On Friday, April 4, the agency announced a preliminary regulation extending the time that foreign graduates in science, technology, engineering or mathematics can work for a U.S. company without obtaining a visa.

That will give them a greater opportunity to secure an H-1B visa, which is for people who have at least the equivalent of a U.S. bachelor’s degree. The H-1B cap is likely to be exceeded again this year, forcing spring graduates to wait until next April to apply.

H-1B opponents criticized the DHS proposal.More criticism may be generated by a condition in the regulation that mandates that only companies using E-Verify, a government-run electronic verification system, can participate.

The Society for Human Resource Management and many other HR groups assert that E-Verify is inefficient, error-prone and could potentially designate many legal workers as ineligible for employment. They are promoting a bill that would establish an alternative verification system.

The new DHS regulation is subject to a 60-day comment period. Then DHS can promulgate a final rule. It’s unclear whether the process can be concluded before the end of the Bush administration.

Under the regulation, the Optional Practical Training program would increase from 12 months to 29 months. Microsoft chairman Bill Gates called for such a reform in congressional testimony last month, saying that hiring and retaining foreign-national graduates is critical to helping technology companies innovate.

The push for a longer training program is the result of a shortage of H-1B visas. For the last fiscal year, companies sent in 123,000 applications for 65,000 H-1B visas, exceeding the cap on the first day they were available, April 2.

Under current law, if a foreign-national hire doesn’t get an H-1B visa within 12 months, he or she must leave the United States.

For the 2009 fiscal year, the cap is set again at 65,000, and an even greater demand is expected. DHS may announce as soon as Monday, April 7, that the cap has been exceeded and that the visas will be distributed by lottery.

The move to expand the training initiative may ease the disappointment of companies, especially in the technology sector, who say they can’t fill high-skill jobs.

“It’s a good first step,” says Robert Hoffman, vice president of government and public affairs for Oracle and co-chair of Compete America. “The administration has clearly recognized through this action that there is a severe skills shortage in this economy.”

Hoffman says that there are 140,000 openings at S&P 500 companies for engineers, scientists and other highly skilled professionals.

But he warned that the DHS regulation alone is not enough. Congress must increase the number of H-1B and permanent work visas, or green cards. Bills to do so are mired in a political stalemate on immigration reform.

If Congress doesn’t act, “you’re going to create one heck of a bottleneck,” Hoffman says. “You’re going to find (that many) more highly skilled individuals are forced to leave the country.”

Opponents of the H-1B program contend that it displaces U.S. workers and depresses wages. They also criticize the training program expansion.

“It’s completely unnecessary,” says John Miano, a Summit, New Jersey, lawyer and computer consultant who founded the Programmers Guild. “Student visas are not supposed to be the gateway to immigration, but they’re being transformed into that.”

Outsourcing companies from India obtain many H-1B visas in order to send foreign workers to the United States who ultimately take jobs away from U.S. applicants, Miano says.

Data on the impact of H-1Bs doesn’t exist, and Department of Labor enforcement is limited, according to Miano.

“No one knows what’s going on in the system,” he says. “There is no ability to investigate these things.”

But Homeland Security Secretary Michael Chertoff promoted the extension of the training program as a way to bolster the U.S. economy.

“This rule will enable businesses to attract and retain highly skilled foreign workers, giving U.S. companies a competitive advantage in the world economy,” he said in a statement.

—Mark Schoeff Jr.