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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 2, 2001 Decided June 29, 2001

No. 00-5163

Federal Election Commission,

Appellee

v.

National Rifle Association of America, et al.,

Appellants

Appeal from the United States District Court

for the District of Columbia

(No. 85cv01018)

Richard E. Gardiner argued the cause and filed the briefs

for appellants. Christopher A. Conte and Michael W. Lojek

entered appearances.

Richard B. Bader, Associate General Counsel, Federal

Election Commission, argued the cause for appellee. With

him on the brief were Lawrence M. Noble, General Counsel,

and Vivien Clair, Attorney.

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Before: Edwards, Chief Judge, Ginsburg and Tatel,

Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Concurring opinion filed by Circuit Judge Ginsburg.

Tatel, Circuit Judge: During the 1978, 1980, and 1982

federal election cycles, the National Rifle Association spent

$37,833 on behalf of its political action committee. In a civil

enforcement action brought by the Federal Election Commission, the district court found that the NRA violated the

Federal Election Campaign Act of 1971, which prohibits

corporations from making contributions or expenditures in

connection with elections for federal office. On appeal, the

NRA argues that its payments fall into various statutory and

regulatory exceptions to the general prohibition on corporate

contributions. Alternatively, the NRA argues that because it

is a not-for-profit organization formed to promote the political

views of its members, applying the Act to its activities

violates the First Amendment. We reject the NRA's statutory claims, as well as its constitutional challenge with respect

to the 1978 and 1982 election cycles. Although the NRA does

promote the political views of its members, the substantial

contributions it received from for-profit corporations in those

two years justify the application of the Act. But because the

corporate contributions the NRA received in 1980 were de

minimis, we agree that, on the record before us, the Act

cannot constitutionally be applied to the NRA's activities for

that year.

I

The Federal Election Campaign Act of 1971 ("FECA"),

2 U.S.C. ss 431-455, regulates the financing of campaigns for

federal office. Section 441b(a) prohibits corporations (and

labor organizations, which are not involved in this case) from

making "a contribution or expenditure in connection with any

[federal] election" and also prohibits "any candidate, political

committee, or other person [from] knowingly ... accept[ing]

or receiv[ing] any contribution prohibited by this section."

Id. s 441b(a). For the purposes of this section, the Act

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defines "contribution or expenditure" as "any direct or indirect payment, distribution, loan, advance, deposit, or gift of

money, or any services, or anything of value ... to any

candidate, campaign committee, or political party or organization, in connection with any election to any of the offices

referred to in this section." Id. s 441b(b)(2).

In FEC v. Massachusetts Citizens for Life, Inc. ("MCFL"),

the Supreme Court articulated the justification for the regulation of corporate political activity:

We have described that rationale ... as the need to

restrict the influence of political war chests funneled

through the corporate form, to eliminate the effect of

aggregated wealth on federal elections, to curb the political influence of those who exercise control over large

aggregations of capital, and to regulate the substantial

aggregations of wealth amassed by the special advantages which go with the corporate form of organization.

479 U.S. 238, 257 (1986) (internal citations omitted). FECA

thus "protect[s] the integrity of the marketplace of political

ideas" from the "corrosive influence of concentrated corporate

wealth." Id.

Notwithstanding FECA's prohibition against corporate

contributions to election campaigns, the statute does permit

corporations to participate in the electoral process in a limited

fashion. Section 441b(b)(2)(C) allows corporations to make

expenditures for "the establishment, administration, and solicitation of contributions to a separate segregated fund to be

utilized for political purposes by a corporation, labor organization, [or] membership organization." 2 U.S.C.

s 441b(b)(2)(C). Though the treasuries of a corporation and

its fund must be kept separate, Pipefitters Local Union No.

562 v. United States, 407 U.S. 385, 414 (1972), a corporation

can nonetheless control how the separate segregated fund

spends its money, FEC v. Nat'l Right to Work Comm., Inc.,

459 U.S. 197, 200 n.4 (1982); 11 C.F.R. s 114.5(d).

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At issue in this case are campaign-related payments made

by appellant, the National Rifle Association, a not-for-profit

membership organization, and its lobbying and fund-raising

division, the NRA Institute for Legislative Action ("ILA"), on

behalf of the Political Victory Fund ("PVF"), the NRA's

separate segregated fund created pursuant to section

441b(b)(2)(C). During the 1978, 1980, and 1982 federal election cycles, the NRA paid $37,833 worth of PVF electionrelated expenses for, among other things, direct mail campaigns for and against individual candidates, as well as production and mailing of pro- and anti-candidate bumper stickers and brochures. The PVF distributed these materials to

NRA members, firearm dealers, gun and sportsmen clubs,

and gun shows. NRA money also paid for newspaper advertising, telephone banks, and a fund-raising breakfast for an

individual candidate. The PVF thereafter reimbursed the

NRA and reported the payments to the Federal Election

Commission as independent expenditures.

Suspicious of the PVF's expenditures, the Commission

commenced administrative proceedings, subsequently finding

"reason to believe" that the NRA, ILA, and PVF had violated

FECA. 2 U.S.C. s 437g(a)(2). After conciliation efforts

failed, the Commission found "probable cause to believe" that

the three organizations had violated FECA section 441b. Id.

s 437g(a)(4)(A)(i). Following the failure of additional conciliation efforts, the Commission filed suit seeking declaratory

and injunctive relief in the United States District Court for

the District of Columbia pursuant to section 437g(a)(6)(A),

which authorizes the Commission to seek civil enforcement of

the Act. See FEC v. NRA, No. 85-1018, at 4-5 (D.D.C. July

27, 1999) (describing the proceedings before the Commission).

Defending its actions, the NRA argued that its payments

on behalf of the PVF were "establishment" and "administration" expenses permitted by section 441b(b)(2)(C) and FEC

regulations. 2 U.S.C. s 441b(b)(2)(C); 11 C.F.R. s 114.1(b).

Citing MCFL, the NRA also challenged the constitutionality

of the Act as applied to NRA activities. In MCFL, the Court

carved out an exception from section 441b for certain political

not-for-profit corporations. 479 U.S. at 254-55, 259-63. BeUSCA Case #00-5163 Document #606957 Filed: 06/29/2001 Page 4 of 29
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cause such organizations do not present the dangers addressed by the statute--contributions by for-profit corporations to political campaigns--the Court held that requiring

them to create separate segregated funds to finance their

political activities unconstitutionally burdens their First

Amendment free speech rights. Id.

On cross motions for summary judgment, the district court

found that because the NRA made payments from its corporate treasury for the PVF's electioneering expenses and

because the PVF accepted those payments, the NRA, ILA,

and PVF all violated FECA section 441b. Persuaded by the

Commission's interpretation of "establishment" costs as limited to initial costs incurred in setting up and running political

committees, the district court concluded that the NRA's

payments did not fall under section 441b(b)(2)(C)'s exception

for establishment, administration, and solicitation costs. FEC

v. NRA, No. 85-1018, at 11. The court also rejected the

NRA's constitutional challenge, id. at 12, finding that because

the organization had not been formed for the express purpose

of promoting political ideas, and because it had no policy

against accepting corporate contributions, it could not qualify

for an MCFL exception. Mem. & Order Denying Def.'s Mot.

for Recons., FEC v. NRA, No. 85-1018, at 3 (D.D.C. Aug. 1,

1995). The court imposed a $25,000 fine on the NRA and

ILA, finding them jointly and severally liable, and a separate

$25,000 fine on the PVF. Final Order & J., FEC v. NRA,

No. 85-1018 (D.D.C. Apr. 3, 2000). Renewing their statutory

and constitutional arguments, all three organizations appeal.

II

The NRA divides the payments it made on behalf of the

PVF into three categories: payments to third-party vendors,

in-kind payments, and payments for employee time. According to the Commission, all payments amounted to illegal

corporate contributions because they were "advance[s]" of

funds within the meaning of section 441b(b)(2) and were made

"in connection with" a federal election. 2 U.S.C.

ss 441b(b)(2), 441b(a). The NRA argues that because the

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PVF fully reimbursed the NRA, and because the payments

fell into various statutory and regulatory exceptions, they

were not "contributions" prohibited by the Act. We consider

each category in turn.

Payments to Third-Party Vendors

The NRA paid $3,710.56 to third-party vendors for services

related to the production of election advocacy materials. The

services included the design, layout, and preparation of mechanical art; typography for an anti-candidate brochure; and

data processing and printing for candidate endorsement letters.

According to the NRA, these payments did not run afoul of

the Act because they fell within section 441b(b)(2)(C)'s exception for the "establishment [and] administration" costs of the

corporation's separate segregated fund. Id. s 441b(b)(2)(C).

FEC regulations define establishment and administration

costs as "the cost of office space, phones, salaries, utilities,

supplies, legal and accounting fees, fund-raising and other

expenses incurred in setting up and running a separate

segregated fund." 11 C.F.R. s 114.1(b). Declaring that this

regulation is "not intended to be read restrictively," the NRA

argues that the definition covers "direct financial support to

the dissemination of communications advocating the election

or defeat of candidates in federal elections." Appellant's

Opening Br. at 22. "Were [such expenditures] not provided

by the corporation," the NRA explains, "[they] would be an

administrative burden on the ... fund which would substantially diminish the amount of money available for contributions and expenditures." Id. at 22-23.

The NRA's argument suffers from two defects. First,

neither the statute nor the regulation requires separate segregated funds to reimburse their corporations for legitimate

administrative expenses. If the NRA's payments to thirdparty vendors qualified as such expenses, why did the PVF

reimburse the NRA? Second, the Commission flatly rejects

the NRA's expansive reading of section 114.1(b). According

to the Commission, that section permits corporations to pay

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only for the general administrative overhead and start-up

costs of their separate segregated funds--not for expenses

incurred in producing express electoral advocacy. The Commission points out that another section of its regulations

expressly provides that "[a] corporation ... may not use the

establishment, administration, and solicitation process as a

means of exchanging treasury monies for voluntary contributions." 11 C.F.R. s 114.5(b).

We review the Commission's interpretation of its own

regulations pursuant to "an exceedingly deferential standard." Trinity Broad. of Fla., Inc. v. FCC, 211 F.3d 618, 625

(D.C. Cir. 2000). An agency's interpretation "will prevail

unless it is plainly erroneous or inconsistent with the plain

terms of the disputed regulation." Everett v. United States,

158 F.3d 1364, 1367 (D.C. Cir. 1998) (internal quotation

omitted). Applying this standard, we see no basis for questioning the Commission's interpretation of section 114.1(b) as

allowing corporations to cover only the overhead and start-up

costs of their separate segregated funds. The regulation's

list of covered expenses--"office space, phones, salaries, utilities, supplies, legal and accounting fees, fund-raising and

other expenses incurred in setting up and running a separate

segregated fund"--suggests, as the Commission argues, that

the regulation covers only expenses for administrative overhead, not, as the NRA claims, for production and distribution

of political materials. Moreover, pointing out that FECA

section 441b(b)(2)(C) does not require reimbursement of administrative payments, the Commission argues that treating

direct support for production and dissemination of political

materials as administrative expenses would enable corporations to use section 441b(b)(2)(C) to dispense money from

their treasuries to pay for direct political activity--precisely

what the statute forbids. Indeed, as the Commission repeatedly emphasizes, section 441b requires strict segregation

of corporate and fund monies, a purpose that would be

undermined by the NRA's broad interpretation of administrative costs. In support of this view, the Commission cites

Pipefitters for the proposition that section 441b's predecessor

statute was intended to provide

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a strong prohibition on the use of corporate and union

treasury funds to reach the general public in support of,

or opposition to, Federal candidates and a limited permission to corporations and unions ... to make political

contributions and expenditures financed by voluntary

donations which have been kept in a separate segregated

fund.

407 U.S. at 431.

We are equally unpersuaded by the NRA's argument that

its payments to third-party vendors were legal because they

were reimbursed and "made ... for the administrative convenience of [the] PVF." Appellant's Opening Br. at 24. Because virtually any reimbursed payment by a corporation to

or for its separate segregated fund could be so characterized,

the NRA's interpretation of section 441b(b)(2)(C)'s administrative cost exception would eviscerate the distinction between corporations and their funds and swallow the statute's

prohibition on corporate advances.

In-Kind Contributions

During the three election cycles at issue in this case, the

NRA provided the PVF with $26,076.76 worth of goods and

services. These in-kind contributions from NRA in-house

inventories and facilities included envelopes, postage, data

processing, photocopying, mail and machine room processing,

and graphics work, all of which the PVF used to produce and

distribute advocacy materials for various election campaigns.

In defense of these payments, the NRA cites section

114.9(c) of the Commission's regulations: "Any person who

uses the facilities of a corporation or labor organization to

produce materials in connection with a Federal election is

required to reimburse the corporation or labor organization

within a commercially reasonable time for the normal and

usual charge for producing such materials in the commercial

market." 11 C.F.R. s 114.9(c). The NRA then points out

that the statute defines "person" as "an individual, partnership, committee, association ... or any other organization or

group of persons." 2 U.S.C. s 431(11). According to the

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NRA, these provisions, when read together, authorize a separate segregated fund--a "committee" under the terms of the

statute--to use corporate facilities as long as the fund reimburses the corporation. The NRA argues that because the

PVF reimbursed the NRA within a commercially reasonable

period of time--a claim not disputed by the Commission--the

in-kind payments did not violate FECA.

The Commission responds that section 114.9(c) applies only

to the use of corporate facilities by stockholders and employees engaged in individual volunteer activity. According to the

Commission, it never intended section 114.9(c) to apply to

financial transactions between corporations and their separate segregated funds, which are subject to a different section

of the regulations--section 114.5. See FEC Advisory Opinion

1984-24, 1 Fed. Election Campaign Fin. Guide (CCH) p 5771,

at 11,083 (concluding that 11 C.F.R. s 114.9(c) applies only to

the use of corporate facilities by individuals engaged in their

own volunteer activities and does not authorize a reimbursement payment method for separate segregated funds). The

Commission explains that it created different rules for separate segregated funds because "[t]he relationship between a

corporation ... and its own separate segregated fund is

unique and raises concerns about circumvention of the prohibition in section 441b that are not presented by others that

are not acting under the corporation's ... control and for its

benefit." Appellee's Br. at 29.

The legality of the NRA's in-kind contributions, like the

legality of its payments to third party vendors, turns on the

Commission's interpretation of its own regulations, so our

review is again at its most deferential. See Trinity Broad.,

211 F.3d at 625. Not only has the NRA given us no basis for

questioning the Commission's reasonable reading of section

114.9(c), but the Commission's position comports well with

FECA's basic purpose: keeping corporate and fund treasuries separate. Because the relationship between corporations

and their separate segregated funds presents risks that do

not arise when individuals use corporate facilities, it makes

perfect sense for the Commission to distinguish between

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corporations and individuals, prohibiting reimbursement arrangements for the former but not for the latter.

Payments for Employee Time

During the 1980 election cycle, several NRA employees

worked for the PVF on the campaigns of two candidates for

the House of Representatives. During that time, the employees earned $3,729.64 from the NRA. The PVF reimbursed

the NRA within 30 days. In defense of this arrangement, the

NRA points to the definition of "contribution" contained in

section 431, the statute's general definition section:

The term contribution includes--(i) any gift, subscription,

loan, advance, or deposit ... or anything of value made

by any person for the purpose of influencing any election

for Federal office; or (ii) the payment by any person of

compensation for the personal services of another person

which are rendered to a political committee without

charge for any purpose.

2 U.S.C. s 431(8)(A). The NRA contends that because the

PVF reimbursed it for the $3,729.64 worth of employee time,

the employees' services were not provided "without charge."

According to the NRA, it would have been "absurd" for

Congress to have intended section 431(8)(A)(ii) to require

candidates to pay for personal services either in advance or at

the very moment those services are rendered. Reading the

Act that way, the NRA argues, would prevent candidates

from using temporary employment agencies without paying in

advance.

We think the NRA misreads the statute. Section

431(8)(A)(ii) has nothing to do with this case. The issue here

relates to whether the NRA's payments amounted to illegal

corporate contributions within the meaning of section

441b(b)(2), which contains its own definition of contribution:

"For the purposes of this section ... the term 'contribution

or expenditure' shall include any direct or indirect payment,

distribution, loan, advance, deposit, or gift of money, or any

services, or anything of value." This definition includes nothUSCA Case #00-5163 Document #606957 Filed: 06/29/2001 Page 10 of 29
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ing comparable to section 431(8)(A)(ii)'s provision regarding

"personal services" provided "without charge."

In Advisory Opinion 1984-24, moreover, the Commission

expressly ruled that a corporation--in that case the Sierra

Club--may not provide to its separate segregated fund the

services of its employees to work on congressional campaigns,

even if the fund fully reimburses the corporation within thirty

days. 1 Fed. Election Campaign Fin. Guide at 11,082-83.

Stating that a "corporation's donation of the services of its

employees and the use of its facilities incident to its employees' services qualifies as a gift of something of value to the

candidate," id. at 11,083, the Commission explained:

[T]he initial disbursement of corporate treasury monies

is a loan, advance, or something of value to both the

candidate and the corporation's separate segregated

fund.... None of the exceptions in the Act or regulations remove such a disbursement from the general

prohibition of s 441b.... [O]nce the [corporation] disburses its treasury funds to pay an employee for political

services rendered to a Federal candidate, ... the [corporation] makes a prohibited contribution or expenditure

and a violation of the Act occurs.... [A] reimbursement

payment method ... does not cause the violation to

abate.

Id.

In response, the NRA, relying on Christensen v. Harris

County, 529 U.S. 576 (2000), argues that FEC advisory

opinions are entitled to no deference. We disagree. Distinguishing between interpretive rules and guidelines on the one

hand and "norms that derive from the exercise of the Secretary's delegated lawmaking powers" on the other, Christensen declined to give deference to an opinion letter issued by a

division of the Department of Labor. Id. at 587 (quoting

Martin v. OSHRC, 499 U.S. 144, 157 (1991)). The critical

Christensen passage reads:

[We] confront an interpretation contained in an opinion

letter, not one arrived at after, for example, a formal

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adjudication or notice-and-comment rulemaking. Interpretations such as those in opinion letters--like interpretations contained in policy statements, agency manuals,

and enforcement guidelines, all of which lack the force of

law--do not warrant Chevron-style deference. Instead,

interpretations contained in formats such as opinion letters are 'entitled to respect' under our decision in Skidmore v. Swift, 323 U.S. 134, 140 (1944).

Id. (internal citations omitted). Just last week, the Supreme

Court, citing Christensen, declined to give Chevron deference

to U.S. Customs Service ruling letters. United States v.

Mead Corp., No. 99-1434, 2001 WL 672258, at *9 (U.S. June

18, 2001).

We have previously considered Christensen's implications

for the deference owed to FEC interpretations of FECA,

though in a different context: an FEC probable cause determination made pursuant to FECA section 437g(a)(4). See In

re Sealed Case, 223 F.3d 775, 779 (D.C. Cir. 2000). Pointing

out that Christensen "appeared to make the interpretation's

legal effect the touchstone," id. at 780, we held that, for

several reasons, the probable cause determination and its

underlying statutory interpretation had sufficient legal effect

to warrant Chevron deference. Id. at 780-81. First, the

Commission makes probable cause determinations pursuant

to detailed statutory procedures analogous to formal adjudication. Id. at 780. The FEC's interpretation of its statute

therefore assumes a "form expressly provided for by Congress." Id. (citing Martin, 499 U.S. at 157). Second, in

making probable cause determinations, the Commission fulfills its statutorily granted responsibilities, giving ambiguous

statutory language concrete meaning through case-by-case

adjudication. Id. Finally, the Commission itself--not its

staff--makes probable cause determinations, which in the

case of a "no probable cause" finding precludes further FEC

enforcement. Id.

FEC advisory opinions possess the same three characteristics. First, FECA section 437f establishes a detailed framework for issuing advisory opinions. Any candidate, person, or

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authorized committee may request an opinion concerning the

statute's application to a "specific transaction." 2 U.S.C.

s 437f(a)(1). The Commission must make public all requests

for advisory opinions and "shall accept written comments

submitted by any interested party." Id. s 437f(d). Second,

in issuing advisory opinions, the Commission fulfills its statutorily granted responsibility to interpret the Act. See, e.g.,

id. s 437f(a)(1). Indeed, a House Report concerning later

amendments to FECA says quite specifically that "[t]he

Committee reaffirms its opinion that the advisory opinion

process is central to the Commission's responsibility to clarify

the Act." H.R. Rep. No. 96-422, at 20 (1979); cf. FEC v.

Democratic Senatorial Campaign Comm., 454 U.S. 27, 37

(1981) (concluding that the FEC is "precisely the type of

agency to which deference should presumptively be afforded"). In pre-Christensen cases involving advisory opinions,

we too have acknowledged that section 437f authorizes the

Commission to formulate general policy with respect to the

Act's administration and to resolve ambiguities in the statute's language. See, e.g., Orloski v. FEC, 795 F.2d 156, 164

(D.C. Cir. 1986); cf. In re Sealed Case, 237 F.3d 657, 670

(D.C. Cir. 2001) (concluding that "choices made by FEC

attorneys--without the Commission's ratification and acceptance--do not stand as the authoritative interpretation of the

agency requiring deference"). Finally, advisory opinions

have binding legal effect on the Commission. Any person

involved in either the specific transaction or another materially indistinguishable transaction may rely on the opinion.

2 U.S.C. s 437f(c)(1). As the Commission pointed out at oral

argument, the statute creates a "safe harbor" for parties who

rely on advisory opinions, providing that "any person who ...

acts in good faith in accordance with the provisions and

findings of such ... opinions shall not ... be subject to any

sanction provided by this Act." Id. s 437f(c)(2).

To be sure, Advisory Opinion 1984-24 involved the Sierra

Club, not the NRA, whereas the parties to In re Sealed Case,

223 F.3d 775, were the same parties involved in the earlier

probable cause determination. But this is a distinction without a significant difference. Our decision in In re Sealed

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Case to give Chevron deference to the probable cause determination had nothing to do with the fact that the case and the

earlier proceedings involved the same parties. The difference

between this case and In re Sealed Case, moreover, does

nothing to change the fact that FEC advisory opinions not

only reflect the Commission's considered judgment made

pursuant to congressionally delegated lawmaking power, but

also have binding legal effect.

The appropriateness of giving FEC advisory opinions Chevron deference is reinforced by the significant differences

between them and the Labor Department letter at issue in

Christensen. Unlike FEC advisory opinions, the Labor Department letter bound neither the requesting party nor the

agency, nor was the letter the product of a statutorily created

decision-making process. Rather, the Labor Department official who issued the letter did so pursuant to informal agency

procedures. Virtually every relevant post-Christensen decision has declined to give Chevron deference to just this type

of informal agency action. See, e.g., Scales v. INS, 232 F.3d

1159, 1165 (9th Cir. 2000) (concluding that a State Department Foreign Affairs Manual is not entitled to deference

because the Attorney General, not the State Department, has

statutory authority to interpret immigration statutes); Madison v. Res. for Human Dev., 233 F.3d 175, 185-87 (3d Cir.

2000) (denying Chevron deference to interpretations of FLSA

authorized by the Secretary of Labor as interpretive guidelines with no legal effect); United States v. 162 Megamania

Gambling Devices, 231 F.3d 713, 719 (10th Cir. 2000) (concluding that opinion letters issued by the National Indian

Gaming Commission are not entitled to Chevron deference);

Ball v. Memphis Bar-B-Q Co., 228 F.3d 360, 365 (4th Cir.

2000) (concluding that a statutory interpretation advanced by

the Secretary of Labor as a litigating position in an amicus

brief was entitled only to Skidmore deference); Utah Wilderness Alliance v. Dabney, 222 F.3d 819, 829 (10th Cir. 2000)

(holding that agency policies still in draft form are not

entitled to Chevron deference); Bussian v. RJR Nabisco,

Inc., 223 F.3d 286, 296-97 (5th Cir. 2000) (finding that although public notice was given of a proposed rulemaking, the

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notice did not focus on the issue involved in a DOL interpretive bulletin, which lacked the force of law, and was therefore

not entitled to Chevron deference). FEC advisory opinions

are equally distinguishable from the U.S. Customs Service

ruling letter at issue in Mead: the Court there found "no

indication that Congress meant to delegate authority to Customs to issue classification rulings with the force of law."

Mead, 2001 WL 672258, at * 7.

This brings us to the Chevron question presented by the

NRA's payments for employee time: does Advisory Opinion

1984-24 represent a "permissible construction of the statute"?

Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467

U.S. 837, 843, 863 (1984). We think it does. To begin with,

interpreting "advance" to include a corporation's payment of

its employees to work for its separate segregated fund is

consistent with the statute's language. Although there may

be other possible interpretations, Chevron deference does not

require that we "conclude that the agency construction was

the only one it permissibly could have adopted ... or even

the reading the court would have reached." Id. at 843 n.11;

see also Serono Labs., Inc. v. Shalala, 158 F.3d 1313, 1321

(D.C. Cir. 1998) ("[U]nder Chevron, courts are bound to

uphold an agency interpretation as long as it is reasonable--

regardless whether there may be other reasonable, or even

more reasonable, views."). As the Commission explains,

moreover, its interpretation would not restrict candidates

from using temporary employment agencies without paying in

advance. The extension of credit by an employment agency,

the Commission points out, would constitute a perfectly legal

arm's length commercial transaction. But because the NRA

does not engage in the business of contracting out its employees, allowing the PVF to use NRA employees for campaign

work is not "in the ordinary course of [the] corporation's

business." 1 Fed. Election Campaign Fin. Guide at 11,083.

Permitting reimbursement arrangements such as the one at

issue here would thus compromise the separation of corporate

and fund treasuries--a separation that both Congress and the

Supreme Court consider essential to preventing the use of

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corporate wealth to fund political advocacy. See Pipefitters,

407 U.S. at 414.

III

Having rejected the NRA's statutory claims, we turn to its

as-applied constitutional challenge. The NRA contends that

as a political, not-for-profit membership organization, it is

exempt from FECA under the Supreme Court's decision in

FEC v. Massachusetts Citizens for Life. In MCFL, the

Supreme Court sustained the Massachusetts Citizens for

Life's as-applied challenge to the statute, finding that section

441b, by encompassing all corporations, swept too broadly.

479 U.S. at 263. The Court observed that the Act's requirement that corporations establish separate segregated funds to

finance their political activities amounts to a substantial burden that threatens to discourage organizations from engaging

in political speech:

These [FECA regulations] may create a disincentive for

such organizations to engage in political speech. Detailed record-keeping and disclosure obligations, along

with the duty to appoint a treasurer and custodian of the

records, impose administrative costs that many small

entities may be unable to bear. Furthermore, such

duties require a far more complex and formalized organization than many small groups could manage. Restriction of solicitation of contributions to "members" vastly

reduces the sources of funding for organizations with

either few or no formal members, directly limiting the

ability of such organizations to engage in core political

speech. It is not unreasonable to suppose that, as in this

case, an incorporated group of like-minded persons might

seek donations to support the dissemination of their

political ideas and their occasional endorsement of political candidates, by means of garage sales, bake sales, and

raffles. Such persons might well be turned away by the

prospect of complying with all the requirements imposed

by the Act. Faced with the need to assume a more

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counting procedures, to file periodic detailed reports, and

to monitor garage sales lest nonmembers take a fancy to

the merchandise on display, it would not be surprising if

at least some groups decided that the contemplated

political activity was simply not worth it.

Id. at 254-55. At the same time, the Court acknowledged

that the statute's "concern over the corrosive influence of

concentrated corporate wealth reflects the conviction that it is

important to protect the integrity of the marketplace of

political ideas." Id. at 257. This concern justifies imposing

such a burden in some cases to prevent "resources amassed

in the economic marketplace" from being "used to provide an

unfair advantage in the political marketplace." Id.; see also

id. at 258-59.

Balancing these interests, the Court concluded that FECA

could not constitutionally be applied to an organization like

the MCFL:

MCFL was formed to disseminate political ideas, not to

amass capital. The resources it has available are not a

function of its success in the economic marketplace, but

its popularity in the political marketplace. While MCFL

may derive some advantages from its corporate form,

those are advantages that redound to its benefit as a

political organization, not as a profit-making enterprise.

In short, MCFL is not the type of traditional corporation

organized for economic gain that has been the focus of

regulation of corporate political activity.

Id. at 259 (internal citations omitted); see also id. at 263. In

support of this conclusion, the Court pointed to several characteristics of the MCFL that made it look more like a

"[v]oluntary political association" than a traditional business

corporation. Id. at 263. First, MCFL members formed the

organization and participated in its activities for the express

purpose of promoting its political ideas. Id. at 264. Second,

individuals connected with the MCFL, unlike corporate

shareholders, would have had no economic reason to continue

their association with the organization if they disagreed with

its political positions. Id. Finally, because of the MCFL's

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policy against accepting corporate contributions, the organization could not become a conduit for direct corporate spending

on election campaigns. Id.

A few years later, the Court explored the limits of the

MCFL exception in Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990). There, the Michigan Chamber of

Commerce challenged the constitutionality of a state campaign finance statute modeled on FECA. Again applying a

demanding standard of review, the Court asked whether the

statute "burdens the exercise of political speech and, if it

does, whether it is narrowly tailored to serve a compelling

state interest." Id. at 657. This time, however, the Court

upheld the statute, concluding that the Michigan Chamber of

Commerce was not the type of voluntary, political organization that qualified for the MCFL exception. To begin with,

as the Court pointed out, not all Chamber goals were inherently political. Id. at 669. "Unlike MCFL's, the Chamber's

educational activities are not expressly tied to political goals;

many of its seminars, conventions, and publications are politically neutral and focus on business and economic concerns."

Id. at 662. Moreover, though the Chamber "lacks shareholders, many of its members may be similarly reluctant to

withdraw as members even if they disagree with the Chamber's political expression, because they wish to benefit from

the Chamber's nonpolitical programs and to establish contacts with the other members of the business community."

Id. at 663. Finally, because more than three-fourths of

Chamber members were corporations, the organization ran

the risk of becoming precisely the type of conduit for corporate funding that the campaign finance statute was designed

to prevent. Id. at 664.

Before addressing the NRA's reasons for believing that it

resembles the MCFL, not the Chamber, we pause to consider

the Commission's contention that because the NRA failed to

raise its constitutional defense in either its answer or a

subsequent amendment, the issue is not properly before us.

See Harris v. Sec'y, U.S. Dep't of Veterans Affairs, 126 F.3d

339, 345 (D.C. Cir. 1997) (holding that "a party must first

raise its affirmative defenses in a responsive pleading before

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it can raise them in a dispositive motion"). According to the

NRA, it did raise the constitutional defense by bringing the

MCFL decision to the district court's attention in a "Notice of

Related Decision" filed on January 6, 1987. We agree that

this was sufficient. The requirement that a party raise

affirmative defenses in a responsive pleading is designed to

"give[ ] the opposing party notice of the defense ... and

permit[ ] the party to develop in discovery and to argue

before the District Court various responses to the ... defense." Harris, 126 F.3d at 343. The record demonstrates

that the Commission had notice of the NRA's constitutional

claim, conducted discovery on the issue, and had ample

opportunity to respond.

The NRA claims entitlement to an MCFL exception because the organization has features "more akin to voluntary

political associations than business firms." MCFL, 479 U.S.

at 263. Like the MCFL, the NRA was not formed to amass

capital, and its resources reflect not the "economically motivated decisions of investors and customers, but rather its

popularity in the political marketplace." Appellant's Opening

Br. at 33. The very first goal listed in the NRA's bylaws is:

To protect and defend the Constitution of the United

States, especially with reference to the inalienable right

of the individual American citizen guaranteed by such

Constitution to acquire, possess, transport, carry, transfer ownership of, and enjoy the right to use arms, in

order that the people may always be in a position to

exercise their legitimate individual rights of selfpreservation and defense of family, person, and property,

as well as to serve effectively in the appropriate militia

for the common defense of the Republic and the individual liberty of its citizens.

NRA Bylaws, Art. I, s 1. Moreover, the NRA tells us that,

like the MCFL, "NRA members and supporters, unlike

shareholders of a business corporation, 'are fully aware of its

political purposes, and in fact contribute precisely because

they support those purposes.' " Appellant's Opening Br. at

34 (quoting MCFL, 479 U.S. at 260-61).

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The NRA acknowledges that it differs from the MCFL in

some respects. For example, the NRA sponsors seemingly

non-political activities, such as firearm competitions and training classes, and provides non-political goods and services to

its members, such as magazines, fraternal items, and accident

insurance. The organization also has no policy against accepting corporate contributions. According to the NRA, however, none of these differences disqualifies it from an MCFL

exception. The organization's non-political activities and the

individuals participating in them are "supportive of, and

enmeshed with, its primary, and plainly political, purpose."

Id. at 36. The NRA's political mission, moreover, extends

well beyond defending the right to bear arms and includes

the promotion of "public safety, law and order, ... the

national defense,.... hunter safety, ... and hunting as a

shooting sport." NRA Bylaws, Art. I, ss 2-5. Finally, the

NRA argues, because contributions received from for-profit

corporations during the three years at issue in this case

amounted to an "insignificant portion of [its total] revenues,"

its "actual practice was tantamount to such a policy [prohibiting contributions]." Appellant's Opening Br. at 37.

The NRA also distinguishes itself from the Michigan

Chamber of Commerce. Not only did the Chamber compile

and disseminate information relating to social, civic, and

economic conditions unrelated to any political objectives, but

its publications focused primarily on business and economic

issues. By contrast, the NRA claims that its publications and

activities all relate to its political goals. The NRA also

contends that, unlike the Chamber, it neither was established

by business corporations nor has for-profit corporate members. For these reasons, the NRA believes that, in contrast

to the Chamber, it does not risk becoming a conduit for direct

corporate spending on election campaigns.

The Commission has a very different view of the NRA. In

contrast to the MCFL, described by the Commission as

having a narrow political focus, the NRA performs a wide

variety of services for its members, only some of which are

political in nature. The Commission points out that in the

1970s the NRA amended its corporate charter to include the

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education and training of "citizens of good repute in the safe

and efficient handling of small arms" and the promotion of

"public safety, hunter safety, ... [and] efficiency in the use of

such arms on the part of members of law enforcement

agencies [and] of the armed forces." Certificate of Amendment of the Certificate of Incorporation, May 9, 1978. The

NRA also sponsors shooting competitions, sells accidental

death and dismemberment insurance, helps train the United

States Olympic shooting team, and provides grants for wildlife studies. According to the Commission, the NRA's business activities, including its sales of magazines and fraternal

items, also distinguish it from the MCFL, whose resources

came from garage sales, bake sales, dances, raffles, and

picnics. MCFL, 479 U.S. at 242.

As to the issue of corporate contributions, the Commission

reads MCFL and Austin as establishing a prophylactic requirement that an organization have a policy against accepting such contributions in order to qualify for an MCFL

exception. According to the Commission, because the NRA

has no policy against corporate contributions, and because it

accepted such contributions during the election cycles at issue

in this case, the organization should not be exempted from

the Act.

In deciding how to resolve this debate and whether to

apply section 441b to the NRA, we tread within closely

guarded First Amendment territory. FECA "operate[s] in

an area of the most fundamental First Amendment activities.

Discussion of public issues and debate on the qualifications of

candidates are integral to the operation of the system of

government established by our Constitution." Buckley v.

Valeo, 424 U.S. 1, 14 (1976). Precisely because of the fundamental freedoms at stake, MCFL rejected a rigid, bright-line

interpretation that would have subjected all corporations to

FECA requirements, fearing that such an approach might

unduly burden "core political speech." See 479 U.S. at 263.

Instead, "[w]here at all possible, government must curtail

speech only to the degree necessary to meet the particular

problem at hand, and must avoid infringing on speech that

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does not pose the danger that has prompted regulation." Id.

at 265.

As we read MCFL and Austin, the Commission must

demonstrate that the NRA's political activities threaten to

distort the electoral process through the use of resources

that, as MCFL put it, reflect the organization's "success in

the economic marketplace" rather than the "power of its

ideas." Id. at 258-59. And because important First Amendment rights are involved, the Commission "must do more

than simply posit the existence of the disease sought to be

cured. It must demonstrate that the recited harms are real,

not merely conjectural, and that the regulation will in fact

alleviate these harms in a direct and material way." Turner

Broad. Sys., Inc. v. FCC, 512 U.S. 622, 664 (1994) (internal

citation omitted); see also Members of City Council v. Taxpayers for Vincent, 466 U.S. 789, 803 n.22 (1984) ("[This

Court] may not simply assume that the ordinance will always

advance the asserted state interests sufficiently to justify its

abridgement of expressive activity.").

Applying this demanding standard, we think the Commission has failed to demonstrate that the NRA resembles a

business firm more closely than a voluntary political association. The NRA repeatedly emphasizes not only that its

political and non-political activities interrelate, but also that

its members join precisely because all NRA activities are

enmeshed in the organization's core political purpose--defending the constitutional right to bear arms. Although the

Commission had full discovery, it offers no factual basis for

questioning these claims. It merely asserts that the "variety

of activities [the NRA] actually undertook reinforces [the]

conclusion" that the NRA's purposes are not strictly political.

Appellee's Br. at 40. This is not enough. To justify subjecting the NRA to FECA regulation, the Commission must

actually demonstrate that, as in the case of the Michigan

Chamber of Commerce, the NRA's political advocacy is sufficiently distinct from its allegedly non-political activities such

that members who disagree with the former are still likely to

participate in the latter.

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This conclusion, however, does not end our task. Notwithstanding the fact that, on this record, the NRA appears to be

a voluntary political association akin to the MCFL, we must

determine whether the corporate contributions it received in

the three years at issue nevertheless justify subjecting it to

FECA's requirements. After all, the Supreme Court never

would have exempted the MCFL had there been evidence

that, even given the organization's core political mission, it

had accepted substantial corporate contributions that it could

have used for campaign purposes.

To begin with, we are unpersuaded by the Commission's

argument that the absence of a policy against the receipt of

corporate contributions automatically makes the NRA ineligible for an MCFL exception. As we read Austin, the Court

relied not on the Chamber's failure to have a policy against

corporate contributions, but rather on the likelihood that the

Chamber could become a conduit for political spending by its

corporate members. The Court emphasized that over threefourths of Chamber members were corporations and that

they "could circumvent the Act's restrictions by funneling

money through the Chamber's general treasury." Austin,

494 U.S. at 664. All three of our sister circuits to have

addressed this issue have read Austin as we do. See N.C.

Right to Life, Inc. v. Bartlett, 168 F.3d 705, 714 (4th Cir.

1999) (holding that courts should be concerned with the

amount of contributions received and whether the "acceptance of those contributions means that [the organization] is

serving as a conduit for the type of direct spending by for

profit corporations that creates a threat to the political marketplace") (internal quotation omitted); FEC v. Survival

Educ. Fund, Inc., 65 F.3d 285, 292-93 (2d Cir. 1995) (noting

that "[t]he only concern that justifies application of s 441b to

nonprofit political advocacy corporations is the prospect that

business firms or labor unions would funnel their wealth,

which derives from the commercial marketplace, into the

political marketplace of ideas," and not the absence of a policy

against corporate contributions); Day v. Holahan, 34 F.3d

1356, 1364 (8th Cir. 1994) (holding that a corporate expenditures statute could not be applied constitutionally to a not-forUSCA Case #00-5163 Document #606957 Filed: 06/29/2001 Page 23 of 29
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profit organization that received no "significant contributions

from for-profit corporations," even though it did not have a

policy against such contributions). Were we to interpret

Austin differently, an organization that has no policy banning

corporate contributions but that nevertheless receives no such

contributions would be subject to the statute despite the fact

that it would not be serving as a conduit for corporate

campaign contributions. We agree with the Second Circuit

that a not-for-profit organization with no corporate ties "does

not surrender its First Amendment freedoms for the want of

... a policy" against corporate contributions. Survival Educ.

Fund, 65 F.3d at 293.

Like our sister circuits, we therefore focus not on the

absence of a policy against corporate contributions, but on

whether such contributions could have turned the NRA into a

potential conduit for corporate funding of political activity.

In 1978 and 1982, the NRA received $7000 and $39,786,

respectively, in contributions from for-profit corporations.

We disagree with the NRA that because these contributions

represented a small percentage of its total revenues, they

were de minimis and thus beyond the Act's purview. See

Day, 34 F.3d at 1365 ("[T]he key issue here is the amount of

for-profit corporate funding a nonprofit receives.") (emphasis

added). The harm contemplated by the statute stems from

the absolute amount of corporate money an organization has

to spend in the political process, not from the relationship

between corporate contributions and the organization's total

revenues. But see N.C. Right to Life, 168 F.3d at 714

(holding that because corporate contributions represented a

"modest percentage" of the right to life organization's revenues, the organization qualified for the nonprofit exemption)

(emphasis added); Survival Educ. Fund, 65 F.3d at 293

(same). Because corporate contributions in 1978 and 1982

were substantial, we see no constitutional barrier to applying

the Act to the NRA for those two years.

But 1980 is a different matter. In that year, the NRA

received only $1000 in corporate contributions. Hinting that

the actual amount might be greater, the Commission points

out that the organization did not record corporate contribuUSCA Case #00-5163 Document #606957 Filed: 06/29/2001 Page 24 of 29
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tions of less than $500. But First Amendment rights cannot

turn on such speculation. See Turner, 512 U.S. at 664. The

Commission also points to the substantial revenues the NRA

received from corporate advertising in its magazines, yet

offers nothing to suggest that the purchasing of advertisements was not legitimate. Because we consider the $1000 to

be de minimis, and because the Commission, as an alternative

to its argument that the NRA lacks a policy against corporate

contributions, does not claim that even this small amount

demonstrates that the organization was serving as a conduit

for corporate funding of election campaigns, we hold that the

Act cannot constitutionally be applied to the NRA for the

1980 election cycle.

IV

The decision of the district court is vacated, and this matter

is remanded with instructions to recalculate the penalties

based on the 1978 and 1982 violations.

So ordered.

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Ginsburg, Circuit Judge, concurring: I write separately to

point out that the Commission's interpretation of 2 U.S.C.

s 441b, to which the court accords deference under Chevron

step two, see Ct. Op. at 15-16, seems to be inconsistent with

the statute. Because the NRA failed to argue the point,

however -- although it feints in the right direction -- I join in

the court's opinion, leaving the neglected argument to another

day when it may be fully developed and debated by the

parties.

Section 441b prohibits "any corporation" from making a

"contribution or expenditure in connection with any election

to any political office." 2 U.S.C. s 441b(a). The statute

defines "contribution or expenditure" broadly as

any direct or indirect payment, distribution, loan, advance, deposit, or gift of money, or any services, or

anything of value (except a loan of money by a national

or State bank made in accordance with the applicable

banking laws and regulations and in the ordinary course

of business).

Id. s 441b(b)(2). The Commission holds it unlawful for a

corporation's employees to provide services for the benefit of

a candidate and for which the corporation is reimbursed by

its separate segregated fund within a commercially reasonable time; this arrangement, according to the Commission,

involves the corporation giving a "loan, advance, or something

of value to both the candidate and the corporation's separate

segregated fund." FEC Advisory Opinion 1984-24, 1 Fed.

Election Campaign Fin. Guide (CCH) p 5771, at 11,083. This

near quotation of the statutory definition of "contribution,"

see 2 U.S.C. s 441b(b)(2) ("contribution" means "loan, advance, ... or anything of value") makes it clear that the

Commission views that definition as embracing the extension

of ordinary trade credit for the period between rendition of

the services and reimbursement therefor.

The Commission's interpretation is not necessarily unreasonable. It does, however, imply that a corporate vendor

may not lawfully enter into an ordinary commercial contract

with a candidate to provide goods and services for which the

candidate will be subsequently and promptly billed. The

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NRA argues in particular that the Commission's interpretation must be in error because it would be impractical and

"absurd" to require a candidate wishing to engage a temporary personnel firm to pay for such services in advance; for

the ordinary arrangement whereby services are rendered and

the bill then paid would constitute an illegal "loan, advance or

something of value" provided to the candidate by the firm.

The same might be said also of in-kind contributions, see Ct.

Op. at 8-10 -- although the argument is not relevant to the

NRA's third-party contributions, which indisputably are advances, see Ct. Op. at 6-8.

The Commission responds to this criticism by invoking its

own regulation under which a corporation may "extend credit

to a candidate ... provided that the credit is extended in the

ordinary course of a corporation's business and the terms are

substantially similar to extensions of credit to nonpolitical

debtors." 11 C.F.R. s 114.10(a) (1980), current version at 11

C.F.R. s 116.3(b) (2000); see 1 Fed. Election Campaign Fin.

Guide at 11,083 to 11,083-2. By recognizing this "exception

in the ... regulations," 1 Fed. Election Campaign Fin. Guide

at 11,083, the Commission makes its ban upon rendering

services to a candidate in advance of payment applicable only

to corporations not acting in the ordinary course of business -- such as the NRA or other corporations "more akin to

voluntary political associations than business firms," FEC v.

Massachusetts Citizens for Life, Inc., 479 U.S. 238, 263

(1986).

The statute, however, unequivocally prohibits "any corporation" -- commercial or ideological -- from providing "any ...

loan [or] advance," etc., to a candidate without regard to

whether it does so in the ordinary course of business. 2

U.S.C. s 441b(a). It is clear, moreover, that the Congress

considered whether the Act might prohibit ordinary commercial transactions and crafted an exception to the Act in order

to avoid that result: no corporation may make a "loan" to a

candidate "except a loan of money by a national or State bank

made ... in the ordinary course of business." Id.

s 441b(b)(2). No such exception is provided for corporations

other than banks. "[W]here Congress includes particular

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language in one section of a statute but omits it in another

section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Russello v. United States, 464 U.S. 16, 23

(1983) (internal quotations and citations omitted); see also

NextWave Personal Communications, Inc. v. FCC,

No. 00-1402 slip op. at 34-35 (D.C. Cir. June 22, 2001).

The Commission might reasonably read s 441b strictly and

deem an ordinary commercial transaction, that is, one in

which performance precedes payment, a prohibited "loan,

advance ... or [ ]thing of value." 2 U.S.C. s 441b(b)(2).

Perhaps it could also reasonably permit such a transaction by

reading that phrase as not including the extension of ordinary

trade credit for services rendered if payment is made within a

commercially reasonable time. What the Commission cannot

reasonably do, however, is distinguish between the provision

of a service by a commercial vendor in the ordinary course of

business and the provision of the same service by a noncommercial corporation not in the ordinary course of its

business; the statute, with its explicit exception for banks

acting in the ordinary course of business, cannot reasonably

be read to contain a broader but implicit exception for

commercial vendors acting in the ordinary course of business.

Nor do I see how holding that the Commission may not ban

the extension of ordinary trade credit by a corporation to a

candidate or to its separated segregated fund except when

such credit is extended in the ordinary course of business

would meaningfully "compromise the separation" between a

corporation's treasury and that of its separate segregated

fund, see Ct. Op. at 15. Were the Commission to construe

"advance" broadly, and thus to bar services not paid for in

advance -- whether provided by a commercial vendor or by

any other corporation -- that separation would not be affected at all. Were the Commission to construe "loan, advance,

... or anything of value" narrowly, and thus to permit the

provision of services by any corporation so long as it was

promptly reimbursed by the segregated fund, the corporation

presumably would still be required to provide such services

upon commercially reasonable terms. That a fund and the

candidates it supports could briefly enjoy the time value of

not paying for employee services until billed in the ordinary

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course would in no way alter the relationship between the

corporation and the separate segregated fund envisioned in

the Act.

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