Rule on Extra Optional Practical Training for F1 Students with STEM Degrees is Vacated

Introduction

In a decision with major ramifications for certain F1 students [see article] with STEM degrees who are engaging in optional practical training [OPT], the United States District Court for the District of Columbia held in a memorandum opinion in Washington Alliance of Technology Workers v. U.S. Department of Homeland Security, —- F.Supp.3d —— (D.D.C., 2015) [PDF version],¹ [hereafter Washington Alliance] decided on August 12, 2015, that a 2008 Department of Homeland Security [DHS] rule extending the length of OPT for certain STEM students is invalid because DHS enacted this new rule without first serving notice and providing an opportunity for public comment.

However, finding that vacating the rule suddenly would cause substantial hardship to F1 students already taking advantage of the rule, and would result in a major labor disruption for those employing them; the Court stayed the vacatur of the DHS rule until February 12, 2016.

What Was the Rule?

Regulations in 8 C.F.R. § 214.2(f)(10)(ii)(A) provide that F1 students are permitted to engage in OPT after completing a course of study and all of the requirements for a bachelor's, master's or doctoral degree program, provided that the OPT is “directly related to the student's major area of study.” Pursuant to 8 C.F.R. § 214.2(f)(10), a student can be authorized for up to 12 months of OPT, which must be completed within a 14-month period following the completion of the course of study. Note that these regulations are unaffected by the decision in Washington Alliance.

However, in 2008, DHS issued a new interim rule: 73 Fed.Reg. 18,946, Extending Period of Optional Practical Training by 17 Months for F-1 Nonimmigrant Students with STEM Degrees and Expanding Cap-Gap Relief for All F-1 Students With Pending H-1B Petitions. The new rule effectively allowed certain F1 students with qualifying STEM degrees to obtain authorization for up to 17 additional months of OPT, bringing the maximum amount of OPT for qualifying F1 students to 29 months.

The eligibility rules for the 17-month OPT extension are found in 8 C.F.R. § 214.2(f)(10)(ii)(C)(1)-(4):

1. The student has not previously received a 17-month OPT extension after earning a STEM degree;
2. The degree that was the basis for the student's current period of OPT is a bachelor's, master's, or doctoral degree in one of the degree programs on the current STEM Designated Degree Program List, published on the SEVP Web site at ice.gov [link];
3. The student's employer is registered in the E-Verify program, as evidenced by either a valid E-Verify company identification number or, if the employer is using a designated agent to perform the E-Verify queries, a valid E-Verify client company identification number, and the employer is a participant in good standing in the E-Verify program, as determined by USCIS;
4. The employer agrees to report the termination or departure of an OPT employee to the Designated School Officials [DSO] at the student's school or through any other means or process identified by DHS if the termination or departure is prior to the end of the authorized period of OPT. Such reporting must be made within 48 hours of the event. An employer shall consider a worker to have departed when the employer knows the student has left its employment or if the student has not reported for work for a period of 5 consecutive business days without the consent of the employer, whichever occurs earlier.

The decision in Washington Alliance noted that DHS's rationale for the new rule was that, because the H1B visa category is oversubscribed, it is often extremely difficult for F1 students with degrees in qualifying STEM programs to obtain H1B Visas. Citing the rule, the Court found that DHS had reasoned that, as a result of the difficultly in procuring H1B Visas for these qualified applicants, U.S. employers were at a “competitive disadvantage.” Crucially, the decision cited DHS's justification for issuing the new rule without notice of its proposed enactment and without a request for public comment: “[t]o avoid a loss of skilled students through the next round of H-1B filings in April 2008.”

Why was the Rule Held to be Invalid?

The plaintiffs argued:

1. That the OPT program exceeded DHS's statutory authority.
2. That DHS acted “arbitrarily and capriciously in promulgating the rule.”
3. That DHS lacked good cause to waive the notice and public comment requirements in promulgating the rule.

To understand what may happen next, it is important to understand why the Court rejected the plaintiffs' arguments (points one and two) and why DHS ultimately lost the case (point three).

In addressing points one and two, the Court applied Supreme Court precedent — the decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). As to point one, the Court concluded that, because the statutes regarding F1 student employment are ambiguous, Chevron requires that deference be afforded to DHS's interpretation. For point two, the Court examined the regulatory history regarding F1 practical training, and it found that DHS's regulation was “reasonable” and not “arbitrary and capricious,” noting that it was similar to many previous INS and DHS regulations regarding F1 employment, and that Congress had not sought to change statutes in order to change DHS's OPT policies.

However, with regard to point three, the Court found that DHS had not provided sufficient justification under existing precedent to waive the notice and public comment requirements for the new regulation. Furthermore, the Court held that the seriousness of DHS's waiving of the notice and public comment period without demonstrating the proper grounds to do so rendered the regulations invalid.

What Happens Now?

While the Court cited various precedents in holding that the proper remedy for DHS's violation was to vacate the rule, it also concluded that issuing an immediate vacatur would be “seriously disruptive,” citing a 2008 DHS estimate that of the 70,000 F1 students then engaged in OPT, about one third had STEM degrees that would qualify them for the 17-month OPT extension. The Court accepted DHS's argument that an immediate vacatur would force thousands of F1 students with suddenly invalid OPT extensions to “scramble to depart the United States,” which would also impose a costly burden on companies employing them. Accordingly, the Court stayed its vacatur for six months from the date of the decision (February 12, 2016). Because the Court did not find the rule to be invalid on any grounds aside from DHS's improper waiving of the notice and public comment period, it noted that DHS may resubmit the rule with time for proper notice and for public comment.

The most we can say for the time being with regard to the effects of Washington Alliance is that a student who is already engaged in OPT under the 17-month extension should not have anything to worry about, provided that his or her OPT ends before the February 12, 2016 end-date of the stay. F1 students finishing 12 months of OPT will be in an uncertain situation with regard to an extension, since DHS has not yet issued new guidelines in response to the adverse decision. F1 students who were previously hoping to obtain the 17-month extension for OPT will have no choice but to wait for DHS' response to the decision. F1 students in this situation should ensure that they keep up to date with developments on the OPT extension issue with their Designated School Officials.

Because the Court issued the vacatur on account of DHS's waiving of the notice and public comment requirements, and not for DHS exceeding its authority, it is entirely possible that DHS may submit the rule for proper notice and public comment, and have it approved prior to the end of the stay.

I will post an update when DHS issues its response.

[Updated with case citation: May 6, 2016]

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1. Washington Alliance of Technology Workers v. DHS, Civil Action No. 2014-0529 (D.C. 2015) published on AILA InfoNet at Doc. No. 15081364 (Aug. 12, 2015)