DOL Publishes Final Rule on Substitutions and Other Labor Certification Issues

[Federal Register: May 17, 2007 (Volume 72, Number 95)]
[Rules and Regulations]
[Page 27903-27947]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17my07-15]

[[Page 27903]]

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Part II

Department of Labor

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Employment and Training Administration

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20 CFR Part 656

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; Final Rule

[[Page 27904]]

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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.

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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 toll-free
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 (E immigrant
workers into categories, e.g., EB-2 and EB-3, based on the general job
requirements and the perceived benefit to American society.

[[Page 27905]]

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).

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\1\ The 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).

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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

[[Page 27906]]

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 Sec. 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 Sec. 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.

[[Page 27907]]

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 Sec.
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 Sec.
656.12(b), now Sec. 656.12(b) and (c), has been revised to reflect
this approach and definitions have been added to Sec. 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 Sec. 656.31(f)
work in tandem with the revision to Sec. 656.26(a)(1). The new Sec.
[acute]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 Sec. 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 Sec. 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 Sec.
656.11(a), this Final Rule also has no retroactive effect on
substitution requests in progress (submitted) prior to this rule taking

[[Page 27908]]

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

[[Page 27909]]

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 notice-and-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 employment-
based 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

[[Page 27910]]

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 government-wide, 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

[[Page 27911]]

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 Sec. 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-in-Recruitment 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,

[[Page 27912]]

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.

[[Page 27913]]

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[acute]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

[[Page 27914]]

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

[[Page 27915]]

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 Sec. 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 Sec. 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

[[Page 27916]]

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 Sec. 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 Sec. 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 Sec. 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 Sec. 656.24(g) setting the new standard for applications
filed on or after the effective date of this Final Rule. The new Sec.
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 Sec. 656.11(b). The revised Sec. 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 Sec.
656.10(f). Revised Sec. 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

[[Page 27917]]

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 re-engineered 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, pre-certification 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 no-modifications 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

[[Page 27918]]

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 Sec. 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 Sec. Sec. 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 Sec.
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 Sec. 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 Sec. 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 Sec. 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 Sec.
656.12(a), prohibiting commerce in labor certification applications and
certifications, or on Sec. 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 Sec. 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

[[Page 27919]]

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 spun-off 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 Sec. 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 employer-incurred
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 pre-payment; 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’

[[Page 27920]]

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 employer-driven 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 employer-incurred
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 Sec.
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 Sec. 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\

—————————————

\2\ Section “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.

—————————————

This Final Rule clarifies the application of Sec. 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
activity-related 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

[[Page 27921]]

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
non-competitive 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

[[Page 27922]]

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 Sec. 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 pre-employment 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

[[Page 27923]]

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 Sec. 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

[[Page 27924]]

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 employer-driven 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 Sec. 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 Sec. 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

[[Page 27925]]

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 employment-based 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 re-submission 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 Sec.
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

[[Page 27926]]

Sec. 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 Sec. 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 Sec. 656.31(b), the Final Rule revises what was Sec. 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 Sec.
656.31(b) (Sec. 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 Sec. 656.31(b) (proposed as Sec. 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 Sec.
656.31(b) (Sec. 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 Sec. 656.31(b) and (c) (Sec.
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 Sec. 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
Sec. 656.31(a)–In this Final Rule, the Department has taken the last
sentence of proposed Sec. 656.31(a) and finalized it as the entirety
of Sec. 656.31(a), moving the remainder of the proposed text to Sec.
656.31(b). One commenter took issue with the portion of Sec. 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 Sec. 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 Sec. 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

[[Page 27927]]

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 Sec. 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 Sec. 656.31(a) as published in the
NPRM and has placed it alone as the first paragraph and designated it
Sec. 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
Sec. 656.31(c) (Sec. 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, Sec. 656.31(e)(3) (Sec. 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 Sec. 656.24(g) or review by the BALCA under Sec.
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 Sec. 656.31(e)(3). Like the
Sec. 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 Sec. 656.31(e).

3. Determination of Fraud or Willful Misrepresentation

As proposed, Sec. 656.31(d) (Sec. 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 Sec.
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
Sec. 656.24 and Sec. 656.31(a).

4. Debarment Proceedings

Commenters generally expressed concern that, as proposed, the
debarment provisions of Sec. 656.31(f)(1) (Sec. 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 Sec.
656.31(f)(1) (Sec. 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
Sec. 656.31(f)(1).

Time limits to pursue debarment–A commenter maintained most
punitive laws include a statute of limitations,

[[Page 27928]]

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 Sec. 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 Sec. 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, Sec.
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 Sec. 656.31.

With respect to the right to request a hearing before an ALJ, this
Final Rule provides, at Sec. 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 Sec. 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).

[[Page 27929]]

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)(.

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.

—————————————

\4\ The 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.]

—————————————

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

[[Page 27930]]

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 Sec. 656.31(f)(1)(ii) (Sec.
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 Sec. 656.31(f)(1)(iii) (Sec. 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 Sec.
656.31(f)(1)(iv), failure to comply in the audit process, and to Sec.
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 Sec. 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
Sec. 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 Sec.
656.31(f)(1)(iv) and (v) (Sec. 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 Sec. Sec.
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

[[Page 27931]]

moot the need for these debarment provisions.

—————————————

\5\ The 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 Sec. 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 Sec.
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.

—————————————

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 sub-accounts. 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 anti-fraud 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.

[[Page 27932]]

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\

—————————————

\6\ Reserved.

—————————————

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\

—————————————

\7\ The O*Net OnLine summary information on Human Resources
Manager positions may be found at http://online.onetcenter.org/link/summary/11-3040.00.

—————————————

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 year-round
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

[[Page 27933]]

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 year-round
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 year-round
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 year-round
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.

[[Page 27934]]

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.

—————————————

\8\ The Department’s analysis followed the guidelines provided
by the Office of Management and Budget (OM 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.

—————————————

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.

—————————————

\9\ This 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.

\10\ This analysis assumes one substitution over the life of a
labor certification application.

—————————————

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

[[Page 27935]]

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).

—————————————

\11\ As 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.

—————————————

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

[[Page 27936]]

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\

—————————————

\12\ For 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.

\13\ The 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.

—————————————

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\

—————————————

\14\ The 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.

—————————————

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

[[Page 27937]]

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\

—————————————

\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 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.

\16\ The 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.

\17\ According 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.

\18\ As 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.

—————————————

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\

—————————————

\19\ The 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).

—————————————

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\

—————————————

\20\ The 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.

—————————————

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.

—————————————

\21\ The 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.

—————————————

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\

—————————————

\22\ The 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.

—————————————

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

[[Page 27938]]

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\

—————————————

\23\ For 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.

—————————————

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

[[Page 27939]]

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.

[[Page 27940]]

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\

—————————————

\24\ For 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.

\25\ The 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.

—————————————

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\

—————————————

\26\ The 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.

—————————————

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

[[Page 27941]]

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\

—————————————

\27\ As 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.

—————————————

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.

—————————————

\28\ The 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.

—————————————

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.

—————————————

\29\ The 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.

\30\ The 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.

—————————————

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.

—————————————

\31\ At 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.

—————————————

3(. 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\

—————————————

\32\ The Department estimated of the 115,952 PERM applications
filed between July 1, 2005 and 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.

—————————————

[[Page 27942]]

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\

—————————————

\33\ The 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).

—————————————

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\

—————————————

\34\ The 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.

—————————————

[[Page 27943]]

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\

—————————————

\35\ The 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.

—————————————

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.

—————————————

\36\ The 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.

—————————————

[[Page 27944]]

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 foreign-based 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 Sec. 656.3 to add the following definitions:

Sec. 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 Sec. 656.11 to read as follows:

[[Page 27945]]

Sec. 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 Sec. 656.12 to read as follows:

Sec. 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 Sec. 656.24, revocation under Sec. 656.32, debarment
under Sec. 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 Sec. 656.32,
revocation under Sec. 656.32, debarment under Sec. 656.31(f), or any
combination thereof.

5. Amend Sec. 656.24 by revising paragraph (g) to read as follows:

Sec. 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 Sec.
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
Sec. 656.26(a).

6. Amend Sec. 656.26 by revising paragraph (a) and adding a new
paragraph (c), to read as follows:

Sec. 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 Sec. 656.32, or if a
debarment is issued under Sec. 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.

[[Page 27946]]

(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 Sec. 656.30 by: revising paragraphs (a), (b), and (c); and
adding a new paragraph (e)(3), to read as follows:

Sec. 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 Sec. 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 Sec. 656.31 to read as follows:

Sec. 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
Sec. 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 Sec. 656.24
and in paragraph (a) of this section.

[[Page 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 Sec. 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 Sec. 656.20;

(v) A pattern or practice of failure to comply in the supervised
recruitment process pursuant to Sec. 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 Sec.
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 Sec. 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 Sec. 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