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November 21, 1997


The opinion of the court was delivered by: SPORKIN

 This matter comes before the Court on cross-motions for summary judgment. *fn1" Plaintiffs in this case, the Independent Bankers Association of America and the American Bankers Association, together represent most of private commercial banks in the country which compete directly with the Defendant Farm Credit Administration's ("FCA") lending institutions as created by the Farm Credit Act of 1971, 12 U.S.C. § 2001 et seq ("Act"). Plaintiffs, on behalf of their member banks, challenge five sections of the Farm Credit Administration's recently adopted Final Rule amending its regulations governing the eligibility and scope of borrowing under the Farm Credit System ("System"). 12 C.F. R., Part 613, Subparts A, B, 62 Fed. Reg. 4,429 (1997) (to be codified at 12 C.F.R. Part 613). Plaintiffs allege that the new regulations violate not only the plain language but also the congressional intent of the Farm Credit Act by broadening the categories of entities eligible to borrow from the System and by relaxing the restrictions on the permissible purposes of the loans. Plaintiffs allege that the new regulations cause competitive injury to its member institutions. In response, the Defendant Farm Credit Administration and the amicus Farm Credit Council, a trade association of the System's lending institutions, allege that Plaintiffs lack standing to bring this suit. Defendants contend that Plaintiffs stand outside the zone of interests envisioned by the Act. Furthermore, regardless of standing, Defendants argue that the new regulations fall well within the lending authority prescribed by the statute.


 Originally established by Congress in 1916, the Farm Credit System is an expansive network of banks and associations designed to provide credit to the agricultural sector of the nation's economy. See H.R. Rep. No. 96-1287, at 15 (1980), reprinted in 1980 U.S.C.C.A.N. 7095, 7098. This case turns on the proper interpretation of section 2001(a) of Farm Credit Act of 1971. Section 2001(a) of the Farm Credit Act states,

 12 U.S.C. § 2001(a).

 To implement this policy, the Farm Credit System established a network of localized member organizations or associations. *fn2" Each is affiliated with either a Farm Credit Bank ("FCB"), an agricultural credit bank ("ACB"), or a bank for cooperatives ("BC"). See 12 U.S.C. §§ 2011, 2013, 2279a-2. Together, these banks obtain funds from the sale of notes, bonds, or other obligations in the private money market, for which they are jointly and severally liable. See 12 U.S.C. §§ 2013, 2122, 2279a-2, 2155. The member associations generally obtain their funds in turn by borrowing from their affiliated bank.

 The Defendant FCA, an independent agency of the federal government, is charged with the responsibility of regulating this System. See 12 U.S.C. § 2241. Although the regulatory role of the FCA is in many ways similar to that of the Federal Deposit Insurance Corporation ("FDIC") which oversees Plaintiffs' commercial banks, the FCA differs in one important respect. The FCA does not insure the liabilities of the Farm Credit System. See 12 U.S.C. § 2511(c) ("The United States shall not be liable or assume any liability directly or indirectly thereon"). In contrast, the FDIC insures the deposits of Plaintiffs' member institutions up to $ 100,000 per deposit with the full faith and credit of the United States government. See 12 U.S.C. §§ 1811, 1813 (1)(5)(B)(1). The System banks are liable jointly and severally for the notes, bonds, debentures, or any other obligations that they issue. See 12 U.S.C. § 2155(a).

 On September 11, 1995, the FCA published a proposed rule to amend its regulations governing the eligibility requirements for farm credit financing and the permissive scope of that financing. See FCA Proposed Rule, 60 Fed. Reg. 47,103. The agency had not carried out a major revision of its regulations since their initial promulgation after the passage of the Act. See FCA General Provisions, 37 Fed. Reg. 11,421 (1972). The stated purpose of the revised rule was "to eliminate unnecessary regulatory restrictions and implement statutory changes." Proposed Rule, 60 Fed. Reg. at 47,103 (1995).

 As required by the Administrative Procedure Act ("APA"), 5 U.S.C. § 553, the FCA published the proposed rule for a 90-day comment period. See 60 Fed. Reg. 47,103 (1995). The agency received over 300 comment letters in response. It revised the rule in light of the comments and resubmitted them for an additional 30 day comment period. See 61 Fed. Reg. 42,092 (1996). The agency received more than 1,500 comments in the second round, all of which were considered. On January 30, 1997, the FCA published its final rule. See 62 Fed. Reg. 4,429 (1997). Congress's review period of 30 days expired without congressional action, and the final rule became effective on March 11, 1997. See 62 Fed. Reg. 11,071 (1997). The new regulations broadened the qualifications used to determine borrower eligibility and the scope of financing from the Farm Credit System.

 Five specific areas of the new FCA regulations form the basis of Plaintiffs' lawsuit in this case. First, the regulations revised several aspects of the agency's definition of "farm-related services" for which financing is available under the statute. Second, the new rule restated the standards for lending to agricultural cooperatives. Third, the regulations adjusted the terms under which financing could be provided to agricultural processors or marketers. Fourth, the new regulations eased the ability of legal entities such as corporations to borrow from System institutions. Fifth, the revised rule increased the availability of System lending to finance rural housing. Plaintiffs claim that the new regulations in these five areas unlawfully permit Defendant's Farm Credit System to lend far more than was intended by Congress under the statute, thereby causing competitive harm to Plaintiffs' private member banking institutions.


 A. Standing

 As a threshold matter, Plaintiffs must have standing to bring this suit. To meet the constitutional requirement of standing, a party must establish: 1) that he or she personally suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant, 2) that such injury fairly can be traced to the challenged action, and 3) that the injury is likely to be redressed by a favorable decision. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 119 L. Ed. 2d 351, 112 S. Ct. 2130 (1992); Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 472, 70 L. Ed. 2d 700, 102 S. Ct. 752 (1982) (citations omitted).

 Plaintiffs in this case claim standing by association. Under the law of standing, an association may sue on behalf of its members even in the absence of injury to itself if: 1) its members would otherwise have standing to sue in their own right; 2) the interests to be protected are germane to the organization's purpose; and 3) neither the claim asserted nor relief requested would require that its members participate in the lawsuit. See Warth v. Seldin, 422 U.S. 490, 511, 45 L. Ed. 2d 343, 95 S. Ct. 2197 (1975).

 Defendants urge this Court to deny standing in this case, arguing that Plaintiffs' individual members lack standing to sustain this action on their own behalf. Because the Act's stated purpose is for the protection of farmers and agricultural interests, Defendants contend that Plaintiffs' alleged injuries stand outside the congressionally prescribed "zone of interest." While the APA grants standing to any person "aggrieved by agency action within the meaning of a relevant statute," 5 U.S.C. § 702, the Supreme Court has interpreted this statutory conferral of standing to be met only when "the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." Association of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970).

 Defendants construe the "zone of interests" test too narrowly. The Supreme Court did not intend for the "zone of interests" test "to be especially demanding; in particular, there need be no indication of congressional purpose to benefit the would be plaintiff." Clarke v. Securities Indus. Ass'n, 479 U.S. 388, 399, 93 L. Ed. 2d 757, 107 S. Ct. 750 (1987) (footnote omitted). "The essential inquiry is whether Congress intended for [this] class to be relied upon to challenge agency disregard of the law." Id. at 399 (quotation omitted). Although the explicitly stated purpose of the Act does not include protecting the competitive interests of private banks, see 23 U.S.C. § 2001(a), such interests were clearly within the scope of congressional consideration. For example, in the Act itself, Congress provided "that in no case is any borrower [of the System] to be charged a rate of interest that is below competitive market rates for similar loans made by private lenders to borrowers of equivalent creditworthiness and access to alternative credit." 23 U.S.C. § 2001(c).

 The Supreme Court and our Court of Appeals for the District of Columbia Circuit have consistently upheld the standing of parties with a competitive interest "in confining a regulated industry within certain congressionally imposed limitations" to sue "to prevent the alleged loosening of those restrictions." First Nat'l Bank & Trust Co. v. National Credit Union Administration, 300 U.S. App. D.C. 314, 988 F.2d 1272, 1277 (D.C. Cir. 1993), cert. granted 117 S. Ct. 1079 (1997) (standing of banks to sue National Credit Union Administration's approval of multiple-employer federal credit union in violation of "common bond" requirement of the Federal Credit Union Act); see also Clarke v. Securities Indus. Ass'n, 479 U.S. 388, 93 L. Ed. 2d 757, 107 S. Ct. 750 (1987) (standing of trade association of securities dealers to challenge Comptroller of the Currency's ruling that banks could operate out-of-state offices); Investment Co. Inst. v. Camp, 401 U.S. 617, 28 L. Ed. 2d 367, 91 S. Ct. 1091 (1971) (standing of association of mutual fund companies to challenge Comptroller of the Currency's decision to allow banks to establish collective investment fund); Association of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 156, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970) (standing of data processors to challenge bank service corporations from engaging in activities other than "the performance of bank services" under the Bank Service Corporation Act). In each of these cases, our higher courts found standing for the competing associations, even though none were the intended beneficiaries of the statutes in question.

 Thus, in this case, because Plaintiffs' member banks have a competitive interest in confining System lending to the dictates of the congressional statute, they have the standing to challenge the agency's new regulations as a violation of the Act's plain language and intent. And as a trade organization representing the interests of its member financial institutions, Plaintiffs ...

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