Opinion ID: 3009075
Heading Depth: 3
Heading Rank: 2

Heading: The State Department’s Regulations Provide a

Text: “Meaningful Standard” for Review We think it evident that the State Department’s regulations creating the EVP provide more than an ample basis in law for us to review its decision under the APA. See 22 C.F.R. pt. 62. Those regulations create the program, § 62.1(b); define all the relevant terms, § 62.2; provide who ASSE INT’L V. KERRY 17 is eligible to be a sponsor, §§ 62.3, 62.7–62.8; provide which foreign nationals may participate, § 62.4; describe the application process for sponsors, § 62.5; establish the general obligations of sponsors, §§ 62.9–62.15; describe the rules for foreign exchange participants, §§ 62.16–62.17, 62.22, 62.43, 62.45; and provide for sanctions against or termination of sponsors, §§ 62.50, 62.60–62.63. After reviewing these regulations, it is obvious to us that they establish a comprehensive scheme for administering an exchange program. For program sponsors, the regulations have the force of law, and there are real consequences for failing to abide by them. Indeed, if the regulations had been enacted as statutes by Congress, we clearly would have law to apply and could review the State Department’s actions under the APA. The fact that the regulations also give the Department discretion in the administration of the EVP does not prevent our review. Section 701(a)(2) of the APA precludes review of agency action “committed to agency discretion by law,” but this has never been thought to put all exercises of discretion beyond judicial review. Indeed, “the APA itself commits final agency action[s] to our review for ‘abuse of discretion.’” Pinnacle, 648 F.3d at 720 (quoting 5 U.S.C. § 706(2)(A)). The abuse of discretion standard is one with which federal courts are quite familiar, and it is just that—a legal standard by which we judge the legitimacy of a lower court’s or an agency’s action. It is a standard of review, not a bar to review. That said, it is a generous standard that gives a lower court or an agency leeway in the decisions it makes. We will reverse under an abuse of discretion standard when the trier of fact and law “based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990); see also Bobbitt v. Milberg LLP, __ F.3d __, 18 ASSE INT’L V. KERRY 2015 WL 5255081, at  (9th Cir. Sept. 10, 2015) (noting that a lower court abuses its discretion when it “makes an error of law, or when it reaches a result that is illogical, implausible, or without support in inferences that may be drawn from the record”). Here, where the State Department has reserved to itself in the EVP certain decisions as within its “discretion,” see, e.g., 22 C.F.R. §§ 62.41(a), 62.50(b)(1), or even its “sole discretion,” see, e.g., id. §§ 62.6(a), 62.62, we will take into account the State Department’s reservation and expertise and accord it the proper deference. But that does not deprive us of the right to review its actions for an abuse of its discretion or to determine if its actions were otherwise arbitrary and capricious. Under the State Department’s regulations, sanctions may be imposed against a program sponsor if the agency determines that any one of four specified grounds exists. Id. § 62.50(a). The agency invoked two of these grounds here. First, the Department found that ASSE “[v]iolated one or more provisions” of the agency’s internal regulations.11 Id. § 62.50(a)(1). Second, it found that ASSE committed “an act of omission or commission” that endangered “the health, safety, or welfare” of Amari. Id. § 62.50(a)(3). ASSE contests the validity of these findings by arguing that the agency did not base those findings on sufficient evidence. This type of challenge—which entails looking at the agency’s decision-making process to ensure that the agency relied on 11 Specifically, the Department charged ASSE with violating regulations that (1) require exchange visitors to speak sufficient English to participate in their programs, (2) prohibit placing exchange visitors for the purpose of fulfilling a labor need instead of providing a genuine training program, and (3) require program sponsors to educate and oversee the third parties that they contract with. We have quoted the regulations, supra notes 2–7. ASSE INT’L V. KERRY 19 sufficient evidence—is equally within our purview. See, e.g., Arrozal v. INS, 159 F.3d 429, 433 (9th Cir. 1998) (granting a petition for review where the INS provided a “cursory and generalized analysis of [the petitioner’s] favorable factors”); Maldonado v. Dep’t of Agric., 154 F.3d 1086, 1088–89 (9th Cir. 1998) (granting petition for review upon finding that the Department of Agriculture’s decision was based on “insufficient evidence”); Dodrill v. Shalala, 12 F.3d 915, 918 (9th Cir. 1993) (reversing the HHS’s determination that claimant was not disabled based on the ALJ’s reliance on insufficient evidence). That is so despite the fact that the State Department’s regulations call upon the agency’s expertise, judgment, and discretion. See Pinnacle, 648 F.3d at 720 (“Although the [agency regulations] provide that the [agency] determines the ‘sufficiency’ of a manufacturer’s evidence and statements, the [agency regulations] do not give the [agency] unbridled discretion.”); Newman v. Apfel, 223 F.3d 937, 943 (9th Cir. 2000) (“The fact that an agency has broad discretion in choosing whether to act does not establish that the agency may justify its choice on specious grounds. To concede otherwise would be to disregard entirely the value of political accountability, which itself is the very premise of administrative discretion in all its forms.”); Beno, 30 F.3d at 1066 (holding that a HHS decision was reviewable even though the statute permitted the Secretary to authorize waivers only “to the extent and for the period the Secretary finds necessary” and according to the Secretary’s “judgment” (alteration and emphasis omitted)). The district court found that ASSE alleged “that the State Department reached the wrong conclusion in making [its] findings, and gave weight to the wrong evidence,” and that whether Amari spoke adequate English to participate in the EVP or whether ASSE’s contractor, ACO, was properly 20 ASSE INT’L V. KERRY trained were “questions well beyond the scope of any meaningful review the Court could provide.” We respectfully disagree. We do not review agency factfinding de novo except when specially authorized. 5 U.S.C. § 706(2)(F); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 414–15 (1971). But that does not mean that we cannot review agency factfinding at all. We are to review the Department’s decision to determine whether it was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). Even though we are “not empowered to substitute [our] judgment for that of the agency,” our “inquiry into the facts is to be searching and careful” and we are to determine “whether there has been a clear error of judgment.” Overton Park, 401 U.S. at 416. The APA prescribes the “substantial evidence” test for review of formal agency proceedings. 5 U.S.C. § 706(2)(E). We have recognized, however, that “as a practical matter, the arbitrary and capricious standard incorporates the substantial evidence test,” and we use that test for review of agency factfinding in informal proceedings as well. Ursack Inc. v. Sierra Interagency Black Bear Grp., 639 F.3d 949, 958 n.4 (9th Cir. 2011); see also Wileman Bros. & Elliott, Inc. v. Espy, 58 F.3d 1367, 1374–75 (9th Cir. 1995), rev’d on other grounds sub nom. Glickman v. Wileman Bros. & Elliott, Inc., 521 U.S. 457 (1997). We have said that “[s]ubstantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Bonnichsen v. United States, 367 F.3d 864, 880 n.19 (9th Cir. 2004) (citing Richardson v. Perales, 402 U.S. 389, 401 (1971)); see also Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991). ASSE INT’L V. KERRY 21 In sum, we may review the State Department’s final agency action under the standards prescribed by 5 U.S.C. § 706(2)(A). To the extent the petition challenges the agency’s factfinding, we may review the State Department’s determinations for substantial evidence.