Federal Register, Volume 74 Issue 193 (Wednesday, October 7, 2009)

[Federal Register Volume 74, Number 193 (Wednesday, October 7, 2009)]
[Rules and Regulations]
[Pages 51447-51452]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-24200]

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Rules and Regulations
Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents
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to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.

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Federal Register / Vol. 74, No. 193 / Wednesday, October 7, 2009 /
Rules and Regulations

[[Page 51447]]

DEPARTMENT OF HOMELAND SECURITY

8 CFR Part 274a

[ICE 2377-06; DHS Docket No. ICEB-2006-0004]
RIN 1653-AA59

Safe-Harbor Procedures for Employers Who Receive a No-Match
Letter: Rescission

AGENCY: U.S. Immigration and Customs Enforcement, DHS.

ACTION: Final rule.

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SUMMARY: The Department of Homeland Security (DHS) is amending its
regulations by rescinding the amendments promulgated on August 15,
2007, and October 28, 2008, relating to procedures that employers may
take to acquire a safe harbor from receipt of No-Match letters. DHS is
amending its regulations as proposed on August 19, 2009, without
change. Implementation of the 2007 final rule was preliminarily
enjoined by the United States District Court for the Northern District
of California on October 10, 2007. After further review, DHS has
determined to focus its enforcement efforts relating to the employment
of aliens not authorized to work in the United States on increased
compliance through improved verification, including participation in E-
Verify, ICE Mutual Agreement Between Government and Employers (IMAGE),
and other programs.

DATES: This final rule is effective November 6, 2009.

FOR FURTHER INFORMATION CONTACT: National Program Manager Charles
McClain, U.S. Immigration and Customs Enforcement, Office of
Investigations--MS 5112, 500 12th Street, SW., Washington DC, 20536.
Telephone: 202-732-3988 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

I. Docket

Public comments on this docket may be viewed online at http://www.regulations.gov or in person at U.S Immigration and Customs
Enforcement, Department of Homeland Security, 500 12th Street, SW.,
Room 1000, Washington, DC 20024, by appointment. To make an appointment
to review the docket, call 202-307-0071.

II. Final Rule

After considering the public comments, DHS has determined, for the
reasons stated in the proposed rule and in this final rule, to
promulgate the rescission of the 2007 and 2008 final rules (referred to
collectively as the ``No-Match rules'') without change.

III. Background

It is unlawful for a person or other entity to hire, or to recruit
or refer for a fee, an alien for employment in the United States
knowing the alien is not authorized to work in the United States.
Immigration and Nationality Act of 1952, as amended (INA), section
274A(a)(1)(A), 8 U.S.C. 1324a(a)(1)(A). It is also unlawful for a
person or other entity, after hiring an alien for employment, to
continue to employ the alien in the United States knowing the alien is
(or has become) an unauthorized alien with respect to such employment.
INA section 274A(a)(2), 8 U.S.C. 1324a(a)(2).
All persons or entities that hire, or recruit or refer persons for
a fee, for employment must verify the identity and employment
eligibility of all employees hired to work in the United States. INA
section 274A(a)(1)(B), (b)(1), (b)(2), 8 U.S.C. 1324a(a)(1)(B), (b)(1),
(b)(2). Under the INA, this verification is performed by completing an
Employment Eligibility Verification form (Form I-9) for all employees,
including United States citizens. INA section 274A(b)(1), (b)(2), 8
U.S.C. 1324a(b)(1), (b)(2); 8 CFR 274a.2. The INA provides, however,
that an employer may not conduct this verification in a manner that
treats employees differently based on their citizenship status or
national origin. INA section 274B(a), 8 U.S.C. 1324b(a). An employer,
or a recruiter or referrer for a fee, must retain the completed Form I-
9 for three years after hiring, recruiting or referral, or, where the
employment extends longer, for the life of the individual's employment
and for one year following the employee's departure. INA section
274A(b)(3), 8 U.S.C. 1324a(b)(3). These forms are not routinely filed
with any Government agency; employers are responsible for maintaining
these records, and they may be requested and reviewed by U.S.
Immigration and Customs Enforcement (ICE). INA section
274A(b)(1)(E)(3); 8 CFR 274a.2(b)(2), (c)(2); see 71 FR 34510 (June 15,
2006) (Electronic Signature and Storage of Form I-9, Employment
Eligibility Verification).
Employers annually send the Social Security Administration (SSA)
millions of earnings reports (W-2 Forms) in which the combination of
employee name and social security number (SSN) does not match SSA
records. In some of these cases, SSA sends a letter, such as an
``Employer Correction Request,'' that informs the employer of the
mismatch. The letter is commonly referred to as an employer ``No-Match
letter.'' No-Match letters may be caused by many things, including
clerical error and name changes. One potential cause may be the
submission of information for an alien who is not authorized to work in
the United States and who may be using a false SSN or an SSN assigned
to someone else. Such a letter may be one indicator to an employer that
one of its employees may be an unauthorized alien; the letter itself,
however, does not make any statement about an employee's immigration
status. ICE sends a similar letter (currently called a ``Notice of
Suspect Documents'') after it has inspected an employer's Employment
Eligibility Verification forms (Forms I-9) during an investigation
audit and after unsuccessfully attempting to confirm, in agency
records, that an immigration status document or employment
authorization document presented or referenced by the employee in
completing the Form I-9 was assigned to that person. After a Form I-9
is completed by an employer and employee, it is retained by the
employer and made available to DHS investigators on request, such as
during an audit.
Over the years, employers have inquired of the former Immigration
and Naturalization Service, and now DHS, whether receipt of a No-Match
letter constitutes constructive knowledge on the part of the employer
that he or she may have hired an alien who is not

[[Page 51448]]

authorized to work in the United States. On August 15, 2007, DHS issued
a final rule describing the legal obligations of an employer following
receipt of a No-Match letter from SSA or a letter from DHS regarding
employment verification forms. See 72 FR 45611. That final rule also
established ``safe-harbor'' procedures for employers receiving No-Match
letters.
The rule has never been implemented in light of a preliminary
injunction issued by the United States District Court for the Northern
District of California. AFL-CIO v. Chertoff, 552 F. Supp. 2d 999 (N.D.
Cal. 2007) (order granting motion for preliminary injunction). As a
result of that litigation, DHS also issued a supplemental proposed and
final rule providing to address specific issues raised by the court.
See, e.g., 73 FR 15944 (Mar. 26, 2008) (supplemental proposed rule), 73
FR 63843 (Oct. 28, 2008) (supplemental final rule). Neither the
supplemental nor 2008 final rules, however, changed any regulatory
text.
DHS proposed to rescind the No-Match rules on August 19, 2009,
explaining that a more appropriate utilization of DHS resources would
be to focus enforcement/community outreach efforts on increased
compliance through improved verification, including increased
participation in the U.S. Citizenship and Immigration Services (USCIS)
E-Verify employment eligibility verification system, the ICE Mutual
Agreement Between Government and Employers (IMAGE), and other programs.
The proposed rescission rule and this final rule are part of a
Government-wide reexamination of regulatory processes. 74 FR 41801,
41802 (Aug. 19, 2009); Docket ICEB-2006-0004-0923. DHS requested public
comments on the proposed rescission of the No-Match rules and provided
a 30-day public comment period.

IV. Public Comments

DHS received 22 comments during the 30-day comment period. DHS
received comments from individuals, professional associations, unions,
trade organizations, and advocacy organizations. DHS received comments
from the litigants in AFL-CIO v. Chertoff, No. 07-cv-4472-CRB (N.D.
Cal.). Many commenters supported the rescission of the 2007 final rule
and provided arguments why the 2007 final rule should be rescinded.
Other commenters argued in favor of retaining and implementing the 2007
final rule. The substantive comments are addressed below.

A. Viability of the 2007 and 2008 Rules

One commenter suggested that the guidance provided in the No-Match
rules clarified and interpreted existing law. The commenter suggested
that the safe harbor provision provided valuable guidance to employers
that need guidance in this area. The commenter further argued that
removal of the No-Match rule will just create uncertainty and more room
for unscrupulous employers to continue to hire and retain workers they
know or should know are not authorized to work. Another commenter
expressed concern that rescinding the No-Match rules will leave
employers wanting to resolve discrepancies but having no guidance on
what DHS would consider a good faith attempt to resolve the discrepancy
to avoid a finding of constructive knowledge, as opposed to violating
the anti-discrimination laws; and that E-Verify, IMAGE and other DHS
programs identified in this rule do not provide guidance in dealing
with No-Match letters or provide a safe harbor to employers.
DHS does not disagree that additional guidance would be valuable to
employers. DHS disagrees, however, with the suggestion that if the No-
Match rules are rescinded, employers will have no guidance on
compliance with the Immigration and Nationality Act's employment
verification requirements. As discussed in all of the proposed and
final rules in this rulemaking, DHS and its predecessor agencies have
provided guidance on the immigration implications and responding to No-
Match letters. Similarly, the Office of Special Counsel for Immigration
Related Unfair Employment Practices, Civil Rights Division, Department
of Justice, enforces the anti-discrimination provisions of INA section
274B, 8 U.S.C. 1324b, and provides guidance to employers about
responding to SSA no-match letters in a manner consistent with the
anti-discrimination provision of the INA. The No-Match rules set out
that advice and provided a safe harbor if employers followed specified
steps to resolve the discrepancy. The commenter, a professional
association, has provided similar advice to its members. DHS, in
considering all of its options, does not believe that the addition of a
``safe-harbor'' to that guidance is as effective as other tools to
assist in compliance with the employment restrictions of the
Immigration and Nationality Act.
DHS continues to provide employer support through IMAGE. IMAGE is
specifically designed to help the business community develop and
implement hiring and employment verification best practices.
As of September 2009, more than 155,000 employers have signed an
MOU with DHS to participate in E-Verify, representing more than 500,000
hiring sites; in fiscal year (FY) 2009, employers queried E-Verify
nearly 8.6 million times. The Administration and DHS fully support the
expansion of E-Verify and have taken steps to encourage use of E-
Verify, including ensuring that federal contractors use E-Verify to
ensure an employment eligible workforce.\1\ USCIS also recently updated
the Handbook for Employers (M-274) to provide more comprehensive
guidance and instructions for completing the Employment Eligibility
Verification Form (Form I-9). http://www.uscis.gov/files/nativedocuments/m-274.pdf.
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\1\ A modest expansion of E-Verify will occur with the
requirement that certain government contractors utilize E-Verify.
See Executive Order 13,465, 73 FR 33285 (June 11, 2008); Designation
of the Electronic Employment Eligibility Verification System Under
Executive Order 12,989, 73 FR 33837 (June 13, 2008); Proposed
Employment Eligibility Verification Rule, 73 FR 33,374 (June 12,
2008); Final Employment Eligibility Verification Rule, 73 FR 67651
(Nov. 14, 2008); Chamber of Commerce of the United States v.
Napolitano, 2009 WL 2632761, D. Md. No. 08-civ-3444 (AW), Memorandum
Opinion, Dk. No. 51 (Aug. 26, 2009) (denying plaintiff's motion for
summary judgment and preliminary injunction; granting defendant's
motion for summary judgment), appeal filed No. 09-2006 (Sept. 4,
2009. DHS also encourages States and other jurisdictions to utilize
E-Verify. Cf., Chicanos por la Causa, Inc. v. Napolitano, 558 F.3d
856, 867 (9th Cir. 2009) (amended on denial of petition for
rehearing) (holding that ``Congress could have, but did not,
expressly forbid state laws from requiring E-Verify
participation.''), pet. for cert. filed sub nom. Chamber of Commerce
v. Candelaria, U.S. No 09-115 (filed May 28, 2009).
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These tools focus on more universal compliance with the employment
eligibility verification requirements of the Immigration and
Nationality Act than a safe harbor procedure for a limited number of
employers who receive a No-Match letter. A No-Match letter is reactive,
either one specifically guided to the employment eligibility issue from
ICE or one indirectly pointing to a potential employment eligibility
issue through social security number record mismatches on tax filings
through SSA.
Furthermore, DHS has acknowledged that unscrupulous employers would
continue to find ways to take advantage of the system, regardless of
whether the No-Match rules were in place. DHS focuses criminal and
civil enforcement against the most egregious violators: employers who
use unauthorized workers in order to gain a competitive advantage or
those who exploit the vulnerable, often engaging in human trafficking
and smuggling, identity theft,

[[Page 51449]]

and social security number and document fraud; and employers in the
Nation's critical infrastructure sites, including airports, seaports
and power plants.

B. Issues Raised in the 2007 and 2008 Rules

Other commenters repeated arguments previously made in the 2007 and
2008 rulemaking, and in the subsequent litigation, that the No-Match
rules created confusion among many small businesses, including farm
businesses, and that the No-Match rules would have resulted in
additional costs; and also that the process outlined in the No-Match
rules would have resulted in additional labor, resource and personnel
costs, which many small businesses would be unable to absorb.
The 2007 and 2008 No-Match rules were intended to clarify the
obligations of an employer following the receipt of a no-match letter
from SSA or a letter from DHS regarding employment verification forms.
Further, as explained, DHS does not believe the No-Match rules imposed
a mandate that forced employers to incur ``compliance'' costs. 73 FR
63863. Only small entities that choose to avail themselves of the safe
harbor would incur direct costs as a result of the No-Match rules, and
all entities are responsible for the wage statement (Form W-2) that
creates a No-Match letter.
Commenters asserted that the No-Match rules should be rescinded
because the correction period allowed in the final rules is inadequate.
SSA, according to the commenters, would be unable to resolve mismatches
presented by authorized workers within the correction period. One
commenter further alleged that the No-Match rules would
disproportionately impact authorized workers of color, transgender
workers, and those who appear or sound ``foreign;'' the rules would
lead to retaliatory firings.
Although DHS agrees with the commenters' suggestions that the rules
should be rescinded, DHS disagrees with the suggestion that the No-
Match rules would have generated additional costs or would have
disproportionately impacted authorized workers or any discrete group.
As stated above, the No-Match rules were intended to clarify the
obligations of an employer following the receipt of a No-Match letter
from SSA or a letter from DHS regarding employment verification forms.
Another commenter alleged that the No-Match rules were an unlawful
expansion of the definition of ``constructive knowledge'' because the
No-Match letters are sent out for reasons unrelated to immigration
status. Similarly, another commenter supported the rescission of the
No-Match rules arguing that the rules would have led to the termination
of large numbers of United States citizens and other authorized workers
because many of the ``no-matches'' in the SSA's Earning Suspense File
have nothing to do with immigration status.
DHS disagrees. DHS has not changed its position as to the merits of
the 2007 and 2008 rules; DHS has decided to focus on more universal
means of encouraging employer compliance than the narrowly focused and
reactive process of granting a safe harbor for following specific steps
in response to a no-match letter. DHS has determined that focusing on
the management practices of employers would be more efficacious than
focusing on a single element of evidence. Receipt of a No-Match letter,
when considered with other probative evidence, is a factor that may be
considered in the totality of the circumstances and may in certain
situations support a finding of ``constructive knowledge.'' A
reasonable employer would be prudent, upon receipt of a No-Match
letter, to check their own records for errors, inform the employee of
the no-match letter, and ask the employee to review the information.
Employers would be prudent also to allow employees a reasonable period
of time to resolve the no-match with SSA.
Another commenter noted that employers are wrongly implementing the
2007 and 2008 final rules even though implementation of the 2007 rule
was enjoined and that employees who receive no-match letters are being
discriminated against and terminated if they are unable to resolve
their discrepancies with SSA within ten days. DHS acknowledges that an
employer who terminates an employee without attempting to resolve the
issues raised in a No-Match letter, or who treats employees differently
based upon national origin, perceived citizenship status, or other
prohibited characteristics may be found to have engaged in unlawful
discrimination under the anti-discrimination provision of the INA
section 274B, 8 U.S.C. 1324b. That fact does not, however, warrant DHS
changing its earlier position that receipt of a No-Match letter and an
employer's response to a No-Match letter, in the totality of the
circumstances, may be used as evidence of a violation of the employment
restrictions of the Immigration and Nationality Act. 73 FR at 63848,
n.2; 74 FR 41804, n.4. Employers should not use No-Match letters,
without more, as a basis for firing employees without resolution of the
mis-match, and DHS has never countenanced such a practice. DHS urges
employers, employees, and other interested parties to contact the
Office of Special Counsel for Immigration-Related Unfair Employment
Practices, (800) 255-8155 or http://www.usdoj.gov/crt/osc/, for
additional information and guidance about the application of the anti-
discrimination provisions.
Another commenter alleges that the No-Match rules failed to address
the concerns of the District Court that led to the injunction of the
rules. This comment appears more attuned to the 2008 supplemental
proposed rule, rather than the rescission of the 2007 final rule.
Although DHS disagrees that the supplemental rule failed to address the
District Court rationale in the order granting a motion for preliminary
injunction, DHS is nonetheless rescinding the No-Match rule as the
commenter urged.

C. Scope of No-Match Letters as an Enforcement Tool

Several commenters suggested that SSA discontinue issuing No-Match
letters to employers and instead send them to affected employees. The
commenters further recommend that, if sent to employers, DHS not use
the no-match letters for immigration compliance purposes or, if the
letters are obtained through audits or investigations, that DHS inform
employers that they will have safe harbor from wrongful termination and
Privacy Act charges. Another commenter further noted that No-Match
letters are issued for administrative purposes; that they were not
designed as an immigration enforcement tool and are, in fact, ill-
suited for this purpose.
Whether the SSA will continue to provide employers and employees
with written notice indicating that there is a discrepancy between the
worker's name and social security number is a decision to be made by
SSA. DHS believes that SSA notification is beneficial to the employer
and the employee, and that the different letters to employers and
employees serve different purposes for SSA. Employers and employees are
made aware of discrepancies in their filings and that the discrepancy
may affect employees' potential benefits, respectively, and the letters
encourage corrective action to ensure that the employee's earnings are
properly credited for retirement, disability, survivor and other
benefits.
As discussed above, a finding of constructive knowledge of
unauthorized employment may be based on the totality of the
circumstances. Employers

[[Page 51450]]

remain liable where the totality of the circumstances establishes
constructive knowledge that the employer knowingly hired or continued
to employ unauthorized workers. An employer's receipt of a No-Match
letter and the nature of the employer's response to the letter are only
two factors that may be considered in determining the totality of the
circumstances.
Another commenter argued that the use of social security numbers
for immigration enforcement through delivery of No-Match letters turns
employers into de facto immigration agents, which goes beyond the scope
of SSA's mission. DHS strongly disagrees. DHS acknowledges that receipt
of the No-Match letter, without more, does not mean that the employee
is not authorized to work or that the employee provided a fraudulent
name or social security number. The discrepancy may be based upon a
number of reasons unrelated to immigration status, such as clerical
errors or employees' name changes that may not have been reported to
SSA. However, a No-Match letter may also be generated because the
individual is unauthorized to work in the United States and provided
fraudulent information to the employer at the time of hire.
With regard to the comment that DHS provide a safe harbor from
wrongful termination and Privacy Act charges, such action is outside of
DHS's authority. DHS, therefore, declines to accept the recommendation.

D. Viability of E-Verify and IMAGE

Several commenters suggested that E-Verify and IMAGE cannot replace
the No-Match rules. One commenter argued that improvements in E-Verify
and other DHS programs do not provide better tools for employers to
reduce the incidence of unauthorized employment and to better detect
and deter the use of fraudulent identity documents by employees,
because IMAGE and E-Verify are voluntary, and unscrupulous employers
will not sign up for either. The commenter further argued that E-Verify
is deeply flawed and will confirm work authorization for individuals
who claim to be a citizen and obtain identity documents using the
citizen's name and social security number. Some commenters expressed
reservations about expansion of E-Verify without significant
modifications because of alleged reliance on databases that are flawed
or riddled with errors that would result in denial of employment to
authorized workers, including United States citizens, and in
discrimination against immigrant workers. Another commenter supported
the rescission of the 2007 and 2008 No-Match Rules, but opposes
mandated participation in E-Verify or IMAGE.
Another commenter suggested that a mandatory or vast expansion of
the E-Verify electronic employment verification system is not a
solution to our nation's immigration problems. Further, the commenter
suggested that the degree of inaccuracy in the E-Verify underlying
databases means that large numbers of Americans will be denied
employment and paychecks, at least temporarily, while they attempt to
resolve the problem with relevant government agencies. Finally, the
commenter suggests that evidence coming from those who have used E-
Verify indicate that the current program is seriously flawed,
ineffective, and could potentially cost thousands of United States
citizens and legal residents their jobs due to database errors.
Other commenters suggested that E-Verify relies upon databases
which are flawed or error-prone and have unacceptably high error rates
that misidentify authorized workers; abuse of the program by employers
is substantial and results in discrimination, profiling of a vulnerable
segment of workers, and illegal employment practices by unscrupulous
employers; the privacy and security concerns of the program have not
been addressed; and expanded use of the program jeopardizes the labor
rights and livelihoods of work-authorized immigrant and citizen
workers.
Other commenters similarly expressed reservations about expansion
of E-Verify without significant modifications to the program, its
timely implementation with added employer safeguards, and fair
procedures to ensure the system's accuracy and accountability. Another
commenter supported the rescission of the 2007 and 2008 final rules,
but opposed mandated participation in E-Verify or IMAGE.
DHS agrees that E-Verify and IMAGE do not replace the no-match
rules per se--DHS never intended to suggest that its change in focus
was a replacement for the No-Match rule. The E-Verify and IMAGE
programs, and DHS enforcement priorities, are not a part of this rule
and the proposed rule did not propose any action that would make E-
Verify or IMAGE or any other program a replacement or mandatory. DHS
stated only that it was changing enforcement priorities and focus.
These comments address broader policy decisions, not the content of the
rescission proposed rule. DHS continues to believe that E-Verify
provides the best available method for employers to verify the
employment eligibility of employees.
DHS strongly disagrees, however, with the commenters' suggestion
that E-Verify contains a degree of inaccuracy that warrants not using
E-Verify.\2\ Although outside the scope of the proposed rule, DHS notes
that many of the statistics used by commenters are out of date and some
do not establish the point suggested by the commenter. As discussed
above, the Administration and DHS are expanding the use of E-Verify
because it is an accurate and effective tool for employers to verify
employment eligibility.
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\2\ Current statistics are available on the Internet at http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=f82d8557a487a110VgnVCM1000004718190aRCRD&vgnextchannel=a16988e60a405110VgnVCM1000004718190aRCRD. See Committee on Oversight
and Government Reform, Subcommittee on Government Management,
Organization and Procurement, E-Verify: Challenges and
Opportunities, 111th Cong., 1st Sess. (July 23, 2009) (prepared
statements available at http://governmentmanagement.oversight.house.gov/story.asp?ID=2552).
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In addition, the IMAGE outreach program and other initiatives, such
as requiring all government contractors to utilize E-Verify, positively
influence United States employers to exercise proactive immigration
compliance, thus restricting the competitive field in which
unscrupulous employers operate.
Several commenters suggested that relying solely on electronic
verification of employment eligibility would disadvantage agricultural
employers who are located in rural areas where modern internet
capability is not readily available; these commenters further argued
that the difficulty faced by these employers in using electronic
verification may subject them to an imprecise interpretation of
constructive knowledge. DHS has made clear that E-Verify is not a
requirement and is one of many means to assure compliance. An employer
who decides to use E-Verify, however, may choose, for example, to use
an outside company or vendor to run E-Verify queries. Employers could
also seek out other sources of internet access, such as public sites.
Accordingly, DHS does not believe that it is impracticable for some
employers to use electronic employment verification methods such as E-
Verify in areas where internet capability may currently be limited. As
discussed above, E-Verify is one of many tools available to employers,
not the exclusive tool available or the exclusive focus of DHS'
assistance to employers. To the extent that agricultural employers are
located in rural areas that are not well served with modern

[[Page 51451]]

internet capability, employers may continue to complete the Employment
Eligibility Verification Form I-9 in the paper format and comply with
the employer verification requirements of the Immigration and
Nationality Act by carefully examining the identification and
employment eligibility documents presented by the employee at the time
of hire.

E. Other Issues

A commenter suggested that the Employment Eligibility Verification
Form I-9 process is flawed and that employers refer to it as the ``ten
foot rule''--i.e. that if the documents presented look valid from ten
feet away, then they are acceptable. DHS shares the commenter's concern
that the Employment Eligibility Verification process can be abused by
fraudulent document holders. The standard implicated in this comment by
which employers are held to account regarding document verification is
fixed by statute. INA section 274A(b)(1)(A), 8 U.S.C. 1324a(b)(1)(A)
requires employers to verify an alien's work eligibility where a work
authorization document presented ``reasonably appears on its face to be
genuine.'' Accordingly the comment treats matters outside the scope of
this rule. DHS is making improvements in the Employment Eligibility
Verification Form I-9 to assist employers and improve the integrity of
employment verification. See, e.g., Documents Acceptable for Employment
Eligibility Verification, 73 FR 76505 (Dec. 17, 2008) (interim final
rule with request for comments amending lists of acceptable documents);
74 FR 5899 (Feb. 3, 2009) (delayed effective date); 74 FR 10455 (Mar.
11, 2009) (correction).
A few commenters further suggested that this rescission rule should
address guest worker programs. These comments are outside the scope of
this rulemaking action and thus will not be addressed in this final
rule. DHS may consider these issues separately.

V. Statutory and Regulatory Reviews

A. Regulatory Flexibility Act

Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have
considered whether this rule would have a significant economic impact
on a substantial number of small entities. This rule would amend DHS
regulations to rescind the amendments promulgated in the 2007 final
rule and the 2008 supplemental final rule relating to procedures that
employers may take to acquire a safe harbor from evidentiary use of
receipt of no-match letters. Implementation of the 2007 final rule was
preliminarily enjoined by the United States District Court for the
Northern District of California on October 10, 2007. This rule
reinstates the language of 8 CFR 274.1(l) as it existed prior to the
effective date of the 2007 final rule.
As explained at 73 FR 63863, DHS does not believe the safe-harbor
offered by the 2007 final rule and the 2008 supplemental final rule
imposed a mandate that forced employers to incur ``compliance'' costs
for the purposes of the Regulatory Flexibility Act. Only small entities
that choose to avail themselves of the safe harbor would incur direct
costs as a result of the 2007 final rule and the 2008 supplemental
final rule. As this rulemaking proposes to rescind the offer of a safe
harbor, this rule does not propose any compliance requirements and
consequently would not impose any direct costs on small entities if
promulgated as a final rule. Therefore, DHS certifies under 5 U.S.C.
605(b) that this rule will not have a significant economic impact on a
substantial number of small entities.

B. Unfunded Mandates Reform Act of 1995

This rule will not result in the expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in one year, and it would not significantly or uniquely
affect small governments. Therefore, no actions were deemed necessary
under the provisions of the Unfunded Mandates Reform Act of 1995,
Public Law No. 104-4, 109 Stat. 48 (1995), 2 U.S.C. 1501 et seq.

C. Small Business Regulatory Enforcement Fairness Act of 1996

This rule is not a major rule as defined by section 804 of the
Small Business Regulatory Enforcement Act of 1996, Public Law 104-121,
804, 110 Stat. 847, 872 (1996), 5 U.S.C. 804(2). This rule has not been
found to be likely to result in an annual effect on the economy of $100
million or more, a major increase in costs or prices; or significant
adverse effects on competition, employment, investment, productivity,
innovation, or on the ability of United States-based companies to
compete with foreign-based companies in domestic or foreign markets.

D. Executive Order 12866 (Regulatory Planning and Review)

This rule constitutes a ``significant regulatory action'' under
Executive Order 12866, and therefore has been reviewed by the Office of
Management and Budget. Under Executive Order 12866, a significant
regulatory action is subject to an Office of Management and Budget
(OMB) review and to the requirements of the Executive Order. The
Executive Order defines ``significant regulatory action'' as one that
is likely to result in a rule that may (1) Have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights or obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.

E. Executive Order 13132 (Federalism)

This rule does not have substantial direct effects on the States,
on the relationship between the National Government and the States, or
on the distribution of power and responsibilities among the various
levels of government. Therefore, in accordance with section 6 of
Executive Order No. 13132, 64 FR 43255 (Aug. 4, 1999), this rule does
not have sufficient federalism implications to warrant the preparation
of a federalism summary impact statement.

F. Executive Order 12988 (Civil Justice Reform)

This rule meets the applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order No. 12988, 61 FR 4729 (Feb. 5, 1996).

G. Paperwork Reduction Act

This rule calls for no new collection of information under the
Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520.

List of Subjects in 8 CFR Part 274a

Administrative practice and procedure, Aliens, Employment,
Penalties, Reporting and recordkeeping requirements.

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Accordingly, for the reasons set forth in the preamble, DHS amends part
274a of title 8 of the Code of Federal Regulations as follows:

[[Page 51452]]

8 CFR CHAPTER 1--DEPARTMENT OF HOMELAND SECURITY

PART 274a--CONTROL OF EMPLOYMENT OF ALIENS

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1. The authority citation for part 274a continues to read as follows:

Authority: 8 U.S.C. 1101, 1103, 1624a, 8 CFR part 2, Public Law
101-410, 104 Stat. 890, as amended by Public Law 104-134, 110 Stat.
1321.

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2. Section 274a.1 is amended by revising paragraph (l) to read as
follows:

Sec. 274a.1 Definitions.

* * * * *
(l)(1) The term knowing includes not only actual knowledge but also
knowledge which may fairly be inferred through notice of certain facts
and circumstances which would lead a person, through the exercise of
reasonable care, to know about a certain condition. Constructive
knowledge may include, but is not limited to, situations where an
employer:
(i) Fails to complete or improperly completes the Employment
Eligibility Verification Form, I-9;
(ii) Has information available to it that would indicate that the
alien is not authorized to work, such as Labor Certification and/or an
Application for Prospective Employer; or
(iii) Acts with reckless and wanton disregard for the legal
consequences of permitting another individual to introduce an
unauthorized alien into its work force or to act on its behalf.
(2) Knowledge that an employee is unauthorized may not be inferred
from an employee's foreign appearance or accent. Nothing in this
definition should be interpreted as permitting an employer to request
more or different documents than are required under section 274(b) of
the Act or to refuse to honor documents tendered that on their face
reasonably appear to be genuine and to relate to the individual.

Janet Napolitano,
Secretary.
[FR Doc. E9-24200 Filed 10-6-09; 8:45 am]
BILLING CODE 9111-28-P