Ruangswang v. Immigration and Naturalization Service

• Decision Date: 02 November 1978
• Docket Number: No. 77-2375,77-2375
• Citation: 591 F.2d 39
• Parties: Yongyouth RUANGSWANG and Vanapar Ruangswang, Petitioners, v. IMMIGRATION AND NATURALIZATION SERVICE, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 39

591 F.2d 39

Yongyouth RUANGSWANG and Vanapar Ruangswang, Petitioners, v. IMMIGRATION AND NATURALIZATION SERVICE, Respondent.

No. 77-2375.

United States Court of Appeals Ninth Circuit.

Nov. 2, 1978.

Michael D. Ullman (argued), Beverly Hills, Cal., for petitioners.

Karin H. Brettauer, Asst. U. S. Atty. (argued), Los Angeles, Cal., for respondent.

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

Before WALLACE and SNEED, Circuit Judges, and ENRIGHT, ^* District Judge.

WALLACE, Circuit Judge:

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.

I

The facts, insofar as they affect this review, are not in dispute. Petitioners, Mr. and Mrs. Ruangswang, are both natives and citizens of Thailand. They were admitted to the United States on August 14, 1971, with authorization to remain until January 31, 1975, the husband as a nonimmigrant student and the wife as the spouse of a nonimmigrant student.

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.

The central question to be decided thus involves whether Mrs. Ruangswang qualifies under the INS investor regulation which, at the time pertinent to this case, read in part:

(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).

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.

The investment must be more than a mere conduit by which the alien seeks to enter the skilled or unskilled labor market. Consequently, the investment either must tend to expand job opportunities and thus offset any adverse impact which the alien's employment may have on the market for jobs, or 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.

14 I. & N.Dec. at 567.

Although the 1973 regulation which was applicable to Mrs. Ruangswang's application has substituted objective standards for the subjective "substantial" language contained in its predecessor, the Board decided in its adjudication of this case that the test announced in Heitland is still applicable to Mrs. Ruangswang. The question before us is whether the Board applied the correct law. We conclude that it did not.

III

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.

Hence, under principles of agency interpretation, the Board's application of the law cannot be sustained. The objective criteria of the 1973 regulation were clearly met by Mrs. Ruangswang. There simply is no room for the agency to interpret the regulation so as to add another requirement.

Our review of whether the proper law was applied, however, does not end when we determine that the added requirement is not justified by agency interpretation. We must still consider whether the Board may establish the standards that it sought to apply by the adjudicatory proceedings in this case and have them bind Mrs. Ruangswang.

IV

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 ...