Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Barahona v. Napolitano


October 11, 2011


The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.



Oscar Antonio Moya Barahona ("Moya") brings this putative class action against Janet Napolitano, Secretary of Homeland Security, and Alejandro Mayorkas, Director of United States Citizenship and Immigration Services ("USCIS") ("Defendants"), in their official capacities. Moya alleges that in promulgating two regulations -- the Adjustment of the Immigration and Naturalization Benefit Application and Petition Fee Schedule, effective July 30, 2007 (the "2007 Regulation"), and the U.S. Citizenship and Immigration Services Fee Schedule, effective November 23, 2010 (the "2010 Regulation") -- USCIS has exceeded its authority under section 286(m) of the Immigration and Nationality Act ("INA"),*fn1 and that the Regulations are arbitrary, capricious, an abuse of discretion, and not in accordance with law.*fn2 Specifically, Moya alleges that the Regulations "bundle" fees for services, with the result that a large number of applicants pay for services that they do not want or need, cannot use, or do not receive, and that the Regulation establishes fees at rates that improperly include the costs of USCIS activities and expenses that are, at best, distantly related to the provision of services to the fee-paying applicants.*fn3

The parties have now cross-moved for summary judgment. For the reasons stated below, Moya's motion is denied and defendants' motion is granted.


A. The Parties

Since 2003, the Department of Homeland Security ("DHS"), through its component agency, USCIS, has been responsible for granting or denying immigration benefits to individuals, including naturalization, permanent residence, and asylum.*fn5 In connection with permanent residence applications, individuals may seek two interim benefits: employment authorization and travel documents.*fn6

The former allows an applicant to work while her permanent residency application is pending, while the latter allows the applicant to leave the United States without relinquishing her application for permanent residence.*fn7

Moya is a twenty-year-old citizen of Honduras who resides in the Bronx, New York.*fn8 On March 5, 2008, he applied for adjustment of status pursuant to section 245(h) of the INA, and paid the $930 fee plus the $80 fee for biometric services.*fn9

On March 25, 2008, Moya applied for the interim benefit of employment authorization "because he was required to pay for it as a condition of applying for permanent residence and determined that, should the adjudication of the permanent residence application be delayed, an employment authorization card could serve as a form of identification."*fn10 As a full-time high school student, he had no intention or need to work at the time.*fn11

On April 24, 2008, his application for adjustment of status was granted.*fn12 His employment authorization was approved approximately one month later, on May 20, 2008.*fn13 Because lawful permanent residency status automatically confers authorization to work, the employment authorization document was "worthless" to Moya by the time it was issued.*fn14 Moya did not apply for a travel document, as he had no intention of traveling.*fn15 In fact, had he traveled at that time, even with a travel document, there is a significant likelihood he would not have been permitted to re-enter the United States.*fn16 Thus, Moya was required to pay for the two interim benefits, even though he had no intention of working or traveling during the pendency of his application for lawful permanent residence.*fn17

Moya alleges that he will also be subject to fees under the 2010 Regulation. He will be eligible for naturalization on April 24, 2013, and if he decides to naturalize, he will need to file an Application for Naturalization (Form N-400) and pay the $595 filing fee.*fn18 If he chooses not to naturalize, his permanent resident card will have to be renewed when it expires on April 24, 2018, so he will have to file an Application to Replace Permanent Resident Card (Form I-90) and pay the $365 filing fee.*fn19

B. The Historical Background and Statutory Scheme Governing Immigration and Naturalization Fees Congress enacted the INA*fn20 to create a "'comprehensive federal statutory scheme for [the] regulation of immigration and naturalization.'"*fn21 Until the creation of DHS in 2003, the Attorney General was responsible for administering immigration and naturalization benefits.*fn22 The Department of Justice ("DOJ"), through its component agency, Immigration and Naturalization Services ("INS"), collected fees for processing and adjudicating immigration and naturalization applications pursuant to its promulgated regulations.*fn23

Prior to 1988, the INS's fee-setting authority was principally based on the Independent Offices Appropriations Act of 1952 ("IOAA"), which permitted federal agencies to collect user fees for "'a service or thing of value provided by the agency.'"*fn24 Those fees were deposited with the U.S. Treasury as "miscellaneous receipts."*fn25 The costs of the INS's administration of immigration and naturalization benefits was funded entirely by Congressional appropriations.*fn26

In 1988, Congress enacted INA sections 286(m) and 286(n).*fn27

Through that legislation, Congress directed that the expenses of administering immigration and naturalization benefits would be funded with the fees collected by the INS for its processing and adjudication of applications.*fn28 Pursuant to section 286(m), Congress established the Immigration Examinations Fee Account ("IEFA") as the depository for "all adjudication fees."*fn29 Under section 286(n), fees deposited in the IEFA were to be used to fund the "expenses in providing immigration adjudication and naturalization services."*fn30 Additionally, under section 286(j), the Attorney General had the authority to "prescribe such rules and regulations as may be necessary to carry out" sections 286(m) and (n), among others.*fn31 The conference report that accompanied the 1988 legislation noted that the IEFA funds were for "'enhancing naturalization and adjudication programs.'"*fn32

In 1990, Congress amended section 286(m) to provide: that fees for providing adjudication and naturalization services may be set at a level that will ensure recovery of the full costs of providing all such services, including the costs of similar services provided without charge to asylum applicants or other immigrants. Such fees may also be set at a level that will recover any additional costs associated with the administration of the fees collected.*fn33

The House Appropriations Committee recognized that the purpose of the 1990 amendment was to ensure that the IEFA funds would fund "'the entire cost of operating the Adjudications and Naturalization program.'"*fn34

In 2002, the INS was abolished and DHS was established.*fn35 Congress transferred to DHS responsibility for adjudicating immigration and naturalization benefits, functions that are performed by USCIS.*fn36 Through that process, defendants assert that "Congress reaffirmed that fees, and primarily the IEFA application fees, should fund the full cost of USCIS's processing and adjudicatory functions."*fn37 Section 477 of the Homeland Security Act ("HSA") "directs the Comptroller General of the United States to report to Congress, within one year, on 'whether [USCIS] is likely to derive sufficient funds from fees to carry out its functions in the absence of appropriated funds.'"*fn38

C. The 2007 and 2010 Fee Regulations

In 2007, DHS performed a comprehensive review and analysis of the level of application fees needed to fund the full costs of processing and adjudicating immigration and naturalization benefits.*fn39 That review revealed that DHS needed to increase application fees for the majority of immigration and naturalization benefits, including for naturalization and permanent residence applications.*fn40

DHS complied with notice-and-comment rulemaking in adjusting the IEFA fee schedule.*fn41 A notice of the proposed 2007 fee regulation was issued on February 1, 2007.*fn42 DHS received more than 3,900 comments and responded to issues raised by the comments by creating several types of fee waivers and exemptions.*fn43 The final 2007 fee regulation was published on May 30, 2007, and took effect on July 30, 2007.*fn44

In 2010, DHS undertook another comprehensive review of the IEFA fees, which revealed the need for further adjustment to fee levels.*fn45 On June 11, 2010, DHS invited comments on a proposed fee regulation and made its cost-modeling software available for public access.*fn46 DHS received 225 public comments, in response to which the agency waived and reduced certain fee amounts.*fn47 The final 2010 fee regulation was published on September 24, 2010 and took effect on November 23, 2010.*fn48 The 2010 fee regulation superseded the 2007 fee regulation.*fn49

D. DHS's Determinations of Appropriate Fee Levels

1. DHS's Interpretation of Its Fee-Setting Authority Under INA Section 286(m)

In the rulemaking process, DHS explained to the public its interpretation of section 286(m) and its view that the 2007 and 2010 fee regulations were consistent with that statutory authority.*fn50 DHS considers its fee-setting authority as deriving from INA section 286(m), not from the general authority of IOAA for federal agencies to charge user fees.*fn51 DHS accordingly views "its fee-setting authority under section 286(m) [as] 'an exception from,' and 'broader' than, 'the stricter costs-for-services-rendered requirements under the [IOAA].'"*fn52

Because section 286(m) provides for fees to be set at a level to recover the "'full costs' of providing immigration and adjudication services and other similar services . . . DHS determined that it is authorized to collect fees to fund the cost of improvements designed to enhance its capacity to administer immigration and naturalization benefits, and to ensure that it administers those benefits consistent with its statutory obligations and policy objectives."*fn53 DHS's view of the legislative history is that "Congress intended to allow DHS to set fees at a level sufficient for funding essential investments in USCIS's technology, staffing, and facilities."*fn54

DHS also received comments during the rulemaking period in 2007 and 2010 arguing for a contrary interpretation of DHS's fee-setting authority, based on a reading of Office of Management and Budget ("OMB") Circular A-25.*fn55 DHS considered those comments and rejected them, based on its view that "OMB Circular A-25 did not dictate how DHS was to interpret the costs that would permissibly be funded with IEFA fees."*fn56 First, DHS determined that the Circular does not control because the Circular "states that its provisions 'shall be applied' when agencies assess 'user charges under the IOAA'" while it "only 'provides guidance' for 'assess[ing] user charges under other statutes," such as INA section 286(m).*fn57 Second, DHS determined that the Circular is an internal executive branch policy, and "thus cannot override DHS's mandate from Congress to ensure that USCIS's programs for administering immigration and naturalization benefits are fee-funded."*fn58

2. DHS's Projections of Costs to Be Funded by IEFA Fees

In both the 2007 and the 2010 reviews, DHS projected the "full costs of the programs, services, and projects at USCIS that should be funded by application fees."*fn59 In 2007, the key priorities for USCIS included "the reduction of processing time for immigration and naturalization applications, while ensuring both the integrity of the adjudicatory process and its adherence to national security and public safety requirements."*fn60 In 2010, its priorities included "maintaining the progress it had made in reducing processing time, and structuring its programs and processes to improve efficiency."*fn61

In the 2007 fee review, DHS realized that "the pre-2007 IEFA fee schedule did 'no more than sustain USCIS operations and provide for delivery of benefits at an unacceptable level.'"*fn62 DHS determined that significant expenditures would be required in order to "preserve 'the considerable progress [it had] made ... to reduce the backlog of immigration benefits applications and petitions."*fn63 DHS considered the lengthy delays due to backlogs as having more impact on individuals than an increase in fees.*fn64 Furthermore, "processing delays undermine 'national security and public safety' by enabling individuals who pose risks to the public to remain in the United States."*fn65

The expenditures that were planned for FY 2008 and FY 2009 included the categories of "infrastructure enhancements," "security enhancements," "service enhancements," and "humanitarian enhancements."*fn66 In 2010, DHS performed similar analyses of its projected costs.*fn67 "By comparing the cost projections and the revenue projections . . . DHS determined that it was necessary to adjust the level of the IEFA fees."*fn68

3. DHS's Evaluation of Combined Fees Versus A La Carte Pricing

Before 2007, USCIS charged separate fees for the applications for permanent residence and for the two interim benefits of employment authorization and travel documents, even though a "significant majority" of permanent residence applicants applied for one or both interim benefits.*fn69 DHS determined that "many" applicants paid multiple rounds of fees to obtain interim benefits while their permanent residence applications were pending.*fn70 Additionally, separate fees increased processing costs to USCIS by requiring independent adjudication for each benefit application.*fn71 DHS also determined that "the system of charging separate fees . . . distorted the relationship between USCIS's efficiency in processing applications and its fee revenue -- the longer it took for USCIS to adjudicate an application for permanent residence, the more it was likely to collect in application fees for the interim benefits."*fn72 This gave rise to a perception of intentional delay.*fn73

DHS determined that switching to a combined fee "restored the proper relationship between processing efficiency and fee revenue generation" and "lowered the total costs for the large number of applicants who would have had to pay multiple times under the old system."*fn74 During the rulemaking period, USCIS considered comments suggesting that a la carte pricing should be offered, so as to "benefit those applicants, such as children, who may not need or desire either work authorization or travel documents."*fn75 Ultimately, DHS rejected this option, "because the costs and administrative burden associated with explaining and administering such a system outweighed any benefits it offered to a subset of the permanent residence applicants."*fn76

4. DHS Used Activity-Based Costing and Adjustments to Set Fees

In 2007 and 2010, DHS used activity-based costing, which "first assigns costs to different activities involved in providing services or making a product," and "then assigns the activity costs to specific products or services."*fn77

Following this methodology and exercising its policy judgment, DHS determined in 2007 that $930 was the appropriate fee for the application for permanent residence and two interim benefits, and that $595 was the appropriate fee for naturalization applications.*fn78


A. Principles of the Administrative Procedure Act

The APA governs judicial review of an agency's compliance with regulations, and provides a mechanism for the review of certain agency decisions. When an agency's decision is challenged, the court "begin[s] by reviewing the agency's construction of the statute at issue . . . . by applying the familiar two-step process of statutory interpretation "*fn79 established by Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.*fn80 The first step under Chevron is to inquire "'whether Congress has directly spoken to the precise question at issue;' if so, our inquiry is at [an] end."*fn81 However, "[i]f there is silence or ambiguity in the statute . . . then the agency has discretion in its implementation, and we ask only if the construction it has given the statute is reasonable."*fn82

Under the APA, a court must set aside an agency action, finding, or conclusion if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, . . . [or] without observance of procedure required by law."*fn83

An agency decision is accorded a "presumption of regularity," and the party challenging the decision has the burden of proof.*fn84 An agency decision is arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.*fn85

A reviewing court must make a "searching and careful" inquiry into "whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment."*fn86 However, review under the APA is not available where the relevant statute precludes judicial review or where "agency action is committed to agency discretion by law."*fn87 The APA does not apply where the plaintiff seeks money damages.


A. DHS Reasonably Interpreted Its Fee-Setting Authority Under Section 286(m) and Did Not Abuse Its Discretion

1. DHS's Interpretation of Section 286(m) Is Reasonable and Entitled to Chevron Deference

Moya challenges DHS's interpretation of its fee-setting authority under section 286(m), as giving it the authority to charge fees to recover "not only the direct costs associated with processing specific applications, but also the costs of projects designed to enhance its capacity to administer immigration and naturalization benefits."*fn88 Moya contends, in particular, that DHS has interpreted the term "full costs" far too expansively, thereby exceeding its authority by raising fees dramatically under the 2007 and 2010 fee schedules.

I review the challenged agency action in accordance with the two-step analysis of Chevron. Applying Chevron's first step, I find that Congress "has [not] directly spoken to the precise question at issue."*fn89 While the term "full costs" appears self-explanatory, section 286(m) contains both silence and ambiguity concerning the precise scope that "full costs" entails in this context.*fn90 Therefore, DHS has discretion in implementing the statute.*fn91

Accordingly, I proceed to Chevron's second step, and ask whether the agency's interpretation of section 286(m) is reasonable. I find that it is. Although Moya's interpretation of section 286(m) is also reasonable, the question is not whether the agency has made the only reasonable decision or the best possible decision, but whether it has made a reasonable decision that is permissible under the statute. Under this narrow standard of review, I conclude, based primarily on the statutory text and the legislative history, that DHS has reasonably interpreted its fee-setting authority under section 286(m) and thus, I must accord Chevron deference to its interpretation.

Moya presents several arguments as to why DHS's interpretation of section 286(m) -- particularly its interpretation of "full costs" -- is wrong. First, Moya argues that the language of section 286(m) is clear. As he reads the statute, "USCIS may charge 'fees' for 'providing adjudication and naturalization services' to recover the 'full costs of providing all such services.'"*fn92 Moya posits that "'full costs' does not mean the 'full costs' of operating USCIS, but rather only those costs "incurred in 'providing adjudication and naturalization services,'" which he interprets as costs "reasonably attributable to the adjudication and naturalization services rendered to applicants."*fn93 However, he does not suggest where the line would be drawn between costs that are "reasonably attributable," and those that are not.

Second, Moya argues that "full costs" means less than "the general costs to the Government"*fn94 of operating USCIS because it must be presumed that Congress was aware of the judicially-established difference between "fees" and "taxes" when it authorized DHS to set "fees."*fn95 He notes that "Congress did not expressly delegate through § 286(m) the taxing power to USCIS, much less provide any 'intelligible principle' by which to exercise any such power."*fn96

Moya suggests further that "full costs" had a specific meaning when section 286(m) was enacted, as defined in OMB Circular A-25, which "permitted agencies 'to recover the full cost' of rendering services, and, in a section entitled '[d]etermination of costs,' stated '[t]he cost computation shall cover the direct and indirect costs to the Government of carrying out the activity[.]'"*fn97 The Circular also stated that "a user charge is appropriate and can be 'made to each identifiable recipient for a measurable unit or amount of Government service . . . from which he derives a special benefit,' which occurs 'when a Government-rendered service . . . is performed at the request of the recipient.'"*fn98

Moya claims that, at previous junctures, the agency cited Circular A-25 as guiding authority when proposing and promulgating fees under section 286(m).*fn99 He alleges that DHS only changed its position after this lawsuit was filed, by stating that it "'disagrees that Circular A-25 applies under INA section 286(m).'"*fn100 Moya urges that, because this interpretation "'conflicts with the agency's earlier interpretation,'" it is "'entitled to considerably less deference than a consistently held agency view.'"*fn101

I find that DHS has reasonably interpreted section 286(m) to include the full costs of operating USCIS because the function of USCIS is to provide adjudication and naturalization services.*fn102 Certain costs may be more or less directly associated with the provision of those services, but fundamentally any cost that the agency incurs in fulfilling its statutory mandate to provide such services can be reasonably interpreted as falling under the "full costs of providing all such services."*fn103 While this may not be the only reasonable interpretation of the statute, it is nonetheless a reasonable interpretation. Similarly, DHS reasonably interpreted its authority to conclude that it could set fees at a rate that would fund the twenty-nine "enhancements," including the expenses of "adjusting staff, upgrading information technology systems, improving fraud detection and prevention capacity."*fn104

Notably, the legislative history indicates that "after amending the statute to add the 'full costs' provision, Congress recognized that fees deposited in the IEFA account would fund the 'entire cost of operating the Adjudications and Naturalization program.'"*fn105 Defendants note that "according to a 1988 conference report accompanying section 286(m)'s enactment, Congress intended for the 'funds generated by [the IEFA] Account' to be used for 'enhancing naturalization and adjudication programs.'"*fn106 This understanding by Congress persists, as revealed in a recent House report stating that "'[r]evenues from fees paid by persons applying for immigration benefits constitute the majority of USCIS's revenues, and support adjudication of applications for immigration benefits as well as government investigations aimed at preventing fraud within the immigration system.'"*fn107

Contrary to Moya's assertion, the Supreme Court recently held that when an agency changes its prior policy, the APA does not dictate a heightened standard of review for the new policy.*fn108 The agency need not demonstrate to a court's satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better, which the conscious change of course adequately indicates.*fn109

Therefore, the fact that the agency previously considered OMB Circular A-25 to be controlling authority is irrelevant, as long as it now provides good reasons for considering the Circular to be merely instructive.

In any case, I find that DHS's interpretation of "full costs" is consistent with the broad definition of the term in OMB Circular A-25. In both cases, full costs includes direct and indirect costs. The Circular specifically includes "direct and indirect personnel costs," "physical overhead, consulting, and other indirect costs," "management and supervisory costs," and the "costs of enforcement, collection, research, establishment of standards, and regulation."*fn110

Thus, even if OMB Circular A-25 were controlling, DHS would still have the discretion to include its overall operating and infrastructure costs, as well as the twenty-nine enhancements, in its definition of "full costs," and to set application fees at rates that would allow recovery of such costs. In sum, based on the statutory text, the legislative history, and the instructive authority of OMB Circular A-25, I find that DHS has reasonably interpreted its fee-setting authority under section 286(m) of the INA.

2. DHS's Decision Was Neither Arbitrary Nor Capricious

In 2007 and the 2010, DHS significantly raised fees in order to cover the costs of USCIS's operations, including the costs of twenty-nine "enhancements." Each time, it did so after conducting a comprehensive review that led to the agency's reasoned conclusion that it could not fulfill its statutory duties without increasing revenue obtained from application fees.*fn111 Moya alleges that "[b]y including these enhancements in its cost calculations, USCIS passed all $524 million in system improvement costs onto applicants for immigration and naturalization benefits."*fn112 Moya objects to the agency using applicant fees to fund any of these enhancements because they benefit the public, rather than the individual applicants, and are unrelated to processing applications for immigration and naturalization benefits.

The 2007 and 2010 fee schedules were promulgated in accordance with notice-and-comment rulemaking procedures. During the rulemaking periods, DHS accepted public comments, including many that Moya has raised in the instant litigation, and gave due consideration to such concerns. In both 2007 and 2010, DHS published final rules that included certain adjustments and waivers based on the public comments it had received, and that provided full and reasoned explanations for the decisions it made.*fn113 There is no indication that DHS abused its discretion in promulgating the fee regulations. DHS did not "rel[y] on factors which Congress [did] not intend it to consider," "fail[] to consider an important aspect of the problem," or "offer[] an explanation for its decision that runs counter to the evidence before the agency."*fn114

Because I have found that the agency has reasonably interpreted its fee-setting authority to fund the entire agency budget, minus appropriations, with fees, and did not abuse its discretion in doing so, I find that it is also appropriate for the agency to have incorporated the cost of improvements in its calculation of fees. Moya's suggestion that any such system-wide improvements should have been funded by additional appropriations from Congress is irrelevant to my assessment of whether the agency has acted within its discretion.*fn115 The question is not whether the agency could have taken a different tack, but whether the tack that it took is permissible under the statute and is an appropriate exercise of discretion. I answer both in the affirmative.

3. DHS's Interpretation of Section 286(m) Does Not Render the Provision Unconstitutional

I do not find that DHS's interpretation of section 286(m) would render it an unconstitutional delegation, "or . . . raise substantial constitutional concerns."*fn116 Moya argues that DHS's interpretation of its fee-setting authority is constitutionally problematic under long-standing Supreme Court precedent distinguishing between user fees, which agencies may charge for services they render, and taxes, which only Congress may constitutionally impose.*fn117 In his view, DHS's interpretation leads to the conclusion that Congress authorized the agency to charge fees "'to recoup some of the general costs to the Government of operating a particular regulatory scheme.'"*fn118 Such "fees" would actually constitute taxes, without Congress having provided any "intelligible principle" limiting DHS's authority.*fn119

Pursuant to the doctrine of constitutional avoidance, "'every reasonable construction must be resorted to in order to save a statute from unconstitutionality.'"*fn120 Therefore, Moya urges this Court to conclude that Congress did not intend to delegate to DHS the authority to charge such fees. I find that the the Supreme Court precedent cited by Moya does not lead to the conclusion that DHS's interpretation of section 286(m) renders the delegation unconstitutional.

In National Cable Television Association v. United States ("NCTA"), the Supreme Court considered an agency's imposition of annual fees on the entities subject to its regulation under the IOAA, holding that [t]axation is a legislative function, and Congress, which is the sole organ for levying taxes, may act arbitrarily and disregard benefits bestowed by the Government on a taxpayer and go solely on ability to pay . . . . A fee, however, is incident to a voluntary act . . . . The public agency performing those services normally may exact a fee for a grant which, presumably, bestows a benefit on the applicant, not shared by other members of society.*fn121

The Court stated "[i]t would be such a sharp break with our traditions to conclude that Congress had bestowed on a federal agency the taxing power that we read [the IOAA] narrowly as authorizing not a 'tax' but a 'fee.'"*fn122 The Court concluded that "[t]he phrase 'value to the recipient' is . . . the measure of the authorized fee."*fn123

In Federal Power Commission v. New England Power Company ("NEPCO"), a companion case, the Court endorsed the interpretation of the IOAA given by OMB Circular A-25. The Circular stated that "a reasonable charge 'should be made to each identifiable recipient for a measurable unit or amount of Government service or property from which he derives a special benefit,'" and that "no charge should be made for services rendered, 'when the ultimate beneficiary is obscure and the service can be primarily considered as benefitting broadly the general public.'"*fn124

The lower courts have often interpreted these two cases as distinguishing between "a permissible user fee and an unconstitutional tax,"*fn125 and accordingly, have upheld fees as long as the agency imposes "'specific charges for specific services to specific individuals or companies.'"*fn126 Articulated in a slightly different manner, "an agency could not assess fees, purportedly in the 'public interest,' to recoup some of the general costs to the Government of operating a particular regulatory scheme."*fn127

The instant case is factually distinguishable from NCTA and NEPCO in at least one important respect. Those cases "involve[] a regulatory agency's attempt to shift wholesale the cost of regulations to the regulated entities, regardless of whether the entities requested or received any agency service."*fn128

Here, by contrast, DHS is "collecting application fees to fund programs and operations connected with adjudicating specific applications or requests."*fn129 The fees assessed by DHS are valid because they remain "specific charges for specific services to specific individuals or companies."*fn130 No principle laid out in NCTA or NEPCO prohibits the agency from setting fees based on "'the total cost of providing services,'" including both direct and indirect costs.*fn131 Furthermore, to the extent that Moya is suggesting that DHS cannot include the costs of programs thatalso serve the public interest, such as its anti-fraud enhancement projects, it is established law that agencies are not "required to segregate public and private benefits."*fn132

I find instructive the D.C. Circuit's analysis in Florida Power & Light Co. v. United States ("FPLCO"), a case challenging fees assessed by the Nuclear Regulatory Commission under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA").*fn133 The D.C. Circuit held in that case that the "'constitutional problem' actually discussed and avoided by the Court [in NCTA] was the delegation of congressional power to agencies without Congress setting standards for their guidance," rather than a "metaphysical distinction" between "fees" and "taxes."*fn134

The court considered whether COBRA laid down "'an intelligible principle'" that would render the delegation permissible, noting that it is the challenger's burden to show that the standards were unintelligible.*fn135 The standard

in COBRA "establishes a legislative policy that NRC collect up to thirty-three percent of its budget from fees 'reasonably related to the regulatory service provided by the Commission' and that the fees 'fairly reflect the cost to the Commission of providing such service.'"*fn136 The court found this authorization distinct from IOAA and "much more precise than delegations upheld by the Supreme Court" in earlier cases.*fn137 Significantly, the court noted that "in only two cases in all of our jurisprudence has the congressional delegation to an agency been invalidated on the ground that Congress has delegated power without sufficient standards."*fn138

Similarly, DHS's fee-setting authority derives from section 286(m) of the INA, not the IOAA,*fn139 I find that Congress has provided an intelligible principle limiting its delegation under section 286(m), quite similar to the COBRA language that the D.C. Circuit upheld in FPLCO. To wit, section 286(m) provides that "fees for providing adjudication and naturalization services may be set at a level that will ensure recovery of the full costs of providing all such services, including the costs of similar services provided without charge to asylum applicants or other immigrants." The agency has been instructed by Congress to recover the costs of its provision of services; to recover the full costs of providing such services; and to recover those costs by charging fees for the provision of services. This delegation is no less specific than the COBRA delegation upheld by the D.C. Circuit. Therefore, I find that DHS's interpretation of its fee-setting authority under section 286(m) does not pose any constitutional difficulty.

B. DHS Reasonably Exercised Its Discretion in "Bundling" Application Fees

1. A Combined Fee Is Permissible Under Section 286(m)

Moya argues that DHS has impermissibly bundled multiple services into one fee, thereby charging many applicants for services that they do not want and which some cannot use.*fn140 Beginning in 2007, DHS began to bundle Form I-485 -- the application for permanent residency -- with two "interim benefits," which permanent residency applicants sometimes seek. Those benefits are (1) an Application for Travel Document (Form I-131), and (2) an Application for Employment Authorization (Form I-765).*fn141

Moya posits that the decision to bundle fees in this manner is arbitrary and capricious, and thus an abuse of agency discretion.*fn142 He argues that the agency's previous practice of charging separate fees for each application belies the agency's representation that it "'would be too complicated and costly for USCIS to administer' 'multiple fee options based on who typically requests . . . benefits, when records indicated that the vast majority of applicants do request interim benefits.'"*fn143 However, Moya has taken the agency's statement out of context in a misleading fashion.

In fact, the agency indicated that it would be "too complicated and costly" to have a system in which individuals could opt to pay a combined fee if they were interested in interim benefits, or to pay a separate fee if they were not -- in essence, multiplying the options from the former fee schedule.*fn144 Defendants note that, during the rulemaking period, "DHS made available its workload projections, which showed that the policy change would result in a significant reduction in the volume of applications to be adjudicated."*fn145 Oddly, Moya urges precisely what the agency determined would be the most complicated and costly to administer -- offering optional bundling.*fn146 Moya claims that the agency has not addressed at all "whether system costs would be higher (and by how much) if [] applicants were offered the choice of taking or not taking the bundle[.]"*fn147

But that is precisely what the agency addressed in its responses to public comments, deciding that the system costs would be higher if applicants were offered the choice.

Moya also critiques DHS's factual assertion that "'the vast majority of applicants do request interim benefits,'"*fn148 pointing out that in the 2007 Regulation, the agency asserted only that it "'believes that the average adult customer files two [applications for work authorization benefits] . . . [and a]bout 40% filed at least one [application for a travel document] and 20% would file a second.'"*fn149

Moya argues that for "many" permanent residency applicants "the travel document is worthless because traveling outside of the United States would cause serious harm."*fn150 Specifically, individuals who have been unlawfully present in the United States may be inadmissible for certain periods of time if they leave the country, and the issuance of a travel document does not waive those grounds of inadmissibility.*fn151 Similarly, federal law generally prohibits the employment of individuals under the age of sixteen and restricts the categories of employment for individuals between sixteen and eighteen.*fn152 DHS statistics reveal that for FY 2006-FY 2009, almost fifteen percent of applicants were under the age of fifteen and thus, could not have used the work authorization benefit.*fn153 Therefore eighty-five percent -- which surely qualifies as the "vast majority" -- could legally work if they received the work authorization benefit.*fn154

In summary, Moya argues that by charging applicants for two benefits that they may or may not ever want or use, "the result is that the agency receives millions of dollars in fees that not only lack any connection with the provision of services, but lack any connection with any identifiable agency activity of any kind."*fn155 Accordingly, they "are charged more than the full cost of the services they receive."*fn156

Moya is correct if one calculates "full cost" in the narrowest sense. However, I find that the agency has reasonably interpreted "full costs" in a more expansive fashion, and thus, the agency's decision to combine fees remains "permissible under the statute."*fn157 Section 286(m) gives the agency wide discretion and does not impose a specific requirement that DHS aggregate or segregate the fees for particular types of benefits.*fn158 User fees need not "be precisely calibrated to the use that a party makes of Government Services."*fn159 Nor is there any legal requirement of "complete fairness," which would often be impractical.*fn160 Instead, the standard is whether the fee represents a "fair approximation of the cost of benefits supplied."*fn161 In this case, the agency explained the process by which it determined the various fees included in the 2007 and 2010 fee schedules, charging more for applications that are more complex to process.*fn162 Therefore, I find that the fees are a "fair approximation," even if not "precisely calibrated."

2. DHS Provided a Reasonable Explanation for the Combined Fee

I find that DHS's decision to shift from three separate fees to a combined fee was not arbitrary or capricious. DHS provided two reasons for making the shift. First, DHS determined that the combined fee policy would reduce the workload for the agency, and thus, processing costs.*fn163 As DHS acknowledged in its response to public comments during the rulemaking period, a la carte pricing would lower costs for certain permanent residence applicants, but, compared to a combined fee, a la carte pricing would result in greater costs and administrative burden on the agency overall.*fn164 DHS considered public comments to the contrary, but, after balancing the competing interests, exercised its policy judgment, "offer[ing] a complete, reasoned basis for both its decision to propose a combined fee system, and for choosing to adhere to that system over the alternative suggested by public comments."*fn165

Second, DHS determined that the policy would create a "better alignment of incentives . . . between revenue and timeliness."*fn166 The new fee structure "addresses the historic perception that because of the Congressional requirement that USCIS be self-funded from fees, USCIS may make decisions that compromise operational efficiency to ensure revenue flow."*fn167

Although the agency does not bear a heightened burden to explain a shift in policy, the Supreme Court recently held that an agency may not "depart from a prior policy sub silentio or simply disregard rules that are still on the books."*fn168 Here, DHS has explained its decision to shift from charging separate fees to charging a bundled fee, and I find that it has provided adequate justification for its decision. Whether or not the agency made the best possible decision, the agency's policy decision to combine fees was rational and reasoned, and permissible under the statute.*fn169 Where "there are several different possible responses to a given problem, more than one of which may be rational," judicial review is limited to determining whether the agency has explained its response and whether its response is rational.*fn170 Therefore, I conclude that there is no reason for this Court to "substitute [its own] policy judgment for that of the agency."*fn171


For the reasons stated above, Moya's motion for summary judgment is denied and defendants' motion for summary judgment is granted. The clerk of the Court is directed to close the motions [Docket No. 15 and 17] and this case.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.