Court Opinion

ID: 9405077
Source: CourtListenerOpinion
Date Created: 2023-06-27 15:01:35.10006+00
Date Added: 2024-06-11T17:20:19.191717
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 10, 2022               Decided June 27, 2023

                        No. 22-5074

                  ITSERVE ALLIANCE, INC.,
                       APPELLANT

                              v.

   UNITED STATES DEPARTMENT OF HOMELAND SECURITY,
                      APPELLEE

        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:20-cv-03855)

    Geoffrey Forney argued the cause and filed the briefs for
appellant.

     Joshua S. Press, Senior Litigation Counsel, U.S.
Department of Justice, argued the cause for appellee. With him
on the brief were Brian M. Boynton, Principal Deputy Assistant
Attorney General, Colin A. Kisor, Deputy Director, and Glenn
M. Girdharry, Assistant Director.

    John M. Miano was on the brief for amicus curiae
Immigration Reform Law Institute and U.S. Tech Workers in
support of appellee.
                               2
    Before: KATSAS and PAN, Circuit Judges, and TATEL,
Senior Circuit Judge.

    Opinion for the Court by Circuit Judge KATSAS.

     KATSAS, Circuit Judge: The H-1B visa program allows
foreign nationals to work in the United States in specialized
positions for sponsoring employers. By regulation, any such
employer must file amended paperwork with the United States
Citizenship and Immigration Services whenever it makes a
“material change” in the terms of covered employment. In
Simeio Solutions, LLC, 26 I & N Dec. 542 (AAO 2015),
USCIS interpreted that phrase to include a change in the place
of employment. And in an ensuing guidance document, USCIS
memorialized this interpretation and exercised discretion to
limit its retroactive enforcement.

    ITServe Alliance, Inc., a trade association representing
employers, seeks a declaratory judgment that Simeio and the
guidance document are unlawful. ITServe contends that
Simeio was a procedurally defective rulemaking and that
USCIS lacks statutory authority to require the amended filings.
We hold that ITServe has Article III standing to raise these
arguments, but we reject them on the merits.

                               I

                               A

     The Immigration and Nationality Act sets forth conditions
for foreign nationals to receive visas allowing entry into the
United States. 8 U.S.C. § 1201(a)(1). An H-1B visa allows an
alien to work for a sponsoring employer in a specialty
occupation, id. § 1101(a)(15)(H)(i)(b), which is one that
requires at least a bachelor’s degree, or its equivalent, in the
specific specialty, id. § 1184(i)(1)(B).
                                3
     Before an alien can obtain an H-1B visa, the sponsoring
employer must file a Labor Condition Application (LCA) with
the Department of Labor. 8 U.S.C. § 1182(n)(1). The
application must specify job details such as the proposed
occupation, place of employment, and wage rate. Id.
§ 1182(n)(1)(A), (D). The employer must promise to pay the
higher of either (I) the actual wage that it pays to similarly
skilled employees or (II) the prevailing wage for such
employees in the local area. Id. § 1182(n)(1)(A)(i). Unless the
application is “incomplete or obviously inaccurate,” Labor
must approve it within seven days. Id. § 1182(n)(1)(G)(ii).

     The employer then must petition USCIS to classify its
prospective employee as eligible for an H-1B visa. 8 U.S.C.
§ 1184(c)(1). 1 The petition “shall be determined by” USCIS,
“after consultation” with the Department of Labor. Id. The
petition “shall be in such form and contain such information”
as USCIS “shall prescribe.” Id. Under this authority, USCIS
requires the employer to submit an approved LCA and promise
to comply with its terms. 8 C.F.R. § 214.2(h)(4)(iii)(B). If
USCIS approves the petition, the alien becomes eligible to
receive a visa to work for the sponsoring employer in the
approved job for up to six years. 8 U.S.C. § 1184(g)(4).

     In some circumstances, sponsoring employers must update
these various filings. Labor regulations require a new LCA
when the employer moves an H-1B employee to a new place
of employment. 20 C.F.R. § 655.730(c)(5). An immigration
regulation requires a new or amended H-1B petition as needed
“to reflect any material changes in the terms and conditions of
employment … or the alien’s eligibility as specified in the

    1
       Section 1184(c)(1) references the Attorney General, but the
Homeland Security Act transferred the authority for adjudicating
these petitions to the Bureau of Citizenship and Immigration
Services, which is now known as USCIS. See 6 U.S.C. § 271(b)(5).
                              4
original approved petition.” 8 C.F.R. § 214.2(h)(2)(i)(E). The
latter provision, which we call the “material change
regulation,” is the focus of this case.

                              B

     In Simeio Solutions, LLC, 26 I & N Dec. 542 (AAO 2015),
USCIS interpreted the material change regulation to require the
sponsoring employer to file a new or amended H-1B petition
whenever a change in the place of employment necessitates the
filing of a new LCA.

     The dispute in Simeio arose when an employee sought an
H-1B visa based on an approved petition that designated Long
Beach, California as the place of employment. 26 I & N Dec.
at 543. When the consular office sought to confirm the
employment details, Simeio responded with information that
did not match the petition. The consular office returned the
petition to USCIS for review. USCIS then discovered that the
employer had abandoned its Long Beach office, so it issued a
notice of intent to revoke the petition. Id. at 543–44. In
response, the employer submitted to the Department of Labor
a new LCA specifying other worksites, but it neglected to
submit an amended H-1B petition to USCIS. Id. at 544. A
USCIS field office therefore revoked the employer’s petition.

    The Administrative Appeals Office of USCIS affirmed the
revocation. It reasoned that because employers must pay H-1B
workers at least the prevailing wage for similar employees “in
the area of employment,” 8 U.S.C. §1182(n)(1)(A)(i)(II), a
geographic move could affect eligibility for H-1B status, and
so the move was a “material” change in the terms of
employment. 26 I & N Dec. at 547–48. The Department of
Homeland Security, USCIS’s parent agency, designated this
decision as precedential, which made it binding within USCIS.
                               5
     A few months after Simeio was decided, USCIS issued a
guidance document describing its holding and outlining how
the agency would implement it in other cases. Policy
Memorandum No. 602-0120, Final Guidance on When to File
an Amended or New H-1B Petition After Matter of Simeio
Solutions, LLC (July 21, 2015), App. 71. Among other things,
the guidance document explained that USCIS would not seek
to revoke H-1B petitions based on workplace moves that
happened before Simeio was decided. Id. at 74.

                               C

     ITServe is a trade association representing companies that
provide information-technology services to clients. In this
lawsuit, ITServe sought a declaratory judgment that Simeio and
the ensuing guidance document are unlawful. ITServe
contends that Simeio was a procedurally defective rulemaking
and that USCIS lacks statutory authority to require updated
petitions whenever a sponsoring employer moves an H-1B
worker to a different worksite. The district court held that
ITServe had Article III standing but granted summary
judgment to the agency. ITServe All., Inc. v. DHS, 590 F. Supp.
3d 27 (D.D.C. 2022).

                               II

    We begin, as we must, with standing. Article III of the
Constitution limits the federal judicial power to resolving
“Cases” or “Controversies.” U.S. Const. art. III § 2, cl. 1.
Standing doctrine implements this case-or-controversy
requirement. Allen v. Wright, 468 U.S. 737, 750–51 (1984).

     ITServe claims representational standing as a voluntary
membership organization. It must show that (1) at least one of
its members would have standing to sue; (2) the lawsuit seeks
to protect interests germane to its purposes; and (3) neither the
                               6
claim nor the requested relief requires individual members to
join. Summers v. Earth Island Inst., 555 U.S. 488, 497–99
(2009); Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S.
333, 343 (1977). There is no dispute about the last two
elements: This lawsuit seeks to make it easier for employers to
move H-1B workers from one location to another, which is
germane to ITServe’s purpose as a trade association
representing the interests of employers who regularly hire such
workers. And there is no reason why individual employers
must join the suit for us to fairly decide the legal issues
presented. The only contestable standing question is whether
a member of ITServe could bring this lawsuit individually.

     To establish Article III standing, an individual entity must
show that it has suffered, or will imminently suffer, an injury
caused by the challenged conduct and likely to be redressed by
a favorable judicial decision. TransUnion LLC v. Ramirez, 141
S. Ct. 2190, 2203 (2021); Lujan v. Defs. of Wildlife, 504 U.S.
555, 560–61 (1992). ITServe adequately proved that Saxon
Global, Inc., an information-technology company that is one of
its members, would have standing. Saxon submitted a
declaration that it “regularly employs foreign nationals in H-
1B status” to provide on-site service to clients. App. 6. These
employees work under client contracts “of a defined duration,”
after which Saxon assigns them to new projects for different
clients. Id. Often, the new projects are at client sites outside
the areas specified in the initial LCA and H-1B petition. Id.
Simeio’s interpretation of the material change regulation thus
requires Saxon to file amended H-1B petitions whenever it
relocates H-1B employees. Id. at 8. And each filing requires
Saxon to incur substantial filing and attorney fees. Id. at 7; 8
C.F.R. § 106.2(a)(3)(i). This is a classic pocketbook injury
traceable to Simeio and redressable by a favorable decision
from this Court.
                                7
      DHS objects that Saxon did not adequately spell out the
details of specific employee movements. DHS invokes a
statement in Lujan that “‘some day’ intentions—without any
description of concrete plans, or indeed even any specification
of when the some day will be” do not establish a sufficiently
imminent injury. 504 U.S. at 564. But the possibility that
Saxon will have to transfer H-1B employees to new locations
is hardly as speculative as the Lujan plaintiffs’ stated intentions
to travel across the world to view endangered species. The very
nature of Saxon’s business involves frequently transferring H-
1B employees, triggering a steady and ongoing obligation to
file amended H-1B petitions. And Saxon did estimate that
Simeio forces it to amend some twenty H-1B petitions per year.
App. 8. DHS objects that the estimate was made as of 2021,
whereas standing must be assessed as of when the lawsuit was
filed in 2020. See Lujan, 504 U.S. at 570 n.4. But no record
evidence suggests that Saxon’s business practices changed
over that one year, so the estimate fairly shows what Saxon
faced when the lawsuit was filed.

     More broadly, DHS contends that a party may never
establish an Article III injury from the precedential effect of an
administrative adjudication to which it was not a party. Teva
Pharmaceuticals USA, Inc. v. Sebelius, 595 F.3d 1303 (D.C.
Cir. 2010), definitively rebuts that contention. In Teva, we held
that a drug manufacturer had standing to challenge an
unfavorable statutory interpretation adopted in administrative
adjudications to which the manufacturer was not a party. We
exhaustively surveyed this Court’s precedents on when non-
parties have standing to challenge administrative adjudications.
We acknowledged one line of cases stating that an
adjudication’s “mere precedential effect within an agency is
not, alone, enough to create Article III standing, no matter how
foreseeable future litigation.” Id. at 1312 (quoting Sea-Land
Serv. v. DOT, 137 F.3d 640, 648 (D.C. Cir. 1998)). But we
                                8
explained why the form of agency action threatening future
injury cannot be dispositive:

    For the purpose of the classic constitutional standing
    analysis, it makes no difference to the “injury” inquiry
    whether the agency adopted the policy at issue in an
    adjudication, a rulemaking, a guidance document, or
    indeed by ouija board; provided the projected
    sequence of events is sufficiently certain, the
    prospective injury flows from what the agency is
    going to do, not how it decided to do it.

Id. We thus concluded that the cases following Sea-Land are
“more naturally understood as arising from the lack of a
sufficiently imminent and concrete injury than from some sort
of ad hoc exception to otherwise-universally applicable
constitutional doctrine.” Id. at 1313. In contrast, we
summarized four other decisions in which we allowed
challenges to policies or interpretations adopted in
administrative adjudications to which the challenger was not a
party. See id. at 1314. In these cases, we explained, the
challengers had standing because “the prospect of impending
harm was effectively certain.” Id.

    DHS counters with Conference Group, LLC v. FCC, 720
F.3d 957 (D.C. Cir. 2013), but it bears little resemblance to this
case. There, the Federal Communications Commission
decided that one company provided telecommunications
services under the governing statute and thus required the
company to contribute to a certain FCC fund. Id. at 961. We
held that another company, Conference Group, had standing to
challenge this action as a procedurally defective rulemaking
because, if the action were a broadly applicable rule, then
Conference Group would likely have to contribute to the same
fund. Id. at 962–63. But if the agency action was an
                                9
adjudication, we further held, then Conference Group would
lack standing to challenge the substance of the action. On that
point, we reiterated that the mere precedential effect of an
agency adjudication does not permit a bystander to challenge
it. Id. at 963. And we stressed that Conference Group did not
“identify any imminent Commission enforcement action
against it.” Id. at 964. Here, in contrast, ITServe showed that
Saxon’s regular business practices would require it either to file
amended petitions or risk revocation under Simeio. To be sure,
agencies do not always enforce their statutes, rules, or
decisions, and the lack of any credible enforcement threat may
foreclose the possibility of an imminent injury. See, e.g.,
California v. Texas, 141 S. Ct. 2104, 2114 (2021). But here,
the guidance document makes clear that USCIS will enforce
Simeio with respect to employee relocations that happened or
will happen after its issuance. App. 73–76. We thus have every
reason to conclude that Saxon will fall within Simeio, which
USCIS will enforce. That is enough to establish an imminent
injury for purposes of Article III.

                               III

     ITServe contends that Simeio was a rulemaking disguised
as an adjudication, which would make it procedurally invalid
for lack of notice-and-comment procedures. We hold that
Simeio was an adjudication.

     The Administrative Procedure Act divides agency action
into two broad categories, rulemaking and adjudication.
Rulemaking is agency process for formulating a “rule,”
5 U.S.C. § 551(5), which is “an agency statement of general or
particular applicability and future effect designed to
implement, interpret, or prescribe law or policy,” id. § 551(4).
Adjudication is agency process for formulating an “order,” id.
                               10
§ 551(7), which is a “final disposition” in a “matter other than
rule making but including licensing,” id. § 551(6).

     Building on these definitions, we have identified two
principal distinctions between rulemaking and adjudication.
First, rulemaking typically announces “generally applicable”
legal principles, whereas adjudication involves case-specific
determinations. Safari Club Int’l v. Zinke, 878 F.3d 316, 332–
33 (D.C. Cir. 2017). Second, rulemaking governs only the
future, whereas adjudications “immediately bind parties by
retroactively applying law to their past actions.” Id. at 333; see
also Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 216
(1988) (Scalia, J., concurring) (“rules have legal consequences
only for the future”).

     Under these standards, Simeio was an adjudication. It
arose out of a specific controversy involving an employer that
changed an H-1B employee’s intended worksites without filing
an amended petition. 26 I & N Dec. at 543–44. It interpreted
pre-existing law—i.e., the material change regulation—to
require an amended petition in those circumstances. Id. at 548.
And it applied that law to revoke approval of the employer’s
H-1B petition. Id. at 549. Simeio thus reads and functions like
a judicial decision interpreting an agency regulation and then
applying it to resolve a case or controversy. It is no less
adjudicatory than such a decision would be.

     The guidance document confirms these points. It explains
how USCIS will enforce Simeio in other cases: For relocations
that occurred before Simeio was decided, USCIS exercised its
discretion to “not pursue new revocations or denials based
upon failure to file an amended or new petition.” App. 74. For
relocations that occurred after Simeio was decided but before
the guidance document was issued, USCIS would withhold
enforcement if the employer filed the requisite new or amended
                               11
petition by a date certain. Id. at 75. And for relocations that
occurred after the guidance document was issued, USCIS
warned that employers “must file an amended or new petition
before an H-1B employee starts working at a new place of
employment not covered by an existing, approved H-1B
petition.” Id. at 76. This extended guidance, tempering
retroactive enforcement to accommodate employers, confirms
that Simeio did not simply announce a new rule for the future,
but set forth the agency’s view of what the material change
regulation had meant from the date of its enactment.

     ITServe objects that the Simeio decision, in construing the
regulation to encompass changes in the place of employment,
contains reasoning that sweeps broadly and does not vary from
case to case. But an agency “is not precluded from announcing
new principles in an adjudicative proceeding.” NLRB v. Bell
Aerospace Co., 416 U.S. 267, 294 (1974). Adjudicating a
specific controversy requires identifying the governing law,
which may involve resolving disputes about what that law
means. For this reason, we have held that “an interpretation
given in the course of an informal adjudication,” even if it
expressly claims to govern “similarly situated” non-parties, is
not a rule. Conf. Grp., 720 F.3d at 965. To the contrary, the
fact that an agency action governs a “large number” of similar
cases “carries little weight” in deciding whether it is a rule or
order. Nat’l Biodiesel Bd. v. EPA, 843 F.3d 1010, 1018 (D.C.
Cir. 2016) (cleaned up).

     ITServe also argues that Simeio had no retroactive effect
because the employer in that case had withdrawn its H-1B
petition before the Administrative Appeals Office rendered its
decision, which in turn caused the petition to be “immediately
and automatically revoked” by operation of law. 8 C.F.R.
§ 214.2(h)(11)(ii). The record includes a letter, from USCIS to
Simeio, referencing the withdrawal and revocation of an H-1B
                                 12
petition. App. 70. Redactions to the letter exclude key
identifying information, and the Simeio decision does not
reference any possible revocation. Nonetheless, we will
assume that the employer withdrew the relevant petition. We
may even assume that USCIS decided an administrative appeal
that, had it been pending before an Article III court, would have
been dismissed as moot.

     But mootness and retroactivity present different questions.
As we explained in Neustar, Inc. v. FCC, 857 F.3d 886 (D.C.
Cir. 2017), the “prospective-retroactive distinction consistently
focuses on the application of principles in the past or future.”
Id. at 896. Or as Justice Scalia put it: “Adjudication deals with
what the law was; rulemaking deals with what the law will be.”
Bowen, 488 U.S. at 221 (Scalia, J., concurring). Viewed
through that lens, Simeio was clearly retroactive. As shown
above, it interpreted and applied the material change regulation
to establish what the law was, regardless of whether that
question presented a live and ongoing dispute in Simeio itself. 2

    Finally, ITServe notes that USCIS’s predecessor agency
proposed but never adopted a rule that would have required an
amended H-1B petition whenever a covered employee moved

     2
        We recognize that announcing broad policies through moot
adjudications might sometimes violate the bedrock principle that
“agencies must act without arbitrariness,” including when choosing
whether to proceed by rulemaking or adjudication. Tennessee Gas
Pipeline Co. v. Fed. Power Comm’n, 606 F.2d 1373, 1380 (D.C. Cir.
1979) (“the arbitrariness standard may beyond some distant point
confine the business of agencies in a manner remotely akin to article
III”). Here, though, the Simeio dispute was live when USCIS
initiated the “process for the formulation of an order.” 5 U.S.C.
§ 551(7). And while ITServe points to other instances where USCIS
declined to resolve moot controversies, it does not separately contend
that USCIS acted arbitrarily by deciding Simeio on the merits.
                              13
to a new worksite. See Petitioning Requirements for the H
Nonimmigrant Classification, 63 Fed. Reg. 30,419, 30,422
(proposed June 4, 1998). But the failure to adopt that rule has
no bearing on whether Simeio permissibly interpreted the
material change regulation to have already imposed the same
obligation.

     In short, Simeio is exactly what it purports to be—an
informal adjudication resting on USCIS’s interpretation of the
material change regulation.

                              IV

     ITServe argues that USCIS lacks statutory authority to
require sponsoring employers to file new or amended H-1B
petitions when they move covered employees to new
worksites. We disagree.

     Two distinct grants of authority bear on this question.
First, Congress charged the Department of Homeland Security
“with the administration and enforcement” of the Immigration
and Nationality Act. 8 U.S.C. § 1103(a)(1). And USCIS is the
DHS component responsible for administering and enforcing
the INA’s H-1B visa program. 6 U.S.C. § 271(b)(5). Second,
Congress directed USCIS to determine the “question of
importing any alien as a nonimmigrant” with H-1B status,
based on petitions from prospective employers. 8 U.S.C.
§ 1184(c)(1).

     These provisions amply support Simeio’s interpretation of
the material change regulation. To qualify an alien for H-1B
status under the INA, the prospective employer must file an
LCA with the Department of Labor.                  8 U.S.C.
§ 1101(a)(15)(H)(i)(b). In the LCA, the employer must make
various promises, including one to pay the employee at least
the prevailing wage in the local geographic area. Id.
                               14
§ 1182(n)(1)(A)(i). These promises are conditions for securing
H-1B status and thus bear on the “question of importing” H-1B
aliens. That is why USCIS regulations require a prospective
employer to submit an approved LCA as part of its initial H-
1B petition. 8 C.F.R. § 214.2(h)(4)(iii)(B). But the employer’s
obligations do not end once USCIS approves the H-1B petition.
And ensuring that the employer keeps its promises thus falls
squarely within “administration and enforcement” of the INA.
That is why, to support compliance review on the back end, the
material change regulation requires an amended H-1B petition
if there are “material changes” in the terms of covered
employment, including changes bearing on “the alien’s
eligibility” for H-1B status “as specified in the original
approved petition.” Id. § 214.2(h)(2)(i)(E). Finally, as Simeio
explained, the transfer of a covered employee from one area to
another bears on this eligibility, for the prevailing wage in one
area might not be the prevailing wage in another. See 26 I & N
Dec. at 548.

     ITServe objects that USCIS’s section 1184(c)(1) authority
is focused on the “question of importing” H-1B workers,
which, it says, does not include policing what happens once the
workers are already here. Yet the INA expressly contemplates
employers filing new or amended section 1184(c)(1) petitions
on behalf of aliens already admitted into the United States, such
as when the alien changes employers.                  8 U.S.C.
§ 1184(c)(9)(A) & (12)(A). The INA also specifies post-entry
situations not requiring amended petitions, such as when the
sponsoring employer is involved in a corporate restructuring
but the terms of employment do not change. Id. § 1184(c)(10).
This would be surplusage if ITServe were correct that USCIS’s
section 1184(c)(1) authority shuts off once the H-1B worker
enters the country.
                              15
     In any event, policing compliance with the terms of an
LCA plainly constitutes “administration and enforcement” of
the INA, which section 1103(a)(1) independently authorizes.
As explained, the statutory requirements for an H-1B visa, and
the LCA promises made to obtain it, remain effective
throughout the term of authorized employment—an employer
cannot promise to pay an alien $100 per hour to work as a
rocket scientist in Los Angeles, secure his entry on that basis,
and then ship him off to drive a cab in Boston. Moreover, an
admitted H-1B worker who fails to maintain qualifying
employment will lose non-immigrant status and become
removable. 8 U.S.C. § 1227(a)(1)(C)(i). The material change
regulation thus allows USCIS to monitor changing facts that
bear on its enforcement responsibilities, including facts
regarding where H-1B workers are employed.

     ITServe further objects that only the Department of Labor
may police questions about the wages and working conditions
of H-1B employees. As ITServe explains, the INA gives the
Department enforcement responsibilities at the front and back
ends of the H-1B process: At the front end, Labor must review
an LCA for “completeness and obvious inaccuracies” and must
decide whether to approve it within seven days. 8 U.S.C.
§ 1182(n)(1)(G)(ii). At the back end, Labor must investigate
alleged LCA violations and may fine employers for them. Id.
§ 1182(n)(2)(A), (C). But these authorities are not by their
terms exclusive, so as to oust USCIS from its own authority
over the H-1B petition process. And the INA strongly suggests
that the agencies’ respective authorities are complementary
rather than exclusive: The statute requires USCIS to adjudicate
H-1B petitions “after consultation” with Labor. Id. §
1184(c)(1). That would be an odd way for Congress to convey
that USCIS, in dealing with prevailing-wage or other LCA
terms, may do nothing more than confirm the fact that the
Department of Labor, after its compressed and limited initial
                             16
review, has approved an LCA filed before or after the covered
alien has entered the country.

    Because USCIS may consider LCA-related issues in
exercising its own authority to approve, disapprove, or revoke
H-1B petitions, it may require new or amended petitions
corresponding to changes in the place of employment that
necessitate the filing of new LCAs.

                                                    Affirmed.