United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 21, 2006 Decided August 1, 2006
No. 05-5218
ALABAMA EDUCATION ASSOCIATION , ET AL.,
APPELLEES
v.
ELAINE L. CHAO , IN HER OFFICIAL CAPACITY AS SECRETARY
OF THE UNITED STATES DEPARTMENT OF LABOR ,
APPELLANT
Consolidated with
05-5220
Appeals from the United States District Court
for the District of Columbia
(No. 03cv00253)
(No. 03cv00682)
Stephanie R. Marcus, Attorney, U.S. Department of Justice,
argued the cause for appellant. With her on the briefs were
Peter D. Keisler, Assistant Attorney General, Gregory G.
Katsas, Deputy Assistant Attorney General, Kenneth L.
Wainstein, U.S. Attorney, Michael J. Singer, Attorney, and
Mark S. Flynn, Counsel, U.S. Department of Labor. Michael J.
Ryan, Oliver W. McDaniel, and R. Craig Lawrence, Assistant
U.S. Attorneys, entered appearances.
2
Nathan Paul Mehrens was on the brief for amici curiae
Stop Union Political Abuse, Inc. and U.S. Union Watch, Inc. in
support of appellant at the time the brief was filed. Roger Clegg
entered an appearance.
Andrew D. Roth argued the cause for appellees Alabama
Education Association, et al. With him on the brief were
Laurence Gold, and Robert H. Chanin.
David J. Strom and Teresa J. Idris were on the brief for
appellees Delaware Federation of Teachers, et al.
Before: GINSBURG , Chief Judge, and ROGERS and
GARLAND , Circuit Judges.
Opinion for the Court filed by Chief Judge GINSBURG .
GINSBURG , Chief Judge: The Secretary of Labor appeals
the decision of the district court granting summary judgment in
favor of the Alabama Education Association, the Delaware
Federation of Teachers, and 37 like organizations representing
public sector employees, primarily public school teachers. After
holding fast to one reading of § 3(j)(5) of the Labor-
Management Reporting and Disclosure Act of 1959 (LMRDA),
29 U.S.C. § 402(j)(5), for more than 40 years, the Department
reconsidered and adopted an alternative interpretation under
which wholly public sector labor organizations for the first time
could be subject to the financial reporting requirement of the
Act.
Applying the familiar two-step analysis in Chevron, U.S.A.,
Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984),
we conclude the district court erred in holding the Department’s
new interpretation was inconsistent with the Act. Because
reasonable readings of § 3(j)(5) are advanced by each of the
3
parties, we cannot say the “Congress had an intention on the
precise question at issue,” Chevron, 467 U.S. at 843 n.9; nor can
we say the Department’s revised reading of § 3(j)(5) is not a
“permissible” one, id. at 843. We order the matter remanded to
the agency nonetheless because “the Department did not provide
a reasoned explanation for its new policy.” AFL-CIO. v. Brock,
835 F.2d 912, 913 (D.C. Cir 1987).
I. Background
The Congress enacted the LMRDA, 29 U.S.C. § 401 et seq.,
in order to “eliminate or prevent improper practices on the part
of labor organizations.” Id. § 401(c). To that end, the Act
requires “[e]very labor organization” annually to provide the
Department with information “in such detail as may be necessary
accurately to disclose [its] financial condition and operations.”
Id. § 431(b); see 29 C.F.R. Part 403 (describing the required
annual reports).
A. “Labor Organizations” under the LMRDA
Two interrelated provisions establish the criteria upon which
an entity is deemed a “labor organization” subject to the
disclosure requirements of the Act. Subsection 3(i), 29 U.S.C.
§ 402(i), states:
“Labor organization” means a labor organization engaged in
an industry affecting commerce and includes [1] any
organization of any kind ... so engaged in which employees
participate and which exists for the purpose, in whole or in
part, of dealing with employers concerning grievances [etc.]
and [2] any conference, general committee, joint or system
board, or joint council so engaged which is subordinate to a
national or international labor organization, other than a
State or local central body.
4
The definition and two examples set forth in § 3(i) are
supplemented by § 3(j), 29 U.S.C. § 402(j), which provides:
A labor organization shall be deemed to be engaged in an
industry affecting commerce if it--
(1) is the certified representative of employees under
the provisions of the National Labor Relations Act ...
or the Railway Labor Act ...; or
(2) although not certified, is a national or
international labor organization or a local labor
organization recognized or acting as the
representative of employees of an employer or
employers engaged in an industry affecting
commerce; or
(3) has chartered a local labor organization or
subsidiary body which is representing or actively
seeking to represent employees of employers within
the meaning of paragraph (1) or (2); or
(4) has been chartered by a labor organization
representing or actively seeking to represent
employees within the meaning of paragraph (1) or (2)
as the local or subordinate body through which such
employees may enjoy membership or become
affiliated with such labor organization; or
(5) is a conference, general committee, joint or
system board, or joint council, subordinate to a
national or international labor organization, which
includes a labor organization engaged in an industry
affecting commerce within the meaning of any of the
5
preceding paragraphs [(1)-(4)] of this subsection,
other than a State or local central body.
As the quoted text makes clear, the term “labor
organization” is implicitly limited by the terms “employer” and
“employee.” As defined in § 3(e), the term “employer” does
not include “any State or political subdivision thereof.” 29
U.S.C. § 402(e). The term “employee,” as used in §§ 3(i) and
(j), includes only “individual[s] employed by an employer,” id.
§ 402(f), that is, employees in the private sector. Although the
terms “employer” and “employee” appear in both §§ 3(i) and
(j), neither appears in the second illustrative clause of § 3(i) or
in § 3(j)(5).
Since 1963 the Department has held, with respect to the
first clause of § 3(i), that a “labor organization composed
entirely of employees of ... governmental entities excluded by
section 3(e) [is not] a labor organization for purposes of the
Act.” 29 C.F.R. § 451.3(a)(4). With respect to the second
clause of § 3(i), however, the Department has made clear that,
“[r]egardless of whether it deals with employers [or] is
composed of employees, any conference, general committee,
joint or system board, or joint council engaged in an industry
affecting commerce and which is subordinate to a national or
international labor organization is a ‘labor organization’ for
purposes of the Act.” 29 C.F.R. § 451.3(b); 28 Fed. Reg.
14,388, 14,388 (Dec. 27, 1963).
B. The Rulemaking
In December 2002 the Department proposed to adopt a
rule expanding the range of organizations subject to the annual
reporting requirement of the LMRDA. Labor Org. Annual
Fin. Reports, 67 Fed. Reg. 79,280 (Dec. 27, 2002) (notice of
proposed rulemaking (NPRM)). Until then, the Department
6
had read the final clause of § 3(j)(5) (“which includes a labor
organization engaged in an industry affecting commerce within
the meaning of [§§ 3(j)(1)-(4)]”) (hereinafter the “which
includes ...” clause), as modifying the phrase “conference,
general committee, joint or system board, or joint council.”
Under that reading, a “conference,” etc., even if “subordinate
to a national or international labor organization,” was not
subject to the LMRDA unless it represented private sector
“employees” in a manner defined in any one of the four
paragraphs at §§ 3(j)(1)-(4). In other words, any labor
organization composed solely of public employees had no
statutory “employees,” was not a “labor organization” subject
to the Act, and therefore did not have to file annual financial
reports with the Department of Labor.
In 2002, however, the Department proposed to amend the
instructions for annual reporting to state that “‘any conference,
general committee, joint or system board, or joint council’ that
is subordinate to a national or international labor organization
will be required to file an annual report.” 67 Fed. Reg. at
79,284. Underlying this change was the Department’s
proposal to read the “which includes ...” clause of § 3(j)(5) as
modifying the phrase immediately preceding it -- “subordinate
to a national or international labor organization.” That reading
of § 3(j)(5) makes a “conference” et al. with solely public
sector members subject to the LMRDA if the conference is
subordinate to a “national or international labor organization”
that is subject to the Act.
The Department explained it was amending its filing
requirements in part to adopt the holding of the Ninth Circuit
in Chao v. Bremerton Metal Trades Council, AFL-CIO, 294
F.3d 1114 (2002), a suit the Department brought under the
LMRDA on behalf of a federal employee alleging the
Bremerton Council had not followed certain election
7
procedures prescribed by the Act. Although the Council had
both private and public sector members, it argued it was not a
“labor organization” under § 3(i) because it did not “bargain
with any non-federal employers.” Id. at 1117. In resolving the
issue under § 3(j)(5), the court stated: “We must decide not
whether the Bremerton Council bargains directly with any
private employers but, instead, whether the Metal Trades
Department, the organization to which the Bremerton Council
is subordinate, is engaged in an industry affecting commerce.”
Id. Because the Metal Trades Department was so engaged and
was a “labor organization” under the LMRDA, the court
concluded the Bremerton Council, as a subordinate body, was
also subject to the Act. Id. at 1118.
Prefacing its revised reading of § 3(j)(5) and related
disclosure proposals in the NPRM, the Department stated:
Labor organizations also have changed tremendously
since the enactment of the LMRDA in 1959. There are
now far fewer small, independent unions and more large
unions affiliated with a national or international body ....
In fact, many large unions today resemble modern
corporations in their structure, scope and complexity ....
Moreover, just as in the corporate sector, there have been
a number of financial failures and irregularities involving
pension funds and other member accounts maintained by
labor organizations. These failures and irregularities
result in direct financial harm to union members. If the
members of labor organizations had more complete,
understandable information about their unions’ financial
transactions, investments and solvency, they would be in
a much better position than they are today to protect their
personal financial interests and exercise their democratic
rights of self-governance.
8
67 Fed. Reg. at 79,280-81.
After issuing the NPRM, the Department alerted certain
organizations they might be newly required to file annual
reports. Among the organizations notified were the appellee
state education associations (SEAs) and state federations of
teachers (SFTs).
By their own account, each of the SEAs now before us is
“composed entirely of individual [public] employees who hold
direct membership,” and whom the “SEA represents ... in
dealing with their employers” concerning grievances, wages,
hours, and other conditions of employment. Each SEA is
affiliated with the National Education Association (NEA),
which, because it has private as well as public sector members,
is subject to the LMRDA.
The SFTs describe themselves as “intermediate state level
union organizations that have only public sector members.”
Like the SEAs, they “do not ‘deal with’ private sector
employers.” The SFTs, however, are affiliated with the
American Federation of Teachers, which is in turn a member
of the American Federation of Labor and Congress of
Industrial Organizations; both the AFT and the AFL-CIO are
national or international “labor organizations” subject to the
Act. Because, under the Department’s proposed interpretation
of § 3(j)(5), the SEAs and SFTs may be deemed “subordinate
to” a “labor organization” and therefore subject to the
LMRDA, each group brought an action in the district court
seeking to enjoin the Department from promulgating and
enforcing its revised reading of § 3(j)(5).
While those suits were pending in the district court, the
Department adopted the proposed rule. See Labor Org. Annual
9
Fin. Reports, 68 Fed. Reg. 58,374 (Oct. 9, 2003) (Final Rule).
In so doing the Department considered comments submitted by
the NEA, the AFL-CIO, and others. Although the Department
recognized its revised interpretation of § 3(j)(5) “represent[ed]
a departure from previous court decisions and the
Department’s prior administration of the Act,” it nonetheless
maintained its new approach, along with that taken by the court
in Bremerton, was “the correct reading of the statutory
language.” 68 Fed. Reg. at 58,384. The Department
acknowledged that the Congress intended “to exempt ‘wholly
public sector’ labor organizations from the coverage of the
Act,” see 29 C.F.R. § 451.3(a)(4), but stated: “The Bremerton
court found that an intermediate labor organization is not
‘wholly public sector’ and exempt from the Act where it is
subordinate to a parent organization that meets the definition
of a labor organization engaged in an industry affecting
commerce.” 68 Fed. Reg. at 58,384.
Thereafter the district court consolidated the appellees’
two pending suits, granted summary judgment for the SEAs
and SFTs, and enjoined the Department from enforcing the
new rule. See Ala. Educ. Ass’n v. Chao, Nos. Civ. A. 03-0253,
03-0682, 2005 WL 736535 (D.D.C. Mar. 31, 2005). Applying
Chevron step one, the district court held the Department’s new
interpretation of § 3(j)(5) was “contrary to the plain meaning
of the statute, its legislative history, and the congressional
purpose behind the law.” Id. at *9. In addition, it held the
Department’s reliance upon Bremerton was misplaced because
that decision “was too limited in its analysis to constitute
persuasive precedent.” Id. Having rejected the Department’s
revised reading of § 3(j)(5), the district court did not reach,
among other things, what it means to be “subordinate to a
national or international labor organization” and whether the
plaintiff SEAs and SFTs were in fact so subordinate.
10
II. Analysis
On appeal the Department contends its revised reading of
the LMRDA is entitled to deference under Chevron because §
3(j)(5) is, at the very least, ambiguous and its current
interpretation of that provision is supported by a reasoned
analysis. The SEAs argue Chevron is inapplicable because the
Department has no authority under the Act to “interpret” any
subsection of § 3, and both the SEAs and the SFTs disagree
with the Department on the merits of its new interpretation of
§ 3(j)(5).
Under the two-step analysis of Chevron, we determine
first “whether Congress has directly spoken to the precise
question at issue,” 467 U.S. at 842 -- here whether an
organization that does not represent statutory “employees” or
deal with statutory “employers” may be subject to the
LMRDA. “[I]f the statute is silent or ambiguous” on that
question, then we must defer to the agency’s interpretation --
here the Department’s reading of § 3(j)(5) -- so long as it is
“based on a permissible construction of the statute.” Chevron,
467 U.S. at 843. When an agency adopts a materially changed
interpretation of a statute, it must in addition provide a
“reasoned analysis” supporting its decision to revise its
interpretation. Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57 (1983).
Not every agency interpretation of a statute is
appropriately analyzed under Chevron. That analysis is
applicable only “when it appears that Congress delegated
authority to the agency generally to make rules carrying the
force of law, and that the agency interpretation claiming
deference was promulgated in the exercise of that authority.”
United States v. Mead Corp., 533 U.S. 218, 226-27 (2001).
11
A. Applicability of Chevron
Although the SEAs and SFTs prevailed when the district
court reviewed the Department’s rulemaking under Chevron,
on appeal the SEAs (alone) argue the Department had no
authority to “interpret” § 3(j)(5) because the “Congress
definitively established the scope of the LMRDA’s coverage
by expressly defining the term ‘labor organization’ as used in
the Act.” Therefore, the SEAs urge, the Department’s
rulemaking was “beyond the Chevron pale,” Mead, 533 U.S.
at 234, and hence entitled only to “respect proportional to its
‘power to persuade,’” id. at 235 (quoting Skidmore v. Swift &
Co., 323 U.S. 134, 140 (1944)).
The Department maintains the Congress expressly
delegated to it authority to resolve ambiguities in the Act,
including any in § 3. Specifically, the Department adverts to
§ 208 of the LMRDA, 29 U.S.C. § 438, which provides:
The Secretary shall have authority to issue, amend, and
rescind rules and regulations prescribing the form and
publication of reports required to be filed under this
subchapter and such other reasonable rules and regulations
... as he may find necessary to prevent the circumvention
or evasion of such reporting requirements.
According to the Department, it is authorized to delineate the
boundaries of the phrase “labor organization ... engaged in an
industry affecting commerce” in § 3(j)(5) precisely because
doing so is “necessary to prevent the circumvention ... of [the]
reporting requirements” of the Act. The Department also
maintains that because the Congress authorized it to bring civil
actions “as may be appropriate” to enforce the Act, 29 U.S.C.
§ 440, the Department may interpret § 3(j)(5) and other
provisions relevant to determining whether to bring a civil
12
action. Relatedly, the Department contends Mead is inapposite
because “the Secretary has the knowledge, judgment and
expertise necessary ... to resolve ambiguities and fill in gaps in
the statute.” Cf. Gonzales v. Oregon, 126 S.Ct. 904, 914-16
(2006) (no delegation of authority to Secretary of Health and
Human Services in Controlled Substances Act to make
decisions requiring medical expertise); Am. Bar Ass’n v. FTC,
430 F.3d 457, 471 (D.C. Cir. 2005) (no delegation of authority
to FTC in Gramm-Leach-Bliley Act to regulate the legal
profession).
We agree with the Department that its interpretation of §
3(j)(5) is reviewable under Chevron. That interpretation
clarifies the meaning of “labor organization ... engaged in an
industry affecting commerce” and therefore comes within its
express authority in § 208 to promulgate rules “prevent[ing]
the circumvention or evasion of [the statutory] reporting
requirements.” If the new reading reaches a “labor
organization engaged in an industry affecting commerce” that
until now had avoided disclosure under the LMRDA, that only
underscores the validity of the Department’s claim of authority
to issue its interpretive regulation. See AFL-CIO v. Chao, 409
F.3d 377, 385-86 (D.C. Cir. 2005) (upholding reporting
regulation issued per § 208 because, in construing § 201(b),
“Secretary could reasonably conclude that ‘[p]roviding
additional detail ... is necessary to give union members an
accurate picture of their labor organization’s financial
condition and operations’”).
B. Chevron Step One
At Chevron step one, the Department contends § 3(j)(5) is
“ambiguous on its face” because the “which includes ...” clause
can be read to modify either the first or the second phrase of
paragraph (5). Further, the Department claims its new reading
13
of the statute is the more consistent with applicable rules of
grammar and relevant interpretive canons.
The Department invokes the “grammatical ‘rule of the last
antecedent,’ according to which a limiting clause or phrase ...
should be read as modifying only the noun or phrase that it
immediately follows.” Jama v. Immigration & Customs
Enforcement, 543 U.S. 335, 343 (2005) (quoting Barnhart v.
Thomas, 540 U.S. 20, 26 (2003)); see also 2A N. Singer,
Sutherland on Statutory Construction § 47.33, p. 369 (6th rev.
ed. 2000) (“Referential and qualifying words and phrases,
where no contrary intention appears, refer solely to the last
antecedent”). The last antecedent before the “which includes
...” clause is, of course, “national or international labor
organization.”
The SEAs and SFTs insist § 3(j)(5) is unambiguous and
fully consistent only with the Department’s prior
interpretation. They contend first that the “rule of the last
antecedent ... applies only to a limiting clause or phrase that
immediately follows a noun or phrase without any off-setting
punctuation.” See 2A N. Singer, Sutherland on Statutory
Construction § 47.33, p. 373 & n.5 (6th rev. ed. 2000). Here,
of course, the “which includes ...” clause is set off from the
preceding phrase by a comma.
They also maintain that “each of the two clauses set off by
commas [must] be treated as stating an independent defining
characteristic of [the] Second Clause of § 3(i) [that is,]
‘conference, general committee, joint or system board, or joint
council.’” For this they rely upon United States v. Ron Pair
Enterprises, Inc., 489 U.S. 235 (1989), in which the Supreme
Court determined that the second clause in the last part of §
506(b) of the Bankruptcy Code, 11 U.S.C. § 506(b), is
independent because, among other things, it “is set aside by
14
commas.” 489 U.S. at 241. Section 506(b) states in part:
“[T]here shall be allowed to the holder of [a secured] claim,
interest on such claim, and any reasonable fees, costs, or
charges provided for under the agreement under which such
claim arose.” Because “interest on [a secured] claim” is an
independent clause, the Supreme Court held a secured creditor
is entitled to “interest” even if interest is not provided “under
the [security] agreement.” Ron Pair, 489 U.S. at 241-42. In
this case, the SEAs and SFTs reason that for an entity to
become subject to the LMRDA by means of § 3(j)(5),
regardless whether it is “subordinate to” another organization,
it must itself be deemed engaged in commerce under one of the
preceding paragraphs, §§ 3(j)(1)-(4).
The Department counters that “the placement of commas”
in § 3(j)(5) is of no moment. Indeed, the Department contends
that in Ron Pair itself “[t]he position of the commas was ... less
significant to the Court’s interpretation than the separation of
the phrase “‘interest on such claim’ ... from the reference to
fees, costs, and charges by the conjunctive words ‘and any.’”
Ron Pair, 489 U.S. at 241. The “which includes ...” clause in
§ 3(j)(5) has no conjunctive or other term indicating which of
the two preceding phrases it modifies. Therein, says the
Department, lies the inherent ambiguity of the provision.*
*Both sides invoke the legislative history of the LMRDA. The
Department relies upon Senator Goldwater’s statement regarding the
importance of ensuring intermediate labor bodies are covered under
the LMRDA in order to prevent “corrupt and racket infested unions
[from] continu[ing] to prey upon honest and decent dues-paying union
members.” 105 Cong. 6516, 86th Cong. 1st Sess. (Apr. 23, 1959).
The SEAs and SFTs also look to Senator Goldwater, as well as several
other senators, in support of their position that the Congress
manifestly intended to exclude from the ambit of the Act labor
organizations having solely public sector members. In protest of the
initial version of the bill, Senator Goldwater co-authored with Senator
15
In our view, nothing in § 3, including the definition of
“labor organization” in § 3(i), forecloses the possibility that a
body without private sector members may be subject to the
LMRDA if it is subordinate to or part of a larger organization
that does have private sector members. As noted above,
neither “employer” nor “employee” appear in the second part
of § 3(i) or in § 3(j)(5). With respect to § 3(j)(5), each side
advances a permissible interpretation. We find in the plain text
of that provision and the relevant subparts of § 3 no guidance
as to which of the first two phrases of § 3(j)(5) the Congress
intended the “which includes ...” clause to modify. Although
the Department is correct that the Supreme Court’s decisions
in Jama and Barnhart support application of the “rule of the
last antecedent,” the SEAs and SFTs are also correct that the
reading they advance is consistent with the Supreme Court’s
approach in Ron Pair. In sum, if the “Congress had an
intention on the precise question at issue,” Chevron, 467 U.S.
at 843 n.9, then we would not find such a patent ambiguity on
the face of § 3(j)(5). Accordingly, we proceed to
Dirksen a Minority Report that stated: “As the bill now reads labor
unions whose membership consists of Government employees and
whose employers are governmental bodies or agencies of any kind ...
are subject to all requirements, restrictions, and limitations of the bill.”
S. Rep. No. 187, reprinted in U.S. Dept. of Labor, Legislative History
of the Labor-Management Reporting and Disclosure Act of 1959, at
199 (1959). The bill was then amended to include the first clause of
§ 3(i). The SEAs and SFTs argue the purpose of the amendment was
to ensure that no wholly public sector organization would be covered
by the Act. The Department argues that had the Congress truly
intended such a result, it would have omitted or altered the second
clause of § 3(i), which, as noted above, makes no mention of statutory
“employers” or “employees.” We find the parties’ references to
legislative history unpersuasive. If anything, the inconsistent
statements above merely confirm the inherent ambiguity of the statute.
16
C. Chevron Step Two
Having arrived at Chevron step two, the Department
argues its revised interpretation is “permissible” and supported
by a “reasoned analysis.” In both the NPRM and the Final
Rule the Department stated that it was adopting the Ninth
Circuit’s reading of § 3(j)(5) in Bremerton “because that
interpretation gives full meaning to the plain language of the
statute.” 67 Fed. Reg. at 79,284. That is, the Department
believes Bremerton is consistent with the notion that the Act
does not extend to “wholly public” organizations: If an
intermediate body is subordinate to a “labor organization,” as
defined by the Act to mean an organization that represents
private sector employees, then that intermediate body is itself
not “wholly public.” See 68 Fed. Reg. at 58,384.
Second, insofar as its revised interpretation may draw the
SEAs and SFTs into the ambit of the LMRDA, the Department
sees that as good policy: “Given the growing complexity of
union finances, as documented in the rule-making record,” the
idea that § 3(j)(5) “covers these types of intermediate labor
bodies is particularly well-founded.” As further evidence that
it acted upon the basis of a “reasoned analysis,” the
Department points to the notice-and-comment rulemaking, in
which it claims to have addressed fully the objections lodged
by the NEA, the AFT, the AFL-CIO, and the “one individual
union member” who supported their position. See 68 Fed.
Reg. at 58,383-84.
The SEAs and SFTs, which reject the foregoing arguments
in their entirety, contend the Department’s reliance upon
Bremerton is misplaced. In particular, the SEAs and SFTs
argue “the Bremerton court’s conclusion that the [Council] was
covered by the LMRDA solely by virtue of its subordination to
an LMRDA-covered national organization was not at all
17
necessary to the correct disposition of that case, much less a
considered resolution of the issue.” Because the Ninth Circuit
acknowledged the Bremerton Council had private sector
members, which was alone sufficient to bring the Council
within the definition of a “labor organization” under § 3(i), the
SEAs and SFTs contend the passage in Bremerton upon which
the Department purportedly based its rulemaking was a dictum.
They imply the Department’s reliance upon that decision was
particularly ill-considered because “[l]ong-standing case law
also supports the conclusion that wholly public sector unions
are not covered by the LMRDA.” See, e.g., Thompson v.
McCombe, 99 F.3d 352, 353 (9th Cir. 1996) (“A labor
organization composed entirely of public sector employees is
not a labor organization for purposes of the LMRDA”).
The Department replies that it properly relied upon
Bremerton because, “[i]n holding that the [Council] was
covered under the LMRDA, the Ninth Circuit ... relied solely
on the fact that the [Council] was subordinate to a parent
organization that met the LMRDA definition of ‘labor
organization.’” As for the “[l]ongstanding case law” to which
the SEAs and SFTs refer, the Department correctly points out
that those decisions either construe only the first clause of §
3(i) or merely defer to the Department’s prior interpretation of
the LMRDA.
We think the SEAs and the SFTs well may have the better
reading of the statute -- but that is a close question and one we
need not decide. For we are obliged “to accept the agency’s
construction of the statute, even if the agency’s reading differs
from what the court believes is the best statutory
interpretation.” Nat’l Cable & Telecomms. Ass’n v. Brand X
Internet Servs., 125 S. Ct. 2688, 2699 (2005). As we noted
above, the Department’s position that the “which includes ...”
clause modifies the phrase immediately preceding it is, from a
18
purely grammatical standpoint, by no means an impermissible
one. And we have made clear that “[a]n agency’s
interpretation of a statute is entitled to no less deference ...
simply because it has changed over time.” Nat’l Home Equity
Mortgage Ass’n v. Office of Thrift Supervision, 373 F.3d 1355,
1360 (D.C. Cir. 2004). Rather, the question raised by the
change is whether the Department has supported its new
reading of § 3(j)(5) with a “reasoned analysis” sufficient to
command our deference under Chevron.
This the Department has failed to do. In the NPRM the
Department reported that much has changed during the last 40
years in terms of the size, financing, and structure of labor
organizations. Although the Department noted that “[t]here are
now far fewer small, independent unions and more large
unions affiliated with a national or international body,” some
of which experienced “financial failures and irregularities,” 67
Fed. Reg. at 79,280, the Department never linked these facts to
the purported concern with the transparency necessary to deter
circumvention of reporting requirements. Nor did the
Department offer examples, or even hypotheticals, to show
that its prior interpretation was deficient. Cf. AFL-CIO, 409
F.3d at 387-88 (proposed rule “illustrated the need for
additional reporting ... by pointing to examples in which union
members could not obtain detailed, reliable information on
[the] financial operations” of labor-related trust funds).
In responding to comments submitted by the NEA and the
AFL-CIO, the Department relied upon the Ninth Circuit’s
decision in Bremerton, but did not acknowledge or seem to
realize that the court there did not face the question at issue
here, that is, whether a body that does not represent statutory
“employees” or deal with statutory “employers” may be
subject nonetheless to the LMRDA. For the Department to
claim it revised its reading of § 3(j)(5) in order to “adopt the ...
19
“holding” of Bremerton, 67 Fed. Reg. at 79,284, therefore,
does not contribute anything toward the reasoned analysis
required of it. In sum, we cannot say the Department’s
interpretation of § 3(j)(5) is impermissible, but neither can we
say its decision to revise its reading of the Act is supported by
a reasoned analysis.
III. Conclusion
Although the Department’s revised reading of the
LMRDA is otherwise entitled to Chevron deference, the
Department has failed to supply a reasoned analysis supporting
its change of position. Accordingly, we vacate the order of the
district court permanently enjoining enforcement of the Final
Rule but “remand [the rule] to the Department ... for a reasoned
explanation of that change.” Brock, 835 F.2d 920; see id. at
913 n.2.*
So ordered.
*We do not reach the remaining question whether the plaintiff SEAs
and SFTs were “subordinate to a national or international labor
organization” under 29 U.S.C. § 405(j)(5). See supra p. 9. Nor do we
reach the question, raised by the plaintiff SEAs, whether “associations
of individual employees rather than associations of labor unions ... are
‘conference[s], general committee[s], joint or system board[s], or joint
council[s]’” under 29 U.S.C. § 402(i). Any interim relief that may be
necessary while those issues are pending, or while this case is on
remand to the Department of Labor for further explanation in
accordance with this opinion, is left to the district court in the first
instance.