1 15-3959-ag Buffalo Transportation Inc v. United States of America 1 In the 2 United States Court of Appeals 3 For the Second…

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15-3959-ag
Buffalo Transportation Inc. v. United States of America
1
In the 2
United States Court of Appeals 3
For the Second Circuit 4
5
6
August Term, 2016 7
No. 15‐3959‐ag 8
9
B UFFALO TRANSPORTATION, INC. 10
Petitioner‐Appellant, 11
v. 12
13
U NITED S TATES OF AMERICA, 14
Respondent‐Appellee. 15
16
17
Petition for review of order of the Office of the Chief Administrative 18
Hearing Officer for the Executive Office of Immigration Review 19
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21
S UBMITTED: O CTOBER 6, 2016 22
D ECIDED: D ECEMBER 22, 2016 23
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25
Before: NEWMAN, L YNCH , and D RONEY , Circuit Judges. 26
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Petition for review of order of the Office of the Chief 30
Administrative Hearing Officer for the Executive Office of 31
Immigration Review that found petitioner to have committed 32
violations regarding verifications of its employees’ immigration 33
status. The Administrative Law Judge found that petitioner had 34
committed numerous substantive violations. The Administrative 35
Law Judge also found that the fines imposed for the substantive 36
violations were not excessive. We DENY the petition for review. 37
38
39
Stephen F. Szymoniak, Law Office of 40
Stephen F. Szymoniak, Williamsville, New 41
York, for Petitioner‐Appellant. 42
43
Andrew N. O’Malley, Trial Attorney, 44
Benjamin C. Mizer, Principal Deputy 45
Assistant Attorney General, Bernard A. 46
Joseph, Trial Attorney, Office of 47
Immigration Litigation, United States 48
Department of Justice, Washington, D.C. for 49
Respondent‐Appellee. 50
51
52
D RONEY, Circuit Judge: 53
54
Buffalo Transportation, Inc. (“Buffalo Transportation”) 55
petitioned pursuant to 8 U.S.C. § 1324a(e)(8) for review of a final 56
order of the Office of the Chief Administrative Hearing Officer for 57
the Executive Office of Immigration Review (“OCAHO”) that found 58

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it to have committed substantive violations of Section 274A(b) of the 59
Immigration and Nationality Act (“INA”) and affirmed the 60
imposition of fines by Immigration and Customs Enforcement of the 61
Department of Homeland Security (“ICE”). The Administrative Law 62
Judge (“ALJ”) found that Buffalo Transportation had not timely 63
complied with the requirements of 8 U.S.C. § 1324a(b) and related 64
regulations that require employers to verify that an employee is 65
legally authorized to work in the United States through executing a 66
Form I‐9 for each employee within three business days of hire. 67
Buffalo Transportation petitioned this Court for review of the ALJ’s 68
decision on the grounds that the violations were “procedural” rather 69
than substantive, and that ICE should have issued a warning rather 70
than imposing fines. Buffalo Transportation also contends that the 71
fines imposed were unreasonably high. We agree with the ALJ’s 72
determination of liability and adjustments of ICE’s original fine 73
amounts, and therefore DENY the petition for review. 74

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BACKGROUND 75
Buffalo Transportation is located in Buffalo, New York, 76
and provides transportation services to individuals for medical 77
appointments. On August 22, 2013, ICE notified Buffalo 78
Transportation of a scheduled audit of its Forms I‐9 to occur on 79
August 28, 2013. At the audit, ICE found that six of the completed 80
Forms I‐9 had technical or procedural errors and allowed Buffalo 81
Transportation to correct those errors. ICE also found, however, that 82
all 54 of the completed Forms I‐9 were not created within three 83
business days of the employees’ hiring dates, and that Buffalo 84
Transportation did not properly retain completed Forms I‐9 for 84 85
former employees. On March 14, 2014, ICE served Buffalo 86
Transportation with a Notice of Intent to Fine in the amount of 87
$794.75 per violation (for a total of $109,675.50) which it calculated 88
using the regulatory scheme at 8 C.F.R. § 274a.10(b)(2) and its own 89
internal guidelines. These guidelines set the base and maximum 90

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fines for various types of violations and adjust the fines for 91
aggravating and mitigating circumstances. See ICE, Fact Sheet: I‐9 92
Inspection Overview, available at https://www.ice.gov/factsheets/i9‐ 93
inspection (last visited Oct. 11, 2016). 94
After receiving the Notice of Intent to Fine, Buffalo 95
Transportation requested a hearing before an ALJ, as permitted by 5 96
U.S.C. § 554. Both Buffalo Transportation and ICE submitted 97
briefing and evidence in support of their motions for a summary 98
decision. The ALJ granted in part both Buffalo Transportation’s and 99
ICE’s motions for summary decision.1 The ALJ found Buffalo 100
Transportation to have committed 81 violations for not retaining the 101
Forms I‐9 for former employees for the proper time period (the later 102
of three years from date of hire, or if terminated, one year from 103
1 Motions for summary decisions are governed by 28 C.F.R. § 68.38 (c), which
provides that an ALJ “shall enter a summary decision for either party if the
pleadings, affidavits, material obtained by discovery or otherwise, or matters
officially noticed show that there is no genuine issue as to any material fact and
that a party is entitled to summary decision.” If a party raises a genuine question
of material fact, then the ALJ shall hold an evidentiary hearing. Id. § 68.38 (e).

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termination) and 54 violations for current employees for Forms I‐9 104
not prepared within three business days of hire.2 The ALJ also 105
determined that the fines assessed by ICE were excessive, and 106
adjusted the penalty to $600 per violation for the former employees 107
and $500 per violation for the current employees. Thus, the total fine 108
that the ALJ assessed was $75,600. In making these adjustments to 109
ICE’s fines, the ALJ considered Buffalo Transportation’s financial 110
situation as well as other mitigating factors pursuant to 8 C.F.R. 111
§ 274a.10 (b)(2)(i)‐(v). See J.A. 45. 112
DISCUSSION 113
I. Standard of Review 114
We review an order of the OCAHO issued pursuant to 8 115
U.S.C. § 1324a under the arbitrary and capricious standard. 8 U.S.C. 116
§ 1324a(e)(8); see Alaska Dep’t of Envtl. Conservation v. E.P.A., 540 U.S. 117
461, 496–97 (2004) (applying arbitrary and capricious standard when 118
2 A review of the Forms I‐9 reflects that many of the forms were prepared
immediately prior to the inspection and more than three business days from the
hiring date. See, e.g., Record on Appeal at 214‐15.

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the statute itself does not specify a standard for judicial review of 119
agency action). We review an agency’s factual determinations under 120
the substantial evidence standard, N.Y. & Atl. Ry. Co. v. Surface 121
Transp. Bd., 635 F.3d 66, 71 (2d Cir. 2011) (citations omitted), while 122
we review an agency’s determinations on questions of law de novo, 123
see Nwozuzu v. Holder, 726 F.3d 323, 326 (2d Cir. 2013) (citations 124
omitted). 125
II. Substantive Violations 126
Section 274A(b) of the Immigration and Nationality Act 127
requires employers to verify that their employees are legally 128
authorized to work in the United States. 8 U.S.C. § 1324a(b). 129
Regulations designate the Employment Eligibility Verification Form 130
(“Form I‐9”) for this purpose, 8 C.F.R. § 274a.2(a)(2), and employers 131
must complete these forms within three business days of hire, id. 132
§ 274a.2(b)(1)(ii). An employer must retain these forms and provide 133
them for inspection by ICE upon three business days’ notice for 134

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current employees, and retain forms for one year for terminated 135
employees. Id. § 274a.2(b)(2)(i)‐(ii). If an employer does not comply 136
with these requirements, it may face civil penalties between $110 137
and $1,100 per individual violation. Id. § 274a.10(b)(2) (for violations 138
prior to November 2, 2015). An employer may be “considered to 139
have complied” with the Form I‐9 requirements if there is only a 140
“technical or procedural failure” so long as the employer made a 141
“good faith attempt to comply.” 8 U.S.C. § 1324a(b)(6)(A). To avail 142
itself of the good faith defense, an employer must also correct the 143
relevant violations within ten business days of receiving notice of 144
the technical or procedural failings. Id. § 1324a(b)(6)(B). 145
The Immigration and Naturalization Services (the 146
predecessor agency to ICE) (“INS”) issued interim guidance about 147
what constitutes a “technical or procedural violation” as opposed to 148
a “substantive violation” for which the good faith defense would not 149
be available. Memorandum of Paul W. Virtue, INS Office of 150

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Programs, Interim Guidelines: Section 274A(b)(6) of the INA (March 151
6, 1997), available at 74 Interpreter Releases 706, App. I (April 28, 152
1997) (“Virtue Memorandum”). ICE has continued to follow that 153
guidance. The OCAHO has consistently relied on the Virtue 154
Memorandum to determine that the failure of an employer to 155
complete a Form I‐9 is a substantive violation of Section 274a.2. See 156
United States v. Anodizing Indust., Inc., 10 OCAHO 1184 (2013); United 157
States v. Platinum Builders of Cent. Fla., Inc., 10 OCAHO 1199 (2013). 158
Formal adjudications and agency‐promulgated rules are given 159
considerable deference under the Administrative Procedure Act and 160
Chevron. See Chevron, USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 161
837, 844 (1984); Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49, 162
55 (2d Cir. 2004). An informal agency interpretation that is neither a 163
formal adjudication nor a promulgated rule may still receive 164
deference under Skidmore v. Swift & Co., 323 U.S. 134 (1944). Such 165
informal agency guidance receives deference “‘according to its 166

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persuasiveness,’ as evidenced by the ‘thoroughness evident in [the 167
agency’s] consideration, the validity of its reasoning, its consistency 168
with earlier and later pronouncements, and all those factors which 169
give it power to persuade.’” Estate of Landers v. Leavitt, 545 F.3d 98, 170
107 (2d Cir. 2008) as amended (Jan. 15, 2009) (quoting United States v. 171
Mead Corp., 533 U.S. 218, 221, 228 (2001)) (internal citation omitted); 172
see also Ketchikan Drywall Servs., Inc. v. Immigration & Customs Enf’t, 173
725 F.3d 1103, 1112–13 (9th Cir. 2013) (applying Skidmore deference 174
to the Virtue Memorandum). We apply Skidmore deference to the 175
Virtue Memorandum because we find it well‐reasoned and 176
thorough. It distinguishes between violations that effectively 177
undermine immigration requirements (such as not filling out the 178
form at all, or not including the employee’s name) and those that 179
create small but solvable problems (such as an omitted birth date). 180
Moreover, the agency has greater expertise “when it comes to 181
determining which omissions are substantive and which ought to be 182

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excused.” Ketchikan, 725 F.3d at 1113. Thus, we agree with the 183
Virtue Memorandum, and with prior decisions of the OCAHO, see, 184
e.g., United States v. Dr. Robert Schaus, D.D.S., 11 OCAHO 1239 185
(2014), that failing to prepare Forms I‐9 within three business days of 186
hire is a substantive violation of the INA and its accompanying 187
regulations. 188
The regulation clearly states that employers must have 189
employees fill out the Form I‐9, verify the employee’s 190
documentation, and have both employee and employer sign the 191
form within three business days of hire. Failure to prepare a Form I‐ 192
9 constitutes a substantive violation, Virtue Memorandum at 3, and 193
necessarily includes the failure to prepare a Form I‐9 within the time 194
allotted by the regulations—here, three business days. The ALJ 195
correctly determined that the 54 Forms I‐9 presented to ICE at the 196
audit contained substantive violations, as there is no genuine 197
dispute that any of the 54 forms had been completed within three 198

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business days of the employees’ hiring dates. Indeed, it appears that 199
Buffalo Transportation only prepared the 54 Forms I‐9 for its current 200
employees in response to ICE’s notice of inspection. 201
Buffalo Transportation contends that it should have been 202
given a Warning Notice pursuant to 8 C.F.R. § 274a.9(c) before 203
receiving the ICE Notice of Intent to Fine. The government contends 204
that this argument is unexhausted. Even assuming that Buffalo 205
Transportation properly raised the warning notice claim, it is 206
without merit. The regulation permits ICE or the Department of 207
Labor “in their discretion” to give a warning of violations. Id. It 208
does not require ICE to do so. 209
Buffalo Transportation also argues that it substantially 210
complied with the employee verification requirements by keeping 211
each employee’s identifying documents on file. That argument is 212
unavailing, however, because the relevant regulations explicitly 213
reject that approach: “[C]opying . . . of [underlying documents] and 214

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retention of the copy or electronic image does not relieve the 215
employer from the requirement to fully complete section 2 of the 216
Form I‐9.” 8 C.F.R. § 274a.2(b)(3); see Ketchikan, 725 F.3d at 1111 217
(rejecting the same argument). 218
III. Fines 219
Buffalo Transportation also challenges the amount of the fines 220
imposed by the ALJ as arbitrary. ICE imposed a fine of $794.75 per 221
violation, which it calculated using the regulatory scheme at 8 C.F.R. 222
§ 274a.10(b)(2) and its own internal guidelines, which ICE uses to set 223
the base penalty and adjust the fine for aggravating and mitigating 224
circumstances.3 See ICE, Fact Sheet: I‐9 Inspection Overview, available 225
at https://www.ice.gov/factsheets/i9‐inspection (last visited Oct. 11, 226
2016). The ALJ considered that Buffalo Transportation was a small 227
business, did not act in bad faith, lacked a history of violations, and 228
3 Both the relevant statute and regulations include the following factors: (i) size of
the business of the employer being charged, (ii) the good faith of the employer,
(iii) the seriousness of the violation, (iv) whether or not the individual was an
unauthorized alien, and (v) the history of previous violations of the employer. 8
U.S.C. § 1324a(e)(5); 8 C.F.R. § 274a.10(b)(2).

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that there was no evidence that Buffalo Transportation had hired 229
unauthorized workers as mitigating factors. The ALJ also considered 230
Buffalo Transportation’s financial situation. In light of this evidence, 231
Buffalo Transportation’s arguments, and the statutory and non‐ 232
statutory factors—including Buffalo Transportation’s ability to 233
pay—the ALJ reduced the fines to $600 per violation for past 234
employees and $500 per violation for current employees. 235
When reviewing agency fines our inquiry is limited to 236
whether the agency made “an allowable judgment in [its] choice of 237
the remedy.” United States v. Int’l Bhd. of Teamsters, 170 F.3d 136, 143 238
(2d Cir. 1999) (internal quotation marks omitted). We conclude that 239
the ALJ made such an allowable judgment here in determining the 240
amount of the fines after properly assessing the various factors, 241
including the seriousness and number of the violations. 242
Buffalo Transportation next argues that because the regulation 243
provides for a broad range of allowable fines (from $110 to $1,100) 244

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and the Virtue Memorandum includes no specific guidance, the ALJ 245
impermissibly made an arbitrary determination as to the amounts of 246
the fines. Buffalo Transportation also contends that other similarly‐ 247
situated employers received larger reductions from ICE‐imposed 248
fines than it did. We do not find these arguments convincing. The 249
ALJ provided well‐reasoned bases for the fine amounts based on 250
Buffalo Transportation’s specific circumstances. 251
* * * 252
For the foregoing reasons, we hold that the ALJ’s 253
determinations regarding liability were not arbitrary and capricious 254
and were supported by substantial evidence, and that the fines were 255
within the ALJ’s allowable discretion. Accordingly, we DENY the 256
petition for review. 257

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