Petition for Writ of Certiorari — National Credit Union Admin. v. First Nat. Bank & Trust Co.

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—

Supreme Court, U.S.

No.

OCTOBER TERM, 1996

NATIONAL CREDIT UNION ADMINISTRATION,

PETITIONER

Vv.

FIRST NATIONAL BANK & Trust Co., r AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

WALTER DELLINGER

Acting Solicitor General

ROBERT M. FENNER FRANK W. HUNGER

General Counsel y recent

JOHN K. [ANNO General 25

Attorney SETH P. WAXMAN

National Credit Union Deputy Solicitor G

—— 99 22914-3428 | DAVID C. FREDERICK

Assistant to the Solicitor

General

DOUGLAS N. LETTER

JACOB M. LEWIS

MICHAEL E. ROBINSON

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

—

QUESTIONS PRESENTED

The Federal Credit Union Act (FCUA) limits fed-

eral credit union membership “to groups having a

common bond of occupation or association, or to

groups within a well-defined neighborhood, commu-

nity or rural district.” 12 U.S.C. 1759. The questions

presented by this petition are:

1. Whether banks, which the court of appeals found

not to be among the intended beneficiaries of the

FCUA, nonetheless fall within the “zone of inter-

ests” of that Act to have standing to challenge the in-

terpretation by the National Credit Union Admini-

stration (NCUA) of the FCUA’s common bond re-

quirement.

2. Whether the NCUA permissibly interpreted the

common bond provision to permit membership in a

federal credit union to consist of multiple groups, so

long as each group has its own common bond.

(I)

PARTIES TO THE PROCEEDING

The appellees in the court of appeals were

the National Credit Union Administration; AT&T

Family Federal Credit Union; and the Credit Union

National Association.

The appellants in the court of appeais were First

National Bank and Trust Company; Lexington State

Bank; Piedmont State Bank; Randolph Bank and

Trust Company; Bankers Trust of North Carolina;

and the American Bankers Association.

(ID)

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TABLE OF CONTENTS

Page

..... 1

6 eee 2

Statutory provisions involved . . 2

Statement 8 ———— 3

Reasons for granting the petitio˖ n . .. 14

. —— 30

3 la

rr eee se 15a

1 1352 B— — — 32a

11111 ———————— 43a

6 . 55a

„ 63a

TABLE OF AUTHORITIES

Cases:

Air Courier Conference v. American Postal Workers

Union, 498 U.S. 517 (4999 ——.—. . — 16, 19

AT & T Family Fed. Credit Union v. First Nat'l

Bank & Trust Co., 510 U.S. 907 (1983) 10

Block v. Community Nutrition Inst., 467 U.S. 340

1 19

Brunch Bunk & Trust Co. v. NCUA, 786 F.2d

621 (4th Cir. a ee

e 14, 16, 17, 18

Chevron U.S.A. Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984) ............. 10, 15, 22, 26

Clarke v. Securities Indus. Ass'n, 479 U.S. 388

(1987) — 17.18, 19, 22

Community First Bunk v. NCUA, 41 F.3d 1050

(6th Cir. 1994) 17, 28, 28

Estate of Cowart v. Nichioe Drilling ca. 505 US.

469 (1992) .. 21

(IID)

Cases—Continued:

First City Bank v. NCUA, Civ. No. 3:94-0334

(M.D. Tenn. Dec. 15, 1994) ........

First City Bank v. NCUA, 897 F. Supp. 1042

(M.D. Tenn. 1996), appeal docketed, No. 95-6543

sk Ä

Investment Co. Institute v. Camp, 401 U.S. 617

CRUE —

Liquid Carbonic Industries Corp. v. FERC, 29

F.3d 697 (D.C. Cir. 199600 —————————.—ẽA——̈S—.,.

Lujan v. National Wildlife Fed’n, 497 U.S. 871

(1990)

NLRB v. United Food & Commercial Workers

Union, 484 U.S. 112 (19877 ——————.—. .

Nations Bank of North Carolina, N. A. v. Variable

Annunity Life Ins. Co., 115 S8. Ct. 810 (19965) ..........

Rettig v. Pension Benefit Guaranty Corporation,

746 F.2d 133 (D.C. Cir. 1980) E —.—2—Ä

Scheduled Airlines Traffic Offices, Inc. v. Depart-

ment of Defense, 87 F.3d 1356 (D.C. Cir. 1996) .......

United States v. Riverside Bayview Homes, Inc.,

III ˙ͤö—

Statutes:

Act of Mar. 10, 1970, Pub. L. No. 91-206, 84 Stat.

88... —————

Administrative Procedure Act, 5 U.S.C. 701 et se.

I ˙

Crime Control Act of 1990, Pub. L. No. 101-647, Tit.

XXV, 104 Stat. 4859

Equality Banking Act of 1987, Pub. I.

Competitive

No. 100-86, §§ 701-716, 101 Stat. 652

Departments of Veterans Affairs and Housing and 8

Urban Development, and

Independent Agencies

Tit. III, 108 Stat. 884

Statutes—Continued: Page

Federal Credit Union Act, ch. 750, 48 Stat. 1216,

12 U.S.C. 1751 et 969. (1984) 3

12 U.S.C. 17875) 4

12 U.S.C. 1757(6) 4

12 U.S.C. 1759 (§ 9, 48 Stat. 1219) . 9

Federal Deposit Insurance

§ 261, 105 Stat. 281

St. 1983:

Development

Amendments Act of 1984, Pub. L. No. 98-479, —

98 Stat. 2234 —

National Defense Authorization Act for Fiscal Tear

Miscellaneous: Page

A. E. Burger & T. Dacin, Field of Membership: An

Evolving Concept (2d ed. 1992) Ra 5

Letter from E. F. Callahan, NUCA Chairman, to

Fernand J. St Germain, Chairman of House Comm.

Se eT ee eae

2K 5, 8

78 Cong. Rec. (1984):

Ba. TEED — 4

899 —ů——ů—ů——— —„—b 4

Credit Unions: Hearing Before a Subcomm. of the

Senate Comm. on Banking and Currency, 73d

Cong., Ist Sess. (198889———————. 24

GAO, Credit Unions: Reforms for Enawring Future

Soundness (July 1991) 6, 8

H.R. Rep. No. 2021, 78d Cong., 2d Sess. (1934) ... 4, 26

Ruling and Policy Statement 82-1,

47 Fed. Reg. 16,775 (1982. 6

Miscellaneous Continued:

S. Rep. No. 518, 91st Cong., Ist Sess. (1969) ......

Unrelated

Business Income Taz: Hearings Before

the Subcomm. on Oversight of the House Comm.

on Ways & Means, 100th Cong., Ist Sess. (1987) ....

Webster New International Dictionary (1917)

— n

In the Supreme Court of the United States

OCTOBER TERM, 1996

No.

NATIONAL CREDIT UNION ADMINISTRATION,

PETITIONER

First NATIONAL BANK & TRUST Co., Er AL.

}

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

The Acting Solicitor General, on behalf of the Na-

tional Credit Union Administration, petitions for a

writ of certiorari to review the judgment of the

United States Court of Appeals for the District of

Columbia Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals on the merits

(App., infra, Ia-14a) is reported at 90 F.3d 525. The

Court’s denial of

certiorari is reported at 510 U.S. 907. The district

court’s of the standing issue (App., infra,

32a-42a) is reported at 772 F. Supp. 609. A subsequent

opinion of the district court enjoining the National

(1)

Credit Union Administration (NCUA) from continu-

ing to implement its interpretation of the Federal

Credit Union Act (App., infra, 55a-62a) and an order

clarifying the injunction (App., infra, 63a-65a) are

unreported.

JURISDICTION

The judgment of the court of appeals was entered on

July 30, 1996. A petition for rehearing was denied on

October 23, 1996. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1).

STATUTORY PROVISIONS INVOLVED

Section 1759 of Title 12, United States Code, pro-

vides in pertinent part (emphasis added):

Federal credit union membership shall consist

of the incorporators and such other persons and

incorporated and unincorporated organizations, to

the extent permitted by rules and regulations

prescribed by the Board, as may be elected to

membership and as such shall each, subscribe to at

least one share of its stock and pay the initial

installment thereon and a uniform entrance fee if

required by the board of directors; except that

Federal credit union membership shall be lim-

ited to groups having a common bond of occupa-

tion or association, or to groups within a well-

defined neighborhood, community, or rural dis-

trict.

Section 702 of Title 5, United States Code, provides

in pertinent part:

A person suffering legal wrong because of

agency action, or adversely affected or aggrieved

by agency action within the of a relevant

statute, is entitled to judicial review thereof.

STATEMENT

This case presents issues of extraordinary impor-

tance to the National Credit Union Administration

(NCUA) and to the Nation’s federally-chartered

credit unions. Overturning an interpretation of the

Federal Credit Union Act (FCUA) formalized by the

NCUA in 1982, the court of appeals construed the

“common bond” provision of the FCUA to require

that all members of a federal credit union share a

single common bond. The NCUA’s interpretation

permits membership in a federal credit union to

consist of multiple groups, so long as each group had

its own common bond. The court of appeals’ ruling, as

implemented by the district court, immediately and

adversely affects nearly 3600 credit unions serving

over 32 million across the country. Those

credit unions hold 79% ($132 billion) of the deposits

(shares)! and 78% ($94 billion) of the loans of the

federal credit union system.

1. a. Congress enacted the FCUA in 1934, after the

Great Depression caused the collapse of the Nation’s

credit markets. Ch. 750, 48 Stat. 1216. At that time,

funds available for loans became scarce, and interest

rates rose too high to enable persons of limited means

In the parlance of credit unions, deposits of funds by

persons are the “purchase” of “shares” by “members” of the

credit union. See App., infra, 2a.

to purchase goods on credit. See S. Rep. No. 555, 73d

Cong., 2d Sess. 1, 3 (1934); H.R. Rep. No. 2021, 73d

Cong., 2d Sess. 1-2 (1934). Because Congress per-

ceived that the Nation’s “industrial recovery de-

pend[ed] on the buying power” of ordinary citizens, it

established “a Federal Credit Union System” to

“bring normal-credit resources on a cooperative ba-

sis” to people. S. Rep. No. 555, supra, at 1, 3; see H.R.

Rep. No. 2021, supra, at 1-2. Borrowers would benefit

by having an alternative to banks that often would not

lend small amounts of money to persons lacking the

requisite security, and to “loan sharks” that charged

usurious rates. See, e.g., 78 Cong. Rec. 7259 (1934)

(remarks of Sen. Sheppard); id. at 12,224 (remarks of

Rep. Luce). An expansion of credit unions would also

facilitate the education of “members in matters hav-

ing to do with the sane and conservative management

of their own money.” S. Rep. No. 555, supra, at 2.

Expanding access to credit unions, therefore, was a

congressional priority. For despite the country’s

financial upheaval, in the “38 States and in the Dis-

trict of Columbia” where credit unions operated,

there had been “no involuntary liquidations,” and

credit unions had compiled an “exceptional” “i ecord

for honest management.” S. Rep. No. 555, supra, at 2.

See also 78 Cong. Rec. 7259 (1934) (remarks of Sen.

Sheppard); id. at 12,225 (remarks of Rep. Patman).

Under the FCUA, each federal credit union is

funded by shares purchased by its members, see 12

U.S.C. 1757(6), and makes loans exclusively to its

members and to other credit unions or credit union

organizations, 12 U.S.C. 1757(5). The members con-

trol the credit union on a democratic basis, with each

member having an equal vote regardless of the

amount of money held in the institution. 12 U.S.C.

1760. Federal credit unions are managed by a board of

directors, a supervisory committee, and (on occasion)

a credit committee, all consisting of credit union

members who, save for one, serve without compensa-

tion. 12 U.S.C. 1761.

In 1970 Congress created the NCUA and em-

powered it to charter, examine, and supervise federal

credit unions. Pub. L. No. 91-206, 84 Stat. 49. The

NCUA has the authority to “prescribe rules and

regulations for the [FCUA’s] administration.” 12

U.S.C. 1766(a). Congress intended the NCUA to

“provide more flexible and innovative [credit union]

regulation.” S. Rep. No. 518, 91st Cong., Ist Sess. 3

(1969).

b. Since its passage in 1934, the FCUA has limited

membership in a federal credit union to groups hav-

ing a common bond of occupation or association, or to

groups within a well-defined neighborhood, commu-

nity, or rural district.” 12 U.S.C. 1759. See ch. 750,

§ 9, 48 Stat. 1219. The history behind the original

FCUA legislation reveals little about Congress’s

precise intent in using the phrase “common bond,”

but the requirement immediately facilitated the ex-

pansion of credit unions, because it was “easier to

promote the idea of a credit union to a group or an

association whose members already had a common

bond.” Letter from E. F. Callahan, NCUA Chairman,

to Fernand J. St Germain, Chairman of House Comm.

on Banking, Finance and Urban Aff., at 8 (Oct. 28,

1983) (Callahan Letter), C.A. App. 584; see also A. E.

Burger & T. Dacin, Field of Membership: An Evolv-

ing Concept 8 (2d ed. 1992), C.A. App. 571 (organizing

2 The NCUA also insures all federal credit union member

accounts. See 12 U.S.C. 1781.

credit unions around “particular groupings” was

“simply easier” and involved “generally lower”

“start-up costs”).

c. In response to changing economic conditions,

the NCUA and its predecessors from time to time

have modified their application of the common bond

provision.“ In 1982 the NCUA adopted a policy per-

mitting the establishment of credit unions consisting

of “multiple occupational * * * groups.” Interpre-

tive Ruling and Policy Statement (IRPS) 82-1, 47

Fed. Reg. 16,775. Under this policy, the agency per-

mitted a credit union to add “distinct group[s]” to its

field of membership, so long as each group had its own

common bond and was within a well-defined area near

the credit union’s offices. IRPS 82-3, 47 Fed. Reg.

26,808 (1982).

In a 1983 letter to the Chairman of the House Com-

mittee on Banking, Finance and Urban Affairs, see

C.A. App. 528, NCUA Board Chairman E. F. Callahan

explained the important purposes served by the

NCUA’s policy. First, experience showed that “some

groups were too small either by themselves or when

3 Thus, for example, in 1967 federal credit union tors

replaced their requirement that members of a federal eredit

union be “extensively acquainted” with each other with the

requirement that members simply “know” one another. GAO,

Credit Unions: Reforms For Ensuring Future Soundness 217

(July 1991), C.A. App. 553. A year later, regulators instituted

a policy that, once a person became a credit union member, he

or she could remain a member for life. Ibid. And in 1972 the

NCUA took account of the growing phenomenon of industrial

and commercial parks to permit satisfaction of the common

bond requirement “if the employees are so situated that as a

consequence of their employment and relationship they can be

expected to effectively operate a credit union.” NCUA, Or-

ganizing a Federal Credit Union 7 (Sept. 1972), C.A. App. 456.

grouped together to support a viable credit union,” so

a policy of permitting multiple group additions en-

sured that credit unions “could serve groups not

otherwise eligible for a viable credit union charter.”

Id. at 536. Second, permitting diversification of credit

union membership provided a measure of protection

against “hard economic times.” Jbid. As Chairman

Callahan pointed out, “[cJredit unions that served

only one employer or one industry could be forced into

liquidation by plant closings or major industrial

slumps.” Jd. at 535-536. By contrast, “a credit union

whose membership was made of distinct groups, each

group serving different employees or industries,

could continue to serve its members,” thereby fur-

thering the FCUA’s intent to promote “a national

system of cooperative credit.” Ibid.

The NCUA consolidated and restated its charter-

ing and field of membership policy in 1989. See IRPS

89-1, 54 Fed. Reg. 31,168. At that time, the agency

reaffirmed that it would permit “select group addi-

tions” to federal credit union membership. Id. at

31,176. The agency again made clear that Aa] select

group of persons seeking credit union service from an

occupational, associational or multiple group Federal

credit union must have its own common bond,” but

counseled that “[tJhe group’s common bond need not

be similar to the common bond(s) of the existing

Federal credit union.“ Ibid. The NCUA reiterated

its new position through a policy statement issued in

1994. See IRPS 94-1, 59 Fed. Reg. 29,066, 29,078,

29,085.

d. From the inception of the NCUA’s revised

common bond policy, Congress has been made aware

of the agency’s policy by the NCUA itself, lobbyists

from the banking industry, and the General Account-

ing Office (GAO). See, eg., NCUA Ann. Rep. to

Congress 1 (1982), C.A. App. 527; Callahan Letter, sw-

pra; Unrelated Business Income Tax: Hearings Be-

fore the Subcomm. on Oversight of the House Comm.

on Ways and Means, 100th Cong., Ist Sess. 1883

(1987) (comments of the American Bankers Associa-

tion objecting to NCUA’s expanded interpretation of

the common bond requirement as unfair because it

“allow[ed] credit unions to compete with banks and

savings and loans for customers among the general

public” and complaining that the common bond re-

quirement already “had been loosely interpreted for

many years before [1982]”); GAO, Credit Unions:

Reforms for Ensuring Future Soundness 218-219

(July 1991), C.A. App. 554-555. Despite amending the

FCUA many times since 1982, Congress has never

altered NCUA’s current construction of the common

bond provision.‘

See Act of Jan. 12, 1983, Pub. L. No. 97-457, $§ 25-29, 96

Stat. 2510-2511; Secondary M Market Enhancement

Act of 1984, Pub. L. No. 98-440, § 105, 98 Stat. 1691 (Oct. 3,

1984); Housing and Community Dev Technical

Amendments Act of 1984, Pub. L. No. 98-479, § 206, 98 Stat.

2234 (Oct. 17, 1984); Competitive Equality Banking Act of 1987,

Pub. L. No. 100-86, §§ 701-716, 101 Stat. 652 . 10, 1987);

Financial Institutions Reform, Recovery, and Enforcement

Act of 1989, Pub L. No. 101-73, Tits. IX, 108 Stat. 446, 519

(Aug. 9, 1989); Support for East European Democracy (SEED)

Act of 1989, Pub. L. No. 101-179, § 206, 103 Stat. 1310 (Nov. 28,

1989); Departments of Veterans Affairs and Housing and

Urban Development, and Independent Agencies 1

tions Act, 1990, Pub. L. No. 101-144, Tit. III, 103 Stat. 864 (Nov.

9, 1989); Crime Control Act of 1990, Pub. L. No. 101-647, Tit.

XXV, 104 Stat. 4859 (Nov. 29, 1990); Federal Deposit Insurance

Corporation Improvement Act of 1991, Pub. L. No. 192-242,

§§ 251, 313, 105 Stat. 2331, 2368 (Dec. 19, 1991); Housing and

Community Development Act of 1992, Pub. L. No. 102-550,

99 1501-1504, 1604-1605, 106 Stat. 4044, 4081 (Oct. 28, 1992);

Fie

125

“i

statute’s “common bond” requirement. Id. at 19a.

ATTF and its trade association filed a petition for

certiorari, which this Court denied. AT&T Family

Fed. Credit Union v. First Nat'l Bank & Trust Co.,

510 U.S. 907 (1998).

e. On remand, the district court granted summary

judgment to NCUA and ATTF, holding that the

NCUA’s construction of Section 1759 was “a reason-

able construction of an ambiguous statute.” App.,

infra, 54a.

d. Again the court of appeals reversed. The court

concluded that Congress’s intent to limit federal

credit union membership to groups that are bound by

a single common bond is “clearly discernible from the

statutory text and the purpose of the statute.” App.,

infra, 6a. Invoking Chevron U.S.A. Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984),

it by the NCUA. Finding no ambiguity in the statu-

tory language, the court concluded that deference was

The court first reasoned that the term “common

bond” in Section 1759 “would be surplusage if it ap-

the interlocutory in which the issue came to the Court,

and advised that the issue would be more efficiently handled

after the merits of the had been decided. The NCUA

with

plied only to the members of each constituent group

and not across all groups of members” in a federal

credit union because “the members of a group are by

definition bonded.” App., infra, 7a. Thus it found that

the text of the “Act clearly forecloses” the possibility

of “the employees of unaffiliated Company B * * *

joinling] the [federal credit union] at Company A.” Id.

at 8a.

The court further analyzed the statutory text by

comparing use of the term “groups” in the parallel

provisions of Section 1759: one involving “groups

Noting that, as to the latter, “(t]he statute does not

allow multiple groups, each within a different neigh-

borhood, to form a single community [federal credit

union],” the court reasoned that “[njor therefore can

the statute consistently allow multiple groups, each

drawn from a different occupation (which the NCUA

equates with a different employer’), to form an

occupational [federal credit union]. Id. at 9a.

The court did not find the legislative history to be

so contrary to its textual analysis as to require a

different result. It rejected the NCUA’s arguments

that its regulations provided other limitations to the

growth and development of federal credit unions, and

concluded that the over-arching purpose of the FCUA

was to “unite[ ] credit union members in a cooperative

venture,” a purpose that would be frustrated by the

NCUA’s interpretation allowing multiple unrelated

groups to form an occupational federal credit union.

That is not, in fact, the NCUA’s position. See pp. 20-21,

infra.

App., infra, 12a. Based on that reasoning, the court

held that “all members of [a federal credit union] must

share a common bond,” and “{ijf there are multiple

occupational groups within a single credit union, then

it is not sufficient that the members of each different

group have a bond common to that group only.” Jd. at

14a. The court reversed the district court’s judgment

and remanded the case “for the entry of declaratory

and injunctive relief, consistent with the foregoing

opinion, concerning the NCUA’s 1989 and 1990

approvals of certain applications filed by ATTF.”

Ibid. On October 23, 1996, the court denied rehear-

ing.

e. On October 7, 1996, the American Bankers Asso-

ciation and two other plaintiffs filed a new action in

district court seeking a temporary restraining order

preventing the addition of new “select employee

groups” to all federal credit unions, as well as barring

the addition of new members to any existing such

group. American Bankers Ass'n v. NCUA, No. 96-

CV-2312 (TPJ). The district court consolidated this

new action with the existing case. On October 25,

1996, based on the D.C. Circuit’s prior determination

setting the meaning of the statutory common bond

bership in a federal credit union by individuals or

groups of individuals who do not share a single

common bond of occupation with all other members

thereof.” App., infra, 6la. Accordingly, that court

The meaning of the common bond provision in the FCUA

is also currently pending before the Sixth Circuit in ;

Bank v. NCUA, No. 95-6543. As we discuss at pp. 28-29, infra,

the pendency of that appeal does not diminish the importance

of granting certiorari in this case.

permanently enjoined the “National Credit Union Ad-

ministration, its officers, attorneys, agents, employ-

occupational

admit members who do not share a single common

The October 25, 1996, order applies the D.C. Cir-

cuit’s common bond ruling on a nationwide basis

through an injunction covering the NCUA’s regula-

occupational

union’s core membership.” App., infra, 65a. Still

pending in the district court is the banks’ motion to

order retroactive divestiture of groups or members

who do not share a common bond with the core group.“

on the underlying merits of the decision on which the injunc-

tion is based. The agency has highlighted the massive disrup-

tion the district court’s order is causing, while the plaintiff

banks are not suffering significant, cognizable injury. The

court has not yet ruled on the stay request.

The NCUA also has taken interim, emergency steps to deal

—

REASONS FOR GRANTING THE PETITION

The court of appeals’ decision expands the concept

of standing under the Administrative Procedure Act

(APA), 5 U.S.C. 701 et seq., well beyond this Court’s

precedents, in conflict with another court of appeals;

it misconstrues the Federal Credit Union Act

(FCUA); and it threatens nationwide instability and

losses in the credit union industry affecting millions

of persons.

This Court has made clear that, to have standing to

challenge administrative actions under the APA, a

complainant must suffer an injury that falls within

the “zone of interests” that Congress intended to pro-

tect in the underlying statute. Lujan v. National

Wildlife Fed’n, 497 U.S. 871, 883 (1990). By holding

that banks have standing to challenge the rules for

federal credit union membership established by Con-

gress and implemented by the NCUA, the court’s

decision squarely conflicts with Branch Bank &

Trust Co. v. NCUA, 786 F. 2d 621 (4th Cir. 1986), cert.

denied, 479 U.S. 1063 (1987).

On the merits, the court’s decision overturns a

policy that has been in place since 1982, and upon

which thousands of federal credit unions have relied.

The NCUA policy construed the statutory phrase

“groups having a common bond of occupation or

association,” 12 U.S.C. 1759, to permit more than one

ing. These temporary, emergency rules, however, are

expected to provide some help in only approximately one-half

of the credit unions affected by the nationwide injunction.

Thus, even with these emergency measures, the effect of the

D.C. Cireuit's decision is being felt immediately by thousands of

credit unions. In addition, the plaintiffs in the pending district

court action have already challenged the validity of even these

temporary, emergency measures.

group to join together in a single federal credit union

so long as a “common bond of occupation or associa-

tion” existed for all the members of each group. The

court below erred by holding that that phrase could

only be construed to mean one or more groups whose

members “shared” a single “common bond of occupa-

tion or association.” The court’s interpretation is

inconsistent with the text and history of the FCUA,

as well as the NCUA’s longstanding administrative

interpretation, which is entitled to deference.

Chevron U.S.A. Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984).

The court’s ruling threatens the survival of many

federal credit unions across the country. To

date, nearly 3600 federal credit unions (or 50% of all

federal credit unions nationwide) have relied on the

NCUA’s common bond policy to absorb some 158,000

employee groups, with millions of members. Of the

Nation’s 200 largest federal credit unions, 158 have

multiple employee groups, with such groups consti-

38% of thelr credit union's membership. By

determining that such membership is contrary to the

governing statute, the court’s decision adversely

affects credit unions with more than 32 million mem-

bers, assets of $150 billion, loans of $94 billion, and

$132 billion in member shares.

The commercial uncertainty created by the court’s

decision far outweighs any benefits this Court might

derive from further percolation of the legal issues

since the lower court’s na-

writ of certiorari should be granted. We have expedi-

tiously filed this petition, seeking a ruling by this

Court during the current Term, in the hope that the

extreme disruption in the credit union industry can

be resolved quickly.

1. The court of appeals’ decision on standing con-

stitutes an unwarranted expansion of this Court’s

test for prudential “zone of interests” standing, and it

conflicts with the decision of the Fourth Circuit in

Branch Bank & Trust Co. v. NCUA, 786 F.2d 621

(1986), cert. denied, 479 U.S. 1063 (1987). An entity

does not have standing to bring suit under the Ad-

ministrative Procedure Act, unless it can show that

it has in fact been “adversely affected or aggrieved by

agency action within the meaning of a relevant

statute.” 5 U.S.C. 702. Thus, it must show that the

injury of which it complains “falls within the ‘zone of

interests’ sought to be protected by the statutory

provision whose violation forms the legal basis for his

complaint.” Lujan, 497 U.S. at 883. See also Air

Courier Conference v. American Postal Workers

Union, 498 U.S. 517, 523 (1991). Courts must examine

“Congress’ intent in enacting [the relevant statutes]

in order to determine whether [the banks] were meant

to be within the zone of interests protected by those

statutes.” Id. at 524.

The court below found that “Congress did not, in

1934, intend to shield banks from competition from

credit unions.” App., infra, 21a. Indeed, as the court

explained, “the very notion seems anomalous, because

Congress’ general purpose was to encourage the

proliferation of credit unions, which were expected to

provide service to those would-be customers that the

banks disdained.” Jbid. Neither the text nor the

history of the FCUA and its many amendments indi-

cates any concern by Congress about the

competitive position of banks,” as the court below

acknowledged. Id. at 22a. The court nonetheless held

that banks are “suitable challengers” to enforce the

FCUA’s common bond requirement because there is

“a reason to think” that _.e banks’ interest in

“patrolling a statutory picket line will bear some

statute. Jd. at 27a-28a (emphasis added). See also

Community First Bank v. NCUA, 41 F.3d 1050, 1054

(6th Cir. 1994). The lower court’s standing

determination thus permits plaintiffs to bring claims

not only when the statute evinces no clear purpose to

benefit them, but also, paradoxically, when Congress

gave every indication that it did not intend to benefit

them.

In identical circumstances, the Fourth Circuit has

held that banks have no standing to challenge the

NCUA’s interpretation of the common bond require-

ment. That court found that “the general purposes of

the [FCUA], rather than indicating a desire to pro-

tect banks, instead suggest that competitive interests

of banks were purposefully sacrificed by Congress to

the interests of facilitating credit for people of limited

personal means.” Branch Bank, 786 F.2d at 626.

Given the rationale for the common bond require-

ment, the Fourth Circuit held, “we will not attribute

to it a meaning that is at cross purposes with the

general goals of the statute. If the NCUA were seen

to violate the common bond requirement to the detri-

ment of credit union members, they would possess

standing to sue. The banks, by virtue of the statute,

simply do not occupy a similar position.” Ibid.

The lower court attempted to distinguish Branch

Bank on the basis of this Court’s intervening deci-

sion in Clarke v. Securities Indus. Ass’n, 479 U.S.

388, 399-400 (1987). In Clarke, this Court held that an

association of securities dealers had standing to

challenge a decision by the Comptroller of the Cur-

rency allowing a national bank to set up discount

brokerage offices. The Court explained that “[iJn

cases where the plaintiff is not itself the subject of

the contested regulatory action, the [zone of inter-

ests] test denies a right of review if the plaintiff’s

interests are so marginally related to or inconsistent

with the purposes implicit in the statute that it

cannot reasonably be assumed that Congress intended

to permit the suit.” Id. at 399. In Clarke, this Court

upheld the standing of the securities dealers because

they were attempting to enforce a requirement that

was intended by Congress to limit the reach and scope

of services offered by national banks. Id. at 403.

The court below concluded that Clarke supports

the proposition that banks have standing as “suitable

challengers” to the FCUA requirement that groups

forming credit unions must have a “common bond.”

Yet unlike in Clarke, the banks’ suit impedes the con-

gressional purpose of the statute, which is to promote

the accessibility and growth of federal credit unions.

Contrary to the court’s analysis, Clarke is perfectly

consistent with a rule that would deny the banks’

standing in this situation.’

The plaintiff banks were found to lack standing in Branch

Bank. Their petition for certiorari on the standing issue was

pending before this Court while Clarke was under submission.

The Court held the petition pending disposition of Clarke, but

when Clarke was decided, the Court did not grant certiorari,

vacate, and remand the decision in Branch Bank in light of

Clarke. Instead, it denied certiorari outright. 479 U.S. 1063

(1987). This treatment negates the D.C. Circuit’s view that the

decision in Clarke undermined the continuing validity of the

This Court’s more recent decision in Air Courier,

which the court below did not discuss, lends support

to the correctness of the Fourth Circuit’s reasoning

in Branch Bank. In Air Courier, this Court es-

chewed any discussion of the “suitable challenger”

test adopted by the D.C. Circuit. In that case, postal

employees challenged a decision by the U.S. Postal

Service to permit private companies to engage in

certain mailing practices, a decision the plaintiffs

claimed violated the postal monopoly created by the

Private Express Statutes. This Court simply stated

that it must inquire into whether the plaintiffs were

meant to be within the zone of interests protected by

those statutes. 498 U.S. at 524. Finding no evidence

that the statutes were intended for the benefit of the

plaintiffs, the Court concluded that they lacked

standing. Id. at 524-526. The Court made no inquiry

into whether the plaintiffs would be “suitable

challengers” to attack the agency’s interpretation of

the statutes, and nothing in Air Courier suggests

that Clarke changed the longstanding principles upon

which “zone of interests” standing should be

analyzed. See, e.g., id. at 523, 529-530; see also Clarke,

479 U.S. at 399 (determining whether a statute is

aimed at protecting the interests of the plaintiff may

indicate “whether Congress ‘intended for [that plain-

tiff] to be relied upon to challenge agency disregard of

the law’”) (quoting Block v. Community Nutrition

Inst., 467 U.S. 340, 347 (1984)).

A square conflict thus exists among the circuits on

the standing issue presented in this case. That con-

Fourth Circuit’s ruling in Branch Bank. There is no reason to

doubt that Branch Bank still represents the law in the Fourth

Circuit.

flict is of considerable importance even beyond the

type of challenge made by banks to the NCUA’s

construction of the FCUA because the D.C. Circuit

has applied its “suitable challenger” test in a number

of cases since its decision in this case.”

2. Independent of the standing issue, review is also

warranted on the merits of the court’s decision to

overturn the NCUA’s established construction of the

FCUA’s common bond requirement. The court of

appeals misapplied Chevron in failing to defer to the

NCUA’s reasonable interpretation of the statute

Congress charged it with administering.

By limiting federal credit union membership to

“groups having a common bond of occupation or

association,” 12 U.S.C. 1759, the FCUA allows for the

possibility that membership in a federal credit union

may consist of more than one employee group. At

worst—as the court of appeals appeared initially to

recognize—the statute is ambiguous: “the plural

noun ‘groups’ could refer * * * to multiple groups in

a single [federal credit union],” or “to each of the

groups that forms a credit union.” App., infra, 6a.

The court nonetheless overturned the agency’s con-

struction by concluding that, despite the apparent

imprecision of the statutory language, Congress’s

intent to require that all members of a federal credit

union share a common bond is “clearly discernible”

from the statute’s text and purpose. Jbid. That

analysis is flawed.

0 See, e. g., Scheduled Airlines Traffic Offices, Inc. v. De-

partment of Defense, 87 F.3d 1356, 1359-1360 (D.C. Cir. 1996);

Liquid Carbonic Industries Corp. v. FERC, 29 F.3d 697, 705-

706 (D.C. Cir. 1994).

a. The NCUA’s interpretation of the common bond

provision is consistent with the language of the stat-

ute. By its terms, the statute limits “Federal credit

union membership” to “groups” having a common

bond. The NCUA’s policy is based on the statute’s

use of the plural form of the word “group,” which

makes clear in and of itself, that the membership of a

federal credit union can have more than one group.

The language of the opening portion of Section 1759

also supports the conclusion that Congress’s refer-

ence to “Federal credit union membership” was in-

tended to refer to membership in a single credit union

that might include multiple “groups.” Section 1759

begins by specifying that “Federal credit union mem-

bership” shall consist of “the incorporators and such

other persons and * * * organizations” who shall

“subscribe to at least one share of its stock and pay

the initial installment thereon and a uniform en-

trance fee if required by the board of directors.” 12

U.S.C. 1759 (emphasis added). The word “its” clearly

refers back to the term “credit union” as used in the

initial phrase, “Federal credit union membership.”

Those requirements clearly apply to a single credit

union. The provision’s subsequent reference to

“groups” in the context of “Federal credit union mem-

bership” is therefore best understood as embracing a

single federal credit union. There is no reason to

think that Congress used the phrase “Federal credit

union membership” in any different manner when it

set forth the common bond requirement later in the

same sentence. See, ¢.g., Estate of Cowart v. Nicklos

Drilling Co., 505 U.S. 469, 479 (1992) (“identical

terms within an Act bear the same meaning”). Ac-

cordingly, it was entirely reasonable for the NCUA

to read the common bond provision to permit “a credit

union” to be composed of several member groups, each

with its own common bond.

b. Under Chevron, 467 U.S. at 843, courts are

required to defer to an agency’s reasonable construc-

tion of a statute that it administers if Congress has

not addressed the precise question at issue. See

Clarke, 479 U.S. at 408 (“It is settled that courts

should give great weight to any reasonable construc-

tion of a regulatory statute adopted by the agency

charged with the enforcement of that statute.”)

(quoting Investment Co. Institute v. Camp, 401 U.S.

617, 626-627 (1971)). The court of appeals nonetheless

concluded that it was “‘not required to grant any

particular deference to the [NCUA’s] parsing of

statutory language or its interpretation of legislative

history’” when attempting to discern congressional

intent “from the statutory text and the purpose of the

statute.” App., infra, 6a (quoting Rettig v. Pension

Benefit Guaranty Corp., 744 F.2d 133, 141 (D.C. Cir.

1984)). This Court, however, has rejected the proposi-

tion that Chevron deference is inapplicable to “a

pure question of statutory construction.” NLRB v.

United Food & Commercial Workers Union, 484

U.S. 112, 123 (1987). See also Nations Bunk of North

Carolina, N. A. v. Variable Annuity Life Ins. Co., 115

S. Ct. 810, 813-814 (1995) (“If the administrator’s

reading fills a gap or defines a term in a way that is

reasonable in light of the legislature’s revealed de-

sign, we give the administrator’s judgment ‘control-

ling weight.’”). According due deference, the court of

appeals should have accepted the NCUA’s interpreta-

tion of the common bond requirement.

e. The NCUA’s interpretation promotes the con-

gressional purposes expressed in the FCUA. Con-

gress enacted the FCUA to promote a “form of credit

organization capable of reaching the masses of the

people.” S. Rep. No. 555, supra, at 3. The NCUA’s

multiple employee policy directly advances that

goal by permitting employees of small businesses to

access to credit union services even though

gain

those businesses might not have enough potential

members to establish a viable stand-alone institution.

The FCUA also was designed to “promote the growth

of credit unions” and “enhance credit union stability.”

See Community First Bank, 41 F.3d at 1054. The

NCUA’s policy substantially furthers those goals by

ensuring that a single credit union will not be unduly

dependent upon the fortunes of a particular company

or industry. The court’s decision thwarts these

statutory concerns.

Notwithstanding the documented congressional

tinction between banks and credit unions, the latter of

which “could ‘loan on character.“ App., infra, 11a

(quoting First National Bank, App., infra, 22a). The

court failed, however, to recognize that the NCUA

policy achieves that objective; a member’s relation-

ship to the credit union is established through the

employer group, thereby enhancing cohensiveness

and improving the likelihood that the member will

repay the loan. As interpreted by the NCUA, the

common bond requirement serves an important

purpose by ensuring that each group within a

credit union has a link among its members;

it simply does not require that there be a single link

binding together all of the members of the various

groups making up a credit union.

Moreover, the court’s analysis misunderstands the

FCUA and its legislative history. The FCUA places

no limit on the size of federal credit unions, and

Congress was well aware when it passed the statute

in 1934 that some state credit unions had grown

sufficiently large that personal knowledge of every

borrower’s character was impossible. See Credit

Unions: Hearing Before a Subcomm. of the Senate

Comm. on Banking and Currency, T3d Cong., Ist

Sess. 15 (1933) (statement of Roy F. Bergengren)

(noting that Boston’s Telephone Workers Credit

Union had 16,000 members).“

d. The court of appeals erred in concluding that

the term “common bond” as used in the FCUA would

be rendered “surplusage” by the agency’s construc-

tion. See App., infra, 6a-7a. First, the court mistak-

enly assumed that the common characteristics that

define a “group” under the statute must necessarily

be the same as the unifying relationship between in-

dividuals embraced in the statutory term “common

bond.” Jd. at 7a. Under the NCUA’s ——

the requirement that members have a common bond”

is in addition to their being part of a “group.” To join

an occupational credit union under the NCUA policy,

a group must show not just that it is defined by an

occupational characteristic, but that its members are

connected with one another in a relationship

sufficiently substantial to qualify as a “common

u Moreover, in this regard the court below simply gave too

mation, which have lessened the necessity for lending officials

to be personally acquainted with a borrower to evaluate his or

her creditworthiness or the likelihood that a loan will be de-

faulted.

ultimately must be members of a single

. But the FCUA limits federal

credit union membership to “groups having a common

2 The court of appeals equated the FCUA’s use of the term

“common bond” by relying on a diction-

term

“group” as an assemblage . . . having some

are “regarded as a unit” simply “because of their comparative

segregation from others.” Webster's New International Dic-

tionary of the English Language (Webster's) 955 (1917)

(definition 3). Thus, 2 group can simply mean “a cluster,” or

an “aggregation.” Ibid. By contrast, a “bond” connotes a more

substantial connection between individuals—a “uniting”

or “cementing” force. I The Oxford English Dictionary 981

(1933); accord Webster’s, supra, at 251 (a bond“ is La] binding

force or influence,” or “a uniting tie”).

The NCUA’s regulations expressly recognize the difference

between the characteristics that may define a group and those

that satisfy the common bond provision. Thus, the agency does

not permit a federal credit union to represent Iplersons em-

yed or working in Chicago, Illinois,” because such occupa-

tional groups are insufficiently defined. See IRPS 94-1, 59 Fed.

Reg. at 29,076; IRPS 89-1, 54 Fed. Reg. at 31,169.

bond of occupation or association.” 12 U.S.C. 1759

(emphasis added). The court suggested that “the

plural noun ‘groups’ could refer not to multiple

groups in a single [federal credit union] but to each of

the groups that forms a credit union.” App., infra, 6a.

The statute nonetheless equally allows for the

possibility that more than one group can join a single

federal credit union, as the district court held here

and as the legislative history clearly contemplates.

See H.R. Rep. No. 2021, supra, at 3 (describing federal

credit union membership as being “limited to groups

having common bonds of occupation or association”).

Finally, the fact that the statute limits community

federal credit union membership to “groups within a

well-defined neighborhood, community, or rural dis-

trict,” 12 U.S.C. 1759, does not support the lower

court’s reading of the provision requiring a common

bond in occupational groups. See App., infra, 9a. The

NCUA interprets the former to restrict a community

federal credit union’s field of membership to a single

geographic area—a construction grounded in the

requirement that a community-based federal credit

union serve groups “within” a well-defined locale.

The NCUA’s construction of Section 1759 does not

give the word “groups” a meaning in the common bond

provision different than in the community fic] of

membership provision.

For these reasons, the court of appeals erred in

concluding that the statute can be read in only one

way. When a statute is susceptible of multiple inter-

pretations, the agency’s reasonable construction is

entitled to deference. Chevron, 467 U.S. at 843 &

n. 11. Well aware of the NCUA’s interpretation, see

pp. 6-8, supra, Congress has not overturned that

policy in the numerous FCUA amendments enacted

since 1982. As this Court has stated, such “a refusal

by Congress to overrule an agency’s construction of

legislation is at least some evidence of the reasonable-

ness of that construction.” United States v. River-

side Bayview Homes, Inc., 474 U.S. 121, 187 (1985).

8.a. Immediate review by this Court is warranted.

b. This Court should not await further percolation

on the legal issues presented even though the identi-

cal issues have been argued and submitted in the

Sixth Circuit.” While ordinarily this Court might

consider waiting to grant certiorari to gain the bene-

fit of the Sixth Circuit’s analysis, in this instance

any possible benefit of further percolation is greatly

outweighed by the continued commercial harm and

uncertainty created by the lower court’s rulings.

Because of the nationwide injunction issued in

reliance on the D.C. Circuit’s decision, with the

exception of the pending Sixth Circuit decision, there

is almost no possibility of a conflict developing. If the

Court does not grant certiorari in this case, and the

Sixth Circuit rules in favor of the NCUA, the agency

would have no basis for petitioning for;certiorari in

that case. Given the nationwide scope of the district

court’s injunction on remand, the banks in the Sixth

® There, the district court relied on a previous Sixth

Circuit decision, Community First Bank v. NCUA, 41 F.3d

1050, 1054 (1994), to hold that a plaintiff bank had standing to

challenge the NCUA's interpretation of the FCUA common

bond requirement. First City Bank v. NCUA, Civ. No. 3:94-

0334 (M.D. Tenn. Dec. 15, 1994). Community First Bank, in

turn, had followed the D.C. Circuit’s standing analysis in the

instant case.

The district court in First City Bank subsequently upheld

the agency’s interpretation of the common bond requirement,

finding that the NCUA had acted within the scope of its

delegated authority in its application of the statute. First City

Bank v. NCUA, 897 F. Supp. 1042, 1046 (M.D. Tenn. 1995).

The plaintiff bank has appealed, and this issue is now before the

Sixth Circuit.

Circuit case might well conclude that it is in their

interest not to seek review by this Court.“

Furthermore, even absent a nationwide injunction,

banking organizations would invariably bring subse-

quent suits challenging the NCUA’s application of

the common bond requirement in the District of

Columbia.” Therefore, the prospects of any future

case producing a circuit conflict are highly remote.

Not only is this Court unlikely to derive benefit from

delay in consideration of the merits issue raised here,

but federal credit unions throughout the country that

have relied upon NCUA’s construction of the statute

would suffer grave commercial harm by the Court’s

failure to grant a petition for certiorari at this time.

155

Sea

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

ROBERT M. FENNER

General Counsel

JOHN K. [ANNO

* > *

National Credit Union

Administration

NOVEMBER 1996

WALTER DELLINGER

FRANK W. HUNGER

Assistant Attorney

General

SETH P. WAXMAN

Deputy Solicitor General

DAVID C. FREDERICK

Assistant to the Solicitor

General

DOUGLAS N. LETTER

JACOB M. LEWIS

MICHAEL E. ROBINSON

Attorneys

APPENDIX A

UNITED STATES COURT OF APPEALS

DISTRICT OF COLUMBIA CIRCUIT

No. 94-5295

FIRST NATIONAL BANK AND TRUST

COMPANY, ET AL., APPELLANTS

Vv.

NATIONAL CREDIT UNION ADMINISTRATION, APPELLEE

and

AT &T FAMILY FEDERAL CREDIT UNION AND

CREDIT UNION NATIONAL ASSOCIATION, APPELLEES

[Argued Sept. 29, 1995]

[Decided July 30, 1996]

Before: BUCKLEY, GINSBURG, and TATEL, Circuit

Judges.

GINSBURG, Circuit Judge:

Section 109 of the Federal Credit Union Act

(FCUA), 12 U.S.C. § 1759, provides that “Federal

credit union membership shall be limited to groups

having a common bond of occupation or association, or

to groups within a well-defined neighborhood, com-

munity, or rural district.” The question presented in

this appeal is whether the members of an occupational

FCU must all share a single “common bond of occupa-

tion” or, as the National Credit Union Administra-

tion (NCUA) contends, membership may be drawn

(la)

from multiple unrelated groups, each with its ow

common bond. The district court held that the NCUA

reasonably interpreted that Act to allow members of

unrelated groups to join the same credit union,

provided only that a common bond exists among the

members of each constituent group. 863 F.Supp. 9

(1994). Because the Congress resolved this very

issue the other way, we reverse the district court and

disapprove the decision of the NCUA under step one

of Chevron, U.S.A., Inc. v. Natural Resources De-

Sense Council, Inc., 467 U.S. 887, 842-43, 104 S.Ct.

2778, 2781-82, 81 L.Ed.2d 694 (1984).

I. Background

The plaintiffs-appellants are the American Bankers

Association and several North Carolina banks, in-

cluding First National Bank and Trust Company

(FNBT). They brought this suit against the NCUA,

the federal regulatory agency that administers the

FCUA, seeking to overturn that agency’s approval of

certain applications filed by AT&T Family Fedéral

Credit Union (ATTF) to expand its field of member-

ship to include employees of various small businesses

in North Carolina and Virginia that are unaffiliated

with the credit union’s existing membership base.

ATTF and the Credit Union National Association, a

trade association, have intervened in support of the

agency.

Under the FCUA, an FCU is, like a mutual asso-

ciation or a cooperative, owned and controlled by its

members, see 12 U.S.C. § 1757(6); it can make loans to

and take deposits from (formally, sell shares to) only

its own members and other credit unions, see id.

§ 1757(5). The Congress expected that the Act, by

“guaranteeing democratic self-government[,] would

infuse the credit union with a spirit of cooperative

self-help and ensure that the credit union would re-

main responsive to its members’ needs.” First Nat’l

Bank and Trust Co. v. NCUA, 988 F.2d 1272, 1274

(D.C.Cir.1993).

The “common bond” provision has been part of the

FCUA since the statute was enacted in 1934. The

Congress did not fully explicate the purpose or limits

of that provision, but “assumed implicitly that a com-

mon bond amongst members would ensure both that

those making lending decisions would know more

about applicants and that borrowers would be more

reluctant to default... The common bond was seen

as the cement that united credit union members in a

cooperative venture.” Id. at 1276.

From 1934 until 1982 the NCUA interpreted the

common bond requirement to mean that the members

of each occupational FCU—we put aside the associa-

tional alternative, which plays no role in this case—

must be drawn from a single occupational group,

defined to mean the employees of a single employer.

58 Fed.Reg. 40473 (July 28, 1993). In 1982, however,

the NCUA altered its interpretation of nearly 50-

years’ standing to allow an FCU to comprise not just

one but “multiple occupational groups.” Interpretive

Ruling and Policy Statement (IRPS) 82-1, 47 Fed.

Reg. 16775 (Apr. 20, 1982). Each such group need only

be within a “well-defined area,” IRPS 82-3, 47 Fed.

Reg. 26808 (June 22, 1982), by which the NCUA means

an area served by an actual or planned office (cf which

there may be any number) of the credit union, IRPS

89-1, 54 Fed.Reg. 31165, 31170 (July 27, 1989).

The 1982 change of interpretation was intended to

enable each FCU to realize economies of scale and to

facilitate occupational diversification within the

ranks of its membership. See Letter from E.F. Cal-

lahan, Chairman of the NCUA, to Congressman Fer-

nand J. St Germain, Chairman of the House Com-

mittee on Banking, Finance and Urban Affairs 8-9

(Oct. 28, 1983). The new policy also made it possible

for the employees of a company with fewer than 500

employees, the minimum for forming a new FCU, to

join an existing FCU. 54 Fed.Reg. at 31171. The

NCUA reiterated its new position through policy

statements issued in 1989, when ATTF filed the first

of the applications that FNBT here challenges, and

most recently in 1994. See id. at 31165; IRPS 94-1, 59

Fed.Reg. 29066 (June 3, 1994). The agency explained

in 1989 that Ja] select group of persons seeking

credit union service from an occupational, ass“ a-

tional or multiple group Federal credit union must

have its own common bond,” but It Ihe group’s com-

mon bond need not be similar to the common bond(s) of

the existing Federal credit union.” 54 Fed.Reg. at

31176.

FNBT’s complaint is at bottom that Interpretive

Ruling 89-1 violates the FCUA by allowing groups

lacking any common bond among them to join to-

gether in a credit union, ATTF in particular. Origi-

nally chartered in 1952 as the Radio Shops Federal

Credit Union, the common bond of ATTF members

was that they were Jelmployees of the Radio Shops of

Western Electric Company, Inc., who work in Win-

ston-Salem, Greensboro, and Burlington, North Caro-

lina; employees of this credit union; members of their

immediate families; and organizations of such per-

sons.” ATTF has since grown to have 112,000 mem-

bers in more than 150 disparate occupational groups

spread across all 50 states, including the employees of

a major tobacco company, an auto supply chain, and a

television station. Its potential membership exceeds

357,000. As of January 1994 ATTF had more than

63,000 loans outstanding, totaling over $268 million.

FNBT maintains that by allowing ATTF to accept

members from among the employees of any number of

employers, the NCUA has in effect opened the mem-

bership to anyone with a job.

Initially, the district court dismissed this case for

lack of standing, 772 F.Supp. 609, 612-13 (1991); on

appeal, however, we reversed on the ground that the

banks are “what we have termed suitable challengers,

that is. . their interests are sufficiently con-

gruent with those of the intended beneficiaries that

[they] are not more likely to frustrate than to further

the statutory objectives.” 988 F.2d at 1275. We re-

manded for a determination on the merits, as to which

the district court granted the defendant’s motion for

summary judgment. 863 F.Supp. 9. The district court

held that the common bond requirement is ambiguous

and that the NCUA’s interpretation of the provision

to mean that “a credit union may have several groups,

each with its own common bond” is reasonable.

II. Analysis

We review an agency’s interpretation of a statute

entrusted to its administration under the familiar

rubric of the Chevron case: If the Congress has

“directly spoken to the precise question at issue,” the

court “must give effect to the unambiguously ex-

pressed intent of Congress”; if, however, the statute

is silent or ambiguous on the question at issue, then

the court will defer to the agency’s interpretation if it

is permissible in light of the structure and purpose of

the statute. 467 U.S. at 842-43, 104 S.Ct. at 2781-82. In

resolving the threshold question whether congres-

sional intent is sufficiently clear for us to review the

case under step one of Chevron, “we are not required

to grant any particular deference to the agency’s

parsing of statutory language or its interpretation of

legislative history.” Rettig v. Pension Benefit

Guaranty Corp., 744 F.2d 188, 141 (D. C. Cir. 1984).

F NBT argues this case under step one of Chevron

only. According to FNBT, the intent of the Congress

is clearly discernible from the statutory text and the

purpose of the statute. We agree.

A. Section 109 by Its Terms

To repeat, § 109 provides in relevant part that

“Federal credit union membership shall be limited to

groups having a common bond of occupation ... or to

groups within a well-defined neighborhood, commu-

nity, or rural district.” FNBT contends, first, that

the article “a” in the phrase “groups having a com-

mon bond” means that all members of an FCU must

be united by a single occupation. The NCUA count-

ers that the plural noun “groups” in the same phrase

indicates that there may be multiple groups in an

FCU, so that the statute makes sense only if it is

understood to contemplate multiple bonds, each

uniting a single group even if the same bond does not

unite all groups, i.¢., the membership as a whole.

Neither syntactical argument is convincing. The

article “a” could as easily mean one bond for each

group as one bond for all groups in an FCU, and the

plural noun “groups” could refer not to multiple

groups in a single FCU but to each of the groups that

forms a credit union under the FCUA. Indeed, focus-

ing upon “groups” begs the question whether they

must share a common bond; it is, after all, a common

bond that makes a group of what would otherwise be a

collection of individuals without a theme.

common characteristic.” Webster’s New Interna-

tional Dictionary 955 (1927). By this definition, a

common bond is implicit in the term “group.” There-

fore, if two or more “occupational groups” can be said

to have a common bond, it must be because there is a

characteristic common to each and every member of

the several groups.

“common bond” would be surplusage if it applied only

to the members of each constituent group and not

across all groups of members in an FCU. Instead of

limiting membership to “groups having a common

bond of occupation,” the Congress could, without

affecting the meaning of the statute, have simply said

“occupational groups.” The addition of the term

“common bond” is necessary only to impart the idea

that the bond is one shared by all members of the

FCU—regardless whether the FCU is composed of

one or of multiple groups. If the members of a group

are by definition bonded, then it is tautological to say

that a single group has a common bond; but if multiple

groups are said to have a common bond, then there is

no tautology—the members of each group share the

same bond as the members of the other groups.

For example, because the NCUA defines an occupa-

tional group to mean the employees of a single em-

ployer, 58 Fed.Reg. at 40473, it is redundant to

require that the workers at Company A have a

common bond; their employment by Company A is

their common bond and that bond is what makes them

an occupational group. Suppose, however, that the

employees of unaffiliated Company B propose to join

the FCU at Company A. The Act clearly forecloses

this possibility for want of a common bond among the

employees. Now suppose that Company A buys Com-

pany B, which remains a separate subsidiary. Joint

ownership of Companies A and B creates a common

bond extending across the two groups; the employees

of Company B could then become members of the

FCU at Company A.

We do not dismiss out of hand the possibility that

the term “common bond”—although supererogatory

when applied to the membership of a single group

nevertheless reflected ordinary usage in 1934. More-

over, having dissected enough statutes to know that

they may upon occasion have redundant terms, see,

e.g., American Fed’n of Gov't Employees, Local 3295

v. Federal Labor Relations Auth., 46 F.3d 73, 77

(D.C.Cir.1995) (“no construction of § 1462a fof the

Federal Deposit Insurance Act] can avoid rendering

either subsection (1) or subsection (2) redundant”), we

look further before deciding with confidence that §

109 is unambiguous on its face.

FNBT’s second textual argument is that the term

“groups” in the two parallel provisions of § 109—per-

mitting credit unions composed either of (1) “groups

having a common bond of occupation” among all the

interpreted in a consistent way. See Wisconsin Dep’t

of Revenue v. William Wrigley, Jr., Co., 505 U.S.

214, 225-27, 112 S.Ct. 2447, 2455, 120 L.Ed2d 174

(1992). If the so-called community provision were con-

strued in a manner consistent with the NCUA’s re-

vised interpretation of the occupational provision,

then a single FCU could include residents of any

number of “well-defined neighborhood{s], commu-

nit{ies}, or rural distrietis] around the country. Yet

this expansive construction has never been advocated

by the NCUA; on the contrary, the NCUA regulation

implementing the community provision expressly re-

quires that all FCU members live, worship, or work

in “a single, geographically well-defined area.” 59

Fed.Reg. at 29077.

The NCUA answers this argument by noting that

the two grammatically parallel provisions of § 109 do

not, upon close inspection, use the same terms: “the

- limitation of geographic groups to those ‘within’ a

defined area,” we are told, “clearly supports the

NCUA’s conclusion that membership in a community

credit union may not consist of groups from widely

dispersed locales.” So it does; no one disputes the

correctness of the NCUA’s restrictive interpretation

of the community clause. But the NCUA’s point is

not at all responsive to FNBT’s argument. The ques-

tion is how “groups” can be given a different meaning

bond of occupation” and “groups within a well-defined

(area].” The statute does not allow multiple groups,

each within a different neighborhood, to form a single

community FCU. Nor therefore can the statute

consistently allow multiple groups, each drawn from a

different occupation (which the NCUA equates with a

different employer), to form an occupational FCU.

perhaps pass

muster under Chevron. Alternatively, the NCUA

may allow multiple occupational groups to form an

FCU under a common bond of “association,” if one can

be found. If the statute is to be read as it is written,

however, the one thing that the agency may not do is

permit unrelated groups to form a single FCU unless

a common bond unites all of the members.

To test the hypothesis that the common bond

provision means what it says, we consult briefly the

purpose of the statute and its legislative history.

B. The Purpose of § 109

First let us dispatch the suggestion of the North

Carolina Alliance of Community Financial Institu-

tions, a trade association that filed an amicus brief in

support of FNBT, that the Congress intended the

common bond provision to foreclose unfair competi-

tion between credit unions, which are tax exempt, and

banks, which are not. (“Without a meaningful com-

mon bond provision, credit unions are merely banks

with a leg up on other banks.”) According to the

Alliance, a principal purpose of the common bond is to

constrict the market that credit unions can serve,

thereby limiting the threat that they pose to banks.

on character.’” Id. There can be little doubt that

growth on the scale achieved by ATTF is inconsis-

tent with that purpose.

The NCUA points out that under its regulations a

blunt FNBT’s claim that under the NCUA’s current

interpretation of the common bond requirement an

FCU could accept anyone as a member simply be-

12a

cause he or she is employed. Upon closer inspection,

however, the agency’s point is a makeweight. For

whatever restraining force the common bond

ment retained after NCUA changed its in

of the Act in 198? it did not impede ATTF’s dramatic

expansion. Indeed, as recently as 1985, ATTF’s field

of membership consisted basically of the employees of

five AT&T affiliates who worked in, or were super-

vised from, certain areas within North Carolina or

Virginia.

In short, reading § 109 as the 78d Congress wrote

it, i.e., to require that a single common bond be shared

among all members of an occupational credit union,

furthers the overriding purpose of the FCUA—to

“unite[ ] credit union members in a cooperative ven-

ture.” First Nat'l Bank and Trust, 988 F.2d at 1276;

the NCUA’s reading, which permits multiple unre-

lated groups to form an occupational FCU, frustrates

that purpose. If this conception of an FCU seems

dated in the world of ATMs and nearly nationwide

financial institutions of a scale surely unimaginable

in 1934, see Douglas H. Ginsburg, Interstate

Banking, 9 HOFSTRA L. REV. 1133 (1981), then the

case for updating the FCUA must be addressed to the

Congress.

C. The Legislative History of § 109

Finally, we look to the legislative history of the

FCUA only to determine whether it so convincingly

contradicts our interpretation of the text, reinforced

by our understanding of the purpose of the statute, as

to require that we rethink the matter. Under these

circumstances, only a show stopper would do.

rency, which paraphrases § 109 as providing that

“[mjembership in Federal credit unions is limited to

(1984) (emphasis supplied; of. MARY ANN

noun in the statute itself. Not surprisingly, there-

fore, the NCUA ultimately joins in the district

court’s conclusion that the legislative history of the

common bond requirement is “murky” and provides

only “a slender reed on which to place reliance.” 863

F.Supp. at 12. Whatever the precise exchange rate

between the metaphors may be, a slender reed is not a

show stopper.

The district court itself assigned some weight to

“the fact that Congress has not objected to. . the

[NCUA’s] 1982 expansion” of the common bond re-

quirement. 863 F.Supp. at 13. In a Chevron step two

analysis, where the issue is whether the agency’s

interpretation of the statute is reasonable, congres-

sional inaction might be minimally enlightening. See,

e. g., Bob Jones Univ. v. United States, 461 U.S. 574,

—

14a

599, 103 S.Ct. 2017, 2082, 76 L. Ed. 2d 157 (1983). This is

a Chevron step one analysis, however; the silence of a

later Congress says nothing about the intent of the

earlier Congress that spoke directly to the question

here at issue.

III. Conclusion

Based upon the text and the purpose of the FCUA,

we conclude under Chevron step one that all the

members of an FCU must share a common bond. If

there are multiple occupational groups within a

single credit union, then it is not sufficient that the

members of each different group have a bond common

to that group only.

Accordingly, wé reverse the judgment of the dis-

trict court. The case is remanded to that court for

the entry of declaratory and injunctive relief, consis-

tent with the foregoing opinion, concerning the

NCUA’s 1989 and 1990 approvals of certain applica-

tions filed by ATTF.

So ordered.

15a

UNITED STATES COURT OF APPEALS

DISTRICT OF COLUMBIA CIRCUIT

Nos. 91-5262, 91-5336

FIRST NATIONAL BANK AND TRUST

COMPANY, ET AL., APPELLANTS

NATIONAL CREDIT UNION ADMINISTRATION, ET AL.

FIRST NATIONAL BANK AND TRUST COMPANY,

ET AL., LEXINGTON STATE BANK, APPELLANTS,

NATIONAL CREDIT UNION ADMINISTRATION

[Argued Nov. 16, 1992]

[Decided April 2, 1993]

OPINION

Before: Wald, SILBERMAN, and D.H. GINSBURG,

Circuit Judges.

Opinion for the Court filed by Circuit Judge

SILBERMAN.

Concurring opinion filed by Circuit Judge WALD.

SILBERMAN, Circuit Judge:

16a

Appellants, four North Carolina banks and the

American Bankers Association, challenged the Na-

tional Credit Union Administration’s (NCUA) ap-

proval of several recent applications by AT & T

Family Federal Credit Union (AT & T Family) to

expand its membership. According to appellants, the

NCUA’s decisions violated the requirement of the

Federal Credit Union Act (FCUA) that membership

in federal credit unions be limited to “groups having a

common bond of occupation or association.” 12 U.S.C.

§ 1759. The banks complain that, by allowing AT & T

Family improperly to extend its membership and

thereby its number of potential borrowing customers,

the NCUA has made the credit union a formidable

competitor. The district court applied the “zone of

interests” tests for prudential standing and deter-

mined that appellants lacked standing to sue. Al-

though-we agree with the district court that the

appellants were not intended beneficiaries of the

FCUA, we think that they are suitable challengers

because the statute arguably prohibits the competi-

tion of which they complain. This case thus falls

within the rationale of Clarke v. Securities Industry

Association, 479 U.S. 388, 107 S.Ct. 750, 98 L.Ed.2d

757 (1987), and Investment Company Institute v.

Camp, 401 U.S. 617, 91 S.Ct. 1091, 28 L.Ed.2d 367

(1971). We reverse and remand to the district court.

Passed in 1934 in the midst of the Great Depres-

sion, the FCUA, 12 U.S.C. §§ 1751-1795k (1988), was

designed to improve access to credit for people of

“small means.” S. Rep. No. 555, 73d Cong., 2d Sess. 1

(1934). For many working Americans, credit at rea-

sonable rates had essentially disappeared in the years

of meeting members’ credit needs, Congress re-

18a

overall common bond united the different groups. See

47 Fed.Reg. 26,808 (1982) (IRPS 82-3); 48 Fed.Reg.

22,899 (1983); 49 Fed.Reg. 46,536 (1984) (IRPS 84-1); 54

Fed.Reg. 31,165 (1989) (IRPS 89-1). The NCUA’s

most recent interpretation, IRPS 89-1, made clear

that a credit union could comprise a “combination of

distinct, definable occupational and/or associational

groups.” 54 Fed.Reg. 31,165, 31,170 (1989).

Appellants challenged several decisions in which

the NCUA applied IRPS 89-1 to approve applications

by AT & T Family to expand its field of membership.

Until recently, AT & T Family’s membership con-

sisted primarily of employees of AT & T Technolo-

gies, Inc., AT & T Network Systems, and Bell Tele-

phone Labs. In late 1989 and 1990, AT & T Family

filed eight applications to extend its membership to

inelude groups of employees from other companies

such as the American Tobacco Company, Western

Auto Supply Company, and WGHP-TV, to name but a

few. In all, the NCUA approved the extension of AT &

T Family's membership to 16 new employee groups.

Appellants claimed before the agency and in the dis-

trict court that IRPS 89-1 ignored the statutory lan-

guage by allowing groups lacking any common bond

between them to join together in a credit union. The

banks contended that by allowing AT & T Family to

expand to 71,000 members in violation of the statute,

the NCUA has allowed the credit union, which is ex-

empt from state and federal income taxes, see 12

U.S.C. § 1768, to become a formidable competitor to

banks.

The district court granted NCUA’s motion to

dismiss for lack of standing. The court determined

that appellants were not pressing claims “arguably

19a

within the zone of interests” protected by the FCUA.

See First Nat'l Bank & Trust Co. v. National Credit

Union Admin., 772 F.Supp. 609, 611-13 (D.D.C.1991).

Relying on the language of this court’s post-Clarke

decisions on prudential standing, see, e. g., Hazardous

Waste Treatment Council v. Thomas, 885 F.2d 918

(D.C.Cir.1989) (HWTC IV ); Hazardous Waste Treat-

ment Council v. United States Envtl. Protection

Agency, 861 F. 2d 277 (D.C.Cir.1988), cert. denied, 490

U.S. 1106, 109 S.Ct. 3157, 104 L.Ed.2d 1020 (1989)

(HWTC I, the district court said that “{tJhose not

regulated by an agency have standing only if they are

the intended beneficiaries of the specific statute or

are nonetheless ‘suitable challengers’ to the statute

because their interests coincide with the interests

which Congress did intend to protect.” First Nat'l

Bank, 772 F Supp. at 611. The banks were not in-

tended beneficiaries of the Act, thought the district

court, because “the Act was passed to establish a

place for credit unions within the country’s financial

market, and specifically not to protect the competitive

interest of banks.” Id. at 612; see also Branch Bank

E Trust Co. v. National Credit Union Admin. Bd.,

786 F.2d 621 (4th Cir.1986), cert. denied, 479 U.S.

1063, 107 S.Ct. 948, 98 L.Ed2d 997 (1987). Under

applicable precedent, the district court believed that

the banks were not suitable challengers either. Be-

cause the banks and the credit union competed for the

same business, any coincidence in their interests

“would be at best fortuitous.” First Nat’ Bank, 772

F. Supp. at 612. The banks, according to the district

court, could not rely on the Supreme Court’s cases,

see, e. g., Clarke v. Securities Industry Ass 'n, 479

U.S. 388, 107 S.Ct. 750, 98 L. Ed. 2d 757 (1987); Invest-

ment Co. Inst. v. Camp, 401 U.S. 617, 91 S. Ct. 1091, 28

20a

L.Ed.2d 367 (1971) (ICI); Association of Data Pro-

cessing Serv. Orgs. v. Camp, 397 U.S. 150, 90 S.Ct.

827, 25 L.Ed.2d 184 (1970), that granted standing to

competitors as suitable challengers because, unlike

the competitors in those cases, the banks were not

suing under an entry-restricting statute. See First

Nat'l Bank, 772 F. Supp. at 613.

question before us is whether under the

objective), see HWTC IV, 885 F.2d at 925, arguably

within the zone of interests Congress intended either

to regulate or protect, and, thus, are they among the

class of persons entitled to sue to enforce FCUA’s

restrictions? See Clarke, 479 U.S. at 396, 107 S.Ct. at

755; Data Processing, 397 U.S. at 153, 90 S.Ct. at 829.

This “zone of interests” test ensures that standing is

granted only to plaintiffs who will not distort con-

gressional objectives. It excludes those plaintiffs

whose “interests are so marginally related to or in-

intended to permit the suit.” Clarke, 479 U.S. at 399,

107 S.Ct. at 757. Because the banks are not regulated

by the common bond requirement, we must inquire

whether the banks can be thought to have been “pro-

2la

tected” by that statutory limitation on the activities

of credit unions. Litigants can qualify as “protected”

by a statute if they are intended beneficiaries of the

legislation or are nevertheless what we have termed

suitable challengers, see HWTC IV, 885 F.2d at 923-

24; that is, if their interests are sufficiently con-

gruent with those of the intended beneficiaries that

the litigants are not “more likely to frustrate than to

further the statutory objectives.” Clarke, 479 US. at

397 n. 12, 107 S.Ct. at 756 n. 12.

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interest is not precisely the one that Congress

sought to protect.’ The limitations may be restric-

tions on entry—geographic or product line—or they

might be, as in our case, limitations on growth, which

are akin to entry restrictions. Like more classic

entry restrictions, the common bond requirement, by

We cannot agree with the pre-Clarke reasoning of Branc

Bank & Trust Co. v. National ~redit Union Administration

which

25a

limiting a credit union’s customer base, effectively

prevents the credit union from offering its services

and competing in a broader market.

Supreme granting

standing to competitors (Data Processing, ICI, and

Clarke), on the grounds that it did not involve an

particular field or transaction.” Jd. at 1109. Indeed,

the district court

bond requirement was not an entry restriction.‘ See

First Nat'l Bank, 772 F. Supp. at 613.

~ ear a

26a

greater market for their own services and products.

We held that HWTC’s interests (irrespective of its

particular objectives in the case before us) were not

sufficiently congruent with those of the intended

beneficiaries of the statute to make HWTC a suitable

challenger. See HWTC IV, 885 F.2d at 924. The

treatment firms’ interest was in selling more serv-

ices and equipment to the regulated companies, and

therefore the firms would seek regulations that would

increase demand for their product regardless of the

effects on the statute’s intended beneficiaries. We

concluded that to have standing under the statute,

HWTC would have to have shown a systematic align-

ment of interests with the statute’s beneficiaries, see

id. at 924, a standard that appellees understandably

claim was stricter than our prior characterization of

Clarke as a test requiring “less than a showing of

congressional intent to benefit but more than a mar-

ginal relationship to the statutory purposes.” HWTC

IT, 861 F.2d at 283.

Our decision did not rest on a conclusion that the

economic interests of the treatment firms were some-

how less deserving than the environmental interests

the statute was designed to foster; nor was it based on

a view that the firms’ economic incentives were

inherently less worthy than the economic objectives

of the securities industry plaintiffs in ICI and Clarke.

On the contrary, the economic motivations could be

thought analogous. If the watchword of the treatment

firms in HWTC IV was “treatment is good and more

treatment is better,” HWTC IV, 885 F.2d at 925, it

might be said that the watchword of all competitors

with regard to their potential rivals must be “regula-

tion is good and more restrictive regulation is

— = ores eo

27a

better.” And one cannot base standing on one’s mere

status as an economic beneficiary of government

regulation of others. In Lujan v. National Wildlife

Federation, 497 U.S. 871, 110 S.Ct. 3177, 111 L.Ed2d

695 (1990), the Supreme Court said:

competitors were channelled by the terms of the stat-

the statutory demareation dividing the banking and

securities industries. The interests the securities

industry plaintiffs sought to protect were thus less

open-ended and more confined than were the economic

interests pursued in HWTC IV, and as a result there

was a reduced danger of congressional pur-

pose. By contrast, nothing in the statute in HWTC

TV could ensure that there would be any connection at

_all between the treatment firms’ interests and the

statutory purpose. IT here is not the slightest

reason to think that treatment firms’ interest in

getting more revenue by increasing the demand for

28a

their particular treatment services will serve [the

statute’s] purpose of protecting health and the envi-

ronment.” HWTC IV, 885 F.2d at 924. There is, how-

ever, a reason to think that a competitor’s interest in

patrolling a statutory picket line will bear some rela-

tion to the congressional purpose, because the entry-

like restriction itself reflects a congressional judg-

ment that the constraint on competition is the means

to secure the statutory end. The restriction connects

the economic interests of competitors to the purposes

of the statute and yet constrains competitors to a

limited role in guarding a congressionally drawn

boundary. In these circumstances the plaintiffs can

be thought to have interests “systematically aligned”

with those the statute is designed to benefit.

The securities industry plaintiffs in JCI and Clarke

were not seeking to impose new regulations on banks

in areas unrelated to an existing, specific statutory

norm simply to provide a demand for their services or

to weaken banks as competitors. We certainly would

not accept as a suitable plaintiff a party who had only

a general economic interest in harming a competitor

and who, accordingly, sought to impose some new,

more onerous regulation upon that competitor. See,

e. g. Calumet Indus., Inc. v. Brock, 807 F.2d 225,

D. C. Cir. 1986). But, when the plaintiff seeks to

5 Perhaps it is also relevant —in considering whether a

plaintiff has prudential standing, if not Article III standing, see

Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208,

227, 94 S.Ct. 2925, 2985, 41 L.Ed.2d 706 (1974)—to ask whether,

as the Supreme Court may well have in JCJ, one can be con-

fident that the intended beneficiaries had sufficient incentive

and organizational resources to sue. See HWTC II. 861 F.2d at

284.

3 nn

29a

enforce a statutory restriction on his competitor—a

restriction the plaintiff enjoys as well as the statu-

tory beneficiaries—there is a good deal less risk that

recognizing the plaintiff’s standing will lead to a

misdirection of a statutory scheme.

Our reasoning in HWTC suggests that our reac-

tion might be different if the banks appeared before

us, not asking to patrol the common bond picket line,

but seeking a new regulation that would squeeze the

market altogether. It is unnecessary,

however, to extend our holding into a definitive an-

swer to appellants’ hypotheticals; we concede that the

general issue is devilishly complex. We feel confi-

dent, however, that this case is a good deal closer to

the paradigm o ICI and Clarke than it is to HWTC,

and, therefore, we hold that appellants have standing.

The judgment of the district court is reversed and the

case remanded.

WALD, Circuit Judge, concurring:

The panel opinion’s analysis of precedents on

“entry-restricting” statutes quite correctly con-

cludes that, under circuit case law, as well as under

the Supreme Court’s directives in Clarke v. Securi-

ties Industry Association, 479 U.S. 388, 107 S.Ct. 750,

93 L.Ed.2d 757 (1987), and Investment Company Insti-

tute v. Camp, 401 U.S. 617, 91 S.Ct. 1091, 28 L. Ed. 2d

367 (1971), plaintiff banks have standing to challenge

the NCUA’s interpretation of the common-bond re-

quirement. I agree with my colleagues that, where an

entry-restricting or analogous statute is involved, “a

plaintiff who has a competitive interest in confining a

regulated industry within certain congressionally

imposed limitations may do so to prevent the alleged

e —

30a

loosening of those restrictions, even if the plaintiff’s

interest is not precisely the one that

sought to protect.” Panel opinion (“Panel op.”) at 9.

I originally—and still—disagree, however, with the

“suitable challenger” test articulated in Hazardous

Waste Treatment Council v. Thomas, 885 F.2d 918

(1989) (HWTC IV), which requires a “systematic

coincidence,” id. at 924, or “systematic alignment,”

Panel op. at 1277-78, 1278, of interests between the

would-be plaintiffs and the statute’s intended

beneficiaries. As I stated at the time, I find this test

without roots either in Supreme Court law’ or in the

general purposes of standing. See HWTC IV, 885 F.2d

at 927-34 (Wald, C.J., dissenting). I recognize, how-

ever, that this test is nonetheless part of our circuit

law. In that context, I agree with the panel opinion

that, when an entry-restricting or analogous statute

“reflects a congressional judgment that the restraint

on competition is the means to assure the statutory

end,” Panel op. at 11, and plaintiffs seek only to “en-

force the statutory demarcation,” id., between the

beneficiaries of a licensing scheme and their competi-

tors, plaintiffs clearly satisfy the goal of the “suitable

challenger” test, i.e., to ensure that plaintiffs are

It should be noted that, while the Supreme Court in Clarke

v. Securities Industry Association, 479 U.S. 388, 107 S.Ct. 750,

98 L.Ed.2d 757 (1988), did determine that the securities indus-

try was a “proper party” to challenge the Comptroller's

decision to permit expanded bank activities, id. at 408, 107 S.Ct.

at 759, it did so under its own not

manding” zone of interest test, id. at 399, 107 S.Ct. at 757,

under any “suitable challenger” test akin to that laid down in

HWTC IV.

31a

more likely to further than to frustrate the purpose of

the statute. See HWTC IV, 885 F.2d at 925; see also

Clarke v. Securities Industry Ass’n, 479 U.S. at 397

n. 12, 107 S.Ct. at 756 n. 12 (citing this as purpose of

“zone of interest” test).

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32a

APPENDIX C

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civ. A. No. 90-2948 SSH

FIRST NATIONAL BANK AND TRUST COMPANY,

PIEDMONT STATE BANK, LEXINGTON STATE

BANK, RANDOLPH BANK AND TRUST COMPANY,

BANKERS TRUST OF NORTH CAROLINA, AND

AMERICAN BANKERS ASSOCIATION, PLAINTIFFS

NATIONAL CREDIT UNION ADMINISTRATION,

DEFENDANT, AND AT & T FAMILY FEDERAL CREDIT

UNION AND CREDIT UNION NATIONAL ASSOCIATION,

INC., DEFENDANTS-INTERVENORS

Filed: Aug. 9, 1991]

OPINION

STANLEY S. HARRIS, District Judge.

Plaintiffs, five North Carolina banks and the

American Bankers Association, challenge decisions

by the National Credit Union Administration

(NCUA) approving amendments to the charter of the

AT & T Family Federal Credit Union (AT & T

Family) expanding its field of membership. They

allege that when the NCUA approved the amend-

33a

ments, it acted arbitrarily and capriciously, and

violated the statutory requirement under the Federal

Credit Union Act, 12 U.S.C. § 1751 et seq. (FCUA),

that there be a “common bond of occupation or asso-

ciation” among the members of a federal credit union

association. Pursuant to 5 U.S.C. § 706 and 28 U.S.C.

§$§ 2201 and 2202, they ask that various NCUA approv-

als of applications by AT & T Family be declared null

and void and that defendant be enjoined from approv-

ing similar amendments to AT & T Family’s charter.

Now before the court are defendant’s motion to

dismiss for lack of standing and plaintiffs’ opposition

thereto. For the reasons set forth below, defendant’s

motion is granted, and the case is dismissed.

BACKGROUND

The Federal Credit Union Act was passed in 1934,

in the wake of the Great Depression. After the crash,

access to credit had been virtually eliminated for the

great majority of the working class: most potential

borrowers lacked the security to acquire a loan from

a bank, and other licensed money lenders were able to

charge extremely high interest rates. S.Rep. No. 555,

73d Cong., 2d Sess. 3 (1934); see also 78 Cong. Rec. 7259

(1934). Without access to credit, the nation’s lower

and middle classes saw their buying power spiral

downward. S.Rep. No. 555 at 3.

The establishment of national credit unions, mod-

elled after state supported organizations which had

thrived through the economic chaos of the Depres-

sion, was seen as a “happy medium” between the loan

shark and the bank. 78 Cong.Rec. 7259 (1934). Con-

gress expected that members of credit unions, “with

their own money and under their own management,”

“ats ~.. e ens *

34a

would be able to solve their own credit difficulties.

S.Rep. No. 555 at 2. It was hoped that with access to

small amounts of funds at reasonable interest rates,

national credit unions would return significant

buying power to those otherwise unable to have it. Id.

at 1. Though state-sponsored credit unions fulfilled

this need in some areas, Congress felt that the nation

would benefit from a federal system because it would

be capable of rapid expansion and would permit the

creation of credit unions in states that did not pre-

viously authorize them. Id. at 2, 3.

The credit union is distinctive in that it is the

members who own and control the organization.

Members purchase shares in the credit union and

exercise control over it democratically, irrespective

of the number of shares held. 12 U.S.C. §§ 1757(6),

1760 (1988). Loans may be made only to members of

the organization or to other credit unions. § 1757(5).

Each credit union is managed by a board of directors

elected annually by and from the members, and no

member of the board receives any compensation for

these services. § 1761. Supervision and chartering of

credit unions is entrusted to the Board of the

National Credit Union Administration (NCUA), a

three-member panel appointed by the President upon

the advice and consent of the Senate. §§ 1752a, 1754,

1756.

At issue in this case is § 109 of the FCUA, now

codified at 12 U.S.C. § 1759, which provides that mem-

bers of a credit union must share “a common bond” of

occupation, association, or location. The NCUA has

defined a common bond as:

45 Fed.Reg. 8285 (1980).

In recent years the NCUA has interpreted the

if each group shares its own common bond. See 12

C.F.R. § 701.1 (1991); 54 Fed.Reg. 31,169 (1989).

Plaintiffs challenge decisions

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40a

Having shown that Congress did not have in mind

the competitive interests of banks when it enacted the

common bond requirement, it is a short step to

conclude that neither are banks suitable challengers

to actions taken under the authority of the FCUA.

As this case shows, the interests of banks will rarely

if ever coincide with those of credit unions, the in-

terest which Congress did intend to protect, because

both compete for the same business. Any coincidence

of interest would be at best fortuitous. Thus, because

they are neither intended beneficiaries nor suitable

challengers, commercial banks are not within the

zone of interests which Congress intended to protect

when it passed the FCUA.

This position is in keeping with D.C. Circuit deci-

sions on the subject of prudential standing. In HWTC

IV and HWTC II, the court found no standing for

waste treatment companies which suffered competi-

tive injury and challenged the regulatory structure

for the safe treatment, storage, and disposal of haz-

ardous wastes. Because those regulations were

designed to protect human health and the environ-

ment and not to improve the business opportunities of

waste treatment companies, the court was unwilling

to infer that Congress intended for such companies to

be able to challenge the HWTC IV, 885

F.2d at 924; HWTC II, 861 F.2d at 283. Nor did their

interests coincide with the interests Congress in-

tended to protect to the point at which they could

nonetheless be seen as “suitable challengers” to the

regulations. HWTC IV, 885 F. 2d at 924; HWTC II, 861

F.2d at 283. In either case, the fact that firms are

benefitted by congressional action, like the court re-

porters in Lujan v. National Wildlife Federation

4la

and like the commercial banks in this case, does not

mean that an agency decision with regard to that

decision confers standing. Id.; see

Federation of Federal Employees v.

F.2d 1038 (D.C.Cir.1989), cert. denied, — U.S. —,

110 S.Ct. 3214, 110 L.Ed.2d 662 (1990) (organization of

federal employees lacks standing to contest the

Army’s decision to contract out certain services as

operations.).

The Fourth Circuit reached the same conclusion

when presented with facts virtually identical to these.

In Branch Bank & Trust Co. v. National Credit

Union Administration, 786 F.2d 621 (4th Cir.1986),

cert. denied, 479 U.S. 1068, 107 S.Ct. 948, 93 L.Ed.2d

997 (1987), the court found no standing for banks to

challenge application of the common bond require-

Te general purposes of the Act, rather than

ann

42a

Plaintiffs erroneously rely on a string of cases in

which the Supreme Court has found standing where a

group or business has suffered a competitive injury

due to agency action. See Clarke, 479 U.S. 388, 107

S.Ct. 750, 93 L.Ed.2d 757 (1987); Data Processing, 397

U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970); Arnold

Tours, Inc. v. Camp, 400 U.S. 45, 91 S.Ct. 158, 27

L.Ed.2d 179 (1970); Investment Co. Institute v. Camp,

401 U.S. 617, 91 S.Ct. 1091, 28 L. Ed.2d 367 (1971).

Contrary to plaintiffs’ assertion, all of these cases

involve statutes directed at restricting entry into a

given field or business. Even in Clarke, where a trade

association representing securities brokers asserted

that a decision to allow two national banks to open a

discount brokerage operation violated anti-branching

laws, the Court found standing because the statute

was passed in part due to congressional fear that

national banks might obtain monopoly control of

credit and money if permitted to branch unrestricted.

479 U.S. at 402, 107 S.Ct. at 758. Because those plain-

tiffs’ members competed with banks in providing

discount brokerage services, the Court found that

Congress arguably had legislated against the compe-

tition that plaintiffs sought to challenge. Id. at 403,

107 S.Ct. at 759. This intent to restrict entry was

what made plaintiffs “very reasonable candidates to

seek review.” Jd. As noted, Congress had no such

intent when it passed the FCUA.

CONCLUSION

For these reasons, the court finds that plaintiffs

lack prudential standing to challenge the action of the

NCUA. Accordingly, defendant’s motion to dismiss is

granted and the case is dismissed.

43a

APPENDIX D

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civ. A. No. 90-2948

FIRST NATIONAL BANK, ET AL., PLAINTIFFS

NATIONAL CREDIT UNION ADMINISTRATION ET AL.,

DEFENDANTS

[Filed: Sept. 15, 1994]

MEMORANDUM OPINION

JOHN H. PRATT, District Judge.

On September 9, 1994, this Court conducted a hear-

ing to consider whether the National Credit Union

Administration’s (“NCUA”) interpretation of the

“common bond provision” in the Federal Credit Union

Act (“FCUA”)' conflicts with the clear intent of

Congress or whether the Court must defer to the

NCUA’s interpretation. The issue has been well-

briefed on both sides. Based on the arguments and

authorities presented by the parties in their briefs

and during the hearing, we defer to the NCUA’s in-

terpretation of the common bond provision. Plaintiffs’

1 12 U.S.C. § 1751 et seq., particularly § 1759.

44a

renewed motion for summary judgment is denied and

defendants’ summary judgment motions are granted.”

I. Background

In 1991, the Court determined that plaintiffs did not

have standing to challenge the agency decision

because they were not the intended beneficiaries

of the FCUA and because Congress did not intend

to protect competitive interests. 772 F.Supp. 609

(D.D.C.1991) (Harris, J.). The Court of Appeals re-

versed, 988 F. 2d 1272 (D.C.Cir.1993), cert. denied,

U.S. ——, 114 S.Ct. 288, 126 L.Ed.2d 238 (1993), and

the matter now comes before the undersigned judge

for consideration on the merits.

Plaintiffs, four North Carolina banks and

the American Bankers Association, challenge the

NCUA’s approval of several applications by AT & T

Family Federal Credit Union (“AT & T Family”) to

expand its membership to include the employees of

unrelated employers in several areas of the United

States. Plaintiffs, which are ccnventional banks and

their trade association, contend that they are suffer-

ing from the competition caused by the expansion of

AT & T Family. At the September 9th hearing, the

Court concluded that it was impossible to consider

the validity of the application approvals by the NCUA

without examining its interpretation of the common

bond provision. The remainder of this opinion will

focus on the common bond provision and whether the

2 Defendants filed two separate summary judgment mo-

tions. The first was filed by the NCUA and the second by AT

& IT Fy mily Federal Credit Union and Credit Union National

Association.

45a

NCUA’s interpretation conflicts with Congress’

intent.

Congress first authorized federal credit unions

during the Great Depression. It will be recalled that

in March 1933, President Roosevelt found it neces-

sary to close all banks and that the woeful state of the

nation’s banking system during the early 1930s left

large segments of the population without access to

necessary credit. Congress reviewed the then exist-

ing system of state licensed credit unions and deter-

mined that federal credit unions would improve access

to credit for people of “small means.” S.Rep. No. 55

[sie], 78d Cong., 2d Sess. 1 (1984). The basic statute

was passed at that time.

By definition, a federal credit union is owned by its

members and can issue loans only to its members or

to other credit unions. 12 U.S.C. § 1757. To insure

sound loan policies in an era before deposit in-

surance, Congress restricted membership to

“groups having a common bond of occupation or

association.” Id. § 1759. The original purpose behind

the common bond provision was twofold: to insure the

financial stability of credit unions by providing a

sense of cohesiveness among members and by ena-

bling the members to establish a borrower's credit

worthiness at minimum cost; and to promote the

growth of credit unions because it was faster and

easier to form a credit union with members who

already had a common bond.

Federal credit unions have only been covered by deposit

insurance (called “share insurance”) since 1970.

46a

Until 1982, the NCUA and its regulatory predeces-

sors interpreted the common bond provision as re-

quiring that the members of each credit union have a

single common bond with each other, although begin-

ning in the 1960s, the NCUA began expanding the

criteria for determining common bond in response to

changing economic conditions. For example, in 1968,

the NCUA permitted a “once a member always a

member” inclusion under common bond. General

Accounting Office, Credit Unions: Reforms for En-

suring Future Soundness 217 (1991) (hereafter “GAO

Report”). The NCUA has followed a broader inter-

pretation of “common bond” since 1982 which allows

multiple unrelated groups to join the same credit

union if each group has a common bond among its

members.

The expansion of AT & T Family is premised on

this interpretation which plaintiffs now challenge.‘

Plaintiffs seek injunctive and declaratory relief

vacating all AT & T Family membership approvals

since November 14, 1989.“ Relief is sought on the

theory that the NCUA’s approval of the membership

expansions violates the Administrative Procedure

Act (“APA”).® 5 U.S.C. § 706.

AT&T Family serves the employees of 150 unrelated

employers, and has assets of more than $267,800,000.

5 The relevance of this date has not been made known to

the Court.

The APA allows the reviewing court to set aside agency

action found to be “arbitrary, capricious, and an abuse of dis-

cretion, or otherwise not in accordance with the law.”

§ 706(2)(A).

47a

Il. Analysis

There are no material questions of fact precludin

summary judgment in this case. The Court’s laine

of an agency’s interpretation of a statute must follow

“the well-trodden path carved out in Chevron U.S.A.,

Inc. v. National Resources Defense Council, Inc., 467

U.S. 837 [104 S.Ct. 2778, 81 L.Ed2d 694] (1984).“

Northwest Airlines, Inc. v. U.S. Dept. of Transporta-

tion, 15 F.3d 1112, 1118 (D.C.Cir.1994). The first

prong of the Chevron formulation, often called “Chev-

ron I,” asks whether the Court,

armed with the traditional tools of statutory

construction, - + ean ascertain clear congres-

sional intent on the precise issue before us.

Id. (emphasis added). If the statutory language is

silent or ambiguous on this specific issue, the Court

then proceeds to the second prong of the Chevron

formulation, “Chevron II.” Doe v. Sullivan, 988 F.2d

1370, 1381 (D.C. Cir. 1991). Under Chevron II, the

Court must determine whether the agency’s inter-

pretation of the statute is a reasonable one. We are

required to defer to the agency’s construction of the

statute as long as it is reasonable or permissible. Jd.

A. Chevron I: Congressional Intent

1, The Language of the Statute

The Court looks first to the language of the statute

itself in establishing whether Congress intended to

mit credit union membership to individuals having a

single common bond.’ Nichols v. Asbestos Workers

The relevant portion of the statute at issue reads as

follows:

7 *

48a

Local 24 Pension Plan, 835 Fd 881, 892 n. 86

(D.C.Cir.1987) (“the best guide to what a statute

means is what it says”) (emphasis in original).

Plaintiffs argue that the common bond provision

should be read in the singular, i.e., that each credit

union shall have a single common bond. Defendants

counter that the reference to “groups” proves that

Congress contemplated multiple groups within a

single credit union.

The Court concludes that either interpretation is

plausible. The first portion of the statute appears to

use “federal credit union membership” in the singular

as it requires each member to “subscribe to at least

one share of its [the credit union’s] stock.” It is

plausible that the second reference to “Federal credit

union membership”, in the common bond phrase, is

also meant in the singular, but then contemplates

several “groups” within that one credit union. A

“court must look to the particular statutory

at issue, as well as the language and design of the

statute as a whole.” McCarthy v. Bronson, 500 U.S.

136, 139, 111 S.Ct. 1737, 1740, 114 L.Ed.2d 194 (1991).

Therefore, a reasonable reading of the common bond

Federal credit union membership shall consist of the incor-

porators and such other persons and incorporated and unin-

corporated organizations, to the extent permitted by rules

and regulations prescribed by [the NCUA], as may be

elected to membership and as such shall each, subscribe to

at least one share of its stock and pay the initial installment

thereon and a uniform entrance fee if required by the

board of directors; except that Federal credit union

membership shall be limited to groups having a common

bond of occupation or association

§ 1759 (emphasis added).

ee ee Pk nee

P r

Win 8

49a

provision is that a credit union may have several

groups, each with its own common bond.

Plaintiffs counter that such a reading of the statute

would permit limitless

‘customers’ of each federal credit union are

expressly ‘limited to groups having a common bond.’

tional Union, UMW v. Federal Mine Safety and

Health Admin., 920 F.2d 960, 963 (D.C.Cir.1990)

50a

(statute is ambiguous if it does not clearly pre-

clud{e}” the agency’s approach). Next we look to the

legislative history for a possible resolution of this

ambiguity.

2. Legislative History of the Common Bond Provision

The legislative history concerning the common

bond provision is predictably murky and is a slender

reed upon which to place reliance. “Congress did not

.. . elaborate on th[e] definition [of the common-bond

provision] at the time [the FCUA was debated] or

express the reason for the requirement.” GAO

Report at 217.“ Both sides point to isolated portions

of the record; particularly to the differing language in

the Senate and House of Representatives committee

reports of 60 years ago.

Plaintiffs rely on a statement from a 1934 Senate

Report in which the Committee describes credit

unions as, inter alia, “limited in each case to the

members of a specific group with a common bond of

occupation or association.” S. Rep. No. 555, 73d Cong.,

2d Sess. (1934). In context, however, this statement

may well be little more than a description of the field

of state credit unions as they existed in 1934. It

appears to be a descriptive rather than exhaustive

Chartering Policy 12 (1979) (hereafter “NCUA Report”)

(“There is very little in the legislative history that can be char-

acterized as a(n) insightful, analytic discussion of the essence of

the [common-bond) phrase, and of its intended scope and

application”); A. Burger & T. Dacin, Field of Membership: An

Evolving Concept (2d ed. 1992).

5la

statement and not meant to define the limits of credit

union organization. NCUA Report at 14."

178, 184, 111 S.Ct. 1759, 1768, 114 L.Ed2d 233 (1991);

of Alcohol, Tobacco & Firearms,

670 F.2d 1051, 1057 (D.C.Cir.1981).

characteristic of a credit union.” Barany v. Buller,

670 F.2d 726, 734 (7th Cir. 1982) (the salient feature

of credit unions is their democratic control and man-

agement”); S. Rep. No. 555, 73d Cong., 2d Sess. 8 (1934)

(“the sole purpose in the bill is to protect credit

unions from further losses from the failure of banks

1 fee ss t+. =

„ *

— E ²˙ r ee eee ee Oe eee

52a

which constituted the greatest source of loss to

credit unions during the depression”). In determin-

ing the meaning of a specific provision, the Court

must look to the provisions of the entire law, and to

its object and policy. Pilot Life Ins. Co. v. Dedeauæ,

481 U.S. 41, 51, 107 S.Ct. 1549, 1555, 95 L. Ed. 2d 39

(1987).

The common bond provision was not an end in itself,

but its purpose was to support the underlying policy

of promoting stable credit unions. It also suggests

that Congress intended a flexible interpretation of

the provision.” This assumption is supported by the

fact that Congress has not objected to either the

original agency interpretation or the 1982 expan-

sion.“ JA] refusal by Congress to overrule an

agency’s construction of legislation is at least some

evidence of the reasonableness of that construction.”

The Court rejects plaintiffs’ contention that the NCUA

policy is contrary to Congress’ intent simply because the policy

may represent a change from nearly 50 years of prior inter-

pretation. Rust, 500 U.S. at 186, 111 S.Ct. at 1769 (At his Court

has rejected the argument that an agency’s interpretation ‘is

not entitled to deference because it represents a sharp break

with prior interpretations’ of the statute in question”) (citing

Chevron, 467 U.S. at 862, 104 S.Ct. at 2791); see also Nat'l

Family Planning and Reproductive Health Ass'n v. Sullivan,

979 F.2d 227, 230-31 (D.C.Cir.1992) (Haln agency, in light of

changed circumstances, is free to alter the interpretive and

policy views reflected in regulations construing an underlying

statute, so long as any changed construction . . is consistent

with express congressional intent or embodies a ‘permissible’

reading of the statute”).

Congress was repeatedly made aware of the revised

common bond interpretation by the NCUA, by lobbyists from

the banking industry, and by the GAO. See eg. NCUA 1982

Annual Report to Congress, 1; GAO Report at 218-19.

53a

United States v. Riverside Bayview Homes, Inc., 474

U.S. 121, 137, 106 S.Ct. 455, 464, 88 L.Ed.2d 419 (1985).

p .

9ist Cong., 2d Sess. (1970), U.S. Code Cong. &

Admin.News 1970, p. 2479, 2481. Such economic

changes require only brief discussion. For example,

until 1970, share accounts in federal credit unions

were not insured. Until that time, a restrictive defi-

nition of “common bond” served the goal of individual-

ized loan decisions by members who knew one

another. See GAO Report at 231. Now that share

accounts are insured, the NCUA, and it appears

Congress u well, has determined that larger credit

unions can better spread the risk of loan defaults. See

e.g. id. at 219 (FCUA amended in October 1992 to

allow the NCUA to merge or transfer assets of credit

unions in danger of insolvency).

In sum, the congressional record does not provide a

— that Congress intended to limit each

credit union to a single group sharing a common bond.

In the face of such we cannot conclude that

Congress precluded the NCUA’s interpretation of the

common bond provision. Therefore, it is necessary to

determine whether this interpretation is reasonable.

B. Chevron II: Reasonableness of the NCUA’s

Interpretation

It is well established that, in case of ambiguity, we

must defer to the agency’s interpretation if it is a

reasonable one. Plaintiffs have not seriously argued

that the interpretation under challenge is unreason-

able. Indeed, it would be a daunting task for them to

54a

do so. The NCUA’s interpretation in fact advances

Congress’ goal of promoting the creation and growth

of credit unions. For example, NCUA policy requires

that groups seeking to form credit unions have at

than 500 people. Employees in small companies have

gained the access to credit unions that they would be

denied under plaintiffs’ interpretation.

III. Conclusion

The Court concludes that the NCUA’s inter-

Congress addresses this matter, the Court will defer

to the s interpretation of the statute at issue

Plaintiffs’ renewed motion for judgment is

UNITED StaTes District Court

For THE District Or CoLuMBIA

No. 90-2948

FIRST NATIONAL BANK AND TRUST

COMPANY, Er AL., PLAINTIFFS

NATIONAL CREDIT UNION

ADMINISTRATION, ET AL., DEFENDANTS

No. 96-2312

AMERICAN BANKERS ASSOCIATION, ET AL.,

PLAINTIFFS

NATIONAL CREDIT UNIO»:

TION, DEFENDANT

Filed: October 25, 1996]

56a

alleged violation of its governing statue. The cases

will accordingly be consolidated for all proceedings

henceforth.

The National Credit Union Administration

(“NCUA”), the agency administering the Federal

Credit Union Act (“FCUA”), 12 U.S.C. § 1751 et seq.,

is the principal defendant in both cases. At issue in

both cases is a policy, purportedly followed by NCUA

since 1982, to permit established federal credit unions

to accept groups of new members who do not share a

“common bond of occupation” with the existing mem-

bership if the members of each new group share such

a bond with one another.

Plaintiffs in both cases are representatives of the

private commercial banking industry. NCUA’s pri-

vate co-defendants are representative of the interests

of the credit unions who are competitors of com-

mercial banks for much personal and family banking

business. Credit unions, it is said, possess certain

competitive advantages by operation of law, and

commercial banks are therefore concerned that credit

union membership not proliferate.

Civil No. 90-2948 (hereinafter the “F NBT” case) is

before the Court on a return of mandate from the U.S.

Court of Appeals for the D.C. Circuit for entry of an

appropriate permanent injunction against NCUA in

accordance with an opinion of a panel of the D.C.

Circuit dated July 30, 1996 and reported as First

National Bank and Trust Co. v. National Credit

Union Administration, 90 F.3d 525 (D.C. Cir. 1996).

Civil No. 96-2312 (hereinafter “ABA” case) is a

recently filed “related” case in which a motion for a

preliminary injunction to the same end is pending.

The subject matter of the FNBT case was a series

of rulings by NCUA in 1989 and 1990 approving

57a

applications by a federal credit union of employees

(and their families) of American Telephone &

Telegraph Co. (the credit union being known as

“ATTF”) to admit to membership groups of employ-

ees of multiple unrelated business entities, e.g., a

major tobacco company, an auto supply firm, and a

television station. The plaintiffs in FNBT (which

included the American Bankers Association) chal-

lenged the actions, alleging that Section 109 of the

FCUA, 12 U.S.C. § 1759, required that all members of

a federal credit union organized as an “occupational”

(as opposed to, e.g., a geographic) unit such as ATTF

must be employed by a single employer (or related

employers) whose business afforded the “common

bond” between all members. In its decision of July

30th, the three-judge panel of the D.C. Circuit agreed

in substance, and, ruling on the basis of its own

construction of Section 109 of the FCUA, held that

Congress had expressly foreclosed all other interpre-

tations. The “common bond requirement” of Section

109, the Court of Appeals held, contemplated that all

members of an occupationally organized federal credit

union comprised of more than one “group” must share

the same common occupational bond. IIlt is not

sufficient,” the Court of Appeals said, “that the mem-

bers of each different group have a bond common to

that group only.” 90 F.3d at 531. The decision con-

cluded with an order of remand to this Court to enter

declaratory and injunctive relief “consistent with” its

ruling, adding, however, the phrase”. . . concerning

the NCUA’s 1989 and 1990 approvals of certain

applications filed by ATTF.” Id.

NCUA believes the FNBT case to have been

wrongly decided by the D.C. Circuit, although its

petition for a rehearing or hearing en banc has been

58a

denied. The mandate having issued to this Court in

the meantime, however, the FNBT plaintiffs demand

that the declaratory and injunctive relief “consistent

with” the panel decision be entered without delay, and

they insist that a general prospective injunction is

the appropriate form of relief, not simply a judicial

cancellation of the 1989 and 1990 ATTF applications

that gave rise to the suit.

For its part NCUA points to the limiting language

at the conclusion of the opinion, contending that any

injunction entered cannot go beyond the 1989 and 1990

applications at issue in the FNBT case. When asked

in open court as to the extent to which it will

voluntarily comply with the ruling, NCUA asserts

that it will refrain from processing further applica-

tions from ATTF to expand its membership by enroll-

ing similar disparate “groups.” Otherwise it intends

to continue to do as it has been doing, unless enjoined,

and will approve such applications from other federal

credit unions across the country, notwithstanding

the decision purports to hold the policy itself, not

merely the ATTF application approvals, to be ultra

vires.

The ABA case thus anticipates both the possibility

that the maximum relief available to the prevailing

parties in FNBT will reach only to the 1989 and 1990

ATTF applications, and the probability that NCUA

will, notwithstanding the apparent universality of

D.C. Cireuit decision, persist in approving other

similarly flawed applications. The prayer for final

judgement in the ABA case is, thus, as general as the

holding in FNBT: a prospective injunction, and a

retrospective divestiture of all disparate employee

groups acquired by federal credit unions throughout

59a

poor country pursuant to NCUA’s misconceived

policy.

The entry of a preliminary injunction in the ABA

case will render the scope of any permanent injunc-

tion entered pursuant to mandate in the FNBT case,

and vice versa, a matter of purely academic interest.

As a practical matter, a “permanent” injunction in

the FNBT case would remain so only so long as the

D.C. Circuit decision stands unreversed and the

statute unrepealed or amended. Conversely, a “pre-

liminary” injunction in the ABA case would be made

permanent as a matter of course upon plaintiffs’

motion for summary judgement. No stay having been

entered by the Court of Appeals, the mandate having

issued despite NCUA’s request for its recall, the

process having been exhausted in the D.C.

Circuit, and NCUA having declared its refusal to

acknowledge the decision as the law of the land, the

issuance of a permanent injunction by this Court is

but a ministerial formality. The prospective injunc-

tion, at least, should be entered forthwith.

To the extent plaintiffs may nevertheless be re-

quired to satisfy the four elements of a meritorious

application for pendite lite relief as prayed in the

ABA case, plaintiffs have clearly done so. First, they

are not only “likely” to prevail on the merits, it is a

virtual certainty unless the law changes. Second,

their members sustain irreparable injury with each

new addition to the membership rolls of competing

financial institutions, because the amount of financial

business they will lose in consequence is impossible

to ascertain for purposes of an award of damages, if

indeed anyone were liable. Third, NCUA has shown

no prospect of an injury to its interests (other than

discomfiture) if it is restrained from approving any

60a

more suspect applications, other than a speculative

apprehension that the vitality of credit unions will

dissipate over time if they are unable to replenish

their memberships with sufficient new recruits.

Moreover, unlike plaintiffs, NCUA has an alternative

remedy available; it can apply to Congress for a

change in the law. Finally, and perhaps of greatest

importance, it is indisputably in the public interest

that the law, once authoritatively declared, be as

authoritatively enforced.

NCUA and the intervening co-defendants interpose

the defense of laches, citing the case of Independent

Bankers Association of America v. Heimann, 627

F.2d 486 (D.C. Cir. 1980), as “indistinguishable”

precedent. They say the commercial have

waited 14 years to object to NCUA’s multiple group

policy, and that NCUA’s reliance upon the plaintiffs’

apparent resignation to the policy to allow it to create

a nationwide system of credit unions comprised of

disparate employee groups should estop plaintiffs

from complaining now.

The defense is spurious. Whenever NCUA may

have first embraced its “policy,” it was only mani-

fested over time in a series of progressively more

expansive rulings upon specific applications that

plaintiffs at first believed themselves without stand-

ing to oppose. The FNBT case, commenced in 1990 as

a challenge to rulings then less than a year old, was

dismissed on standing grounds in 1991, 772 F.Supp.

609, 612-13 (D.D.C. 1991), and was not allowed to

proceed on the merits until April, 1993. 998 F. 2d 1272

(D.C. Cir. 1993). In September, 1994, this Court held

that NCUA had made a reasonable interpretation of

its legislative mandate and gave judgement for

NCUA, 863 F.Supp. 9 (D.D.C. 1994), a judgement that

6la

was not reversed until the D.C. Circuit decision of

last July. The FNBT case has been diligently and

persistently pursued. NCUA was never deluded into a

belief that plaintiffs were content to live with its

multiple group policy.

The ABA case was filed by plaintiffs only when

they were alerted in August to NCUA’s unwilling-

ness to accept the D.C. Circuit decision as to the

meaning of Section 109, and its startling assertion

upon the return of mandate that it would not voluntar-

ily obey it except as it pertained to the ATTF rulings

of 1989 and 1990. NCUA has shown neither the unrea-

sonable delay nor the reasonable reliance necessary

to a meritorious efense of laches.

For the foregoing reasons, it is, this 25th day of

October, 1996,

ORDERED, that the plaintiffs’ applications for

declaratory and injunctive relief in both the FNBT

and ABA cases are granted; and it is

FURTHER ORDERED, ADJUDGED and DE-

CREED, that membership in a federal credit union by

individuals or groups of individuals who do not share a

single common bond of occupation with all other

members thereof is declared to be unlawful; and it is

FURTHER ORDERED, that National Credit

Union Administration, its officers, attorneys, agents,

employers, and all others in active concert or partici-

pation with it, including the intervenor-defendants,

are hereby restrained and enjoined preliminarily and

permanently from henceforth authorizing occupa-

tional federal credit unions to admit members who do

not share a single common bond of occupation; and it

62a

FURTHER ORDERED, that these cases are

scheduled for a status conference to determine the

course of subsequent proceedings herein on

December 4, 1996 at 9:30 a.m.

/s/ THOMAS PENFIELD JACKSON

THOMAS PENFIELD JACKSON

USS. District Judge

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 90-2948

First NATIONAL BANK AND TRUST

COMPANY, ET AL., PLAINTIFFS

NATIONAL CREDIT UNION ADMINISTRATION, ET AL.,

DEFENDANTS

Civil Action No. 96-2312

AMERICAN BANKERS ASSOCIATION, ET AL. PLAINTIFFS

NATIONAL CREDIT UNION ADMINISTRATION,

DEFENDANT

Filed: Oct. 31, 1996]

MEMORANDUM AND ORDER

Defendant NCUA and defendant-intervenors Credit

Union National Association and National Association

of Federal Credit Unions (collectively “defendants”)

seek clarification of the scope of the injunction en-

tered in accordance with the Memorandum and Order

of October 25, 1996, granting plaintiffs’ motions for

injunctive relief in the above-captioned cases.

Specifically, defendants ask the Court’s guidance as

to whether the injunction: (1) bars NCUA from

r .

occupational bond with the credit union’s core mem-

bership; and it is

FURTHER ORDERED, that the Order of October

25, 1996 bars credit unions from enrolling new mem-

bers of existing occupational groups that do not share

a common occupational bond with a credit union’s core

membership, without regard to when the groups were

initially approved for affiliation by NCUA, including

those approved more than six years ago.

/s/

THOMAS PENFIELD JACKSON

United States District Judge

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.