Melcher v. Federal Open Market Committee

• Decision Date: 25 September 1986
• Docket Number: Civ. A. No. 84-1335.
• Citation: 644 F. Supp. 510
• Parties: John MELCHER, Plaintiff, v. FEDERAL OPEN MARKET COMMITTEE, et al., Defendants.
• Court: U.S. District Court — District of Columbia

644 F. Supp. 510

John MELCHER, Plaintiff, v. FEDERAL OPEN MARKET COMMITTEE, et al., Defendants.

Civ. A. No. 84-1335.

United States District Court, District of Columbia.

June 5, 1986.

Supplemental Opinion September 25, 1986.

Grasty Crews, II, Falls Church, Va., for plaintiff.

Brook Hedge, Sandra M. Schraibman, Alfred Mollin, Mona Butler, Civil Div., U.S. Dept. of Justice, Washington, D.C., for defendants; Michael Bradfield, General Counsel, Bd. of Governors of the Federal Reserve System and the Federal Open Market Committee, John H. Oltman, General Counsel, Federal Reserve Bank of New York and Deputy General Counsel, Federal Open Market Committee, of counsel.

OPINION

HAROLD H. GREENE, District Judge.

United States Senator John Melcher of Montana, the plaintiff in this action, has challenged the process by which five members of the Federal Reserve Board's Federal Open Market Committee (hereinafter FOMC) are selected. The gravamen of his complaint is that these five members, known as the "Reserve Bank members," are selected in violation of the appointments clause, Article II, § 2, cl. 2 of the Constitution, because they are selected by the boards of directors of the several Federal Reserve Banks — private individuals — rather than by the President of the United States with confirmation by the Senate. See 12 U.S.C. § 263(a).¹

The adjudication of Senator Melcher's cause has travelled a long and somewhat tortuous course, due essentially to recent changes in the state of the law in this area. Thus, the action had to be stayed September 26, 1984, pending the appeal in Committee for Monetary Reform v. Board of Governors, No. 83-1730 (D.D.C. Oct. 26, 1983), aff'd, 766 F.2d 538 (D.C.Cir.1985), which was claimed to be dispositive of the issues here. The decision in that case, when it was issued, was found to be in significant tension with an earlier case, Riegle v. FOMC, 656 F.2d 873 (D.C.Cir. 1981), and this necessitated new submissions and a hearing on the motion to dismiss. Between Riegle and Committee for Monetary Reform, the Supreme Court decided Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984), which also had an impact on the issues here, and finally, the recent decision in Synar v. United States, 626 F.Supp. 1374 (three judge court), prob. juris. noted, Bowsher v. Synar, ___ U.S. ___, 106 S.Ct. 1181, 89 L.Ed.2d 298 (1986), generated still another round of pleadings from the parties and required renewed consideration by the Court.

After consideration of numerous submissions by all parties, and after hearing, the Court now decides the question of Senator Melcher's ability to pursue his claim in federal court.

I

Supreme Court pronouncements establish a two-part test for standing questions. A litigant must (1) allege a "distinct and palpable" injury to himself; and (2) show that the injury is "`fairly' traceable to the challenged action" and that it is capable of being redressed by a favorable decision. Allen v. Wright, supra, 104 S.Ct. at 3325; Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472-73, 102 S.Ct. 752, 758-59, 70 L.Ed.2d 700 (1982); Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2204, 45 L.Ed.2d 343 (1975).

The first prong of this test may be termed the "injury" requirement, while the second constitutes the "causation" requirement. See Allen v. Wright, supra, 104 S.Ct. at 3326 n. 19.

The standing doctrine is, of course, one means for limiting court intervention to the resolution of those controversies envisioned by the framers of Article III. The courts' role in the constitutional scheme consists of deciding highly particularized disputes between individual litigants and avoiding broad public policy determinations that are more appropriately made by the political branches. The injury requirement ensures that the judicial process will be "more than a vehicle for the vindication of the value interests of concerned bystanders," Valley Forge College, supra, 454 U.S. at 473, 102 S.Ct. at 759 (quoting United States v. SCRAP, 412 U.S. 669, 687, 93 S.Ct. 2405, 2415, 37 L.Ed.2d 254 (1973)); the causation requirement "tends to assure that the legal questions presented to the court will be resolved, not in the rarified atmosphere of a debating society, but in a concrete factual context conducive to a realistic appreciation of the consequences of judicial action." Id. 454 U.S. at 472, 102 S.Ct. at 758.

If plaintiff is correct that five members of the FOMC exercise their powers in derogation of the Constitution's appointments clause, the injury suffered by the United States Senate as an institution is fairly obvious: that body is deprived of its constitutionally delegated power to review the credentials of persons exercising executive authority. See Moore v. U.S. House of Representatives, 733 F.2d 946, 951 (D.C. Cir.1984); Riegle v. FOMC, 656 F.2d 873, 878 (D.C.Cir.1981); Kennedy v. Sampson, 511 F.2d 430, 435 (D.C.Cir.1974). Senator Melcher's individual standing to assert the Senate's interest in safeguarding its confirmation power has been sustained in a case that is — on the standing issue at least — on all fours with this one:

Assuming that the five Reserve Bank members of the FOMC are officers who must be appointed with the advice and consent of the Senate, an individual Senator's inability to exercise his right under the Appointments Clause of the Constitution is an injury sufficiently personal to constitute an injury-in-fact.

Riegle v. FOMC, 656 F.2d at 878. See also, Moore v. U.S. House of Representatives, supra, 733 F.2d at 951-53 (individual members of House possessed standing to challenge origination of revenue bill in Senate). The conclusion that standing exists in this case is buttressed by Synar v. United States, supra, 626 F.Supp. at 1374. Synar held that members of Congress could challenge an automatic deficit reduction procedure,² on the ground that the procedure granted to the Comptroller General and the President power to nullify the members' votes on appropriations legislation.³ Synar v. United States, 626 F.Supp. at 1381-82.

The existing procedure for appointing FOMC members, if unconstitutional, similarly deprives Senator Melcher of his vote for or against confirmation. The fact that Synar involved a nullification of prior votes, while this case involves a deprivation of Melcher's right to vote in the first instance, is a distinction without difference. In either case, the plaintiff suffers a "`specific and cognizable' injury arising out of an interest `positively identified by the Constitution.'" Id. (quoting United Presbyterian Church v. Reagan, 738 F.2d 1375, 1381 (D.C.Cir.1984) (quoting Moore v. United States House of Representatives, supra, 733 F.2d at 951)). Just as the automatic deficit reduction act "interfered with plaintiffs' `constitutional duties to enact laws regarding federal spending,'" id., so the invalid appointment of FOMC members interferes with Senator Melcher's constitutional right and duty to advise and give consent to executive appointments. See also, Crockett v. Reagan, 720 F.2d 1355, 1357 (D.C.Cir.1983) (Bork, J., concurring) (action which nullifies or diminishes congressman's vote creates injury-in-fact necessary for standing).

The causation prong of the analysis is more difficult, but also leads to a conclusion that standing exists. The gravamen of Senator Melcher's complaint is that 12 U.S.C. § 263(a) is unconstitutional, and that the defendants in this action, who were appointed pursuant to that section, cannot legally exercise the powers they have adopted.

To be sure, it can be argued that the defendants' allegedly illegal exercise of executive power is not the direct cause of plaintiff's injury, for it is the appointment of these defendants without the Senate's advice and consent, rather than their activities after appointment, that directly causes the injury. On this basis, it could be said that the only proper defendants in this case are the directors of the Federal Reserve banks who appointed these defendants.

The Court of Appeals has previously addressed this argument and rejected it. Riegle v. FOMC, supra, 656 F.2d at 879 (D.C.Cir.1981). The court noted that the causation prong of the standing analysis is satisfied where it is shown that "prospective judicial relief will remove the harm." Id. (quoting Warth v. Seldin, supra, 422 U.S. at 498-99, 95 S.Ct. at 2204-05). A declaration that appointments under section 263(a) are unconstitutional would, quite obviously, constitute an advisory opinion if it did not also amount to a declaration that persons appointed under that section have no lawful authority and can be enjoined from exercising executive powers. Thus, it was proper for Senator Melcher to name the Reserve Bank members of the FOMC in his complaint.

His failure also to name the persons purportedly exercising an illegal appointment power does not deprive him of standing, where the named defendants satisfy both rationales underlying the Supreme Court's standing pronouncements, for two reasons. First, the named defendants, like Senator Melcher, have a very real stake in the outcome of the dispute. They are far more than "concerned bystanders," Valley Forge College, supra, 454 U.S. at 473, 102 S.Ct. at 759 (quoting United States v. SCRAP, supra, 412 U.S. at 687, 93 S.Ct. at 2415); rather, they are the most obvious beneficiaries of the disputed appointments process. Second, invalidation of section 263(a) will, for the reasons already stated, necessarily deprive the defendants of their powers, a result that certainly qualifies as "a concrete factual context conducive to a realistic appreciation of the consequences of judicial action." Id. 454 U.S. at 472, 102 S.Ct. at 758.

II

That brings the Court to the most difficult question in this case: whether it should invoke the doctrine known as equitable discretion laid down by Riegle v. FOMC, supra, and...