PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

SUNDANCE ASSOCIATES, INC., a Colorado corporation,

Plaintiff-Appellee,

v.

JANET RENO, Attorney General of the United States, in her official capacity only; UNITED STATES DEPARTMENT OF JUSTICE,

Defendants-Appellants.

No. 96-1501

Appeal from the United States District Court

for the District of Colorado

(D.C. No. 95-N-2592)

Arthur M. Schwartz (Michael W. Gross, Cindy D. Schwartz, and Gary M. Kramer, with him on the brief) of Arthur M. Schwartz, P.C., Denver, Colorado, for Plaintiff-Appellee.

Anne M. Lobell (Jacob M. Lewis with her on the briefs), United States Department of Justice, Washington, D.C., for Defendants-Appellants.

Before BALDOCK and BRORBY, Circuit Judges, and BROWN,* District Judge.

BRORBY, Circuit Judge.

The Attorney General and the United States Department of Justice ("the government") appeal the United States District Court for the District of Colorado's award of summary judgment for Sundance Associates ("Sundance"), holding 28 C.F.R. § 75.1(c)(4)(iii) is an invalid implementation of 18 U.S.C. § 2257. This court assumes jurisdiction pursuant to 28 U.S.C. § 1291 and affirms.

Concerned about the exploitation of children by pornographers, Congress enacted the Child Protection and Obscenity Enforcement Act of 1988, Pub. L. No. 100-690, Title VII, § 7513(a), 102 Stat. 4187, 4485-4503 (significantly amended by the Child Protection Restoration and Penalties Enhancement Act of 1990, Pub. L. No. 101-647, Title III, §§ 301(b), 311, 104 Stat. 4808, 4816-17) to require producers of sexually explicit matter to maintain certain records concerning the performers1 that might help law enforcement agencies monitor the industry. See 18 U.S.C. § 2257. Violations of these record keeping requirements are criminal offenses punishable by imprisonment for up to two years for first-time offenders and up to five years for repeat offenders.2 See 18 U.S.C. § 2257(i).

The record keeping requirements apply to "[w]hoever produces" the material in question. 18 U.S.C. § 2257(a) (emphasis added). The statute defines "produces" as

to produce, manufacture, or publish any book, magazine, periodical, film, video tape or other similar matter and includes the duplication, reproduction, or reissuing of any such matter, but does not include mere distribution or any other activity which does not involve hiring, contracting for[,] managing, or otherwise arranging for the participation of the performers depicted.

18 U.S.C. § 2257(h)(3).

Pursuant to her authority to issue regulations to carry out the statutory requirements, see 18 U.S.C. § 2257(g), the Attorney General issued regulations implementing the statute on April 24, 1992.3 See 57 Fed. Reg. 15017-022 (1992); 28 C.F.R. § 75.

The extent to which the record keeping requirements apply to various persons and businesses is one area the regulations attempt to define. Under the regulatory language, the requirements apply to "[a]ny producer of any book, magazine, periodical, film, videotape, or other matter that contains one or more visual depictions of actual sexually explicit conduct made after November 1, 1990." 28 C.F.R. § 75.2(a) (emphasis added). The regulation defines "producer" as:

[A] person, including any individual, corporation, or other organization, who is a primary producer or a secondary producer.

(1) A primary producer is any person who actually films, videotapes, or photographs a visual depiction of actual sexually explicit conduct.

(2) A secondary producer is any person who produces, assembles, manufactures, publishes, duplicates, reproduces, or reissues a book, magazine, periodical, film, videotape, or other matter intended for commercial distribution that contains a visual depiction of actual sexually explicit conduct.

(3) The same person may be both a primary and a secondary producer.

(4) Producer does not include persons whose activities relating to the visual depiction of actual sexually explicit conduct are limited to the following:

(i) Photo processing;

(ii) Distribution; or

(iii) Any activity, other than those activities identified in paragraphs (c)(1) and (2) of this section, that does not involve the hiring, contracting for, managing, or otherwise arranging for the participation of the depicted performers.

28 C.F.R. § 75.1(c) (emphasis in original). The ultimate question in this case is whether this definition of "producer" clashes impermissibly with the statutory definition of "produces."

Sundance publishes five magazines: Odyssey, Odyssey Express, Connexion, Looking Glass, and UnReal People. These magazines print personal or commercial announcements by individuals seeking to contact others with similar sexual interests. The announcements are typically accompanied by pictures, most of which are sexually explicit. The pictures are submitted voluntarily to Sundance by the individuals advertising in the magazines. Sundance, therefore, does not participate in the production of the photographs it publishes in its various magazines.

Facing possible criminal liability as a "secondary producer" under the regulation, Sundance filed a complaint seeking declaratory relief in the district court. The parties filed cross-motions for summary judgment in the district court.

The court ruled for Sundance, finding 28 C.F.R. § 75.1(c)(4)(iii) to be an invalid implementation of 18 U.S.C. § 2257. 4 Applying Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the district court found the intent of Congress to be clear from the language of the statute and, consequently, did not inquire into the legislative history of the Act. Finding "[t]he plain meaning of this section of the Restoration Act clearly exempts persons whose activities '... include mere distribution or any other activity which does not involve hiring, contracting for[,] managing, or otherwise arranging for the participation of the performers depicted,'" the court determined the scope of the regulation's coverage to be impermissibly broader than that intended by the statute.

The government raises one issue on appeal: whether the district court erred in finding 28 C.F.R. § 75.1(c)(4)(iii) to be an invalid implementation of 18 U.S.C. § 2257.5

This court reviews the grant of a motion for summary judgment de novo, applying the same legal standard used by the district court. See Kaul v. Stephan, 83 F.3d 1208, 1212 (10th Cir. 1996). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). "When applying this standard, we examine the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. If there is no genuine issue of material fact in dispute, then we next determine if the substantive law was correctly applied by the district court." Kaul, 83 F.3d at 1212 (quoting Wolf v. Prudential Ins. Co., 50 F.3d 793, 796 (10th Cir. 1995)).

The facts in this case are not in dispute. The only question is whether the district court was correct in its legal analysis of the statute and regulation. We review de novo a district court's interpretation of a statute. See United States v. Diaz, 989 F.2d 391, 392 (10th Cir. 1993).

When faced with a challenge to the validity of a regulation, we apply the analytical framework provided by the United States Supreme Court in Chevron. As an initial matter, we decide "whether Congress has directly spoken to the precise question at issue." Chevron, 467 U.S. at 842. "'If the statute is clear and unambiguous "that is the end of the matter, for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." ... The traditional deference courts pay to agency interpretation is not to be applied to alter the clearly expressed intent of Congress.'" K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988) (quoting Board of Governors of Fed. Reserv. Sys. v. Dimension Fin. Corp., 474 U.S. 361, 368 (1986) (quoting Chevron, 467 U.S. at 842-43)). If, however, the statute does not speak directly to the question at issue or is ambiguous, the court, giving considerable weight to the agency's interpretation, must decide if the agency's answer is "a permissible construction of the statute." Chevron, 467 U.S. at 843-44.

In this case, we need go no further than the initial analysis. "[T]he text and reasonable inferences from it give a clear answer against the Government, and that ... is 'the end of the matter.'" Brown v. Gardner, 513 U.S. 115, 120 (1994) (quoting Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 409 (1993) (quoting Chevron, 467 U.S. at 842)). We agree with the district court that "[t]he plain meaning of [§ 2257((h)(3)] clearly exempts persons whose activities '... include mere distribution or any other activity which does not involve hiring, contracting for[,] managing, or otherwise arranging for the participation of the performers depicted.'"

Under the statutory scheme, the requirements apply to persons or organizations who "produce, manufacture, or publish" any of the identified matter, including those involved in "duplication, reproduction, or reissuing" of the matter, but not including those who merely distribute or whose activity "does not involve hiring, contracting for[,] managing, or otherwise arranging for the participation of the performers depicted." 18 U.S.C. § 2257(h)(3). The plain language of the statute establishes a group possibly subject to its requirements (including those who "produce, manufacture, or publish" and those involved in "duplication, reproduction, or reissuing") and then excludes from that group those who basically have had no contact with the performers (mere distributors and others not involved in the "hiring, contracting for[,] managing, or otherwise arranging for the participation of the performers depicted").6 Id.

The Attorney General's regulatory definition of producer follows the statute in establishing a class of individuals and organizations possibly subject to the record keeping requirements, but it fails to exclude persons from the class that the statute requires. The regulation conditions its exclusion of those "not involve[d in] the hiring, contracting for, managing, or otherwise arranging for the participation of the depicted performers" to persons who are not a primary or secondary producer. 28 C.F.R. § 75.1(c)(4)(iii). The statute makes no such condition. This is not a minor matter, because, as will be explained in detail below, the practical effect of the regulatory scheme is that the exclusion cannot be applied to anyone. "[A]n agency's interpretation of a statute is not entitled to deference when it goes beyond the meaning that the statute can bear." MCI Telecomm. Corp. v. American Tel. & Tel. Co., 512 U.S. 218, 234 (1994). An agency's rulemaking power is not "the power to make law," it is only the "'power to adopt regulations to carry into effect the will of Congress as expressed by the statute.'" Mabry v. State Bd. of Community Colleges & Occupational Educ., 813 F.2d 311, 315 (10th Cir.) (quoting Ernst & Ernst v. Hochfelder, 425 U.S. 185, 213-14 (1976) (further quotation marks and citations omitted), cert. denied, 484 U.S. 849 (1987).

Attempting to justify its regulation, the government urges upon this court a tortured reading of the statute. The government contends the second part of § 2257(h)(3), beginning with "does not include mere distribution," was actually intended to broaden the scope of the statute. The government's approach leads us down a path toward Alice's Wonderland, where up is down and down is up and words mean anything. The words "but does not include ... any other activity which does not involve hiring, contracting for[,] managing, or otherwise arranging for the participation of the performers depicted," the argument goes, were not intended to "not include" anyone listed above, but were actually intended by implication only to include more activities in the definition. This is too much of a stretch. In reviewing statutes, courts do not assume the language is imprecise, as the government would have us do. See United States v. LaBonte, ___ U.S. ___, 117 S. Ct. 1673, 1677 (1997). Rather, we assume that in drafting legislation, Congress says what it means. Id. This is not a case of verbal ambiguity presenting accepted alternative meanings; it is one of an agency twisting words to reach a result it prefers. Although § 2257(h)(3) was poorly drafted and should never be used as a model of the English language, its intent is clear to this court.

One wonders, looking at the regulation, why the government did not follow the logic of its own argument when implementing the regulation. 7 If the second clause of the statute actually was intended to broaden the definition of produces to include activities that "involve hiring, contracting for[,] managing, or otherwise arranging for the participation of the performers depicted," it seems odd that none of those activities are included in the regulatory definition of producer. The regulation defines a producer as a person who is a primary or secondary producer, yet the definitions of primary and secondary producer do not address hiring, contracting for, managing, or otherwise arranging for participation, as they should according to the government's arguments. See 28 C.F.R. § 75.1(c)(1)-(3).

Explaining its position, the government states "[t]he structure of the statute, which identifies 'mere distribution' as the activity specifically excluded from the definition of 'produces,' suggests that Congress did not intend to exempt actual producers from the definition, but only those whose involvement in production is wholly tangential." The problem with this position is the statute does not identify "mere distribution" as the only activity specifically excluded, but also "any other activity" basically not involving contact with the performers. 18 U.S.C. § 2257(h)(3). The government's explanation simply ignores the obvious import of the final clause of the statute.

The government also argues the Attorney General properly rejected the district court's reading of the statute because if "[S]ection 2257(h)(3) is interpreted that way, the clause 'includ[ing] the duplication, reproduction, or reissuing of any such matter' would be read out of the statute, because such activities would not necessarily involve the hiring, contracting for, or managing of performers." This is wrong. The clause would not be read out of the statute because it is easy to imagine persons duplicating, reproducing, or reissuing material they originally created who would have had the requisite contact with the performers, and as a result such persons would be subject to the requirements of the statute. Just because the exclusionary clause would make the statute inapplicable to some duplicators, reproducers, and reissuers is no reason to justify reading it out of the statute — narrowing the field is the very nature of exclusions.

The government further argues its comprehensive regulatory scheme is necessary because of the difficulties involved in enforcing the record keeping requirements only on those producers who hire, contract for, manage, or otherwise make arrangements for the participation of sexual performers.8 "[S]uch considerations address themselves to Congress, not to the courts." MCI Telecommunications, 512 U.S. at 234 (quoting Armour Packing Co. v. United States, 209 U.S. 56, 82 (1908)). Of course, this court is sympathetic to the purported9 goals of this legislation — preventing the sexual exploitation of children. And although it seems the Attorney General has identified a problem with its effective enforcement — that it is drawn in such a way as to make it narrow in application10 — neither the court nor the Attorney General has the authority to rewrite a poor piece of legislation (if, indeed, that is what it is). That responsibility lies solely with Congress.

Even if we assumed for purposes of this analysis that the statutory language was unclear, and proceeded to the second stage of Chevron analysis, we would have to find the Attorney General's regulation to be an impermissible construction of the statute. The regulation makes the final part of § 2257(h)(3), beginning with "or any other activity" superfluous. Although we afford deference to the Attorney General's interpretation of a statute under her purview, we cannot overlook an interpretation that flies in the face of the statutory language. See Bridger Coal Co./Pacific Minerals, Inc. v. Director, Office of Workers' Compensation Programs, U.S. Dep't of Labor, 927 F.2d 1150, 1153 (10th Cir. 1991) ("We will not construe a statute in a way that renders words or phrases meaningless, redundant, or superfluous.").

The regulation defines "producer as any "individual, corporation, or other organization, who is a primary producer or secondary producer." 28 C.F.R. § 75.1(c) (emphasis in original). Obviously then, if individuals, corporations, or other organizations are not primary or secondary producers, they are not producers for purposes of the regulation. That means, by definition, producers must engage in the activities listed in either 28 C.F.R. § 75.1(c)(1) or (2). See 28 C.F.R. § 75.1(c). For the exception to apply, however, one cannot be engaged in the activities listed in 28 C.F.R. § 75.1(c)(1) or (2). See 28 C.F.R. § 75.1(c)(4)(iii). Therefore, the exception is meaningless; it excepts those persons and organizations to which the regulation does not apply in the first place and it does not except any of the persons and organizations to which the regulation does apply.11

We have to assume Congress intended its words "but does not include ... any other activity which does not involve hiring, contracting for[,] managing, or otherwise arranging for the participation of the performers depicted" to have some meaning and effect. See Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979) ("In construing a statute we are obliged to give effect, if possible, to every word Congress used."). Because the government's construction makes these words mere surplusage, it cannot stand.

The government correctly notes the district court should not have held all of 28 C.F.R. § 75.1(c)(4)(iii) invalid. The flaw in the subsection of the regulation arises from the clause "other than those activities identified in paragraphs (c)(1) and (2) of this section." 28 C.F.R. § 75.1(c)(4)(iii) Our decision, therefore, necessitates only that clause be stricken from § 75.1(c)(4)(iii).

For the foregoing reasons, the district court's decision is AFFIRMED; however, we remand to the district court so it may issue a judgment striking from § 75.1(c)(4)(iii) only the clause identified above.