Opinion ID: 328133
Heading Depth: 2
Heading Rank: 4

Heading: Application of the Controlling Influence Test

Text: 37 Assuming arguendo that the section 1841(d)(3) definition of  subsidiary does apply to subsidiary as it appears within the grandfather proviso, counsel for the Board have advanced two additional arguments concerning the proper application of the controlling influence test which, if correct, might serve to validate the Board's June 29, 1973, order of divestiture. Initially we note that these arguments are not mentioned in the Board Secretary's July 6, 1973, letter as rationales upon which the Board based its decision with respect to Patagonia. Rather, the arguments are counsels' post hoc rationalizations for the Board's action. As such, they are entitled to careful consideration, but not to the great weight accorded to carefully considered and articulated views set forth by the Board. Investment Company Institute v. Camp, 401 U.S. 617, 627-28, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971). 38 First, counsel contend that even if the Board were to determine that Patagonia exercised a controlling influence over Pima, the determination could be effective only as of the date it was rendered. Counsel assert that the determination could not relate back to June 30, 1968. In support of this argument, counsel cite the Board's decision in Ribsco, Inc., 38 Fed.Reg. 7092 (1973), in which the Board stated that a controlling influence determination could not relate back to a date before its making. 39 As discussed earlier, however, the Board's primary holding in Ribsco was that section 1841(a)(2)(C) does not entitle a holding company to a Board determination as to whether it exercised a controlling influence over a bank on June 30, 1968, for the purpose of conferring grandfather benefits. In Ribsco, the Board carefully stated its view that Congress added section 1841(a)(2)(C) to the Act only for the purpose of expanding the Board's jurisdiction. The Board's statement that a controlling influence determination cannot relate back to a date beyond its making was merely a corollary to the Board's principal position concerning the limited applicability of the controlling influence test. 40 It is true that when the Board undertakes a controlling influence determination for the purpose of extending its regulation to a bank holding company or a bank holding company subsidiary, the determination would need to be effective only as of the date of its making. Since we have rejected the Board's view that the controlling influence test cannot be applied for the purpose of conferring grandfather benefits, however, the Board's relation-back corollary also must fall. When the Board undertakes a controlling influence determination for the purpose of ascertaining a holding company's eligibility for grandfather benefits, the issue before the Board must be whether the asserted controlling influence existed on June 30, 1968, regardless of when the Board's determination is made. 41 Second, the Board's counsel argue that if the Board must determine whether Pima was Patagonia's subsidiary on June 30, 1968, it may do so only by applying the definitions of subsidiary that the Act contained on that date. As we have previously said, those definitions required the holding company either to vote 25 percent of the subsidiary's stock or elect a majority of the subsidiary's directors. See 12 U.S.C. §§ 1841(d)(1)-(d)(2) (1970). Counsel offer little support for this argument, and we have found none, either in the statute or the legislative history. The argument, again, would have the effect of rendering the controlling influence test a nullity within the context of the grandfather proviso, and we simply cannot believe that Congress intended such a result. Counsel brand the view that the Board could apply the controlling influence test to facts in existence on June 30, 1968, as a retroactive application of the 1970 Amendments, attempting, perhaps, to raise the traditional presumption against retroactivity. See, e. g., United States v. Perry, 431 F.2d 1020, 1023 (9th Cir. 1972). The attempt misses the mark. That a statute's operation depends, as here, upon the existence of antecedent facts does not give retroactive effect to the statute. Cox v. Hart, 260 U.S. 427, 435, 43 S.Ct. 154, 67 L.Ed. 332 (1922); Lohf v. Casey, 466 F.2d 618, 620 (10th Cir. 1972).