On October 19, 2015, the Department of Homeland Security published eagerly anticipated proposed STEM OPT Extension rules that, if adopted would allow U.S. employers greater flexibility for employing foreign nationals graduating from United States higher education institutions in qualifying STEM fields. These proposed changes were previewed as early as November 2014, when the Obama administration announced that it would take numerous executive actions to reform U.S. immigration rules. However, the specific timeline for the proposed regulation’s publication was accelerated by Washington Alliance of Technology Workers v. U.S. Department of Homeland Security, 14-cv-529 (D.C. Aug. 12, 2015), which, as of February 12, 2016, vacates the previous 2008 interim regulation on the subject.

The proposed rules preview changes to the practical training guidelines for foreign students who are currently studying or have completed studies in the academic areas of science, technology, engineering and mathematics (STEM) in the U.S. and elect to work to enhance their knowledge in a STEM field.  The most important components of the new rule are:

• It increases the STEM OPT extension to 24 months while retaining the requirement for employment with an E-Verify enrolled employer to qualify for this extension.
• It provides a more formal definition of the “STEM fields” eligible for the 24 month extension.
• It requires employers to incorporate a formal mentoring and training requirement into the STEM OPT period.
• It also requires employers to attest that the STEM OPT will not lead to terminations, layoffs or furlough of a U.S. worker and further attest that the terms and conditions of employment of STEM OPT students will be commensurate to those provided to the employer’s similarly situated U.S. workers

History of the STEM OPT Extension

The STEM OPT Extension is a subset of the Optional Practical Training (OPT) program that provides foreign students studying at SEVIS-accredited U.S. higher education institutions on F-1 visas the right to work and gain practical training during or after completing their studies. In general, OPT provides for 12 months of practical training with an approved United States employer.  Employers seeking to employ F-1 students beyond that date have been expected to sponsor them for work authorization, such as an H-1B. In some cases, students have an independent basis for work authorization beyond the expiration of their work authorization, such as marriage to a U.S. citizen.

Most employers have relied on the H-1B visa to sponsor F-1 students for work authorization towards the end of their OPT period. The H-1B cap and lottery system have resulted in the rejection of many applications to the frustration of employers. In 2008, the Department of Homeland Security promulgated the STEM OPT Extension and increased the OPT for certain foreign students studying in STEM fields for an additional 17 months, amounting to a total OPT period of 29 months. The extension was enacted in part to provide more training to STEM graduates and to address unmet labor needs in the U.S. economy. However, the Department promulgated the STEM OPT Extension regulation without requesting public notice and comment as required by the Administrative Procedures Act (APA). Under the Act, federal agencies must publish a proposed rule and request public notice and comment, gather and review the comments, and only then promulgate a final rule that incorporates the notice and comments or provides reasons why the notice and comments were not adopted into the final rule. The Department promulgated the 2008 rule without public notice and comment by relying on 5 U.S.C. §553(b) which, the agency argued, allowed it to dispense with the notice and comment requirement because there was “good cause” that the notice and comment procedures were “impracticable, unnecessary or contrary to public interest” due to, among other reasons, the increasing competition faced by the United States in areas of science, technology, engineering and mathematics from foreign nations such as China and India.

The district court rejected the Department’s arguments that this “fiscal emergency” warranted bypassing the public notice and comment requirement of the APA and vacated the 2008 rule as a “serious procedural deficiency.” However, in light of the substantial hardship that an immediate order to vacate would cause to foreign students on an OPT and the employers who have employed these students, the court stayed the order until February 12, 2016. The race to enact a new regulation that would comply with the APA’s requirements thus began.

Changes Proposed by DHS in the New STEM OPT Extension Regulation

Most significantly, the proposed regulation would allow F-1 students with STEM degrees to extend the OPT period by 24 months for each STEM degree obtained in the United States. This means that an F-1 nonimmigrant student with one degree in a STEM field may lawfully work for a US employer under OPT for a total of 36 months. DHS explains that the extension was increased from the previous 17 months due to the “complexity and typical durations” that are common in STEM research, development, testing and other projects and require months or years for completion.

The DHS’s new proposed regulations, if adopted without further revision, first time define a “STEM field” that qualifies certain F-1 visa holders to a STEM OPT extension based on their studies in mathematics, natural sciences (including physical sciences and biological/agriculture sciences), engineering or engineering technologies, and computer/information sciences and related fields (as defined by the Department of Education). This definition is intended to address current STEM needs in the US economy while balancing the potential for future changes.

Additionally, DHS proposes that employers incorporate a formal mentoring and training to enhance the STEM OPT students’ skill and exposure to valuable practical work experience directly related to their fields of study. To assuage concerns that STEM OPT students may distort the domestic labor market by accepting lower wages, DHS proposes that employers attest that the STEM OPT will not lead to terminations, layoffs or furlough of a U.S. worker and further attest that the terms and conditions of employment of STEM OPT students will be commensurate to those provided to the employer’s similarly-situated U.S. workers.

Finally, DHS proposes to retain the automatic “cap-gap” extension for STEM OPT F-1 visa holders who have filed H-1B petitions and change of status requests so long as the student’s petition has an employment start date of October 1 of the following fiscal year. The existing cap-gap rule has significantly eliminated the  disruption felt by students and potential employers where an F-1 student is required to leave the country or terminate employment, even though he or she has an approved H-1B petition, due to the OPT period ending before the effective date of the H-1B petition, namely October 1st.

Impact on F-1 Students and STEM OPT Employers

The 2008 regulations still remain in effect until February 12, 2016, which means that STEM OPT extensions in the interim will be granted for an additional 17 months under the current rule. Students should apply for OPT under the 2008 procedures and employers should follow the existing guidelines until the final rules are promulgated. In the interim, it remains to be seen whether DHS will issue full 17-month extensions for OPT extension requests filed before promulgation of these final rules given the necessity for the agency to recall improperly issued employment authorization cards to DACA recipients that were the subject of an injunction issued by federal district court Judge Andrew Hanen in Texas. 

Significantly, the February 12, 2016 deadline may be stayed yet again as the Washington Alliance plaintiffs have appealed the District Court’s ruling to the U.S. Court of Appeals for the District of Columbia Circuit, particularly with respect to the court's finding that DHS had the authority to issue the 2008 STEM OPT extension regulation (although, as noted, the court found that it was procedurally defective). Nevertheless, DHS’s actions in publishing this proposed rule ensures that DHS is procedurally on track to publish a new rule by February 12, 2016, when the existing rule is set to expire. While U.S. employers and foreign STEM graduates should pay careful attention to this situation as it continues to evolve, one thing is certain – many U.S. employers and STEM graduates will sleep easier now that DHS has taken the first step to implement a new STEM OPT extension final rule