, the continued 

payment of a lower, invalid wage to H– 

2B workers.’’ CATA v. Solis, Dkt. No. 

119, 2011 WL 2414555 at *4. The 

payment of this lower, invalid wage 

clearly has an adverse effect on the 

wages of similarly employed U.S. 

workers. 

We do not dispute that the 

implementation of the Wage Rule, 

whether on the amended or original 

timeframe, regrettably may result in the 

layoffs of H–2B workers and possibly 

U.S. workers in positions that support 

those that are currently filled by H–2B 

workers. However, our role in the H–2B 

program, as further reinforced by the 

district court in CATA, is to protect the 

wages and working conditions of 

similarly employed U.S. workers—a 

constituency that few, if any, of the 

commenters acknowledge—but who are 

the very group the labor certification 

program was designed to protect. 

E. Earlier Effective Date 

Two worker advocacy organizations 

and a labor organization supported 

putting the Wage Rule into effect as 

quickly as possible. A worker advocacy 

organization specifically requested ‘‘the 

earliest administratively practical 

effective date’’ for the Wage Rule and 

that the effective date be no later than 

30 days after the publication of the final 

rule resulting from this rulemaking— 

i.e., August 31, 2011. The commenter 

stated that it disagreed with our 

suggestion in the NPRM that the fact 

that the Congressional Review Act 

(CRA) applied to the Wage Rule 

provided any basis for delaying the 

Wage Rule another 60 days from the 

date of publication of the final rule 

resulting from this rulemaking. The 

commenter believes that we have the 

authority under the APA to set an 

immediate effective date for the Wage 


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Federal Register / Vol. 76, No. 147 / Monday, August 1, 2011 / Rules and Regulations 45669 

2 It has not been possible to perform 

recalculations of the prevailing wage before July 1, 

as the wages in OES are updated on or about that 

date each year, and were not available before that 

date for use in the H–2B program. 

3Until we have reviewed all affected applications 

some of which are still in the process of 

adjudication we will not know the exact number of 

determinations that that the NPWC must issue. 

Rule upon publication of the final rule 

resulting from this rulemaking. The 

commenter contends that we would 

have good cause for doing so, as more 

than six months have passed without 

any action from Congress to vacate the 

Wage Rule under the CRA, while ‘‘H–2B 

workers continue to be paid unlawfully 

low wages.’’ While the commenter 

agreed that the Department’s 

‘‘administrative needs in 

implementation of [the Wage Rule] is an 

appropriate factor to consider in 

establishing the effective date,’’ the 

commenter believes that: 

It would be administratively practicable for 

DOL to immediately issue bulk interim 

prevailing wage determinations by electronic 

mail notifying all applicants for H–2B 

prevailing wage determinations submitted 

since October 1, 2010 that if they employed 

any H–2B workers after August 1, 2011, they 

would be immediately required to pay the 

FLC Data Center Level 3 wage based on 2011 

OES data for the SOC (ONET/OES) code on 

their initial prevailing wage determination 

for their geographic area until such time as 

DOL determined if there were higher Service 

Contract Act (SCA) or Davis Bacon Act (DBA) 

wage rates for their H–2B workers and other 

workers in corresponding employment. 

Employers could be directed to http:// 

www.flcdatacenter.com/ 

OESWizardStart.aspx, the Online Wage 

Library—FLC Wage Search Wizard, to 

mathematically calculate the appropriate 

prevailing wage rate pending an 

individualized further notice from DOL. 

Employers for whom SCA or DBA wages 

might be appropriate could be notified of 

procedures for submitting further 

information for determining those wage rates. 

The same commenter also stated that 

if we have an internal computerized 

system for tracking H–2B certification 

applications and decisions, identifying 

employers with certifications for 

periods of employment on or after 

August 1, 2011 should be relatively 

straightforward. Additionally, the 

commenter raised the possibility of 

whether the existing computerized data 

for the H–2B prevailing wage 

determinations could be used to 

automatically recompute new prevailing 

wage rates at the July 2011 OES Level 

3 wage rates, which would relieve 

employers from having to re-calculate 

the new wage rates themselves. Lastly, 

the commenter stated that if we already 

have a cross reference by SOC (ONET/ 

OES) codes for employment involving 

potential DBA or SCA wage rates, ‘‘that 

possibility could be specifically flagged 

only for those codes and a questionnaire 

seeking additional information in 

relationship thereto could be 

generated.’’ 

We still consider the proposed 60 day 

delayed effective date to be necessary 

and appropriate, despite the 

commenter’s proposal of various 

operational measures to implement the 

Wage Rule in a more expeditious 

manner. We do not dispute that the 60 

day delayed effective date requirement 

of the CRA applied only to the 

publication of the Wage Rule in January 

2011 and that we are not legally 

required under the CRA to delay by 60 

days from the publication of this 

rulemaking the effective date of the rule. 

However, while we agree with the 

commenter that the Wage Rule should 

have the ‘‘earliest possible 

administratively practical effective 

date,’’ an effective date of 30 days after 

the publication of the final rule does not 

provide us with sufficient operational 

time to issue new prevailing wage 

determinations (PWDs) under the 

methodology prescribed by the Wage 

Rule. 

Because the new wage methodology 

under the Wage Rule would take effect 

for all wages paid to H–2B workers and 

U.S. workers recruited in connection 

with an H–2B labor certification for all 

work performed on or after the new 

effective date, we will have to issue 

PWDs using the Wage Rule 

methodology not only for all 

applications received after the new 

effective date but also for existing 

certifications for which work is to be 

performed on or after the new effective 

date. What this means is that our 

National Prevailing Wage Center 

(NPWC) will have to issue 

approximately 4,000 supplemental 

prevailing wage determinations.2 This is 

a manual process, as there is no way to 

automatically link the PWD requests 

that were submitted and processed in 

the iCert prevailing wage system with 

the actual H–2B applications that were 

subsequently filed and approved for 

work that will be performed on or after 

the effective date. Many of these 

requests involve multiple locations, 

some including dozens of locations, 

each of which requires a separate 

determination.3 While the NPWC 

anticipates being able to issue all of 

these 4,000 supplemental wage 

determinations before October 1, to do 

so before August 31 is physically and 

operationally impossible. 

We appreciate the commenter’s 

suggestions for streamlining the PWD 

process in order to implement the new 

Wage Rule in the most expeditious 

manner possible. However, it is 

imperative that we issue individual 

PWDs for each employer that has an H– 

2B labor certification for work being 

performed on or after the new effective 

date to ensure the integrity and 

enforceability of the new prevailing 

wage. The commenter’s suggestion that 

employers calculate their own 

prevailing wage would present us with 

substantial challenges in both 

implementation and enforcement. 

NPWC staff provide a level of 

consistency and accuracy that would 

not be replicable if responsibility for 

PWDs were devolved to hundreds, if not 

thousands, of individual H–2B 

employers and their various 

representatives. In the simplest scenario 

proposed by the commenter, an 

employer with limited or no previous 

knowledge of the prevailing wage 

determination process would have to 

follow our instructions to use an 

unfamiliar set of online tools to 

determine their correct prevailing wage. 

In addition to possible errors caused by 

lack of familiarity with the system, 

further complications could arise for 

employers with certified occupations 

that are a blend of two unique 

occupations or with multiple areas of 

intended employment. There is 

potential for employer error at every 

step that could result in the 

unintentional payment of an incorrect 

wage rate to thousands of H–2B 

workers. Moreover, our ability to 

enforce an employer’s failure to pay the 

correct wage would be compromised if 

we could not definitively show that the 

employer knew what the proper wage 

was (see 20 CFR 655.65(e)), which 

would be quite difficult, given the 

practical challenges just discussed. 

Moreover, obtaining the appropriate 

SCA and DBA wages for the job 

opportunity is not as simple a process 

as obtaining the OES wage, since the 

SCA and DBA wages are determined in 

a completely different manner and 

updated on a completely separate 

timeframe. We make SCA and DBA 

wage rates available to Federal 

contracting officers and the public 

through the http://www.wdol.gov Web 

site. While it is easy to use this Web site 

to locate wage determinations, selecting 

the appropriate occupations or job 

classification from the wage 

determination presents additional 

opportunities for employer error. 

Occupations under the SCA are 

determined using the Dictionary of 

Occupational Titles (DOT). Employers 

would be required to review the 


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45670 Federal Register / Vol. 76, No. 147 / Monday, August 1, 2011 / Rules and Regulations 

definitions in the DOT and determine 

the appropriate SCA occupation for 

their specific job opportunity. For 

example, an employer seeking to hire 

H–2B workers for its restaurant could be 

presented with SCA wage rates for a 

‘‘Cook I,’’ ‘‘Cook II,’’ and ‘‘Food Service 

Worker’’ on the same wage 

determination. The employer would be 

required to analyze the DOT to 

determine the appropriate occupation. 

A similar challenge exists with DBA 

wage rates. DBA wage rates reflect the 

area practice concept which makes it 

difficult for someone inexperienced 

with those wage rates to determine 

which rate applies. For example, in 

some areas of the country, a rate is 

established for ‘‘welders,’’ and in other 

areas welders receive the rate prescribed 

for the craft to which performance of the 

welding is an incidental operation, 

depending on whether it is the practice 

in the area to treat welding as a separate 

occupation. Therefore, we do not 

believe that employers could easily 

select the correct prevailing wage rate 

for the job opportunity without this 

specialized knowledge. The commenter 

implicitly acknowledges this 

complexity, as it offers no proposal for 

obtaining those wages in an expedited 

manner; instead, it proposes that 

employers be required to immediately 

begin paying the OES Level 3 wage and 

that the NPWC would determine the 

applicability of the SCA or DBA wage at 

a later date. This would serve further to 

undermine our ability to enforce the 

payment of the prevailing wage as of the 

new effective date if either the SCA or 

DBA wage eventually were found to be 

the highest wage (see 76 FR 3484 (Jan. 

19, 2011) (to be codified at 20 CFR 

655.10(b)(2)), because the employer may 

not have been aware at the time that the 

work was performed after the new 

effective date that either the SCA or 

DBA wage was the prevailing wage. 

We do not think it appropriate to 

issue ‘‘interim’’ wage determinations 

and then issue corrected wage 

determinations at a later date, possibly 

requiring employers to pay make-up pay 

at a later date, or for workers to have 

their pay adjusted downward. Sound 

program administration and basic 

fairness require us to provide employers 

with a prevailing wage determination on 

which they can rely in time for them to 

make any needed adjustments in their 

payroll systems and pay the correct new 

wages when they are due. Issuing 

prevailing wage determinations as 

quickly as possible but in time for 

employers to implement them on the 

effective date avoids confusion for both 

employers and workers, and also 

reduces the necessity of enforcement 

actions and the possibility of litigation. 

F. Later Effective Date 

Two employer associations asserted 

that the court in CATA did not mandate 

an earlier effective date but merely 

required that the effective date be 

subject to notice and comment. One 

employer suggested that any new wage 

changes apply to H–2B visas released 

after the new effective date. We do not 

believe, based on the CATA decision 

and on our mandate to ensure that the 

employment of foreign workers in 

temporary non-agricultural positions 

does not adversely affect similarly 

employed U.S. workers, that we can 

further delay implementing the Wage 

Rule beyond the time that it takes to 

issue and implement the new prevailing 

wage determinations, as described 

above. While the court did not order us 

to issue any particular effective date, its 

decision made it clear that the court was 

concerned with the ‘‘critical importance 

of avoiding the depression of wages 

paid to U.S. and to H–2B workers, and 

* * * the already protracted delay in 

implementing a valid prevailing wage 

regime.’’ CATA v. Solis, Dkt. No. 119, 

2011 WL 2414555 at *5. Applying the 

Wage Rule’s prevailing wage 

methodology only to H–2B visas issued 

after the new effective date would result 

in what the court in CATA specifically 

sought to avoid—prolonging the 

payment of a lower, invalidated wage to 

H–2B workers. We believe that, under 

the court’s decision, we must do all we 

can that is administratively and 

operationally feasible to minimize the 

period in which these payments 

continue. 

G. Impact of Changing the Prevailing 

Wage for Existing Certifications 

Several commenters objected to the 

application of the Wage Rule’s 

prevailing wage methodology to existing 

certifications. An employer association 

asserted that we would be acting in 

conflict with our regulations providing 

that the prevailing wage would be valid 

throughout the intended of period 

employment. Similarly, another 

employer association claimed that 

allowing the new prevailing wage 

methodology to apply to existing 

certifications would violate the 

attestation on older versions of the ETA 

Form 9142, Appendix B.1 that ‘‘the 

offered wage equals or exceeds the 

highest of the prevailing wage, the 

applicable, Federal, State, or local 

minimum wage, and the employer will 

pay the offered wage during the entire 

period of the approved labor 

certification.’’ 

In the fall of 2010, the CATA plaintiffs 

moved for additional relief including 

seeking an order requiring the 

Department to condition future H–2B 

certifications on employer agreement to 

pay the wage rate under the Wage Rule 

once it became effective. We opposed 

this order, arguing that the regulation at 

20 CFR 655.10(d) meant that once an 

employer had received a prevailing 

wage determination in any year, it is 

entitled to use that prevailing wage 

throughout the duration of its H–2B 

certification. In a November 24, 2010 

ruling, the court rejected that argument: 

Nothing in § 655.10(d), nor any related 

regulation, prevents the DOL from devising 

interim measures to reduce the impact of the 

deficient methodology. Thus an employer 

must pay a valid wage for the duration of 

employment, but it does not follow that an 

employer must continue paying that wage 

after it has been deemed to be the product 

of an invalid regulation. 

CATA v. Solis, Dkt. No. 97, 2010 WL 

4823236 at *2 (footnote omitted). 

Although the court did not order us to 

take any specific action, we 

reconsidered our position in light of the 

court’s ruling that the current wage 

methodology is invalid and that we 

have the authority to require employers 

to pay wages other than those issued in 

a prevailing wage determination. 

Accordingly, in these special 

circumstances, we decided that it is not 

appropriate to allow wage 

determinations made under the 

invalidated current methodology to 

continue to govern the payment of 

wages beyond the effective date of the 

Wage Rule. 

While these commenters may not 

agree with the district court’s rationale, 

as discussed above, the decision is 

nevertheless binding. As to the 

commenter’s concern that an employer 

would be in violation of the attestation 

on the previous version of the ETA 

Form 9142, Appendix B.1, we do not 

consider the attestation to be 

inconsistent with an employer’s 

payment of a higher wage rate once the 

Wage Rule takes effect. The attestation 

only requires that the offered wage 

equal or exceed the highest of the 

prevailing wage or applicable minimum 

wage and that the employer pay the 

offered wage during the time period the 

work is performed. If the prevailing 

wage increases as a result of the Wage 

Rule taking effect, then the employer’s 

offered wage would need to increase in 

accordance with that change. 

Additionally, a commenter stated that 

because employers have a protected 

property interest in the validity of the 

prevailing wage throughout the period 

of intended employment, we would be 


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Federal Register / Vol. 76, No. 147 / Monday, August 1, 2011 / Rules and Regulations 45671 

4 76 FR 37686, 37688–89 (June 28, 2011). 

denying the employer due process to 

take away that right without notice and 

an opportunity for an individual 

hearing. The commenter’s concerns 

about due process are not warranted. As 

a threshold matter, due process applies 

only to individualized determinations, 

and not to legislative rulemaking. See 

United States v. Florida East Coast 

Railway, 410 U.S. 224, 244–46 (1973). 

We are not required to provide a hearing 

before taking an action that affects the 

property interest of a class of 

individuals or regulated entities. See 

McMurtray v. Holladay, 11 F.3d 499, 

504 (5th Cir. 1993). In any event, when 

employers operating under current 

certifications are notified of the new 

prevailing wage, the notice will provide 

them with appropriate appeal rights 

under section 655.11, so that they can 

challenge the correctness of their 

individualized prevailing wage 

determination. 

Another employer association 

claimed that because an employer 

would have advertised and tested the 

labor market at a wage rate that is 

different than the new prevailing wage 

under the Wage Rule, the employer 

could be accused of applying a wage 

that is higher than the wage that was 

advertised to domestic workers, which 

could result in a revocation of the 

employers’ petition by DHS. The 

commenter relies on what it deems to be 

the Department of State’s interpretation 

that an employer may not pay above the 

prevailing wage that was advertised at 

the time the H–2B job was advertised 

per regulation. Along the same lines, 

one commenter called for the 

Department to provide extra time to reapply to USCIS for continued 

certification under the new prevailing 

wage, and another commenter stated 

that any new changes to the wage rates 

must not require employers to complete 

the recruitment phase or obtain a new 

foreign labor certification once these 

steps have already been completed. 

The Department of State and USCIS, 

each of which play a role in the H–2B 

process, are aware of the unique 

circumstances of this supplemental 

wage determination process as outlined 

in the Wage Rule and in this Final Rule. 

We contacted each agency about this 

issue. The Department of State advised 

us that it might not issue a visa in some 

circumstances where the visa has not 

yet been issued but the wage will be 

higher than stated on the petition. 

However, because this is a regulatory 

change mandated by an agency with the 

authority to do so—namely, the 

Department—this is not in itself a basis 

for petition revocation. USCIS advised 

that, while circumstances vary, they 

generally cannot deny or revoke a 

nonimmigrant visa petition for this 

reason. We will continue to advise both 

the Department of State and USCIS as 

the supplemental wage determinations 

are issued. 

III. Administrative Information 

A. Executive Orders 12866 and 13563 

Under Executive Order (E.O.) 12866 

and E.O. 13563, we must determine 

whether a regulatory action is 

significant and therefore, subject to the 

requirements of the E.O.s and subject to 

review by the Office of Management and 

Budget (OMB). Section 3(f) of E.O. 

12866 defines a ‘‘significant regulatory 

action’’ as an action that is likely to 

result in a rule that: (1) Has an annual 

effect on the economy of $100 million 

or more or adversely and materially 

affects a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local or Tribal governments or 

communities (also referred to as 

‘‘economically significant’’); (2) creates 

serious inconsistency or otherwise 

interferes with an action taken or 

planned by another agency; (3) 

materially alters the budgetary impacts 

of entitlement grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raises novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the E.O. 

Executive Orders 13563 and 12866 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. 

We have determined that this Final 

Rule is not an economically significant 

regulatory action under sec. 3(f)(1) of 

E.O. 12866. We have, however, 

determined that this Final Rule is a 

significant regulatory action under sec. 

3(f)(4) of the E.O. and, accordingly, 

OMB has reviewed this Final Rule. 

B. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

at 5 U.S.C. 603 requires agencies to 

prepare a regulatory flexibility analysis 

to determine whether a regulation will 

have a significant economic impact on 

a substantial number of small entities. 

Section 605 of the RFA allows an 

agency to certify a rule in lieu of 

preparing an analysis if the regulation is 

not expected to have a significant 

economic impact on a substantial 

number of small entities. Further, under 

the Small Business Regulatory 

Enforcement Fairness Act of 1996, 5 

U.S.C. 801 (SBREFA), an agency is 

required to produce a compliance 

guidance for small entities if the rule 

has a significant economic impact. The 

Assistant Secretary of ETA has notified 

the Chief Counsel for Advocacy, Small 

Business Administration (SBA), under 

the RFA at 5 U.S.C. 605(b), and certified 

that this rule will not have a significant 

economic impact on a substantial 

number of small entities. 

We received a comment from the 

Chief Counsel for Advocacy, SBA, in 

which the Chief Counsel contended that 

we did not adequately provide a factual 

basis for the RFA certification and that 

the certification did not take into 

consideration the economic impact that 

this unexpected change in the effective 

date of the Wage Rule will have on 

small businesses. The Chief Counsel for 

Advocacy, SBA strongly encouraged us 

to complete an Interim Regulatory 

Flexibility Analysis of the NPRM. 

Several associations also asserted that 

we failed to consider the impact of this 

rulemaking on small businesses. 

In particular, the Chief Counsel for 

Advocacy, SBA, claimed that we offered 

no data or other analysis in support of 

the factual basis used to support the 

certification as required by the RFA 

beyond the statement ‘‘[w]hile the 

change in the effective date of the Wage 

Rule that is being proposed in this 

NPRM may change the period in which 

the total cost burdens for small entities 

would occur, the Department believes 

that the amount of the total cost burdens 

themselves would not change.’’ 4 An 

employer association stated that if the 

effective date moves to October 1, 2011, 

its average member’s payroll would 

increase from $79,840 to $159,680 and 

that their ‘‘total cost of labor’’ would 

likely double or even triple these 

figures. Another employer association 

argued that if the period that the Wage 

Rule is in effect is increasing, the total 

cost burden would increase along with 

the extended period, as the difference in 

implementing the Wage Rule on October 

1, 2011 as opposed to January 1, 2012 

would be $1,872 per worker. 

We disagree with the Chief Counsel 

for Advocacy, SBA’s assessment that we 

did not provide a factual basis for the 

certification. As we stated in the NPRM, 

we already established in the Wage Rule 

that we believed that the Wage Rule was 


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45672 Federal Register / Vol. 76, No. 147 / Monday, August 1, 2011 / Rules and Regulations 

5 76 FR 3452, 3475 (Jan. 19, 2011). 

6See id. at 3476. 

7 Id. 

8Lipton, Douglas D. Analysis of Economic Impact 

of H–2B Worker Program on Maryland’s Economy. 

not likely to impact a substantial 

number of small entities, and we 

provided an extensive analysis in the 

Wage Rule to support this conclusion. 

See 76 FR 3452, 3473–3482 (Jan. 19, 

2011). Changing the effective date of the 

Wage Rule does not change the total 

cost burden for small entities as 

calculated under the Wage Rule. The 

total cost burden for small entities 

under the Wage Rule accounted for the 

increase in wage costs as a result of the 

new wage methodology (e.g., a $4.83 

increase in the weighted average hourly 

wage for H–2B workers (and similarly 

employed U.S. workers hired in 

response to the recruitment required as 

part of the H–2B application)) 5 and the 

cost of reading and reviewing the Wage 

Rule—neither of which accounted for or 

were impacted by the original January 1, 

2012 effective date of the Wage Rule. 

While we found that the Wage Rule has 

a significant economic impact 6

(contrary to a commenter’s assertion 

that we did not make such a finding), 

we found that the Wage Rule did not 

impact a substantial number of small 

entities, as the small entities that have 

historically applied for H–2B workers 

represent relatively small proportions of 

all small businesses—i.e., less than 10% 

of the relevant universe of small entities 

in a given industry.7 The H–2B 

employers that the commenters cite are 

already captured by these numbers, as 

the determination of the number of 

small entities affected by the Wage Rule 

neither accounted for, nor was affected 

by, the original January 1, 2012 effective 

date of the Wage Rule. We do not 

dispute that as a result of the Wage 

Rule, employers may in the short term 

experience an increase in costs, but the 

increase in total costs of the H–2B 

program as a result of the Wage Rule 

during the first year of its 

implementation and annually thereafter 

would be the same, regardless of 

whether it goes into effect October 1, 

2011 or January 1, 2012. Therefore, the 

RFA analysis in the Wage Rule 

continues to be an accurate analysis of 

the impact of the Wage Rule on small 

businesses and would remain 

unaffected by the change in the effective 

date of the Wage Rule. 

The Chief Counsel, Office of 

Advocacy, SBA, also stated that ‘‘[t]here 

is nothing cited in the Proposed Rule 

that negates the agency’s previous 

concern noted in the Wage Rule about 

the impact of the wage modification on 

small businesses, other than a court 

order mandating a new effective date,’’ 

a sentiment that was echoed by a 

number of associations. However, the 

Chief Counsel is mistaken, as the NPRM 

clearly states that the need for the 

rulemaking arose from the CATA 

litigation under which the court 

specifically found that we violated the 

INA in considering hardship to 

employers (regardless of size) when 

deciding to delay the effective date. We 

do not dispute the Chief Counsel’s 

observations that ‘‘[s]mall businesses 

have made plans, commitments, and 

have expended money for the current 

year based on the January 1, 2012, 

effective date announced in the Wage 

Rule nearly six months ago’’ but, as we 

discussed in the Wage Rule’s RFA 

analysis, the rule does not impact a 

significant number of small businesses. 

Moreover, the court in CATA has 

explicitly prohibited us from 

considering these employer hardships 

when setting the effective date of the 

Wage Rule. Additionally, as we have 

explained above, we continue to rely on 

the total cost burden provided in the 

Wage Rule’s RFA analysis, as it is not 

impacted by the change in the effective 

date of the Wage Rule. 

C. Unfunded Mandates Reform Act of 

1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531) 

directs agencies to assess the effects of 

Federal regulatory actions on State, 

local, and tribal governments, and the 

private sector. The Final Rule has no 

Federal mandate, which is defined in 2 

U.S.C. 658(6) to include either a 

‘‘Federal intergovernmental mandate’’ 

or a ‘‘Federal private sector mandate.’’ A 

Federal mandate is any provision in a 

regulation that imposes an enforceable 

duty upon State, local, or tribal 

governments, or imposes a duty upon 

the private sector which is not 

voluntary. 

D. Small Business Regulatory 

Enforcement Fairness Act of 1996 

We have determined that this 

rulemaking does not impose a 

significant impact on a substantial 

number of small entities under the RFA; 

therefore, we are not required to 

produce any compliance guides for 

small entities as mandated by the 

SBREFA. We have similarly concluded 

that this Final Rule is not a major rule 

requiring review by the Congress under 

the SBREFA because it will not likely 

result in: (1) An annual effect on the 

economy of $100 million or more; (2) a 

major increase in costs or prices for 

consumers, individual industries, 

Federal, State or local government 

agencies, or geographic regions; or (3) 

significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or on the 

ability of U.S.-based enterprises to 

compete with foreign-based enterprises 

in domestic or export markets. We 

received two comments that suggested 

that the earlier effective date of the 

Wage Rule would exacerbate the already 

negative impact that higher wages 

resulting from the Wage Rule would 

have on competition, employment, and 

investment and, in particular, the crab 

meat processing industry, as cheaper 

foreign crabmeat will completely 

displace domestically produced 

crabmeat in local markets. Another 

employer echoed this concern for the 

manufacturing industry in general, 

stating that the change in effective date 

would result in job losses either because 

the company fails or moves its 

operations outside the U.S. 

The only data offered by one of the 

commenters in support of these 

statements is an undated study on 

Maryland’s crabmeat processing 

industry.8 This study not only appears 

to challenge the underlying merits of the 

Wage Rule, which would make it out of 

scope for purposes of this rulemaking, 

but also is premised on the assumption 

that absolutely no U.S. workers would 

be willing to work in any positions 

formerly held by H–2B workers, thereby 

resulting in major job losses in 

Maryland’s crabmeat processing 

industry and in the loss of related jobs 

affected by the crabmeat processing 

industry. Given that the increase in 

wages not only would ensure against 

adverse effect but may also have the 

effect of causing U.S. workers to become 

more interested in these jobs, the 

study’s assumption that no U.S. workers 

would ever replace the H–2B workers is 

fundamentally flawed. Therefore, 

neither of these commenters makes a 

sufficient case that changing the 

effective date of the Wage Rule would 

result in significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or on the 

ability of U.S.-based enterprises to 

compete with foreign-based enterprises 

in domestic or export markets. 

E. Executive Order 13132—Federalism 

We have reviewed this Final Rule in 

accordance with E.O. 13132 on 

federalism and have determined that it 

does not have federalism implications. 

The Final Rule does not have 

substantial direct effects on States, on 

the relationship between the States, or 

on the distribution of power and 


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Federal Register / Vol. 76, No. 147 / Monday, August 1, 2011 / Rules and Regulations 45673 

responsibilities among the various 

levels of government as described by 

E.O. 13132. Therefore, we have 

determined that this Final Rule will not 

have a sufficient federalism implication 

to warrant the preparation of a summary 

impact statement. 

F. Executive Order 13175—Indian 

Tribal Governments 

We reviewed this Final Rule under 

the terms of E.O. 13175 and determined 

it not to have tribal implications. The 

Final Rule does not have substantial 

direct effects on one or more Indian 

tribes, on the relationship between the 

Federal Government and Indian tribes, 

or on the distribution of power and 

responsibilities between the Federal 

Government and Indian tribes. As a 

result, no tribal summary impact 

statement has been prepared. 

G. Assessment of Federal Regulations 

and Policies on Families 

Section 654 of the Treasury and 

General Government Appropriations 

Act, enacted as part of the Omnibus 

Consolidated and Emergency 

Supplemental Appropriations Act of 

1999 (Pub. L. 105–277, 112 Stat. 2681) 

requires us to assess the impact of this 

Final Rule on family well-being. A rule 

that is determined to have a negative 

effect on families must be supported 

with an adequate rationale. We have 

assessed this Final Rule and determined 

that it will not have a negative effect on 

families. 

H. Executive Order 12630—Government 

Actions and Interference With 

Constitutionally Protected Property 

Rights 

The Final Rule is not subject to E.O. 

12630, Governmental Actions and 

Interference with Constitutionally 

Protected Property Rights, because it 

does not involve implementation of a 

policy with takings implications. 

I. Executive Order 12988—Civil Justice 

The Final Rule has been drafted and 

reviewed in accordance with E.O. 

12988, Civil Justice Reform, and will not 

unduly burden the Federal court 

system. The Department has developed 

the Final Rule to minimize litigation 

and provide a clear legal standard for 

affected conduct, and has reviewed the 

Final Rule carefully to eliminate 

drafting errors and ambiguities. 

J. Plain Language 

We drafted this Final Rule in plain 

language. 

K. Paperwork Reduction Act 

As part of our continuing effort to 

reduce paperwork and respondent 

burden, we conduct a preclearance 

consultation program to provide the 

general public and Federal agencies 

with an opportunity to comment on 

proposed and continuing collections of 

information in accordance with the 

Paperwork Reduction Act of 1995 (PRA) 

(44 U.S.C. 3506(c)(2)(A)). This process 

helps to ensure that the public 

understands the collection instructions; 

that respondents provide requested data 

in the desired format; that reporting 

burden (time and financial resources) is 

minimized; that collection instruments 

are clearly understood; and that we 

properly assess the impact of collection 

requirements on respondents. 

The PRA requires all Federal agencies 

to analyze proposed regulations for 

potential time burdens on the regulated 

community created by provisions 

within the proposed regulations that 

require the submission of information. 

These information collection (IC) 

requirements must be submitted to the 

OMB for approval. Persons are not 

required to respond to a collection of 

information unless it displays a 

currently valid OMB control number as 

required in 5 CFR 1320.11(l) or it is 

exempt from the PRA. 

The majority of the IC requirements 

for the current H–2B program are 

approved under OMB control number 

1205–0466 (which includes ETA Form 

9141 and ETA Form 9142). There are no 

burden adjustments that need to be 

made to the analysis. For an additional 

explanation of how we calculated the 

burden hours and related costs, the PRA 

package for information collection OMB 

control number 1205–0466 may be 

obtained at http://www.RegInfo.gov. 

IV. Change of Effective Date of Wage 

Rule 

In the final rule published January 19, 

2011, 76 FR 3452, under the DATES

section, the effective date of the final 

rule is amended to read as follows: 

This final rule is effective September 

30, 2011. 

Signed in Washington, this 26th day of July 

2011. 

Jane Oates, 

Assistant Secretary, Employment and 

Training Administration. 

[FR Doc. 2011–19319 Filed 7–29–11; 8:45 am] 

BILLING CODE 4510–FP–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9534] 

RIN 1545–BD81 

Methods of Accounting Used by 

Corporations That Acquire the Assets 

of Other Corporations 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations relating to the methods of 

accounting, including the inventory 

methods, to be used by corporations that 

acquire the assets of other corporations 

in certain corporate reorganizations and 

tax-free liquidations. These regulations 

clarify and simplify the rules regarding 

the accounting methods to be used 

following these reorganizations and 

liquidations. 

DATES: Effective date: These regulations 

are effective on August 31, 2011. 

Applicability date: For dates of 

applicability, see §§ 1.381(a)–1(e), 

1.381(c)(4)–1(f), 1.381(c)(5)–1(f), and 

1.446–1(e)(4)(iii). 

FOR FURTHER INFORMATION CONTACT: 

Cheryl Oseekey at (202) 622–4970 (not 

a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains amendments 

to 26 CFR part 1. On November 16, 

2007, the IRS and the Treasury 

Department published a notice of 

proposed rulemaking (REG–151884–03) 

in the Federal Register (72 FR 64545). 

This notice of proposed rulemaking, 

while continuing most of the provisions 

of the regulations originally issued 

under sections 381(c)(4) and 381(c)(5) of 

the Internal Revenue Code (Code) 

regarding the methods of accounting to 

be used by a corporation that acquires 

the assets of another corporation in a 

section 381(a) transaction, proposed to 

clarify and simplify those existing 

regulations. The IRS received no 

comments in response to the notice of 

proposed rulemaking. No public hearing 

was requested or held. The proposed 

regulations, as revised by this Treasury 

decision, are adopted as final 

regulations. 

Explanation of Provisions 

The final regulations differ somewhat 

in organization and format from the 

notice of proposed rulemaking. These 

changes are intended to be editorial in 


emcdonald on DSK2BSOYB1PROD with RULES