Waiting For Bureaucrats To Say It's Time To Make The Donuts

One of the benefits of reading a lot of judicial opinions, as I do, is that you get to see a lot of retail examples of how our government operates at its most legalistic-bureaucratic. Yesterday’s opinion by the U.S. Court of Appeals for the First Circuit in River Street Donuts, LLC v. Napolitano is a wonderful little vignette about a bureaucratic system run amok.

River Street runs a donut baking operation, and in January 2003, it wanted to hire a new head donut baker/supervisor for a salary of about $40,000 a year. This is your basic business decision – hire a new baker, try to grow the business – but there’s a catch: the guy they wanted to hire, a man named Farag Mohamed, is a foreign national, so River Street needed the approval of the Bureau of Citizenship and Immigration Services to sponsor a work visa for Mr. Mohamed.

At this point, some readers will balk at the fact that River Street wanted to bring in a foreigner, but in a sane world, if a business has a skilled laborer they want to offer a job to, as long as there’s not some other reason to keep the guy out of the country, this should not be a terribly onerous process.

But here’s where things get complicated. Because BCIS demands that River Street submit proof that it can afford to hire Mr. Mohamed to make donuts, and after reviewing River Street’s 2001 and 2002 tax returns, BCIS tells River Street that it knows River Street’s donut business better than the company does, and they can’t afford a $40,000 a year donut baker. Whereupon River Street enters the mad world of administrative law litigation, proceeding up through the Administrative Appeals Office of Homeland Security and ultimately to a federal court of appeals, consuming six years of litigation that almost certainly cost them more than $40,000 and did not produce any donuts. The First Circuit ultimately upheld the BCIS’ and AAO’s decisions, rejecting River Street’s arguments about how to allocate depreciation in determining its financial strength. The opinion is mostly about administrative procedure, and I can’t really quibble with the court’s legal reasoning, but I still stand in some awe of the insanity of the entire exercise. Should it really be this complicated and bureaucratic to hire a guy to bake donuts? And is this a preview of the future of the financial and health care sectors?

Now, I don’t know any more about this particular case than what’s in the court’s opinion, so I can’t tell you if River Street made a good business decision to hire Mr. Mohamed or if he’d be a good person to have in this country. And I understand that, as with many such legal rules and regulations, there are arguments for why you need this sort of regulation: to make companies think twice about hiring foreigners instead of Americans and to ensure that people don’t get brought in on work visas for jobs that dry up.

But no matter how you slice it, making a company spend years and legal fees trying (in this case unsuccessfully) to justify their own business decisions to second-guessintg bureaucrats and judges is a recipe for economic paralysis (as well as an inducement to seek to do business instead on the black market). You can write this off if you will as a symptom of our screwed-up immigration laws, which are simultaneously draconian in their terms and tepid and sporadic in their enforcement, but the nature of bureaucracy is universal and not unique to BCIS. I fear that in the years to come, a lot more businesses large and small are going to be living through similar experiences.