# 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)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1997

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0040%3A03. Public record. Not legal advice.