Chamber of Commerce of U.S. v. Federal Election Com'n

• Decision Date: 14 November 1995
• Docket Number: No. 94-5339,94-5339
• Citation: 69 F.3d 600
• Parties: , 64 USLW 2328 CHAMBER OF COMMERCE OF the UNITED STATES of America, et al., Appellants, v. FEDERAL ELECTION COMMISSION, Appellee. District of Columbia Circuit
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 600

69 F.3d 600

314 U.S.App.D.C. 436, 64 USLW 2328

CHAMBER OF COMMERCE OF the UNITED STATES of America, et al Appellants, v. FEDERAL ELECTION COMMISSION, Appellee.

No. 94-5339.

United States Court of Appeals,District of Columbia Circuit.

Argued Oct. 10, 1995.

Decided Nov. 14, 1995.

Appeal from the United States District Court for the District of Columbia (94cv02184).

Carter G. Phillips, argued the cause, for appellants, with whom Michael A. Nemeroff, Jonathan E. Nuechterlein, Stephen A. Bokat, Judith K. Richmond, and Jack R. Bierig were on the brief.

Richard B. Bader, Associate General Counsel, Federal Election Commission, argued the cause, for appellee, with whom Lawrence M. Noble, General Counsel, and Vivien Clair, Attorney, were on the brief.

Before: SILBERMAN, SENTELLE, and HENDERSON, Circuit Judges.

SILBERMAN, Circuit Judge:

The United States Chamber of Commerce and the American Medical Association challenge the Federal Election Commission's rule that in effect limits "members"--to whom a membership organization can convey political messages and solicitations--to individuals having the right to vote, directly or indirectly, for at least one member of the organization's highest governing body. The district court thought appellants lacked standing and that the case was not ripe, but held that the FEC's rule was a reasonable interpretation of "member." We reverse and remand with an order to issue the requested declaratory relief.

I.

The Federal Election Campaign Act generally prohibits any corporation or labor organization from making contributions or expenditures "in connection with any election." 2 U.S.C. Sec. 441b(a). But it allows corporations to solicit contributions from stockholders, executive and administrative personnel, and their families; labor organizations to solicit members and their families; and membership organizations or nonstock corporations to solicit members. 2 U.S.C. Secs. 441b(b)(4)(A) & (C). Also exempted are expenditures made for "any communication by any membership organization or corporation to its members, stockholders, or executive or administrative personnel" (so long as the organization is not organized primarily for the purpose of influencing a federal election). 2 U.S.C. Sec. 431(9)(B)(iii). The statutory structure thus contemplates three types of organizations--stock corporations, labor organizations, and membership organizations or nonstock corporations--with analogous exemptions from Sec. 441b's restrictions for solicitation of and political communication to their constituents. "Membership organization" and "member" are not defined. In 1976, the FEC issued regulations defining "member" as

all persons who are currently satisfying the requirements for membership in a membership organization, trade association, cooperative, or corporation without capital stock.... A person is not considered a member under this definition if the only requirement for membership is a contribution to a separate segregated fund.

11 C.F.R. Sec. 114.1(e) (1977-1993). This definition was construed in subsequent Advisory Opinions and court decisions to require some financial attachment or a certain level of organizational attachment. In 1993, the FEC promulgated a new, more restrictive definition of "member":

Members means all persons who are currently satisfying the requirements for membership in a membership association, affirmatively accept the membership association's invitation to become a member, and either:

(i) Have some significant financial attachment to the membership association, such as a significant investment or ownership stake (but not merely the payment of dues);

(ii) Are required to pay on a regular basis a specific amount of dues ... and are entitled to vote directly either for at least one member who has fully participatory and voting rights on the highest governing body of the membership association, or for those who select at least one member ...; or

(iii) Are entitled to vote directly for all of those on the highest governing body of the membership association.

11 C.F.R. Sec. 114.1(e)(2) (emphasis in original; latter emphasis added).

The Chamber is a nonprofit corporation that promotes the free enterprise system. Its constituents include 3,000 state and local chambers of commerce, 1,250 trade and professional groups, and 215,000 "direct business members." All constituents pay annual dues ranging from $65 to $100,000. A self-perpetuating Board of 63 members governs the Chamber, but 59 policy committees play a significant role in determining the Chamber's position on various issues. The Chamber has traditionally published and distributed endorsement reports on, and has sponsored meetings with, various federal candidates. Under the prior regulatory definition of "member," all of the Chamber's constituents were included. Under the FEC's new rule, only the 63 members of the self-perpetuating Board qualify as members.

The AMA is a nonprofit corporation, the constituents of which include approximately 290,000 physicians and medical students who belong either directly to the national association or through their membership in state medical associations. AMA constituents pay annual dues ranging from $20 for medical students to $420 for physicians, receive various AMA publications, participate in professional programs, and are bound by, and subject to discipline under, the Principles of Medical Ethics. The AMA's House of Delegates has 435 members elected by members of the state medical associations; individuals who do not belong to state associations--the approximately 44,500 "direct" members--cannot vote for House members. The House determines AMA policy on--among other issues--health care legislation, professional liability, and medical ethics. The AMA solicits its constituents for contributions to its political action committee, which contributes to various federal candidates' campaigns, and endorses candidates that support the AMA's position on important issues. Under the FEC's new rule (but not the old one), the more than 44,500 physicians who do not belong to local medical associations are no longer AMA "members." The only difference between individuals who qualify as AMA "members" under the new definition and those who do not, is the right to vote for at least one member of the governing board; the two groups of individuals have otherwise identical rights, obligations, and benefits.

Once the FEC promulgated its new rule, the Chamber and the AMA ceased making their traditional political communications and solicitations to the individuals whose status is in dispute, rather than risk enforcement proceedings by the FEC. Both organizations requested Advisory Opinions from the FEC--the sole administrative remedy. ¹ The FEC's general counsel recommended, in draft Advisory Opinions, that the 220,000 individuals and organizations in the Chamber (i.e., everyone other than the 63 Board members) and the 44,500 "direct" members of the AMA do not meet the requirements of membership under the new rule. The Commissioners split three-three over whether to adopt the drafts, so no Advisory Opinion issued. However, four of the six Commissioners agreed that the plain terms of the rule required the result recommended by the general counsel; one of the Commissioners who voted against adopting the drafts did so solely because she had reconsidered her earlier support for the final rule and believed it should be withdrawn. The AMA and the Chamber then filed a challenge to the final rule, seeking a declaratory judgment that the rule was invalid and an injunction against its enforcement. The district court agreed with the FEC that there was no standing and the controversy was not ripe, but went on to hold that the rule was valid on the merits as a reasonable interpretation of "member," without, however, addressing the implications of appellants' First Amendment arguments for the standard of review.

II.

The Commission contends vigorously that appellants have not suffered cognizable injury and therefore lack Article III standing. Whatever the rule's definition of "members," the Commission split three-three on whether to issue an Advisory Opinion. Therefore, appellants are not faced with any present danger of an enforcement proceeding, because such an action, like an Advisory Opinion, requires a majority vote of the Commission. Nothing, however, prevents the Commission from enforcing its rule at any time with, perhaps, another change of mind of one of the Commissioners. The rule constitutes the purported legal norm that binds the class regulated by statute. In the last federal election, appellants, not surprisingly, felt constrained to alter their prior practice--they ceased political communications with those constituents who did not qualify as "members" under the Commission's new rule. And counsel for the Commission agreed at oral argument--as he really had to--that he would not advise the Chamber and the AMA to ignore the rule. All of this would seem to confer standing on appellants, but there is much more.

This statute is unusual in that it permits a private party to challenge the FEC's decision not to enforce. 2 U.S.C. Sec. 437g(a)(8). See, e.g., FEC v. National Right to Work Comm., 459 U.S. 197, 200-01, 103 S.Ct. 552, 556, 74 L.Ed.2d 364 (1982) (NRWC ) (competing lobbying group filed a complaint with the FEC, initiating enforcement action); Akins v. FEC, 66 F.3d 348, 349 (1995) (political competitors filed complaint with the FEC, and then challenged dismissal of complaint under Sec. 437g(a)(8)). If appellants were to communicate with persons who were not "members" under the FEC's new definition, a political competitor could challenge the Commission's dismissal of its complaint. And it would be easy to establish that such agency action was contrary to law; the Commission's refusal to enforce would be based not on a dispute over the meaning or applicability of the rule's clear...