Opinion ID: 185991
Heading Depth: 3
Heading Rank: 1

Heading: The Farm Credit Act

Text: 22 Section 2013(12)(C) of Title 12 authorizes an FCB to participate with non-System lenders in loans that the bank is authorized to make under this subchapter. The plaintiffs argue that the Final Rule does not authorize an FCB to make a direct loan to an out-of-territory borrower without the consent of the System institutions located in the borrower's territory. Therefore, it reasons, an FCB is not authorized to make such a direct loan under this subchapter, and the rule, by authorizing it to participate in such a loan, runs afoul of the statute. The FCA responds that, because Subchapter I of the Act, 12 U.S.C. §§ 2011-2023, authorizes an FCB to make certain long-term real estate mortgage loans, id. § 2015(a)(1), section 2013(12)(C) simply restricts FCBs to participating in that type of out-of-territory loan. 23 In order to determine whether the FCA's interpretation of the Act it administers is permissible, we look to the standard set out 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). At Chevron step one, we ask whether the Congress has directly spoken to the precise question at issue, id. at 842, 104 S.Ct. 2778; if so, then we must give effect to [its] unambiguously expressed intent. Id. at 843, 104 S.Ct. 2778. If the intent of the Congress is ambiguous with respect to the question before us, then at Chevron step two we defer to the FCA's interpretation so long as it is based on a permissible construction of the statute. Id. 24 The plaintiffs argue that the plain statutory text prohibits an FCB from enter[ing] into a participation loan if the [FCB] could not make the loan as a direct loan. Not quite. The plain statutory text states that an FCB may not participate in a loan if that loan is one that the bank is [not] authorized to make under Subchapter I. This of course surfaces the question obscured by the plaintiffs' formulation: Authorized by what? The statute itself authorizes FCBs to make certain long-term real-estate mortgage loans, but the FCA, exercising its delegated authority to promulgate regulations implementing the Act, restricted FCBs to a subset of those loans. Thus the disputed statutory phrase, loans that the bank is authorized to make under this subchapter, is susceptible to at least two interpretations. It might mean either authorized [by the statute, as limited by the applicable regulations,] to make under this subchapter, or it might mean authorized to make under this subchapter [without regard to any limiting regulations]. We conclude that in these circumstances the intent of the Congress is unclear; it did not speak directly to the precise issue before us. 25 Nothing in the legislative history of § 2013(12)(C) changes our view of the statute. The plaintiffs point to the following statement in the Senate Report: land banks could partici[p]ate with nonsystem lenders only in real estate mortgage loans that the land banks are authorized to make under the Act. S.Rep. No. 96-837, at 14 (1980). The plaintiffs argue that if the Congress had intended the meaning now urged by the FCA, then it would have ended this statement after the word loans because the remainder would be superfluous. But that is not correct because § 2015(a)(1) does not authorize FCBs to make any and all real estate mortgage loans. Instead it authorizes FCBs to make such loans in rural areas... or to producers or harvesters of aquatic products. Because the Act allows FCBs to participate only in a subset of real estate mortgage loans, the remainder of the sentence is not superfluous even upon the FCA's interpretation; it invokes the limitation just quoted. 26 Having determined in Chevron step one that the Congress did not directly address the question at issue, we move briefly to Chevron step two. We need only say that, for the reasons stated above, we think the FCA's interpretation is reasonable. 27 The plaintiffs next claim the FCA's interpretation of § 2013(12)(C) is not entitled to Chevron deference because the Agency first presented that interpretation in this litigation. Although we would not defer to the mere litigating position of agency counsel, see, e.g., Inv. Co. Inst. v. Camp, 401 U.S. 617, 627-28, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971), that is not what the FCA has urged here. The Agency itself has long interpreted § 2013(12)(C) to authorize an FCB to participate with a non-System lender in a loan of the type it is authorized to make under title I of the Act. See 12 C.F.R. § 614.4000(d)(1).