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March 30, 1998

American Council of Life Insurance, Plaintiff
Eugene A. Ludwig, in his official capacity as the Comptroller of the Currency of the United States, Office of the Comptroller of the Currency, Defendants, Magna Bank, N.A., Intervenor/Defendant; American Bankers Association, The Bankers Roundtable, Association of Banks in Insurance, Missouri Bankers Association, Amici Curiae

The opinion of the court was delivered by: GREEN


 Before the Court are Defendants Eugene A. Ludwig ("Comptroller") and the Office of the Comptroller of the Currency's ("OCC") motion to dismiss on the pleadings or in the alternative, for summary judgment; the opposition and reply thereto; a statement of points and authorities by amicus curiae, American Bankers Association, Bankers Roundtable, Association of Banks and Missouri Bankers, and the response thereto. Intervenor/Defendant Magna Bank, N.A., has filed its own motion for dismissal or for summary judgment, which is opposed by the Plaintiff.

 For the reasons that follow, Defendants' motions to dismiss are denied, but their alternative motions for summary judgment are granted.


 The Plaintiff in this case is a non-profit trade association representing 577 insurance companies. Plaintiff filed this action in response to a decision made by the Comptroller of the Currency concerning the Intervenor/Defendant, Magna Bank.

 On September 21, 1995, Magna Bank of Missouri and Magna Bank of Illinois, two state-chartered banks, each sent a Letter of Intent to the OCC seeking to convert from state to national bank status, pursuant to 12 U.S.C. § 35 (1994). Magna Bank of Missouri requested to retain ownership in certain corporate assets, which included two subsidiaries: MGI Insurance Agency, Inc ("MGI Insurance), and Inbank Insurance Agency, Inc. ("Inbank Insurance"). These subsidiaries act as agents for the sale of annuities, term, universal and whole life insurance, health insurance, disability insurance and long-term care insurance. (A.R. I at 189-92; AR II at 375.) On November 15, 1995, the Comptroller of the Currency issued opinions approving of the conversion of the two banks and granting permission for the merger of Magna Bank of Illinois into Magna Bank of Missouri (collectively "Magna"). The Comptroller also authorized Magna's retention of ownership of the stock of the corporation engaged in insurance agency activities (MGI Insurance and Inbank Insurance). The Comptroller approved Magna's retention of this stock pursuant to 12 U.S.C. § 35, which ostensibly gives him the discretion to permit a state bank converting into a national bank to "retain and carry" certain nonconforming assets.

 Plaintiff challenges the Comptroller's interpretation of this provision of the statute and states that it is contrary to the National Banking Act ("NBA"), 12 U.S.C. § 1 et. seq. (1994), which limits the authority of national banks to engage in a wide range of activities. Plaintiffs point specifically to 12 U.S.C. § 92 (1994), which permits national banks to sell insurance, but only if the bank is "located and doing business in any place the population of which does not exceed five thousand inhabitants." 12 U.S.C. § 92. The insurance agencies in this case operate in part in offices situated in communities with populations that exceed 5,000. (A.R. I at 12.)

 In its complaint, Plaintiff seeks a declaration that the OCC exceeded the statutory grant of authority in 5 U.S.C. § 35, and in so doing violated the Administrative Procedure Act ("APA"), 5 U.S.C. § 552(a)(1)(D), and the Federal Register Act ("FRA"), 44 U.S.C. § 1505(a)(3). Plaintiff also seeks a permanent injunction prohibiting the OCC from allowing Magna or any other national bank from engaging in insurance activities in violation of the NBA.


 The Defendants' motion, in the first instance, is made pursuant to Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when the Complaint fails to state a claim upon which relief can be granted. *fn1" When assessing the adequacy of a Complaint under Federal Rule of Civil Procedure 12(b)(6), the Court must accept the Plaintiff's allegations as true and construe those allegations in a light most favorable to the Plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974). Moreover, "a motion to dismiss should be granted only when it appears beyond doubt that, under any reasonable reading of the complaint, the Plaintiff will be unable to prove any set of facts that would justify relief." Haynesworth v. Miller, 261 U.S. App. D.C. 66, 820 F.2d 1245, 1254 (D.C. Cir. 1987).

 A. Reviewability Under the Administrative Procedure Act

 The OCC seeks dismissal on the basis that the Comptroller's decision to allow Magna Bank to retain its nonconforming assets following conversion, is discretionary and therefore not judicially reviewable.

 The APA sets forth provisions for judicial review of agency actions, 5 U.S.C. §§ 701-706, with a strong presumption toward judicial reviewability. See Dickson v. Secretary of Defense, 314 U.S. App. D.C. 345, 68 F.3d 1396 (D.C. Cir. 1995). That presumption, however, is limited by 5 U.S.C. § 701(a)(2), which prevents judicial review of agency decisions "to the extent that . . . [the] agency action [at issue] is committed to agency discretion by law." The reasoning behind section 701(a)(2) is that judicial review should not be available in those instances where a court would have no meaningful standard against which to judge the agency's exercise of discretion. Heckler v. Chaney, 470 U.S. 821, 830, 84 L. Ed. 2d 714, 105 S. Ct. 1649 (1985). In other words, in such situations, discretion really does mean absolute discretion.

 While determining which cases warrant such treatment has been the subject of some interpretation, authority is in general agreement that such unreviewability is a narrowly drawn exception. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971). In Chaney, for instance, the Supreme Court, while finding unreviewable the Food and Drug Administration's decision not to undertake certain enforcement action, also reaffirmed the narrowness of this exception. 470 U.S. at 837. Six months after the Supreme Court decided Chaney, the Court of Appeals for this circuit analyzed the reviewability issue in Robbins v. Reagan, 250 U.S. App. D.C. 375, 780 F.2d 37 (D.C. Cir. 1985). In Robbins, the Court of Appeals viewed the Chaney decision simply as adding agency non-enforcement decisions to the small list of presumptively non-reviewable agency action, along with State Department action in foreign affairs and Federal Reserve Board decisions setting interest rates. 780 F.2d at 45 quoting ( Cardoza v. Commodity Futures Trading Comm'n, 768 F.2d 1542, 1549 (7th Cir. 1985)). More important, however, Robbins provides a framework for measuring suitability of judicial review for discretionary agency actions taken pursuant to 5 U.S.C. § 701(a)(2). That framework permits courts, even in the absence of statutory guidelines, to look not only to agency policy statements, but also to the statutory scheme by which congressional intent of a general goal might be inferred. 780 F.2d at 45.

 The Plaintiff's position is that the discretionary language of 12 U.S.C. § 35 does not give the Comptroller the authority permanently to override statutory limitations on national bank activities as set forth in the NBA, and that this conflict provides a meaningful standard for judicial review. Pl. Opp. at 16. *fn2" As a further standard, Plaintiff points to section 35 itself which states that converting banks "shall have the same powers and privileges" as originally organized national banks.

 With regard to any policy statements, Plaintiff cites the OCC's own policy manual issued to its field examiners which states "generally, converting institutions must dispose of ineligible assets within a reasonable time after conversion." (A.R. II at 561, (Corporate Reference Manual/Conversion Examinations).)

 Finally, the Plaintiff argues that the Comptroller's longstanding prior practice of requiring converting banks to divest themselves of nonconforming assets, is a standard by which to measure the Comptroller's discretion here. The OCC does not dispute that this has been its practice. (Pl.'s Opp. to Def.'s motion at 16.)

 The Court agrees with the Plaintiff. Given the presumption of judicial review and insofar as the Robbins case allows the Court to look toward such factors as a statutory scheme and/or policy statements, there are standards here by which this Court can measure the discretionary activity of the Comptroller. The existence of the NBA and its provisions limiting the very activities the Comptroller has granted, as well as the Comptroller's own policy statements and longstanding practices concerning that discretion, indicate to the Court that such discretion was not intended to be absolute, but subject to judicial review.

 Having found that such review is available, the motion to dismiss on the pleadings must be denied. The remaining issues, whether the Comptroller properly exercised his discretion, are fact-dependent and, although there does not appear to be any factual dispute, are more appropriately analyzed under the OCC's alternative motion for summary judgment.

 B. Summary Judgment Standard

 Unlike a motion to dismiss, which is made pursuant to Rule 12 of the Federal Rules of Civil Procedure, a motion for summary judgment is made pursuant to Fed. R. Civ. P. 56(c). Rule 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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." In deciding a motion for summary judgment, the material before the Court "must be viewed in the light most favorable to the [nonmoving] party." Adickes v. S.H. Kress and Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970).

 C. Standard of Review Under the APA

 Finding that the Comptroller's actions are reviewable, the Court must next determine whether the Comptroller's interpretation of Section 12 U.S.C. § 35 is proper.

 The Supreme Court, in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984), set forth a multi-step analysis for making such a review. The Court must first look at the statute and/or its legislative history and decide ". . . whether Congress has spoken directly to the precise question at issue. If the intent of Congress is clear, that is the end of the matter." Id. at 842. If it is not clear or there is some ambiguity or if Congress was silent, "the question for the court is whether the agency's answer is based on a permissible construction of the statute." Id. at 843. Whether it is permissible depends upon the reasonableness of the agency's interpretation. The Supreme Court concluded that the interpretation should be given "considerable weight" and "deference." Id. at 844.

 Here, the dispute is over the meaning of 12 U.S.C. § 35 and whether it grants the Comptroller the authority to allow a state chartered bank, converting to a national bank, indefinitely to retain its nonconforming assets.

 That section provides:

The Comptroller of the Currency may, in his discretion and subject to such conditions as he may prescribe, permit such converting bank to retain and carry at a value determined by the Comptroller such of the assets of such converting bank as do not conform to the legal requirements relative to assets acquired and held by national banking associations.


 The Plaintiff argues that this section is silent on the issue of whether a converting bank must eventually divest itself of nonconforming assets and, in any event, that interpreting section 35 to allow banks to retain such assets indefinitely would give them privileges beyond other nationally chartered banks. Plaintiff argues that such a result could not have been intended by Congress and cites the first part of section 35 and the NBA in support.

 The Plaintiff's interpretation is not correct. There is nothing on the face of the statute or in its legislative history that requires such a narrow reading as Plaintiff suggests. The terms "retain and carry," are plain enough, and given their ordinary meaning, do not suggest to the Court that ultimate divesture of nonconforming assets is a built in, yet unstated component of section 35. The legislative history also supports the Comptroller's interpretation, showing that the purpose of section 35 was to remove impediments from state banks seeking to convert to national bank status by allowing them to retain their nonconforming assets. *fn3" In fact, the legislative history suggests that encouraging banks to convert (while keeping them financially sound by avoiding divestiture) appears to be an important purpose of section 35.

 The Plaintiff makes much of a preceding paragraph of section 35, which states:

When the Comptroller has given to such bank or banking association a certificate that the provisions of this Act have been complied with, such bank or banking association . . . shall have the same powers and privileges, and shall be subject to the same duties, liabilities, and regulations, in all respects, as shall have been prescribed by the Federal Reserve Act and ...

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