Patel v. Immigration and Naturalization Service

• Citation: 638 F.2d 1199
• Decision Date: 30 March 1981
• Docket Number: No. 79-7284,79-7284
• Parties: Khapabhai Dahyabhai PATEL and Pramilaben Khapabhai Patel, Petitioners, v. IMMIGRATION AND NATURALIZATION SERVICE, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1199

638 F.2d 1199

Khapabhai Dahyabhai PATEL and Pramilaben Khapabhai Patel, Petitioners, v. IMMIGRATION AND NATURALIZATION SERVICE, Respondent.

No. 79-7284.

United States Court of Appeals Ninth Circuit.

Argued and Submitted July 2, 1980.

Decided Oct. 22, 1980.

Rehearing and Rehearing En Banc Denied March 30, 1981.

Michael D. Ullman, of Bert D. Greenberg, Inc., Beverly Hills, Cal., for petitioners.

Lawrence B. Gotlieb, Asst. U. S. Atty., Los Angeles, Cal., for respondent.

Petition to Review a Decision of The U. S. Immigration and Naturalization Service.

Before Chief Judge MARKEY, ^* and Circuit Judges WALLACE and SKOPIL.

WALLACE, Circuit Judge:

In August 1970, Khapabhai D. Patel (Patel), a citizen of India, entered the United States as a nonimmigrant student authorized to stay until July 31, 1974. Patel's wife, Pramilaben K. Patel, entered the United States in July 1972 as the spouse of a nonimmigrant student, also authorized to stay until July 31, 1974. The Patels failed to depart at the end of their authorized stay, and the Immigration and Naturalization Service (INS) issued an Order to Show Cause and Notice of Hearing which charged that the Patels were deportable. At a deportation hearing held in October 1977, the Patels admitted their deportability, but applied for adjustment of status under 8 U.S.C. § 1255, and suspension of deportation under 8 U.S.C. § 1254(a)(1). The Immigration Judge denied both applications and granted voluntary departure. The Board of Immigration Appeals (Board) affirmed. We affirm in part and reverse and remand in part.

I

8 U.S.C. § 1255 provides that the Attorney General, in his discretion, may adjust the status of a deportable alien to that of an alien lawfully admitted for permanent residence. To be eligible for such discretionary action an alien must, among other things, be eligible for an immigrant visa. 8 U.S.C. § 1255(a)(2). Aliens like Patel, who will enter the American work force if admitted for permanent residence, are not eligible for immigrant visas unless the Secretary of Labor certifies that their presence in the United States will not be detrimental to the American labor force. 8 U.S.C. § 1182(a)(14). This labor certification requirement may be avoided, however, if the alien comes within a regulatory exception known as the "investor exemption." At the time of Patel's application for adjustment of status the investor-exemption regulation provided:

(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.

8 C.F.R. § 212.8(b)(4) (1974).

Patel attempted to establish his eligibility for adjustment of status by qualifying for the investor exemption. He introduced evidence that in 1974 he invested $13,500 in a motel, and that prior to his arrival in the United States he had worked in an Indian guest house for more than one year. Despite Patel's apparent compliance with the criteria stated in 8 C.F.R. § 212.8(b)(4), the Board affirmed the Immigration Judge's conclusion that Patel did not qualify for the investor exemption. This conclusion was based upon the Board's holding that, in addition to the investment of $10,000 and one year of experience in the field of investment, an alien's investment "must tend to expand job opportunities" in the United States. Patel contends that the Board erred in applying this additional requirement, and that he established his eligibility for adjustment of status by compliance with the clear criteria of 8 C.F.R. § 212.8(b)(4). At oral argument the government agreed that Patel had proven a $10,000 investment and one year of experience in the motel business. Thus, if the Board erred in requiring that the investment expand job opportunities, Patel is eligible for section 1255 relief and we must remand so that the INS may exercise its discretion to grant or deny adjustment of status.

In requiring that Patel's investment expand American jobs, the Board purported to be following two of its previous decisions, In re Ruangswang, I.D. 2546 (BIA 1976), and In re Heitland, 14 I. & N. Dec. 563 (BIA 1974). "(A) reviewing court, in dealing with a determination or judgment which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency." SEC v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 1577, 91 L.Ed. 1995 (1947). Thus, we must determine whether the Board erred by relying upon Heitland and Ruangswang to add a job-creation requirement to an already clear regulation. Essential to this determination is the history of the investor exemption.

The investor exemption was created by regulation. ¹ When first promulgated the regulation simply required that an alien engage in an agricultural or commercial enterprise in which he had invested a "substantial amount of capital." 8 C.F.R. § 212.8(b)(4) (1967). The Board did not interpret this regulation as requiring any minimum capital outlay, but rather as requiring an investment that was substantial relative to the capital required to operate the enterprise. In re Finau, 12 I. & N. Dec. 86, 88-89 (BIA 1967). In addition, the Board examined the skills of the alien and the likelihood of his or her success in the enterprise. Id.

The INS introduced the idea that an investment must expand job opportunities in late 1972. It proposed an investor-exemption regulation which required a minimum investment of $25,000 in an enterprise "reasonably ... 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 ...." 37 Fed.Reg. 23274 (1974). After public comment on this proposed regulation, however, the INS eliminated the requirement that the investment benefit the economy. 38 Fed.Reg. 1379 (1973). Instead, the INS promulgated the regulation applicable to Patel and quoted earlier in this opinion, which requires an investment of $10,000 and one year of experience in a similar enterprise. 8 C.F.R. § 212.8(b)(4) (1974).

After the promulgation of this new regulation in 1973, the Board decided Heitland, supra, 14 I. & N. Dec. 563, a case arising under the "substantial amount of capital" requirement of the pre-1973 regulation. Heitland overruled previous Board interpretations of "substantial," and stated that the alien's investment "must tend to expand job opportunities and thus offset any adverse impact which the alien's employment may have on the market for jobs ...." 14 I. & N. Dec. at 567. Although Heitland was concerned only with the pre-1973 "substantial amount of capital" requirement, it stated in dicta that the recently-promulgated and facially-objective 1973 regulation must also be construed to require that the investment expand job opportunities. Id. at 566-67. Thus, by adjudication, the Board attempted to add a requirement to the 1973 regulation which had been expressly discarded during its rule-making proceedings. ²

The Board applied the job-creation criterion of Heitland to facts arising under the 1973 regulation in Ruangswang, supra, I.D. 2546. Despite the clear requirements of a $10,000 investment and one year of experience, the Board followed the Heitland dicta and held that an alien must also show that the investment will tend to expand job opportunities. On appeal, we reversed the Board's application of the Heitland criterion. Ruangswang v. INS, 591 F.2d 39 (9th Cir. 1978). Addressing the narrow issues presented before us, we held that Heitland was not a valid adjudicatory interpretation of the 1973 regulation because it was " 'clearly contrary to the plain and sensible meaning of the (1973) regulation.' " Id. at 43, quoting Hart v. McLucas, 535 F.2d 516, 520 (9th Cir. 1976). In addition, we concluded that even if Heitland was a valid adjudicatory creation of an agency standard, the Board abused its discretion by applying that standard to Ruangswang who had no notice of its existence. Id. at 45. On the basis of this lack of notice, we also distinguished Mehta v. INS, 574 F.2d 701 (2nd Cir. 1978), a case which had approved a Board application of the Heitland criterion to the 1973 regulation. We were thus not required to pass upon the merits of Mehta. Consequently, in Ruangswang we did not consider the substantive question now properly before us: whether the Board may rely upon Heitland to add a job-creation criterion to the facially-clear 1973 regulation. ³

The Supreme Court has determined that an administrative agency, such as the INS, "is not precluded from announcing new principles in an adjudicative proceeding and that the choice between rulemaking and adjudication lies in the first instance within the (agency's) discretion." NLRB v. Bell Aerospace Co., 416 U.S. 267, 294, 94 S.Ct. 1757, 1771, 40 L.Ed.2d 134 (1974). See also SEC v. Chenery Corp., supra, 332 U.S. at 202-03, 67 S.Ct. at 1580-1581; NLRB v. Children's Baptist Home of Southern California, 576 F.2d 256, 260 (9th Cir. 1978). But, like all grants of discretion, "there may be situations where the (agency's) reliance on adjudication would amount to an abuse of discretion ...." NLRB v. Bell Aerospace Co., supra, 416 U.S. at 294, 94 S.Ct. at 1771. Thus, we must determine whether the Board abused its discretion by choosing to announce the job-creation criterion in the adjudicatory setting of Heitland, rather than waiting for INS promulgation of the criterion in rulemaking, ⁴ and by applying the job-creation criterion to Patel.

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