Intro: The Department of Homeland Security has proposed a new rule that will dramatically change the way the H-1B application process works. The rule would establish an electronic pre-registration system and run the annual lottery based on the pre-registrations rather than requiring employers to file entire H-1B applications. DHS is also changing the way it conducts the lottery to improve the odds of those with graduate degrees from US universities.
The rule has obvious appeal in terms of saving employers considerable time and money. USCIS recognizes a concern many are already expressing – that there will be attempts to “game” the process to allow some companies to try to flood the system with registrations and hoard H-1B visas. Also, some are questioning whether DHS has exceeded its authority under the Immigration and Nationality Act.
The rule imposes a new requirement for H-1B petitioners to initially electronically register with USCIS during a designated registration period. USCIS would conduct the annual H-1B lottery from the pool of timely-filed pre-registrants instead of requiring would-be petitioners to submit complete petitions. Under the current system, 65,000 H-1Bs are available each year under the annual quota (this does not count petitioners exempt from the cap under various categories). An additional 20,000 are available to graduates of US graduate degree programs. Petitioners submit completed applications during the first week in April since petitions can be accepted up to 180 days in advance and the annual allotment of visas becomes available on October 1st each year (the first day of the federal fiscal year). Those petitions that are selected are then adjudicated and those not accepted are returned to the petitioner (along with the filing fees).
USCIS is also proposing to change the way it conducts the lottery. There are currently two pools of applicants – regular H-1B applicants who are eligible for 65,000 H-1B visas allocated annually and graduates of US masters degree programs who are additionally eligible for a separate pool of 20,000 H-1Bs. Currently, USCIS puts the masters cap applicants through a lottery for the 20,000 and then conducts the general lottery which would include individuals not selected in the masters cap lottery. USCIS seeks to flip this and require the general lottery first and put all masters cap eligible people through that lottery and then put unselected eligible people through the masters cap. The idea is that this will increase the overall number of people with US masters degrees and higher. Note that physicians completing US graduate medical education programs are not eligible for the masters cap.
USCIS is providing 30 days for public comment. The agency is attempting to fast-track this in order to have the system in place for the upcoming H-1B application period which is set to begin in April 2019.
Purpose and Summary of the Regulatory Action
USCIS first explains how the current system works (which I’ve noted above).
USCIS then notes that a pre-registration program was included in USCIS’ 2011 regulatory agenda and this rule is also being proposed as part of the President’s Buy American Hire American executive action which called on agencies to “suggest reforms to help ensure that H-1Bs are to the most-skilled or highest-paid petition beneficiaries.”
USCIS argues that a pre-registration program would streamline the petition process by reducing the cost, paperwork burden and complexity of participation in the H-1B program by alleviating the burden of preparing and filing H-1B cap-subject petitions.
Under the proposed plan, DHS will establish a designated registration period prior to the date petitions can be filed. At the end of the initial registration period, if USCIS finds they’ve received more registrations than needed to reach the H-1B regular cap, it will close the registration period for the regular cap and randomly select a sufficient number of electronic registration projected as needed to meet the cap. Those selected would then be invited file petitions. If less than the number needed to meet the cap are filed, USCIS will notify all registered petitioners that all registrations have been selected and all are invited to file petitions (and the registration period would be held over to allow more filings).
If the lottery fills and new slots open up (e.g. USCIS estimated usage wrong and is increasing slots or an employer has revoked an approved H-1B petition), then USCIS will consider unselected applicants to be in a reserve pool and will contact petitioners not initially selected.
USCIS states that the rule will reduce costs to employers and will also relieve service centers of the burden of having to handle hundreds of thousands of packages (though the actual number of cases adjudicated should be the same).
USCIS has indicated it doesn’t intend to charge a fee for pre-registration at this point.
As noted above, DHS is proposing changing the sequence of the master’s cap and regular H-1B lotteries. Currently, the master’s cap lottery happens first and unselected applicants are placed in the regular lottery. By reversing the order, there will be approximately 20,000 more master’s level applicants in the regular lottery, thus improving the odds of those with US master’s degrees and higher and reducing the odds of everyone else. One group that will be hurt that may be an example of unintended consequences are US-trained physicians. They represent 25% of the doctors in training in the US and many go through the H-1B regular lottery because residency and fellowship training, while graduate medical education, does not meet the definition of graduate education required under the statute.
DHS cites provisions in the Immigration and Nationality Act relating to regulating in the immigration space as well as to set rules governing H-1Bs. They do not cite specifically how this program fits under the statute.
Costs and Benefits
DHS notes that while there is some extra time involved with pre-registering, the time/cost savings for not having to actually file a complete petition.
DHS estimates the current cost of preparing H-1B petitions to be $128 million to $161 million per year. They estimate that the additional cost to do pre-registration would be $6,000,000 to $10,000,000 annually. The cost savings for not having to submit a petition that is not selected after pre-registration would range from $47 million to $75 million annually. DHS would save $1.6 million annually by not having to handle petitions ultimately not selected in the annual lottery. They believe they can develop the registration system for $279,000 and maintenance of the system would cost about $200,000 per year.
In 2011, DHS issued a Notice of Proposed Rulemaking and gave the public a 60-day comment period. It received 60 comments and chose not to finalize the rule. Because of the passage of time, DHS has decided to start the process again.
DHS goes on to outline the current selection process. USCIS makes projections on the number of petitions it needs to select based on historical data related to approvals, denials, revocations “and other relevant factors.” USCIS typically selects a quantity of petitions exceeding by approximately 10 to 15% the regular cap number and approximately 5 to 10% more than 20,000 for the masters cap (Note – I believe this is the first time USCIS has ever offered this information).
USCIS notes that over the last four years it has received anywhere from 172,000 to 236,000 petitions in the annual lottery and that it takes significant resources to manage this process (“a massive strain on USCIS operations”). An electronic pre-registration would be much more efficient.
Proposed Changes to the Rules
The mandatory pre-registration would happen before April 1st each year and would not have a fee. The registration period would be at least 14 days before the first day of filing (i.e. at least 14 days before April 1st). USCIS would provide 30 days advance notice of the opening of the initial registration period. However, USCIS noted in its press release accompanying the rule that it would revert to the current system possibly at the last minute if it is not ready with the new system on time. The 30-day countdown announcement will happen via the USCIS website versus a Federal Register notification. Also, USCIS is considering announcing the date for the first registration period as part of issuing a final rule.
For initial registration, one can request a start date of October 1st(as is the case with the current process). However, if a person is selected later because new slots are added, then a later start date can be selected (as long as it is less than 180 days away).
– DHS invites comments on whether the duration and timing of the registration period are adequate.
As for what will be required to register, DHS says only basic information regarding the petitioner and the beneficiary including, but not limited to 1) the employer’s name, employer ID number and mailing address; 2) the employer’s authorized representative’s name, job title and contact information; 3) the beneficiary’s full name, date of birth, country of birth, country of citizenship, gender and passport number; 4) if the beneficiary has obtained a master’s or higher degree from a U.S. institution of higher education; 5) the employer’s attorney or accredited representative, if applicable (and possibly submitting an electronic G-28); and 6) any additional basic information requested by the registration system or USCIS. Petitioner’s would not have to submit a Labor Condition Application in advance. They would need to check an attestation regarding the truthfulness and accuracy of the information and that the petitioner intends to employ the beneficiary consistent with the registration. USCIS invites comments on whether this is the appropriate information to be collecting.
“To address potential issues of ‘flooding the system’ with non-meritorious registrations, DHS is prohibiting petitioners from submitting more than one registration for the same beneficiary during the same fiscal year, and is requiring petitioners to make an attestation in the system indicating their intent to file an H-1B petition for the beneficiary in the position for which the registration is filed.” USCIS is concerned about high volume filers pre-registering for people who they won’t ultimately file. They intend to monitor closely and could investigate and find employers were fraudulent in their attestations and possibly criminally liable. DHS will be “data mining” registering the system to look for instances of such fraud. But DHS admits it doesn’t have a solution to absolutely guarantee prevention of non-meritorious registrations or filing prior to adjudication and invites suggestions via the commenting process.
Regarding a beneficiary only being registered once by an employer, USCIS would penalize a violation of this requirement by invalidating all other petitions filed by that employer for that fiscal year.
Once a registration has been received, no editing will be permitted. However, editing will be permitted after it is selected. USCIS will assign a unique identifying number for each registration.
During the selection period, if fewer registrations are received than the limit of the cap, USCIS will announce the registration period is remaining open. If too many applications are received on the last day, a random selection of people from that day may occur. Those not selected would be held in reserve. Winners will be notified and invited even as new registrations continue to be accepted.
During the registration period, if more registrations are received than available slots, USCIS will conduct a computer-selected random lottery of registrations received. The number selected will be determined the same way it currently is. The main difference will be that the order for the two lotteries will be reversed from the current system with the regular lottery happening first and the masters cap lottery second. Those not selected will be kept in reserve.
USCIS discusses the benefits of the reserve system where people already in the system could be selected and invited to apply if they later determine numbers are available. This would address a long-standing complaint that USCIS is obligated to use up all available numbers, but has never reopened the application period. A reserve system as described would help address this.
Petitioners selected in the pre-registration lottery would receive a notice of eligibility to file an H-1B petition with information on the place to file and time period required for filing. No substitution of beneficiaries will be permitted. USCIS may also require petitioners submit copies of the registration information with the Form I-129 in order to verify the registration.
The prohibition on a petitioner filing more than one H-1B extends to registration and that includes related entities such as a parent, company, subsidiary or affiliate and a violation of this prohibition will result in the invalidation of all of a company’s registrations for that year.
Once selected, DHS proposes that petitioners would have at least 60 days to properly file an H-1B petition for the named beneficiary. USCIS may choose to stagger the filing periods (e.g. between 4/1 and 5/311, between 5/1 and 6/30, etc.) in the selection notice and provide periods of longer than 60 days if necessary to accommodate processing backlogs or other operational needs. Failure file within the prescribed filing period will result in a rejection or denial and the petitioner would forego eligibility to file based on that selection notice. By defining the filing windows and offering 60 days, applicants will also be able to obtain an LCA with sufficient time. DHS is proposing to amend the rule allowing filing up to 180 days in advance to accommodate this new system.
Proposed Advanced Degree Exemption Allocation Amendment
This section describes the switching of the order of the two H-1B lotteries, as discussed above and reminds that the point is to increase the number of people with US masters or higher degrees getting selected and that this switch stems from the Buy American Hire American executive action. What is left unsaid is whether USCIS ultimately has this authority under the statute.
Possible Suspension of the Registration Process for Fiscal Year 2020
USCIS acknowledges that it may not get the registration system in place in time for the April filing season. If this occurs, they would suspend the program for this coming year and begin using the system later. If that happened, USCIS would make an announcement on its website and inform readers of the time-frame for filing a regular H-1B petition. However, they would still run the lotteries for filed petitions in the way described in this proposed rule (regular first, then masters). DHS may finalize the reversal of the lottery order as a final rule on a separate timetable from the pre-registration portion of the rule and is seeking comments on this idea.
Anticipating they will get sued, DHS is proposing a clause that would allow DHS to implement either the lottery reversal or the pre-registration if either part of the rule got stopped by a court.
DHS provides statistical information on H-1B filing over the last five years. While the number of regular cases dropped from 182,249 over the last two years to 111,080 in 2017, the number of masters cases increased from 50,724 to 87,380 over that same period. DHS estimates that on average (based on five years data), 5,340 more masters cap applicants (or about 16%) would get H-1Bs under the proposed switch.
DHS devotes many pages to analyzing the costs for each aspect of the H-1B process and provides estimates of savings and costs associated with the proposed rule.
DHS believes it can develop the system within its existing infrastructure, hence the relatively low costs to implement ($229,149 to launch and about $200,000 for maintenance.
DHS believes that the status quo is a much more costly process for small business petitioners as long as demand exceeds available visas. The high costs of filing a full petition without the guarantee of obtaining a worker under the status quo is a barrier to some small businesses and the lower costs of a registration system could allow more small businesses to participate in the H-1B program.
Regulation text – all consistent with what is described in the preamble.
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