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.
"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
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.
William A. Good, CAE
Executive Vice President
Craig S. Brightup
Vice President, Government Relations