# 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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## Record

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

## Text

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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

ets

: wee OOH >

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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standing to bring this action. Air Courier Conference,

498 US. at 529.

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0040%3A18. Public record. Not legal advice.