H-1B Program Overhaul
DHS Sent a Second H-1B Rule to OMB on August 24. This One Is About Who Gets to Use the Visa at All.
Two days before the $103,265 fee proposal hit the Federal Register, DHS submitted a separate H-1B overhaul rule to the White House for review. RIN 1615-AD00 targets cap exemption eligibility, employer violations, and third-party placements — program integrity questions that affect a different set of people than the fee.
Two H-1B rules hit the pipeline in the same week
Two separate proposed rules targeting the H-1B program were submitted to federal review in the same week of August 2026. Most of the coverage went to the $103,265 cap-petition fee that DHS published in the Federal Register on August 25. That proposal is loud and concrete — a six-figure dollar amount attached to every H-1B cap petition — and it generated immediate attention from employers, practitioners, and industry groups.
The other rule, submitted to the White House Office of Management and Budget on August 24 — the day before the fee proposal — got less attention but may end up affecting a broader population of current H-1B holders and employers. The rule is titled 'Reforming the H-1B Nonimmigrant Visa Classification Program.' Its regulatory number is RIN 1615-AD00. Its draft text has not been publicly released, but its abstract, published in the federal regulatory agenda, describes three specific areas of reform: cap exemptions, employer violations, and third-party placements.
Unlike the fee proposal, which is a financial question — can you write a check large enough — this rule is a program eligibility question: who qualifies to use the H-1B category in the first place, who gets enhanced scrutiny, and what happens to employers who have a record of violations. The two rules can move at different speeds, be challenged independently in court, and affect entirely different parts of the employer population.
What OIRA review means and how long it takes
OMB's Office of Information and Regulatory Affairs is the White House's regulatory gatekeeper. Before any significant proposed rule can be published in the Federal Register as a Notice of Proposed Rulemaking, it must go through OIRA review. That review is not perfunctory. OIRA checks the rule's legal authority, its economic analysis, its consistency with White House policy priorities, and whether the cost-benefit analysis holds up. Agencies sometimes receive written questions from OIRA that require extensive responses before the review can clear.
DHS classified RIN 1615-AD00 as 'economically significant' before submission. That classification means the administration believes the rule's annual economic effect will be at least $100 million, or that it will materially affect the economy, jobs, productivity, competition, or a major economic sector. Economically significant rules get more intensive OIRA scrutiny — typically a 90-day review period, though OIRA can take longer and often does for complex rulemakings.
Once OIRA clears the rule — which could happen in weeks or months — DHS can publish it in the Federal Register as an NPRM. That publication opens the public comment period, which for an economically significant rule typically runs 60 days. Public comments, DHS responses, and any revisions to the rule come after that. The earliest a final rule from this process could take effect is sometime in 2027. A 2028 effective date is more realistic for a rule of this complexity, given the comment volume an H-1B overhaul will attract.
Cap exemptions: who currently gets out of the lottery and why it matters
The H-1B cap exemption is one of the most significant structural features of the program. The annual statutory cap is 65,000 regular cap petitions plus 20,000 advanced degree exemption petitions — 85,000 total. Most employers who want to hire a new H-1B worker must go through the lottery, filed in March for October entry, and their petition only proceeds if USCIS selects it. Given that registrations have run into the hundreds of thousands in recent years, selection odds have been poor for most employers.
But certain employers are entirely exempt from this process. Institutions of higher education — universities and colleges — can file H-1B petitions at any time, for any number of workers, without going through the lottery. Nonprofit entities affiliated with or related to an institution of higher education get the same exemption. Nonprofit research organizations and governmental research organizations are also cap-exempt. These exemptions have been in place since the cap was created, and they allow universities and research institutions to hire H-1B workers on any timeline with no lottery risk.
The reform proposal signals that DHS wants to revisit who actually qualifies for cap-exempt status. The regulatory agenda abstract says DHS will 'revise eligibility for cap exemptions' — language that could mean tightening the definition of qualifying nonprofit or related-entity arrangements, or raising evidentiary standards employers must meet to claim cap-exempt filing without lottery. The specific direction of the change will not be known until the NPRM text is publicly released. What is known is that the administration believes changing this has at least a $100 million annual economic effect — the threshold required to classify any rule as economically significant.
Third-party placements: the structure that has been a reform target for decades
Third-party placement is the arrangement where an H-1B worker is employed by one company — the H-1B petitioner of record — but performs work at a different company's worksite. IT consulting and staffing firms use this arrangement extensively. The firm files the H-1B petition, employs the worker on its payroll, and then contracts the worker to a client company for a specific project. The client's work is what the H-1B worker actually does day-to-day; the staffing firm is the legal employer.
This structure has been legally permissible under H-1B rules, with constraints, for decades. USCIS requires third-party placement cases to demonstrate a valid employer-employee relationship, a qualifying specialty occupation at the actual work location, and sufficient documentation of the placement terms including specific itineraries for off-site work. But the arrangement has also drawn persistent criticism that some firms use it to move H-1B workers through the system in ways that undercut domestic wages or bypass lottery requirements through creative cap-exempt designation claims.
The administration's interest in tightening third-party oversight is not new — it appeared in regulatory efforts during both the Obama and first Trump administrations, and was the subject of active litigation during Trump's first term. What is new is that this specific proposal is at OIRA now, classified as economically significant. That classification signals DHS expects either a large number of currently approved third-party arrangements to be disrupted by new compliance requirements, or significant new documentation burdens on employers who use this structure. Both outcomes have implications not just for the staffing firms filing the petitions, but for the client companies whose projects depend on those workers.
Employers with violations: what enhanced scrutiny means in practice
The third leg of the proposal — greater scrutiny for employers that have violated program requirements — is described in abstract terms in the regulatory agenda, but the practical meaning is fairly direct. Employers who have prior H-1B violations documented through USCIS site inspections, DOL Wage and Hour Division investigations, fraud determinations from FDNS, or substantive misrepresentation findings in prior petition adjudications would face additional review when filing new petitions.
USCIS already operates the Administrative Site Visit and Verification Program, through which officers visit employer and worksite locations to verify that H-1B petitions are being complied with — the position, the wage, the worksite, the actual duties. DOL enforces prevailing wage requirements for H-1B workers under the Labor Condition Application that every employer must file. An employer found to have underpaid H-1B workers, misrepresented a worksite, or provided false information in a petition already faces consequences under existing law.
If the reform rule formalizes an enhanced scrutiny track for employers with prior violations, future petitions from those employers would receive additional review before approval. The practical effect would be longer processing times, higher RFE rates, and potentially a formal risk tier system where certain employers begin every new petition with a heightened evidentiary bar to clear. For employers with a clean compliance record, this part of the proposal likely has no direct effect. For employers with any history of USCIS or DOL enforcement action, the calculus for future H-1B filings changes.
How this is different from the $103K fee — and why the confusion will spread
These two H-1B proposals will get conflated in coverage, and it is worth being precise about the difference. The $103,265 fee NPRM (RIN 1615-AD20) published August 25 is about money. It proposes to add a new per-petition charge to every cap-subject petition, calculated by dividing estimated government-wide immigration administration costs by the annual number of cap petitions. Cap-exempt petitions would not pay this fee. The legal authority is DHS's fee-setting power under the Homeland Security Act and the INA.
The H-1B program reform NPRM (RIN 1615-AD00) submitted August 24 is about program eligibility and oversight structure. It does not propose a new fee. It proposes to change who qualifies for cap-exempt status, which employers get enhanced scrutiny, and how third-party placements are evaluated. The legal authority for program eligibility changes is the INA's substantive H-1B provisions — different statutes, different administrative record, different legal challenges.
The two rules can move at different speeds. DHS can finalize one before the other. Courts could enjoin one without affecting the other. An employer whose main concern is the cost of future cap petitions needs to track the fee NPRM and comment by September 24, 2026. An employer who operates as a cap-exempt institution, runs a third-party staffing model, or has any prior compliance history needs to track RIN 1615-AD00. Most H-1B-dependent employers should be tracking both.
What to watch for and when
The immediate question is how long OIRA takes to review RIN 1615-AD00. A 90-day standard review period from August 24 would put the OIRA clearance deadline around November 22, 2026. OIRA can extend that or clear it faster. Once cleared, the NPRM appears in the Federal Register and the public comment period opens. For a rule of this economic significance, a 60-day comment window is standard, which would push comments into early 2027.
The comment period — when it opens — is when employers in affected categories need to engage. Cap-exempt institutions whose affiliated entity arrangements might be narrowed have strong interests in how the cap exemption revision is written. IT staffing firms and their client companies have strong interests in how the third-party placement oversight requirements are framed. Employers with any prior compliance record have an interest in how the violation-scrutiny track is defined. Comment periods for rules this size regularly draw thousands of submissions, and DHS is legally required to respond to significant comments before finalizing.
Nothing in this OIRA submission changes today's H-1B filing rules. Current cap-exempt employers remain cap-exempt. Current third-party placements that comply with existing rules remain compliant. The enhanced scrutiny framework for employers with violations does not exist in formal rule form yet. The rule is proposed — it has not been published as an NPRM, it has not been finalized, it has not taken effect. Acting as if it is already operative would be a mistake. This article is informational only and does not constitute legal advice. The specific provisions of RIN 1615-AD00 have not been publicly disclosed. All descriptions of what the rule may contain are drawn from the abstract language published in the 2026 federal regulatory agenda. Consult a licensed immigration attorney before making any petition or workforce planning decisions based on rules that are still in OIRA review.