UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA GREENSBORO DIVISION NORTH CAROLINA - ASSOCIATION, INC., PO. Box 417, Vass, NC 28394, and THE AMERICAN FARM BUREAU FEDERATION, 600 Maryland Ave, sw, . Washington, DC. 20024, Plaintiffs Case No: 10 cv 200 HILD A L, SOLIS, ORAL ARGUNIENT REQUESTED in her of?cial capacity as United States Secretary of Labor, 200 Constitution Avenue, NW, Washington, DC 20210, and THE UNITED STATES DEPARTMENT OF LABOR, 200 Constitution Avenue, NW, Washington, DC 20210, Defendants. CONIPLAINT Plaintiffs the North Carolina Grcwers? Association, Inc. and the American Farm Bureau Federation (the ?Farm Bureau?), hereby. bring this Complaint against Defendants Hilda L. Solis, in her of?cial capacity as Secretary of the US. Department of Labor, and the US. Department of Labor (?the alleging as follows: INTRODUCTION 1. Plaintiffs bring this action for judicial review and declaratory and injunctive relief related to Temporary Agricultural Employment of Aliens in the DCI 302740972 Case Document 1 Filed 03/12/10 Pace 1 of 25 United States, 75 Fed. Reg. 6884 (Feb. 12, 2010) (the ?Solis 2010 Final Rule?); and Temporary Agricultural Employment of Aliens in the United States, 74 Fed. Reg. 45906 (Sept. 4, 2009) (the ?Solis 2010 The Plaintiffs contend that the Solis 2010 Final Rule should be enjoined and declared to be in violation of the Regulatory Flexibility Act, 5 U.S.C. 601 _et seq. (the and the Administrative Procedure Act, 5 U.S.C. ?701, et seq. (the JURISDICTION AND VENUE 2. This Court has federal question jurisdiction pursuant to 28 U.S.C. ?1331, as this action involves judicial review of agency action pursuant to the APA, 5 U.S.C. ??553 and 701, et seq, and the RFA, 5 U.S.C. 611. 3. Venue is proper in the Middle District of North Carolina because Plaintiff NCGA is a citizen Carolina and its principal place of business is located in the Middle District of North Carolina. 28 U.S.C. ?1391(e)(3). PARTIES 4.. I Plaintiff NCGA is a non-pro?t growers? association based in Vass, Moore County, North Carolina. NCGA is the nation?s largest provider of workers, providing approximately 7,500 workers per year to approximately 700 farmers. NCGA is a North Carolina corporation. 5. Plaintiff Farm Bureau is a general voluntary farm organization with over 6.2 million member families. Established in 1.919, the purpose of the Farm Bureau is to protect, promote and represent the business, economic, social, and educational interests of America?s fannch and ranchers. Through its af?liates in each of the 50 States and Puerto Rico, the Farm Bureau represents the producers of every farm and ranch commodity raised and grown in the Nation. Farming is labor intensive, and thus Farm Bureau members 2 302740972 Case Document 1 Filed 03/12/10 Pace 2 of 25 routinely employ both family labor and hired labor. Hired labor includes both US. workers and nonimmigrant labor through the guestworker program. 6. Defendant Hilda L. Solis (?Solis?) is Secretary of the US. Department of Labor (the or ?Department?). The Secretary of Labor is responsible for all functions of the DOL, including administration of the program. Solis is sued in her of?cial capacity, pursuant to 5 U.S.C. ?703. 7. Defendant DOL is responsible for administration of the program. FACTS Overview of the H-2A Program 8. The H-QA program was instituted in 1987 after the enactment of the Immigration Reform and Control Act amendments to the Immigration and Nationality Act, 8 U.S.C. ?llOl, ez? seq. The program replaced the prior program that had also provided a legal means by which agricultural employers could obtain the temporary services of foreign agricultural workers when US. workers were unavailable. 9. The purpose of the program is to provide non-immigrant alien labor for agricultural concerns (?farmers?) in the United States. Under the program, farmers must apply to the DOL (as well as DHS and the State Department) and be approved to hire workers. The farmers must meet a number of stringent regulatory requirements regarding the wages paid, reimbursing or furnishing of certain tranSportation expenses, furnishing of housing, and the like. 10. I All of these terms are set forth in a contract (Agricultural and Food Processing Clearance Order, or ?Clearance Order?) that must be approved by DOL and is provided to the worker. 3 302740972 Case Document 1 Filed 03/12/10 Pace 3 of 25 11. The H-2A program was not designed to replace U.S. farm workers with H- 2A workers. Before an employer can proceed to hire workers, the DOL must first certify that there are insuf?cient US. workers available and that the employer?s use of 11-- 2A workers will not adversely affect the wages and working conditions of similarly situated US. workers. 12. Farmers are required by regulation to ?le H-2A applications no fewer than 45 days before the date they expect to need workers. The DOL is required by statute to, in most cases, render a decision on an application no fewer than 30 days before the employer?s date of need. 13. For much of its existence, up until 2009, the H-ZA program had historically been plagued by severe processing and administration problems and criticized by both workers and farmers for its inef?ciencies. 14. Until January 2009, the program had been substantively unchanged for more than 20 years. 15. NCGA has been requesting changes to the 1987 H-2A regulations since 1991. Similarly, the Farm Bureau has been requesting changes to the 1987 regulation for many years. The ?Chao Final Rule? 16. On February 13, 2008, then-Secretary of Labor Elaine L. Chao issued a Notice of Proposed Rulemaking, Temporary Agricultural Employment of Aliens in the United States; Modernizing the Labor Certification Process and Enforcement; Proposed Rule, 73 Fed. Reg. 8538 (Feb. 13, 2008) (the ?Chao 4 302740972 Case Document 1 Filed 03/12/10 Paoe 4 of 25 17. The Chao proposed a ?re-engineering? of the existing regulations in an effort to revise and update the program to address many of the criticisms of the program and make it more responsive to the changes in agriculture over the prior 20 years since the program was created. 18. On December 18, 2008, and after more than six additional months of deliberation and consideration of approximately 11,000 comments, the DOL promulgated Temporary Agricultural Employment of Aliens in the United States; Modernizing the Labor Certification Process and Enforcement; Final Rule (the ?Chao Final Rule?), 74 Fed. Reg. 77111 (Dec. 18, 2008), which became effective on January 17, 2009. 19. The Chao Final Rule streamlined the application process, including removing the burdens of duplicative tiling requirements. 20. The Chao Final Rule also clari?ed issues related to reimbursement of travel expenses, calculation of the applicable wage rate, handling of workers? compensation bene?ts when the H-2A requirement appears to con?ict with applicable state law, ensured additional due process rights for applicants, improved worker protections, and many other issues, providing much?needed legal certainty to both farmers and workers. The First Attempt at Revocation by Secretary Solis 21. On March 17, 2009, less than one month after Secretary Solis? confirmation, the DOL published a Notice of Proposed Suspension of the Chao Final Rule, Temporary Employment of Aliens in the United States, 74 Fed. Reg. 11408 (March 17, 2009) (the ?Solis 22. The soucalled ?suspension? sought to throw out the entire Chao Final Rule and replace it with the predecessor 1987 Rule. 5 DCI 302740972 Case Document 1 Filed 03/12/10 Pace 5 of 25 23. After allowing only 10 days for public comment, the DOL published a Notice of Final Suspension for the Chao Final Rule Temporary Employment Aliens in the United States, 74 Fed. Reg. 25972 (May 29, 2009) (the ?Solis Final Rule?). 24. On June 9, 2009, Plaintiffs ?led a complaint in this Court, seeking to enjoin the DOL from enforcing the Solis Final Rule. The suit alleged that the rule was not a ?suspension? but rather a full??edged rulemaldng and that its promulgation violated the APA by, among other things, improperly restricting the scope and content of public comments. The court granted the Plaintiffs? Motion for Preliminary Injunction on June 29, 2009. NC. Growers ?Ass?n v. Solis, 644 F. Supp. 2d 664, 674 (M.D.N.C. 2009). 25. After the court?s Order enjoining the Department?s effort to replace the Chao Final Rule and resurrect the 1987 Rule, the DOL published a Notice of Proposed Rnlernaking, Temporary Agricultural Employment of HHZA Aliens in the United States, 74 Fed. Reg. 45906 (Sept. 4, 2009) (?Solis 2010 The Solis 2010 NPRM, like its predecessors, proposed to radically revise the H-2A program, including replacing or rewriting most of the provisions adepted in the Chao Final Rule and reverting in many cases to the 20-year old provisions from the 1987 Rule. 26. As part of the Solis 2010 NPRM, the Assistant Secretary of Employment and Training Administration which oversees the program at the US. Department of Labor, certi?ed to the Chief Counsel for Advocacy, US. Small Business Administration, under the Regulatory Flexibility Act, 5 U.S.C. 605(b), that the Solis 2010 NPRM would not have a signi?cant economic impact on a substantial number of entities (the Certi?cation?). The NPRM Certification estimated the economic impact at $911 per year, per average ?rst?time farmer, and $904 per year, per average repeat 6 302740972 Case Document 1 Filed 03/12/10 Pace 6 of 25 farmer. 74 Fed. Reg. 45936 n. 28. In determining that the number of entities was not ?substantial,? the DOL compared the number of small farmers affected by the Rule with all small fathers in the United States, including all non?H-2A farmers, who were not even part of the regulated community. This was inappropriate, did not comply with the RFA, and substantially diluted the ?significant number? of affected entities. In fact, the number of small farmers should have been compared against the number of all farmers. The percentage of small H-2A fanners among all farmers is approximately 98 percent, according to the own calculations, or approximately 7,900 farmers, or approximately 22,600 farmers through the year 2018. A 27. Based on the above, the NPRM Certi?cation was made without a good faith reasonable supporting factual basis or analysis. 28. On February 12, 2010, the DOL issued Temporary Agricultural Employment of Aliens in the United States, 75 Fed. Reg. 6884 (Feb. 12, 2010) (the ?Solis 2010 Final Rule?). 29. The DOL received nearly 7,000 comments on the Solis 2010 NPRM. 30. The vast majority of comments opposed the changes included in the Solis 2010 NPRM, and for some individual provisions contained in the Solis 2010 NPRM (that were adopted verbatim in the Solis 2010 Final Rule) every one of the comments submitted on the issue opposed the change. 31. As part of the Solis 2010 Final Rule, the Assistant Secretary of ETA again certi?ed to the Chief Counsel for Advocacy, Small Business Administration, under the RFA, 5 U.S.C. 605(b) that the Solis Final Rule would not have a signi?cant economic impact on a substantial number of entities (the ?Final Certi?cation?). This time, the DOL 7 DCI 302740972 Case Document 1 Filed 03/12/10 Pace 7 of 25 found that the economic impact would be signi?cant m? instead of $911 for a ?rst-time user, the revised estimate was $22,934 for a ?rst?time user but again found that the number was not ?substantia because the DOL inappropriately used all small U.S. farmers, and non-H-2A, as the comparator instead of all H-2A farmers. The DOL claimed that 98 percent of US farms had revenues of less than $750,000 and thus met the SBA defmition of ?small entity.? See 75 Fed. Reg. 6953. The Final Certi?cation therefore underestimated the number of affected small fanners to be 1.2 percent of the total. 32. The DOL did not provide a Final Regulatory Flexibility Analysis with the Solis Final Rule as required by the RFA under 5 U.S.C. 604. 33. Because the DOL used the wrong comparator to dilute the impact of the Solis 2010 Final Rule on small farmers, the Final Certi?cation was made without a good faith, reasonable suf?cient factual basis or suf?cient analysis. 34. . Despite the certi?cation to the contrary, the Solis 2010 Final Rule will plainly have a signi?cant impact on a substantial numbers of small entities: approximately 98 percent of all farmers, or approximately 7,800 farmers. 35. DOL did not acknowledge numerous detailed comments explaining how, even using own limited data in the NPRM, the proposal would, in fact, have a signi?cant economic impact on a substantial number of small entities. 36. DOL acknowledges that 98 percent of US. farms qualify as ?small entities? with annual revenues of less than $750,000. 37. DOL assumes the average employer has annual revenues of $367,000 and hires 12 workers. 8 302740972 Case Document 1 Filed 03/12/10 Pace 8 of 25 38. DOL assumes, however, that even if all employers (as many as 22,601 in 2018 by estimate) are small businesses, they are not substantial in number. 39. The Solis Final Rule is scheduled to become effective on March 15, 2010, and contains no ?Grandfather Clause? exempting employers with contracts already in place for H-2A workers from having to comply with the Solis Final Rule. FIRST CAUSE OF ACTION Violation of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 40. The Plaintiffs re?allege and incorporate by reference the allegations of Paragraphs 1-39 of the Complaint as if fully set forth herein. 41. The RFA, 5 U.S.C. ?601, et seq, requires agencies to consider the impact of their regulatory proposals on small entities, analyze alternatives to minimize that impact, and make the analyses available for public comment. The only exception tothis requirement is where the regulation will not have a substantial impact on a signi?cant number of small entities. 42. The Solis 2010 NPRM and the Solis 2010 Final Rule have a substantial impact on a signi?cant number of small entities -- that is, farmers doing annual business of less than $75 0,000. However, the DOL failed to conduct a good faith, reasonable economic analysis regarding the impact of the Solis 2010 NPRM as required by the failed to provide the public with a sufficient opportunity to comment on that analysis; and failed to conduct a good faith, reasonable economic analysis regarding the impact of the Solis 2010 Final Rule as required by the RFA. As a result, the entire 9 302740972 Case Document 1 Filed 03/12/10 Pace 9 of 25 rulemaking process related to the Solis 2010 NPRM and the Solis 2010 Final Rule has been tainted. 43. The NPRM Certi?cation submitted by the DOL failed to provide any good faith, reasonable factual basis or analysis supporting such a certi?cation; and has failed to provide the public with an opportunity to comment on any factual basis and analysis supporting such a certi?cation. 7 44. The NPRM Certi?cation, because it was made Without any good faith, reasonable factual basis, and because the public was deprived of an opportunity to comment on any factual basis and analysis supporting such a certi?cation, the entire Solis Final Rule rulemaking process has been tainted. 45. The Solis 2010 NPRM and the Solis 2010 Final Rule violate the RFA because both i) fail to include an analysis of the impact of the suspension on small entities; ii) ignore readily available information about the number of small entities affected by the Solis 2010 NPRM or the Solis 2010 Final Rule; incorrectly claim that as many as 22,601 small farms that will be affected by the Solis 2010 Final Rule through the year 2018 is not a substantial number; iv) fail to provide the public With an opportunity to comment on the analysis; v) fail to provide any good faith basis or analysis supporting such a certi?cation; and vi) fail to provide the public with an opportunity to comment on the factual basis and analysis supporting such a certi?cation; and vii) fail to consider less burdensome alternatives that would minimize the signi?cant economic impact on small entities. 46. Despite certifying in the Solis 2010 NPRM that the proposed regulations would not have a signi?cant economic impact on a substantial number of small entities, the 10 nc1 302740972 Case Document 1 Filed 03/12/10 Paoe 10 of 25 Solis 2010 NPRM claimed the Department did not know how many H-2A employers were small entities but that it did not believe that it constituted a substantial number. 47. The DOL was provided with comments suggesting that based on DOL data, including data cited in the Solis 2010 NPRM, that it would be reasonable to conclude that at least 98 percent of the more than 8,150 employers, or nearly 7,900, in the prior year quali?ed as small entities. DOL assumes in the Solis 2010 Final Rule that there will be 22,601 small entities participating the program by 2018. 48. DOL cited no evidence indicating that fewer numbers of small entities are present in the H-ZA program than in the general farming population. 49. Thus, by any reasonable measure, 7,800 farms is a substantial number, and 22,601 is also a substantial number. 50. In the Solis 2010 Final Rule, the DOL admits that the regulatory changes will have a ?substantial impact? on small entities. 51. However, the DOL improperly concluded that the number of affected small entities was not ?significant? by using all small farms in the United States as the comparator instead of all farms in the United States. By using the wrong comparator, the DOL underestimated the number of affected entities at 1.2 percent of the total 52. That calculation, however, distorts the impact of this rule because the vast majority of small farms in the US. will never participate in the program. 53. The proper universe of potentially affected entities should be just those farms that participate in the program. 1 1 not 302740972 Case Document 1 Filed 03/12/10 Paoe 11 of 25 54. DOL also claimed for the ?rst time in the Solis Final Rule that because 10 percent of the total number of small farms in the US. are not affected by the Rule that there is not an impact on a substantial number of small entities. 55. DOL does not disclose upon what basis it suddenly determined in the Final Rule that a 10 percent threshold is a reasonable basis for determining a ?substantial number.? 56. Even assuming a ten percent threshold, the Solis Final Rule affects a substantial number of small entities because virtually all employers are small and the Rule affects each one of them. 57. Upon information and belief, in the Solis Final Rule, the DOL ignored comments and relevant information relating to the substantial number of small entities affected by the Rule, and unreasonably calculated the percentage of small U.S. farms affected by factoring in all small farms in the US. in an effort to make the Solis Final Rule appear as though it had minimal impact on small entities and thus would be exempt from the reach of the 58. Upon information and belief, the DOL did not adequately consider less burdensome alternatives, including delaying implementation of some or all portions of the Solis Final Rule until the end of the harvest season or end of the calendar year as a means of mitigating the impact on farmers. The Solis Final Rule change will now take effect in the middle of a growing season and as a result will cause substantial confusion and uncertainty for employers who will have to simultaneously comply with two completely different regulatory regimes covering workers who in many cases will work side by side, and for employers who are uncertain about the extent of their obligations going forward, as 12 DCE 302740972 Case Document 1 Filed 03/12/10 Paoe 12 of 25 well as the status of their pre-existing contractual obligations due to the arnbiguous or contradictory language of the Final Rule. 59. Because of these de?ciencies, the Solis NPRM and the Solis Final Rule in its entirety violates the RFA and is arbitrary and capricious, and contrary to law, and should be set aside. SECOND CAUSE OF ACTION Violation of the Administrative Procedure Act, 5 U.S.C. 553 and 701, et seq. 60. The Plaintiffs re?all?ege and incorporate by reference the allegations of Paragraphs 1:59 of the Complaint as if fully set forth herein. 61. Before becoming Secretary, Solis publicly declared her hostility toward the Chao Final Rule in December of 2008. 62. Secretary Solis, within hours of taking office, issued a press release indicating her intent to replace the Chao Rule. 63. The original Solis NPRM was issued only four days after the Secretary took office and was subsequently challenged as violating the APA and then enjoined by this Court. 64. The NPRM Certi?cation issued in connection with the Solis 2010 NPRM, and the Final Certi?cation issued in connection with the Solis 2010 Final Rule, were arbitrary and capricious because they did not comply with the RFA, lacked a good faith, reasonable factual basis, and failed provide the necessary noti?cation to the public. 65. Upon information and belief, the has engaged in and continues to engage in an arbitrary and capricious rulernaking process as part of its attempt to ensure that it accomplished the goal announced by Secretary Solis within days of taking office. 13 DCI 302740972 Case Document 1 Filed 03/12/10 Pace 13 of 25 66. In an effort to overcome this court?s injunction enjoining the prior effort to replace the Chao Rule, the DOL issued the Solis 2010 Final Rule in a manner that ignored substantive comments opposing the proposed regulatory changes, failed to consider. or rebut evidence that contradicted conclusory statements, and failed to comply with various statutory requirements in order to arrive at an outcome that was prejudged and preordained. 67. The Solis 2010 Final Rule is scheduled to become effective on March 15, 2010, and contains no ?Grandfather Clause? to exempt employers with contracts already in place. The absence of the Grandfather Clause indicates that employers now . must apply the standards of the Solis 2010 Final Rule to pre-existing contractual relationships. I 68. The Solis 2010 NPRM did not include any noti?cation that farmers who applied for workers in 2010 under the terms of Chao Final Rule might instead be bound by the terms of the Solis 2010 Final Rule, thus depriving affected farmers of an opportunity to comment on this material element of the Solis 2010 Final Rule. 69. Without an explicit Grandfather Clause, the Solis 2010 Final Rule has an impermissible retroactive effect and upsets the settled expectations of employers and workers. 70. The DOL incorrectly calculated the percentage of small entities affected by the new regulatory scheme by relying on an arbitrary calculation accounting for all small farms in the US, instead of only those small entities employing workers. 71. The DOL failed to consider relevant evidence that it possessed, ignored public comments and evidence suggesting a different course of action and failed to provide 14 DCI 302740972 Case Document 1 Filed 03/12/10 Paoe 14 of 25 a reasoned analysis for its departure from past practice. For example, the Solis 2010 Final Rule removed a provision of the Chao Final Rule that permitted an employer?s application to continue to move through the certi?cation process even though an inspection of worker housing had not yet been completed. This provision of the Chao Final Rule was accompanied by extensive analysis eXplaining it was instituted to help ensure the DOL could meet its strict statutory requirement at 8 U.S.C. 1188(c)(3) to certify an employer?s application 30 days before the employer?s speci?ed date of need for workers. See 73? Fed. Reg. 77110, 77142. In the Solis 2010 Final Rule, the DOL acknowledges that prior to implementation of the Chao Final Rule, it failed to meet its strict statutory timeframe for certi?cation. 75 Fed. Reg. 6910. The DOL failed to provide the public with any data on the certi?cation time?ame in ?scal year 2009, the year following implementation of the Chao Final Rule, despite citing to ?scal year 2009 program data elsewhere in the Solis 2010. Final Rule. The failure to provide that data prevented the public from be able to judge whether the provision in the Chao Final Rule was effective and whether the evidentiary basis supported or rebutted the position expressed in the Solis 2010 Final Rule. 72. The DOL summarily dismissed comments from employers 0 indicating that in their experience this provision of the Chao Final Rule had contributed to a marked improvement in the meeting its statutory requirement to issue certi?cations 30 days before the date of need. The Department failed to provide a reasoned, good faith analysis supporting its rejection of a provision that was thoroughly substantiated in the Chao Final Rule, and for which available evidence and public comment would indicate actually helped the Department abide by its statutory requirement. 15 302740972 Case Document 1 Filed 03/12/10 Paoe 15 of 25 73. The DOL impermissiny relies on conclusory statements without factual or evidentiary support for the proposed changes and ignores evidence and comments that directly contradict the Department?s position. For example, the DOL proposed without suf?cient factual basis or analysis in the NRPM to change the de?nition of ?"Temporary or Seasonal Nature? that had been part of the H-2A program for more than 20 years. Every one of the comments submitted on this issue opposed the change. See '75 Fed. Reg. 6890. Despite the acknowledgement that the comments ?found that there was no rational basis for the change and stated that the preamble explanation was insuf?cient,? the DOL failed to cite any countervailing evidence or analysis but rather simply concludedthat it would retain in the Solis 2010 Final Rule the proposed change announced in the Solis 2010 NPRM. 74. In order to justify positions in the Solis 2010 Final Rule, the DOL relies on data and information accumulated after the proposal was published and which the public had no opportunity to evaluate or offer comment on. In addition, in the Solis 2010 Final Rule, the Department fails to provide the underlying data or specify the calculations performed to reach the conclusions in the Solis 2010 Final Rule, let alone providing such information in the Solis 2010 NPRM and permitting the public to evaluate such data and calculations and offer additional relevant and/or alternative evidence. For example, the Department noted that several commenters questioned the Department?s conclusions in the NPRM and asked for more speci?c data. See 75 Fed. Reg. 6896. In response, the Solis 2010 Final Rule explained that as a justi?cation for its wholesale change in the wage calculation methodology it analyzed H-ZA program data from ?scal years 2008 and 2009. Id. Significantly, ?scal year 2009 had not yet ended when the Solis 2010 NPRM was 1 6 302740972 Case Document 1 Filed 03/12/10 Paoe 16 of 25 published for public comment. The DOL did not explain that the 2009 data were only for a partial ?scal year and misleadingly created the impression that the DOL had considered data from two full ?scal years. 75._ The DOL adopted substantive requirements in the Solis 2010 Final Rule that were not subject to notice and comment in the Solis 2010 NPRM. To cite one example, the DOL includes in the Solis 2010 Final Rule at 20 CFR ?120(a) a requirement that ?an employer must offer, advertise in its recruitment, and pay a wage that is the highest of the prevailing hourly wage or piece rate, the agreed-upon collective bargaining wage, or the Federal or State minimum 75 Fed. Reg. 6962. The .- provision at 20 CFR ?l20(a) results in signi?cant additional burdens on employers and is materially different from the language that was proposed in the Solis 2010 NPRM, which did not include a requirement that employers consider or pay a collective bargaining'wage if it was the highest of the other potentially applicable wages. See 74 Fed. Reg. 45906, 45943. The Department even acknowledges that it did not propose in the Solis 2010 NPRM to add this requirement, but decided to include it in the Final Rule in response to a request froma commenter. Id. at 6901.. Because a commenter suggests the Department include additional substantive requirements in the Solis 2010 Final Rule, however, the 1 Department is not absolved of its responsibility to ensure the public has a fair opportunity to comment on substantive regulatory requirements under consideration. In this case the public was not apprised of the fact that the Department was considering imposing the additional requirement at 20 CFR ?120(a) on employers. Nor could the public have been expected to foresee that the Department would consider imposing this substantive requirement on employers, as it is not a logical outgrowth of the Department?s original 17 not 302740972 Case Document 1 Filed 03/12/10 Pace 17 of 25 proposed provision relating to offered wage rates. The Department?s proposed language relating to offered wage rates at 20 CFR ?655.120 included several changes, but signi?cantly, the Department proposed no change to the four sources of potential wage rates (AEWR, prevailing rate, Federal or State minimum wage) that have been a part of the program for more than 20 years. Therefore, the Department?s failure to provide the public with notice and an opportunity to comment on the merits of this signi?cant policy change requiring employers to potentially pay a collective bargaining rate even when not parties to a collective bargaining agreement is arbitrary and capricious, and contrary to law. 76. The Department?s explanation of an employer?s new requirement to pay the collective bargaining wage described at 20 CFR ?120(a) is impermissiny vague and fails to suf?ciently apprise employers of the conditions under which the will be required to pay this new wage rate. It is not clear based on the Department?s explanation of the provision whether employers will have to pay a statewide average of collective bargaining wage rates, or whether just collective bargaining wage rates within the employer?s area of intended. employment will be applicable. In addition, a collective bargaining rate may be higher on a particular farm because of the type of work conducted on that farm. The Department provides no indication whether an employer producing different agricultural crops than those produced on a farm with a collective bargaining wage rate will nonetheless be required to pay that collective bargaining wage rate (assuming it is the highest of the other wage rates). - 77. The DOL adopted provisions in the Solis 2010 Final Rule that are impermissiny vague and/or contradict the explanation of the provision in the Preamble, thus preventing the public from knowing the actual requirement or standard to which they 13 not 302740972 Case Document 1 Filed 03/12/10 Paoe 18 of 25 are held and thus are unable to order their conduct accordingly. To cite one example, in the Preamble discussion of deductions made for transportation costs, the DOL references a - Field Assistance Bulletin issued in connection with the visa program in which the Wage and Hour Division found that such costs are ?for the primary benefit of the employers,? and thus are reimbursable to the employee in the first week of employment to the extent that failure to do so would cause the employee?s wages to fall below the minimum wage established under the Fair Labor Standards Act 75 Fed. Reg. 6915. The Preamble continues by extending the analysis contained in the Field Assistance Bulletin to the program and requiring employers to reimburse inbound transportation costs in the first week of employment to the extent that failure to do so would cause the employee?s wages to fall below the minimum wage established under the FLSA. Id The Preamble then applies the same concept to the wage (17.6. certain deductions are impermissible if they cause an employee?s wage rate to fall below the wage rate), but nevertheless suggests that ?the Final Rule does not require an employer to reimburse an employee in the first workweek up to the level of the H-ZA required wage.? Id. at 6916. Notwithstanding the foregoing representation in the Preamble, the regulatory text, at 20 CFR states that deduction that is primarily for the bene?t or convenience of the employer will not be recognized as reasonable and therefore the cost of such an item may not be included in computing wages.? Id. at 6966. In other words, the Preamble states that transportation costs are primarily for the bene?t of the employer under the program and the regulatory text states that deductions that are for the primary benefit of the employer are not permissible under the H-2A program. But, the Preamble l9 DCI 302740972 Case Document 1 Filed 03/12/10 Paoe 19 of 25 elsewhere states that deductions for transportation coSts are.1 in fact, permissible under the H42A program. 78. Another provision in the Solis Final Rule that is impermissiny vague and/or contradicts the explanation of the provision in the preamble is 20 CFR which requires that family housing be provided ?[w]hen it is the prevailing practice in the area of intended employment and 75 Fed. Reg. 6964. ?Prevailing practice? is in turn de?ned at 20 CFR ?655.103(b) as ?a practice engaged by employers, that: Fifty percent or more or employers in an area and for an occupation engage in . . . and (2) This 50 percent or more of employers also employs 50 percent or more of US. worker in the occupation and area. . . Id. at 6961. The Preamble discussion of the housing requirement at 20 CFR however, says that ?where agricultural employers are required by State statute or applicable court decisions to provide family housing to workers with families, the prevailing practice is to provide family housing.? Id. at 6910. That Preamble discussion imposes an additional substantive obligation on employers that was not included in the Sclis 2010 NPRM and which the public had no opportunity to comment upon. In addition, the Preamble language imposes an additional substantive obligation that directly contradicts the plain language of the housing provision at as well as the de?nition of prevailing practice at ?655.103 Given this direct and irreconcilable con?ict between the Preamble and the regulatory text, the farmers are unable to know the actual standard to which they will be held and are unable to order their conduct accordingly. 79. Yet another provision in the Solis 2010 Final Rule that is impermissiny vague and/or contradicts the explanation of the provision in the preamble is 20 CFR 20 no: 302740972 Case Document 1 Filed 03/12/10 Paoe 20 of 25 65 5. 122(a), which states that employers have to provide H-2A workers ?at least the same level of minimum bene?ts, wages and working conditions? offered US. workers. 75 Fed. Reg. 6963. But the Preamble explanation of that provision states that ?these regulations are not intended to require an employer to raise the wage rate of all workers . . . if a long-term US. worker being paid a higher wage is engaged in [the same type of work as the worker]. Given this direct and irreconcilable con?ict between the Preamble and the regulatory'text, the public is unable to know the actual standard to which they will be held and are unable to order their conduct accordingly. 80. The Solis 2010 Final Rule includes provisions that contradict the plain language of the governing statute and thus are contrary to law. To cite one example, the DOL is required by statute to accept or reject a labor certification application from a prospective H-ZA employer within seven days of the application being ?led. See 8 U.S.C. ?1188(c)(A) (?The employer shall be noti?ed in writing within seven days of the date of ?ling if the application does not meet the standards . . . for approval?). The Preamble to the Solis 2010 Final Rule, in discussing 20 CFR states, ?We do not interpret the provision requiring the Department to accept or reject an Application within 7 days to limit the Department from requiring modi?cations after acceptance.? 75 Fed. Reg. 6904. The provision at 20 CFR ?655.121(e) indicates that the DOL Certifying Of?Cer can require modi?cations at any time and that ?[s]uch modi?cations must be made or certi?cation [of the application] will be denied. . Id. at 6963. The DOL claims that it can initially accept an application and then later reject it as not meeting the program?s standards unless the employer makes some required modi?cation at that later time. But such a scenario renders irrelevant the initial statutory requirement that DOL determine at 21 302740972 Case Document 1 Filed 03/12/10 Paoe 21 of 25 the outset whether or not the application meets the program?s standards. The reasoning is that, without this ?exibility, it would be forced ?to overlook any apparent violations.? This rationale is unconvincing, as the statute clearly contemplates that within seven days of receiving the application DOL must evaluate it to determine whether it meets the program standards. If it does not, the application is not accepted and instead is returned to the employer for modi?cation. See 8 USC 1188(c)(2)(B) (?if the application does not meet such standards, the notice shall include the reasons therefore and the Secretary shall provide an opportunity for-the prompt resubmission of a modi?ed application?) The Department?s Preamble explanation and'adoption of 20 CFR ?655. 121 are in direct con?ict with the requirements of the statute. 81. The DOL adopted provisions without a factual basis or reasoned analysis justifying the Department?s sudden change in position. For example, the Solis 2010 Final Rule dramatically revises the standards for debarring employers that have existed in the program for decades. The DOL accomplishes this change, including jettisoning the long- standing requirement that a pattern or practice of violations exist before debarment and instead adopting a ?one?strike~and?you?re ou approach that will result in employers? being debarred after a single ?substantia Violation. 82. The Department unreasonably claimed without suf?cient factual basis that the Solis 2010 Final Rule would not result in a $100 million impact on the economy. The Department ignored numerous comments pointing out that the Department?s own data provided in the NPRM could lead to no other reasonable conclusion but that the proposal would have an annual impact on the economy of much more than $100 million. See Blake Brown Af?davit, 5?6. 22 302740972 Case Document 1 Filed 03/12/10 Paoe 22 of 25 83. The Department unreasonably claimedwithout suf?cient factual basis that the additional ?costs? associated with the required higher wage rate were not in fact ?costs? to the US. economy, but were instead just ?transfers? from H-ZA employers to H-2A (and US.) workers. The claim that cests associated with the Solis 2010 Final Rule are ?transfers? lacks any rational basis in fact, is an attempt to disguise the true cost of the proposed rule in order to avoid more fully analyzing its impact on small entities and considering less burdensome alternatives, and is arbitrary and capricious. 84. The DOL goes to great in the NPRM and in the Final Rule to explain that the result of the change in the wage methodology is not a cost, but is rather a ?transfer? from one group to another within society. In-the Final Rule, the DOL even cites to OMB Circular A-4 in support of this assertion. What DOL fails to mention, however, is that OMB Circular A-4 unequivocally states on page 38 that ?transfers from the United States to other nations should be included as costs. . . (emphasis in original). The increased wage payments required by the Solis 2010 Final Rule will go almost exclusively to workers, who by de?nition are citizens of foreign nations and whose income will primarily be sent out of the United States economy. Thus, the DOL has apparently conducted its analysis in direct contradiction to the instructions provided in very authority it cites as requiring the analysis in the first place. Moreover, the DOL makes what appears to be a highly unusual claim in footnote 16 of the Solis 2010 Final Rule, noting that the purposes of this analysis, H- ZA workers are considered temporary residents of It would appear that the DOL assumes foreign workers are not foreign workers in order to avoid the conclusion that the impact of this regulation is at least $100 million. I 85. The Department failed to properly in good faith consider reasonable and less burdensome alternatives, including those suggested by commenters. The DOL 23 302740972 Case Document 1 Filed 03/12/10 Paoe 23 of 25 . inexplicably claims that it was faced with and considered only three options: (1) to keep the Chao Final Rule; (2) to revert to the 1987 Rule; or (3) to proceed with the Solis 2010 Final Rule. I 86. The Department?s failure to comply with the requirements of the RFA was an arbitrary and capricious and contrary to law and thus, is also a violation of the APA. 87. Because of these de?ciencies, the Solis Final Rule in its entirety violates the Administrative Procedure Act and is arbitrary and capricious, and contrary to law, and should he set aside. See 5 U.S.C. (C), and (E). PRAYER FOR RELIEF For the reasons set forth in this Complaint, the Plaintiffs pray the Court for the following relief: 88. That a temporary restraining order and a preliminary injunction be granted, pending a decision on the merits, that enjoins the Defendants from giving effect to or implementing in any manner Temporary Agricultural Employment of Aliens in the United States, 75 Fed. Reg. 6884 (Feb. 12', 2010) (the ?Solis 2010 Final Rule?); and 89. That a permanent injunction be issued, enjoining the Defendants from implementing Temporary Agricultural Employment of Aliens in the United States, 75 Fed. Reg. 6884 (Feb. 12, 2010) (the ?Solis 2010 Final Rule?); and 90. That a declaratory judgment be issued, ?nding that Temporary Agricultural Employment of H-2A Aliens in the United States, 75 Fed. Reg. 6884 (Feb. 12, 2010) (the ?Solis 2010 Final Rule?) violates the Regulatory Flexibility Act and is arbitrary and capricious within the-meaning of the Administrative Procedure Act; 24 em 302740972 Case Document 1 Filed 03/12/10 Paoe 24 of 25 91. That DOL be temporarily restrained, and preliminarily and permanently enjoined from requiring employers to comply with the Solis 2010 Final Rule for contracts already entered into before March 15, 2010; and that the plaintiffs be granted declaratory relief that contracts already entered into and approved by the DOL are valid, binding on the parties, and cannot be altered by the Solis 2010 Final Rule. 92. That the Plaintiffs be awarded their costs in pursuing this action, including reasonable attorneys? fees; and 93. That the Court award such other relief as it may deem just and proper. DATED: March 12, 2010 Respectfully submitted, ls/ Loftis. Jr. WR. Loftis, Jr., Esq. NC. State Bar No. 2774 Robin E. Shea NC. State Bar No. 15862 CONSTANGY, BROOKS SMITH, LLP 100 N. Cherry Street, Suite 300 Winston-Salem, NC 27101 Tel: (336) 721-1001 Fax: (336) 748-9112 rloftis@constangy.com rshea@constangy.corn Leon R. Sequeira, Esq. (to be admitted pro hac vice) Paul H. (to be admitted pro hac vice) SEYFARTH SHAW LLP 975 Street, NW Washington, DC 20004 Tel: (202) 463-2400 Fax: (202) 828-5393 lsequeira@seyfarth.eorn pkehoe@seyfarth.com Counsel for Plaintiff 25 DCI 302740972 Case Document 1 Filed 03/12/10 Paoe 25 of 25