Source: https://law.justia.com/cases/federal/appellate-courts/F2/591/39/369209/
Timestamp: 2020-01-23 10:28:04
Document Index: 664526911

Matched Legal Cases: ['§ 212', '§ 1255', '§ 1251', '§ 1182', '§ 212', '§ 212', '§ 212', '§ 1182', '§ 1101', '§ 3']

Yongyouth Ruangswang and Vanapar Ruangswang, Petitioners, v. Immigration and Naturalization Service, Respondent, 591 F.2d 39 (9th Cir. 1978) :: Justia
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Yongyouth Ruangswang and Vanapar Ruangswang, Petitioners, v. Immigration and Naturalization Service, Respondent, 591 F.2d 39 (9th Cir. 1978)
U.S. Court of Appeals for the Ninth Circuit - 591 F.2d 39 (9th Cir. 1978) Nov. 2, 1978
Mrs. Ruangswang attempted to qualify as an "investor" pursuant to 8 C.F.R. § 212.8(b) (4) (1974). She and her husband petition for review of an order denying their application for adjustment of status. We reverse and remand.
On June 3, 1974, petitioners submitted applications for adjustment of status pursuant to section 245 of the Immigration and Nationality Act, 8 U.S.C. § 1255 (1970).1 The District Director denied the applications on March 17, 1975. The Immigration and Naturalization Service (INS) subsequently issued an order to show cause and notice of hearing to each petitioner. The orders charged that they had remained in the United States for a longer time than permitted, and that each was thus deportable pursuant to section 241(a) (2) of the Immigration and Nationality Act, 8 U.S.C. § 1251(a) (2) (1970). Although at their deportation hearing both petitioners admitted the charges against them and conceded deportability, the hearing officer continued the hearing to enable the petitioners to submit their renewed applications for adjustment of status.
At the continued hearing, as she had in her earlier application, Mrs. Ruangswang claimed to be exempt from the labor certification requirement of section 212(a) (14) of the Immigration and Nationality Act, 8 U.S.C. § 1182(a) (14) (1970),2 because she believed she was an "investor" within the meaning of the INS investor regulation, 8 C.F.R. § 212.8(b) (4) (1974). Mr. Ruangswang claimed exemption under 8 C.F.R. § 212.8(b) (2) (1974)3 as the spouse of an investor alien, and his status is thus dependent upon that of his wife. The hearing officer denied these applications, and the Board of Immigration Appeals (Board) affirmed.
(b) Aliens not required to obtain labor certifications. The following persons are not considered to be within the purview of section 212(a) (14) of the Act and do not require labor certification: . . . (4) an alien who establishes . . . that he is seeking to enter the United States for the purpose of engaging in a commercial or agricultural enterprise in which he has invested, or is actively in the process of investing, capital totaling at least $10,000, and who establishes that he has had at least 1 year's experience or training qualifying him to engage in such enterprise.
The pertinent factual background for this decision began in early 1974 when Mrs. Ruangswang purchased AAA Coin Operated Dry Cleaning, Inc. (AAA) for a total purchase price of $11,000. She made an initial $2,000 payment in mid-January 1974, and subsequent payments of $4,000 in February 1974, $3,000 in March 1974, and $2,000 in April 1974. A bill of sale of AAA to Mrs. Ruangswang was executed on March 18, 1974, and by the time of her hearing, she had made a total investment of approximately $13,300.4 This met the minimum investment amount required for qualification under section 212.8(b) (4). Mrs. Ruangswang also demonstrated that she had the requisite experience and training prescribed by the INS investor regulation: she had worked for AAA for approximately one and one-half years prior to purchasing it, she completed a dry cleaning course of four months' duration, and she was licensed as a dry cleaning operator by the State of California.5
The INS does not contest these facts or that Mrs. Ruangswang has met the objective requirements of section 212.8(b) (4). Instead, it argues that merely meeting these objective criteria is insufficient to qualify one for investor status, and thus for exemption from labor certification. This was the position of the District Director when he denied the Ruangswangs' original applications for adjustment of status, the hearing officer when he denied the renewal applications, and the Board when it affirmed the decision of the hearing officer. In order to understand this contention, some review of the regulations and their applicability is necessary.II
Prior to amendment in 1973 (1973 regulation), the investor regulation (pre-1973 regulation) did not specify objective criteria, but rather required only that the investment be "substantial." 8 C.F.R. § 212.8(b) (4) (1973). From 1967 through 1973, the INS applied this regulation pursuant to the standards set forth in the Board's decision in In re Finau, 12 I. & N.Dec. 86 (B.I.A.1967). In 1974, the Board decided that these standards were no longer appropriate:
In Finau we held that the requirement of the old regulation regarding the investment of a "substantial amount of capital" did not mandate an absolute minimum capital outlay, but rather that the term "substantial" embraced a relative concept necessitating that the investment must be substantial only in relation to the total capital requirements of the particular enterprise. We also examined the skills which the alien possessed and considered the likelihood of success of the enterprise, even though these factors appear to be quite unrelated to whether a given investment is "substantial" or not. However, in view of the rationale behind the enactment of section 212(a) (14), we are convinced that the Finau approach to the regulation is unsatisfactory.
In re Heitland, 14 I. & N.Dec. 563, 566 (B.I.A.1974), Aff'd, 551 F.2d 495 (2d Cir.), Cert. denied, 434 U.S. 819, 98 S. Ct. 59, 54 L. Ed. 2d 75 (1977). Although Heitland was decided subsequent to the promulgation of the 1973 regulation which is involved in the case before us, the Board based its decision on the pre-1973 regulation. The case established new standards for determining whether or not a given investment was "substantial," as that word was used in the pre-1973 regulation.
We are aware that, as the INS argues, courts must give "great deference" and "controlling weight" to an agency's interpretation of its own regulations. E. g., United States v. Larionoff, 431 U.S. 864, 872, 97 S. Ct. 2150, 53 L. Ed. 2d 48 (1977); Udall v. Tallman, 380 U.S. 1, 16-17, 85 S. Ct. 792, 13 L. Ed. 2d 616 (1965). That doctrine is inapplicable, however, when the agency's interpretation " 'is plainly erroneous or inconsistent with the regulation.' " United States v. Larionoff, supra, 431 U.S. at 872, 97 S. Ct. at 2156 (quoting Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65 S. Ct. 1215, 89 L. Ed. 1700 (1945)). We have thus refused to defer to an agency construction that "is clearly contrary to the plain and sensible meaning of the regulation." Hart v. McLucas, 535 F.2d 516, 520 (9th Cir. 1976). What is clear in this case is that the interpretation of the INS is contrary to the plain language of the regulation, and that there was no reason for Mrs. Ruangswang to expect, when she sought to comply with the regulation, that the requirements for receiving an adjustment of status would be anything other than the objective criteria set forth in the 1973 regulation.
Through a series of cases commencing with its second decision in SEC v. Chenery Corp. (Chenery II), 332 U.S. 194, 67 S. Ct. 1575, 91 L. Ed. 995 (1947), the United States Supreme Court has held that administrative agencies may properly use adjudication to "announc(e) and (apply) a new standard of conduct," Id. at 203, 67 S. Ct. at 1580. In NLRB v. Wyman-Gordon Co., 394 U.S. 759, 89 S. Ct. 1426, 22 L. Ed. 2d 709 (1969), Justice Fortas, speaking for a plurality of four, stated that although the NLRB could not, in light of the Administrative Procedure Act, establish binding prospective rules by adjudication, it could establish a new standard of conduct that would be binding on the parties before it in any particular case, and that such adjudications could have stare decisis effect.
More recently the Court again considered this question, and, relying heavily on the two former cases, held that the adjudicative forum can often be used to announce new principles applicable to the specific parties before the NLRB in particular cases, even if the principles involve a change from past policies. NLRB v. Bell Aerospace Co., 416 U.S. 267, 290-95, 94 S. Ct. 1757, 40 L. Ed. 2d 134 (1974). The Court cautioned, however, that "there may be situations where the Board's reliance on adjudication would amount to an abuse of discretion or a violation of the Act . . . ." Id. at 294, 94 S. Ct. at 1771. The Court suggested that the "adverse consequences ensuing from . . . reliance (upon the NLRB's past decisions may be) so substantial that the Board should be precluded from reconsidering the issue in an adjudicative proceeding." Id. at 295, 94 S. Ct. at 1772. Adjudication might also be inappropriate where "some new liability" results from "past actions which were taken in good-faith reliance on Board pronouncements," or where "fines or damages" are involved. Id.
While the Court favors, whenever possible, the use of prospective quasi-legislative rule-making powers to formulate new standards rather than ad hoc adjudication, See, e. g., Chenery II, supra, 332 U.S. at 202, 67 S. Ct. 1575; NLRB v. Majestic Weaving Co., 355 F.2d 854, 860 (2d Cir. 1966), we have not received definitive limits on agency6 use of adjudicative proceedings to change course in midstream. We are, however, convinced that what the Board seeks to do in this case is beyond the bounds of that which is permissible under Bell. The adverse consequences voluntary departure at best, and deportation at worst are certainly substantial. In the sense that the requirement added to the 1973 regulation prevents an adjustment of status, there is some new liability. Finally, if there was good faith reliance on the 1973 regulation, Bell militates against allowance of the adjudication method.
Applying the standards of Bell, we hold there was an abuse of discretion in attempting to establish a new standard based upon Heitland and applying it to Mrs. Ruangswang by the adjudicatory process.12 Cf. Boston Edison Co. v. FPC, 181 U.S.App.D.C. 222, 557 F.2d 845, 849, Cert. denied,434 U.S. 956, 98 S. Ct. 482, 54 L. Ed. 2d 314 (1977) (in a rate-making case, agency "acted arbitrarily and abused its discretion in applying a standard contrary to its existing regulations").
Many of the statutory provisions applicable to this case were amended by the Immigration and Nationality Act Amendments of 1976, Pub. L. No. 94-571, 90 Stat. 2703 (1976); where material changes were made, citations in this opinion are to the legislation in force at the time this action arose
Section 212(a) (14) of the Immigration and Nationality Act, 8 U.S.C. § 1182(a) (14) (1970), as it then read, stated in part:
In this case the "agency" is the Department of Justice, because both the Immigration and Naturalization Service and the Board of Immigration Appeals are arms of the Department. See 8 U.S.C. § 1101(a) (34) (1976) (Immigration and Naturalization Service); 8 C.F.R. § 3.1(a) (1) (1978) (Board of Immigration Appeals)
As to this issue, the court did not base its analysis on NLRB v. Bell Aerospace Co., 416 U.S. 267, 94 S. Ct. 1757, 40 L. Ed. 2d 134 (1974), Supra, or any other stated authority
Since the relevant factor in determining adequacy of notice in any given case is prejudice to the party before the agency, See NLRB v. Bell Aerospace Co., supra, 416 U.S. at 295, 94 S. Ct. 1757, this type of case is distinguishable from rate-making cases where the party is prejudiced only at the time that an application is filed, and only if the party has not had sufficient notice to file the necessary data and to prepare a case. See, e. g., Central Arkansas Auction Sale, Inc. v. Bergland, 570 F.2d 724 (8th Cir.), Cert. denied, 436 U.S. 957, 98 S. Ct. 3070, 57 L. Ed. 2d 1121 (1978); Boston Edison Co. v. FPC, 181 U.S.App.D.C. 222, 557 F.2d 845, Cert. denied, 434 U.S. 956, 98 S. Ct. 482, 54 L. Ed. 2d 314 (1977)
That the INS could have made the regulation stricter is not important. As we recently observed, numerous authorities hold "that federal courts will require federal agencies to abide by the agency's own regulations, Even where the regulations are more generous than required by law." United States v. Newell, 578 F.2d 827, 834 (9th Cir. 1978) (emphasis supplied). In any event, it is a "general principle that an agency is to be held to the terms of its regulations." United States v. Coleman, 478 F.2d 1371, 1374 (9th Cir. 1973) (citations omitted). See, e. g., Morton v. Ruiz, 415 U.S. 199, 235, 94 S. Ct. 1055, 39 L. Ed. 2d 270 (1974); Vitarelli v. Seaton, 359 U.S. 535, 539-40, 79 S. Ct. 968, 3 L. Ed. 2d 1012 (1959); Accardi v. Shaughnessy, 347 U.S. 260, 74 S. Ct. 499, 98 L. Ed. 681 (1954); See also Note, Violations by Agencies of Their Own Regulations, 87 Harv. L. Rev. 629, 631 (1974). On balance, the ill effect on the Ruangswangs from the Board's establishment of a standard without adequate notice outweighs any possible mischief done to the statutory design by our literal reading of the regulation based upon the facts of this case. See generally Chenery II, supra, 332 U.S. at 203, 67 S. Ct. 1575.