ITServe Alliance, Inc. v. DHS

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 10, 2022 Decided June 27, 2023

No. 22-5074

ITSERVE ALLIANCE, INC.,

APPELLANT

v.

UNITED STATES DEPARTMENT OF HOMELAND SECURITY,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:20-cv-03855)

Geoffrey Forney argued the cause and filed the briefs for

appellant.

Joshua S. Press, Senior Litigation Counsel, U.S.

Department of Justice, argued the cause for appellee. With him

on the brief were Brian M. Boynton, Principal Deputy Assistant

Attorney General, Colin A. Kisor, Deputy Director, and Glenn

M. Girdharry, Assistant Director.

John M. Miano was on the brief for amicus curiae

Immigration Reform Law Institute and U.S. Tech Workers in

support of appellee.

2

Before: KATSAS and PAN, Circuit Judges, and TATEL,

Senior Circuit Judge.

Opinion for the Court by Circuit Judge KATSAS.

KATSAS, Circuit Judge: The H-1B visa program allows

foreign nationals to work in the United States in specialized

positions for sponsoring employers. By regulation, any such

employer must file amended paperwork with the United States

Citizenship and Immigration Services whenever it makes a

“material change” in the terms of covered employment. In

Simeio Solutions, LLC, 26 I & N Dec. 542 (AAO 2015),

USCIS interpreted that phrase to include a change in the place

of employment. And in an ensuing guidance document, USCIS

memorialized this interpretation and exercised discretion to

limit its retroactive enforcement.

ITServe Alliance, Inc., a trade association representing

employers, seeks a declaratory judgment that Simeio and the

guidance document are unlawful. ITServe contends that

Simeio was a procedurally defective rulemaking and that

USCIS lacks statutory authority to require the amended filings.

We hold that ITServe has Article III standing to raise these

arguments, but we reject them on the merits.

I

A

The Immigration and Nationality Act sets forth conditions

for foreign nationals to receive visas allowing entry into the

United States. 8 U.S.C. § 1201(a)(1). An H-1B visa allows an

alien to work for a sponsoring employer in a specialty

occupation, id. § 1101(a)(15)(H)(i)(b), which is one that

requires at least a bachelor’s degree, or its equivalent, in the

specific specialty, id. § 1184(i)(1)(B).

3

Before an alien can obtain an H-1B visa, the sponsoring

employer must file a Labor Condition Application (LCA) with

the Department of Labor. 8 U.S.C. § 1182(n)(1). The

application must specify job details such as the proposed

occupation, place of employment, and wage rate. Id.

§ 1182(n)(1)(A), (D). The employer must promise to pay the

higher of either (I) the actual wage that it pays to similarly

skilled employees or (II) the prevailing wage for such

employees in the local area. Id. § 1182(n)(1)(A)(i). Unless the

application is “incomplete or obviously inaccurate,” Labor

must approve it within seven days. Id. § 1182(n)(1)(G)(ii).

The employer then must petition USCIS to classify its

prospective employee as eligible for an H-1B visa. 8 U.S.C.

§ 1184(c)(1). 1 The petition “shall be determined by” USCIS,

“after consultation” with the Department of Labor. Id. The

petition “shall be in such form and contain such information”

as USCIS “shall prescribe.” Id. Under this authority, USCIS

requires the employer to submit an approved LCA and promise

to comply with its terms. 8 C.F.R. § 214.2(h)(4)(iii)(B). If

USCIS approves the petition, the alien becomes eligible to

receive a visa to work for the sponsoring employer in the

approved job for up to six years. 8 U.S.C. § 1184(g)(4).

In some circumstances, sponsoring employers must update

these various filings. Labor regulations require a new LCA

when the employer moves an H-1B employee to a new place

of employment. 20 C.F.R. § 655.730(c)(5). An immigration

regulation requires a new or amended H-1B petition as needed

“to reflect any material changes in the terms and conditions of

employment … or the alien’s eligibility as specified in the

1

Section 1184(c)(1) references the Attorney General, but the

Homeland Security Act transferred the authority for adjudicating

these petitions to the Bureau of Citizenship and Immigration

Services, which is now known as USCIS. See 6 U.S.C. § 271(b)(5).

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original approved petition.” 8 C.F.R. § 214.2(h)(2)(i)(E). The

latter provision, which we call the “material change

regulation,” is the focus of this case.

B

In Simeio Solutions, LLC, 26 I & N Dec. 542 (AAO 2015),

USCIS interpreted the material change regulation to require the

sponsoring employer to file a new or amended H-1B petition

whenever a change in the place of employment necessitates the

filing of a new LCA.

The dispute in Simeio arose when an employee sought an

H-1B visa based on an approved petition that designated Long

Beach, California as the place of employment. 26 I & N Dec.

at 543. When the consular office sought to confirm the

employment details, Simeio responded with information that

did not match the petition. The consular office returned the

petition to USCIS for review. USCIS then discovered that the

employer had abandoned its Long Beach office, so it issued a

notice of intent to revoke the petition. Id. at 543–44. In

response, the employer submitted to the Department of Labor

a new LCA specifying other worksites, but it neglected to

submit an amended H-1B petition to USCIS. Id. at 544. A

USCIS field office therefore revoked the employer’s petition.

The Administrative Appeals Office of USCIS affirmed the

revocation. It reasoned that because employers must pay H-1B

workers at least the prevailing wage for similar employees “in

the area of employment,” 8 U.S.C. §1182(n)(1)(A)(i)(II), a

geographic move could affect eligibility for H-1B status, and

so the move was a “material” change in the terms of

employment. 26 I & N Dec. at 547–48. The Department of

Homeland Security, USCIS’s parent agency, designated this

decision as precedential, which made it binding within USCIS.

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A few months after Simeio was decided, USCIS issued a

guidance document describing its holding and outlining how

the agency would implement it in other cases. Policy

Memorandum No. 602-0120, Final Guidance on When to File

an Amended or New H-1B Petition After Matter of Simeio

Solutions, LLC (July 21, 2015), App. 71. Among other things,

the guidance document explained that USCIS would not seek

to revoke H-1B petitions based on workplace moves that

happened before Simeio was decided. Id. at 74.

C

ITServe is a trade association representing companies that

provide information-technology services to clients. In this

lawsuit, ITServe sought a declaratory judgment that Simeio and

the ensuing guidance document are unlawful. ITServe

contends that Simeio was a procedurally defective rulemaking

and that USCIS lacks statutory authority to require updated

petitions whenever a sponsoring employer moves an H-1B

worker to a different worksite. The district court held that

ITServe had Article III standing but granted summary

judgment to the agency. ITServe All., Inc. v. DHS, 590 F. Supp.

3d 27 (D.D.C. 2022).

II

We begin, as we must, with standing. Article III of the

Constitution limits the federal judicial power to resolving

“Cases” or “Controversies.” U.S. Const. art. III § 2, cl. 1.

Standing doctrine implements this case-or-controversy

requirement. Allen v. Wright, 468 U.S. 737, 750–51 (1984).

ITServe claims representational standing as a voluntary

membership organization. It must show that (1) at least one of

its members would have standing to sue; (2) the lawsuit seeks

to protect interests germane to its purposes; and (3) neither the

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claim nor the requested relief requires individual members to

join. Summers v. Earth Island Inst., 555 U.S. 488, 497–99

(2009); Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S.

333, 343 (1977). There is no dispute about the last two

elements: This lawsuit seeks to make it easier for employers to

move H-1B workers from one location to another, which is

germane to ITServe’s purpose as a trade association

representing the interests of employers who regularly hire such

workers. And there is no reason why individual employers

must join the suit for us to fairly decide the legal issues

presented. The only contestable standing question is whether

a member of ITServe could bring this lawsuit individually.

To establish Article III standing, an individual entity must

show that it has suffered, or will imminently suffer, an injury

caused by the challenged conduct and likely to be redressed by

a favorable judicial decision. TransUnion LLC v. Ramirez, 141

S. Ct. 2190, 2203 (2021); Lujan v. Defs. of Wildlife, 504 U.S.

555, 560–61 (1992). ITServe adequately proved that Saxon

Global, Inc., an information-technology company that is one of

its members, would have standing. Saxon submitted a

declaration that it “regularly employs foreign nationals in H-

1B status” to provide on-site service to clients. App. 6. These

employees work under client contracts “of a defined duration,”

after which Saxon assigns them to new projects for different

clients. Id. Often, the new projects are at client sites outside

the areas specified in the initial LCA and H-1B petition. Id.

Simeio’s interpretation of the material change regulation thus

requires Saxon to file amended H-1B petitions whenever it

relocates H-1B employees. Id. at 8. And each filing requires

Saxon to incur substantial filing and attorney fees. Id. at 7; 8

C.F.R. § 106.2(a)(3)(i). This is a classic pocketbook injury

traceable to Simeio and redressable by a favorable decision

from this Court.

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DHS objects that Saxon did not adequately spell out the

details of specific employee movements. DHS invokes a

statement in Lujan that “‘some day’ intentions—without any

description of concrete plans, or indeed even any specification

of when the some day will be” do not establish a sufficiently

imminent injury. 504 U.S. at 564. But the possibility that

Saxon will have to transfer H-1B employees to new locations

is hardly as speculative as the Lujan plaintiffs’ stated intentions

to travel across the world to view endangered species. The very

nature of Saxon’s business involves frequently transferring H-

1B employees, triggering a steady and ongoing obligation to

file amended H-1B petitions. And Saxon did estimate that

Simeio forces it to amend some twenty H-1B petitions per year.

App. 8. DHS objects that the estimate was made as of 2021,

whereas standing must be assessed as of when the lawsuit was

filed in 2020. See Lujan, 504 U.S. at 570 n.4. But no record

evidence suggests that Saxon’s business practices changed

over that one year, so the estimate fairly shows what Saxon

faced when the lawsuit was filed.

More broadly, DHS contends that a party may never

establish an Article III injury from the precedential effect of an

administrative adjudication to which it was not a party. Teva

Pharmaceuticals USA, Inc. v. Sebelius, 595 F.3d 1303 (D.C.

Cir. 2010), definitively rebuts that contention. In Teva, we held

that a drug manufacturer had standing to challenge an

unfavorable statutory interpretation adopted in administrative

adjudications to which the manufacturer was not a party. We

exhaustively surveyed this Court’s precedents on when non-

parties have standing to challenge administrative adjudications.

We acknowledged one line of cases stating that an

adjudication’s “mere precedential effect within an agency is

not, alone, enough to create Article III standing, no matter how

foreseeable future litigation.” Id. at 1312 (quoting Sea-Land

Serv. v. DOT, 137 F.3d 640, 648 (D.C. Cir. 1998)). But we

8

explained why the form of agency action threatening future

injury cannot be dispositive:

For the purpose of the classic constitutional standing

analysis, it makes no difference to the “injury” inquiry

whether the agency adopted the policy at issue in an

adjudication, a rulemaking, a guidance document, or

indeed by ouija board; provided the projected

sequence of events is sufficiently certain, the

prospective injury flows from what the agency is

going to do, not how it decided to do it.

Id. We thus concluded that the cases following Sea-Land are

“more naturally understood as arising from the lack of a

sufficiently imminent and concrete injury than from some sort

of ad hoc exception to otherwise-universally applicable

constitutional doctrine.” Id. at 1313. In contrast, we

summarized four other decisions in which we allowed

challenges to policies or interpretations adopted in

administrative adjudications to which the challenger was not a

party. See id. at 1314. In these cases, we explained, the

challengers had standing because “the prospect of impending

harm was effectively certain.” Id.

DHS counters with Conference Group, LLC v. FCC, 720

F.3d 957 (D.C. Cir. 2013), but it bears little resemblance to this

case. There, the Federal Communications Commission

decided that one company provided telecommunications

services under the governing statute and thus required the

company to contribute to a certain FCC fund. Id. at 961. We

held that another company, Conference Group, had standing to

challenge this action as a procedurally defective rulemaking

because, if the action were a broadly applicable rule, then

Conference Group would likely have to contribute to the same

fund. Id. at 962–63. But if the agency action was an

9

adjudication, we further held, then Conference Group would

lack standing to challenge the substance of the action. On that

point, we reiterated that the mere precedential effect of an

agency adjudication does not permit a bystander to challenge

it. Id. at 963. And we stressed that Conference Group did not

“identify any imminent Commission enforcement action

against it.” Id. at 964. Here, in contrast, ITServe showed that

Saxon’s regular business practices would require it either to file

amended petitions or risk revocation under Simeio. To be sure,

agencies do not always enforce their statutes, rules, or

decisions, and the lack of any credible enforcement threat may

foreclose the possibility of an imminent injury. See, e.g.,

California v. Texas, 141 S. Ct. 2104, 2114 (2021). But here,

the guidance document makes clear that USCIS will enforce

Simeio with respect to employee relocations that happened or

will happen after its issuance. App. 73–76. We thus have every

reason to conclude that Saxon will fall within Simeio, which

USCIS will enforce. That is enough to establish an imminent

injury for purposes of Article III.

III

ITServe contends that Simeio was a rulemaking disguised

as an adjudication, which would make it procedurally invalid

for lack of notice-and-comment procedures. We hold that

Simeio was an adjudication.

The Administrative Procedure Act divides agency action

into two broad categories, rulemaking and adjudication.

Rulemaking is agency process for formulating a “rule,”

5 U.S.C. § 551(5), which is “an agency statement of general or

particular applicability and future effect designed to

implement, interpret, or prescribe law or policy,” id. § 551(4).

Adjudication is agency process for formulating an “order,” id.

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§ 551(7), which is a “final disposition” in a “matter other than

rule making but including licensing,” id. § 551(6).

Building on these definitions, we have identified two

principal distinctions between rulemaking and adjudication.

First, rulemaking typically announces “generally applicable”

legal principles, whereas adjudication involves case-specific

determinations. Safari Club Int’l v. Zinke, 878 F.3d 316, 332–

33 (D.C. Cir. 2017). Second, rulemaking governs only the

future, whereas adjudications “immediately bind parties by

retroactively applying law to their past actions.” Id. at 333; see

also Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 216

(1988) (Scalia, J., concurring) (“rules have legal consequences

only for the future”).

Under these standards, Simeio was an adjudication. It

arose out of a specific controversy involving an employer that

changed an H-1B employee’s intended worksites without filing

an amended petition. 26 I & N Dec. at 543–44. It interpreted

pre-existing law—i.e., the material change regulation—to

require an amended petition in those circumstances. Id. at 548.

And it applied that law to revoke approval of the employer’s

H-1B petition. Id. at 549. Simeio thus reads and functions like

a judicial decision interpreting an agency regulation and then

applying it to resolve a case or controversy. It is no less

adjudicatory than such a decision would be.

The guidance document confirms these points. It explains

how USCIS will enforce Simeio in other cases: For relocations

that occurred before Simeio was decided, USCIS exercised its

discretion to “not pursue new revocations or denials based

upon failure to file an amended or new petition.” App. 74. For

relocations that occurred after Simeio was decided but before

the guidance document was issued, USCIS would withhold

enforcement if the employer filed the requisite new or amended

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petition by a date certain. Id. at 75. And for relocations that

occurred after the guidance document was issued, USCIS

warned that employers “must file an amended or new petition

before an H-1B employee starts working at a new place of

employment not covered by an existing, approved H-1B

petition.” Id. at 76. This extended guidance, tempering

retroactive enforcement to accommodate employers, confirms

that Simeio did not simply announce a new rule for the future,

but set forth the agency’s view of what the material change

regulation had meant from the date of its enactment.

ITServe objects that the Simeio decision, in construing the

regulation to encompass changes in the place of employment,

contains reasoning that sweeps broadly and does not vary from

case to case. But an agency “is not precluded from announcing

new principles in an adjudicative proceeding.” NLRB v. Bell

Aerospace Co., 416 U.S. 267, 294 (1974). Adjudicating a

specific controversy requires identifying the governing law,

which may involve resolving disputes about what that law

means. For this reason, we have held that “an interpretation

given in the course of an informal adjudication,” even if it

expressly claims to govern “similarly situated” non-parties, is

not a rule. Conf. Grp., 720 F.3d at 965. To the contrary, the

fact that an agency action governs a “large number” of similar

cases “carries little weight” in deciding whether it is a rule or

order. Nat’l Biodiesel Bd. v. EPA, 843 F.3d 1010, 1018 (D.C.

Cir. 2016) (cleaned up).

ITServe also argues that Simeio had no retroactive effect

because the employer in that case had withdrawn its H-1B

petition before the Administrative Appeals Office rendered its

decision, which in turn caused the petition to be “immediately

and automatically revoked” by operation of law. 8 C.F.R.

§ 214.2(h)(11)(ii). The record includes a letter, from USCIS to

Simeio, referencing the withdrawal and revocation of an H-1B

12

petition. App. 70. Redactions to the letter exclude key

identifying information, and the Simeio decision does not

reference any possible revocation. Nonetheless, we will

assume that the employer withdrew the relevant petition. We

may even assume that USCIS decided an administrative appeal

that, had it been pending before an Article III court, would have

been dismissed as moot.

But mootness and retroactivity present different questions.

As we explained in Neustar, Inc. v. FCC, 857 F.3d 886 (D.C.

Cir. 2017), the “prospective-retroactive distinction consistently

focuses on the application of principles in the past or future.”

Id. at 896. Or as Justice Scalia put it: “Adjudication deals with

what the law was; rulemaking deals with what the law will be.”

Bowen, 488 U.S. at 221 (Scalia, J., concurring). Viewed

through that lens, Simeio was clearly retroactive. As shown

above, it interpreted and applied the material change regulation

to establish what the law was, regardless of whether that

question presented a live and ongoing dispute in Simeio itself. 2

Finally, ITServe notes that USCIS’s predecessor agency

proposed but never adopted a rule that would have required an

amended H-1B petition whenever a covered employee moved

2

We recognize that announcing broad policies through moot

adjudications might sometimes violate the bedrock principle that

“agencies must act without arbitrariness,” including when choosing

whether to proceed by rulemaking or adjudication. Tennessee Gas

Pipeline Co. v. Fed. Power Comm’n, 606 F.2d 1373, 1380 (D.C. Cir.

1979) (“the arbitrariness standard may beyond some distant point

confine the business of agencies in a manner remotely akin to article

III”). Here, though, the Simeio dispute was live when USCIS

initiated the “process for the formulation of an order.” 5 U.S.C.

§ 551(7). And while ITServe points to other instances where USCIS

declined to resolve moot controversies, it does not separately contend

that USCIS acted arbitrarily by deciding Simeio on the merits.

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to a new worksite. See Petitioning Requirements for the H

Nonimmigrant Classification, 63 Fed. Reg. 30,419, 30,422

(proposed June 4, 1998). But the failure to adopt that rule has

no bearing on whether Simeio permissibly interpreted the

material change regulation to have already imposed the same

obligation.

In short, Simeio is exactly what it purports to be—an

informal adjudication resting on USCIS’s interpretation of the

material change regulation.

IV

ITServe argues that USCIS lacks statutory authority to

require sponsoring employers to file new or amended H-1B

petitions when they move covered employees to new

worksites. We disagree.

Two distinct grants of authority bear on this question.

First, Congress charged the Department of Homeland Security

“with the administration and enforcement” of the Immigration

and Nationality Act. 8 U.S.C. § 1103(a)(1). And USCIS is the

DHS component responsible for administering and enforcing

the INA’s H-1B visa program. 6 U.S.C. § 271(b)(5). Second,

Congress directed USCIS to determine the “question of

importing any alien as a nonimmigrant” with H-1B status,

based on petitions from prospective employers. 8 U.S.C.

§ 1184(c)(1).

These provisions amply support Simeio’s interpretation of

the material change regulation. To qualify an alien for H-1B

status under the INA, the prospective employer must file an

LCA with the Department of Labor. 8 U.S.C.

§ 1101(a)(15)(H)(i)(b). In the LCA, the employer must make

various promises, including one to pay the employee at least

the prevailing wage in the local geographic area. Id.

14

§ 1182(n)(1)(A)(i). These promises are conditions for securing

H-1B status and thus bear on the “question of importing” H-1B

aliens. That is why USCIS regulations require a prospective

employer to submit an approved LCA as part of its initial H-

1B petition. 8 C.F.R. § 214.2(h)(4)(iii)(B). But the employer’s

obligations do not end once USCIS approves the H-1B petition.

And ensuring that the employer keeps its promises thus falls

squarely within “administration and enforcement” of the INA.

That is why, to support compliance review on the back end, the

material change regulation requires an amended H-1B petition

if there are “material changes” in the terms of covered

employment, including changes bearing on “the alien’s

eligibility” for H-1B status “as specified in the original

approved petition.” Id. § 214.2(h)(2)(i)(E). Finally, as Simeio

explained, the transfer of a covered employee from one area to

another bears on this eligibility, for the prevailing wage in one

area might not be the prevailing wage in another. See 26 I & N

Dec. at 548.

ITServe objects that USCIS’s section 1184(c)(1) authority

is focused on the “question of importing” H-1B workers,

which, it says, does not include policing what happens once the

workers are already here. Yet the INA expressly contemplates

employers filing new or amended section 1184(c)(1) petitions

on behalf of aliens already admitted into the United States, such

as when the alien changes employers. 8 U.S.C.

§ 1184(c)(9)(A) & (12)(A). The INA also specifies post-entry

situations not requiring amended petitions, such as when the

sponsoring employer is involved in a corporate restructuring

but the terms of employment do not change. Id. § 1184(c)(10).

This would be surplusage if ITServe were correct that USCIS’s

section 1184(c)(1) authority shuts off once the H-1B worker

enters the country.

15

In any event, policing compliance with the terms of an

LCA plainly constitutes “administration and enforcement” of

the INA, which section 1103(a)(1) independently authorizes.

As explained, the statutory requirements for an H-1B visa, and

the LCA promises made to obtain it, remain effective

throughout the term of authorized employment—an employer

cannot promise to pay an alien $100 per hour to work as a

rocket scientist in Los Angeles, secure his entry on that basis,

and then ship him off to drive a cab in Boston. Moreover, an

admitted H-1B worker who fails to maintain qualifying

employment will lose non-immigrant status and become

removable. 8 U.S.C. § 1227(a)(1)(C)(i). The material change

regulation thus allows USCIS to monitor changing facts that

bear on its enforcement responsibilities, including facts

regarding where H-1B workers are employed.

ITServe further objects that only the Department of Labor

may police questions about the wages and working conditions

of H-1B employees. As ITServe explains, the INA gives the

Department enforcement responsibilities at the front and back

ends of the H-1B process: At the front end, Labor must review

an LCA for “completeness and obvious inaccuracies” and must

decide whether to approve it within seven days. 8 U.S.C.

§ 1182(n)(1)(G)(ii). At the back end, Labor must investigate

alleged LCA violations and may fine employers for them. Id.

§ 1182(n)(2)(A), (C). But these authorities are not by their

terms exclusive, so as to oust USCIS from its own authority

over the H-1B petition process. And the INA strongly suggests

that the agencies’ respective authorities are complementary

rather than exclusive: The statute requires USCIS to adjudicate

H-1B petitions “after consultation” with Labor. Id. §

1184(c)(1). That would be an odd way for Congress to convey

that USCIS, in dealing with prevailing-wage or other LCA

terms, may do nothing more than confirm the fact that the

Department of Labor, after its compressed and limited initial

16

review, has approved an LCA filed before or after the covered

alien has entered the country.

Because USCIS may consider LCA-related issues in

exercising its own authority to approve, disapprove, or revoke

H-1B petitions, it may require new or amended petitions

corresponding to changes in the place of employment that

necessitate the filing of new LCAs.

Affirmed.