Opposition Brief — AT & T Family Federal Federal Credit Credit Union Union v. First National National Bank Bank & & Trust Trust Co Co. (Nos. 96-847, 96-843)

Nos. 96-843, 96-847

Iu the Supreme Court of the United States

OCTOBER TERM, 1996

NATIONAL CREDIT UNION ADMINISTRATION,

Petitioner,

v.

First NATIONAL BANK AND TRUST CO., ET AL.,

CREDIT UNIO

Respondents.

N NATIONAL ASSOCIATION, ET AL.,

Petitioners,

Vv.

First NATIONAL BANK AND TRUST CO., ET AL.,

Respondents.

ON PETITIONS FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE DISTRICT

OF COLUMBIA CIRCUIT

BRIEF OF RESPONDENTS FIRST NATIONAL BANK

AND TRUST CO., ET AL., IN OPPOSITION

Of Counsel

Joun J. Grit Il

MICHAEL F. CroTTYy

Louis R. COHEN

Counsel of Record

MICHAEL S. HELFER

CHRISTOPHER R. LipseETT

Eric MOGILNICKI

LEON B. GREENFIELD

JEFFREY S. JACOBSON

American Bankers Association Wilmer, Cutler & Pickering

1120 Connecticut Ave., N.W. 2445 M Street, N.W.

Washington, D.C.

(202) 663-5026

December 30, 1996

20037 Washington, D.C. 20037

(202) 663-6000

“a

QUESTIONS PRESENTED

1. Whether banks that compete for customers against

to challenge decisions of the National Credit Union

Administration permitting federal credit unions to expand their

fields of membership in violation of the “common bond”

requirement of the Federal Credit Union Act, 12 U.S.C. § 1759.

2. Whether the “common bond” requirement is violated

when an “occupational” federal credit union accepts members

who have no “common bond of occupation” with the existing

membership.

- TABLE OF CONTENTS

Page

es iie wells ee bocsccccccccesscceces 2

BN Hob cba tedwsibccccccccvccccecccccecccs 10

I. The Court of Appeals Decision on Standing Was a

Straightforward and Correct Application of this

SEE ai etbdbsed codocccccccec. 10

Il. The Court of Appeals’ Interpretation of the

Common Bond Requirement Was Dictated by

“Traditional Tools of Statutory Construction,”

Was Correct, Presents No Conflict with Other

Circuits, and Resolves a Construction Question

Unique to this Statute and of No Wider Importance. . 14

ET URGES pcbadas dx deccseceneccnseccece 20

DE CadUUde on eeese os babdcdedccccdtceuces la

DED sccdéebdet cobtabacdsececesevecccoccs 4a

u

TABLE OF AUTHORITIES

Page

Cases:

AT&T Family Federal Credit Union v. First National

Bank & Trust Co., 510 U.S. 907 (1993) ......... 3,8

Adams v. Watson, /0 F 3d 915 (1st Cir. 1993) ....... 12

Air Courier Conference of America v. American Postal

Workers Unions, AFL-CIO, 498 U.S. 517 (1991) ... 14

Arnold Tours, Inc. v. Camp, 400 U.S. 45 (1970) ..... 10

Association of Data Processing Services Organizations

v. Camp, 397 U.S. 150 (1970) ... 2... 6c ccc ene 8, 10

Board of Directors and Officers, Forbes Federal Credit

Union v. NCUA, 477 F.2d 777 (10th Cir.), cert.

denied, 414 U.S. 924 (1973) o.oo ccc cece nee 5

Board of Governors v. Dimension Financial Corp.,

CTOGE, SEG, GGG 6 0c ci ct dWawdot iv ctcs 15, 16

Branch Bank & Trust Co. v. NCUA, 786 F.2d 621 (4th

Cir. 1986), cert. denied, 479 U.S. 1063 (1987) ..... 13

Cabell Huntington Hospital, Inc. v. Shalala, No. 95-3095,

1996 WL 682215 (4th Cir. Nov. 27, 1996) ........ 17

Chevron, U.S.A., Inc. v. National Resources Defense

Council, 467 U.S. 837 (1984) ©... cee 14,15

Clarke v. Securities Industry Association,

GO SE hdabsncncécdvewieonsen passim

Community First Bank v. NCUA, 41 F.3d 1050 (6th Cir.

GS cockvbtbdvtncensebbesdiabsiietns 10Ks< 12

Control Data Corp. v. Balrige, 655 F.2d 283

(D.C. Cir.), cert. denied, 454 U.S. 881 (1981) ..... 13

DeLoss v. Department of Housing and Urban

Development, 822 F.2d 1460 (8th Cir. 1987) ...... 12

Dole v. United Steelworkers of America, 494 U.S. 26,

GREED vevececesccccsguhetesabaeebinasiorve 14

Foremost Sales Promotions, Inc. v. Director, Bureau of

Alcohol, Tobacco & Firearms, 860 F.2d 229

FED GE TEE cv ccacscccegsacdsisecssecccces 12

/o ——

Hazardous Waste Treatment Council v. Thomas

885 F.2d 918 (D.C. Cir. 1989) ... 2... 6 ea ee. 8, 13

Hernandez v. Reno, 91 F.3d 776 (Sth Cir. 1996) ..... 17

Immigration and Naturalization Services v.

Cardoza-Fonseca, 480 U.S. 421 (1987) .......... 17

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

GUE Cacbntbdsbestabbcesedsévcccccccs passim

L.P. Cavett Co. v. United States Department of Labor,

No. 95-3902, 1996 WL 688966 (6th Cir. Dec. 3

ea ee ee ee 17

Legacy Emanuel Hospital and Health Center v. Shalala,

OF Fe Gee Gs FID on diicccccccccccccs 17

Louisiana Public Service Commission v. FCC,

SE BEN Shido dicccccdéiccece 18

NationsBank of North Carolina, N.A. v. Variable

Annuity Life Insurance Co., 513 U.S. 251

PERSE Ty ees eae 12, 16

Scheduled Airline Traffic Offices v. Department of

Defense, 87 F.3d 1356 (D.C. Cir. 1996) .......... 12

Smiley v. Citibank (South Dakota), N.A.,

__ US. __, 1168. Ce. 1730 (1996) ........... 16, 17

Statutes:

The Federal Credit Union Act, 12 U.S.C.

ea. bis secddubbdecceccedds 2

«tpn dovadds sWevewsitevcnces 2

Ns ad cee nehsaddieesiives 3

ae a sale 3

ee ee da bdine 18

PE EE a Ee 3

iv

Legislative Materials:

77 Cong. Rec. 3206 (1933) ©... ccc ccn cc cccnceeues 4

Credit Unions: Hearings on S. 1639, S. 1640, and

S. 1641 Before a Subcommittee of the Senate

Committee on Banking and Currency 73d Cong.,

Bap Gian, ER GG eds dd ce Hee ce sbas ewe ve tons 5

S. Rep. No. 555, 73d Cong., 2d Sess. 2 (1934) ........ 4

Miscellaneous:

Studies in Federal Credit Union Chartering Policy

8 8 RR LEG): cnicccbd vtavst pene stGed Fs cccces- 4

Department of Health, Education and Welfare,

FRED Kicqwudos vs ikanretes abide cn cees ie Poe 5

45 Fed. Reg. 8285 (1980) ... 2.0... c ccc cccceee 4 15

47 Fed. Reg. 16,775, 26,808 (1982) ........00045: 3, 6

Interpretive Regulation and Policy Statement 94-1,

59 Fed. Reg. 29,066 (1994) 2.0... ccc ccc enc wnnes 6

61 Fed. Reg. 59,305 (1996) ... 0... ccc cc cnc enue 10

Iu the Supreme Court of the United States

OcToser TERM, 1996

Nos. 96-843, 96-847

NATIONAL CREDIT UNION ADMINISTRATION,

Petitioner,

v.

First NATIONAL BANK AND TRUST CO., ET AL.,

Respondents.

Crepit UNION NATIONAL ASSOCIATION, ET AL.,

Petitioners,

Vv.

First NATIONAL BANK AND TRUST CO., ET AL.,

Respondents.

ON PETITIONS FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE DISTRICT

OF COLUMBIA CIRCUIT

BRIEF OF RESPONDENTS FIRST NATIONAL BANK

AND TRUST CO., ET AL., IN OPPOSITION

2

STATEMENT ”

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

et seq., governs the chartering and regulation of federal credit

unions and delegates regulatory authority to the National Credit

Union Administration (“NCUA”). Section 109 of the 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, community, or rural district.” This case

concerns federal credit unions claiming a “common bond of oc-

cupation.”

For nearly fifty years, the NCUA and predecessor agencies

interpreted this requirement to mean that all the members of

any one “occupational” federal credit union must share a single

“common bond of occupation.” In 1982, the NCUA altered

this interpretation and began approving applications by

occupational federal credit unions to serve groups of people

who do not share “a common bond” with the existing

members. The NCUA stated in substance that, since the Act

speaks of “groups [plural] having a common bond,” a single

credit union may serve several groups, each with its own bond,

“ — Pursuant to Rule 29.6, the parents and subsidiaries (except wholly-

owned subsidiaries) of the respondents are as follows:

The parent company of respondent First National Bank and Trust

Company is FNB Corp. The parent company of respondent Lexington State

Bank is LSB Bancshares, Inc. Neither of these respondents has subsidiaries

other than wholly-owned subsidiaries. Respondent Randolph Bank and

Trust Company has no parent; Corporate Data Services, Inc. is its only

subsidiary (other than wholly-owned subsidiaries). Respondent American

Bankers Association has no parent companies or subsidiaries (other than

wholly-owned subsidiaries). United Carolina Bank is the successor to the

original plaintiffs Piedmont State Bank and Bankers Trust of North

Carolina. Its parent company is United Carolina Bancshares Corp. It has

no subsidiaries that are not wholly-owned.

3

and need not limit its membership to people sharing “a [single]

common bond.” 47 Fed. Reg. 16,775 and 26,808 (1982).

Respondents filed this suit in 1990, alleging that these

NCUA approvals of credit union expansions violated the

common bond requirement. The district court dismissed for

lack of “prudential” standing, but the court of appeals reversed

and this Court denied certiorari. Pet. App. 15a,” cert. denied

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

& Trust Co., 510 U.S. 907 (1993). On remand, the district

court ruled for the defendants, but the court of appeals again

reversed, holding that (1) “the intent of the Congress is clearly

discernible from the statutory text and the purpose of the

statute”; and (2) Congress intended that “all the members of a

credit union [must] share a single common bond.” Pet. App.

6a, 10a.

1. The Federal Credit Union Act became law on June

26, 1934. Then and since, Congress has bestowed on federal

credit unions certain advantages not enjoyed by their com-

mercial bank competitors. See, eg., 12 U.S.C. § 1768

(exempting credit unions from taxation); 12 U.S.C. § 2902

(exempting credit unions from the Community Reinvestment

Act); 12 U.S.C. § 1770 (allotting space in federal buildings to

credit unions serving federal employees). But Section 109 of

the FCUA imposes an important restriction on federal credit

union activity: in pertinent part, it limits federal credit union

membership to “groups having a common bond of occupation.”

There was an express reason for this requirement. Credit

unions were designed to be cooperatives, owned and managed

by their members, that would enable persons of limited

¥ All citations to “Pet. App.” refer to NCUA Pet., No. 96-843.

4

resources to pool their funds for saving and lending among

themselves.” As the Senate Report on the Act stated,

A credit union is a cooperative society,

organized in accordance with the provisions

of a specific credit-union law, carefully

supervised, self-managed, limited in each case

to the members of a specific group with a

common bond of occupation or association.”

This common bond, the NCUA has explained, “is the sharing

of some unifying factor or characteristic among persons that

simultaneously links them together and distinguishes them

from the general public.” 45 Fed. Reg. 8285 (1980). The

NCUA thus ruled that an occupational credit union could serve

more than one “group” (e.g., the employees of each of several

affiliated companies), but all members had to share the same

“common bond” (i.e., the same corporate family). Jd. As

NCUA’s predecessor agency explained:

Common bond is that pre-existing

condition which causes the members of a

group to associate together, to know each

other, to have common interests and

purposes, and to be able and willing to

work together to accomplish group

¥ See generally NCUA, Studies in Federal Credit Union Chartering

Policy § 1 (July 1979), C.A. App. 476.

“ §. Rep. No. 555, 73d Cong., 2d Sess. 2 (1934) (emphasis added), C.A.

App. 52. At the introduction of S. 1639, which ultimately became the Act,

Senator Sheppard proffered an accompanying statement that described a

credit union as “organized within and in each case limited to a specific

group of people. ... No one outside the specific group can have anything

to do with the specific credit union.” 77 Cong. Rec. 3206 (1933) (emphasis

added).

5

objectives. A group has a common bond

when it is composed of people who have

the same employer, or are otherwise

associated through some common interest

or enterprise, and are so si\ated in relation

to each other as a consequence of that

community of employment or association

that they could be expected to operate

effectively as a cooperative organization

for credit union purposes.”

Credit unions are not necessarily required to be small

institutions, but they are required to define their membership by

the common bond. As the drafter of the model act on which

the FCUA was based told Congress:

[A] credit union first, as I have said, is a

bank organized within a specific group of

people. That group may be quite large.

The Telephone Workers Credit Union in

Boston has 16,000 members. [It is,

however, confined to employees of the New

England Telephone & Telegraph Co.*

In 1982, however, the NCUA revised its field of member-

ship policy. Under the new rules, a single federal credit union

may serve members of an unlimited number of occupational

¥ — Department of Health, Educ., and Welfare, “Organizing a Federal

Credit Union” 3 (May 1967); quoted in Board of Directors and Officers,

Forbes Federal Credit Union v. NCUA, 477 F.2d 777, 783 (10th Cir.), cert.

denied, 414 U.S. 924 (1973).

“ — Credit Unions: Hearings on S. 1639, S. 1640, and S. 1641 Before a

Subcomm. of the Sen. Comm. on Banking and Currency, 73d Cong., \st

Sess. 15 (1933) (emphasis added) (statement of Roy F. Bergengren); see

NCUA Pet. 24 (eliding the last sentence quoted above).

6

groups, and the members of one group need not have anything

in common with the members of another. 47 Fed. Reg. 16,775

and 26,808 (1982) See NCUA Interpretive Regulation and

Policy Statement (IRPS) 94-1, 59 Fed. Reg. 29,066, 29,075-76

(1994).

The change is dramatic: any single federal credit union

could, without violating the NCUA’s current interpretation of

the common bond requirement, serve every person in the

United States who is employed (and, by virtue of other NCUA

interpretations, every family member of every employed

person).”

2. One credit union that took advantage of the new

policy was AT&T Family Federal Credit Union (“ATTF”) in

North Carolina. ATTF was chartered in 1952 with a field of

membership limited to “Employees of the Radio Shops of

Western Electric Co., Inc., who work in Winston-Salem,

Greensboro, and Burlington, North Carolina; employees of this

credit union; members of their immediate families; and

organizations of such persons.” The people within this field of

membership shared the common bond of occupation (namely,

employment by Radio Shops) required by the FCUA.

Pursuant to the NCUA’s revised policy, ATTF later began

serving customers not employed by AT&T, including

employees of a Coca Cola bottler, Black & Decker Corp., Duke

VY See 59 Fed. Reg. 29,066, 29,079 (1994) (family members of those

within common bond eligible for credit union membership). The NCUA’s

regulations recognize that it may not permit a credit union to be established

with a membership defined generally to include employees of all firms,

because there is “[n]Jot the same occupational bond” among them all. 59

Fed. Reg. at 29,076 (1994). However, the NCUA would deem the same

membership to be eligible for a “multiple group charter” if it were defined

by listing the “names of firms,” e.g., ABC Inc., DEF, Inc., GHI, Inc., etc.

Id.

7

Power Co., and American Tobacco Co. ATTF also became a

multi-state operation, serving its customers (“members,” in

credit union parlance) with branches in many states. At the

time of the decision below, ATTF had “112,000 members in

more than 150 disparate occupational groups spread across all

50 states.” Pet. App. 4a-5Sa.

American Bankers Association (a national trade association for

banks). In 1990, respondents filed suit against the NCUA in

the U.S. District Court for the District of Columbia, alleging

that the multiple-bond policy is contrary to the FCUA, and

asking specifically that recent NCUA approvals of expansion

requests by ATTF be set aside as “arbitrary, capricious, or

otherwise in violation of law.”

In 1991, the district court dismissed, ruling that, although

dential standing.” Pet. App. 32a-42a. The court of appeals

reversed. It agreed that there was no issue of constitutional

standing (“that [respondents] will suffer competitive or

economic injury is not in doubt,” Pet. App. 20a), and it held

ing as well. Pet. App. 15a-31a.

The court of appeals noted that the common bond require-

ment is a congressionally imposed limit on credi{ union

activity: “Like more classic entry restrictions, the common

bond requirement, by limiting a credit union’s customer base,

effectively prevents the credit union from offering its services

and competing in a broader market.” Jd. 24a-25a. The court

then held that, under this Court’s precedents, competitors have

standing to enforce such a limit. Clarke v. Securities Indus.

Ass'n, 479 U.S. 388, (1987); Investment Co. Inst. v. Camp, 401

U.S. 617, (1971) (“ICI”); and Association of Data Processing

Servs. Orgs. v. Camp, 397 U.S. 150, (1970). The court of

appeals read these cases as standing for “the principle that a

plaintiff who has a competitive interest in confining a regulated

may sue to prevent the alleged loosening of those restrictions,

even if the plaintiff's interest is not precisely the one that

Congress sought to protect.” Pet. App. 24a.”

Importantly, the court of appeals rejected NCUA’s attempt

to invoke that court’s earlier decision in Hazardous Waste

Treatment Council v. Thomas, 885 F.2d 918 (D.C. Cir. 1989).

See Pet. App. 25a. In HWTC JV, the court had held that the

interests of hazardous waste treatment firms “were not

sufficiently congruent with those of the intended beneficiaries

of the [relevant EPA act]” to allow them to sue to force the

EPA to adopt stricter environmental regulations. Jd. 25a-26a.

Concluding here that “this case is a good deal closer to the

paradigm of JC/ and Clarke than it is to HWTC,” Id. 29a, the

court of appeals held that respondents had standing te challenge

the NCUA « actions and remanded for proceedings on the

merits. Intervenors ATTF and Credit Union National

Association, a credit union trade group, sought a writ of

certiorari, but this Court denied the petition.”

4. | Onremand, on cross-motions for summary judgment

on the merits, the district court ruled that “the common bond

provision was not the defining characteristic of a credit union,”

¥ — The court noted that this Court allowed investment firms or their trade

association to enforce competitive restrictions imposed on banks by the

Glass-Steagall Act and the McFadden Act, even though those statutes were

23a, citing Clarke, 479 U.S. at 388 & n.13; and JCI, 401 U.S. at 618-19.

¥ See AT&T Family Federal Credit Union v. First Nat'l Bank & Trust

Co., 510 U.S. 907 €1993).

9

Pet. App. 51a, and that “[tJhe NCUA was given a mandate to

provide more flexible and innovative regulation in the face of

changing economic conditions.” Jd. 53a (internal quotations

and citations omitted). It then upheld the NCUA’s construction

po “reasonable construction of an ambiguous statute.” Jd.

On July 30,:1996, the court of appeals again reversed the

unambiguously requires that all the members of any one

federal credit union must have a single common bond. This

" construction, the court found, is required by the text of the

common bond requirement (which the NCUA’s interpretation

“would drain . . . of all meaning” Pet. App. 10a) and the Act’s

purpose “to unite credit union members in a cooperative

venture.” Pet. App. 12a (brackets and citations omitted). The

court of appeals also concluded that the “common bond”

requirement must be read consistently with the parallel clause

relating to “community” credit unions, whose membership

(NCUA agreed) is limited to a single community. Pet. App.

8a-9a. Thus, the statutory requirement that “credit union

membership shall be limited to groups having a common bond

of occupation . . . or to groups within a well-defined

neighborhood, community, or rural district” would allow credit

unions of either kind to include more than one group, but all of

the constituent groups must share a single common bond of

occupation or a single geographic community. The court

accordingly found the NCUA’s construction, under which a

single occupational credit union could serve an unlimited

10

number of employer groups with disparate occupational bonds,

to be impermissible. Jd. 14a.”

ARGUMENT

I. THE COURT OF APPEALS DECISION ON STAND-

ING WAS A STRAIGHTFORWARD AND CORRECT

APPLICATION OF THIS COURT’S DECISIONS.

The decision below was a routine and correct application

of this Court’s competitor standing jurisprudence. See Clarke

v. Securities Indus. Ass'n, 479 U.S. 388 (1987) (“Clarke”),

Investment Co. Inst. v. Camp, 401 U.S. 617 (1971) (“JCTP’),

Arnold Tours, Inc. v. Camp, 400 U.S. 45 (1970); Association

of Data Processing Servs. Orgs. v. Camp, 397 U.S. 150 (1970).

The court of appeals held that respondents have standing under

the doctrine set forth in JC/ and Clarke, see Pet. App. 22a, and

not because of any special circuit rule on standing. There is no

live conflict between courts of appeals on competitor standing,

and no new or important “standing” issue is presented.

1” __ The mandate of the court of appeals was expedited in light of

statements by the NCUA that it would not follow the decision, and an

injunction was entered by the district court on October 25 (modified slightly

on October 31). Pet. App. 55a-65a. Subsequently, the district court

enjoined pendente lite the implementation of a regulation issued by the

NCUA, without public notice or comment, in response to the district court's

action, 61 Fed. Reg. 59,305 (1996), on the ground that it was adopted in

violation of the Administrative Procedure Act and “with specific intent to

circumvent the terms of this Court’s Orders.” App. la. On December 24,

the court of appeals stayed the district court’s orders dated October 25 and

31 insofar as they may bar “enrolling new members of existing occupational

groups” and refused other relief requested by the NCUA. App. 3a. The

NCUA’ statement, NCUA Pet. 13, that a motion is pending in the district

court concerning “retroactive divestiture of [credit union] groups or

members who do not share a common bond with the core group” is

incorrect.

There is no dispute that respondents suffered actual injury

below was whether, under this Court’s “zone of interests” test

for “prudential standing” to challenge agency action under the

Administrative Procedure Act, banks have standing as competi-

tors to enforce statutory limits on the activities on credit

unions. The court of appeals answered that question “yes” in

a straightforward application of JC/ and Clarke.

In both of those cases, the Court held that trade associations

of securities firms had prudential standing to challenge agency

approvals of activities of commercial banks that allegedly

violated the banking statutes. As NCUA’s petition acknow-

ledges, “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.” NCUA Pet.

18; citing 479 U.S. at 403. Similarly here, the banking industry

respondents have standing to enforce a requirement that was

intended by Congress to limit the reach and scope of services

offered by credit unions. The NCUA argues that this case is

different because the purpose of the Federal Credit Union Act

is “to promote the accessibility and growth of federal credit

unions.” NCUA Pet. 18. But that is not an answer to Clarke

and JCI: The “common bond” requirement of the FCUA is

explicitly a limit on credit union reach, just as the Glass-

Steagall Act and the McFadden Act are limits on bank

activities. The subject of this case is the delineation of those

limits, just as Clarke and ICI concerned the delineation of

similar limits in the banking laws.

Petitioners contend that this case lies outside Clarke and JC]

because Congress did not say that the FCUA was intended to

12

protect banks. NCUA Pet. 16-17. But Clarke rejected exactly

this argument:

479 U.S. at 398. Clarke went on to summarize the “zone of

interests” test as not requiring any “indication of congressional

purpose to benefit the would-be plaintiff.” Jd. at 399-400.

The decision below is in accord with other reported

decisions of the circuit courts on competitor standing that post-

date Clarke,” including a case involving FCUA standing

issues identical to this one. See Community First Bank v.

NCUA, 41 F.3d 1050 (6th Cir. 1994). In particular, there is no

live conflict with Fourth Circuit jurisprudence. Though ~

See Scheduled Airline Traffic Offices v. DOD, 87 F.3d 1356 (D.C. Cir.

1996); Adams v. Watson, 10 F.3d 915 (ist Cir. 1993) (out-of-state milk

producers have competitor standing to challenge constitutionality of state

milk pricing order); DeLoss v. HUD, 822 F.2d 1460 (8th Cir. 1987) (owners

of rental property have competitor standing to challenge Department's

decision, under § 202 of the Housing Act, to finance a housing project); see

also NationsBank of North Carolina, N.A. v. Variable Annuity Life Ins. Co.

(“VALIC™), 513 U.S. 251 (1995) (implicitly finding that the insurance

industry has competitor standing to challenge regulations allowing banks

to sell insurance); Foremost Sales Promotions, Inc. v. Director, Bureau of

Alcohol, Tobacco & Firearms, 860 F 2d 229, 233 (7th Cir. 1988) (alcoholic

beverage retailers have standing to allege that BATF regulations unfairly

constrained distributors in their dealings with retailers).

13

petitioners correctly state that Branch Bank & Trust Co. v.

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

1063 (1987), reached a contrary conclusion, that case was

decided before Clarke and has not since been followed by t!<

Fourth Circuit or any other Circuit on the competitor standing

issue presented here. As the court of appeals stated, Pet. App.

24a n.3, Branch Bank did not survive Clarke; it was part of a

line of cases, limiting standing to express beneficiaries of a

statutory restriction, that was specifically overruled in Clarke.

See 479 U.S. at 400 n.15.”

Finally, nothing in the decision below suggests that it was

based on a body of special D.C. Circuit doctrine that is “easier”

than, or contrary to, Clarke and JCI. The court of appeals did

discuss its “suitable challenger” test as elaborated in Hazardous

Waste Treatment Council v. Thomas, 885 F.2d 918 (D.C. Cir.

1989) (finding no standing to challenge agency action by a

non-competitor who was not a “suitable challenger”). But the

court was quite clear that its decision upholding standing in this

case was based on Clarke and JC]. It went on to address

“suitable challenger” because “appellees [petitioners here] . . .

claim [it] was stricter than .. . Clarke... .” Pet. App. 26a

(emphasis added). It found that test inapplicable and “the

The Clarke foomote refers to the line of cases exemplified by Control

Data Corp. v. Baldrige, 655 F 2d 283, 293-94 (D.C. Cir.), cert. denied, 454

U.S. 881 (1981), on which Branch Bank specifically relied. See 786 F.2d

at 625. In stating that it was overruling these cases, the Clarke Court said:

“The [zone of interests] test is not meant to be especially demanding.” 479

U.S. at 399. Control Data and other similar cases were rejected as being

“inconsistent with our understanding of the ‘zone of interests’ test, as now

formulated.” Jd. at 400 n.15.

14

paradigm of /C/ and Clarke,” controlling.” See Pet. App. 29a.

It is quite inappropriate for petitioners now to suggest that the

court of appeals followed an indulgent “suitable challenger”

test rather than this Court’s decisions in Clarke and JCI.

Il. THE COURT OF APPEALS’ INTERPRETATION OF

THE COMMON BOND REQUIREMENT WAS

DICTATED BY “TRADITIONAL TOOLS OF

STATUTORY CONSTRUCTION,” WAS CORRECT,

PRESENTS NO CONFLICT WITH OTHER

CIRCUITS, AND RESOLVES A CONSTRUCTION

QUESTION UNIQUE TO THIS STATUTE AND OF

NO WIDER IMPORTANCE.

On the merits, the court of appeals properly applied the

Chevron test to an agency’s revised interpretation of a non-

tools of statutory construction,” Chevron, 467 U.S. at 843 n.9;

see Dole v. United Steelworkers of Am., 494 U.S. 26, 35

(1990), and starting with the language of the statute, the court

concluded that the new interpretation conflicted with an

unambiguous statutory mandate. Its invalidation of NCUA’s

actions was wholly appropriate in light of that conclusie>. See

Board of Governors v. Dimension Financial Corp., 474 U.S.

‘Y Although petitioners feign surprise, it is obvious why the court of

appeals did not cite Air Courier Conf. of Am. v. American Postal Workers

Unions, AFL-CIO, 498 U.S. 517 (1991): Air Courier was not a competitor

standing case. In any event, what Air Courier says is this: “Clarke is the

most recent in a series of cases in which we have held that competitors of

regulated entities have standing to challenge regulations.” /d at 529. That

is precisely what the court below held.

Chevron, U.S.A., Inc. v. National Resources Defense Council, 467 U.S.

837 (1984).

15

361, 368 (1986) (“The traditional deference courts pay to

agency interpretation is not to be applied to alter the clearly

expressed intent of Congress”); Chevron, 467 U.S. at 842-43

(“If the intent of Congress is clear, that is the end of the

matter”).

The provision at issue says, “Federal credit union member-

ship shall be limited to groups having a common bond of

occupation ....” Only two readings of this provision have

been suggested. The court of appeals’ reading fits the

language and makes sense: a credit union may have members

from one or more occupational groups as long as they all have

“a” common bond that “simultaneously links them together and

distinguishes them from the general public.” 45 Fed. Reg.

8285 (1980). NCUA’s current reading does not fit the

language and makes no sense: a credit union may have

members drawn from one or more groups, including “groups”

of just one or two people, that need not share “a” common

bond; on that reading every person in the United States who has

a job with any employer (or has a family member who is

employed) could be a member of the same federal credit union

without violating the requirement, which, under this

construction, serves no discernible purpose.

The court of appeals was also correct in concluding that the

NCUA’s current interpretation could not be made to fit the

structure of the sentence in which the common bond

requirement is set forth. That sentence states that federal credit

union membership is restricted to (a) “groups having a common

bond of occupation or association,” or (b) “groups within a

well-defined neighborhood, community, or rural district.” The

NCUA has always agreed that, while a community credit union

may include plural “groups,” all must necessarily share “a” —

i.e., one — community, or else the credit union could expand

16

to fill the map. The parallel phrasing similarly requires that,

while an occupationally-defined credit union may contain

plural “groups” (i.e., from affiliated employers), all must share

“a” — one — common bond.

Petitioners assert that the NCUA’s policy “promotes the

congressional purposes expressed in the [Act],” NCUA Pet.

22. But at best, “{a}pplication of ‘broad purposes’ of

legislation at the expense of specific provisions ignores the

complexity of the problems Congress is called upon to address

and the dynamics of legislative action.” Dimension Financial,

474 U.S. at 373-74. And one of the purposes clearly expressed

in the text and legislative history of this statute was to limit

federal credit union membership to persons having certain

relationships that Congress thought would enable them to trust

and rely on each other. As the court of appeals ruled, NCUA

simply prefers to leave that limiting purpose of the statute out

of account.

Chevron does not call for deference to agency inter-

“traditional tools” to discern congressional intent, that the

intent is unclear and concludes that the agency’s construction

is reasonable. See, e.g., Smiley v. Citibank (South Dakota),

N.A., U.S. __, 116 S. Ct. 1730 (1996); INS v. Cardoza-

‘The NCUA cites NationsBank of North Carolina, N.A. v. Variable

Annuity Life Ins. Co., 115 S. Ct. 810, 813-14 (1995) (“VALIC”), arguing

that the NCUA’s multiple-bond policy merely “fills a gap or defines a term

in a way that is reasonable in light of the legislature’s revealed design.”

NCUA Pet. 22. Unlike VALIC, however, where the Comptroller of the

Currency interpreted the phrase “all such incidental powers as shall be

necessary to carry on the business of banking,” this is not a case where an

agency gave content to an open-ended provision. Here, the NCUA simply

abandoned the reading dictated by language, context, and purpose in favor

of a reading that renders the words at issue nugatory.

17

Fonseca, 480 U.S. 421, 447-48 (1987). Petitioners’ problems

are that the “traditional tools” — language and purpose of the

provision — do dictate the answer here, and NCUA’s

interpretation is incorrect because it would deprive the

“common bond” requirement of all substance.

The question presented is unique to the Federal Credit

Union Act. The fact that credit unions are affected by the issue

is not a reason for this Court to review the court of appeals’

decision in the absence of a conflict. In just the last few weeks,

courts of appeals have invalidated important regulations of a

number of federal agencies as violative of unambiguous

statutory mandates, including regulations affecting labor,

Medicaid,” and legal aliens. This Court of course does not

routinely provide a second level of review in such cases.

Petitioners also argued below that a meaningful common

bond provision would be inconsistent with today’s realities, but

Judge Ginsburg fully answered this argument: “if this [single-

bond] conception of an FCU seems dated in the world of ATMs

and nearly nationwide financial institutions of a scale surely

unimaginable in 1934, . . . then the case for updating the FCUA

See L.P. Cavett Co. v. United States Dep't of Labor, No. 95-3902,

1996 WL 688966 (6th Cir. Dec. 3, 1996) (Department of Labor regulation

implementing the Davis-Bacon Act).

See Cabell Huntington Hosp., Inc. v. Shalala, No. 95-3095, 1996 WL

682215 (4th Cir. Nov. 27, 1996) (HHS regulation regarding Medicare

reimbursement); Legacy Emanuel Hosp. and Health Ctr. v. Shalala, 97 F.3d

1261 (9th Cir. 1996) (same).

W See Hernandez v. Reno, 91 F.3d 776 (Sth Cir. 1996) (INS regulation

implementing the Immigration Act).

18

must be addressed to Congress.”"” Respondents note that the

policy issue before Congress would not be whether credit union

services will be broadly available: they are universally avail-

able, through numerous state-chartered credit unions not

affected by the decision below,” as well as federal community

credit unions and federal occupational and associational credit

unions complying with the common bond requirement. The

policy issue for Congress would be whether it wishes to permit

federally chartered credit unions to add members across the

nation without any common bond limitation. That is, as Judge

Ginsburg said, not an issue for the courts.

Finally, there is no conflict between the decision below and

any other appellate decision. The NCUA makes the extra-

ordinary argument, NCUA Pet. at 29, that this Court should

anticipate the possibility of a conflict with a case pending in the

Sixth Circuit because the plaintiffs in that case might not

choose to petition from an adverse decision. But if a conflict

develops, and if thereafter petitioners lose any case, petitioners

will be able to give this Court the opportunity to consider the

issue. There is no reason to anticipate in this case a possible

1” Pet. App. 12a; see also Louisiana Public Serv. Comm'n v. FCC, 476

U.S. 355, 376 (1986):

What is really troubling respondents, of course, is

their sense that state regulators will not allow them

sufficient revenues. While we do not deprecate this

concern, § 152(b) precludes both the FCC and this

Court from providing the relief sought. As we so

often admonish, only Congress can rewrite this

Statute.

* — Federal credit unions operating in states that do not impose a common

charters, see 12 U.S.C. § 1771, and, if press reports are accurate, many have

already taken steps toward doing so.

19

future conflict calling for this Court’s attention when — on

petitioners’ own view of the matter — the issue will cease to

arise.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted,

Louis R. COHEN

Counsel of Record

MICHAEL S. HELFER

CHRISTOPHER R. LIPSETT

ERIC MOGILNICKI

LEON B. GREENFIELD

JEFFREY S. JACOBSON

WILMER, CUTLER & PICKERING

2445 M Street, N.W.

Washington, D.C. 20037-1420

(202) 663-6000

Counsel for Respondents

JouN J. Gitt Il

MICHAEL F. CROTTY

AMERICAN BANKERS ASSOCIATION

1120 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 663-5026

Of Counsel

December 30, 1996

la

APPENDIX A

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

NO. 90-2948

FIRST NATIONAL BANK AND TRUST

COMPANY, ET AL., PLAINTIFFS

v.

NATIONAL CREDIT UNION

ADMINISTRATION, ET AL., DEFENDANTS

NO. 96-2312

AMERICAN BANKERS ASSOCIATION, ET AL..,

PLAINTIFFS,

Vv.

NATIONAL CREDIT UNION

ADMINISTRATION, DEFENDANTS

[Filed: December 4, 1996]

2a

In accordance with the proceedings in open court at the

status conference and motions hearing of December 4, 1996,

and upon consideration of the record before the Court, the

Court having found, for essentially the reasons set forth by

plaintiffs and those expressed orally by the Court, that

defendant National Credit Union Administration (“NCUA”)

adopted its recently promulgated regulation of November 14,

1996, entitled Interim Field of Membership Policy (“IRPS”)

96-2, collusively with co-defendant intervenors; in violation of

the Administrative Procedure Act, 5 U.S.C. § 551, et seq.; and

with specific intent to circumvent the terms of this Court’s

Orders of October 25, 1996, and October 31, 1996, it is, this

4th day of December, 1996,

ORDERED, that plaintiffs’ motion for immediate

enforcement of the Court’s Orders of October 25, 1996, and

October 31, 1996, is granted, and any further implementation

of IRPS 96-2, is enioined, pendite lite, or subsequent order of

Court; and it is

FURTHER ORDERED, that any approval henceforth of

requests for occupational federal credit union membership

made pursuant to NCUA’s purported redefinition of “core

membership” or “common occupational bond,” see IRPS 96-2,

other than as defined by the Order of October 31, 1996,

including further implementation of the 31 requests reportedly

already approved by NCUA pursuant to the agency’s new

policy, are enjoined, pendite lite; and it is

FURTHER ORDERED, that plaintiffs’ request for an

expedited Rule 16 conference is denied as moot; and it is

FURTHER ORDERED, that the motions of defendant and

defendant intervenors for a stay or, in the alternative, a partial

stay, pending appeal of the Court’s Orders of October 25 and

October 31, 1996, and possible Supreme Court review of First

3a

National Bank and Trust Co. v. National Credit Union Adm’n,

90 F.3d 525 (D.C. Cir. 1996), is denied; and it is

FURTHER ORDERED, sua sponte, that a stay of this

Order pending appeal is denied; and it is

FURTHER ORDERED, that counsel for all parties furnish

courtesy copies to this Court of all papers filed in the U.S.

Court of Appeals for the District of Columbia Circuit and the

U.S. Supreme Court in connection with these cases, and keep

this Court apprised of significant action thereon; and it is

FURTHER ORDERED, that these cases are scheduled for

an initial status and scheduling conference pursuant to Fed. R.

Civ. P. 16 and D.D.C. Rule 206 on January 29, 1996, at 9:30

a.m.

/s/ Thomas Penfield Jackson

Thomas Penfield Jackson

United States District Judge

4a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

NO. 96-5347

CONSOLIDATED WITH 96-5348, 96-5349, 96-5350,

96-5351, 96-5352

PIEDMONT STATE BANK, ET. AL.,

APPELLEES

Vv.

NATIONAL CREDIT UNION

ADMINISTRATION, ET AL., APPELLEES

NATIONAL ASSOCIATION OF FEDERAL CREDIT

UNIONS,

APPELLANT

BEFORE: Ginsburg, Sentelle, and Rogers, Circuit Judges

[Filed December 24, 1996]

ORDER

Sa

Upon consideration of the motions to stay, the alternative

motions for a partial stay, the opposition to the motions to stay,

and the replies to the opposition, it is

ORDERED that so much of the October 25, 1996 and

October 31, 1996 district court orders that bar a credit union

from enrolling new members of existing occupational groups

that do not share a common occupational bond with the credit

union’s core membership, be stayed pending appeal, or

resolution of the petitions for certiorari filed by the National

Credit Union Administration and the AT&T Family Federal

Credit Union in the United States Supreme Court in the matter

of First National Bank and Trust Co. et al. v. National Credit

Union Admin., 90 F.3d 525 (D.C. Cir. 1996), petitions for cert.

filed, 65 U.S.L.W. 3416 (U.S. Nov. 26, 1996) (No. 96-843) and

(U.S. Nov. 27, 1996) (No. 96-847). To the extent that the

movants seek to stay other aspects of the district court’s orders,

their motions are denied. It is

FURTHER ORDERED, on the court’s own motion, that

the parties file motions to govern further proceedings herein

within fourteen days of the Supreme Court’s resolution of the

/s/ Mark 1. Langer _

FOR THE COURT:

Mark J. Langer, Clerk