Court Opinion

ID: 6945714
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:25:24.309391+00
Date Added: 2024-06-11T16:07:54.018231
License: Public Domain

JONES, Circuit Judge,
dissenting.
This case involves the interpretation of the Federal Credit Union Act, a statute administered by the National Credit Union Administration (“NCUA”). I believe that the text of the common bond provision is ambiguous and that the district court properly determined that the National Credit Union Administration’s (“NCUA”) interpretation of the common bond provision is reasonable. Because I believe that this case must be examined under both prongs of the doctrine articulated in Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), I must respectfully dissent from the majority’s opinion reversing the judgment of the district court. Instead, I would affirm the judgment of the district court.
The Chevron decision requires that courts undertake a two-step process in reviewing an agency’s interpretation of a statute that it is entrusted to administer. The first step is to determine “whether Congress has directly spoken to the precise question at issue. Chevron, 467 U.S. at 842, 104 S.Ct. at 2781. If Congress has clearly addressed the issue, courts must “give effect to the unambiguously expressed intent of Congress.” Id. at 842-43, 104 S.Ct. at 2781-82. If the court determines that Congress has not “directly addressed the precise question at issue,” the court must then-reach the second prong of the Chevron test and determine the reasonableness of the agency’s interpretation of the statute. Id. This court has adopted the Chevron standard. See e.g., Nationwide Mut. Ins. Co. v. Cisneros, 52 F.3d 1351, 1356 (6th Cir.1995), cert. denied, — U.S. -, 116 S.Ct. 973, 133 L.Ed.2d 893 (1996); Garcia v. Secretary of Health and Human Services, 46 F.3d 552, 555 (6th Cir.1995).
In the case at bar, the statutory provision at issue is ambiguous. The statute provides: “[fjederal credit union membership shall be limited to groups having a common bond of occupation or association.” 12 U.S.C. § 1759 (emphasis added). In determining whether Congress has addressed the common bond requirement, this court should look to the plain meaning of the statute and the legislative history. See Chevron, 467 U.S. at 859-63, 104 S.Ct. at 2790-92. Neither of these sources expresses the clear intent of Congress concerning the common bond provision.
Unlike the majority in this case and the D.C. Circuit in First Nat’l Bank & Trust Co. v. National Credit Union Administration, 90 F.3d 525 (D.C.Cir.1996), cert. granted, - U.S. -, 117 S.Ct. 1079, 137 L.Ed.2d 215 (1997). I do not believe that the words of the statute clearly and unambiguously define the common bond requirement. The majority rejects the syntactical arguments raised by both parties and bases its decision on the relationship between the occupational clause and the community clause. Maj.Op. at 438. The majority concludes that because the two clauses have a similar syntactical structure, the “two ought to be interpreted consistently.” Id. This is not clear from the words of the statute.
Athough the majority contends that this is a Chevron step 1 case, the majority, never*440theless, utilizes a Chevron step 2 analysis. The majority’s argument that the terms of the occupational and community-based clauses should be interpreted consistently goes to the reasonableness of the NCUA’s interpretation of the statute rather than to a consideration of whether the words of the statute are clear on their face. In fact, the majority notes that “[t]he only reasonable way to read these two phrases, one following on the heels of the other, is as the FNBT II court does.” Maj.Op. at 438. This is a Chevron step 2 analysis determining whether the NCUA’s interpretation of the statute is reasonable. This syntactical argument does not support the position that the words of the common bond provision are clear on their face.
The common bond provision can be read one of two ways. Either the provision requires that each group in a credit union have a bond with the other groups in the credit union, or the provision requires that each group joining a credit union have a common bond among the members of the group, but not necessarily a common bond with the other groups in the credit union. The statute does not clearly establish the unambiguous congressional intent concerning the common bond requirement and determine which reading of the statute is appropriate. I agree with the . district court’s conclusion that “[wjhen an agency’s interpretation is one of two plausible alternatives, the statute is ambiguous.” First City Bank v. National Credit Union Admin., 897 F.Supp. 1042, 1044 (M.D.Tenn.1995).
The language of the statute simply indicates that credit unions are to be formed based on common bonds of occupation or community. The words of the statute do not go so far as to define the limits of the common bond requirement. I believe that the majority’s conclusion that the terms of the common bond provision and the community provision must be interpreted in exactly the same way is reading more into the statute than the actual words suggest. The statute does not define the contours of the common bond requirement and offers no clear answer to the question at bar. As a result, we must conclude that Congress has not “directly spoken to the precise question at issue.”
In addition, the legislative history of the common bond requirement does not clarify the ambiguity in the words of the statute. I agree with the majority that the legislative history of the common bond requirement is murky at best and does not demonstrate a clear intention concerning the common bond provision.
This court has previously recognized that the NCUA is given the authority to regulate credit union membership. Community First Bank v. National Credit Union Administration, 41 F.3d 1050, 1055 (6th Cir.1994). In Community First Bank, this court examined the regulations promulgated by the NCUA concerning community-based credit unions and concluded that the NCUA’s regulations constituted a permissible interpretation of the word “community.” Id. While this court did not explicitly conduct a Chevronmqxúry, it appears that the court concluded that the words of the statute were ambiguous because it engaged in a determination of whether the NCUA’s interpretation of the word “community” was reasonable, the second prong of Chevron. M(“The NCUA’s regulations defining ‘community’ (a clearly defined geographical area whose residents identify it as a distinct area) constitute a permissible definition of community.”). I believe that a similar inquiry is necessary in this case, as we must decide whether the NCUA’s interpretation of the common bond provision is reasonable.
Neither the words nor the legislative history of the common bond provision clearly evidence the intent of Congress. Therefore, it is necessary to determine whether the NCUA’s interpretation of the common bond provision is reasonable. The interpretation of the common bond provision is embodied in an interpretive ruling rather than a regulation promulgated by the NCUA. An interpretive ruling is not entitled to the same amount of deference as given to a regulation. Threlkeld v. Commissioner, 848 F.2d 81, 84 (6th Cir.1988). However, this does not mean that interpretive rulings are not entitled to any deference at all. In CenTra, Inc. v. United States, this court noted that an IRS *441revenue ruling is “entitled to some deference unless ‘it conflicts with the statute it supposedly interprets or with that statute’s legislative history or if it is otherwise unreasonable.’” 953 F.2d 1051, 1056 (6th Cir.1992) (quoting Threlkeld, 848 F.2d at 84). The standard of “some deference” enunciated in CenTra is applicable to the NCUA interpretive ruling at issue in this case. While the NCUA’s interpretive ruling is not entitled to presumptive deference, because it is an interpretive ruling rather than a regulation, it is, nevertheless, entitled to “some deference.”
It is a clearly established legal principle that courts accord deference to an agency’s interpretation of a statute that it is entrusted to administer. See Chevron, 467 U.S. at 842-45, 104 S.Ct. at 2781-83 (giving deference to the Environmental Protection Agency’s interpretation of the Clear Air Act Amendments); Smiley v. Citibank (South Dakota), N.A., — U.S. -, -, 116 S.Ct. 1730, 1733, 135 L.Ed.2d 25 (1996) (giving deference to the regulations of the Comptroller of the Currency); Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1355 (6th Cir.1994) (giving deference to the Secretary of Agriculture’s amendments to the Agricultural Marketing Agreement Act of 1937), cert. denied, — U.S. -, 116 S.Ct. 50, 133 L.Ed.2d 15 (1995). This deference is required even if the court would have reached a different conclusion than the administrative agency. “The court need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding.” Chevron, 467 U.S. at 843 n. 11, 104 S.Ct. at 2782 n. 11 (citations omitted). Thus, this court cannot strike down the NCUA’s interpretation of the common bond provision because it would have interpreted the clause differently; instead, we must give deference to the NCUA’s interpretation as long as it is reasonable.
To determine the reasonableness of the NCUA’s common bond policy, we must examine the policy within the context of the Federal Credit Union Act as a whole. Chevron, 467 U.S. at 864-65, 104 S.Ct. at 2792-93. The purpose of the Federal Credit Union Act as set forth in 1934 at the time of its enactment was to:
establish a Federal Credit Union System, to establish a further market for securities of the United States and to make more available to people of small means credit for provident purposes through a national system of cooperative credit, thereby helping to' stabilize the credit structure of the United States.
Federal Credit Union Act, Pub.L. 73^467, 48 Stat. 1216 (1934) (codified with some differences in language at 12 U.S.C. §§ 1751-1795). It is helpful to trace the socio-eco-nomic background of the credit union movement when looking to the reasonableness of the NCUA’s interpretation of the common bond provision.
Credit unions experienced steady growth from the enactment of the Federal Credit Union Act in 1934 until the 1970’s. At the end of the 1970’s credit unions were hit with the impact of rising interest rates, which affected the entire financial services industry. A. Burger & T. Daein, Field of Membership: An Evolving Concept, Center for Credit Union Research, University of Wisconsin-Madison School of Business, at 25 (2d ed. 1992). The rise in interest rates increased the competition for customers between banks and credit Unions.
In 1979, the rate of growth was slowed at all financial institutions but credit unions were especially hard hit. Id. at 27. In the period of 1978-79, credit unions had changed from being the fastest growing financial institution -in 1978 to the second slowest growing financial institution in 1979. Id. As a result of these economic considerations, many credit unions limited their consumer lending. Id. In 1981, an economic recession developed, which continued into 1982. Id. at 29.
The 1982 adjustment to the common bond policy was a response to the volatile economic conditions of the late 1970’s and early 1980’s. The revision of the common bond interpretation allowed groups to join existing credit unions if they did not have the number of members to make an individual credit union economically feasible. The revision protected against two potential problems. *442First, it allowed credit unions to shield themselves from the economic consequences of wide-spread layoffs or plant closings of a particular employer. Second, it allowed credit unions to create economies of scale to provide services to its members in the most cost effective manner available. Without the more expansive interpretation of the common bond provision many credit unions would have failed, and many other groups would not have been able to attain credit union services. These effects would have been clearly inconsistent with the Congressional intent to make credit available to those with limited means.
The NCUA is entrusted with the administration of federal credit unions. 12 U.S.C. § 1766(a). It is authorized to charter, examine, and prescribe rules and regulations for the administration of the Federal Credit Union Act. Id. In Interpretive Ruling and Policy Statement 82-1, the NCUA permitted occupational credit unions to accept members of different occupational groups as long as the following guidelines are met:
1) The occupational groups to be included (new charter) or added (amendment, merger, conversion) have specifically requested credit union service. 2) The applicant demonstrates that credit union service can be provided and that each group wishes to be served by the applicant. 3) All the occupational groups to be included (new charter) or added (amendment, merger, conversion) are located within a well defined area. 4) The applicant has adequately supported the proposal as economically feasible and advisable.
47 Fed.Reg. 16775 (1982). In addition, the NCUA Interpretive Ruling and Policy Statement 89-1 states:
[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. The select groups themselves may be either employee (occupational) groups or associational groups. However, a select group for expansion purposes cannot be defined by a common bond of community. The group’s common bond need not be similar to the common bond(s) of the existing Federal credit union.
54 Fed.Reg. 31165, 31176 (1989). Each of these rulings was intended to clarify the interpretation of Sections 107(14) and 109 of the Federal Credit Union Act. 47 Fed.Reg. 16775, 16775 (1982); 54 Fed.Reg. 31165, 31165 (1989).
The common bond approach adopted by the NCUA is a reasonable policy choice in light of the economic circumstances discussed above. Therefore, it is entitled to deference by this court.
Finally, it is immaterial that the NCUA interpreted the common bond provision in the manner that the majority suggests from 1934 until 1982. The Supreme Court has noted:
[o]f course the mere fact that an agency interpretation contradicts a prior agency position is not fatal. Sudden and unexplained change ... may be “arbitrary, capricious [or] an abuse of discretion____” But if these pitfalls are avoided, change is not invalidating, since the whole point of Chevron is to leave the discretion provided by the ambiguities of a statute with the implementing agency.
Smiley v. Citibank (South Dakota), N.A., — U.S. -, -, 116 S.Ct. 1730, 1734, 135 L.Ed.2d 25 (1996) (citations omitted). Similarly in Rust v. Sullivan, 500 U.S. 173, 186-87, 111 S.Ct. 1759, 1768-69, 114 L.Ed.2d 233 (1991), the Supreme Court rejected the idea that agency principles must last forever. The Court observed that agencies “must be given ample latitude to ‘adapt [its] rules and policies to the demands of changing circumstances.’” /¿.(citation omitted). Agency policies are not etched in stone. An agency is permitted to change its policies to address continually changing circumstances. The NCUA’s decision was not arbitrary or capricious nor was it an abuse of discretion. As a result, the change is not “invalidating.”
We should AFFIRM the judgement of the district court determining that the NCUA’s interpretation is reasonable under the two-step approach enunciated in Chevron.