Railway Labor Executives' Association, Petitioner, v. United States Railroad Retirement Board, Respondent, 749 F.2d 856 (D.C. Cir. 1984)

The Railway Labor Executives' Association ("RLEA") seeks review, pursuant to 45 U.S.C. §§ 231g and 355(f), of a decision of the Railroad Retirement Board ("the Board") which determined that Canadian employees of United States railroads operating in Canada ceased to be covered by the Railroad Retirement Act of 1974 ("RRA"), 45 U.S.C. §§ 231-231t, and the Railroad Unemployment Insurance Act ("RUIA"), 45 U.S.C. §§ 351-367, as of April 10, 1978, the effective date of certain Canadian immigration regulations. The issue on review is whether the Board properly construed the Canadian Immigration Act, 1976 2d Sess., ch. 52, Sec. 10, and the 1978 regulations issued thereunder, as requiring United States railroads operating in Canada to employ, in whole or in part, Canadian citizens or residents, so as to bring such workers within the exceptions to covered service found in section 231(d) (3) of the RRA and section 351(e) of the RUIA. We find that the Board's decision lacked any coherent articulation of what types of foreign law restrictions on hiring are sufficient to satisfy the requirement language found in sections 231(d) (3) and 351(e) and consequently lacked any reasoned analysis of why these Canadian regulations come within the meaning of these two sections. We also find that the record on which the Board acted is inadequate to support its apparent conclusion concerning the actual effects of the Canadian law and regulations. We vacate the Board's decision and remand for further proceedings.

Together the RRA and RUIA provide a system of retirement and unemployment benefits for railroad workers. Both Acts define an employee as an individual in the service of an employer for compensation or an employee representative. 45 U.S.C. §§ 231(b) (1), 351(d). An individual in the service of an employer is covered under the Acts whether the service is performed inside or outside the United States. 45 U.S.C. §§ 231(d) (1), 351(e). Both Acts, however, contain the following exception to covered service:

[A]n individual not a citizen or resident of the United States shall not be deemed to be in the service of an employer when rendering service outside the United States to an employer who is required under the laws applicable in the place where the service is rendered to employ therein, in whole or in part, citizens or residents thereof.

45 U.S.C. §§ 231(d) (3), 351(e) (emphasis added). It is this exception, contained in both Acts, that is at the heart of the controversy. The Board asserts that Canadian immigration regulations require United States railroads operating in Canada to employ Canadians. Consequently, the Canadian employees are excepted from coverage under RRA and RUIA by virtue of sections 231(d) (3) and 351(e), respectively. The RLEA asserts that the Canadian regulations in question do not require the railroads to hire Canadians, hence the exceptions to covered service do not apply.

The Canadian Immigration Act provides that any noncitizen or nonresident of Canada seeking to enter Canada for the purpose of engaging in employment must obtain an employment authorization prior to appearing at a port of entry.¹  Immigration Act, 1976 2d Sess., ch. 52, Sec. 10. Regulations issued by the Canadian Minister of Employment and Immigration pursuant to the Immigration Act, 1976 2d Sess., ch. 52, Sec. 115(1) (j), establish the guidelines for the issuance of employment authorizations. See 112 Can.Gaz., Part II, No. 5, Secs. 18-20 (March 8, 1978). Section 20 of the regulations provides in relevant part:

(1) An immigration officer shall not issue an employment authorization to a person if,

(a) in his opinion, employment of the person in Canada will adversely affect employment opportunities for Canadian citizens or permanent residents in Canada;

....

(3) In order to form an opinion for the purposes of paragraph (1) (a), an immigration officer shall consider

(a) whether the prospective employer has made reasonable efforts to hire or train Canadian citizens or permanent residents for the employment with respect to which an employment authorization is sought;

(b) the qualifications of the applicant for the employment for which the employment authorization is sought; and

(c) whether the wages and working conditions offered are sufficient to attract and retain in employment Canadian citizens or permanent residents.

(4) For the purpose of considering the question set out in paragraphs (3) (a) and (c), an immigration officer shall consult an officer of the National Employment Service serving the area in which the person seeking an authorization wishes to engage in employment.² 

Id. at Sec. 20 (emphasis added).

On the basis of the above provisions of the Canadian Immigration Act, and regulations issued thereunder, the General Counsel of the Railroad Retirement Board issued Legal Opinion L-83-79,³  on March 25, 1983, stating:

I am of the opinion that this statute constitutes a law requiring the employment of Canadian citizens or permanent residents "in whole or in part" for railroad operations in Canada. Consequently, for [sic] months after April 9, 1978, service in Canada by Canadian citizens and permanent residents of Canada employed by United States railroads operating in Canada is not covered under the Railroad Retirement Act and the Railroad Unemployment Insurance Act by virtue of sections 1(d) (3) of the Railroad Retirement Act and 1(e) of the Railroad Unemployment Insurance Act.

Appendix at 8.⁴  The General Counsel further stated that this determination would apply prospectively from January 1, 1983.⁵  On May 11, 1983, the General Counsel issued Legal Opinion L-83-79.1 making Legal Opinion L-83-79 also applicable to elected railway labor organization officials who are Canadian.⁶ 

On June 3, 1983, the RLEA sought reconsideration of the Board's decision pursuant to 20 C.F.R. Sec. 259.3. In its request for reconsideration, the RLEA argued that the Canadian immigration regulations do not on their face require the hiring of Canadians or even the denial of an employment authorization to any person, but merely delineate criteria for immigration officers to use in exercising their discretion as to whether an employment authorization should be issued in a specific instance. Appendix at 13-14. The RLEA included in its request for reconsideration a memorandum of law written by a Canadian attorney, Mr. M.W. Wright, Q.C., stating that the regulations create a "preference" for hiring Canadians but do not make the hiring of Canadians "obligatory." Appendix at 20-28.

On December 12, 1983, the Deputy General Counsel issued Legal Opinion L-83-79.2 denying the RLEA's request for reconsideration but permitting the RLEA request to be considered an appeal to the three-member Board pursuant to 20 C.F.R. Sec. 259.5. Appendix at 30-35. The Board affirmed the Deputy General Counsel's decision and denied the RLEA's appeal on January 10, 1984, with one member dissenting. Appendix at 2-4.

The Board frames the issue in this case as: " [W]hether the Board's interpretation of the RRA and the RUIA, the statutes which it administers, as they are affected by Canadian law and regulations and Canada's application of them to United States companies, has a reasonable basis in law." Brief for Board at 10. The RLEA, on the other hand, argues that the Board's decision was based upon a determination of foreign law and as such is entitled to no deference. The RLEA asserts that the "question involved in the case at bar is a pure question of statutory and regulatory construction of Canadian law in determining the applicability of the exceptions from covered service contained in 45 U.S.C. §§ 231(d) (3), 351(e), [thus] this court should review the matter de novo." Brief for RLEA at 7. We cannot accept the RLEA's contention that the issue in this case is solely an issue of the determination of foreign law. Clearly, what is at issue here is the interplay between the exception to coverage provisions of the RRA and RUIA and Canadian law. Although we basically accept the Board's statement of the issue in this case, that does not bring in its wake an acceptance of the Board's idea of the high level of deference to be accorded its decision.

The Board's determination of Canadian law is entitled to no deference from this court. Bamberger v. Clark, 390 F.2d 485, 488 (D.C. Cir. 1968) (overturning agency's determination of German law). This is purely a question of law and the court is free to make its own independent determination of Canadian law.⁷  In the present case, however, we are not being asked to make an isolated determination of foreign law but rather to determine whether the relevant provisions of foreign law come within the meaning of sections 231(d) (3) and 351(e). To make this latter determination, we must first know the meaning of sections 231(d) (3) and 351(e), i.e., the standard or criteria to be used in assessing and evaluating Canadian law.

It is well established that an agency's construction of its own governing statutes is entitled to considerable deference. Chevron U.S.A., Inc. v. Natural Resources Defense Council, --- U.S. ----, 104 S. Ct. 2778, 2782-83, 81 L. Ed. 2d 694 (1984). In Chevron, the Supreme Court articulated the appropriate framework for analysis:

If ... the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, ... the question for the court is whether the agency's answer is based on a permissible construction of the statute.

... Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit. In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.

Id. at 2782 (footnotes omitted). Thus, when an agency formulates standards or policy pursuant to an implicit delegation of authority, Chevron directs us to uphold the agency's interpretation of its own governing statute if "reasonable." Id.

Congress, in the RRA and RUIA, has granted the Board broad authority to exercise the duties and powers necessary to administer and enforce the Acts, including the authority to determine which employees are covered. See 45 U.S.C. §§ 231f(b) (1), 362(l) . Thus the Board has been implicitly delegated the task of elaborating the standard in question. The principal argument advanced by the RLEA, however, is that the plain meaning of the requirement language in Secs. 231(d) (3) and 351(e) is controlling, and that no reasonable construction of the Canadian regulations can be deemed to create a requirement in whole or in part to hire Canadians. See Brief for RLEA at 8-12. Specifically, the RLEA argues that the word "require," as defined in the dictionary and construed in the case law,⁸  connotes the idea of compulsion--an act which is mandatory or compelled. Brief for RLEA at 10. Moreover, the RLEA appears to assert that the terms "in whole or in part" mean a quota or absolute percentage. See Brief for RLEA at 12. Given this construction of sections 231(d) (3) and 351(e), the RLEA asserts that the Board made an erroneous determination of Canadian law because the Canadian regulations do not on their face require the hiring of Canadians but merely "set forth criteria for immigration officers to use in making a determination as to whether an employment authorization shall issue in a specific instance." See Brief for RLEA at 9.

Although the RLEA's plain meaning argument is plausible and even superficially appealing, we ultimately reject it. The language of sections 231(d) (3) and 351(e) simply does not compel the narrow, literal interpretation advanced by the RLEA. The statutory terms at issue, "required under the laws" and "in whole or in part," do not have one plain meaning in the context of this case, but rather are subject to varying interpretations. For instance "required under the laws" may refer to express provisions mandating the hiring of Canadians, or provisions which on their face create such a strong preference so as to in effect compel the hiring of Canadians, or provisions which appear facially neutral but, as implemented, operate to compel the hiring of Canadians. Similarly, a requirement "in part" may be interpreted to mean a requirement that an absolute percentage or quota of Canadians must be hired or that Canadians must be hired to fill certain types of jobs.

In sum, the plain words contained in the RRA and RUIA exceptions to covered service do not compel us to adopt any particular meaning. Moreover, nothing in the legislative history of these provisions gives us any clue as to the meaning Congress intended.⁹  Finally, this appears to be the first time the Board has been called upon to interpret these provisions, hence we have no past Board interpretations to consider. Thus, we must defer to the Board's interpretation of its own governing statutes, provided its interpretation has a reasonable basis. See Itel Corp. v. United States Railroad Retirement Board, 710 F.2d 1243, 1245 (7th Cir. 1983).

Our task in determining the reasonableness of the Board's decision is not to interpret the statutes as we think best but only to inquire as to whether the Board's interpretation is " 'sufficiently reasonable' to be accepted by a reviewing court." Federal Election Commission v. Democratic Senatorial Campaign Committee, 454 U.S. 27, 39, 102 S. Ct. 38, 46, 70 L. Ed. 2d 23 (1981). Nonetheless, "the thoroughness, validity, and consistency of an agency's reasoning are factors that bear upon the amount of deference to be given an agency's ruling." Id. at 37, 102 S. Ct. at 44. In the present case, the Board's reasoning is so lacking in thoroughness that we are unable to discern the Board's basic path of analysis and consequently we are unable to determine the reasonableness of the Board's decision.

At a minimum, the Board's path of analysis should have included an articulation of its interpretation of sections 231(d) (3) and 351(e), including the standard to be used in assessing provisions of foreign law, followed by an application of that standard to the relevant provisions of Canadian law, resulting in a final determination.¹⁰  Instead, the Board has given no definitive interpretation of sections 231(d) (3) and 351(e), articulated no coherent standard as to what kinds of foreign law provisions come within the requirement language of those sections, and thus given no consistently reasoned analysis of how the Canadian regulations qualified under the requirement language of the exceptions.

In the initial opinion issued on March 25, 1983, the General Counsel offered little in the way of reasoned analysis but appeared to be saying that the Canadian regulations on their face require the hiring of Canadians. See supra p. 859 & n. 4. The Deputy General Counsel, in denying the RLEA's request for reconsideration, states that to accept the position advanced by the Canadian lawyer, Mr. Wright, in his letter submitted by the RLEA, "one has to give an extremely literal interpretation to the word 'required,' as used in the sections of the Acts under consideration." Appendix at 31. The Deputy General Counsel, however, then proceeds to discuss the Canadian regulations without ever specifying the "appropriate" interpretation of the word "required." The Deputy General Counsel concludes that "the practical result of the [Canadian] regulations is to 'require' an employer in Canada to fill most of his positions with Canadians." Appendix at 32 (emphasis added). This language seems to imply that "require" may mean an express statutory provision or a statutory provision which, while not express, in effect has the result of requiring the hiring of local citizens or residents. In short, the Board never articulates a definitive interpretation of the requirement language contained in the coverage exceptions.¹¹ 

Even if the Board could be construed to have articulated an adequate standard for assessing whether provisions of foreign law come within the meaning of the coverage exceptions, we find it difficult to see how a reasonable assessment of Canadian law could be made on the basis of the evidence entered in the record. The only evidence in the record as to the substance or effect of Canadian law is the letter from the Canadian lawyer, Mr. Wright, submitted by the RLEA in its request for reconsideration and the self-serving assertions of Conrail in its request for a private letter ruling from the Internal Revenue Service.¹²  A letter to the Board from Canada's Executive Director of Immigration stating that the Board had misconstrued Canadian law was never even entered in the record. See Appendix to Amicus Curiae Brief for Canada, Tab C. The Board made absolutely no independent attempt to ascertain the meaning or effect of Canadian law.¹³  This might be acceptable if the Canadian regulations contained an explicit, expressed requirement that U.S. Railroads hire a specific percentage of Canadians. Given the equivocal language of the regulations, see supra p. 858, however, the Board has an obligation to make some further inquiry into the intended nature and effect of the regulations.

For the foregoing reasons, we vacate the Board's decision and remand for further proceedings consistent with this opinion.

Vacated and remanded.