The opinion of the court was delivered by: WADDY
I. The Factual Background
This action arises under the Federal Credit Union Act of 1934, as amended, 12 U.S.C. § 1751, et seq. Plaintiff seeks a declaration that defendant's action in denying its application for a federal credit union charter for its membership was arbitrary, capricious and discriminatory, and in excess of, and contrary to the provisions of the Federal Credit Union Act, more specifically Sections 1754 and 1759 thereof, and the regulations issued thereunder. Plaintiff further seeks injunctive relief and asks the Court to order defendant to grant its application. The case is now before the Court on defendant's motion for summary judgment and plaintiff's cross-motion for summary judgment.
Plaintiff, National Alliance of Postal and Federal Employees (National Alliance), is a national labor organization with a membership of approximately 40,000, the vast majority of which are black postal employees. Defendant is the Administrator of the National Credit Union Administration (NCUA), an independent agency in the Executive Branch of the United States Government.
The provisions of the Federal Credit Union Act applicable to the issues raised herein provide in pertinent part:
"The organization certificate shall be presented to the Administrator for approval. Before any organization certificate is approved, an appropriate investigation shall be made for the purpose of determining (1) whether the organization certificate conforms to the provisions of this chapter; (2) the general character and fitness of the subscribers thereto; and (3) the economic advisability of establishing the proposed Federal credit union . . . ." 12 U.S.C. § 1754.
"Federal credit union membership shall consist of the incorporators and such other persons and incorporated and unincorporated organizations, to the extent permitted by rules and regulations prescribed by the Administrator . . . except 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." 12 U.S.C. § 1759.
In 1971 National Alliance applied to NCUA for a Federal credit union charter to serve its membership on a national basis. The application was referred to an investigator who made a report (Federal Credit Union Investigation Report) and recommended that a charter be granted to the group. The report contained, inter alia the following information:
(1) National Alliance applied as a group having an associational common bond;
(2) The proposed field of membership was defined as "Regular and Associate members of the National Alliance of Postal and Federal Employees . . .",
(3) There were no factions within the group which may render smooth and efficient credit union operations difficult;
(5) Organization on an employee basis was not considered because the membership is widely disbursed with many members located in isolated places where it would not be practical to organize a credit union;
(6) 1,500 members had signified their intention of joining and supporting the credit union; and
(7) Space in union publications, a secure office area, clerical assistance, and payroll deductions would be provided by National Alliance.
In an internal memorandum transmitting that report to the Assistant Regional Director of NCUA the investigator referred to the charter meeting of the applicant group, stating that "[all] of the persons attending the meeting appear to be highly qualified and all are long-time members of National Alliance."
The Acting Regional Director, however, did not recommend the charter to the Administrator because approximately 98 percent of the membership were postal service employees, resulting in a 100 percent overlap with the U.S. Postal Service Federal Credit Union, Charter Number 16402, which serves all postal employees not having credit union service available on a local basis.
The Administrator concluded that National Alliance did not qualify for a charter because of this overlap, and because association of members was on a local basis, there being no provisions in the union's constitution or bylaws for association on a national basis through regular annual meetings.
By letter dated March 31, 1972, which incorporated the substance of the Administrator's conclusions, National Alliance was advised by the Regional Director that its application was denied.
Plaintiff appealed to the Administrator to reverse the denial pointing to the numerous and continuous contacts among the members of National Alliance, the objectives shared by the membership, and the fact that the National Association of Postmasters of the United States as well as other associations similarly situated to National Alliance had been granted charters by the NCUA. In connection with this review, comments from various divisions and persons within NCUA were solicited. By letter dated June 5, 1972, the denial was affirmed, the Administrator finding there existed no common bond of association, and that the granting of the charter would create overlapping availability of credit union service, contrary to chartering policy set forth in its manual "Organizing a Federal Credit Union", which contained the standards and guidelines relating thereto.
Under the circumstances herein, the latter rationale is essentially a denial based on economic advisability.
Plaintiff continued with its appeal efforts through February 8, 1974, when it was informed that NCUA policy had not changed since March 31, 1972, the date of the original rejection. During this period defendant made repeated suggestions that plaintiff apply for separate charters based on its local or district organizational levels.
The discretionary power vested in the Administrator by 12 U.S.C. § 1754 has not heretofore been challenged. The Court is persuaded by defendant's contention that the power of NCUA is analogous to that granted to the Federal Home Loan Bank Board by 12 U.S.C. § 1464(a) and (e), and to the Comptroller of the Currency by 12 U.S.C. §§ 26 and 27. It is well established that vast discretion has been conferred upon these similar regulatory agencies and that judicial review of discretionary action is necessarily limited. See, Federal Home Loan Bank Board v. Rowe, 109 U.S. App. D.C. 140, 284 F.2d 274, 277-278 (1960); Sterling National Bank of Davie v. Camp, 431 F.2d 514, 516 (5th Cir. 1970). Accordingly, plaintiff must carry the burden of proving that the Administrator's denial of its application for a Federal credit union charter was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
In reviewing the Administrator's denial of the National Alliance application, the Court is confined to the administrative record and such additional explanation of those factors considered as may be necessary to determine if the Administrator's action was unwarranted by the facts. See, Camp v. Pitts, 411 U.S. 138, 36 L. Ed. 2d 106, 93 S. Ct. 1241 (1973); ...