Bahat v. Sureck, 79-3374

• Citation: 637 F.2d 1315
• Decision Date: 30 January 1981
• Docket Number: No. 79-3374,79-3374
• Parties: Izhak BAHAT, Plaintiff/Appellant, v. Joseph SURECK, District Director of the Immigration and Naturalization Service, Los Angeles District, Defendant/Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1315

637 F.2d 1315

Izhak BAHAT, Plaintiff/Appellant, v. Joseph SURECK, District Director of the Immigration and Naturalization Service, Los Angeles District,

Defendant/Appellee.

No. 79-3374.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 9, 1980.

Decided Jan. 30, 1981.

David F. Aberson, Aberson & Korenberg, Encino, Cal., for plaintiff/appellant.

Katherine V. Tooks, Los Angeles, Cal., for defendant/appellee.

Appeal from the United States District Court for the Central District of California.

Before HUG and BOOCHEVER, Circuit Judges, and RICHEY, ^* District Judge.

BOOCHEVER, Circuit Judge:

Izhat Bahat, a native of Germany and a citizen of Israel, appeals from a summary judgment granted by the district court in favor of the District Director of the Immigration and Naturalization Service ("INS"), affirming the Director's denial of Bahat's Application for Status as a Permanent Alien. Bahat contends that he is entitled to exemption from the labor certification requirement of Section 212(a)(14) of the Immigration and Nationality Act as amended, 8 U.S.C. § 1182(a)(14), ¹ by reason of his investment of $10,000 in an electrical contracting business and his prior experience as an electrician.

The "alien investor" regulation in effect on June 30, 1976, when Bahat filed his application, eliminated the labor certification requirement under certain circumstances. The exemption applied if the alien entered the United States for the purpose of engaging in a commercial or agricultural enterprise in which the alien had invested capital of $10,000 and had had at least one year's experience and training qualifying engagement in such enterprise. ² Although Bahat complied with the literal terms of the regulation, the District Director denied Bahat's application for adjustment of status, stating:

It has long been held that in order for an application of this type to receive favorable consideration, the "investment" must tend to expand the market for jobs within the United States and thereby guard against the possibility that the alien will compete with American labor for available skilled or unskilled positions. Matter of Heitland, I. D. 2259, BIA January 25, 1974.

Evidence submitted in support of the application indicates that you have applied the minimum $10,000 to an already existing business in return for which you are employed as an electrician.

(The i)nstant application, therefore, is merely a conduit by which you would seek to enter the labor market as an electrician. Therefore, your application is denied as a matter of law. (E.R. 8)

Thus, in addition to the literal requirements of the regulation, it was held that the investment must meet the requirements set forth in Matter of Heitland.

Our standard for reviewing the district court's award of summary judgment to the Director is whether the Director's denial of Bahat's application constituted an abuse of discretion.

To review that denial of relief a consideration of abuse of discretion would necessarily be two-fold (1) if reasonably supported by any evidence the determinations of administrative tribunals must be affirmed; (2) if however, not supported by evidence or although supported by evidence the decision is the result of a misunderstanding of the law, an administrative determination will be reversed. ³

Here there are no factual disputes and the sole question is whether the decision is the result of a misunderstanding of the law. Bahat complied with the literal requirements of the version of 8 C.F.R. § 212.8(a)(4) in effect at the time of his application. Specifically we must determine whether, as applied to Bahat, the regulation was modified by the January 25, 1974 interim decision of the Board of Immigration Appeals in the Matter of Heitland, 14 I & N Dec. 563 (BIA 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). Because we believe (1) that Heitland did not give adequate notice to Bahat that the 1973 version of the regulation was modified, and (2) that the application of Heitland to the 1973 amendments was an improper circumvention of rule making procedure, we reverse.

For an understanding of our reasons for reaching this conclusion, it is necessary to set forth a brief history of modifications made in the applicable regulations. The regulations were promulgated by the Commissioner of Immigration & Naturalization to implement the requirements of 8 U.S.C. § 1182(a)(4). That section states that aliens seeking to enter the United States for the purpose of performing skilled or unskilled labor shall be ineligible to receive visas unless the Secretary of Labor certifies that there are not sufficient American workers and that the employment of the aliens will not adversely affect the wages and working condition of workers in the United States similarly employed. ⁴

Prior to 1973 the regulation interpreting section 1182(a)(4) provided that labor certification would not be required if the alien who will engage in a commercial or agricultural enterprise invests "a substantial amount of capital." ⁵ To show that an investment was substantial, Heitland imposed two alternative requirements. The investment either (1) "must tend to expand job opportunities" or (2) "be of an amount adequate to insure, with sufficient certainty, that the alien's primary function with respect to the investment, and with respect to the economy will not be as a skilled or unskilled laborer." Heitland, 14 I & N Dec. at 567 (emphasis added).

We believe that the vagueness of the "substantial investment" standard apparently caused difficulties leading to the promulgation of more specific requirements. In any event in 1972 the following amendment of the regulation was proposed:

(b) Aliens not required to obtain labor certifications ... (4) an alien who established on Form I-526 that he is seeking to enter the United States for the purpose of engaging in a commercial or agricultural enterprise which may reasonably be expected to be of prospective benefit to the economy of the United States and not intended solely to provide a livelihood for the investor and his family, and in which he has invested or is actively in the process of investing his own capital, totaling at least $25,000 exclusive of goodwill or personal skills .... ⁶

This version, however, was not adopted and in lieu thereof the 1973 amendment required only a $10,000 investment and one year's experience. ⁷ In essence the INS takes the position that the 1973 version of the investment regulation was modified by Heitland to include essentially the same requirements that were rejected by the Commissioner in promulgating the amended regulation.

As pointed out by a panel of this court in Ruangswang v. I & NS, 591 F.2d 39, 44-45 (9th Cir. 1978), administrative agencies may properly use adjudication to announce and apply new standards of conduct. ⁸ In NLRB v. Bell Aerospace Co., 416 U.S. 267, 94 S.Ct. 1757, 40 L.Ed.2d 134 (1974), the Supreme Court indicated, however, that there may be situations where reliance on adjudication would be an abuse of discretion, stating in upholding the regulation at issue:

Furthermore, this is not a case in which some new liability is sought to be imposed on individuals for past actions which were taken in good-faith reliance on Board pronouncements. Nor are fines or damages involved here.

Id. at 295, 94 S.Ct. at 1772, 40 L.Ed.2d at 154.

In Ruangswang, the panel concluded that the attempted modification of the regulation by adjudicative proceedings ⁹ constituted an abuse of discretion as applied to Mrs. Ruangswang. Ruangswang involved an initial investment made under the 1973 regulation prior to January 25, 1974, when Heitland was decided. Accordingly, the panel concluded that Mrs. Ruangswang did not receive adequate notice of the adjudicatory modification of the regulation.

First, the INS had recently amended its investor regulation, setting forth seemingly objective criteria, which she met. Second, on the date of her initial capital outlay, there was no Heitland law or dictum that could have led her to conclude that more was required than the objective criteria stated in the regulation. ¹⁰

Bahat, unlike Ruangswang, made his investment in 1976, long after the Heitland interim decision. In determining the adequacy of Bahat's notice of the Heitland modification, we first consider that the interim decision of the BIA in Ruangswang was not issued until December 1976, after Bahat had made his investment. ¹¹ Thus Ruangswang did not provide Bahat with notice that the INS considered Heitland as applying to the 1973 amended regulation as well as to the earlier version specifically considered in Heitland. ¹²

We do not believe that Heitland gave Bahat adequate notice that the 1973 regulation would be construed in the same manner as the vague earlier regulation requiring investment of a "substantial amount of capital." In fact, Heitland set forth as an alternative test that the investment "must be of an amount adequate to insure, with sufficient certainty, that the alien's primary function with respect to the investment and with respect to the economy will not be as a skilled or unskilled laborer." ¹³ The earlier regulation considered in Heitland did not require the investment of a specific sum. ¹⁴

A plausible reading of the 1973 amendment, coupled with the Heitland interpretation of the earlier regulation, is that the $10,000 investment requirement was the amount determined by the Commissioner to insure with sufficient certainty that the alien's primary function with reference to the investments would not be as a skilled or unskilled laborer. Applicable to Bahat is the comment in Ruangswang:

Even if she had investigated the history of the 1973 regulation, she would have only become aware that in promulgating its amendment to the investor regulation, the INS had explicitly decided to omit language strikingly similar to that...