MN Citizens v. Federal Election Com

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 96-2612
___________
Minnesota Citizens Concerned *
for Life; Elizabeth A. Blosser, *
*
Plaintiffs - Appellees, * Appeal from the United States
* District Court for the
v. * District of Minnesota.
*
Federal Election Commission, *
*
Defendant - Appellant. *
___________
Submitted: February 10, 1997
Filed: May 7, 1997
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Before MAGILL, BEAM, and LOKEN, Circuit Judges.
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LOKEN, Circuit Judge.
The Federal Election Commission (“FEC”) appeals the district
court’s1 decision that 11 C.F.R. § 114.10 violates the First
Amendment rights of Minnesota Citizens Concerned for Life (“MCCL”)
as construed by this court in Day v. Holahan, 34 F.3d 1356 (8th
Cir. 1994), cert. denied, 115 S. Ct. 936 (1995). Concluding that
MCCL has standing to challenge the regulation and the dispute is
ripe for judicial determination, we affirm.
Federal election laws bar corporate expenditures intended to
influence any presidential or congressional election, unless the
1
The HONORABLE RICHARD H. KYLE, United States District Judge
for the District of Minnesota.
corporation forms “a separate segregated fund to be utilized for
political purposes.” That fund is then regulated as a “political
committee.” See 2 U.S.C. §§ 431(4)(B), 441b(a), 441b(b)(2)(C). In
FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. 238 (1986)
(“MCFL”), the Supreme Court held that § 441b violates the First
Amendment by prohibiting all voluntary political associations from
making “independent expenditures,” that is, expenditures “expressly
advocating the election or defeat of a clearly identified candidate
. . . made without cooperation or consultation” with any candidate,
2 U.S.C. § 431(17).
MCFL did not define which voluntary political associations are
entitled to a First Amendment exemption from § 441b’s independent
expenditures prohibition. We addressed that question in Day, a
case involving certain provisions of Minnesota’s fair campaign
practices law. We concluded that Minnesota’s attempt to codify a
narrow “nonprofit corporate exemption” to its ban on independent
expenditures reflected a misreading of MCFL that infringed the
First Amendment rights of MCCL, a non-profit Minnesota corporation
with a mission similar to that of the respondent in MCFL.2 We held
that MCCL may not be denied the MCFL exemption merely because it
engages in minor business activities or accepts insignificant
contributions from business corporations. 34 F.3d at 1363-65.
After our decision in Day, the FEC promulgated 11 C.F.R.
§ 114.10, a regulation that attempts to codify an MCFL exemption to
the independent expenditures prohibition in § 441b. Like the
Minnesota law at issue in Day, the FEC’s regulation narrowly
defines those “qualified nonprofit corporations” that are entitled
2
MCCL’s stated purpose is “to educate the public through the
presentation of detailed and factual information about fetal
development, abortion, alternatives to abortion, infanticide,
euthanasia and related issues.”
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to an MCFL exemption. To qualify for the exemption, an
incorporated voluntary political association such as MCCL must
engage in no “business activities,” must offer no member incentives
such as “[c]redit cards, insurance policies or savings plans,” and
must accept no donations from business corporations or unions. See
§ 114.10(c)(2)-(4). The FEC’s public comments stated that our
contrary decision in Day “is controlling law in only one circuit,3
is contrary to the plain language used by the Supreme Court in
MCFL, and therefore is of limited authority.” 60 Fed. Reg. 35292,
35297 (1995).
MCCL and an interested Minnesota resident promptly commenced
this action to enjoin enforcement of § 114.10 as violative of
MCCL’s First Amendment rights as construed in Day. The district
court granted declaratory relief. Rejecting FEC’s contention that
MCCL lacks standing, and declining FEC’s request for discovery
because only the regulation’s facial validity is at issue, the
court held that §§ 114.10(2) and (4) are constitutionally infirm
under Day because they deny the MCFL exemption to a voluntary
political association that conducts minor business activities or
accepts insignificant corporate donations. The court then declared
the entire regulation void because the remainder of § 114.10 cannot
be severed from the invalid definition of qualified nonprofit
corporations in § 114.10(c).
On appeal, FEC argues that MCCL lacks standing to bring this
pre-enforcement challenge to the regulation. In addition,
conceding that portions of the regulation conflict with Day, FEC
urges us to overrule this panel decision, an action that may only
3
This is no longer true. The Second Circuit agreed with our
analysis in Day in FEC v. Survival Educ. Fund, Inc., 65 F.3d 285,
292 (2d Cir. 1995).
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be taken by the court en banc. FEC does not challenge the district
court’s severability ruling. See generally New York v. United
States, 505 U.S. 144, 186 (1992).
I.
Article III standing requires a party to show actual injury,
a causal relation between that injury and the challenged conduct,
and the likelihood that a favorable decision by the court will
redress the alleged injury. See Lujan v. Defenders of the
Wildlife, 504 U.S. 555, 560-61 (1992). FEC argues that MCCL lacks
standing because voiding the regulation will not redress MCCL’s
alleged injury -- even without the regulation, FEC explains, MCCL
must comply with § 441b, and on this record, particularly given the
district court’s denial of discovery, MCCL has not established that
it is entitled to an independent expenditures exemption under MCFL.
When government action or inaction is challenged by a party
who is a target or object of that action, as in this case, “there
is ordinarily little question that the action or inaction has
caused him injury, and that a judgment preventing or requiring the
action will redress it.” Lujan 504 U.S. at 561-62. More
particularly, when a party brings a pre-enforcement challenge to a
statute that both provides for criminal penalties and abridges
First Amendment rights, “a credible threat of present or future
prosecution itself works an injury that is sufficient to confer
standing.” New Hampshire Right to Life Political Action Comm. v.
Gardner, 99 F.3d 8, 13 (1st Cir. 1996). Here, the statute provides
for criminal as well as civil penalties, see § 437g(d)(1), and the
challenged regulation denies MCCL a partial exemption from that
statute. MCCL suffers Article III injury when it must either make
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significant changes to its operations to obey the regulation, or
risk a criminal enforcement action by disobeying the regulation.4
FEC counters that MCCL cannot satisfy the redressability
requirement without proving that it would qualify for an exemption
from § 441b under MCFL and Day. However, a party “satisfies the
redressability requirement when he shows that a favorable decision
will relieve a discrete injury to himself. He need not show that
a favorable decision will relieve his every injury.” Larson v.
Valente, 456 U.S. 228, 243 n.15 (1982) (plurality opinion). Here,
the district court redressed an injury by clarifying that MCCL may
continue to make independent expenditures if it meets the less
stringent exemption standard defined in Day. See Meese v. Keene,
481 U.S. 465, 476-77 (1987).
II.
Even though MCCL has standing to challenge § 114.10, we must
also consider whether its dispute with FEC is ripe for adjudication
or, stated differently, whether the district court’s discretionary
authority to grant declaratory judgment relief was properly
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exercised. The statutes enforced by FEC, including § 441b, create
an elaborate regime of agency investigation and conciliation,
reinforced by judicial penalties. See 2 U.S.C. § 437g. The
ultimate question underlying this dispute -- whether MCCL’s
4
FEC has demonstrated its willingness to enforce § 441b
against incorporated political associations such as MCCL in cases
like MCFL and Faucher v. FEC, 928 F.2d 468 (1st Cir.), cert.
denied, 502 U.S. 820 (1991).
5
This limitation on judicial power goes beyond Article III
standing and must be considered even if not raised by the parties.
See Buckley v. Valeo, 424 U.S. 1, 114-118 (1976); Regional Rail
Reorg. Act Cases, 419 U.S. 102, 138 (1974).
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independent expenditures are lawful because MCCL is entitled to the
MCFL exemption -- is fact intensive and is normally resolved by an
FEC enforcement action. If a party such as MCCL may seek a
declaratory judgment that its independent expenditures comply with
the statute, that forces FEC to commit its limited enforcement
resources in a manner not of the agency’s choosing. For this
reason (and others), courts are wary of such pre-enforcement
challenges. As the Supreme Court said in Heckler v. Chaney, 470
U.S. 821, 831 (1985), “[t]his Court has recognized on several
occasions over many years that an agency’s decision not to
prosecute or enforce, whether through civil or criminal process, is
a decision generally committed to an agency’s absolute discretion.”
This principle is relevant here. FEC has announced its
disagreement with our interpretation of MCFL and has promulgated a
contrary regulation. The agency has enforcement options in seeking
to validate its position. It can bring enforcement actions in
other circuits, hoping to create a conflict with Day that the
Supreme Court will resolve. Or it can seek to enforce the
regulation in this circuit by asking our court en banc to overrule
Day and then petitioning the Supreme Court for a writ of certiorari
if we decline to do so. MCCL’s declaratory judgment action
deprives FEC of that enforcement flexibility, a constraint we
should not lightly impose upon any agency.
On the other hand, the judicial reluctance to entertain pre-
enforcement lawsuits that might interfere with agency enforcement
discretion is far from absolute. In a line of cases beginning with
Abbott Labs. v. Gardner, 387 U.S. 136 (1967), for example, the
Supreme Court has held that the Administrative Procedure Act
authorizes a pre-enforcement challenge to agency regulations if the
issue is “fit” for prompt judicial decision and if failure to
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review would cause significant hardship to the parties. See Thomas
v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 581-82 (1985);
EPA v. National Crushed Stone Ass’n, 449 U.S. 64, 72 n.12 (1980).
Fitness for judicial decision means, most often, that the issue is
legal rather than factual. Sufficient hardship is usually found if
the regulation imposes costly, self-executing compliance burdens or
if it chills protected First Amendment activity. See Reno v.
Catholic Soc. Servs., Inc., 509 U.S. 43, 69-71 (1993) (O’Connor,
J., concurring); Chamber of Commerce v. FEC, 69 F.3d 600, 603-04
(D.C. Cir. 1995).
In this case, we are satisfied that the pre-enforcement
challenge to § 114.10 is suitably ripe. Although the ultimate
question of whether MCCL is entitled to the MCFL exemption may be
fact intensive, the legal issue presented here -- whether our
interpretation of MCFL in Day invalidates critical portions of the
regulation -- is fit for prompt determination. And while all the
uncertainty inherent in complying with § 441b cannot be remedied by
this facial challenge to FEC’s new regulation, MCCL is relieved of
significant hardship by knowing that its established methods of
operation will be tested under Day, rather than the regulation, at
least until FEC successfully overturns Day in this circuit. That
is sufficient to satisfy the hardship prong of the Abbott Labs.
test when a regulation is challenged because it allegedly chills
protected First Amendment activity.
We discern in FEC’s defense of this lawsuit at least a tacit
concession that the dispute is ripe. First, FEC argues standing
but not ripeness. Second, although FEC pleaded no present plans to
enforce 441b against MCCL, it asked for discovery in the district
court, which indicates a willingness to litigate broader compliance
questions at this time; moreover, FEC briefed the merits of Day at
length on appeal, which indicates a willingness to test its
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contrary interpretation of MCFL at this time in this court.
Finally, FEC did not appeal the one aspect of the district court’s
declaratory judgment that may provide MCCL a regulatory windfall --
the court’s conclusion that the solicitation disclosure requirement
in § 114.10(f), though likely constitutional, is non-severable and
therefore void. Evidently, FEC decided either that it did not wish
to enforce this provision standing alone, or that it will
repromulgate § 114.10(f) as a free-standing regulation if
§ 114.10(c) is held invalid.
For the foregoing reasons, we conclude that MCCL has standing
to challenge 11 C.F.R. § 114.10, that the issue presented is ripe
for resolution in a declaratory judgment action, and that the
district court correctly held portions of the regulation invalid
under Day v. Holahan. Accordingly, the judgment of the district
court is affirmed.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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