Federal Election Com'n v. Sailors' Union of Pacific Political Fund

• Decision Date: 15 September 1987
• Docket Number: No. 86-1775,86-1775
• Citation: 828 F.2d 502
• Parties: FEDERAL ELECTION COMMISSION, Plaintiff-Appellant, v. SAILORS' UNION OF the PACIFIC POLITICAL FUND; Paul Dempster, Treasurer; Marine Firemen's Union Political Action Fund; Joel E. McCrum, Treasurer; Seafarers' Political Activity Donation; John Fay, Treasurer; Thomas J. Bovo, Assistant Treasurer, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 502

828 F.2d 502

FEDERAL ELECTION COMMISSION, Plaintiff-Appellant, v. SAILORS' UNION OF the PACIFIC POLITICAL FUND; Paul Dempster, Treasurer; Marine Firemen's Union Political Action Fund; Joel E. McCrum, Treasurer; Seafarers' Political Activity Donation; John Fay, Treasurer; Thomas J. Bovo, Assistant Treasurer, Defendants-Appellees.

No. 86-1775.

United States Court of Appeals Ninth Circuit.

Argued and Submitted March 9, 1987.

Decided Sept. 15, 1987.

Jonathan A. Bernstein, Washington, D.C., for plaintiff-appellant.

James Altman, New York City, for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before CANBY, NORRIS and KOZINSKI, Circuit Judges.

NORRIS, Circuit Judge:

This case presents the question whether three affiliate unions of Seafarers International Union of North America (Seafarers) should be considered "local units" of Seafarers or independent "labor organizations" affiliated with Seafarers for the purpose of calculating compliance with the campaign contributions limitation of the Federal Election Campaign Act of 1971, as amended, 2 U.S.C. Secs. 431 et seq. (the Act). We hold that at least two of the three unions are independent labor organizations under the Act and that therefore the respective related political action committees (PACs) of all three must be treated separately to determine the PACs' compliance with the campaign contribution limitation in 2 U.S.C. Sec. 441a(a)(2).

I

A

In its original form, the Federal Election Campaign Act of 1971 consisted mainly of comprehensive financial contribution and expenditure reporting requirements for federal election campaigns and limitations on expenditures from personal funds by candidates for federal office. Pub.L. No. 92-225, 86 Stat. 3, 11 (1972). Concerned with the related problems of the influence of wealth on federal elections and the potential for abuse created by a system of uninhibited political giving, Congress revised the Act in 1974 to curtail perceived abuses in the system. Federal Election Campaign Act Amendments of 1974 (1974 Amendments), Pub.L. No. 93-443, 88 Stat. 1263, 1272. The 1974 Amendments established for the first time substantive contribution caps, enforced by criminal penalties, that strictly limited the amount that any group or individual could contribute to a campaign for federal office. Id. at Sec. 101. Moreover, the amendments created the Federal Election Commission, an oversight agency to police compliance with the Act's substantive and procedural requirements.

The Commission's enforcement of the new contribution limitations soon proved inadequate to the task of controlling the amounts contributed to federal campaigns by resourceful unions and corporations. Faced with limitations on the amounts their PACs could contribute to a given campaign, large unions and corporations began creating hundreds of new PACs through their locals and subsidiaries. See 122 Cong.Rec. 6710-23 (1976) (excerpt of presentation by Common Cause). In 1976, Congress responded. See Federal Election Campaign Act Amendments of 1976 (1976 Amendments), Pub.L. No. 94-283, 90 Stat. 475. Although its main concern at that time was making the necessary amendments in response to Supreme Court's recent decision in Buckley v. Valeo, 424 U.S. 1, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976), ¹ Congress also enacted "[p]rovisions to curtail vertical proliferation of contributions by political committees." 122 Cong.Rec. 12182 (1976) (summary of key provisions of the amendments by Senator Cannon).

First, leaving the monetary caps on individual and organizational contributions to federal campaigns virtually unchanged, ² the 1976 Amendments provided far more detailed regulation of group contributions, especially from corporations and labor organizations. Under the 1976 Amendments, a labor organization may no longer contribute directly to federal campaigns but must instead create "a separate segregated fund to be utilized for political purposes." 2 U.S.C. Sec. 441b(b)(2). These funds are popularly known as political action committees or PACs, and the labor organizations responsible for the establishment, finance, maintenance and control of particular PACs are denominated the PACs' "connected organizations." 2 U.S.C. Sec. 431(7).

Moreover, in order to prevent unions and corporations from using their locals and subsidiaries to establish large numbers of separate segregated funds, Congress added specific so-called "anti-proliferation rules" which provide:

For purposes of the limitations [on campaign contributions] provided by paragraph (1) and paragraph (2), all contributions made by political committees established or financed or maintained or controlled by any corporation, labor organization, or any other person, including any parent, subsidiary, branch, division, department, or local unit of such corporation, labor organization, or any other person, or by any group of such persons, shall be considered to have been made by a single political committee.... In any case in which a corporation and any of its subsidiaries, branches, divisions, departments, or local units, or a labor organization and any of its subsidiaries, branches, divisions, departments, or local units establish or finance or maintain or control more than one separate segregated fund, all such separate segregated funds shall be treated as a single separate segregated fund for purposes of the limitations provided by paragraph (1) and paragraph (2).

2 U.S.C. Sec. 441a(a)(5). As the House Conference Report notes, "The anti-proliferation rules established by the conference substitute are intended to prevent corporations, labor organizations, or other persons or groups of persons from evading the contribution limits...." H.R.Conf.Rep. No. 1057, 94th Cong., 2d Sess. 58, reprinted in 1976 U.S.Code Cong. & Admin.News 929, 946, 973. Thus, when subdivisions of large unions each create segregated funds for making campaign contributions, section 441a(a)(5) requires the contributions of those funds to be aggregated for the purpose of calculating the funds' compliance with campaign contribution limitations. Through this mechanism, Congress hoped to prevent unions from evading contribution limitations through a Hydra-like proliferation of segregated funds, each making separate contributions, but each being a part of the same beast. ³

B

Seafarers, nominally an "international union," is concededly a labor organization covered by section 441a(a)(5). Its organizational structure is divided into various units, including what its constitution terms "autonomous affiliated organizations." Constitution of the Seafarers International Union of North America, AFL-CIO (Seafarers Constitution), Excerpts of Record (E.R.) at 124-27. Three of those affiliated organizations--Seafarers International Union of North America, Atlantic, Gulf, Lakes and Inland Waters District (SIUAG), Marine Firemen's Union (MFU), and Sailors' Union of the Pacific (SUP) (collectively "the affiliates")--are involved in this action. Each of them has established and maintained a multicandidate PAC--respectively, Seafarers' Political Activity Donation (SPAD), Marine Firemen's Union Political Action Fund (Firemen's Fund), and Sailors' Union of the Pacific Political Fund (Sailors' Fund) (collectively, "the PACs")--through which the affiliates make contributions to the political campaigns of individual candidates.

Between May 1981 and March 1982, the PACs contributed in the aggregate more than $5,000 to the senatorial campaign of former California Governor Jerry Brown. Individually, however, none of the affiliates exceeded this amount. Upon a citizen complaint that the combined contributions of the three PACs violated the limits of section 441a(a)(2), the Commission investigated the contributions and then brought this action in the Northern District of California for declaratory and injunctive relief and civil penalties against the three PACs. The Commission claimed that the affiliates, as the connected organizations of the PACs, must be considered local units of Seafarers, and therefore the campaign contributions of the three PACs must be aggregated for the purpose of determining compliance with section 441a(a)(2).

On cross-motions for summary judgment, the district court rejected the Commission's argument that the affiliates are "local units" of Seafarers under the statute and granted summary judgment in favor of the PACs. 624 F.Supp. 492 (N.D.Cal.1986). The Commission appeals. We affirm.

II

We review a summary judgment de novo. Siles v. ILGWU National Retirement Fund, 783 F.2d 923, 926 (9th Cir.1986). "[P]ure questions of statutory construction [are] for the courts to decide." INS v. Cardoza-Fonseca, --- U.S. ---- 107 S.Ct. 1207-22, 94 L.Ed.2d 434 (1987). When an agency construes a statute by applying the statutory standard to particular sets of facts through a process of case-by-case adjudication, its interpretation is entitled to deference. Id. at 1221-22. Here, however, the Commission has engaged in no such adjudication, nor has Congress authorized it to do so. It has merely determined that "probable cause" exists to bring this action. See 2 U.S.C. Sec. 437g(a)(4)(A)(i), (5)(C). The Commission's views, while entitled to deference, FEC v. Democratic Senatorial Campaign Committee, are not entitled to prevail if contrary to the congressional intent of the statute. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843 n. 9, 104 S.Ct. 2778, 2781 n. 9, 81 L.Ed.2d 694 (1984).

III

A

On the merits, we must determine whether SIUAG, MFU, and SUP are "subsidiaries, branches, divisions, departments, or local units" of Seafarers. The Commission presses the argument that section 441a(a)(5) creates an "automatic" or "per se" rule "requiring that the political committees of all subdivisions of an international union be subject to a single contribution limit regardless...