Amer Bnkr Assn v. Natl Crdt Un Admin

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 5, 2001 Decided November 9, 2001

No. 00-5195

American Bankers Association,

Appellant

v.

National Credit Union Administration, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 99cv00042)

Eric Mogilnicki argued the cause for appellant. With him

on the briefs were Christopher R. Lipsett, Jonathan M.

Mastrangelo, John J. Gill and Michael F. Crotty. Kimberly

A. Parker entered an appearance.

Michael E. Robinson, Attorney, U.S. Department of Jus-

tice, argued the cause for appellees. With him on the brief

were Kenneth L. Wainstein, U.S. Attorney, Jacob M. Lewis,

Attorney, U.S. Department of Justice, and John K. Ianno,

Counsel, National Credit Union Administration.

William J. Donovan, David M. Cherubin, Paul J. Lam-

bert, Gerard P. Finn and Robert M. Krasne were on the joint

brief for intervenors-appellees Credit Union National Associ-

ation, National Association of Federal Credit Unions, and

State Employees Federal Credit Union. Theodore W. Ruger

and Peter S. Leyton entered appearances.

Before: Randolph, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: The American Bankers Association

challenges a National Credit Union Administration rule gov-

erning chartering and membership standards for federal

credit unions. According to the ABA, the rule violates the

Credit Union Membership Access Act of 1998, pursuant to

which the Administration issued the rule. Except for one

claim that we dismiss as moot and another as unripe, we find

the ABA's arguments without merit and affirm the district

court's dismissal of the case.

I.

The Federal Credit Union Act (FCUA), 12 U.S.C. ss 1751-

1795k, provides for the establishment of federal credit unions

and governs their operations. A credit union is a "coopera-

tive association organized in accordance with the provisions of

[the FCUA] for the purpose of promoting thrift among its

members and creating a source of credit for provident or

productive purposes." Id. s 1752(1). The National Credit

Union Administration "may prescribe rules and regulations

for the ... administration of the [FCUA]," id. s 1766(a), and

charters, examines, and supervises federal credit unions, see

id. ss 1753, 1754, 1756.

As originally enacted, the FCUA limited credit union mem-

bership to "groups having a common-bond of occupation or

association, or to groups within a well-defined neighborhood,

community, or rural district." FCUA, Pub. L. No. 73-467,

s 9, 48 Stat. 1216, 1219 (1934) (codified at former 12 U.S.C.

s 1759 (amended 1998)). Starting in 1982, the Administra-

tion began permitting multiple occupational groups, i.e.,

groups with different common bonds, to combine into one

"multiple common-bond credit union." Interpretative Ruling

and Policy Statement (IRPS) 82-1, 47 Fed. Reg. 16,775,

16,775 (Apr. 20, 1982). In 1998, the Supreme Court, affirm-

ing a decision of this court, held that the FCUA prohibited

such credit unions. See Nat'l Credit Union Admin. v. First

Nat'l Bank & Trust Co., 522 U.S. 479, 499-501 (1998). Later

that year, however, Congress

amended the FCUA to authorize multiple common-bond

credit unions. Credit Union Membership Access Act, Pub. L.

No. 105-219, s 2, 112 Stat. 913, 914-15 (1998) (amending 12

U.S.C. s 1759(b)).

As amended, the FCUA permits three types of credit

unions, each defined by a different "membership field": sin-

gle common-bond credit unions, comprised of one group

having a common occupational or associational bond; multiple

common-bond credit unions, comprised of more than one such

group; and community credit unions. 12 U.S.C.

s 1759(b)(1)-(3). Pursuant to what the parties call a "grand-

father clause," the FCUA exempts certain previously existing

"members and groups" from the new membership field provi-

sions. Id. s 1759(c)(1). The FCUA also imposes several

limitations and conditions on multiple common-bond credit

union formation and growth, including: (1) restricting multi-

ple common-bond credit unions to groups with less than 3,000

members, id. s 1759(d)(1), unless certain exceptions apply,

including where a larger group "could not feasibly or reason-

ably" form its own credit union, id. s 1759(d)(2)(A); (2)

directing that the Administration "encourage" a group seek-

ing to join an existing credit union to form its own separately

chartered credit union instead, id. s 1759(f)(1)(A); (3) requir-

ing that in order to be added to an existing credit union a

group be within "reasonable proximity" of that credit union,

id. s 1759(f)(1)(B); and (4) requiring that where an existing

credit union seeks to include an additional group, the credit

union must satisfy certain "approval criteria" concerning its

financial soundness and administrative capabilities, and that

any harmful effect the expansion will have on any other credit

union must be "clearly outweighed in the public interest by

the probable beneficial effect of the expansion," id.

s 1759(f)(2). Finally, the 1998 Amendments added the word

"local" to the community credit union definition, thus confin-

ing such credit unions to "well-defined local communit[ies],

neighborhood[s], or rural district[s]." Id. s 1759(g)(1).

Following notice and comment, the Administration issued a

final rule implementing the 1998 Amendments. See IRPS

99-1, 63 Fed. Reg. 71,998 (Dec. 30, 1998). Several of the

rule's provisions regarding multiple common-bond credit un-

ions are at issue in this case. First, although the rule allows

the immediate family and household of a group member, as

well as "[p]ersons retired as pensioners and annuitants," to

join the group's multiple common-bond credit union, the rule

does not count these persons toward the 3000-member limit.

Id. at 72,002, 72,037. Second, in determining whether a

group with 3000 or more members "could not feasibly or

reasonably" form its own credit union, 12 U.S.C. s 1759(d)(2),

the Administration considers the group's "desire and intent,"

63 Fed. Reg. at 72,002. Third, while the rule requires groups

with 3000 or more members to "demonstrate why they cannot

satisfactorily form a separate credit union if they want to be

added to another credit union," it requires groups with fewer

than 3000 members to "demonstrate why they can successful-

ly operate a credit union" in order to be separately chartered.

Id. at 72,001. Fourth, the rule permits healthy multiple

common-bond credit unions comprised of groups with fewer

than 3000 members to merge with each other "without regard

to the statutory analysis that is required when [such groups]

... seek to join an existing credit union." Id. at 72,003.

Also at issue in this case are the rule's provisions imple-

menting the FCUA's grandfather clause, "reasonable proxim-

ity" requirement, and "well-defined local community" stan-

dard. See 63 Fed. Reg. at 71,998, 72,003, 72,015, 72,037-38.

Under the rule, the grandfather clause covers not just indi-

viduals who were members of a group at the time the FCUA

was amended, but also those who subsequently become mem-

bers of the group. Id. at 72,015. The rule provides that a

group is within "reasonable proximity" of a credit union if it is

within the "service area of a service facility of the credit

union"; a service facility includes a "credit union owned

electronic facility" other than an automated teller machine.

Id. at 72,002-03. Finally, the rule establishes criteria to

implement the statute's "well-defined local community" stan-

dard and adopts a presumption that certain areas, defined by

political jurisdiction and population, meet that standard. Id.

at 72,037-38.

Alleging that these provisions of the rule violate the FCUA,

appellant, the American Bankers Association (ABA), filed suit

in the United States District Court for the District of Colum-

bia pursuant to the Administrative Procedure Act. See 5

U.S.C. s 706. Underlying all of the ABA's claims is its belief

that the rule is too permissive with respect to credit union

formation and growth. Except for the provision regarding

pensioners, which the district court found the ABA's amended

complaint failed to challenge, the district court concluded that

each of the challenged provisions reflects a reasonable inter-

pretation of the FCUA and dismissed the amended complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6).

Renewing the arguments it made in the district court, the

ABA appeals. Three organizations representing credit un-

ions intervened to defend the rule. We review the district

court's Rule 12(b)(6) dismissal de novo. See, e.g., Brown v.

Plaut, 131 F.3d 163, 167 (D.C. Cir. 1997).

II.

Before considering the merits of the ABA's claims, we must

deal with its preliminary argument that the district court

erred by failing to direct the Administration to produce the

administrative record. According to the ABA, the district

court needed the administrative record in order to consider

its "claims under the APA, challenging NCUA's rule and

certain expansions on the ground that the agency's actions

were 'arbitrary, capricious, an abuse of discretion, or other-

wise not in accordance with the law.' " Appellant's Opening

Br. at 17 (quoting amended complaint). Having reviewed the

amended complaint, however, we agree with the district court

that the ABA's argument that the challenged provisions

violate the FCUA can be resolved with nothing more than the

statute and its legislative history. See Am. Bankers Ass'n v.

Nat'l Credit Union Admin., 93 F. Supp. 2d 35, 48-49 (D.D.C.

2000); see also Sierra Club v. United States Fish & Wildlife

Serv., 245 F.3d 434, 440 n.37 (5th Cir. 2001) ("Although the

administrative record for the regulation is not before this

Court, that is of no moment. Our review is limited to

interpreting the extent to which the regulation is consistent

with the statute--a task which we are competent to perform

without the administrative record.") (citing INS v. Cardoza-

Fonseca, 480 U.S. 421, 447 (1987)). Although the ABA now

hints that it also asserted a challenge to the Administration's

rule-making process, we can find no such claim in the amend-

ed complaint. Nor, and again contrary to what the ABA

says, can we find any challenge to the manner in which the

Administration has applied the rule in specific cases that does

not depend entirely on the argument that the rule itself

violates the statute. Should the ABA have concerns about

the Administration's application of the rule to specific cases, it

remains free to bring an as-applied challenge.

Because the ABA argues that the provisions of the rule it

challenges violate the FCUA, a statute the Administration is

charged with enforcing, we proceed in accordance with Chev-

ron's familiar two-part test. See Chevron U.S.A., Inc. v.

Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). Al-

though Chevron step one analysis begins with the statute's

text, we must not "confine [ourselves] to examining a particu-

lar statutory provision in isolation. The meaning--or ambi-

guity--of certain words or phrases may only become evident

when placed in context." FDA v. Brown & Williamson

Tobacco Corp., 529 U.S. 120, 132 (2000). We must also

"exhaust the traditional tools of statutory construction," Nat-

ural Res. Def. Council, Inc. v. Browner, 57 F.3d 1122, 1125

(D.C. Cir. 1995) (internal quotation marks and citation omit-

ted), including examining the statute's legislative history to

"shed new light on congressional intent, notwithstanding stat-

utory language that appears superficially clear," id. at 1127

(internal quotation marks and citation omitted). And, of

course, "we must be guided to a degree by common sense as

to the manner in which Congress is likely to delegate a policy

decision ... to an administrative agency." Brown & Wil-

liamson, 529 U.S. at 121. If, applying these principles, we

find that "Congress has directly spoken to the precise ques-

tion at issue ... 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." Chevron, 467 U.S. at 842-43.

Only if we find the statute either silent or ambiguous with

respect to "the precise question at issue" do we proceed to

Chevron's second step, asking "whether the agency's answer

is based on a permissible construction of the statute." Chev-

ron, 467 U.S. at 842-44. But not in this case. Although the

district court resolved all issues on the basis of Chevron step

two analysis, Am. Bankers, 93 F. Supp. 2d at 40, the ABA

rests its appeal entirely on Chevron step one. Throughout its

opening brief, the ABA uses only Chevron step one language:

"the District Court misapplied Chevron ... by upholding

actions that are contrary to the clearly expressed intent of

Congress," Appellant's Opening Br. at 11; "the language of

the FCUA expressly rejects NCUA's policy choice," id. at 26;

"Congress makes plain," id.; "it is clear that Congress did

not intend," id. at 28; "[the Administration] decided it could

evade the plain meaning of [the statute]," id. at 29; "[the rule

is unlawful] as a matter of simple English," id. at 35. More-

over, the brief never uses the word "unreasonable" nor any

other language suggesting a Chevron step two argument.

Even after the Administration and Intervenors responded

with Chevron step one and two defenses, the ABA confined

its reply brief to straightforward Chevron step one argu-

ments: "policy considerations cannot trump the clearly ex-

pressed intent of Congress," Appellant's Reply Br. at 7; "[the

Administration's] argument is contrary to the plain lan-

guage," id. at 9; "Congress did express an intent," id. at 12;

"there is no basis to believe that Congress's concern did not

apply," id. at 14. Accordingly, we will evaluate the ABA's

claims under Chevron step one standards alone.

We begin with the ABA's challenge to the Administration's

method for calculating the size of a common-bond group.

Under the statute, the "membership field" of a multiple

common-bond credit union is limited to groups comprised of

persons sharing a common bond, 12 U.S.C. s 1759(b)(2), and

"only a group with fewer than 3,000 members shall be eligible

to be included in the field of membership category of a

[multiple common-bond] credit union...." 12 U.S.C.

s 1759(d)(1). Under the rule, the Administration counts only

"primary potential members," 63 Fed. Reg. at 72,000, 72,002,

i.e., persons sharing the occupational or associational bond

that defines the group, toward the 3000-member limit. Al-

though "by virtue of their close relationship to a common-

bond group," certain other persons "may be included ... in

the field of membership" of a common-bond credit union--

that is, they may join the credit union--such persons are not

counted toward the 3000-member limit. Id. at 72,037. These

persons include immediate family and household members of

primary potential members, as well as pensioners and annui-

tants. Id. We consider each category in turn.

Family Members

Calling the rule's failure to count family members toward

the 3000-member limit a "serious misreading of the Act,"

Appellant's Opening Br. at 21, the ABA argues that individu-

als are eligible to join a common-bond credit union only if

they share the common bond. Therefore, the ABA claims, if

family members are eligible for common-bond credit union

membership, then they are necessarily group members and

must be counted. The ABA also points out that subsection

1759(c) contains two "[e]xceptions" to subsection (b), the

"membership field" provision--one for "grandfathered mem-

bers and groups" and another for "underserved areas"--

neither of which pertains to family and household members.

12 U.S.C. s 1759(c).

The ABA focuses too narrowly. Subsection 1759(b) ex-

pressly states that it is "subject to the other provisions of

[Section 1759]," 12 U.S.C. s 1759(b), and section 1759 con-

tains a provision relating to family and household members:

the "Additional membership eligibility provisions," 12 U.S.C.

s 1759(e). This subsection states:

No individual shall be eligible for membership in a credit

union on the basis of the relationship of the individual to

another person who is eligible for membership in the

credit union, unless the individual is a member of the

immediate family or household ... of the other person.

12 U.S.C. s 1759(e)(1). Though phrased as a limitation,

subsection 1759(e) links credit union membership eligibility

for family and household members to the personal relation-

ship between such persons and group members (or other

persons eligible for credit union membership), rather than to

group membership. Moreover, the fact that this provision

speaks of individuals' eligibility for credit union membership,

while the 3000-member limit provision, 12 U.S.C.

s 1759(d)(1), speaks of "group ... eligibil[ity] to be included

in ... a [multiple common-bond] credit union," indicates that

credit union members and group members do not entirely

overlap. Under these circumstances, we have no basis for

concluding that the FCUA unambiguously requires the Ad-

ministration to count family and household members toward

the 3000-member limit.

The ABA insists that "the history of the statute" supports

its view that section 1759(e)(1) provides no basis for family

and household credit union membership eligibility other than

sharing the common bond. Appellant's Opening Br. at 21.

Specifically, it argues that prior to the 1998 Amendments, the

Administration treated family and household members as

part of the common-bond group, and that in the district court

the Administration conceded that Congress "merely 'endorsed

the agency's longstanding policy' " regarding these persons.

Appellant's Opening Br. at 21-22 (quoting Admin. Mem. In

Supp. Motion to Dismiss at 51 (internal quotation marks and

citation omitted)). Although the ABA cites some evidence

that supports this characterization of the Administration's

prior policy, see 44 Fed. Reg. 43,737, 43,739 (July 26, 1979)

(proposed rule characterizing family members as "additional

persons [who] ... share a common bond with the basic

group") (cited in Appellant's Opening Br. at 21-22), other

evidence indicates that the matter is not so clear. For

example, a 1994 Final Interpretive Ruling and Policy State-

ment describes family members as "secondary or derivative"

members included in the field of membership "by virtue of

their close relationship to a common bond group." 59 Fed.

Reg. 29,066, 29, 093 (June 3, 1994) (cited in Intervenors' Br.

at 13 n.6). Such conflicting evidence cannot clarify ambigu-

ous statutory language. See Ayuda, Inc. v. Thornburgh, 880

F.2d 1325, 1345 (D.C. Cir. 1989) ("[E]ither the plain language

of the statute must be clear, or the legislative history and

design of the act must illustrate a specific intent despite

arguably ambiguous statutory language.") (citations omitted),

vacated on other grounds, 498 U.S. 1117 (1991).

Pensioners

Unlike the FCUA's express provision for family and house-

hold members, the statute never mentions pensioners or

annuitants. According to the ABA, this silence means that its

argument that anyone eligible for multiple common-bond

credit union membership must be counted toward the 3000-

member limit applies even more forcefully in the case of

pensioners. The district court concluded that the ABA had

failed to raise this claim because the amended complaint

mentions only family and household members in the relevant

count. Am. Bankers, 93 F. Supp. 2d at 41 n.3. We agree.

In its original complaint, the ABA made only one allegation

with respect to the Administration's method for calculating

common-bond group size: that the rule unlawfully fails to

count family and household members. See Complaint p p 40-

42. The complaint never mentioned pensioners. In its

amended complaint, the ABA continues to focus on family

members, although pensioners are mentioned. The amended

complaint describes how the rule permits certain persons

whom the Administration does not count as group members--

"persons in the immediate families or households of the credit

unions [sic] members; pensioners and annuitants of a quali-

fied business; spouses of persons who died when in the credit

union's field of membership; and employees of the credit

union"--to be eligible for credit union membership, Amended

Complaint p 24, and alleges that "if the persons listed in [this]

section of the rule ... do not share the common bond, then

they cannot be eligible for membership in a common-bond

credit union," id. p 28. The amended complaint further alleg-

es that the Administration's approval of a certain credit

union's application to add an occupational common-bond

group violated the statute because the Administration failed

to count "members of the employees' immediate families,

persons [who] retired as pensioners or annuitants ... and

[s]pouses of persons who died" as group members. Id. p 27

(internal quotation marks omitted). Like the original com-

plaint, however, the amended complaint challenges only the

failure to count family and household members. For exam-

ple, immediately after describing the rule's failure to count

pensioners and annuitants, among others, the amended com-

plaint alleges that the rule is unlawful because it "excludes

family members" and "counts only ... primary members."

Id. p p 25, 26 (internal quotation marks omitted). Likewise,

Count One objects to the rule's failure to count "certain

members of the common bond, including family and house-

hold members," id. p 69; neither Count One nor any of the

other sixteen counts mentions pensioners. Under these cir-

cumstances, we doubt the Administration could have known

that the ABA intended to challenge the rule's application to

pensioners and annuitants. See Fed. R. Civ. P. 8(a)(2);

Conley v. Gibson, 355 U.S. 41, 47 (1957) (setting forth notice

pleading rule).

III.

The FCUA's grandfather clause provides: "(i) any person

or organization that is a member of any Federal credit union

as of August 7, 1998 may remain a member of the credit

union after August 7, 1998"; and "(ii) a member of any group

whose members constituted a portion of the membership of

any Federal credit union as of August 7, 1998 shall continue

to be eligible to become a member of that credit union, by

virtue of membership in that group after August 7, 1998." 12

U.S.C. s 1759(c)(1)(A)(i) and (ii). The Administration inter-

prets the grandfather clause to permit persons who are

members of a group that was part of a credit union as of

August 7, 1998, the date the 1998 Amendments were enacted,

to join the credit union even if they didn't become group

members until after that date. See 63 Fed. Reg. at 72,015

(grandfather provision applies to "a member, or subsequent

new member, of any group, whose membership constituted a

portion of the membership of any federal credit union at the

date of enactment"). Disagreeing, the ABA argues that the

clause's plain language permits only persons who were group

members as of August 7, 1998, to join because only they could

"continue to be eligible" to become credit union members. 12

U.S.C. s 1759(c)(1)(A)(ii).

The ABA's interpretation is certainly plausible. But when

we read the grandfather clause in its entirety, as we must, see

Brown and Williamson, 529 U.S. at 120 (noting that statuto-

ry words and phrases should be read in context), its meaning

is not so clear. The grandfather clause's first part--referring

to "a member of any group whose members constituted a

portion of the membership of any Federal credit union as of

August 7, 1998," 12 U.S.C. s 1759(c)(1)(A)(ii)--suggests, as

the Administration argues, that its scope turns not on wheth-

er the individual was a group member as of August 7, 1998,

but on whether the group was part of a credit union as of that

date. Indeed, if individuals needed to be group members on

the date the FCUA was amended, the phrase "as of August 7,

1998" would follow the words "a member of any group."

According to the ABA, the Administration's interpretation

of the grandfather clause "has the effect of reading the word

'continue' out of the statute." Appellant's Reply Br. at 16.

We disagree. The Administration plausibly interprets this

word to refer to any member of a group that was part of a

credit union as of August 7, 1998. To use the statute's

language, if a group's "members constituted a portion of the

membership of any federal credit union as of August 7, 1998,"

12 U.S.C. s 1759(c)(1)(A)(ii), then the group's members,

whether they became members before or after August 7,

1998, shall "continue" to be eligible for credit union member-

ship.

Faced with two plausible interpretations of the grandfather

clause, we may examine its legislative history, see Browner,

57 F.3d at 1126-29 (considering legislative history at Chevron

step one), and that history definitively resolves the debate

over the grandfather clause's meaning in the Administration's

favor. The House Report explains that the "broad grandfa-

ther" clause "covers all persons or organizations or successors

who were members of a federal credit union on the date of

enactment of this Act, as well as anyone who is or becomes a

member of a group representing a portion of the credit

union's membership," H.R. Rep. No. 105-472, at 19 (1998),

and "[the provision] grandfathers all current members as well

as current groups contained within the membership of a

credit union as of the date of enactment of this legislation.

The grandfather [provision] will permit such groups to contin-

ue accepting new members," id. at 11. The Senate Report

makes the same point, stating that the clause includes "all

current members as well as current groups.... The grand-

father provision also permits such groups to continue adding

new members." S. Rep. No. 105-193, at 3-4 (1998). As the

district court put it, this legislative history is "pellucid" on the

issue. Am. Bankers Ass'n v. Nat'l Credit Union Admin., 38

F. Supp. 2d 114, 134 (D.D.C. 1999).

IV.

The ABA's next challenge focuses on the FCUA's require-

ment that in order for a group to be added to a credit union,

the group must be within "reasonable proximity" of that

credit union. 12 U.S.C. s 1759(f)(1)(B). The rule defines

"reasonable proximity" as "within the service area of a service

facility of the credit union." 63 Fed. Reg. at 72,002. Al-

though the rule defines a "service facility" as "a credit union

owned electronic facility" at which the credit union member is

"able to deposit funds, apply for a loan, and obtain funds on

approved loans," the rule "excludes ... ATMs." Id. at

72,003. Claiming that an "electronic facility" is similar to an

ATM, and that the legislative history of the 1998 Amend-

ments shows that "Congress did not intend for devices similar

to ATMs to be considered 'service facilities,' " Appellant's

Opening Br. at 37, the ABA argues that the Administration's

definition violates the statute. Defending its rule, the Admin-

istration argues that the legislative history deals with the

term "facility" in the context of a different statutory provi-

sion, that Chevron step two applies because the FCUA no-

where defines "reasonable proximity," and that the agency's

interpretation is reasonable.

Although the parties obviously feel strongly about this

issue--they devoted nine pages of briefing to it--not one has

identified an "electronic facility" that is not also an ATM.

The rule doesn't define "electronic facility"; the briefs never

define it; and when asked at oral argument, neither counsel

could define it, much less tell us whether non-ATM electronic

facilities even exist. Under these circumstances, this issue is

plainly unripe for judicial review. See Abbott Labs. v. Gard-

ner, 387 U.S. 136, 148-49 (1967) (ripeness requires that issue

be fit for judicial decision); Louisiana Envtl. Action Network

v. United States Envtl. Prot. Agency, 172 F.3d 65, 69 (D.C.

Cir. 1999) (issue not fit for judicial decision where its "[c]on-

sideration ... would benefit from a more concrete setting").

V.

The ABA raises several other challenges to the rule's

provisions governing multiple common-bond credit unions.

None has merit.

First, the ABA argues that the Administration's criteria for

determining when a group with 3000 or more members "could

not feasibly or reasonably establish a new single common-

bond credit union," 12 U.S.C. s 1759(d)(2)(A), and may there-

fore join an existing credit union, violate the FCUA because

the Administration considers the group's "desire and intent"

to be "[i]mportant" and "key" in this analysis, 63 Fed. Reg. at

72,002, 72,010. According to the ABA, the statutory phrase

"feasibly or reasonably" requires the Administration to deter-

mine independently whether the group could operate its own

credit union, but the rule "essentially ... allows the group

itself to decide whether it will be allowed to join an existing

credit union." Appellant's Opening Br. at 25. The rule

specifies, however, that "the intent of the group ... [is] not

the sole factor[ ]. The final decision must be based on an

independent regulatory analysis in consideration of the re-

maining factors in the regulation." 63 Fed. Reg. at 72,002

(emphasis added). Those remaining factors include "the vol-

unteers and resources to support the efficient and effective

operations of the credit union, whether the group meets the

economic advisability criteria and the demographics of the

group." Id. at 72,010.

Second, the ABA challenges the portion of the rule that

permits voluntary mergers between healthy multiple com-

mon-bond credit unions comprised of groups with fewer than

3000 members "without regard to the statutory requirements

for non-affiliated groups of [this size] ... seeking to join an

existing credit union." 63 Fed. Reg. at 72,003. These re-

quirements, which apply to multiple common-bond credit

union "expansions," include a provision directing the Adminis-

tration to "encourage the formation of separately chartered

credit unions," the "reasonable proximity" requirement, and

the "approval criteria" for credit unions seeking to include

new groups. 12 U.S.C. s 1759(f). The ABA argues that

these requirements "apply on their face whenever a credit

union seeks to expand its field of membership by adding new

groups--including when it does so through merger." Appel-

lant's Opening Br. at 30. This argument suffers from an

obvious defect: Several of the requirements set forth in the

"expansions" subsection make no sense in the case of merg-

ers. For example, how can the Administration "encourage

the formation of separate credit unions," since mergers, by

definition, bring together already-formed credit unions? Or

why would Congress have written the "approval criteria" in

the singular--"the credit union has not engaged in any unsafe

or unsound practice," "is adequately capitalized," and "has the

administrative capability ... and the financial resources ...

to serve the new membership group," 12 U.S.C.

s 1759(f)(2)--if it had intended them to apply to mergers of

two credit unions? Contrary to the ABA's argument, there-

fore, subsection 1759(f) does not unambiguously apply to

mergers.

Third, the ABA challenges the requirement that groups

with fewer than 3000 members "demonstrate why they can

successfully operate a credit union" in order to obtain a

separate charter. 63 Fed. Reg. at 72,001. According to the

ABA, this provision violates the FCUA's requirement that the

Administration "encourage the formation of separately char-

tered credit unions." 12 U.S.C. s 1759(f)(1)(A). Yet the

statute only requires the Administration to encourage groups

to form their own credit unions "whenever practicable and

consistent with reasonable standards for the safe and sound

operation of the credit union." Id. Requiring that smaller

groups show they can operate their own credit unions safely

is entirely consistent with this requirement.

VI.

We turn finally to the ABA's challenges to the Administra-

tion's approach to the chartering of community credit unions.

Pointing out that Congress added the word "local" to the

"well-defined community, neighborhood, or rural district"

community credit union definition, the ABA argues that al-

though Congress intended the Administration to take a more

restricted approach to community credit union charters, the

new rule is either the same as, or in some instances, less

restrictive than, the prior rule. In support of this proposi-

tion, the ABA cites two provisions of the rule: the criteria for

determining whether a community qualifies for a charter,

see 63 Fed. Reg. at 72,038, and the new 34presumptive community34

standard applicable to a recognized political jurisdiction with no more than

300,000 residents, or multiple contiguous political jurisdictions with no more

than 200,000 residents, see 63 Fed. Reg. at 72,013, 72,037-38. The ABA

contends that the community credit union criteria are substantially unchanged.

Compare 63 Fed. Reg. at 72,038 (new rule listing political jurisdictions,

major trade areas, shared/common facilities, organiza-

tions/clubs, newspapers/other periodicals, maps designating

community to be served, common characteristics and back-

ground of residents, and other documentation demonstrating

common interests or interaction) with 59 Fed. Reg. at 29,077

(former rule listing political jurisdictions, major trade areas,

shared/common facilities, organizations/clubs, newspa-

pers/other periodicals, census tracts, common

characteristics and background of residents, history of area, and other evidence of what

distinguishes chosen area and its residents).

The ABA also points out that an area benefitting from the

"presumptive community" standard is sub-

ject to less demanding documentation requirements than

ordinarily apply to an area seeking a credit union charter.

See 63 Fed. Reg. at 72,013, 72,037-38.

Keeping in mind that the ABA limits this appeal to Chev-

ron step one, we have little difficulty rejecting these arguments.

To begin with, the Administration acknowledges in the rule

itself that the addition of the word "local" reflects congres-

sional intent that it take "a more circumspect and restricted

approach to chartering community credit unions." 63 Fed.

Reg. at 72,012. Moreover, although the Administration left

the community credit union criteria substantially unchanged,

it has made clear that it intends to apply them more strin-

gently. Specifically, where a community tests the limits of

the statutory standard, the Administration will require it "to

demonstrate more definitively how it meets the local require-

ment." Id. at 72,012; see also id. at 72,037-38 (more docu-

mentation required for larger or more densely populated

areas). And although the Administration adopted a new

presumption, the rule not only requires documentation "de-

scribing how the area meets the standards for community

interaction or common interests," but also makes clear that

the Administration reserves the right to request additional

evidence of community interaction or common interests when

the community's initial submission falls short. See id. at

72,038. At least on its face, therefore, the rule adopts a more

circumspect method for applying the community credit union

criteria.

The ABA also argues that because the rule provides that

the Administration will consider an area's "primary ethnic

composition" in determining whether it qualifies as a "well-

defined local community," 63 Fed. Reg. at 72,038, the rule

violates the Fifth Amendment, the FCUA, and the Equal

Credit Opportunity Act, 15 U.S.C. s 1691(a)(3). The district

court dismissed this claim, concluding that the ABA, having

failed to allege injury to itself, lacked Article III standing. In

the alternative, the court held that the consideration of eth-

nicity in the chartering process violates none of the cited

statutory or constitutional provisions. See Am. Bankers, 93

F. Supp. 2d at 48. The Administration argues that this issue

has now become moot because it deleted the ethnicity provi-

sion from the rule during the pendency of this appeal. Com-

pare 63 Fed. Reg. at 72,038 (final rule) with 66 Fed. Reg.

15,619, 15,620 (March 20, 2001) (amending final rule). Al-

though the ABA insists that we should nonetheless "declare

[the] policy unlawful to prevent the [Administration] from

returning to it," Appellant's Reply Br. at 21, we think the

Administration has met its burden to show mootness: It has

eliminated the allegedly unlawful provision and "there is no

indication [it] will revert to its past [policy]." Arizona Pub.

Serv. Co. v. EPA, 211 F.3d 1280, 1295-96 (D.C. Cir. 2000)

(holding that challenge to EPA rule was moot where agency

issued clarification modifying challenged provision); see Nat'l

Mining Ass'n v. United States Dep't of Interior, 251 F.3d

1007, 1011 (D.C. Cir. 2001) (holding that challenge to National

Mining Association regulations was moot where agency

adopted new regulations eliminating challenged provisions);

Motor & Equip. Mfrs. Ass'n v. Nichols, 142 F.3d 449, 458-59

(D.C. Cir. 1998) (holding that EPA met " 'heavy' burden" to

show that challenge to EPA waiver for state regulatory

program was moot to extent state had eliminated allegedly

unlawful regulations) (quoting County of Los Angeles v.

Davis, 440 U.S. 625, 631 (1979)).

VII.

The ABA's challenge to the "reasonable proximity" require-

ment is dismissed as unripe. Its challenge to the ethnicity

provision is dismissed as moot. In all other respects, the

decision of the district court is affirmed.

So ordered.