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March 31, 1983

DONALD J. DEVINE, Director, Office of Personnel Management, Defendant

The opinion of the court was delivered by: GREEN

 This is an action by the NAACP Legal Defense and Educational Fund, Inc. (LDF) and the Puerto Rican Legal Defense and Education Fund, Inc. (PRLDEF) against the Director of the Office of Personnel Management, by which the plaintiffs challenge certain policies or rules of defendant governing the distribution of funds received from charitable contributions of federal employees through the 1981 Combined Federal Campaign (CFC) fund raising drive. Plaintiffs are eligible to participate in the CFC and have received "designated funds" therefrom, i.e., contributions specifically designated by donors to be distributed to the plaintiffs. See NAACP Legal Defense and Educational Fund, Inc. v. Campbell, 504 F. Supp. 1365 (D.D.C. 1981) (hereinafter NAACP LDF I). In the instant action, plaintiffs seek to ensure that they may receive a portion of "undesignated funds" received by the CFC. Essentially, plaintiffs argue that defendant's policy concerning funds is vague and leads to arbitrary decisions in violation of due process requirements and the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). Plaintiffs also argue that the denial of access to undesignated funds violates their rights under the first amendment to the Constitution. Both sides have moved for summary judgment. For the reasons which follow, defendant's motion for summary judgment shall be granted and plaintiffs' motion shall be denied.

 The CFC was established pursuant to Executive Order No. 10,927, issued on March 18, 1961, by President Kennedy. It is the only means whereby federal employees and military personnel may be solicited for charitable contributions by private voluntary agencies during working hours at their offices and duty stations. Procedures governing the CFC and requirements for eligibility to participate in the campaign are set forth in the Manual on Fund Raising Within the Federal Service for Voluntary Health and Welfare Agencies (hereinafter, "Manual").

 Organizations participate in the CFC on either the national or local level. Eligibility is determined by officials of the Office of Personnel Management, in accordance with standards set forth in the Manual. There are five authorized voluntary groups, which are: (1) United Way Agencies (local united funds or community chests recognized by the United Way of America), (2) National Health Agencies, (3) International Service Agencies, (4) the American Red Cross, and (5) National Service Agencies. Manual, § 4.2. Plaintiffs are two of a number of organizations in the National Service Agencies (NSA) group. The NSA group within the CFC was only recently created and has not been in existence as long as the other groups.

 To participate in the CFC, National Health Agencies and NSAs must receive approval not only from the nationwide campaign but from each local CFC in which they desire to solicit contributions. This is because these agencies might not provide "direct and substantial services" to the public of every particular local CFC area. Manual, § 4.2(b, e). By contrast, International Service Agencies need only receive approval at the national level, their fund-raising eligibility not being limited to localities where they have local chapters or committees for the reason that their work generally is performed overseas. Manual, § 4.2(c). American Red Cross units are eligible only in those local CFCs where the Red Cross does not raise funds through the United Way; this, of course, is to avoid duplicative efforts in those areas where the Red Cross is part of the local united fund or community chest. Manual, § 4.2(d). Likewise, National Health Agencies are eligible to raise funds separately through the CFC only in localities where they are not members of the local united fund or community chest. Manual, § 4.2(b). For these and other reasons, since each local CFC may have a different composition of beneficiaries, a substantial amount of local decision making is necessary. Accordingly, decision making authority has been delegated to committees called Local Federal Coordinating Groups (LFCGs). E.g., Manual, §§ 4.2A-4.3.

 Contributors may designate that their donations be distributed to particular agencies participating in the CFC. If a contributor does not designate a particular agency to benefit from the donation, the amount contributed goes into a pool which is divided among the approved agencies based on a formula set forth in the Manual. Manual, § 4.7. It is the manner in which undesignated funds are distributed that is at issue here.

 Arriving at a formula for distribution of undesignated funds has been a problem long plaguing the CFC. The difficulties encountered by defendant have been set forth in the affidavit of the Assistant to the Director, Office of Personnel Management. The question of distributing undesignated funds has been of great importance to the voluntary agencies participating in the CFC because of the financial benefits at stake; the agencies' "conflicting objectives and intents have been very difficult to reconcile." First Affidavit of Joseph S. Patti, Assistant to the Director, Office of Personnel Management, Exhibit A to Defendant's Motion (hereinafter, Patti Affidavit I), para. 3. The various agency groups have proposed different formulas for distributing undesignated contributions and although defendant has made efforts to arrive at a compromise formula, none of the formulas used by defendant have satisfied the groups. Id.

 The formula used at times relevant to this action came into use in fall 1980, pursuant to revisions to the Manual promulgated at 45 Fed. Reg. 24958-59 (Apr. 11, 1980). Section 4.7 of the revised Manual provides in part that:

The following method will be used for distribution receipts for all [local] CFCs which have been in existence for five years, unless the representative [sic] of the participating voluntary groups unanimously agree on another method: the local Federal Coordinating Group will allocate what it believes to be a reasonable portion to the undesignated funds to the National Service Agencies who participate in that CFC. The balance of the undesignated funds will be distributed to the United Way, the National Health Agencies, the International Service Agencies, and, when it is not part of the local United Way, the American Red Cross in the same proportions that their respective shares of undesignated funds from the past five campaigns bear to that CFC's total undesignated receipts from its last five campaigns.

 This portion of section 4.7 contemplates that undesignated funds could and should be distributed to the National Service Agencies. It also recognizes the problem of determining how to distribute undesignated funds in general, and reflects the government's policy to use past contributing history for guidance in making such determinations. Because the NSAs lacked a five-year contributing history, there could be no such guidance with respect to distributions to those agencies; evidently the "reasonable portion" direction was provided as a result.

 Likewise, local CFCs that had not been in existence for five years obviously could not disperse receipts to the other agency groups on the basis of a five-year contributing history; accordingly, section 4.7 provides that in such circumstances the appropriate LFCG will determine how undesignated funds would be distributed to the various groups using "any system they find reasonable except that undesignated funds may not be allocated among the participating groups on the basis of their respective shares of designated contributions." Distributing undesignated funds on such a basis was rejected because such an approach would be equivalent to presuming that those making undesignated contributions had the same intent or preferences as those designating the beneficiaries of their contributions and could work unfairly to the detriment of those organizations lacking high public visibility. See Second Affidavit of Joseph S. Patti, Exhibit E to Defendant's Opposition to Plaintiffs' Motion (hereinafter Patti Affidavit II), para. 6.

 On December 18, 1980, OPM transmitted further guidance, in the form of questions and answers, to the LFCGs on various issues including the question of the distribution of undesignated funds to NSAs. OPM's response was:

Widely varying local circumstances effectively preclude such guidance. Some FCGs have decided to allot the NSA group that percentage of total undesignated funds which corresponds to NSA's relative share of total designations. Others have attempted to make an approximate determination of the relative community needs served by the NSAs and have allotted undesignated funds to the NSA Group accordingly. Still other FCGs have allotted undesignated funds to the NSA Group on the basis of the number of agencies in the group and the total number of agencies in that CFC. A FCG may use any process or system it chooses to help it determine what is an appropriate share of the undesignated funds for the NSA Group.
Q. Now that the National Service Agencies Group has had a year's participation in the CFC, should it be treated ...

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