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NRCA issues comments for SBA's National Regulatory Fairness Board Hearing, March 2008

On March 5, 2008, NRCA submitted comments to the U.S. Small Business Administration for its second annual National Regulatory Fairness Hearing. NRCA's comments follow.



March 5, 2008

Nicholas N. Owens
National Ombudsman and Assistant Administrator for Regulatory Enforcement Fairness
U.S. Small Business Administration
409 Third Street, S.W.
Washington, D.C. 20416

Dear Ombudsman Owens:

On behalf of the National Roofing Contractors Association (NRCA), we thank you for the opportunity to provide comments and participate in this second annual National Regulatory Fairness Hearing.

Established in 1886, NRCA is one of the construction industry's oldest trade associations and the voice of professional roofing contractors worldwide. NRCA is an association of roofing, roof deck, and waterproofing contractors; industry-related associate members including manufacturers, distributors, architects, consultants, engineers, and city, state and government agencies; and international members. NRCA has approximately 4,000 members from all 50 states and 54 countries and is affiliated with 105 local, state, regional and international roofing contractor associations.

NRCA's comments last year analyzed our nation's broken immigration system and its negative consequences for construction — a significant portion of the Gross Domestic Product — and the roofing industry. We expressed concern over proposed regulations from the Department of Homeland Security (DHS) that would mandate how employers must respond to Social Security Administration (SSA) "no-match" letters, and enforcement actions of its Immigration and Customs Enforcement (ICE) division.

Subsequent new policies at the federal, state and local levels have created even more problems for NRCA members regarding the workforce and immigration. As such, the comments we are submitting for this year's hearing are an update of comments we submitted one year ago.

Update on DHS's SSA No-Match Letter Rule

After having its original proposal blocked in 2007 by the U.S. District Court for the Northern District of California, DHS is expected to release a revised SSA no-match letter rule in the very near future. The revised proposal purportedly will attempt to rectify the deficiencies identified by the court in the original rule issued by DHS in August 2007. The original rule would have required employers to take certain steps to confirm the work eligibility of employees who are the subjects of no-match letters. Employers would have been required to terminate workers whose eligibility information cannot be rectified within 93 days or risk being deemed to have "constructive knowledge" of employing an illegal worker. "Constructive knowledge" is the legal standard for enforcement under the Immigration Reform and Control Act of 1986 (IRCA).

In October 2007, the U.S. District Court blocked DHS and SSA from implementing the no-match rule in response to litigation brought by the AFL-CIO and ACLU that was joined by a coalition of business groups in which NRCA is a named plaintiff. In his ruling, U.S. District Court Judge Charles Breyer found in favor of business plaintiffs that DHS had not performed a Regulatory Flexibility Analysis as required by the Regulatory Flexibility Act (RFA), and, therefore, its certification that the final rule would not have a significant impact on a substantial number of small entities lacked credibility. The judge found that "plaintiffs have demonstrated they will be irreparably harmed if DHS is permitted to enforce the new rule." DHS initially signaled it would withdraw its case, but then filed an appeal while also attempting to do a proper RFA economic analysis and revise other parts of the proposed regulations to address Judge Breyer's concerns.

The new DHS no-match proposal is currently under review at the Office of Management and Budget. There have been reports that the revised rule will, when formally issued, provide for only a 30-day public comment period, which would constrain efforts to formulate constructive input for such a complex rule. NRCA and other business organizations are skeptical that DHS can conduct a thorough Regulatory Flexibility Analysis in such a short period of time.

New DHS/ICE Enforcement Effort

ICE is the investigative arm of DHS and has initiated a nationwide enforcement campaign that could potentially impact NRCA members. The enforcement effort consists of ICE inspections which involve the serving of an administrative subpoena that demands an employer produce I-9 Forms for all current employees and employees terminated over the past year. In addition, the subpoena requests that the targeted employer provide ICE with any SSA no-match letters received in the prior three calendar years. Finally, the subpoena may also demand copies of the employer's most recent payroll report, a certified list of all current employees hired after November 6, 1986, and other business information.

ICE's issuance of administrative subpoenas for no-match letters looks to be an "end-run" around Judge Breyer's ruling blocking implementation of the DHS no-match regulations. This ICE "phishing" expedition concerns NRCA, because there are substantial deficiencies in ICE's legal authority to demand no-match letters from employers. Under current law, ICE does not have the authority to obtain copies of no-match letters from the SSA unless such information is relevant to a pending or anticipated criminal investigation of the subject employer. Also, administrative subpoenas are not self-enforcing, meaning the recipient is not legally required to comply with the subpoena. Furthermore, DHS is supposed to include a $30 check made payable to the recipient of the subpoena because the employer is technically a "witness" for purposes of the subpoena.

Click here to download a redacted copy of an ICE administrative subpoena issued in January. NRCA and other business associations have made available a sample response that members may want to use to respond to an ICE subpoena. The following suggested text was provided by counsel to the Essential Worker Immigration Coalition (EWIC), which NRCA co-chairs:

"ICE has requested through Administrative Subpoena #__________ all "Employer Correction Requests and Requests for Employee Information issued by the Social Security Administration for the tax period of (2004 - 2005)." Company is cooperating with this investigation even though there are serious legal deficiencies in the administrative subpoena. Please note that the regulations set forth the legal requirements and procedures for ICE to issue an administrative subpoena. The administrative subpoena does not follow the legal requirements, it is not issued on the Form I-138 and it is not signed by the proper signatory as envisioned and set forth in regulation. The language of this subpoena is also substantively deficient and far reaching as ICE does not have the jurisdiction to obtain the requested information."

State Immigration Reform Developments

With the failure of Congress to pass comprehensive immigration reform legislation in 2007, and the prospects for further action by Congress on comprehensive reform before 2009 remote, many state and local governments are moving forward with their own immigration initiatives. In 2007, more than 1,500 immigration-related bills were introduced at the state level and over 200 of them have become law, mostly imposing new conditions and sanctions on employers. However, state and local immigration laws may be of questionable constitutional validity, because many legal experts believe that the U.S. Constitution gives the federal government sole jurisdiction over the regulation of immigration. This situation is producing extensive litigation, some of which NRCA is involved with on behalf of its members.

Arizona's so-called Legal Arizona Workers Act became effective Jan. 1, 2008. Businesses found to have undocumented workers now face prosecution and a 10-day business license suspension for a first violation and permanent revocation for a second. The Act mandates employers use the federal government's voluntary employment verification system, E-Verify, despite data-quality problems. The Act also deprives businesses and workers the opportunity for a hearing before a "determination" is made that that a worker is unauthorized, as required by federal law.

A number of business groups, including NRCA, are plaintiffs in litigation to challenge the law in U.S. District Court on federal preemption and due process grounds. On Feb. 7, 2008, Judge Neil Wake ruled in favor of the defendant, finding that the Arizona law does not encroach on federal laws. Because the law relates to state control over the issuance of business licenses, the court held that it falls within the exception for "licensing and similar laws" to the preemption Congress created in IRCA for civil or criminal sanctions on employers who employ unauthorized workers. However, the court states that the Act does not apply to "casual hires" and "domestic workers" as a business license is not needed to hire those persons. On Feb. 8, plaintiffs filed an appeal of the decision in the 9th U.S. Circuit Court of Appeals.

Another prime example of state/local immigration action is in Pennsylvania, where the town of Hazelton enacted a series of ordinances in 2006 aimed at curtailing illegal immigration through sanctions on employers and landlords. The Hazelton laws, which have served as templates for similar efforts in other states, have been blocked from taking effect by a federal judge, primarily on preemption grounds. The judge's decision held that the Hazleton ordinances are preempted under every theory of the federal preemption doctrine. The town of Hazelton has appealed the judge's decision to the 3rd U.S. Circuit Court of Appeals.

Oklahoma is another state which enacted a major immigration law in 2007 that likely will have nationwide implications. The Oklahoma law, regarded by some as the toughest crackdown on illegal immigration in the country, requires employers to use E-Verify and establishes sanctions for employers who hire illegal workers, among other provisions. This law has been upheld by a U.S. district judge and faces further litigation, but to illustrate how crazy things are getting, the town of Inola, Okla., recently passed its own immigration ordinance which places even more new burdens employers. And the Inola ordinance appears to conflict with both Oklahoma and federal immigration laws!

Adding further confusion is that not all recently enacted state and local immigration-related laws are punitive to employers or workers. An Illinois law actually prohibits employers from using E-Verify and is being challenged by the U.S. Department of Justice. Also, the city of New Haven, Conn., has approved a program to issue municipal identification cards so that illegal residents can open bank accounts and use other services that traditionally have required a driver's license.

Anti-Stimulus for U.S. Economy

Most state and local laws, however, make employers the linchpin of immigration enforcement efforts. Moreover, the existence of widely different and sometimes conflicting statutes poses even greater challenges for multi-state employers. It should come as no surprise, then, that the proliferation of state and local immigration laws is beginning to take an economic toll on the U.S. economy as it struggles to avoid a recession. For example, Oklahoma government officials blame the state's strict immigration law for a major reduction in the number of business license applications since the law took effect and the state must now look for new sources of revenue.

Eventually, the U.S. Supreme Court will decide whether state and local immigration laws are preempted by IRCA, but the conclusion to this legal fight could take years. Congress could help by reaffirming federal preemption, but has proven so unable to do anything on immigration that even the widely-supported H-2B visa program's "returning worker" provision cannot get passed. It is crucial, therefore, that DHS/ICE not engage in regulatory actions and enforcement activities that further exacerbate this precarious situation for small businesses, which historically have been the job-growth engine of the U.S. economy. NRCA fully supports improving America's national security, but DHS will fall short of this goal while continuing to generate economic dislocation if it maintains its present course regarding the issues discussed above.

Respectfully submitted,

William A. Good, CAE
Executive Vice President

Craig S. Brightup
Vice President, Government Relations





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