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March 10, 1999


The opinion of the court was delivered by: Kollar-kotelly, District Judge.


For years, the National Credit Union Administration (NCUA) interpreted Section 109 of the Federal Credit Union Act (FCUA), 12 U.S.C. § 1759, to permit various employment groups, each one united by its own peculiar occupational bond but otherwise unrelated to another group, to coalesce and form a "multiple common-bond" credit union. See Interpretative Ruling and Policy Statement (IRPS) 82-1, 47 Fed.Reg. 16775 (1982). Early last year, after the issue had been volleyed twice between this Circuit's trial and appellate courts, the Supreme Court held that the NCUA's interpretation of Section 109 violated the unambiguous provisions of the FCUA. See National Credit Union Admin. v. First Nat'l Bank & Trust Co., 522 U.S. 479, 118 S.Ct. 927, 939-40, 140 L.Ed.2d 1 (1998). Six months later, by overwhelming votes in both houses, Congress enacted the Credit Union Membership Access Act (CUMAA) "to amend existing law and specifically authorize multiple common bond federal credit unions." S.REP. No. 105-193, at 6 (1998). After a notice-and-comment period, the NCUA promulgated IRPS 99-1, which, since January 1, 1999, has set forth the criteria by which the agency now evaluates applications to add new groups to multiple common-bond credit unions. See 63 Fed.Reg. 71,998 (1998).

Eight days after the effective date of IRPS 99-1, Plaintiff American Bankers Association (ABA) submitted an application for a preliminary injunction, seeking to enjoin seven aspects of the rule on substantive grounds and the rule in its entirety due to an alleged procedural error.*fn1 Defendant NCUA and two Intervenors, the National Association of Federal Credit Unions (NAFCU) and the Credit Union National Association (CUNA), maintain that IRPS 99-1 comports with the plain language of the CUMAA, or where the statute is ambiguous, represents a reasonable interpretation that warrants deference from the judicial branch under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The parties also disagree over the extent to which IRPS 99-1 threatens ABA member-banks with irreparable harm. Pending before the Court are the Plaintiffs' two applications for a preliminary injunction, the Defendants' oppositions, the reply memoranda thereto, and the Defendants' sur-replies. After reviewing the briefs and the arguments that counsel presented at a hearing held on March 1, 1999, the Court denies the applications.


  A. 1934-1998: Administrative Interpretation and Judicial
    Review of the FCUA

Enacted during the Great Depression, the FCUA authorizes the chartering of federal credit unions, which by statutory directive, are "cooperative association[s] organized . . . for the purpose of promoting thrift among [their] members and creating a source of credit for provident or productive purposes." 12 U.S.C. § 1752(1). Over the years, the FCUA has spawned the growth of almost 7000 federal credit unions. One variable that explains their ubiquity is that they are, unlike the banks and thrifts against which they compete for consumers, exempt from federal and state taxes. Congress, however, has bestowed this putative competitive advantage on credit unions because, unlike banks and thrifts, they "are member-owned, democratically operated, not-for-profit organizations generally managed by volunteer boards of directors . . . [that] have the specific mission of meeting the credit and savings needs of consumers, especially persons of modest means." CUMAA, Pub.L. No. 105-219, § 2(4), 112 Stat. 913, 914 (1998). By statutory directive, credit unions traditionally have been managed according to an ethos of volunteerism: But for one director, no member of a credit union's board of directors, supervisory committee, or any other committee may receive compensation for the services that he or she performs. See 12 U.S.C. § 1761(c), 1761a.

As distinct as a credit union's management structure is compared to that of its private counterpart, so too is its customer base. From its inception, the FCUA narrowly circumscribed "Federal credit union membership . . . to groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community, or rural district." FCUA, ch. 750, § 9, 48 Stat. 1216, 1219 (1934). Rooted in the cooperative spirit that animated the credit-union movement, the "common bond" requirement was intended to "ensure both that those making lending decisions would know more about applicants and that borrowers would be more reluctant to default. . . . The common bond was seen as the cement that united credit union members in a cooperative venture." First Nat'l Bank and Trust Co. v. NCUA, 988 F.2d 1272, 1274 (D.C.Cir. 1993).

For forty-eight years, the NCUA and its predecessors interpreted the FCUA's common-bond provision to require that every member of a credit union share the same common bond of occupation. Then, in 1982, the NCUA modified its enduring interpretation to permit multiple occupational groups, each one united by its own particular common bond, to coalesce into a single credit union regardless of whether any common denominator linked the disparate constituent groups. See IRPS 82-1, 47 Fed.Reg. 16775 (1982). In the years that followed, the NCUA reiterated and clarified its novel understanding of the FCUA, culminating in IRPS 89-1, which explained that "[a] select group of persons seeking credit union service from an occupational, associational or multiple group Federal credit union must have its own common bond," but "[t]he group's common bond need not be similar to the common bond(s) of the existing Federal credit union." 54 Fed.Reg. 31165, 31176 (1989).

IRPS 89-1 ushered in an era of unprecedented growth in the credit-union industry. AT & T Family Federal Credit Union (ATTF), for example, though initially chartered with rather modest field-of-membership and geographic restrictions, swelled under IRPS 89-1 to provide services for 110,000 members in more than 150 distinct occupational groups throughout the United States. Operating for the benefit of not only AT & T employees, ATTF swept within its ranks the employees of other corporate giants such as the Lee Apparel Company, the Coca-Cola Bottling Company, the Diba-Geigy Corporation, the Duke Power Company, and the American Tobacco Company. See First Nat'l, 118 S.Ct. at 931.

As more credit unions evolved under IRPS 89-1 into large multiple common-bond institutions, the ABA and similar trade groups feared that an increasing number of consumers would abandon traditional private banks and thrifts to pursue the lower interest rates on loans and higher yields on savings that credit unions have typically offered. In 1990, the banking industry fired the opening salvo, in what has proven to be a lengthy battle, when it challenged the NCUA's decision to expand ATTF's field of membership pursuant to IRPS 89-1. After the litigation traveled back and forth between the trial and appellate courts of this Circuit to resolve the banks' prudential standing under the Administrative Procedure Act, see First Nat'l, 988 F.2d 1272, 1275-79 (D.C.Cir. 1993), the D.C. Circuit subsequently held that IRPS 89-1 violated the unambiguously expressed intent of the FCUA. See First Nat'l Bank & Trust Co. v. NCUA, 90 F.3d 525, 528-30 (D.C.Cir. 1996). In early 1998, the Supreme Court affirmed. See First Nat'l, 118 S.Ct. at 938-40. Like the court below it, the Supreme Court concluded that because "Congress has made it clear that the same common bond of occupation must unite each member of an occupationally defined federal credit union, . . . the NCUA's contrary interpretation is impermissible under the first step of Chevron." Id. at 938-39 (emphasis in original).


Although the Supreme Court's First National decision quelled the judicial dispute over NCUA's multiple common-bond chartering policy, the debate continued, moving from an Article III case or controversy to an Article I lobbying initiative. What emerged from a summer-long legislative effort was the CUMAA. Enacted to "amend existing law and specifically authorize multiple common bond federal credit unions," S.REP. No. 105-193, at 6 (1998); accord H.R.REP. No. 105-472, at 18 (1998), U.S.Code Cong. & Admin.News 1998, the CUMAA garnered broad support from both houses of Congress, passing by a vote of 411-8 in the House of Representatives and by a count of 92-6 in the Senate. Displacing the FCUA's traditional field-of-membership restrictions, the CUMAA established three distinct types of credit unions: single common-bond credit unions, multiple common-bond credit unions, and community credit unions. See 12 U.S.C. § 1759(b)(1)-(3).*fn2 A single common-bond credit union, defined as "[o]ne group that has a common bond of occupation or association," simply reflects the traditional common-bond requirement that the FCUA had always mandated. See 12 U.S.C. § 1759(b)(1).

Of far greater importance to the parties in this case, however, is how Congress defined a multiple common-bond credit union. While, to be sure, the CUMAA unambiguously authorized the chartering of multiple common-bond credit unions, it did not simply ratify the NCUA's preexisting policy. Rather, Congress crafted "certain additional group size and geographic expansion limits," H.R.REP. No. 105-472, at 18, to ensure the "sense of cohesion or identity [that] is essential to the fulfillment of the public mission of credit unions." CUMAA, Pub.L. No. 105-219, § 2(3), 112 Stat. at 913. Under the CUMAA, a multiple common-bond credit union consists of more than one group

  (A) each of which has (within the group) a common
  bond of occupation or association; and
  (B) the number of members, each of which (at the time
  the group is first included within the field of
  membership of a credit union described in this
  paragraph) does not exceed any numerical limitation
  applicable under subsection (d).

12 U.S.C. § 1759(b)(2)(A)-(B). By enacting subparagraph (B), Congress significantly modified the NCUA's former multiple common-bond chartering policy by restricting the size of groups that may be added to a multiple common-bond credit union. Subsection (d), which contains these quantitative limitations, permits "only a group with fewer than 3,000 members [to] be eligible to be included in the field of membership" of a multiple common-bond credit union. § 1759(d)(1). Even groups with fewer than 3000 members, however, may not automatically enlist within the ranks of a multiple common-bond credit union; the NCUA is expressly directed to charter separate credit unions "instead of approving an application to include an additional group within the field of membership of an existing credit union whenever practicable and consistent with reasonable standards for the safe and sound operation of the credit union." § 1759(f)(1)(A).

Although groups with more than 3000 members presumptively may not consociate with a multiple common-bond credit union, the CUMAA recognizes certain exceptions to this general rule. The 3000-member limit does not apply with respect to

  (A) any group that the Board determines, in writing
  and in accordance with the guidelines and regulations
  [promulgated by the NCUA], could not feasibly or
  reasonably establish a new single common-bond credit
  union . . . because —
    (i) the group lacks sufficient volunteer and other
    resources to support the efficient and effective
    operation of a credit union;
    (ii) the group does not meet the criteria that the
    Board has determined to be important for the
    likelihood of success in establishing and managing
    a new credit union . . .; or
    (iii) the group would be unlikely to operate a safe
    and sound credit union.

§ 1759(d)(2)(A)(i)-(iii).*fn3

Beyond size restrictions, the CUMAA also tempers the growth of multiple common-bond credit unions by imposing an important proximity requirement. When the NCUA determines that a group — whether it contains fewer or more than 3000 members — cannot independently charter a single common-bond credit union consistent with reasonable safety and soundness concerns, the agency must, whenever practicable in light of those same concerns, add the group to an existing credit union "that is within reasonable proximity to the location of the group." § 1759(f)(1)(B). How to gauge "reasonable proximity," however, is a task that Congress left to the NCUA to determine.

C. IRPS 99-1

On August 31, 1998, the NCUA issued a proposed rule to revise and update the agency's chartering and field-of-membership policies, many of which had been rendered obsolete after the President signed the CUMAA into law. See 63 Fed.Reg. 49164 (1998). After the sixty-day notice-and-comment period elapsed, the NCUA examined 369 comments submitted by various federal and state credit unions, national credit-union trade associations, banks and their trade associations, and other interested public and private entities. The agency's final rule, IRPS 99-1, was published in the Federal Register on December 30, 1998. Invoking the good-cause exception set forth at 5 U.S.C. § 553(d)(3), the NCUA bypassed the normal thirty-day waiting period between a final rule's publication and effective date; IRPS 99-1 took effect on January 1, 1999. See 63 Fed.Reg. at 72017.

IRPS 99-1 heralded a number of important and fundamental policy changes, many of which precipitated this latest round of litigation. Because each of the provisions that the ABA challenges is addressed later in this Memorandum Opinion, the Court need not explore the finer contours of IRPS 99-1 here. It is enough simply to note that the ABA seeks preliminary injunctive relief against seven discrete aspects of the final rule: the criteria for adding groups in excess of 3000 members to multiple common-bond credit unions, the standard for adding groups with fewer than 3000 members to multiple common-bond credit unions, the calculus by which the NCUA measures a group's membership, the definition of "reasonable proximity," the scope of "grandfathered" membership, the definition of a single occupational common bond, and rules governing voluntary mergers of financially sound multiple common-bond credit unions.


When considering an application for a preliminary injunction, federal courts in this Circuit examine whether: (1) there is a substantial likelihood that the plaintiff will succeed on the merits of its claims; (2) the plaintiff will suffer irreparable injury if an injunction does not issue; (3) an injunction will substantially injure other parties; and (4) the public interest will be furthered by interim injunctive relief. See Serono Lab. v. Shalala, 158 F.3d 1313, 1317-18 (D.C.Cir. 1998); Sea Containers Ltd. v. Stena AB, 890 F.2d 1205, 1208 (D.C.Cir. 1989); Washington Metro. Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d 841, 842 (D.C.Cir. 1977). "This calculus reflects a sliding-scale approach in which an injunction may issue if the arguments for one factor are particularly strong `even if the arguments in other areas are rather weak.'" Kelso v. United States Dep't of State, 13 F. Supp.2d 1, 3 (D.D.C. 1998) (quoting CityFed Fin. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C.Cir. 1995)); accord Davenport v. International Bhd. of Teamsters, AFL — CIO, 166 F.3d 356, 360 (D.C.Cir. 1999) ("These factors interrelate on a sliding scale and must be balanced against each other.").


Although the ABA seeks to enjoin seven different rules set forth in IRPS 99-1, the issue presented in each instance is the same: whether the NCUA validly interpreted an act of Congress — in this case, the CUMAA. To resolve this inquiry, the Court looks to the Supreme Court's seminal decision in Chevron U.S.A, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The first task under Chevron is to ask "whether Congress has directly spoken to the precise question at issue." To determine whether Congress has, in fact, spoken directly to the question presented — an analytic process known as Chevron step one — the Court "must first exhaust the traditional tools of statutory construction." Natural Resources Defense Council, Inc. v. Browner, 57 F.3d 1122, 1125 (D.C.Cir. 1995). As always, this examination proceeds from "the fundamental canon that statutory interpretation begins with the language of the statute itself." Pennsylvania Dep't of Pub. Welfare v. Davenport, 495 U.S. 552, 557-58, 110 S.Ct. 2126, 109 L.Ed.2d 588 (1990). If, after employing the traditional tools of statutory construction, it appears that Congress has already spoken to the issue, "that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778.

If, on the other hand, Congress has been silent or ambiguous with respect to the particular issue, the Court must defer to the agency's interpretation so long as it is "based on a permissible construction of the statute." Id. at 843, 104 S.Ct. 2778. Denominated as Chevron step two, this deferential inquiry looks only to whether the agency's interpretation is "reasonable and consistent with the statutory scheme and legislative history." Cleveland v. United States Nuclear Regulatory Comm'n, 68 F.3d 1361, 1367 (D.C.Cir. 1995); see also Chevron, 467 U.S. at 845, 104 S.Ct. 2778 (holding that if an agency's interpretation "represents a reasonable accommodation . . ., we should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned"). Moreover, as is the case here, the "view of the agency charged with administering the statute is entitled to considerable deference; and to sustain it, we need not find that it is the only permissible construction that [the NCUA] might have adopted." Chemical Mfrs. Ass'n v. Natural Resources Defense Council, Inc., 470 U.S. 116, 125, 105 S.Ct. 1102, 84 L.Ed.2d 90 (1985).

  A. Whether IRPS 99-1 impermissibly liberalizes exceptions to
    the CUMAA's 3000-member limit on groups that can be added to
    multiple common-bond credit unions

Generally, the CUMAA forecloses groups with more than 3000 members from joining the field of membership of an existing credit union. See 12 U.S.C. § 1759(d)(1)-(2). Where a group of that same size, however, could not feasibly or reasonably charter its own credit union, Congress has authorized the NCUA to add the group to a multiple common-bond credit union. See § 1759(d)(2)(A). Under IRPS 99-1, among the factors that the NCUA will examine in considering a group's "economic advisability" are the "desire and intent of the group and the sponsor support." 63 Fed.Reg. at 72002. Seizing on this single sentence, the ABA contends that IRPS 99-1 violates § 1759(d)(2) because, when the NCUA considers whether to recognize an exception to the 3000-member restriction, its "determination turns essentially on whether the new group wants to form a separately chartered entity." ABA's App. for Prelim. Inj. at 15 (emphasis in original).

Recognizing that "statutory interpretation begins with the language of the statute itself," Butler v. West, 164 F.3d 634, 639 (D.C.Cir. 1999) (internal quotations omitted), the Court concludes that Congress has not spoken directly to the issue at hand. Deference to agency interpretation is warranted "when Congress has left a gap for the agency to fill pursuant to an express or implied `delegation of authority to the agency.'" Chevron, 467 U.S. at 843-44, 104 S.Ct. 2778. As this Circuit has explained the dichotomy of express and implied delegations, Congress generates interstices "explicitly by authorizing the agency to adopt implementing regulations, or implicitly by enacting an ambiguously worded provision that the agency must interpret." National Fuel Gas Supply Corp. v. FERC, 811 F.2d 1563, 1569 (D.C.Cir. 1987). Section 1759(d)(2)(A) is replete with both express and implied delegations. Perhaps most telling of the discretion that the NCUA enjoys is the second exception to the 3000-member limit that Congress adopted: "the group does not meet the criteria that the Board has determined to be important for the likelihood of success in establishing and managing a new credit union." § 1759(d)(2)(A)(ii) (emphasis added). Beyond this express authorization, Congress implicitly delegated to the NCUA the power to define such ambiguous terms as "sufficient volunteer and other resources," "efficient and effective operation," "other factors that may affect the financial viability and stability of a credit union," and "unlikely to operate a safe and sound credit union." § 1759(d)(2)(A)(i)-(iii). Statutory terms such as these, bound by no fixed meaning, compel judicial deference to reasonable agency interpretations.

The field-of-membership criteria set forth in IRPS 99-1 is eminently reasonable. As an initial matter, it would seem that the Plaintiffs' concerns about the final rule stem more from their own myopic reading of IRPS 99-1 than from an inherent flaw in the regulation itself. All that animates the ABA's objection is one spare sentence: "Important factors in making this determination [whether a group could charter an independent, financially sound credit union], however, are the desire and intent of the group and the sponsor support." 63 Fed.Reg. at 72002. To read the ABA's briefs, one would believe that desire and intent are all that the NCUA will ever examine. A more contextual and faithful reading of the final rule, however, belies the Plaintiffs' claims. In the sentence that immediately precedes the one just quoted, IRPS 99-1 provides: "As the legislation [CUMAA] directs, the Board will encourage the formation of separately chartered credit unions if it is prudent and economically advisable." Id. (emphasis added). It is only to resolve this fundamental question — whether it would be prudent and economically advisable for a group to charter its own credit union — that the group's desire, intent, and sponsor support become "[i]mportant factors in making this determination." Id. Notably, IRPS 99-1 does not state, as the ABA somewhat deceptively paraphrases, that group desire and intent are the "most important factors"; it only states that they are "important factors." Compare ABA's App. for Prelim. Inj. at 15 with 63 Fed.Reg. at 72002. Indeed, two sentences later, the regulation concludes: "While the intent of the group and sponsor support cannot be ignored and will carry great weight, they are not the sole factors. The final decision must be based on an independent regulatory analysis in consideration of the remaining factors specified in the regulation." 63 Fed.Reg. at 72002; see also id. at 72019-20 (enumerating other factors to be considered in determining economic advisability, including the proposed management's character and fitness, the group's proposed business plan, and present and future market conditions).

Although it might very well amount to arbitrary and capricious decision-making were the NCUA to add a group of more than 3000 members to a multiple common-bond credit union based on nothing more than desire and intent, IRPS 99-1 does not purport to establish such a regime. Notwithstanding the ABA's fears that the NCUA will elevate group desire and intent to dispositive importance, "agency action comes to us with a presumption of regularity." Advanced Micro Devices v. CAB, 742 F.2d 1520, 1546 (D.C.Cir. 1984). As the final rule plainly states, "[t]hose groups that can or should be able to meet [financial marketplace challenges], regardless of size, will be required to form a separate credit union." 63 Fed.Reg. at 72002. (emphasis added). The Court's conclusion that IRPS 99-1 is a reasonable interpretation of the CUMAA is predicated upon "certain assumptions about how the policy [will] be implemented," assumptions that are "based on a straightforward reading of the policy and on the Board's representations in its Brief to this court." Advanced Micro Devices, 742 F.2d at 1546. "Thus the parade of horribles that the [Plaintiffs] predict will result from implementation of [IRPS 99-1], if in fact it does result, will have to be dealt with in future litigation." Id. Having won the right to contest NCUA chartering decisions in First National, the ABA may proceed on a case-by-case basis if it suspects the NCUA of arbitrary and capricious agency action.*fn4

Having placed IRPS 99 1 in a proper context, the question remains whether group desire and intent and sponsor support are factors that are reasonably consistent with statutory structure and legislative history. See City of Cleveland v. NRC, 68 F.3d 1361, 1367 (D.C.Cir. 1995). There can be little doubt that they are. Federal credit unions, since their inception in 1934, have been and remain cooperative enterprises. See 12 U.S.C. § 1752(1). In the CUMAA itself, Congress expressly observed in its findings that credit unions "are member-owned, democratically operated, not-for-profit organizations generally managed by volunteer boards of directors." CUMAA, Pub.L. No. 105-219, § 2(4), 112 Stat. 913, 914 (1998). Obviously cognizant of the cooperative and voluntary nature inherent in credit-union management, Congress provided that a group with more than 3000 members could nonetheless join an existing credit union if it "lack[ed] sufficient volunteer and other resources to support the efficient and effective operation of [a separate] credit union." § 1759(d)(2)(A)(i) (emphasis added). Where Congress has explicitly ...

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