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National Community Reinvestment Coalition v. National Credit Union Administration

November 6, 2003



Plaintiff, National Community Reinvestment Coalition ("NCRC"), brings this action against defendants, National Credit Union Administration and its Chairman, Dennis Dollar, in his official capacity (collectively,"NCUA"), for failure to comply with the Administrative Procedure Act ("APA"), 5 U.S.C. § 551 et seq. NCRC alleges that NCUA violated the APA when it promulgated an interim final rule on December 20, 2001, that repealed a regulatory requirement promulgated on October 27, 2000. Presently before this court is defendants' motion to dismiss [#3]. Upon consideration of defendants' motion to dismiss, the opposition thereto, and the record of this case, the court concludes that defendants' motion to dismiss must be granted.


NCRC is a nonprofit trade association that seeks to promote economic justice in the United States and to increase fair and equal access to credit, capital, and banking services to traditionally underserved populations. NCRC's members include individuals who, because of income or race, lack adequate access to credit products and financial services that traditional financial institutions offer, and the organizations that advocate for these individuals. NCRC's members also include credit unions. These individuals and member organizations rely on the availability of the products and services of credit unions. One of NCRC's primary activities is advocating for increased access to credit products and financial services in low-income and minority communities. NCRC accomplishes this goal by informing the public about whether financial institutions, such as credit unions, are complying with their obligation to provide credit products and services to the entire community.

NCUA is the federal agency charged with administering the Federal Credit Union Act, 12 U.S.C. § 1751 et seq. Credit unions are nonprofit cooperative associations organized for the purpose of promoting thrift among their members and providing a source of credit for productive purposes. 12 U.S.C. § 1752(1). A credit union is authorized to provide financial services only to persons or organization within a particular credit union's"field of membership." 12 U.S.C. § 1759. A community credit union services a membership field comprised of"[p]ersons or organizations within a well-defined local community, neighborhood, or rural district." Id. § 1759(b)(3). To receive a charter for a community credit union, or if an existing federal credit union wants to convert to a community charter, the applicant must submit business and marketing plans to NCUA. Organization and Operations of Federal Credit Unions, 63 Fed. Reg. 71,998, 72,037-38 (Dec. 30, 1998). The business plan incorporates the applicant's projections and assumptions regarding market conditions, member support, financial services, goals, and related information. Id. at 72,019-20. The marketing plan addresses how the relevant community will be served. Id. at 72,038.

On June 13, 2000, NCUA issued proposed amendments to the NCUA's charter and field of membership policies and provided a sixty-day comment period. Organization and Operations of Federal Credit Unions, 65 Fed. Reg. 37,065, 37,065 (June 13, 2000). The June 13, 2000 proposed amendments included a requirement that all community credit unions develop a Community Action Plan ("CAP"). The CAP would"supplement a community credit union's marketing plan by specifically addressing how the credit union plans to market its services to the entire community, including any underserved or low-income areas." Organization and Operations of Federal Credit Unions, 65 Fed. Reg. 64,512, 64,517 (Oct. 27, 2000). If a credit union failed to follow its CAP, the NCUA could"initiate appropriate supervisory actions to require compliance." Id. NCUA received 423 comments opposing implementation of the CAP, and seven comments supporting the CAP. Id. On October 27, 2000, in response to the public comments, NCUA promulgated a final rule that modified the CAP proposal such that a credit union no longer had to provide a separate document,*fn1 but could"specifically address in its business plan, marketing plan or other appropriate separate documentation how the credit union plans to market its products and services to the entire community." Id. at 64,527; see id. at 64,518. The final regulation required that all credit unions have a plan in place by December 31, 2001. Id. at 64,519.

On December 20, 2001, NCUA promulgated an interim final rule that repealed the CAP; this repeal was effective immediately. Organization and Operations of Federal Credit Unions, 66 Fed. Reg. 65,625, 65,625 (Dec. 20, 2001). The interim rule was not published thirty days prior to its effective date. NCUA stated that the immediate repeal of the CAP was"necessary and in the public interest because of the recent and sudden increase in credit union asset growth and the current uncertainty in the national economy." Id. at 65,626. NCUA determined that repeal of the CAP furthered the public interest by"removing a potentially costly and unnecessary regulatory burden and promotes the efficient use of agency resources and staff." Id. NCUA stated that the notice and public comment requirements of the APA were"impracticable, unnecessary, and contrary to the public interest." Id. NCUA provided a sixty-day period for public comment after the promulgation of the interim rule concerning"whether the community service plan requirement should be deleted from the Chartering Manual." Id. On January 18, 2002, NCRC submitted a response to NCUA's request for comments. NCRC informed NCUA that the repeal of the CAP violated the APA and that a post-hoc comment period after the repeal was not an effective substitute.

NCUA received 428 comments in response to its request for comments about the interim final rule.*fn2 Of these comments, 415 supported the elimination of the CAP; twelve favored its reinstatement. Organization and Operations of Federal Credit Unions, 67 Fed. Reg. 20,013, 20,014-15 (April 24, 2002). On April 24, 2002, after the sixty-day comment period, NCUA issued a final rule with an effective date of May 24, 2002 that repealed the CAP and adopted without change the interim final rule at issue in this case. Id. at 20,013. NCRC alleges that NCUA violated the APA, 5 U.S.C. §§ 551(5), 553(b), (c), by failing to (1) publish general notice of the proposed repeal of the CAP in the Federal Register, and (2) provide an opportunity for the submission of public comments before the effective date of the repeal of the CAP. NCRC also alleges that NCUA violated the APA, 5 U.S.C. § 553(d), by failing to publish the proposed repeal thirty days before its effective date.

NCUA moves to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) on the grounds that NCRC lacks standing to pursue its claim. NCUA further contends that the issuance of the final rule on April 24, 2002 after notice and comment that adopts the interim rule at issue rendered NCRC's claims moot. NCRC also moves to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) because it had good cause to dispense with the APA requirements of notice and comment before the interim rule became effective.


A. Legal Standard for Motion to Dismiss

A motion to dismiss may be granted"only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Martin v. Ezeagu, 816 F. Supp. 20, 23 (D.D.C. 1993) (internal quotation marks omitted); see Conley v. Gibson, 355 U.S. 41, 45-46 (1957) (stating that a complaint should not be dismissed"unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief"). In addition, the court must"construe the complaint in a light most favorable to [the] plaintiff and must accept as true all reasonable factual inferences drawn from well-pleaded factual allegations." In re United Mine Workers of Am. Employee Benefit Plans Litig., 854 F. Supp. 914, 915 (D.D.C. 1994); see Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979) (stating that the court must give the plaintiff"the benefit of all inferences that can be derived from the facts alleged").

In evaluating a Rule 12(b)(6) motion to dismiss, the court is limited to considering facts alleged in the complaint, any documents either attached to or incorporated in the complaint, matters of which the court may take judicial notice, EEOC v. St. Francis Xavier Parochial School, 117 F.3d 621, 624 (D.C. Cir. 1997), and matters of public record, Marshall County Health Care Authority v. Shalala, 988 F.2d 1221, 1226 n.6 (D.C. Cir. 1993). In resolving a Rule 12 (b)(1) motion for lack of jurisdiction, unlike motions brought pursuant to Rule 12(b)(6), courts are generally free to consider relevant materials outside the pleadings. Land v. Dollar, 330 U.S. 731, 735 n.4 (1947) ("[W]hen a question of the District Court's jurisdiction is raised, either by a party or by the court on its own motion,... the court may inquire, by affidavits or otherwise, into the facts as they exist."); Artis v. Greenspan, 223 F. Supp. 2d 149, 152 (D.D.C. 2002) ("A court may consider material outside of the pleadings in ruling on a motion to dismiss for lack of venue, personal jurisdiction or subject-matter jurisdiction.").

B. Standing

The court must address standing before it addresses the merits. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101-02 (1998). The plaintiff bears the burden of establishing standing. Id. at 104. Although the court must"accept as true all material allegations of the complaint," the plaintiff must"clearly... allege facts demonstrating that [it] is a proper party to invoke judicial resolution of the dispute and the exercise of the court's remedial powers." Warth v. Seldin, 422 U.S. 490, 501, 518. The plaintiff need only allege facts that demonstrate"'a realistic danger of ... sustaining a direct injury.'" Bristol-Myers Squibb Co. v. Shalala, 91 F.3d 1493, 1497 (D.C. Cir. 1996) (quoting Babbitt v. United Farm Workers Nat'l Union, 442 U.S. 289, 298 (1979))."[G]eneral factual allegations of injury resulting from the defendant's conduct may suffice [to establish standing], for on a motion to dismiss we'presum[e] that general allegations embrace those specific facts that are necessary to support the claim.'" Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (quoting Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 889 (1990)).

The three constitutional components of standing are: First, the plaintiff must have suffered an"injury in fact" – an invasion of a legally protected interest which is (a) concrete and particularized and (b)"actual or imminent, not'conjectural' or'hypothetical.' Second, there must be a causal connection between the injury and the conduct complained of – the injury has to be"fairly... trace[able] to the challenged action of the defendant.... ...

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