Amicus Curiae 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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“FILED

JUL 11 1997

2 i>

NATIONAL CREDIT UNION ADMINISTRATION,

pa Petitioner,

AT&T FAMILY FEDERAL CREDIT UNION and

CrepDIT UNION NATIONAL ASSOCIATION, INC.,

* Petitioners,

First NATIONAL BANK & Trust Co.., ef al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

BRIEF OF AMICI CURIAE

INDEPENDENT BANKERS ASSOCIATION

OF AMERICA AND

AMERICA’S COMMUNITY BANKERS

IN SUPPORT OF RESPONDENTS

C. DAWN CAUSEY LEONARD J. RUBIN

General Counsel Counsel of Record

AMERICA’S COMMUNITY RICHARD D. Horn

BANKERS BRACEWELL & PATTERSON,

900 Nineteenth Street, N.W. LLP.

Washington, D.C. 20006 2000 K Street, N.W.

(202) 857-8100 Washington, D.C. 20006

Counsel for Amicus Curiae (202) 828-5834

America’s Community Counsel for Amicus Curiae

Sn

ST AVA

QUESTIONS PRESENTED

1. Whether banks (and their trade associations), as

competitors of Federal credit unions like AT&T Family

Federal Credit Union (“AT&T FCU”), fall within the

zone of interests to be protected by the Federal Credit

Union Act (“FCUA”), and therefore have standing to

challenge the National Credit Union Administration’s

(“NCUA’s”) violation of the “common bond” require-

ment of the FCUA.

2. Whether the NCUA’s approval of a Federal credit

union like AT&T FCUA’s expansion of membership to the

employees of multiple organizations, who have no common

bond uniting all of them, violates the FCUA’s express re-

quirement that Federal credit union membership be limited

to “groups having a common bond.”

(i)

SUMMARY OF ARGUMENT .

ARGUMENT

I. BANKS (AND THEIR TRADE ASSOCIA-

TIONS), AS COMPETITORS OF FEDERAL

CREDIT UNIONS LIKE AT&T FCU, FALL

WITHIN THE ZONE OF INTERESTS TO BE

PROTECTED BY THE FEDERAL CREDIT

UNION ACT (“FCUA”), AND THEREFORE

HAVE STANDING TO CHALLENGE THE

NATIONAL CREDIT UNION ADMINISTRA-

TION’S (“NCUA’S”) VIOLATION OF THE

“COMMON BOND” REQUIREMENT OF THE

FCUA

A. Respondents Have Standing To Challenge

The NCUA’s Action Under The Well Settled

Zone Of Interests Test

=a oa ww

ll

14

iv

TABLE OF CONTENTS—Continued

A. Congress Clearly Intended That Members Of

A Federal Credit Union Share A Single

Common Bond

B. Congressional And Administrative State-

ments Over Five Decades Confirm That The

FCUA Requires That The Members Of A

Federal Credit Union Must Have A Single

Common Bond .. nes c

CONCLUSION

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14

v-

TABLE OF AUTHORITIES

CASES Page

*Air Courier Conference v. American Postal Work-

ers Union, 498 U.S. 517 (1991) 6, 8, 10-12

Arnold Tours, Inc. v. Camp, 400 U.S. 45 (1970)... 9,10

Association of Data Serv. Orgz., Inc. v.

Camp, 397 U.S. 150 (1970) 6, 8, 9, 10, 13

Bennett v. Spear, 520 U.S. ——, 117 S.Ct. 1154,

187 L.Ed.2d 281 (1997) 12, 18

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

(4th Cir. 1986), cert. denied, 479 U.S. 10638

(1987) 10

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

(1984) 8, 12

*Chevron U.S.A. Inc. v. Natural Resources De-

fense Council, Inc., 467 U.S. 837 (1984) 7, 15, 24

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

(1987) 6-10, 12, 13

First City Bank v. NCUA, 111 F.3d 488 (6th Cir.

1997) 16

*Hazardous Waste Treatment Council v. Thomas,

885 F.2d 918 (D.C. Cir. 1989) (HWTC = 11

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

(1971) 6, 8, 9, 10, 13

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

(1990) 10

Norwegian Nitrogen Prods. Co. v. United States,

288 U.S. 294 (1983) 22

Panhandle Producers and Royalty Owners Ass’n

v. Economie Regulatory Admin., 822 F.2d 110%

(D.C. Cir. 1987) - i)

Trans Alaska Pipeline Rate Cases, 436 U.S. 631

(1978) 22

Zuber v. Allen, 396 U.S. 168 (1969) 24

STATUTES

5 U.S.C. § 702 x

5 U.S.C. § 706 14

*12 U.S.C. § 1759 5,7, 14

12 U.S.C. § 2901 et seq. 5

59 Fed. Reg. 29,066 (1994) 16

* Authorities chiefly relied upon.

vi

TABLE OF AUTHORITIES—Continued

OTHER AUTHORITIES

54 Fed. Reg. 31,168 (1989) i

47 Fed. Reg. 16,775 (1982)

i

19

16

vii

TABLE OF AUTHORITIES—Continued

Jo McIntyre, Boom in Mortgage Lending at CUs,

National Mortgage News (Faulkner & Gray,

Inc., New York, NY) Oct. 21, 1996

Sheshunoff Information Services, Inc., Credit

Unions, CD ROM (Dec. 1996) .............-..........

Nos. 96-843 & 96-847

NATIONAL CREDIT UNION ADMINISTRATION,

end Petitioner,

AT&T Famiry Feperat Crepit UNION and

CREDIT UNION NATIONAL ASSOCIATION, INC.,

Petitioners,

v.

First NATIONAL BANK & Trust Co., et al.,

2

brief is filed with the consent of all parties, which are on

file with the Court.’

INTERESTS OF AMICI CURIAE

IBAA is a non-profit national trade association that ex-

clusively represents the interests of the nation’s community

banks. The IBAA’s nearly 6,000 national and state char-

tered member financial institutions are located in all 50

states and in the District of Columbia. IBAA members

engage in all forms of lending to businesses and consumers.

ACB is the national trade association for 2,000 savings

and community financial institutions and related business

firms. The savings industry has more than $1 trillion in

assets, 250,000 employees and 15,000 offices. ACB mem-

bers have diverse business sttategies based on consumer

finance, housing, and community development.

Amici curiae jointly submit this Brief in order to ex-

press the support among the financial institutions they

represent, for the respondents’ challenge to the NCUA’s

action loosening restrictions on Federal credit union mem-

bership, and to emphasize the importance of this case to

the entire financial services industry and to community

banks and savings institutions in particular.

The members of IBAA and ACB are community-based,

full service financial institutions. Their customers are in-

dividuals, small employers, college students, farmers, and

others like them who are well and adequately served by

these institutions. The NCUA, AT&T FCU and the

many amici who have appeared on behalf of the credit

union industry, argue that unless the Court reads the plain

language of the statute to permit multi-employer groups

to affiliate, employees of small businesses and other individ-

uals will be denied access to comparable financial institu-

1 No counsel for any party had any role in authoring this brief,

and no person other than amici curiae made any monetary con-

tribution to its preparation or submission.

companies,

all compete for the same customers. Permitting credit

unions to serve multiple unaffiliated groups has an enor-

mous competitive impact on these other providers of finan-

cial services,

company, now have been allowed to expand their charters

to permit them to serve much of the general public over

a wide geographic area. Credit unions have been allowed,

indeed encouraged by the NCUA, to include under one

umbrella an unlimited number of unrelated membership

groups. Huge financial organizations, like AT&T FUA

with its 150,000 customers and reported 560 subgroups,

bear no resemblance to the credit unions authorized by

Congress in the FCUA.

Since the late 1970's, credit union powers have been

gradually and significantly expanded so as now to permit

credit unions to offer the same range of consumer lending

products, accounts, and services as banks and savings in-

stitutions to the same general population of consumers. It

is important to note that as the authority of credit unions

has changed and expanded, the traditional types of credit

union customers also have changed and expanded. Today,

the segments of the local community served by credit

4

unions are indistinguishable from those served by banks

and savings institutions. Credit union customers are no

longer primarily drawn from lower income groups. In

1995, the average U.S. household income was $36,740;

the average household income for credit union members

was $43,480. Seventy percent of credit union members

owned or were buying homes in 1995. By comparison,

only 62 percent of nonmembers owned homes. CUNA &

Affiliates, Credit Union National Association, Inc., Na-

tional Member Survey, at 10-11 (1996); see also General

Accounting Office, Credit Unions: Reforms for Ensuring

Future Soundness, at 231 (1991) (“There is no evidence

that today’s credit union members are for the most part

‘of small means.’”). “The U.S. credit union industry has

evolved from serving simple, short term consumer savings

and lending needs, to being full-service consumer banks.”

A. K. Moysich, An Overview of the United States Credit

Union Industry, FDIC Banking Review, Fall 1990, Vol.

3, No. 1, at 25 (1990). And, according to 1995 NCUA

statistics, credit unions, compared to banks and savings

associations, are the most likely to deny loan applications

from low-income minorities. Of all loan denials by credit

unions, 97.2% were from low-income minorities, com-

pared with denials of 2.8% to low-income whites and

Asians. CUs Rated Worst Lenders to Minorities, NCUA

Watch (American Banker, Inc., Washington, D.C.) Oct.

21, 1996, at 1, 3.

Unlike full-service banks with whom credit unions now

compete, however, credit unions are exempt from federal,

state and local taxes on their income. This confers on

credit unions a financial advantage averaging $.71 per

$100 in deposits nationwide. For a typical $100 million

community bank, this differential equates to a $710,000

annual financial competitive advantage for credit unions.

This allows credit unions to accumulate additional capital

to support asset growth, and their lower cost of funds

allows them to pay higher interest rates on deposits and

to charge lower interest rates on loans.

5

Unlike full-service banks, credit unions also are exempt

from bank regulatory requirements like the Community

Reinvestment Act (“CRA”). 12 U.S.C. § 2901 ef seq.

When Congress adopted CRA in 1977, it exempted credit

unions because they were small institutions with a small

place. However, today many credit unions are major finan-

cial institutions with tens of thousands of members and no

important players in the mortgage market, instead of rely-

ing on smaller balance consumer loans.

NCUA, credit union real estate loans in 1995 totaled

$62.9 billion, or 32 percent of total loans. Search of

Sheshunoff Information Services, Inc., Credit Unions, CD

ROM (Dec. 1996). Credit unions made $8.37 billion in

first mortgages in the first six months of 1996, more than

double the $4 billion they made in the first half of 1995.

And, as noted above, have a very poor record of minority

mortgage lending. Jo McIntyre, Boom in Mortgage Lend-

ing at CUs, National Mortgage News (Faulkner & Gray,

Inc., New York, NY) Oct. 21, 1996 at 1. Although credit

unions currently function in a community like a bank or

Savings institution, they are not required to meet similar

community investment standards.

Credit unions were established by Congress to permit

individuals with a common employment or community

bond to create limited purpose financial institutions to

serve them and their common interests, and were given

special tax and regulatory exemptions to assist them in

furthering this goal. Congress did not intend to authorize

multi-state, multi-billion dollar, tax-privileged, full-service

financial institutions to unfairly compete with private

financial institutions for customers in the

tion. In section 109 of the FCUA, 12 U.S.C. § 1759,

Congress spoke directly and precisely to this limitation by

imposing the “common bond” requirement, which now

must be enforced.

SUMMARY OF ARGUMENT

Amici agree with the arguments made and authorities

cited by respondents in support of respondents’ standing,

and with respect to the unlawfulness of the NCUA’s

actions.

The court of appeals properly held that respondents, as

competitors of credit unions, have standing to challenge

the NCUA’s action approving the expansion of the mem-

bership of a Federal credit union to include innumerable,

wholly unrelated groups. Pet. App. 26a.* The court of

appeals’ decision represents a straightforward application

of the zone of interests test as this Court has applied it

in a line of cases holding that “competitors of regulated

entities have standing to challenge rcgulations.” Air

Courier Conference v. American Postal Workers Union,

498 U.S. 517, 529 (1991) (citing Clarke v. Securities

Indus. Ass'n, 479 U.S. 388 (1987); Investment Co. In-

stitute v. Camp, 401 U.S. 617 (1971); Association of

Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150

(1970)). Im light of those precedents, the court of

appeals’ decision was correct.

The court of appeals’ analysis of standing follows this

Court’s explanation of the zone of interests test. As the

Court stated in Clarke, a plaintiff is not required to show

that there was a “congressional to benefit the

would-be plaintiff.” Clarke, 479 U.S. at 399-400. Thus,

the court of appeals correctly reasoned that a plaintiff

may have standing, even if the plaintiff is not the “in-

tended beneficiary” of the statute at issue. Respondents’

standing turns on whether respondents are members of a

particular class of plaintiffs that Congress intended to

be relied upon to challenge agency disregard of the law.

2 References to “Pet. App.” refer to NCUA Pet. No. 96-843.

7

Id. at 399. Persons that Congress intended to rely upon

to challenge agency oe a ee

“suitable challengers,” court of appeals used that

term. ~Aoapareon or in reasoning thus is fully sup-

ported by this Court’s jurisprudence on standing.

On the merits, the court of appeals properly applied

the analysis specified in Chevron U.S.A. Inc. v. Natural

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

to hold that NCUA’s action was not in accordance with

the FCUA. Pet. App. 2a. The plain language of section

109 of the FCUA, 12 U.S.C. § 1759, clearly conveys

Congress’ intent that all of the members of a Federal

credit union share a single common bond. The legislative

history of the FCUA and congressional and administrative

statements made after the FCUA’s passage further confirm

the court of appeals’ finding that the plain meaning of

the statutory language prohibits a credit union’s member-

ship from being comprised of amalgams of wholly un-

related groups. The decision of the court of appeals

therefore should be affirmed.

ARGUMENT

I. BANKS (AND THEIR TRADE ASSOCIATIONS),

AS COMPETITORS OF FEDERAL CREDIT UNIONS

LIKE AT&T FCU, FALL WITHIN THE ZONE OF

INTERESTS TO BE PROTECTED BY THE FED-

ERAL CREDIT UNION ACT (“FCUA”), AND

THEREFORE HAVE STANDING ‘TO CHALLENGE

THE NATIONAL CREDIT UNION ADMINISTRA-

TION’S (“NCUA’S”) VIOLATION OF THE “COM-

MON BOND” REQUIREMENT OF THE FCUA.

A. Respondents Have Standing To Challenge The

NCUA’s Action Under The Well Settled Zone Of

Interests Test.

There is no dispute in this case that the respondents

have suffered injury in fact as a result of the NCUA’s

grant of applications for expanded membership to un-

affected by agency action within the meaning

vant statute.” 5 U.S.C. § 702. As shown below, how-

ever, the respondents clearly satisfy the test for prudential

standing to challenge the NCUA’s actions.

A party meets the requisite standard for prudential

standing if “the interest sought to be protected by the

complainant is arguably within the zone of interests to

be protected or regulated.” Association of Data Proces-

sing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153 (1970).

This Court further articulated the “zone of interests”

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

(1987), explaining, “The essential inquiry is whether Con-

gress ‘intended for [a particular] class [of plaintiffs] to

be relied upon to challenge agency disregard of the law.’”

Clarke, 479 U.S. at 399 (quoting Block v. Community

Nutrition Inst., 467 U.S. 340, 347 (1984) (altera-

tions in original)). The Court did state that in cases

such as the instant case, where the plaintiff is not itself

the subject of the contested regulatory action, the plain-

tiff lacks standing if its interests “are so marginally related

to or inconsistent with the purposes implicit in the statute

that it cannot reasonably be assumed that Congress in-

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

Court expressly noted, however, that “there need be no

indication of congressional purpose to benefit the would.

be plaintiff.” Clarke, 479 U.S. at 399-400 (citing Invest-

ment Co. Institute v. Camp, 401 U.S. 617 (1971)).

Indeed, Clarke was simply one case in a “series of

cases” in which this Court has held that “competitors of

regulated entities have standing to challenge regulations.”

Air Courier Conference v. American Postal Workers

Union, 498 U.S. 517, 529 (1991) (citing Clarke, 479

U.S. 388; Investment Co. Institute, 401 U.S. 617; Asso-

ciation of Data Processing Serv. Orgs., Inc., 397 US.

150). In Clarke, securities firms had standing to chal-

lenge the Comptroller of the Currency’s ruling that

national banks could operate out-of-state brokerage

offices. In Investment Co. Institute, an association of

mutual fund companies had standing to challenge the

Comptroller of the Currency’s decision that a bank could

establish and operate a collective investment fund for

managing agency accounts. In Data Processing, data proc-

essors had standing to challenge the Comptroller of the

Currency’s decision that national banks could make data

processing services available to their customers.

The Court also could have cited Arnold Tours, Inc. v.

Camp, 400 U.S. 45 (1970). In that case, travel agents

Owners Ass'n v. Economic Regulatory Admin., 822 F.2d

1105, 1009 (D.C. Cir. 1987) (the court observed that

“[c]ompetitors have a seemingly unbroken record of suc-

cess in securing standing to challenge decisions involving

agency licensing”).

The instant case represents yet another challenge by

competitors to a regulatory agency’s decision in violation

the law limiting the activities of its regulated entities.

banks—competitors of the regulated entity AT&T

and other similarly situated federal credit unions—

challenge the NCUA’s regulatory action as a viola-

the statutory common bond requirement. The

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found that respondents were suitable challengers, using

HWTC IV’s term, because this Court's decisions have

made clear that competitors are suitable piaintiffs to chal-

lenge a regulatory decision applying market-defining stat-

utes such as the one at issue here. Pet. App. 31a-37a.

The court’s analysis is consistent with the zone of in-

terests test. This Court’s statement in Clarke that the

essential inquiry is whether Congress intended for a par-

ticular class of plaintiffs to be relied upon to challenge

agency disregard of the law compels application of the

suitable challenger analysis. See Clarke, 479 U.S. at 399

(quoting Block, 467 U.S. at 347). Moreover, the develop-

ment and application of the suitable challenger analysis is

appropriate in light of the line of cases holding that “com-

petitors of regulated entities have standing to challenge

regulations.” Air Courier Conference, 498 U.S. at 529.

The court of appeals properly derived from that state-

ment and the line of cases upon which it relies the prin-

ciple stated in the opinion below:

a plaintiff who has a competitive interest in confining

a regulated industry within certain congressionally

imposed limitations may sue to prevent the alleged

loosening of those restrictions, even if the plaintiff's

Pet. App. 33a.

Petitioners advance an improperly cramped view of the

zone of interests test in asking the Court to reject the

court of appeals’ suitable challenger analysis. Petitioners

argue that unless the banks’ interests were specifically

intended to be protected by Congress, the banks cannot

meet this test. Citing Bennett v. Spear, 520 U.S. ——,

117 S. Ct. 1154, 1167, 137 L. Ed. 2d 281 (1997), NCUA

argues that respondents must “demonstrate that Congress

intended to protect the plaintiff's commercial interests in

the statutory provision, the violation of which formed the

based on the

bring their claim. Bennett,

117 S. Ct. 11

indicated by the word “zone,” and the plural “interests.”

stitute, 401 U.S. 617). The “suitable challenger” vocabu-

lary developed and applied by the court of appeals appro-

priately describes those plaintiffs, like the respondents

14

Il. THE NCUA’S APPROVAL OF A FEDERAL CREDIT

UNION LIKE AT&T FCU’S EXPANSION OF MEM-

BERSHIP TO THE EMPLOYEES OF MULTIPLE

ORGANIZATIONS, WHO HAVE NO COMMON

BOND UNITING ALL OF THEM, VIOLATES THE

FCUA’S EXPRESS REQUIREMENT THAT FED-

ERAL CREDIT UNION MEMBERSHIP BE LIM-

ITED TO “GROUPS HAVING A COMMON BOND”.

A. Congress Clearly Intended That Members Of A

Federal Credit Union Share A Single Commop

Bond.

The decision in this case turns on the interpretation of

Section 109 of the FCUA, enacted by Congress in 1934

to govern the chartering and regulation of Federal credit

unions. 12 U.S.C. § 1759. Section 109 provides:

Federal credit union membership shall consist of the

incorporators and such other persons and incorpor-

ated and unincorporated organizations, to the extent

permitted by rules and regulations prescribed by the

[NCUA] 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 limited to groups having

a common bond of occupation or association, or to

groups within a well-defined neighborhood, com-

munity, or rural district.

12 U.S.C. § 1759 (italics and underscoring added). The

critical phrase to be interpreted in that statutory provi-

sion is “groups having a common bond.” The court of

appeals correctly held that “the FCUA requires by its

commen bond.” Pet. App. 9a.

Judicial review of an agency’s construction of a statute

in an action under the Administrative Procedure Act, 5

U.S.C. § 706, is governed by the well settled rules estab-

15

lished in Chevron U.S.A. Inc. v. Natural Resources De-

fense Council, Inc., 467 U.S. 837 (1984). The first

question to be addressed is “whether Congress has directly

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within a well-defined neighborhood, community, or rural

district,” the NCUA has adopted different rules covering

the two sections. The NCUA’s regulations i i

the geographic limitation on membership require that all

members of the Federal credit union live, worship, or work

in “a single, geographically well-defined area where resi-

dents interact.” 59 Fed. Reg. 29,066, 29,077 (1994).

In a separate challenge to NCUA’s interpretation of sec-

tion 109 of the FCUA, the Court of Appeals for the

Sixth Circuit found the common bond and the geographic

limitation “share the same syntactical structure [and]

ought to be interpreted consistently.” First City Bank v.

NCUA, 111 F.3d 433, 438 (6th Cir. 1997) (striking

down the NCUA’s interpretation of section 109). The

court of appeals likewise correctly found that the same

phraseology used in the statute cannot sensibly be read

to mean two different things.

Respondent NCUA tries in vain to justify the con-

tradictory readings of similar language in the same sen-

tence of the statute by drawing a distinction between the

participial phrase “having a common bond” and the

prepositional phrase “within a well-defined neighborhood,

community, or rural district.” It is, however, a distinction

without a difference. NCUA incorrectly contends that the

participial phrase is merely “an example of a noun being

described,” while the prepositional phrase “imposes a limit

on the noun.” NCUA Brief at 31 (emphasis added).

Participial phrases immediately following nouns without

being set off by commas are “restrictive,” and thus impose

a limit on the noun to which they refer, just as do preposi-

tional phrases. William Strunk, Jr. & E.B. White, The

Elements of Style (3d ed. 1979).

NCUA goes so far as to state that “[i]n selecting a

participial phrase to serve as the adjective to a plural

noun, Congress necessarily created ambiguity.” NCUA

Brief at 32 n.12. Participial phrases do not suffer from

that inherent defect, however. The King’s English, cited

17

by NCUA, NCUA Brief at 31 n.11, does not suggest that

participial phrases are necessarily ambiguous when refer-

ring to plural nouns. See H.W. Fowler & F.G. Fowler,

shia toe Seaery 1931). That work discusses

e misuse of participial phrases due to the

absence of or disagreement with the noun referent. The

frequency of such “blunders” in English usage is irrelevant

to the issue in this case, since the phrase, “groups having

a common bond,” properly links the participial phrase to

' the noun “groups.”

It would have been possible for Congress easily to indi-

cate clearly that several groups could form the member-

ship of a Federal credit union without having a single

common Reaage myre begfe ceamy Ahi hm dhs oe

gress’ intent. i phrase “groups having common

bonds” might better support a reading of the statute that

NCUA currently advances. Similarly, the language used

by the NCUA in its 1989 revision of its field of member-

ship policy includes clear language stating that “{a] select

group of persons seeking credit union service from an oc-

cupational, associational or multiple group Federal credit

union must have its own common bond. ... The group’s

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

of the existing Federal credit union.” 54 Fed. Reg. 31,168

(1989) (emphasis added) (cited in NCUA Brief at 8).

NCUA’s construction of the statutory phrase “a common

bond” to mean “the common bond(s)” is patently incon-

sistent with the clearly expressed intent of Congress.

Petitioners’ arguments focus only on the minutiae of

the phrases in the statute, without taking into considera-

tion whether Congress could have intended the statute to

mean what NCUA now interprets it to mean. If section

109 of the FCUA requires only that each group have its

own common bond, any limitation on Federal credit union

membership would be illusory. Under petitioners’ reading,

the statute would permit a credit union to offer member-

ship to every person in the United States who has a job,

18

if the credit union simply went through the process of list-

ing every employer. Such a reading of the statute would

make the common bond requirement meaningless.

The legislative history of the FCUA supports the court

of appeals’ interpretation of the plain language of the

statute. Congressional statements concerning the purpose

of the common bond requirement establish that Congress

intended that the members of each Federal credit union

be united by a single common bond. The Senate Banking

Committee’s report on the FCUA reveals the congressional

definition of a credit union:

with a common bond of occupation or association

(such as the employees of a given industry, farmers

in a given district, members of a church parish,

employees of the United States Government, groups

within a well-defined neighborhood, small community

or rural district, etc.) ....

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

added).

In addition, the bill’s sponsor, Senator Sheppard, made

statements during passage of the FCUA that support the

court of appeals’ interpretation of the statute. Senator

Sheppard supplied an accompanying statement to S. 1639,

which ultimately became the FCUA, that defined a credit

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

specific group of people.” 77 Cong. Rec. 3206 (1933).

Similarly, during debate of the bill, he explained that

“{c]redit unions are organizations of working people which

enable members of a given group to have money . . . which

is loaned to members of the individual group for provident

— at normal interest rates.” 78 Cong. Rec. 7259

(1934).

20

unions were intended to bring credit resources to the

masses “on a cooperative basis.” S. Rep. No. 555, 73d

Cong., 2d Sess. 3 (1934). See also H.R. Rep. No. 2021,

73d Cong., 2d Sess. 1-2 (1934). Credit unions’ ability

to weather the storm of the Great Depression was attrib-

uted to their democratic control, honest management and

“the worth of cooperative credit” generally. S. Rep. No.

555, 73d Cong., 2d Sess. 2-4 (1934). Congress believed

that because of the cooperative nature of credit unions,

they, unlike banks, could “loan on character.” 78 Cong.

Rec. 7259, 12,223 (1934) (statement of Rep. Luce).*

The existence of a single common bond uniting all the

members of a Federal credit union is essential to promote

cooperation between members. Credit unions with mem-

bership of wholly unrelated, disparate, and even compet-

ing, groups would not enjoy the cooperation of members

that Congress saw as a defining element of credit union

membership. The NCUA’s approval of Federal credit

union’s expansion of membership to include unrelated

groups does not merely ignore Congress’ intent, but effec-

tively flouts it. It is wholly unreasonable to believe that

Congress could have intended to foster establishment of

credit unions on a cooperative basis, while permitting

membership to include groups having no reason to coop-

erate with one another.

Amicus curiae National Association of Federal Credit

Unions in support of petitioners urges, however, that the

Court should construe the FCUA to permit a credit union

to include members lacking a single common bond, because,

otherwise, individual credit unions would lack “the diversity

in membership necessary to minimize risk and avoid the

* Congress’ emphasis on cooperation among the members of a

Federal credit union was reconfirmed by subsequent statements of

Congress. See S. Rep. No. 814, 86th Cong., Ist Sess. 1 (1959),

reprinted in 1959 U.S.C.C.A.N. 2784 (the Senate Banking Commit-

tee stated, “Federal credit unions are cooperative associations

[whose] membership is limited to a group of persons having a

common bond of association, occupation, or residence’).

21

adverse effects of a downturn in the business affairs of a

single underlying company or business.” Brief of Amicus

Whatever the advisability of fostering diversity among

a credit union’s membership, that is a decision for Con-

ing all members within a single group of people. Nowhere

in the legislative history of the FCUA is there a reference

to any credit union composed of unrelated groups of mem-

22

bers. The legislative history instead compels the conclu-

sion that the statute means what it says, all members of a

Federal credit union must share one common bond.

B. Congressional And Administrative Statements Over

Five Decades Confirm That The FCUA Requires

That The Members Of A Federal Credit Union

Must Have A Single Common Bond.

For nearly fifty years, the NCUA consistently inter-

preted the FCUA to require that all the members of a

Federal credit union be united by a single common bond.

E.g., 45 Fed. Reg. 8280, 8285 (1980); see also General

Accounting Office, Credit Unions: Reforms for Ensuring

Future Soundness, at 219 (1991). In seeking to under-

stand statutory language, it is customary to attend to the

construction adopted by the agency administering that

statute promptly after its enactment. See Trans Alaska

Pipeline Rate Cases, 436 U.S. 631, 648 n.26 (1978);

Norwegian Nitrogen Prods. Co. v. United States, 288 U.S.

294, 314-15 (1933). The long-standing constructions,

adopted by the NCUA’s predecessor regulator prior to the

1982 policy change, clearly supports the respondents’ posi-

tion. It should further be noted that when the NCUA

adopted its new policy in 1982, it provided no explana-

tion for its decision to change its interpretation of the

statute. See 47 Fed. Reg. 16,775 (1982). However,

the NCUA’s chairman conceded at the time that the mul-

tiple common bond policy represented “the most significant

deregulation” of credit unions because it allowed eco-

nomic diversification. General Accounting Office, Credit

Unions: Reforms for Ensuring Future Soundness, at 57

(1991).

Congress has never wavered in its interpretation that

section 109 of the FCUA requires a single common bond

among all the members of a Federal credit union. Rather,

Congress has on numerous occasions expressly reaffirmed

its intent that Federal credit union membership be limited

-

1948 U.S.C.C.AN.

9, the Senate Bank-

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tion, or residence.” S. Rep. No. 814, 86th Cong., Ist

Sess. 1 (1959), reprinted in 1959 U.S.C.C.A.N, 2784.

Even more recent statements by Congress are in accord

with the consistently expressed interpretation of section

109 of the FCUA as requiring members of a Federal

credit union to have a single common bond. See H.R.

Rep. No. 23, 95th Cong., Ist Sess. 6 (1977), reprinted

in 1977 U.S.C.C.A.N. 105, 110 (credit unions are orga-

nized around the concept of “people of close common

interests joining together for the economic benefit of that

group of persons”); S. Rep. No. 487, 94th Cong., Ist

Sess. 8 (1975) (“{c]redit unions are distinguished from

iated by a ‘common bond’ of employment... .”); S. Rep.

No. 1265, 90th Cong., 2d Sess. 2 (1968), reprinted in

1968 U.S.C.C.A.N. 2469, 2470 (“{nJo individual may

belong to a credit union or borrow from a credit union

In light of that background, the fact that Congress has

not moved to repudiate the NCUA’s changed interpreta-

24

ee ee

it!

Because Congress’ intent

issue in this case is clear, the Court's inquiry is at an end.

Chevron, 467 U.S. at 836-837. No deference is to be

CONCLUSION

For the foregoing reasons, the decision of the court of

appeals should be affirmed.

Respectfully submitted,

C. DAWN CAUSEY LEONARD J. RUBIN

General Counsel Counsel of Record

AMERICA’S COMMUNITY RICHARD D. Horn

BANKERS BRACEWELL & PATTERSON,

900 Nineteenth Street, N.W. L.L.P.

Washington, D.C. 20006 2000 K Street, N.W.

(202) 857-3100 Washington, D.C. 20006

Counsel for Amicus Curiae (202) 828-5834

America’s Community Counsel for Amicus Curiae

Bankers Independent Bankers

Association of America

July 11, 1997