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March 30, 2000


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


This case is before the Court on the following dispositive motions: Defendant National Credit Union Administration's ("NCUA's") Motion to Partially Dismiss Plaintiff American Banker Association and Plaintiff-Intervenor Independent Bankers Association of America's (together "Plaintiffs") First Amended Complaints; Defendant-Intervenor Credit Union National Association's ("CUNA's") Motion to Dismiss Plaintiffs' Facial Claims; Defendant-Intervenor National Association of Federal Credit Union's ("NAFCU's") Motion for Partial Summary Judgment;*fn1 Defendant's Motion to Dismiss Plaintiff-Intervenor Irondequoit Federal Credit Union's ("Irondequoit's") First Amended Complaint; and Defendant-Intervenor CUNA's Motion to Dismiss same. In their amended complaints, Plaintiffs and Plaintiff-Intervenor challenge certain aspects of the NCUA's regulations — IRPS 99-1, see 63 Fed.Reg. 71,998 (1998) — interpreting the Credit Union Membership Access Act ("CUMAA") of 1998. Because the Court finds that the challenged policies constitute permissible interpretations of CUMAA, the Court shall dismiss Plaintiffs' and Plaintiff-Intervenor's facial challenges to IRPS-99. Plaintiffs also contest the NCUA's application of IRPS 99-1 in several instances. Some of these as-applied challenges rely so thoroughly on Plaintiffs' facial ones that they also must be dismissed.*fn2


In its earlier memorandum opinion denying Plaintiffs' motion for a preliminary injunction against the NCUA's application of IRPS 99-1, the Court engaged in a lengthy discussion of the statutory history and related aspects of this suit. Rather than reproduce that discussion, the Court incorporates it by reference here, and gives merely a brief account of the relevant background. See American Bankers v. Nat'l Credit Union Admin., 38 F. Supp.2d 114, 116-20 (D.D.C. 1999). Congress enacted CUMAA in 1998 to amend the Federal Credit Union Act ("FCUA"), 12 U.S.C. § 1759, after the Supreme Court invalidated the reading NCUA had given to this statute since 1982. 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). For those sixteen years, NCUA interpreted Section 109 of FCUA, relating to federal credit union membership, to permit the formation of "multiple common bond" credit unions. Finding this interpretation at odds with congressional intent, the Supreme Court held that the provision authorized NCUA to charter only two kinds of credit unions: "single common bond" credit unions, where a group sharing an occupational bond wished to form a credit union, and community-based ones. See id. In a demonstration of its commitment to preserving the strength and viability of credit unions, Congress assembled broad bipartisan support to enact the CUMAA, which explicitly wrote into law the interpretation that the Supreme Court had deemed impermissible under the former version of the statute. See S. Rep. 105-193 (1998).

Beyond merely ratifying the NCUA's policy of authorizing multiple common-bond credit unions, however, Congress also enunciated certain limitations relating to group size and geographic expansion. See H.R.Rep. No. 105-472, U.S.Code Cong. & Admin.News 1998, at 18. For example, Congress distinguished for purposes of analysis between groups with fewer than 3,000 members, which enjoy eligibility for inclusion in the field of membership of an existing multiple common-bond credit union, and those with more than 3,000 members, which must form separate single common-bond credit unions unless they meet specified criteria. See 12 U.S.C. § 1759(d)(1)-(2). In all cases, though, Congress directed the NCUA to "encourage the formation of separately chartered 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). Second, Congress specified that, when deciding which multiple common-bond credit union should absorb a given group, the NCUA must include the group "in the field of membership of a credit union that is within reasonable proximity to the location of the group." § 1759(f)(1)(B). Third, Congress described a community credit union as being composed of "[p]ersons or organizations within a well-defined local community, neighborhood, or rural district . . .," § 1759(b)(3), appending the qualifier "local" to the extant version of this provision. Compare CUMAA, § 1759(b)(3) (1998), with FCUA, § 1759 (1989).

Following a sixty-day notice-and-comment period, the NCUA promulgated IRPS 99-1 (the "final rule"), which established updated criteria for implementing the new statute. Several days after these regulations took effect (on January 1, 1999), Plaintiff American Bankers Association came to this Court seeking a preliminary injunction to enjoin several aspects of the final rule. In a Memorandum Opinion filed on March 10, 2000, see American Bankers, 38 F. Supp.2d at 114, the Court denied Plaintiff's Motion, ruling that Plaintiff had not demonstrated a likelihood of success on the merits of six out of seven claims. On the remaining claim, the Court found that Plaintiff failed to make its required showing of irreparable harm. See id. at 142. After the Court denied its Motion for a Preliminary Injunction, Plaintiff, along with Plaintiff-Intervenor Independent Community Bankers of America, filed an Amended Complaint consisting of seventeen (17) counts. Several of those counts replicate ones preliminarily adjudicated on the earlier motion, and others, including one facial and several as-applied claims, are new. In addition, Plaintiff-Intervenor Irondequoit brings seven (7) counts in its Amended Complaint, most of which reflect the same challenges.

Below, the Court first shall treat those counts of Plaintiffs' Amended Complaint which it considered at the earlier stage, and then shall turn to the remaining facial claim. To the extent Irodequoit echoes facial claims contained in Plaintiffs' Amended Complaint, the Court will not embark on a separate discussion of those; claims that differ receive separate treatment.


Plaintiffs contend that, in several respects, the NCUA's final rule contravenes Congressional intent in drafting and enacting the CUMAA. Since "`statutory interpretation begins with the language of the statute itself,'" Butler v. West, 164 F.3d 634, 639 (D.C.Cir. 1999) (quoting Pennsylvania Dep't of Pub. Welfare v. Davenport, 495 U.S. 552, 557-58, 110 S.Ct. 2126, 109 L.Ed.2d 588 (1990)), as a general matter the Court first must determine whether Congress has spoken directly to the issue at hand. Following 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), this step has become known as Chevron step one. If, using "traditional tools of statutory construction," Natural Resources Defense Council, Inc. v. Browner, 57 F.3d 1122, 1125 (D.C.Cir. 1995), the Court answers this inquiry in the affirmative, then "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.

But Chevron review also concerns itself with the extent and application of agency discretion in interpreting the statute at issue. In other words, "a reviewing court's inquiry under Chevron is rooted in statutory analysis and is focused on discerning the boundaries of Congress' delegation of authority to the agency." Arent v. Shalala, 70 F.3d 610, 615 (D.C.Cir. 1995). To resolve the issue, "the question for the reviewing court is whether the agency's construction of the statute is faithful to its plain meaning, or, if the statute has no plain meaning, whether the agency's interpretation `is based on a permissible construction of the statute.'" Id. (quoting Chevron, 467 U.S. at 843, 104 S.Ct. 2778). If this 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), then the Court must defer to the agency. This inquiry into the agency's interpretation constitutes Chevron step two. Having already found significant ambiguity and/or delegation of interpretive authority to the agency in most of the relevant provisions of the CUMAA, see, e.g., American Bankers, 38 F. Supp.2d at 125 ("Congress's intent, whatever it may be, is by no means `express' or `clear' as the ABA maintains."), the Court shall concentrate on this second line of inquiry.

Below, the Court reviews first those facial challenges to the NCUA's final rule on which it ruled preliminarily at the earlier proceeding, and then the only new facial challenge in Plaintiffs' Amended Complaint, contesting the NCUA's interpretation of "local community" in section 1759(b)(3). Following the discussion of Plaintiffs' facial claims, the Court addresses each of Plaintiffs' as-applied challenges that Defendants have moved to dismiss, and, finally, considers Irondequoit's claims in light of the rulings below.

A. Facial challenges to IRPS 99-1

1. Challenges addressed at the preliminary injunction stage

Plaintiffs challenge the following aspects of the NCUA's final rule in their most recent Complaint, all of which this Court addressed during the earlier proceeding: the NCUA's exclusion of family and household members when determining whether the group in question has fewer than 3,000 members for eligibility to join a "multiple common-bond credit union" (Count 1); the NCUA's alleged policy of permitting common-bond groups with more than 3,000 members to join existing credit unions even where they could "feasibly or reasonably establish a new single common-bond credit union" (Count 2); the rule requiring common-bond groups with fewer than 3,000 members to demonstrate their ability to successfully operate a credit union, rather than merely encouraging such groups to form separately chartered credit unions (Count 7); the alleged policy of permitting multiple common-bond credit unions to add new common-bond groups not "within reasonable proximity" to the existing credit union (Count 8); the policy of permitting persons who, after August 7, 1998, join a group whose members constitute a portion of a federal credit union to "grandfather" membership into the credit union (Count 15); the policy of permitting family and household members to enjoy "grandfathered" membership although not counted for the purpose of discerning whether the group has fewer than 3,000 members (Count 16); and the alleged policy of permitting "unlawfully formed credit unions" to grandfather membership eligibility (Count 17). Each of these claims arose at the earlier stage, and each received extensive treatment in the Court's memorandum opinion denying Plaintiff's application for a preliminary injunction. Plaintiffs have failed to persuade the Court that its original analysis of these claims was in error. Accordingly, with respect to each of these Counts, the Court incorporates by reference its earlier discussion of Plaintiffs' facial challenges to the NCUA regulations, and provides merely a brief summary below.

In addition, Plaintiffs challenge the NCUA's policy of permitting "financially healthy credit unions" comprised of groups with fewer than 3,000 members to merge together without undergoing exacting scrutiny (Count 10). Although the Court found previously that Plaintiffs had demonstrated a likelihood of success on the merits of this claim, upon further review of the pleadings, the relevant provisions of both the CUMAA and the FCUA, and the legislative history, the Court has revised its opinion. In consequence, the Court includes a separate and lengthier discussion of this claim.

a. Family and household members

The Court finds, once again, that Plaintiffs' challenge to the NCUA's decision not to include family members when calculating the membership of a group comports thoroughly with the statute. See American Bankers, 38 F. Supp.2d at 127-29. Section 1759(e)(1), which renders family and household members "eligible for membership in a credit union," suggests that this eligibility derives not from these members' common bond with the group, but rather from their intimate connection to persons in the group who share the common bond. Hence, FCUA's policy of excluding family and household members from the primary ...

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