Iowa Bankers Ass'n v. Iowa Credit Union Dept.

Decision Date15 June 1983
Docket NumberNo. 68254,68254
Citation335 N.W.2d 439
CourtIowa Supreme Court

Thomas J. Miller, Atty. Gen., Elizabeth M. Osenbaugh, and Steven G. Norby, Asst. Attys. Gen., for appellant.

A. Arthur Davis, John A. Templer, Jr., and Jamie A. Wade of Davis, Hockenberg, Wine, Brown & Koehn, Des Moines, for appellee.


REYNOLDSON, Chief Justice.

Respondent Iowa Credit Union Department (department) appeals from district court's invalidation of five separate chapters of the department's administrative rules in this judicial review of rule-making under Iowa Code chapter 17A. We find this appeal moot as to one chapter, petitioner Iowa Bankers Association (association) lacks standing to challenge three other chapters, and the department failed to substantially comply with statutory rule-making procedures with respect to the remaining chapter. We accordingly dismiss in part, reverse and vacate in part, and affirm in part.

This is the second appeal generated by Iowa credit unions' drive to increase the permissible scope of their financial services. In Iowa Credit Union League v. Iowa Department of Banking, 268 N.W.2d 165 (Iowa 1978), we held their incidental powers under Iowa Code section 533.4(11) (1977) could not be interpreted to include engaging in share-draft business. Following our decision, the legislature amended Iowa Code chapter 533, defining the authority and responsibility of Iowa credit unions in making available to their patrons share-draft accounts, loans secured by real property, and branch office services. 1978 Iowa Acts ch. 1169, §§ 24, 29; 1979 Iowa Acts ch. 130, §§ 1-4. Other chapter 533 amendments related to insolvency guideline provisions, and statutory references to small employee groups to which credit union services may be made available. 1978 Iowa Acts ch. 1169, § 23; 1979 Iowa Acts ch. 130, § 6. Pursuant to these Acts, the department adopted rules comprising five chapters in the Iowa Administrative Code. 1 The association filed an Iowa Code section 17A.4(1)(b) written demand for a concise statement of principal reasons for and against adoption of each of the five chapters, in each instance within one month after the department's notice of intent, and prior to adoption. The department failed to respond to the association's demands until June 16, 1980, after the association filed its petition for judicial review.

District court found the association had standing to challenge the rules, and invalidated all five chapters, ruling the department failed to substantially comply with Iowa Code section 17A.4(1)(b). The court held this statute requires an agency to issue a concise statement of principal reasons for and against adoption at the time of adoption when a prior request is made. The department appeals.

We recently summarized the scope of our review in contested cases under Iowa Code chapter 17A as follows:

The scope of that review is circumscribed by Iowa Code sections 17A.19 and .20. District court exercised appellate review and was entitled to alter or grant relief from the agency action upon those grounds specified in section 17A.19(8). Our duty is to correct errors of law made by the district court. We apply the standards of section 17A.19(8) to the agency action, to determine whether our conclusions comport with those of the district court.

Women Aware v. Reagen, 331 N.W.2d 88, 90 (Iowa 1983) (citations omitted). The same standard applies in this review of agency rule-making, except that district court was entitled to consider such additional evidence as it deemed appropriate, in addition to that received by the agency. Community Action Research Group v. Iowa State Commerce Commission, 275 N.W.2d 217, 219 (Iowa 1979); see Iowa Code § 17A.19(7) (1981).

I. Department's Motion for Partial Dismissal.

During pendency of this appeal, the 69th General Assembly amended Iowa Code section 533.16(4), which prescribes guidelines under which credit unions may make loans secured by real property. 1982 Iowa Acts ch. 1253, § 5. The Act directed the department to issue, pursuant to Iowa Code chapter 17A, new administrative rules governing issuance of such loans. Id. The department rescinded 295 Iowa Administrative Code chapter 10 (1980), one chapter of the rules at issue here, and adopted new real estate loan rules pursuant to the Act. 5 Iowa Admin.Bull. 517-18 (October 13, 1982); see 295 Iowa Admin.Code ch. 10 (1982). The department moved for dismissal of the appeal as to the rescinded rules, on grounds any challenge to their validity is moot. We ordered the issue submitted with the appeal.

A case is moot if it no longer presents a justiciable controversy because the issues involved are academic or nonexistent. Women Aware, 331 N.W.2d at 92; Hamilton v. City of Urbandale, 291 N.W.2d 15, 17 (Iowa 1980). Our test is whether an opinion would be of force or effect in the underlying controversy. Wederath v. Brant, 287 N.W.2d 591, 595 (Iowa 1980). The department's rescission of the 1979 real estate loan rules renders academic any decision by this court as to their validity. Although the issues raised by the association regarding the adoption process employed by the department arguably meet the criteria of our public interest exception to the mootness doctrine, see State ex rel. Turner v. Buechele, 236 N.W.2d 322, 324 (Iowa 1975), our resolution of identical issues with respect to other rules challenged by the association will provide appropriate guidance for the public and agency officials. We dismiss so much of this appeal as pertains to 295 Iowa Administrative Code chapter 10 (1980).

II. The Association's Standing to Seek Judicial Review.

District court held the association possessed standing to challenge the department's rules, based on its finding the association has "a specific interest as opposed to an interest of the community as a whole, and an interest as competitors of credit unions arguably injured by the rules."

Appealing, the department initially argues the association failed to establish its interests are within those protected by the legislature's 1978 and 1979 amendments to Iowa Code chapter 533, urging us to recognize the "zone of interest" test adopted by the United States Supreme Court in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d 184, 188 (1970).

The zone of interest inquiry urged by the department is part of a two-tier analysis comprising requirements emanating from the case or controversy provisions of United States Constitution, article III, section 2, and prudential considerations imposed by the Court itself. Valley Forge Christian College v. Americans United For Separation of Church and State, Inc., 454 U.S. 464, 471-76, 102 S.Ct. 752, 758-60, 70 L.Ed.2d 700, 708-12 (1982); Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 72, 80, 98 S.Ct. 2620, 2630, 2634, 57 L.Ed.2d 595, 610, 614-15 (1978). It is not a constitutional requirement, but rather is one of the Court's prudential limitations. Valley Forge Christian College, 454 U.S. at 474-75, 102 S.Ct. at 760, 70 L.Ed.2d at 711; Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99-100, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66, 77 n. 6 (1979).

Section 17A.19(1) of the Iowa Administrative Procedure Act (IAPA) provides in relevant part:

A person or party who has exhausted all adequate administrative remedies and who is aggrieved or adversely affected by any final agency action is entitled to judicial review under this chapter.

(Emphasis added.) We have utilized a two-part test to determine whether a litigant is "aggrieved or adversely affected." A party must demonstrate a specific, personal, and legal interest in the subject matter of the agency decision, and show that interest has been specially and injuriously affected. Southeast Warren Community School District v. Department of Public Instruction, 285 N.W.2d 173, 176 (Iowa 1979); City of Des Moines v. Public Employment Relations Board, 275 N.W.2d 753, 759 (Iowa 1979).

The corresponding provision of the federal Administrative Procedure Act (APA) renders judicial review of agency action available to persons

suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action, within the meaning of a relevant statute.

5 U.S.C.A. § 702 (West 1977). The zone of interest test has been identified by federal courts as arising from the language "within the meaning of a relevant statute." See Marshall & Ilsley Corp. v. Heimann, 652 F.2d 685, 696 n. 19 (7th Cir.1981), cert. denied sub nom. Marshall & Ilsley Corp. v. Conover, 455 U.S. 981, 102 S.Ct. 1489, 71 L.Ed.2d 691 (1982); Shiffler v. Schlesinger, 548 F.2d 96, 102 (3d Cir.1977); Standard Engineers and Constructors, Inc. v. United States Environmental Protection Agency, 483 F.Supp. 1163, 1166 (D.Conn.1980). The Supreme Court itself linked the test with the foregoing language of the federal APA:

The question of standing ... concerns ... whether the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question. Thus the Administrative Procedure Act grants standing to a person "aggrieved by agency action within the meaning of a relevant statute."

Association of Data Processing Service Organizations, Inc., 397 U.S. at 153, 90 S.Ct. at 830, 25 L.Ed.2d at 188 (emphasis added); see Gladstone, Realtors, 441 U.S. at 100, 99 S.Ct. at 1608, 60 L.Ed.2d at 77 n. 6.

Our statutory requirement on standing to seek judicial review of agency action does not contain the qualifying language present in the federal APA. Iowa Code § 17A.19 (1981). Interpretation of the Iowa statute is a question of law, Hamilton v. City of Urbandale, 291 N.W.2d at 19,...

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