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December 5, 1975

JAMES E. SMITH, Comptroller of the Currency, The Department of the Treasury, Defendant

The opinion of the court was delivered by: FLANNERY


 Plaintiffs seek a judgment declaring invalid a ruling of the Comptroller of the Currency holding that automatic stock purchasing services offered by national banks did not violate sections 16 and 21 of the Glass-Steagall Act, 12 U.S.C. §§ 24, 378 (1970). The matter is now before the court on cross motions for summary judgment, pursuant to rule 56 of the Federal Rules of Civil Procedure. Defendant also urges that the case be dismissed on the grounds that plaintiffs lack standing to sue, the ruling in question is not reviewable, and necessary parties have not been joined. The court finds that plaintiffs have satisfied all threshold requirements, but that defendant is entitled to summary judgment on the merits.


 This action is brought by the New York Stock Exchange (NYSE), a national securities exchange, and the Investment Company Institute (ICI), an association of open-end investment companies and their investment advisors and principal underwriters. Defendant James E. Smith, the Comptroller of the Currency, is responsible for the supervision and regulation of the national banking system. On June 10, 1974, he issued an opinion letter stating that sections 16 and 21 of the Glass-Steagall Act do not prohibit national banks from offering customers automatic stock purchasing services.

 The plan approved in the Comptroller's letter, called Automatic Investment Service (AIS), permits checking account customers to designate a sum of money between $20 and $500 to be deducted automatically from their account each month and invested in one of 25 selected securities. The 25 stocks available are those having the highest aggregate market value of outstanding stock on Standard & Poor's 425 Industrial Index. Advertising brochures and the contracts between AIS customers and their banks state that the banks make no recommendation as to the merits of any individual stock or to the group of stocks as a whole. The plans are extensively advertised, however, and the stocks are often referred to as "blue chip."

 Stocks purchased under AIS are held in the name of the purchasing bank, but the customer has full beneficial ownership. The customer can vote the shares and will directly receive any dividends paid on them. A customer can withdraw from the plan at any time and receive his stock certificates or their cash value. If a customer wishes to sell only a portion of his holdings, the bank will also execute the transaction for him. When holdings acquired under AIS are liquidated, the bank will often "cross" the sell order with a buy order from another AIS customer. Internal crosses allow the bank to avoid paying a broker's fee on the transactions and ensure that the money will not be needed for the full 30 days.

 The letter of June 10, 1974, numbered 27 pages in length and represented the culmination of a substantial deliberative effort by the Comptroller. Consideration of AIS began on October 30, 1972, when the Security Pacific National Bank requested the Comptroller's opinion of the plan's legality. Following the issuance of a letter approving AIS, both ICI and NYSE requested the Comptroller to reconsider his position. Briefs exploring the legal merits of AIS were submitted by NYSE, ICI, and several national banks. After reviewing these documents, which contained virtually all the arguments presented by the parties now before the court, the Comptroller issued the June 10 letter.


 Defendant urges upon the court several preliminary arguments which, if correct, would prevent adjudication of the merits of plaintiffs' complaint. Specifically, defendant contends that plaintiffs lack standing, that the letter in issue is not a reviewable agency action and, consequently, no justiciable case or controversy exists, and that plaintiffs have failed to join indispensable parties. The court finds no merit in any of these contentions.

 A more substantial issue raised by defendant is the power of the court to review the opinion letter in question. Defendant submits that the opinion letter is not subject to review under section 10 of the Administrative Procedure Act, 5 U.S.C. § 704 (1970), because it is not legally binding on any party or the Comptroller's Office and because the plaintiffs conduct is not directly affected by the Comptroller's interpretation of the statute. *fn3"

 The propriety of reviewing a statutory interpretation by an agency responsible for administering the act has been explored at length by the Supreme Court in Abbott Laboratories, Inc. v. Gardner, 387 U.S. 136, 18 L. Ed. 2d 681, 87 S. Ct. 1507 (1967), and by the Court of Appeals for the District of Columbia Circuit in National Automatic Laundry and Cleaning Council v. Shultz, 143 U.S. App. D.C. 274, 443 F.2d 689 (D.C. Cir. 1971) and Continental Air Lines, Inc. v. CAB, 173 U.S. App. D.C. 1, 522 F.2d 107 (D.C. Cir. 1975) (en banc). Abbott Laboratories established that in deciding whether an agency ruling is ripe for judicial review a court must "evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." 387 U.S. at 148-49. Further, doubt as to justiciability must be resolved in favor of the plaintiff since the Administrative Procedure Act "embodies the basic presumption of judicial review . .." Id. at 140.

 The fitness of a particular ruling for judicial review depends upon its finality and the court's ability to discern and resolve the legal issues the ruling presents. See Toilet Goods Ass'n v. Gardner, 387 U.S. 158, 162-63, 18 L. Ed. 2d 697, 87 S. Ct. 1520 (1967); National Automatic Laundry and Cleaning Council v. Shultz, supra, at 694. An opinion letter signed by the head of an agency, not indicating on its face that it is tentative, and growing out of substantial deliberation is "presumptively final" for purposes of judicial review. National Automatic Laundry and Cleaning Council v. Shultz, supra, at 701-02. This is so even though the opinion legally could be reconsidered by the agency at any time. Thus, in Continental Air Lines the court of appeals reviewed the merits of a CAB order which was not legally binding on the agency. See 522 F.2d at 123, 124-25. The agency action reviewed in NALCC similarly did not bind the agency, and, in fact, was an opinion letter interpreting a portion of the statute administered by the agency. See 443 F.2d at 692, 702. Opinion letters signed by an agency head are also "presumptively final" even though they have no legal effect on parties subject to agency regulation; the opinion need only affect those subject to regulation and their competitors as a practical matter. See Continental Air Lines, Inc. v. CAB, supra, at 124-25, citing, Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 9 L. Ed. 2d 584, 83 S. Ct. 631 (1963). In the instant case, the opinion letter is signed by the agency head, shows no indication of being tentative, follows substantial deliberation, and, as a practical matter, encourages national banks to institute AIS programs. It thus appears that the letter is sufficiently final to permit judicial review of its merits.

 The letter in issue is also fit for judicial review in all other respects since the court can discern and resolve the legal issues involved. The principal factor considered in judging this aspect of an action's fitness for review is whether the case turns on a "purely legal" question. See Abbott Laboratories, Inc. v. Gardner, supra, at 149; Continental Air Lines, Inc. v. CAB, supra, at 126; National Automatic Laundry and Cleaning Council v. Shultz, supra, at 695. There is no doubt that the case at bar presents a "purely legal" question only, the validity of the Comptroller's construction of the Glass-Steagall Act. Further, it is a legal question properly before this court since the Supreme Court has stated that Congress did not intend to preclude judicial review of actions taken by the Comptroller in furtherance of his obligations under the Act. See Investment Company Institute v. Camp, supra, at 620; Association of Data Processing Service Organizations, Inc. v. Camp, supra, at 157.

 Considering the second prong of the test set out in Abbott Laboratories, the court finds that the plaintiffs will suffer substantial hardship if the court withholds consideration of the Comptroller's letter at this time. National banks are presently offering AIS to customers as a direct result of the Comptroller's ruling, thereby injuring the plaintiffs who, heretofore, were free of bank competition in the securities field. Defendant argues that plaintiffs are not directly subject to regulation by the Comptroller and thus are not facing the dilemma of obeying a questionable ruling or accepting the consequences of violating it. This, of course, was precisely the position of the plaintiffs in Continental Air Lines and NALCC and it was because the plaintiffs faced such a dilemma that the courts in those cases determined that withholding review would cause hardship. See 522 F.2d at 126; 443 F.2d at 696. The plaintiffs in Continental Air Lines and NALCC faced a "Hobson's choice" for a simple reason, they were adversely affected by the agency action. The position of plaintiffs in the case at bar is the other side of this coin. The agency action benefited those directly regulated by the statute; only non-regulated parties, like the plaintiffs, are hurt by the Comptroller's letter and, consequently, only non-regulated parties would seek to challenge the letter. Prohibiting review in this case because plaintiffs are not faced with the prospect of having to disobey a regulation would undermine the Supreme Court's holding in Data Processing that competitors of parties directly affected by ...

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