NATIONAL ASS'N OF INS. AGTS., INC. v. BOARD OF GOV. OF FRS, 72-1938.

• Decision Date: 09 January 1974
• Docket Number: No. 72-1938.,72-1938.
• Citation: 489 F.2d 1268
• Parties: NATIONAL ASSOCIATION OF INSURANCE AGENTS, INC., Petitioner, v. The BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM, Respondent, The National Association of Life Underwriters, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

489 F.2d 1268 (1974)

NATIONAL ASSOCIATION OF INSURANCE AGENTS, INC., Petitioner, v. The BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM, Respondent The National Association of Life Underwriters, Intervenor.

No. 72-1938.

United States Court of Appeals, District of Columbia Circuit.

January 9, 1974.

Herbert E. Marks and Thomas J. Bacas, Washington, D. C., were on the brief for petitioner.

William N. Albus, Washington, D. C., was on the brief for intervenor.

Harlington Wood, Jr., Asst. Atty. Gen., and Walter H. Fleischer, and Robert S. Greenspan, Attys., Dept. of Justice, were on the brief for respondent.

Before BAZELON, Chief Judge, and McGOWAN and MacKINNON, Circuit Judges.

PER CURIAM:

This petition for direct review under Section 9 of the Bank Holding Company Act (12 U.S.C. § 1848) seeks to set aside a rule issued by the Federal Reserve Board which purports to interpret one of its own regulations (12 C.F.R. §§ 225.4(a)(9) and 225.128). It is variously asserted that, in doing so, the Board acted improperly without notice and hearing, failed to articulate adequate reasons, and lacked the support of substantial record evidence. The Board, in addition to challenging these assertions, contends that we are without jurisdiction to review the rule in question. We look to the setting in which the controversy arose.

The 1970 amendments to the Bank Holding Company Act extended its coverage to one-bank holding companies, and authorized the Federal Reserve Board to exempt from the general prohibition against engaging in non-banking activities such "activities . . . which the Board after due notice and opportunity for hearing has determined (by order or regulation) to be so closely related to banking or managing or controlling banks as to be a proper incident thereto." 12 U.S.C. § 1843(c)(8). The Board in 1971 gave notice of a proposed regulation identifying a number of activities to be considered permissible for bank holding companies, including "acting as insurance agent or broker principally in connection with extensions of credit . . .," and invited public comment on its proposal. Petitioner participated actively in the hearings held on this proposal, urging among other things that the Board be more specific in its delineation of permissible insurance activities. Following the hearings, the Board promulgated in August, 1971, a regulation which enumerated permissible types of insurance activities. Thereafter petitioner challenged applications filed with the Board by individual bank holding companies for approval to engage in certain insurance activities, claiming that such activities fell outside the scope of the legislative authorization.

The Board did not approve any of the bank holding companies' applications, nor schedule hearings on them. In September, 1972, the Board issued the rule under attack here, setting forth its views on the meaning of some of the terms used in its regulation of August, 1971. This was done without prior notice or opportunity to comment, and it is this rule that petitioner, and intervenor National Association of Life Underwriters, urge us to set aside. Petitioner filed its brief in January, 1973. In March, 1973, the Board scheduled hearings on the individual bank applications pending before it, as to which petitioner had manifested its purpose actively to oppose.

Petitioner's claim is essentially that the 1972 rule has the effect of a "determination" that particular insurance activities are permissible for bank holding companies, and thus is subject to the notice and hearing requirements of 12 U.S.C. § 1843(c)(8), pp. 1269, 1270, supra. This court long ago recognized the difference, in terms of the necessity for notice and hearing, between regulations having the force of law, on the one hand, and interpretative rules, on the other:

Administrative officials frequently announce their views as to the meaning of regulations. Generally speaking, it seems to be established that `regulations\' . . . are those which create law, usually implementary to an existing law, whereas inter-pretative rules are statements as to what the administrative officer thinks the regulation means. (Emphasis supplied). Gibson Wine Co. v. Snyder, 90 U.S.App.D.C. 135, 194 F.2d 329 (1952).

This difference is also reflected in the Administrative Procedure Act, 5 U.S.C. § 553(b)(3)(A), wherein it is specifically stated that the notice...