Court Opinion

ID: 6370809
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:45:49.173813+00
Date Added: 2024-06-11T15:49:27.379584
License: Public Domain

Concurring and Dissenting Opinion by
Judge Craig:
I concur with the court’s reversal of the decision of the Secretary of the Department of Banking; however, because I conclude that the Department cannot define and authorize additional permissible activities for savings and loan service corporations without the valid promulgation of regulations, I cannot concur with the majority’s remand for “proper adjudications. ’ ’
As the majority notes, the legislative grant of authority enabling the Department to define service corporations and their activities is in general terms. Sec*583tion 922 (n) of the Savings Association Code, Act of December 14,1967, P.L. 746, as amended, 7 P.S. §6020-162(n). The Department exercised that authority in 10 Pa. Code §37.1, listing quite specifically the activities of service corporations deemed to be permissible at that point:
[T]he activities of a service corporation shall consist of originating, purchasing, selling - and servicing loans upon real estate and participating interests therein, or performing clerical, bookkeeping, accounting, statistical, or similar functions primarily for associations and Federal savings and loan associations.
Notably, the regulation does not mention third party brokerage as a permissible activity. However, the majority concludes that the Department may also now proceed to define permissible activities by individual adjudications, citing only Budzinski v. Department of Public Welfare, 39 Pa. Commonwealth Ct. 176, 394 A.2d 1333 (1978). Although Budsinski did reiterate general language to the effect that administrative agencies have wide discretion in the discharge of their duties, it did not involve an agency pursuing its legislative mandate on a case-by-case basis; rather, the petitioner there challenged a decision which the agency had reached by relying on its duly promulgated regulations.
Our Supreme Court has declared, albeit in a constitutional context, that an administrative agency should pursue its definition and interpretation of statutory provisions “by means of [its] statutorily granted rule-making powers. . . .” Pennsylvania State Board of Pharmacy v. Cohen, 448 Pa. 189, 198, 292 A.2d 277, 281-82 (1972).
The Supreme Court specifically rejected the Pharmacy Board’s cotention that its legislative authority *584to “regulate the practice of pharmacy” empowered it to proceed on an ad hoc basis, stating that:
Neither the legislatively chosen agency, here the Board, nor the courts may imagine rules or standards for conduct not properly adopted and announced in advance. To hold otherwise is to substitute for either statute or rule a purely subjective criterion which may reflect merely the personal or professional views of individual members of the Board.
448 Pa. at 200, 292 A.2d at 282.
In his Administrative Law Treatise, Kenneth C. Davis cites the State Board of Pharmacy case in his discussion of judicially mandated administrative rule-making, observing that:
The court may permit the agency to do its rulemaking under the vague statutory standard, but the court may forbid the agency to make individual determinations without first doing what it reasonably can do, by rulemaking or otherwise, to give specific meaning to the vague statutory standard.
1 K. Davis, Administrative Law Treatise §3:9 (2d ed. 1978).
After the State Board of Pharmacy case, this court invalidated agency actions because they were not grounded on regulations duly promulgated under the act formerly known as the Commonwealth Documents Law, Act of July 31, 1968, P.L. 769, as amended, 45 P.S. §§1101-1602.
In Newport Homes, Inc. v. Kassab, 17 Pa. Commonwealth Ct. 317, 332 A.2d 568 (1975), this court concluded that an agency’s “final directive” represented an internal policy codifying the agency’s statutorily granted discretion. The court reasoned that the di*585rective’s general applicability and future effect placed it precisely within the statutory definition of a regulation, and therefore, the agency’s failure to comply with the procedures for the promulgation of regulations rendered its directive a nullity.
'Similarly, in Elkin v. Department of Public Welfare, 53 Pa. Commonwealth Ct. 554, 419 A.2d 202 (1980), the court determined that an unpublished internal agency memorandum interpreting federal law was a “regulation” under the Commonwealth Documents Law, and because the memorandum had not been properly promulgated, it could not provide a lawful basis for the agency’s determination.
The facts in the present case bring it squarely in ■line with our earlier decisions. The Department had initially announced the permitted activities for service corporations by valid regulation; its subsequent decision to augment that list by adding third party brokerage was the same kind of action, requiring the promulgation of regulations.
The parties agree that the Department had made a decision that it would permit third party brokerage before any service corporation filed an application. The majority characterizes that decision as a “general policy,” relying on Pennsylvania Human Relations Commission v. Norristown Area School District, 473 Pa. 334, 374 A.2d 671 (1977).
In the Human Relations Commission case, this court recognized the difficulty of distinguishing a general policy statement from a regulation and concluded that the commission’s “guidelines” and “recommended elements” for public school desegregation were policy statements and thus did not require promulgation. In reaching its decision, the court considered the “language and form of the guidelines as well as the Commission’s characterization and *586treatment” of them. Pennsylvania Human Relations Commission, 473 Pa. at 347, 374 A.2d at 678.
Because the Department did not express its advance decision in writing, we do not have its “language or form” to aid our interpretation; however, the Department’s treatment of that decision is instructive.
The evidence indicates that the Department received six applications from service corporations seeking approval of third party brokerage activities. The Department approved each of those applications with out giving individual attention to the applicant’s financial standing or regulatory status, as the Secretary’s opinion acknowledged. Indeed, the process was so perfunctory that one service corporation received approval before it had made a formal application, apparently on the strength of an oral request.
The Department’s actions here were far more than mere inartful attempts at adjudications under a general policy; its summary approach to the implementation of its decision compels the conclusion that the Department has been giving ad hoc approval to service corporations ’ applications pursuant to a new and significant — but undefined — course of action, adding third party brokerage to the scope of permissible activities.
The danger of ad hoc approval actions is that they are susceptible to a lack of uniformity and possible discrimination.
Hence, I concur with the reversal of the Secretary’s decision and dissent from the majority only to the extent that the order of court remands the case for further administrative proceedings without the promulgation of regulations.
Judge Barky joins in this concurring and dissenting opinion.