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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 29, 1995 Decided July 30, 1996

No. 94-5295

FIRST NATIONAL BANK AND TRUST COMPANY, ET AL.,

APPELLANTS

v.

NATIONAL CREDIT UNION ADMINISTRATION,

APPELLEE

AND

AT&T FAMILY FEDERAL CREDIT UNION AND

CREDIT UNION NATIONAL ASSOCIATION,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 90cv02948)

-

Christopher R. Lipsett argued the cause for appellants, with whom Michael S. Helfer, Leon B.

Greenfield, John J. Gill, III, and Michael F. Crotty were on the briefs.

Jacob M. Lewis, Attorney, U.S. Department of Justice, argued the cause for appellees, with whom

Frank W. Hunger, Assistant AttorneyGeneral, Eric H. Holder, Jr., United States Attorney, Douglas

N. Letter, Litigation Counsel, U.S. Department of Justice, and John K. Ianno, Counsel, National

Credit Union Administration, were on the brief for appellee National Credit Union Administration.

Paul J. Lambert and Teresa Burke were on the brief for appellees AT&T Family Federal Credit

Union and Credit Union National Association.

Edward C. Winslow, III, and William C. Scott were on the brief for amicus curiae North Carolina

Alliance of Community Financial Institutions.

Before: BUCKLEY, GINSBURG, and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge: Section 109 of the Federal Credit Union Act (FCUA), 12 U.S.C.

§ 1759, providesthat "Federal credit union membership shall be limited to groups having a common

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bond of occupation or association, or to groups within a well-defined neighborhood, community, or

rural district." The question presented in this appeal is whether the members of an occupational FCU

must allshare a single "common bond of occupation" or, asthe NationalCredit UnionAdministration

(NCUA) contends, membership may be drawn from multiple unrelated groups, each with its own

common bond. The district court held that the NCUA reasonably interpreted that Act to allow

members of unrelated groupsto join the same credit union, provided only that a common bond exists

among the members of each constituent group. 863 F. Supp. 9 (1994). Because the Congress

resolved this very issue the other way, we reverse the district court and disapprove the decision of

the NCUA under step one of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467

U.S. 837, 842-43 (1984).

I. Background

The plaintiffs-appellants are the American Bankers Association and several North Carolina

banks, including First NationalBank and Trust Company (FNBT). They brought this suit against the

NCUA, the federal regulatory agency that administers the FCUA, seeking to overturn that agency's

approval of certain applications filed by AT&T Family Federal Credit Union (ATTF) to expand its

field of membership to include employees of various small businessesin North Carolina and Virginia

that are unaffiliated with the credit union's existing membership base. ATTF and the Credit Union

National Association, a trade association, have intervened in support of the agency.

Under the FCUA, an FCU is, like a mutual association or a cooperative, owned and controlled

by its members, see 12 U.S.C. § 1757(6); it can make loans to and take deposits from (formally, sell

shares to) only its own members and other credit unions, see id. § 1757(5). The Congress expected

that the Act, by "guaranteeing democratic self-government[,] would infuse the credit union with a

spirit of cooperative self-help and ensure that the credit union would remain responsive to its

members' needs." First Nat'l Bank and Trust Co. v. NCUA, 988 F.2d 1272, 1274 (D.C. Cir. 1993).

The "common bond" provision has been part of the FCUA since the statute was enacted in

1934. The Congress did not fully explicate the purpose or limits of that provision, but "assumed

implicitly that a common bond amongst members would ensure both that those making lending

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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." Id. at 1276.

From1934 until 1982 the NCUA interpreted the common bond requirement to mean that the

members of each occupational FCUwe put aside the associational alternative, which plays no role

in this casemust be drawn from a single occupational group, defined to mean the employees of a

single employer. 58 Fed. Reg. 40473 (July 28, 1993). In 1982, however, the NCUA altered its

interpretation of nearly 50-years' standing to allow an FCU to comprise not just one but "multiple

occupational groups." Interpretive Ruling and Policy Statement (IRPS) 82-1, 47 Fed. Reg. 16775

(Apr. 20, 1982). Each such group need only be within a "well-defined area," IRPS 82-3, 47 Fed.

Reg. 26808 (June 22, 1982), bywhich the NCUA means an area served by an actual or planned office

(of which there may be any number) of the credit union, IRPS 89-1, 54 Fed. Reg. 31165, 31170 (July

27, 1989).

The 1982 change of interpretation was intended to enable each FCU to realize economies of

scale and to facilitate occupationaldiversificationwithin the ranks ofits membership. See Letterfrom

E.F. Callahan, Chairman of the NCUA, to Congressman Fernand J. St. Germain, Chairman of the

House Committee on Banking, Finance and Urban Affairs 8-9 (Oct. 28, 1983). The new policy also

made it possible for the employees of a company with fewer than 500 employees, the minimum for

forming a new FCU, to join an existing FCU. 54 Fed. Reg. at 31171. The NCUA reiterated its new

position through policy statements issued in 1989, when ATTF filed the first of the applications that

FNBT here challenges, and most recently in 1994. See id. at 31165; IRPS 94-1, 59 Fed. Reg. 29066

(June 3, 1994). The agency explained in 1989 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. at 31176.

FNBT's complaint is at bottom that Interpretive Ruling 89-1 violates the FCUA by allowing

groupslacking any common bond among them to join together in a credit union, ATTF in particular.

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Originally chartered in 1952 as the Radio Shops Federal Credit Union, the common bond of ATTF

members was that they were "[e]mployees of the Radio Shops of Western Electric Company, Inc.,

who work in Winston-Salem, Greensboro, and Burlington, North Carolina; employees of this credit

union; members of their immediate families; and organizations of such persons." ATTF has since

grown to have 112,000 members in more than 150 disparate occupational groups spread across all

50 states, including the employees of a major tobacco company, an auto supply chain, and a television

station. Its potential membership exceeds 357,000. As of January 1994 ATTF had more than 63,000

loans outstanding, totaling over $268 million. FNBT maintains that by allowing ATTF to accept

members from among the employees of any number of employers, the NCUA has in effect opened

the membership to anyone with a job.

Initially, the district court dismissed this case for lack ofstanding, 772 F. Supp. 609, 612-13

(1991); on appeal, however, we reversed on the ground that the banks are "what we have termed

suitable challengers, that is ... their interests are sufficiently congruent with those of the intended

beneficiariesthat [they] are not more likely to frustrate than to further the statutory objectives." 988

F.2d at 1275. We remanded for a determination on the merits, as to which the district court granted

the defendant's motion for summary judgment. 863 F. Supp. 9. The district court held that the

common bond requirement is ambiguous and that the NCUA'sinterpretation ofthe provision to mean

that "a credit union may have several groups, each with its own common bond" is reasonable.

II. Analysis

We review an agency's interpretation of a statute entrusted to its administration under the

familiar rubric of the Chevron case: If the Congress has "directly spoken to the precise question at

issue," the court "must give effect to the unambiguously expressed intent of Congress"; if, however,

the statute is silent or ambiguous on the question at issue, then the court will defer to the agency's

interpretation if it is permissible in light of the structure and purpose of the statute. 467 U.S. at 842-

43. In resolving the threshold question whether congressional intent is sufficiently clear for us to

review the case under step one of Chevron, "we are not required to grant any particular deference

to the agency's parsing of statutory language or its interpretation of legislative history." Rettig v.

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Pension Benefit Guaranty Corp., 744 F.2d 133, 141 (D.C. Cir. 1984).

FNBT argues this case under step one of Chevron only. According to FNBT, the intent of

the Congress is clearly discernible from the statutory text and the purpose of the statute. We agree.

A. Section 109 by Its Terms

To repeat, § 109 provides in relevant part that "Federal credit union membership shall be

limited to groups having a common bond of occupation ... or to groups within a well-defined

neighborhood, community, or rural district." FNBT contends, first, that the article "a" in the phrase

"groups having a common bond" means that all members of an FCU must be united by a single

occupation. The NCUA counters that the plural noun "groups" in the same phrase indicates that

there may be multiple groups in an FCU, so that the statute makes sense only if it is understood to

contemplate multiple bonds, each uniting a single group even if the same bond does not unite all

groups, i.e., the membership as a whole.

Neither syntactical argument is convincing. The article "a" could as easily mean one bond for

each group as one bond for all groups in an FCU, and the plural noun "groups" could refer not to

multiple groups in a single FCU but to each of the groupsthat forms a credit union under the FCUA.

Indeed, focusing upon "groups" begs the question whether they must share a common bond; it is,

after all, a common bond that makes a group of what would otherwise be a collection of individuals

without a theme.

Nonetheless, use of the word "groups" in § 109 does support FNBT's interpretation and not

the NCUA's. As a leading dictionary of the time put it, a group is an "assemblage ... having some

resemblance or common characteristic." Webster's New International Dictionary 955 (1927). By

this definition, a common bond is implicit in the term "group." Therefore, if two or more

"occupationalgroups" can be said to have a common bond, it must be because there is a characteristic

common to each and every member of the several groups.

Or, viewing the question another way, the term "common bond" would be surplusage if it

applied only to the members of each constituent group and not across all groups of members in an

FCU. Instead of limiting membership to "groups having a common bond of occupation," the

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Congress could, without affecting the meaning ofthe statute, have simplysaid "occupationalgroups."

The addition of the term "common bond" is necessary only to impart the idea that the bond is one

shared by all members of the FCUregardless whether the FCU is composed of one or of multiple

groups. If the members of a group are by definition bonded, then it is tautological to say that a single

group has a common bond; but if multiple groups are said to have a common bond, then there is no

tautologythe members of each group share the same bond as the members of the other groups.

For example, because the NCUA defines an occupational group to mean the employees of a

single employer, 58 Fed. Reg. at 40473, it is redundant to require that the workers at Company A

have a common bond; their employment by Company A is their common bond and that bond is what

makes them an occupational group. Suppose, however, that the employees of unaffiliated Company

B propose to join the FCU at Company A. The Act clearly forecloses this possibility for want of a

common bond among the employees. Now suppose that Company A buys Company B, which

remains a separate subsidiary. Joint ownership of Companies A and B creates a common bond

extending across the two groups; the employees of Company B could then become members of the

FCU at Company A.

We do not dismiss out of hand the possibility that the term "common bond"although

supererogatory when applied to the membership of a single groupnevertheless reflected ordinary

usage in 1934. Moreover, having dissected enough statutes to know that they may upon occasion

have redundant terms, see, e.g., American Fed'n of Gov't Employees, Local 3295 v. Federal Labor

Relations Auth., 46 F.3d 73, 77 (D.C. Cir. 1995) ("no construction of § 1462a [of the Federal

Deposit Insurance Act] can avoid rendering either subsection (1) or subsection (2) redundant"), we

look further before deciding with confidence that § 109 is unambiguous on its face.

FNBT's second textual argument is that the term "groups" in the two parallel provisions of

§ 109permitting credit unions composed either of (1) "groups having a common bond of

occupation" among all the members or of (2) "groups within a well-defined neighborhood,

community, or rural district"must be interpreted in a consistent way. See Wisconsin Dep't of

Revenue v. William Wrigley, Jr., Co., 112 S. Ct. 2447, 2455 (1992). If the so-called community

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provision were construed in a manner consistent with the NCUA's revised interpretation of the

occupational provision, then a single FCU could include residents of any number of "well-defined

neighborhood[s], communit[ies], or rural district[s]" around the country. Yet this expansive

construction has never been advocated by the NCUA; on the contrary, the NCUA regulation

implementing the community provision expressly requires that all FCU members live, worship, or

work in "a single, geographically well-defined area." 59 Fed. Reg. at 29077.

The NCUA answers this argument by noting that the two grammatically parallel provisions

of § 109 do not, upon close inspection, use the same terms: "the limitation of geographic groups to

those "within' a defined area," we are told, "clearlysupportsthe NCUA's conclusion that membership

in a community credit union may not consist of groups from widely dispersed locales." So it does;

no one disputes the correctness of the NCUA's restrictive interpretation of the community clause.

But the NCUA's point is not at all responsive to FNBT's argument. The question is how "groups"

can be given a different meaning in the two parallel phrases: "groups having a common bond of

occupation" and "groups within a well-defined [area]." The statute does not allow multiple groups,

each within a different neighborhood, to forma single communityFCU. Nor therefore can the statute

consistentlyallow multiple groups, eachdrawnfroma different occupation(whichtheNCUAequates

with a different employer), to form an occupational FCU.

In sum, the FCUA requires by its terms that all members of a credit union share a single

common bond. Our example of two companies under joint ownership meets that statutory

requirementand does so without including unrelated groups, which would drain the phrase

"common bond" of allmeaning. The NCUA may identify and approve other types of common bonds,

subject only to the rule of reason embedded in Chevron step two. Indeed, the agency might define

an occupational group differentlye.g., all workers in the same tradeand perhaps pass muster

under Chevron. Alternatively, the NCUA may allow multiple occupational groups to form an FCU

under a common bond of "association," if one can be found. If the statute is to be read as it is

written, however, the one thing that the agency may not do is permit unrelated groups to form a

single FCU unless a common bond unites all of the members.

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To test the hypothesisthat the common bond provision means what it says, we consult briefly

the purpose of the statute and its legislative history.

B. The Purpose of § 109

First let us dispatch the suggestion of the North Carolina Alliance of Community Financial

Institutions, a trade association that filed an amicus brief in support of FNBT, that the Congress

intended the common bond provision to foreclose unfair competition between credit unions, which

are tax exempt, and banks, which are not. ("Without a meaningful common bond provision, credit

unions are merely banks with a leg up on other banks.") According to the Alliance, a principal

purpose of the common bond is to constrict the market that credit unions can serve, thereby limiting

the threat that they pose to banks. We squarely rejected this argument on the first appeal of this case:

"Congress did not, in 1934, intend to shield banks from competition from credit unions. Indeed, the

very notion seems anomalous, because Congress' general purpose wasto encourage the proliferation

of credit unions, which were expected to provide service to those would-be customers that banks

disdained." 988 F.2d at 1275. Only "as time passedas credit unions flourished and competition

among consumer lending institutions intensified[did bankers begin] to see the common bond

requirement as a desirable limitation on credit union expansion." Id. at 1276.

FNBT itselfmakes a more persuasive argument based upon the purpose ofthe common bond

requirement. The Congress intended that each FCU be a cohesive association in which the members

are known by the officers and by each other in order to "ensure both that those making lending

decisions would know more about applicants and that borrowers would be more reluctant to default.

That is surely why it was thought that credit unions, unlike banks, could "loan on character.' " Id.

There can be little doubt that growth on the scale achieved byATTF isinconsistent with that purpose.

The NCUA points out that under its regulations a new group is not permitted to join an

existing FCU unless the members are within an area that can reasonably be served from an existing

or proposed office of the credit union. See 54 Fed. Reg. at 31170. This administrative policy might

initially seem to blunt FNBT's claim that under the NCUA's current interpretation of the common

bond requirement an FCU could accept anyone as a member simply because he or she is employed.

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Upon closer inspection, however, the agency's point is a makeweight. For whatever restraining force

the common bond requirement retained after NCUA changed its interpretation of the Act in 1982,

it did not impede ATTF's dramatic expansion. Indeed, as recently as 1985, ATTF's field of

membership consisted basically of the employees of five AT&T affiliates who worked in, or were

supervised from, certain areas within North Carolina or Virginia.

In short, reading § 109 as the 73d Congress wrote it, i.e., to require that a single common

bond be shared among all members of an occupational credit union, furthers the overriding purpose

of the FCUAto "unite[ ] credit union members in a cooperative venture." First Nat'l Bank and

Trust, 988 F.2d at 1276; the NCUA's reading, which permits multiple unrelated groups to form an

occupational FCU, frustrates that purpose. If this conception of an FCU seems dated in the world

of ATMs and nearly nationwide financial institutions of a scale surely unimaginable in 1934, see

Douglas H. Ginsburg, Interstate Banking, 9 HOFSTRA L. REV. 1133 (1981), then the case for

updating the FCUA must be addressed to the Congress.

C. The Legislative History of § 109

Finally, we look to the legislative history of the FCUA only to determine whether it so

convincinglycontradicts our interpretation ofthe text,reinforced byour understanding ofthe purpose

of the statute, as to require that we rethink the matter. Under these circumstances, only a show

stopper would do.

FNBT emphasizes the Report of the Senate Committee on Banking and Currency, which

defines a credit union, in part, as "a cooperative society ... limited in each case to the members of a

specific group with a common bond of occupation or association." S. REP. NO. 555, 73d Cong., 2d

Sess. 2 (1934) (emphasis supplied). The NCUA and ATTF extract their version of the legislative

history fromthe Report ofthe House Committee onBanking and Currency, which paraphrases § 109

as providing that "[m]embership in Federal credit unions is limited to groups having common bonds

of occupation or association." H.R. REP. NO. 2021, 73d Cong., 2d Sess. 3 (1934) (emphasis

supplied); cf. MARY ANN GLENDON, A NATION UNDER LAWYERS 197 (1994) (quoting Karl

Llewellyn: "Never paraphrase a statute"). Thus do the parties replay their jejune debate over the use

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of a singular article and a plural noun in the statute itself. Not surprisingly, therefore, the NCUA

ultimately joins in the district court's conclusion that the legislative history of the common bond

requirement is "murky" and provides only "a slender reed on which to place reliance." 863 F. Supp.

at 12. Whatever the precise exchange rate between the metaphors may be, a slender reed is not a

show stopper.

The district court itself assigned some weight to "the fact that Congress has not objected to

... the [NCUA's] 1982 expansion" of the common bond requirement. 863 F. Supp. at 13. In a

Chevron step two analysis, where the issue is whether the agency's interpretation of the statute is

reasonable, congressional inaction might be minimally enlightening. See, e.g., Bob Jones Univ. v.

United States, 461 U.S. 574, 599 (1983). This is a Chevron step one analysis, however; the silence

of a later Congress says nothing about the intent of the earlier Congress that spoke directly to the

question here at issue.

III. Conclusion

Based upon the text and the purpose of the FCUA, we conclude under Chevron step one that

all the members of an FCU must share a common bond. If there are multiple occupational groups

within a single credit union, then it is not sufficient that the members of each different group have a

bond common to that group only.

Accordingly, we reverse the judgment of the district court. The case is remanded to that

court for the entry of declaratory and injunctive relief, consistent with the foregoing opinion,

concerning the NCUA's 1989 and 1990 approvals of certain applications filed by ATTF.

So ordered.

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