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WASHINGTON MUT. SAV. BANK v. FDIC
July 21, 1972
Washington Mutual Savings Bank and Grays Harbor Savings & Loan Assn., Plaintiffs,
Federal Deposit Insurance Corp., Defendant
Sharp, District Judge.
The opinion of the court was delivered by: SHARP
This is a suit for declaratory judgment filed by the plaintiffs, seeking review of a Federal Deposit Insurance Corporation decision denying approval of a proposed consolidation between the two named plaintiffs. The matter is submitted to this court on motions for summary judgment by both plaintiffs and defendant.
The case is one of first impression under the Bank Merger Act of 1966, as it deals with disapproval rather than approval of a requested consolidation.
In the case of an approved merger, the reviewing court is specifically required under the Act to review de novo the determination of the responsible agency. However, the Act is silent on the method, standards and scope of review where the agency denies a merger. In this court's opinion, the review is substantially more limited and the court should apply the guidelines provided for review under the Administrative Procedures Act (5 U.S.C. § 701, et seq.). As stated by this court in its oral opinion of March 3, 1972, the scope of review is limited to the standards set forth in 5 U.S.C. § 706(2)(A-D), which provides:
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall --
(2) hold unlawful and set aside agency action, findings, and conclusions found to be --
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law;
These standards were discussed recently by the United States Supreme Court in Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S. Ct. 814, 822-23, 28 L. Ed. 2d 136 (1971). There, the court directed the reviewing court to engage in "substantial review," a "thorough, probing, in-depth review." The reviewing court should first determine whether the responsible agency acted within the scope of its authority, which determination requires a delineation of the scope of that authority and discretion. If the agency acted within the scope of its authority, then the reviewing court must determine whether the choice made was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). In making this latter determination,
. . . the court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. ...
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