American Bankers v. National Credit Union Admin., Civ.A. 99-00042(CKK).

Decision Date10 March 1999
Docket NumberNo. Civ.A. 99-00042(CKK).,Civ.A. 99-00042(CKK).
Citation38 F.Supp.2d 114
PartiesAMERICAN BANKERS ASSOCIATION, Plaintiff, Independent Bankers Association of America, Plaintiff-Intervenor, v. NATIONAL CREDIT UNION ADMINISTRATION, Defendant, National Association of Federal Credit Unions, and Credit Union National Association, Defendant-Intervenors.
CourtU.S. District Court — District of Columbia

Michael S. Helfer, Wilmer, Cutler & Pickering, Washington, D.C., for plaintiff.

Leonard J. Rubin, Albert B. Krachman, Bracewell & Patterson, L.L.P., Washington, D.C., for Plaintiff-Intervenor.

Arthur R. Goldberg, Lois Bonsal Osler, United States Department of Justice, Federal Programs Branch, Civil Division, Washington, D.C., for Defendant.

David M. Malone, Ronald R. Glancz, Venable, Baetjer, Howard & Civiletti, L.L.P., Washington, D.C., Paul J. Lambert, Bingham Dana, L.L.P., Washington, D.C., for Defendant-Intervenor.


KOLLAR-KOTELLY, District Judge.

For years, the National Credit Union Administration (NCUA) interpreted Section 109 of the Federal Credit Union Act (FCUA), 12 U.S.C. § 1759, to permit various employment groups, each one united by its own peculiar occupational bond but otherwise unrelated to another group, to coalesce and form a "multiple common-bond" credit union. See Interpretative Ruling and Policy Statement (IRPS) 82-1, 47 Fed.Reg. 16775 (1982). Early last year, after the issue had been volleyed twice between this Circuit's trial and appellate courts, the Supreme Court held that the NCUA's interpretation of Section 109 violated the unambiguous provisions of the FCUA. See National Credit Union Admin. v. First Nat'l Bank & Trust Co., 522 U.S. 479, 118 S.Ct. 927, 939-40, 140 L.Ed.2d 1 (1998). Six months later, by overwhelming votes in both houses, Congress enacted the Credit Union Membership Access Act (CUMAA) "to amend existing law and specifically authorize multiple common bond federal credit unions." S.REP. No. 105-193, at 6 (1998). After a notice-and-comment period, the NCUA promulgated IRPS 99-1, which, since January 1, 1999, has set forth the criteria by which the agency now evaluates applications to add new groups to multiple common-bond credit unions. See 63 Fed.Reg. 71,998 (1998).

Eight days after the effective date of IRPS 99-1, Plaintiff American Bankers Association (ABA) submitted an application for a preliminary injunction, seeking to enjoin seven aspects of the rule on substantive grounds and the rule in its entirety due to an alleged procedural error.1 Defendant NCUA and two Intervenors, the National Association of Federal Credit Unions (NAFCU) and the Credit Union National Association (CUNA), maintain that IRPS 99-1 comports with the plain language of the CUMAA, or where the statute is ambiguous, represents a reasonable interpretation that warrants deference from the judicial branch under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The parties also disagree over the extent to which IRPS 99-1 threatens ABA member-banks with irreparable harm. Pending before the Court are the Plaintiffs' two applications for a preliminary injunction, the Defendants' oppositions, the reply memoranda thereto, and the Defendants' sur-replies. After reviewing the briefs and the arguments that counsel presented at a hearing held on March 1, 1999, the Court denies the applications.

A. 1934-1998: Administrative Interpretation and Judicial Review of the FCUA

Enacted during the Great Depression, the FCUA authorizes the chartering of federal credit unions, which by statutory directive, are "cooperative association[s] organized ... for the purpose of promoting thrift among [their] members and creating a source of credit for provident or productive purposes." 12 U.S.C. § 1752(1). Over the years, the FCUA has spawned the growth of almost 7000 federal credit unions. One variable that explains their ubiquity is that they are, unlike the banks and thrifts against which they compete for consumers, exempt from federal and state taxes. Congress, however, has bestowed this putative competitive advantage on credit unions because, unlike banks and thrifts, they "are member-owned, democratically operated, not-for-profit organizations generally managed by volunteer boards of directors ... [that] have the specific mission of meeting the credit and savings needs of consumers, especially persons of modest means." CUMAA, Pub.L. No. 105-219, § 2(4), 112 Stat. 913, 914 (1998). By statutory directive, credit unions traditionally have been managed according to an ethos of volunteerism: But for one director, no member of a credit union's board of directors, supervisory committee, or any other committee may receive compensation for the services that he or she performs. See 12 U.S.C. §§ 1761(c), 1761a.

As distinct as a credit union's management structure is compared to that of its private counterpart, so too is its customer base. From its inception, the FCUA narrowly circumscribed "Federal credit union membership ... to groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district." FCUA, ch. 750, § 9, 48 Stat. 1216, 1219 (1934). Rooted in the cooperative spirit that animated the credit-union movement the "common bond" requirement was intended to "ensure both that those making lending decisions would know more about applicants and that borrowers would be more reluctant to default.... The common bond was seen as the cement that united credit union members in a cooperative venture." First Nat'l Bank and Trust Co. v. NCUA, 988 F.2d 1272, 1274 (D.C.Cir.1993).

For forty-eight years, the NCUA and its predecessors interpreted the FCUA's common-bond provision to require that every member of a credit union share the same common bond of occupation. Then, in 1982, the NCUA modified its enduring interpretation to permit multiple occupational groups, each one united by its own particular common bond, to coalesce into a single credit union regardless of whether any common denominator linked the disparate constituent groups. See IRPS 82-1, 47 Fed.Reg. 16775 (1982). In the years that followed, the NCUA reiterated and clarified its novel understanding of the FCUA, culminating in IRPS 89-1, which explained that "[a] select group of persons seeking credit union service from an occupational, associational or multiple group Federal credit union must have its own common bond," but "[t]he group's common bond need not be similar to the common bond(s) of the existing Federal credit union." 54 Fed.Reg. 31165, 31176 (1989).

IRPS 89-1 ushered in an era of unprecedented growth in the credit-union industry. AT & T Family Federal Credit Union (ATTF), for example, though initially chartered with rather modest field-of-membership and geographic restrictions, swelled under IRPS 89-1 to provide services for 110,000 members in more than 150 distinct occupational groups throughout the United States. Operating for the benefit of not only AT & T employees, ATTF swept within its ranks the employees of other corporate giants such as the Lee Apparel Company, the Coca-Cola Bottling Company, the Diba-Geigy Corporation, the Duke Power Company, and the American Tobacco Company. See First Nat'l, 118 S.Ct. at 931.

As more credit unions evolved under IRPS 89-1 into large multiple common-bond institutions, the ABA and similar trade groups feared that an increasing number of consumers would abandon traditional private banks and thrifts to pursue the lower interest rates on loans and higher yields on savings that credit unions have typically offered. In 1990, the banking industry fired the opening salvo, in what has proven to be a lengthy battle, when it challenged the NCUA's decision to expand ATTF's field of membership pursuant to IRPS 89-1. After the litigation traveled back and forth between the trial and appellate courts of this Circuit to resolve the banks' prudential standing under the Administrative Procedure Act, see First Nat'l, 988 F.2d 1272, 1275-79 (D.C.Cir.1993), the D.C. Circuit subsequently held that IRPS 89-1 violated the unambiguously expressed intent of the FCUA. See First Nat'l Bank & Trust Co. v. NCUA, 90 F.3d 525, 528-30 (D.C.Cir. 1996). In early 1998, the Supreme Court affirmed. See First Nat'l, 118 S.Ct. at 938-40. Like the court below it, the Supreme Court concluded that because "Congress has made it clear that the same common bond of occupation must unite each member of an occupationally defined federal credit union, ... the NCUA's contrary interpretation is impermissible under the first step of Chevron." Id. at 938-39 (emphasis in original).


Although the Supreme Court's First National decision quelled the judicial dispute over NCUA's multiple common-bond chartering policy, the debate continued, moving from an Article III case or controversy to an Article I lobbying initiative. What emerged from a summer-long legislative effort was the CUMAA. Enacted to "amend existing law and specifically authorize multiple common bond federal credit unions," S.REP. No. 105-193, at 6 (1998); accord H.R.REP. No. 105-472, at 18 (1998), U.S.Code Cong. & Admin.News 1998, the CUMAA garnered broad support from both houses of Congress, passing by a vote of 411-8 in the House of Representatives and by a count of 92-6 in the Senate. Displacing the FCUA's traditional field-of-membership restrictions, the CUMAA established three distinct types of credit unions: single common-bond credit unions, multiple common-bond credit unions, and community credit unions. See 12 U.S.C. § 1759(b)(1)-(3).2 A single common-bond credit union, defined as "[o]ne group that has a common bond of occupation or association," simply reflects the traditional common-bond requirement that the FCUA had always mandated. See 12 U.S.C. § 1759(b)(1).

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