Case Name: CLARKE, COMPTROLLER OF THE CURRENCY v. SECURITIES INDUSTRY ASSOCIATION
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1987-01-14
Citations: 479 U.S. 388
Docket Number: No. 85-971
Parties: CLARKE, COMPTROLLER OF THE CURRENCY v. SECURITIES INDUSTRY ASSOCIATION
Judges: White, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, Blackmun, and Powell, JJ., joined, and in Parts I and III of which Rehnquist, C. J., and Stevens and O’Connor, JJ., joined. Stevens, J., filed an opinion concurring in part and concurring in the judgment, in which Rehnquist, C. J., and O’CONNOR, J., joined, post, p. 409. Scalia, J., took no part in the consideration or decision of the cases.
Reporter: United States Reports
Volume: 479
Pages: 388–417

Head Matter:
CLARKE, COMPTROLLER OF THE CURRENCY v. SECURITIES INDUSTRY ASSOCIATION
No. 85-971.
Argued November 3, 1986
Decided January 14, 1987
White, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, Blackmun, and Powell, JJ., joined, and in Parts I and III of which Rehnquist, C. J., and Stevens and O’Connor, JJ., joined. Stevens, J., filed an opinion concurring in part and concurring in the judgment, in which Rehnquist, C. J., and O’CONNOR, J., joined, post, p. 409. Scalia, J., took no part in the consideration or decision of the cases.
Charles A. Rothfeld argued the cause for petitioner in No. 85-971. With him on the briefs were Solicitor General Fried, Assistant Attorney General Willard, Deputy Solicitor General Wallace, Anthony J. Steinmeyer, Nicholas S. Zeppos, Richard V. Fitzgerald, and Mark L. Leemon. William T. Coleman, Jr., argued the cause for petitioner in No. 85-972. With him on the briefs were John H. Beisner and Edward J. McAniff.
James B. Weidner argued the cause for respondent in both cases. With him on the brief were David A. Schulz, William J. Fitzpatrick, and Donald J. Crawford.
Together with No. 85-972, Security Pacific National Bank v. Securities Industry Association, also on certiorari to the same court.
Briefs of amici curiae urging reversal were filed for the American Bankers Association by John J. Gill III and Michael F. Grotty; for the Consumer Bankers Association by Craig Ulrich; and for the New York Clearing House Association by Robert S. Rifkind.
Briefs of amici curiae urging affirmance were filed for Branch Banking and Trust Co. et al. by John R. Jordan, Jr., Henry W. Jones, Jr., and Eugene Gressman; and for Independent Bankers Association of America by Erwin N. Griswold, Leonard J. Rubin, and Mollie A. Murphy. Murphy.

Opinion:
Justice White
delivered the opinion of the Court.
In these cases, we review an application of the so-called "zone of interest" standing test that was first articulated in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U. S. 150 (1970). Concluding that respondent is a proper litigant, we also review, and reverse, a judgment that the Comptroller of the Currency exceeded his authority in approving the applications of two national banks for the establishment or purchase of discount brokerage subsidiaries.
I
In 1982, two national banks, Union Planter's National Bank of Memphis (Union Planters) and petitioner Security Pacific National Bank of Los Angeles (Security Pacific), applied to the Comptroller of the Currency for permission to open offices that would offer discount brokerage services to the pub- lie. Union Planters proposed to acquire an existing discount brokerage operation, and Security Pacific sought to establish an affiliate named Discount Brokerage. Both banks proposed to offer discount brokerage services not only at their branch offices but also at other locations inside and outside of their home States.
In passing on Security Pacific's application, the Comptroller was faced with the question whether the operation of Discount Brokerage would violate the National Bank Act's branching provisions. Those limitations, enacted as § 7 and 8 of the McFadden Act, 44 Stat. 1228, as amended, are codified at 12 U. S. C. § 36 and 12 U. S. C. § 81. Section 81 limits "the general business" of a national bank to its headquarters and any "branches" permitted by §36. Section 36(c) provides that a national bank is permitted to branch only in its home State and only to the extent that a bank of the same State is permitted to branch under state law. The term "branch" is defined at 12 U. S. C. § 36(f) "to include any branch bank, branch office, branch agency, additional office, or any branch place of business . at which deposits are received, or checks paid, or money lent."
The Comptroller concluded that "the non-chartered offices at which Discount Brokerage will offer its services will not constitute branches under the McFadden Act because none of the statutory branching functions will be performed there." App. D to Pet. for Cert, in No. 85-971, p. 39a. He explained that although Discount Brokerage would serve as an intermediary for margin lending, loan approval would take place at chartered Security Pacific offices, so that Discount Brokerage offices would not be lending money within the meaning of § 36(f). Likewise, although Discount Broker age would maintain, and pay interest on, customer balances created as an incident of its brokerage business, the Comptroller concluded that these accounts differ sufficiently in nature from ordinary bank accounts that Discount Brokerage would not be engaged in receiving deposits. He further observed that treating offices conducting brokerage activities as branches under § 36(f) would be inconsistent with the "long-standing and widespread" practice of banks' operating nonbranch offices dealing in United States Government or municipal securities. Id., at 44a. Accordingly, the Comptroller approved Security Pacific's application.
Respondent, a trade association representing securities brokers, underwriters, and investment bankers, brought this action in the United States District Court for the District of Columbia. Among other things, respondent contended that bank discount brokerage offices are branches within the meaning of § 36(f) and thus are subject to the geographical restrictions imposed by § 36(c). The Comptroller disputed this position on the merits and also argued that respondent lacks standing because it is not within the zone of interests protected by the McFadden Act. The Comptroller contended that Congress passed the McFadden Act not to protect securities dealers but to establish competitive equality between state and national banks.
The District Court, relying on Association of Data Processing Service Organizations, Inc. v. Camp, 397 U. S. 150 (1970), held that respondent has standing and rejected the Comptroller's submission that national banks may offer discount brokerage services at nonbranch locations. A divided panel of the Court of Appeals affirmed in a brief per curiam opinion, 244 U. S. App. D. C. 419, 758 F. 2d 739 (1985), and rehearing en banc was denied, with three judges dissenting. 247 U. S. App. D. C. 42, 765 F. 2d 1196 (1985).
The Comptroller sought review by petition for certiorari, as did Security Pacific. We granted both petitions, and consolidated the cases. 475 U. S. 1044 (1986). We now affirm the judgment that respondent has standing, but reverse on the merits.
I — I f — <
In Association of Data Processing Service Organizations, Inc. v. Camp, supra, the association challenged a ruling by the Comptroller allowing national banks, as part of their incidental powers under 12 U. S. C. § 24 Seventh, to make data-processing services available to other banks and to bank customers. There was no serious question that the data processors had sustained an injury in fact by virtue of the Comptroller's action. Rather, the question, which the Court described as one of standing, was whether the data processors should be heard to complain of that injury. The matter was basically one of interpreting congressional intent, and the Court looked to § 10 of the Administrative Procedure Act (APA), 5 U. S. C. § 702, which "grants standing to a person 'aggrieved by agency action within the meaning of a relevant statute.'" 397 U. S., at 153. The Court of Appeals had interpreted § 702 as requiring either the showing of a "legal interest," as that term had been narrowly construed in our earlier cases, e. g., Tennessee Electric Power Co. v. TVA, 306 U. S. 118, 137 (1939), or alternatively as requiring an explicit provision in the relevant statute permitting suit by any party "adversely affected or aggrieved." See Association of Data Processing Service Organizations, Inc. v. Camp, 406 F. 2d 837 (CA8 1969). This Court was unwilling to take so narrow a view of the APA's "'generous review provisions,'" 397 U. S., at 156 (quoting Shaughnessy v. Pedreiro, 349 U. S. 48, 51 (1955)), and stated that in accordance with previous decisions the Act should be construed "not grudgingly but as serving a broadly remedial purpose," ibid, (citing Shaughnessy, supra, and Rusk v. Cort, 369 U. S. 367, 379-380 (1962)). Accordingly, the data processors could be "within that class of 'aggrieved' persons who, under § 702, are entitled to judicial review of 'agency action/" 397 U. S., at 157, even though the National Bank Act itself has no reference to aggrieved persons, and, for that matter, no review provision whatsoever. It was thought, however, that Congress, in enacting §702, had not intended to allow suit by every person suffering injury in fact. What was needed was a gloss on the meaning of §702. The Court supplied this gloss by adding to the requirement that the complainant be "adversely affected or aggrieved," i. e., injured in fact, the additional requirement that "the interest sought to be protected by the complainant [be] arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." Id., at 153.
The Court concluded that the data processors were arguably within the zone of interests established by §4 of the Bank Service Corporation Act of 1962, 76 Stat. 1132, 12 U. S. C. § 1864, which forbids bank service corporations to "engage in any activity other than the performance of bank services for banks." See 397 U. S., at 155. In so holding, the Court relied on a brief excerpt from the legislative history of § 4 indicating that Congress intended to enforce adherence to "the accepted public policy which strictly limits banks to banking." Ibid, (internal quotations omitted). The data processors were therefore permitted to litigate the validity of the Comptroller's ruling.
The "zone of interest" formula in Data Processing has not proved self-explanatory, but significant guidance can nonetheless be drawn from that opinion. First. The Court interpreted the phrase "a relevant statute" in § 702 broadly; the data processors were alleging violations of 12 U. S. C. § 24 Seventh, see 397 U. S., at 157, n. 2, yet the Court relied on the legislative history of a much later statute, §4 of the Bank Service Corporation Act of 1962, in holding that the data processors satisfied the "zone of interest" test. Second. The Court approved the "trend . . . toward [the] enlargement of the class of people who may protest administrative action." 397 U. S., at 154. At the same time, the Court implicitly recognized the potential for disruption inherent in allowing every party adversely affected by agency action to seek judicial review. The Court struck the balance in a manner favoring review, but excluding those would-be plaintiffs not even "arguably within the zone of interests to be protected or regulated by the statute . . . ." Id., at 153.
The reach of the "zone of interest" test, insofar as the class of potential plaintiffs is concerned, is demonstrated by the subsequent decision in Investment Company Institute v. Camp, 401 U. S. 617 (1971). There, an association of open-end investment companies and several individual investment companies sought, among other things, review of a Comptroller's regulation that authorized banks to operate collective investment funds. The companies alleged that the regulation violated the Glass-Steagall Banking Act of 1933, which prohibits banks from underwriting or issuing securities. See 12 U. S. C. §24 Seventh. The Comptroller urged that the plaintiffs lacked standing, to which the Court responded that plaintiffs not only suffered actual injury but, as in Data Processing, suffered injury from the competition that Congress had arguably legislated against by limiting the activities available to national banks.
Discount brokers execute trades on behalf of their customers but do not offer investment advice. As a result, the commissions they charge are substantially lower than those charged by full-service brokers. See Securities Industries Assn. v. Board of Governors, FRS, 468 U. S. 207, 209, n. 2 (1984).
The Comptroller relied primarily on the fact that banks publicly solicit deposits and use deposited funds in lending, while credit balances maintained by brokers are not, as such, directly solicited from the public, and are subject to regulatory restrictions regarding use by brokers. See the Securities Investor Protection Act, 15 U. S. C. § 78aaa et seq. (restricting advertising, promotional, and selling practices of brokers regarding interest-bearing free credit balances); 17 CFR § 240.15c3-2 (1986) (regulating the use of credit balances by brokers).
Although the Comptroller believed that § 36(f) should be read narrowly to define "branch" only with reference to receiving deposits, making loans, and cashing checks, he recognized that there is authority supporting a broader reading. In St. Louis County National Bank v. Mercantile Trust Company National Assn., 548 F. 2d 716 (CA8 1976), cert. denied, 433 U. S. 909 (1977), a trust office operated by a national bank was held to be a branch. While disagreeing with this holding, the Comptroller took the position that it "should at the very least be limited to those dealings with the public requiring a specialized banking or similar license." App. D to Pet. for Cert, in No. 85-971, pp. 43a-44a.
A month later, the Comptroller approved without comment the application of Union Planters to acquire an existing brokerage firm. App. E to Pet. for Cert. in No. 85-971, p. 47a.
Respondent also contended that national banks are entirely prohibited from offering discount brokerage services by the Glass-Steagall Act, 12 U. S. C. §24 (1982 ed. and Supp. III); 12 U. S. C. §78, 377, 378. This contention was rejected by the District Court, a holding that is not before us.
The Comptroller also argued unsuccessfully that respondent could show no injury, and thus had not presented the court with a "case or controversy" within the meaning of Article III. The Comptroller has since abandoned this argument.
The dissenting judge argued that there was no standing, as he did in dissenting, with two other judges, from the denial of en bane rehearing. In his view, the purpose of the McFadden Act is to establish competitive equality between national and state banks as regards branching, and while "state banks (and state banking commissions) are obviously within the zone of interests protected by the statute,. . . the brokerage houses suing in the present case are no more within it than are businesses competing for the parking spaces that an unlawful branch may occupy." 247 U. S. App. D. C., at 43, 765 F. 2d, at 1197. The dissenter also argued that the indefinite language of § 36(f) "presents precisely the situation in which our deference to the agency should be at its height" id., at 44, 765 F. 2d, at 1198, and concluded that the Comptroller's construction of the statute "cannot by any means be considered unreasonable" and therefore should be affirmed if respondent is held to have standing. Ibid.
"Congress can, of course, resolve the question [of standing] one way or another, save as the requirements of Article III dictate otherwise." 397 U. S., at 154.
Section 402(b) of the Communications Act of 1934, as amended, 47 U. S. C. § 402(b), is an example of a statute granting an explicit right of review to all persons adversely affected or aggrieved by particular agency actions (there, licensing actions by the Federal Communications Commission). See generally FCC v. Sanders Bros. Radio Station, 309 U. S. 470 (1940).
We have most recently reaffirmed this liberal reading of the review provisions of the APA in Japan Whaling Assn. v. American Cetacean Society, 478 U. S. 221 (1986). There, the Cetacean Society sought judicial review of the Secretary of Commerce's refusal to carry out his alleged duty, under the Pelly Amendment to the Fishermen's Protective Act of 1967, to certify Japan for taking actions that diminished the effectiveness of the International Convention for the Regulation of Whaling. The Secretary contended, among other things, that the Cetacean Society had no private cause of action under the Pelly Amendment. We rejected this argument, holding that respondents had a right of action "expressly created by the Administrative Procedure Act (APA), which states that 'final agency action for which there is no other adequate remedy in a court [is] subject to judicial review,' § 704, at the behest of'[a] person . . . adversely affected or aggrieved by agency action.' " Id., at 231, n. 4. We held further, with citations to such previous decisions as Block v. Community Nutrition Institute, 467 U. S. 340 (1984), that "[a] separate indication of congressional intent to make agency action reviewable under the APA is not necessary; instead, the rule is that the cause of action for review of such action is available absent some clear and convincing evidence of legislative intention to preclude review." Japan Whaling, supra, at 231, n. 4.
Subsequently, in Arnold Tours, Inc. v. Camp, 400 U. S. 45 (1970), the Court held that, under the rationale of Data Processing, travel agents have standing to challenge the Comptroller's decision to allow banks, pursuant to their incidental powers under 12 U. S. C. § 24 Seventh, to provide travel services to their customers. The Court found it of no moment that Congress never specifically focused on the interests of travel agents in enacting §4 of the Bank Service Corporation Act. 400 U. S., at 46, and n. 3.
The zone test has also been the subject of considerable scholarly writing, much of it critical. See, e. g., 4 K. Davis, Administrative Law Treatise § 24:17 (2d ed. 1983); Stewart, The Reformation of American Administrative Law, 88 Harv. L. Rev. 1667, 1731-1734 (1975); Albert, Standing to Challenge Administrative Action: An Inadequate Surrogate for Claim for Relief, 83 Yale. L. J. 425 (1974); Scott, Standing in the Supreme Court — A Functional Analysis, 86 Harv. L. Rev. 645 (1973); Jaffe, Standing Again, 84 Harv. L. Rev. 633, 634, and n. 9 (1971).
The Court's concern was to ensure that the data processors' association would be "a reliable private attorney general to litigate the issues of the public interest in the present case." 397 U. S., at 154. The language quoted is directed most immediately to the inquiry whether sufficient concrete adversity existed in the case to satisfy Article III. However, the concern that the plaintiff be "reliable" carries over to the "zone of interest" inquiry, which seeks to exclude those plaintiffs whose suits are more likely to frustrate than to further statutory objectives.
The Court stated:
"This contention [that plaintiffs lack standing] is foreclosed by Data Processing Service v. Camp, 397 U. S. 150. There we held that companies that offered data processing services to the general business community-had standing to seek judicial review of a ruling by the Comptroller that national banks could make data processing services available to other banks and to bank customers. We held that data processing companies were sufficiently injured by the competition that the Comptroller had authorized to create a case or controversy. The injury to the petitioners in the instant ease is indistinguishable. We also concluded that Congress did not intend 'to preclude judicial review of administrative rulings by the Comptroller as to the legitimate scope of activities available to national banks under [the National Bank Act].' 397 U. S., at 157. This is precisely the review that the petitioners have sought in this case. Finally, we concluded that Congress had arguably legislated against the competition that the petitioners sought to challenge, and from which flowed their injury. We noted that whether Congress had indeed prohibited such competition was a question for the merits. In the discussion that follows in the balance of this opinion we deal with the merits of petitioners' contentions and conclude that Congress did legislate against the competition that the petitioners challenge. There can be no real question, therefore, of the petitioners' standing in the light of the Data Processing case. See also Arnold, Tours v. Camp, 400 U. S. 45." 401 U. S., at 620-621.
In the discussion of the merits that followed, the Court interpreted the Glass-Steagall Act as reflecting "a [congressional] determination that policies of competition, convenience, or expertise which might otherwise support the entry of commercial banks into the investment banking business were outweighed by the 'hazards' and 'financial dangers' that arise when commercial banks engage in the activities proscribed by the Act." Id., at 630 (footnote omitted). The Court described these "hazards" primarily in terms of the danger to banks of making imprudent investments or risky loans, as well as the dangers of possible loss of public confidence in banks and the danger to the economy as a whole of speculation fueled by bank loans for investment purposes. Id., at 629-634.