Texas Bankers Ass'n v. National Credit Union Admin.

• Decision Date: 31 May 1995
• Docket Number: Civ. A. No. 94-1650.
• Citation: 888 F. Supp. 184
• Parties: TEXAS BANKERS ASSOCIATION, et al., Plaintiffs, v. NATIONAL CREDIT UNION ADMINISTRATION, Defendant, and Communicators Federal Credit Union, et al., Defendant/Intervenors.
• Court: U.S. District Court — District of Columbia

888 F. Supp. 184

TEXAS BANKERS ASSOCIATION, et al., Plaintiffs, v. NATIONAL CREDIT UNION ADMINISTRATION, Defendant and Communicators Federal Credit Union, et al., Defendant/Intervenors.

Civ. A. No. 94-1650.

United States District Court, District of Columbia.

May 31, 1995.

COPYRIGHT MATERIAL OMITTED

Michael S. Helfer, A. Douglas Melamed, and William P. Donovan, Jr., Wilmer, Cutler & Pickering, Washington, DC, for plaintiffs (Kelly S. Rodgers, Texas Bankers Ass'n, Austin, TX, of counsel).

Arthur R. Goldberg and Jessica A. Lerner, Federal Programs Branch, U.S. Dept. of Justice, Washington, DC, for defendant.

Paul J. Lambert and Teresa Burke, Bingham, Dana & Gould, Washington, DC, for defendant/intervenors.

MEMORANDUM OPINION

JOHN H. PRATT, District Judge.

Before the Court are cross motions for summary judgment concerning the propriety of the National Credit Union Administration's ("NCUA") approval of the expansion of the jurisdiction of Communicators Federal Credit Union ("Communicators") to include seven unrelated occupational groups and a "regional senior citizen/retiree association". After consideration of the briefs, and arguments made at the April 28, 1995 motions hearing, the Court concludes that the NCUA properly approved the addition of unrelated occupational groups to Communicators. On the other hand, we determine that the NCUA's approval of the expansion of Communicators to include the "regional senior citizen/retiree association" was improper. Accordingly, defendant's and defendant/intervenors' motions for summary judgment are granted in part and denied in part and plaintiffs' motion for summary judgment is denied in part and granted in part.

I. Background

This is the second time the Court stands on the fault line between national banks and federal credit unions.¹ Credit unions receive certain preferred treatment, such as tax exempt status, that banks believe give credit unions a competitive advantage. See 12 U.S.C. § 1768 (tax exemption). Banks have looked to the "common bond provision," section 109 of the Federal Credit Union Act ("FCUA"),² in their attempts to limit the expansion of credit unions. The common bond provision holds 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, community or rural district." § 1759. Both cases before this Court relate to this provision.

In the earlier case, First Nat'l Bank & Trust Co. v. Nat'l Credit Union Admin., 863 F.Supp. 9 (D.D.C.1994), appeal docketed, No. 94-5295 (D.C.Cir. Sept. 30, 1994) ("First Nat'l"), we considered the extent to which unrelated groups, each with a common bond among its members, could join the same credit union. For ease of reference we will refer to this as the "multiple group policy." We concluded that the statute was ambiguous in this regard, and deferred to the reasonable interpretation of the NCUA. The present case requires consideration of both the multiple group policy at issue in First Nat'l, and whether the senior citizen/retiree group at issue has an associational common bond to support its inclusion by Communicators.

Defendant-intervenor Communicators is a Houston, Texas based federal credit union which currently serves 93 different groups with a membership of 38,283.³ At issue are several expansions to Communicators which the NCUA approved between September 1993 and February 1994.⁴ Seven expansion groups which were added under the multiple group policy are unrelated occupational groups. These groups are composed of employees in particular businesses. The eighth group, also allegedly joined under the multiple group policy, is more complex. It is a purported association covering all retirees or senior citizens⁵ living or working within a 25 mile radius of Communicators' offices.

Plaintiffs opposing these expansions are six state and federally chartered commercial banks in competition with Communicators and two trade associations representing the interests of commercial banks in Texas. Plaintiffs seek injunctive and declaratory relief vacating the additions as "arbitrary and capricious, and an abuse of discretion" under the Administrative Procedure Act. 5 U.S.C. § 706(2)(A). The matter has been extensively briefed by all parties, the chief emphasis being on the propriety of Communicators' attempted inclusion of the senior citizen/retiree group.

Using defendants' more conservative figures, the senior citizen/retiree group adds to the credit union approximately 478,000 potential members in three nearby Texas counties. The NCUA has attempted to justify the addition of so large and varied a group of senior citizens on the basis of its so-called "senior/citizen retiree" policy, first adopted in 1984. See Interpretive Ruling and Policy Statement ("IRPS") 84-1, 49 Fed.Reg. 46,536. The NCUA forthrightly acknowledged in IRPS 84-1 that

legitimate concern has been expressed that simply authorizing Federal credit unions to serve all senior citizens and retirees in their area may not meet the statutory requirement of an occupational or associational common bond.

Id. at 46,539. This concern, while commendable for its candor, understates the NCUA's problem given its rather restrictive requirements of an associational common bond. The NCUA limits putative associations to those "who participate in activities developing common loyalties, mutual benefits, and mutual interests." 59 Fed.Reg. 29,076. In determining whether a group satisfies these requirements, the NCUA understandably considers "the totality of the circumstances," including whether "members pay dues, have voting rights, ... hold office, whether the group maintains a membership list, ... the frequency of meetings and ... interaction of members," and the "compactness" of the group's membership.⁶ Id. On the other hand, "associations formed primarily to obtain a credit union charter do not have a sufficient associational common bond." 54 Fed.Reg. 31,168-69.

Nevertheless, the NCUA adopted a policy encouraging credit unions to admit senior citizens into credit unions they could not otherwise lawfully join. 54 Fed.Reg. at 31,177. Existing credit unions are encouraged to "sponsor and assist" in the formation of regional associations of senior citizens who would then be able to join established credit unions under the multiple group policy. Id. The NCUA waived the normal rules excluding associations formed solely for purposes of securing credit union services.⁷ The NCUA justified this policy because those over 50 years of age allegedly have a common bond that arises both from the members' common status as senior citizens and retirees — with similar financial concerns and needs arising from their later stage in life — and from the members' common interest in obtaining credit union service as a group from a particular credit union in their geographic region.

Defendant NCUA's motion for summary judgment, p. 20.

Senior citizens in the Houston area are encouraged to join the newly created "Credit Union Link" ("CUL"). Defendants candidly concede that this purported association had no mission other than to secure credit union membership in Communicators for those over the age of 50. The activities of CUL are limited — when Communicators' employees indicate on the senior citizen's application that he or she has joined CUL, a "personalized welcome letter" and key chain are sent to the senior citizen, and there are purported plans to hold brown bag lunches to discuss "credit union services". Austin Affidavit submitted with Intervenor's motion for summary judgment at ¶¶ 13-16. The NCUA claims that this regional association, predicated on such minimal activities, has a requisite common bond among its "members."

II. Analysis

Fed.R.Civ.P. 56(c) permits a court to grant summary judgment where, as is the case here, the evidence in the record indicates that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

Our review of the NCUA's interpretation of the FCUA is governed by the familiar two part test announced in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Under the first prong of Chevron, the Court must determine whether it can ascertain Congress' intent on the precise issue before it. Northwest Airlines, Inc. v. U.S. Dept. of Transportation, 15 F.3d 1112, 1118 (D.C.Cir.1994). Under the second prong of Chevron, the Court must defer to the agency's interpretation if Congress' intent is not clear and that interpretation is reasonable in light of the statutory language, history, and policies of the statute. National Recycling Coalition, Inc. v. Browner, 984 F.2d 1243, 1250-51 (D.C.Cir.1993) (citing NRDC v. EPA, 822 F.2d 104, 111 (D.C.Cir. 1987)).

A. The NCUA's approvals under the multiple group policy.

Plaintiffs have asked the Court to reconsider its holding in First Nat'l that the common bond provision could reasonably be interpreted to allow the addition to the same credit union of unrelated groups, each with its own common bond. 863 F.Supp. at 14. This we decline to do. "The inquiry is not how the parties would prefer to construe this statute, but whether the agency's construction is permissible." Community First Bank v. National Credit Union Administration, 41 F.3d 1050, 1055 (6th Cir.1994) (internal quotation marks omitted). We concluded that Congress intended a flexible interpretation of the common bond as necessary to promote stable credit unions. 863 F.Supp. at 13; c.f. Community First Bank, 41 F.3d at 1055 ("statute does not define a common bond, but gives the NCUA authority to regulate credit union membership"). The NCUA's multiple group policy is reasonable because it furthers the overall goals of the FCUA while continuing to require the members of each group to share a common bond. The common...