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November 14, 1961

FEDERAL HOME LOAN BANK BOARD and Quaker City Federal Savings and Loan Association

The opinion of the court was delivered by: KRAFT

This is an action by Bridgeport Federal Savings and Loan Association ('Bridgeport') for declaratory and injunctive relief against the Federal Home Loan Bank Board ('Board') and Quaker City Federal Savings and Loan Association ('Quaker City'), following the Board's approval of Quaker City's application to establish a branch office. The case is before us on defendants' motions to dismiss.

 Bridgeport contends that in the conduct of the hearings the Board failed to comply with the requirements of the Administrative Procedure Act ('APA') in several particulars. It complains, inter alia, of the Board's refusal to issue subpoenas duces tecum at Bridgeport's request; of the Board's refusal to make available at the hearing the correspondence, reports and economic surveys which the Board considered in reaching its decision; of the Board's failure 'to make Findings and Conclusions, as well as the reasons or basis therefor upon all the material issues of fact, law or discretion presented on the record.' Bridgeport further contends that the Board erred in its conclusions of law and order, and that the Board's decision is subject to judicial review under Sec. 10 of APA, 5 U.S.C.A. § 1009.

 Defendants' motions to dismiss assert that the Court lacks jurisdiction over the subject matter; that Bridgeport is without standing to complain of the Board's action; that the complaint fails to state a claim upon which relief can be granted.

 We are not persuaded that the APA is applicable here either in respect to the Board's procedure or to the right to judicial review. Sec. 5 of that Act, 5 U.S.C.A. § 1004, requires that 'in every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing' (except in six listed circumstances not here applicable), an agency shall observe certain procedures specified in subsequent sections of the Act.

 Under Sec. 5(a) of the Home Owners' Loan Act of 1933 ('HOLA'), 12 U.S.C.A. § 1464(a), 'the Board is authorized, under such rules and regulations as it may prescribe, to provide for the organization, incorporation, examination, operation, and regulation' of Federal savings and loan associations, 'and to issue charters therefor, giving primary consideration to the best practices of local mutual thrift and home-financing institutions in the United States.' While HOLA does not give explicit authority to the Board to permit branch offices for associations set up under its guidance, there is language in the statute which seems to recognize such authority. At any rate, it has several times been held that a Federal savings and loan association can have a branch office. See, e.g., North Arlington Nat. Bank v. Kearny Federal Savings & Loan Ass'n, 187 F.2d 564 (3rd Cir. 1951). Regulations adopted by the Board provide for the establishment of branch offices. 12 C.F.R. 545.14.

 HOLA contains no specific requirement for an agency hearing even in the case of an application for an original charter. However, it has been assumed that a hearing is required in that instance. First National Bank of McKeesport v. First Federal Sav. & Loan Ass'n, 96 U.S.App.D.C. 194, 225 F.2d 33, 36 (D.C.Cir.1955). The only reference in the Regulations to a hearing on a branch office application is found in 12 C.F.R. 542.2. What is of vital importance here, however, is that neither HOLA, as amended, nor the regulations thereunder, contain any provision that an application for a branch office must be 'determined on the record after opportunity for an agency hearing.'

 Bridgeport points to Sec. 5(e) of HOLA, 12 U.S.C.A. § 1464(e) which provides:

 'No charter shall be granted except to persons of good character and responsibility, nor unless in the judgment of the Board a necessity exists for such an institution in the community to be served, nor unless there is a reasonable probability of its usefulness and success, nor unless the same can be established without undue injury to properly conducted existing local thrift and home-financing institutions.' (Emphasis added.)

 Bridgeport recognizes that this provision applies to charters and makes no reference to branches, but contends that the same considerations are relevant in both cases. In our view of the case, the point is immaterial. Bridgeport places particular emphasis on the italicized portion, and argues that this confers upon existing institutions such as Bridgeport statutory protection from economic injury caused by competition of other Federal savings and loan associations. This protection, the argument runs, is a property right, and it follows that the requirements of due process necessitate an APA hearing before Bridgeport can be deprived of that property right. Reliance is placed on that line of cases beginning with Wong Yang Sung v. McGrath, 339 U.S. 33, 70 S. Ct. 445, 94 L. Ed. 616 (1950). In Wong, the Supreme Court gave definitive interpretation to Sec. 5 of APA (p. 50, 70 S. Ct. at page 454):

 'We think that the limitation to hearings 'required by statute' in 5 of the Administrative Procedure Act exempts from that section's application only those hearings which administrative agencies may hold by regulation, rule, custom, or special dispensation; not those held by compulsion. We do not think the limiting words render the Administrative Procedure Act inapplicable to hearings, the requirement for which has been read into a statute by the Court in order to save the statute from invalidity. They exempt hearings of less than statutory authority, not those of more than statutory authority. We would hardly attribute to Congress a purpose to be less scrupulous about the fairness of a hearing necessitated by the Constitution than one granted by it as a matter of expediency.'

 While we have been impressed by Bridgeport's able and ingenious argument, we are unable to agree with its conclusion. Bridgeport has no common law right to be free from competition; *fn1" nor, in our opinion, does the language relied upon confer such a right. We think the considerations mentioned in 1464(e) are mere criteria or standards to guide the Board in its decision on an application for a charter. The criterion, in relevant regard, is that no charter shall be granted unless in the judgment of the Board an institution 'can be established without undue injury to properly conducted existing local thrift and home-financing institutions.' Having in mind the magnitude of the public interest affected, it seems clear that the standards prescribed in 1464(e) far transcend the interests of any particular institution. In speaking of this very provision, in Federal Home Loan Bank Board v. Rowe, 109 U.S.App.D.C. 140, 284 F.2d 274, 275, (D.C.Cir.1960), the Court well said:

 'No statutory provision whatever was made for hearings through the medium of which the prescribed criteria were to be established. On the contrary, Congress clearly reposed in the Board a wide discretion in its determination of whether or not the standards had been met. The Board was charged with a high responsibility, and was commensurately bound to exercise its best judgment, necessarily flexible in the banking and monetary field, in order 'to provide local mutual thrift institutions in which people may invest their funds and in order to provide for the financing of homes * * *.' The Board was not required to issue a charter; it might issue within a given area more than one. It might limit the issuance to a single association. Congress knew very well that conditions in an agricultural area might differ from those in an urban field or a mining community. A delicate balance of the Board's judgment clearly was required in determining the likelihood of successful operations, not only for the welfare of shareholders in the association but with regard to the possible impairment of confidence in and the stability of other thrift institutions. The Government itself had a continuing interest in each such association as might qualify for a charter. In particulars here pertinent, from 1933 to the present time, Congress has never amended the basic act.'

 Since HOLA makes no provision whatever for a hearing, and, since, in our view, the requirements of due process do not necessitate an APA type of hearing, we think Bridgeport has no legal ...

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