SCRANTON, Pa.-The defendants' filings opposing the American Bankers Association's request for discovery in the court challenge to the community charter approved for Members 1st Federal Credit Union are in and now it is the ABA's turn for rebuttal.
The Department of Justice, on behalf of NCUA, filed a memorandum May 22 refuting the ABA's request for discovery under the Administrative Procedures Act. The intervenors in the case-CUNA, NAFCU, the Pennsylvania Credit Union Association, Members 1st Federal Credit Union, AmeriChoice Federal Credit Union, and New Cumberland Federal Credit Union-filed a simultaneous brief.
NCUA General Counsel Bob Fenner said discovery was "uncalled for as a matter of law." He added that the agency has nothing to worry about should discovery be permitted and the charters would not have been granted if they did not meet the requirements. According to the NCUA's brief, "In cases under the APA, including a challenge to an agency's grant or denial of a license, a court must uphold the agency's decision unless it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." This is a standard that encompasses a substantial degree or deference in favor of agency decisionmaking." The Supreme Court and the Third Circuit, which encompasses Pennsylvania, have held the position that de novo review in this scenario is inappropriate, NCUA's brief pointed out.
The APA's narrow exceptions do not apply here, according to the defendants, as the plaintiffs have asserted. In its filing, ABA had stated, "A reviewing court may also consider evidence not included in the administrative record when.the evidence is needed to demonstrate how the agency failed to consider all relevant factors." (See CU Times, May 17, 2006 issue, page 13)
However, the agency's brief argued that this is "applied only in `exceptional circumstances.' " The main exception is where the " bare administrative record [does] not disclose the factors considered by an agency." This exception is a narrow one, requiring the administrative record to be so inadequate that judicial review is effectively prohibited."
NCUA states that even if the agency's record prevents judicial review, it would not result in a trial de novo, but remand it to the agency. This is what occurred in a similar lawsuit decided at the end of 2004, when the ABA challenged NCUA's approval of a large community charter for four Utah credit unions; in that situation, the larger community charters were revoked by the agency. Defendants in this case have stated strongly that the facts of the case are very different from those in Utah.
The ABA also argued that the agency's findings were biased against the bankers, which the agency dismissed out of hand "as NCUA had no obligation to prove such procedural protections under the FCUA" as to initiate a public notice and comment period for the consideration of a possible charter amendment.
The bankers also charge that NCUA was coaching Members 1st on its application by suggesting the I-83 corridor as a community, recommending the omission of irrelevant information, a supplemental documentation is needed for commuting and traffic patterns. On the other hand, the agency defended itself from ABA's "cheerleader" accusations, emphasizing that it had initially turned down the credit union's original application for eight counties.
NCUA also looked for further information in the application for the approved field of membership. "NCUA's requests for analysis or discussion of these major areas show that the draft application was not readily accepted by NCUA without critical analysis," the brief read.
NCUA also said that materials for "judicial notice" were improper in APA cases.
The intervenors' brief made many of the same points and even cited some of the same cases. "The record compiled by NCUA is more than adequate to show that there is a rational basis for NCUA's decisions, and that is the only question before the court," CUNA General Counsel Eric Richard stated. "NAFCU believes that the Banker's motion for discovery in this matter is not appropriate and should be denied by the court. NCUA acted in accordance with the law in approving the community charters of Members 1st, New Cumberland and AmeriChoice Federal Credit Unions," NAFCU Senior Counsel and Director of Regulatory Affairs Carrie Hunt agreed. Richard added, "The bankers' brief throws a lot of stuff at the wall in the hope that maybe something will stick. Our brief, by contrast, focuses on the key elements of the law that applies to this situation. It explains very clearly what we think should take place here: a limited and respectful review by the court of a duly considered administrative decision by NCUA." The plaintiffs have until June 12 to file their response, according to an NCUA spokesperson. The ABA did not return requests for comment on the case in time for press.
-scooke@cutimes.com
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