The opinion of the court was delivered by: ROBINSON, JR.
AUBREY E. ROBINSON, Jr., District Judge.
This is an action by the American Bankers Association and Tioga State Bank against the National Credit Union Administration ("NCUA") and its Administrator, challenging the statutory authority of Federal Credit Unions ("FCUs") to operate share draft programs under the Federal Credit Union Act (the "FCU Act"), 12 U.S.C. § 1751, et seq.1 The matter is before the Court on the parties' cross-motions for summary judgment. For the reasons discussed below, the Court finds that there are no genuine issues of material fact and that Defendants are entitled to judgment as a matter of law.
FCU share drafts originated in 1974 as an experimental pilot program approved by NCUA. By late 1977 some 514 FCUs in at least forty-five (45) states were participating in share draft programs. In September 1976, the American Bankers Association filed an action challenging the legality of the experimental share draft program. That litigation was dismissed without prejudice after NCUA agreed to undergo rulemaking procedures and promulgate a formal rule governing share drafts. On December 8, 1977, NCUA published its final rule, which authorizes FCUs to continue establishing and implementing share draft programs.
Plaintiffs filed the instant lawsuit on December 9, 1977.
The issue before the Court is whether, consistent with the terms of the FCU Act and the general statutory scheme controlling federal financial institutions, the NCUA can authorize FCUs to utilize share drafts as a means of accessing members' accounts. A secondary issue in the case is whether the manner in which NCUA promulgated its regulation comports with the standards of the Administrative Procedure Act.
The Court begins with the proposition that a departmental construction of its own enabling legislation is entitled to great deference from the Courts. Udall v. Tallman, 380 U.S. 1, 16, 85 S. Ct. 792, 13 L. Ed. 2d 616 (1965). The interpretation given the statute by the agency charged with its administration is sustainable as long as that interpretation has a reasonable basis in law. Only where there are compelling indications that the interpretation is plainly erroneous should a Court invalidate an administrative construction of a statute. Espinoza v. Farah Manufacturing Company, 414 U.S. 86, 94-95, 94 S. Ct. 334, 38 L. Ed. 2d 287 (1974); Zuber v. Allen, 396 U.S. 168, 192-193, 90 S. Ct. 314, 24 L. Ed. 2d 345 (1969); Board of Dir. & Officers, Forbes Federal Credit Union v. National Credit Union Administration, 477 F.2d 777, 784 (10th Cir. 1973).
It is uncontested that FCUs possess the power to authorize and regulate withdrawals from share accounts. The source for this power is no where found in the express provisions of the FCU Act.
Rather, such power must be inferred from the language of 12 U.S.C. § 1757(15), which grants FCUs the authority to "exercise such incidental powers as shall be necessary or requisite to enable [FCUs] to carry on effectively the business for which [FCUs are] incorporated." An activity is authorized as an "incidental power" if it is convenient or useful in connection with the performance of one of the institution's established activities pursuant to its express powers. Arnold Tours v. Camp, 472 F.2d 427, 432 (1st Cir. 1972).
Both sides focus too strongly on the mechanics of accessing accounts. What is important is not the method by which withdrawals are effected, but rather the type of account involved in this litigation: the traditional FCU share account.
There is no legal restriction on the amount or frequency of withdrawals from credit union share accounts. In the past, FCU members have had a variety of options available for withdrawing funds and making payments to third-parties out of their share accounts, including cash withdrawals, and withdrawals by travelers checks, by money order, or by credit union check. Further, it is not necessary that members make their withdrawals in person. Share drafts have been developed as a more convenient and efficient means by which FCUs can offer withdrawal and payment services, allowing FCUs to take advantage of advancements in computer technology.
Share drafts are simply a variation on established methods of accessing members accounts, similar to previous procedures for credit union third-party payments, and similarly valid as part of the exercise of FCUs incidental powers under the FCU Act.
To rule otherwise would be to raise form over substance, to deny the history of the use of drafts in commercial practice, and to unreasonably limit the undisputed power of FCUs to honor and regulate share account withdrawals.
Such a holding does not work violence with the statutory purposes for which FCUs were created. FCUs exist for the purposes of promoting thrift among members and creating a source of credit for provident or productive enterprises. 12 U.S.C. § 1752(1). There has been no suggestion that the share draft program, as presently conducted on an experimental basis, has adversely affected the viability of FCUs or the interests of FCU members. The Court is satisfied that the use of share drafts will serve the basic purposes of FCUs.
Further, the Court is persuaded that a finding that share draft practices are among the incidental powers of FCUs is not inconsistent with the legislative history of the FCU Act or the general Congressional scheme controlling federal financial institutions. Legislative history in this case has minimal utility. On the one hand, there is no indication from the Congressional debates on the FCU Act and other related legislation that Congress has intended to prohibit FCUs from utilizing share draft procedures. Throughout the course of development by FCUs of various methods of withdrawal from members' share accounts, there has been total silence from Congress concerning the propriety of any of these methods. Congress has been well aware of the on-going share draft program for several years now,
and yet in passing sweeping amendments to the FCU Act in 1977 failed to include any provision evidencing disagreement with the NCUA's position regarding share drafts. When Congress has intended to proscribe conduct on the part of financial institutions, Congress has done so with dispatch and specificity. See 12 U.S.C. §§ 1464(b) and 1832.
Thus it might be possible to find an implied ratification by Congress of NCUA's approval of FCU share drafts. See Massachusetts Mutual Life Ins. Co. v. United States, 288 U.S. 269, 283, 53 S. Ct. 337, 77 L. Ed. 739 (1933); Alabama Association of Insurance Agents v. Board of Governors of the Federal Reserve System, 533 F.2d 224 (5th Cir. 1976).
On the other hand, measures which would have authorized certain third-party payment powers on the part of FCUs have been introduced in the Congress, but have failed to pass.
In addition, there is language in the Congressional discussions on the FCU Act and related legislation that Congress has intentionally deferred consideration of the issue of FCU third-party payment powers.
This deferred consideration is evident in the fact that there are presently pending before the Congress several pieces of proposed legislation which relate to FCU share draft powers.
Congressional failure to specifically address the share draft issue and the spectre of future legislation on the subject do not mean that FCUs presently lack the authority to adopt share draft procedures. As noted earlier, share draft practices are valid as part of the exercise of the incidental powers of FCUs. If Congress eventually acts with regard to share drafts, Congress then will be making a policy judgment.
This Court cannot and will not indulge in such policy ...