The opinion of the court was delivered by: FISHER
Montgomery National Bank ("Montgomery") commenced this action seeking to reverse the decision of the Office of the Comptroller of the Currency of the United States ("OCC") approving the application of The First Jersey National Bank / Central ("First Jersey") to establish a branch at the northeast corner of the intersection of Route 206 and Route 518 in Montgomery Township, New Jersey. Several motions are presently before the court. Both the federal defendant, Robert Clarke, Comptroller of the Currency (the "Comptroller") and the state defendant-intervenor, Mary Little Parell, Commissioner of the New Jersey Apartment of Banking (the "Commissioner")
have moved for summary judgment.
Plaintiff, Montgomery National Bank, opposes the summary-judgment motions and simultaneously cross-moves for a de novo hearing to determine the validity of the Comptroller's waiver of Montgomery's home-office protection when approving First Jersey's application.
The administrative record (hereinafter referred to as "Admin. Rec.") made by the Comptroller and submitted herein sets forth the undisputed facts giving rise to this lawsuit. On March 13, 1987, First Jersey filed an application with the OCC to establish and operate a branch at the intersection of Routes 206 and 518 in Rocky Hill, New Jersey. As required by statute,
First Jersey gave notice of its filing the application by publishing the following legal notice in the Princeton Packet on March 13, 1987:
Notification is hereby given that The First Jersey National Bank / Central, 200 East State Street, Trenton, New Jersey, 08608, has filed an application with the Comptroller of the Currency on March 13, 1987 . . . for permission to establish a domestic branch at Rt. 206 and Rt. 518, Rocky Hill, New Jersey, 08553.
Any person wishing to comment on this application may file comments in writing with the Regional Administrator of National Banks, Northeastern District, Comptroller of the Currency, 1211 Avenue of the Americas, Suite 4250, New York, New York, 10036, within 30 days after the date of this publication.
First Jersey in its initial application did not request a waiver of the home-office protection normally granted to a bank whose principal branch is located in a municipality with a population of less than 10,000, because the application was based on the erroneous assumption that the proposed site was located in Rocky Hill borough, which did not contain another bank's home-office. On April 22, 1987, Montgomery filed a letter of protest with the OCC seeking a denial, by the Comptroller, of First Jersey's application on the following grounds: (1) improper notice, (2) that approval would be contrary to the public interest, and (3) that approval would violate the provisions of N.J. Stat. Ann. § 17:9A-19.
In addition, Montgomery requested oral argument to present its objections further.
In response to Montgomery's objections, First Jersey submitted an addendum to its application, noting that the statute in issue provided for a waiver of home-office protection by the Commissioner of Banking, but stating that a waiver would not be sought because a merger between the New Jersey National Corporation and Montgomery was under way which, if consummated, would render moot the issue of home-office protection. On May 15, 1987, however, Montgomery's shareholders voted to defeat the merger agreement between Montgomery and the New Jersey National Corporation. First Jersey then submitted a further amendment of its application, requesting a waiver of the population requirement for branching into a municipality which serves as a home for another bank's principal office.
In its amendment, First Jersey pointed to the following factors as supplying ample support for the granting of a waiver of home-office protection by the OCC:
(1) An increased competitive environment in Montgomery Township resulting from the establishment of the branch as well as the provision of a banking alternative and access to a wider array of products and services for customers, including trust products and state of the art retail services not offered by the other banks in the area.
(2) First Jersey's intended targeting of a wider geographic market, which would encompass, in addition to the Township of Montgomery, the western portion of Princeton and would draw as customers high tech concerns and larger retail businesses as well as the average consumer.
(3) Increased deposit growth (20%) at the already established banking institutions in the area and consistent population growth within the Township which is evidenced not only by the population statistics but by an increase in the number of building permits from 29 in 1982 to 158 in 1984.
On June 1, 1987, Montgomery submitted another letter of protest to the OCC, reemphasizing the need for home-office protection and refuting First Jersey's contention regarding population growth and the increased competitive environment which would result from the location of a new bank branch in Montgomery Township.
On September 22, 1987, the OCC issued its approval of First Jersey's application, based on its determination that Montgomery had no need for home-office protection and that the public need and convenience would be served by an alternative banking presence in the area. Montgomery instituted the instant action on February 29, 1988. The amended complaint alleges that the decision of the Comptroller was arbitrary, capricious and unreasonable in that the Comptroller failed to address the objections, failed to make findings of fact and conclusions of law and failed to conduct a public hearing or any additional investigation into either the application or the objections, relying instead on information in the public record. The amended complaint further alleges that N.J. Stat. Ann. § 17:9A-19(K) is unconstitutional under both the state and federal constitutions because it lacks an adequate standard for waiving home-office protection and is unconstitutionally vague. Montgomery seeks, as relief, a declaration that N.J. Stat. Ann. § 17:9A-19(K) is void for vagueness and that the waiver of home-office protection in the instant case is contrary to New Jersey law, and an order enjoining the Comptroller from approving an application by First Jersey for a bank branch at the intersection of Rt. 206 and Rt. 518 in Montgomery Township.
The matter is now before the court on defendants' motions for summary judgment. The Comptroller included in his motion a certified copy of the administrative record compiled on the application of First Jersey to open a branch in Montgomery Township. The Comptroller contends that the undisputed facts show that the decision to approve First Jersey's application was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, the only grounds on which a district court can reverse the action of the Comptroller. The federal defendant also contends that the New Jersey statute providing for home-office protection - N.J. Stat. Ann. § 17:9A-19(X) - passes constitutional scrutiny under both the federal and state constitutions.
Montgomery does not dispute any of the facts contained within the administrative record. Instead, Montgomery's opposition of the motions for summary judgment is based first on its contention that N.J. Stat. Ann. § 17:9A-19(K) is unconstitutionally vague and lacks adequate standards, and that, in any event, the Comptroller applied the wrong legal standard in granting the waiver. Montgomery also argues, in the alternative, that should the court find the waiver provision of section 17:9A-19(K) to be constitutional and that the Comptroller applied the correct legal standard in waiving home-office protection, summary judgment should still be denied because deficiencies in the administrative record warrant a de novo hearing on the validity of the waiver. Last, Montgomery asserts that summary judgment should be denied because the Comptroller's decision was arbitrary, capricious and unreasonable. In addition, Montgomery requests an order compelling the Comptroller to answer certain interrogatories propounded by Montgomery which relate to its contention that the Comptroller's approval of First Jersey's application was arbitrary, capricious and unreasonable.
The Comptroller is the chief officer of the Office of the Comptroller of the Currency, Department of the Treasury. 12 U.S.C. § 1 (1979). As such, he is charged with the administration of the National Bank Act, 12 U.S.C. §§ 21 et seq. In furtherance of this, Congress has delegated to the Comptroller the authority to regulate certain activities of national banks, including the authority to investigate and approve or disapprove applications to establish new banks (12 U.S.C. §§ 26-27); to approve or disapprove name changes for national banks (12 U.S.C. § 30); and to investigate and approve or disapprove applications by national banks to establish branches (12 U.S.C. § 36). See also State Bank of Fargo v. Merchants Nat'l Bank & Trust, 451 F. Supp. 775, 779 (D.N.D. 1978), aff'd, 593 F.2d 341 (8th Cir. 1979).
The authority of the Comptroller to regulate branch banking is found in 12 U.S.C. § 36, which provides, in part:
The conditions upon which a national banking association may retain or establish and operate a branch or branches are the following:
(1) within the limits of the City, town or village in which said association is situated, if such establishment and operation are at the time expressly authorized to State banks by the law of the State in question; and (2) at any point within the State in which said association is situated, if such establishment and operation are at the time expressly authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks.
In order to effect a "competitive equality" between national and state banks, insofar as branch banking was concerned, Congress imposed a condition in 12 U.S.C. § 36(c) that "a branch may be established only when, where and how state law would authorize a state bank to establish and operate such a branch. First Nat'l Bank v. Dickinson, 396 U.S. 122, 130, 24 L. Ed. 2d 312, 90 S. Ct. 337 (1969); First Nat'l Bank of Logan v. Walker Bank, 385 U.S. 252, 260-61, 17 L. Ed. 2d 343, 87 S. Ct. 492 (1966). This condition results in incorporating into the National Bank Act the branching limitations of each state where branch banking by national banks located in the respective state is concerned. Dakota Nat'l Bank & Trust Co. v. First Nat'l Bank, 554 F.2d 345, 353-54 (8th Cir.), cert. denied, 434 U.S. 877, 54 L. Ed. 2d 157, 98 S. Ct. 229 (1977). Therefore, since Congress has "entrusted to the States the regulation of branching," First Nat'l Bank v. Dickinson, 396 U.S. at 133, the Comptroller is under a congressional mandate to apply state branching laws when acting upon an application by a national bank to open a branch within a particular state. Springfield State Bank v. National State Bank of Elizabeth, 459 F.2d 712, 717 (3d Cir. 1972).
The state branching statute brought under fire by this litigation is N.J. Stat. Ann. § 17:9A-19(K). In relevant part, it provides:
A bank or savings bank may establish a full branch office, a minibranch office, or communications terminal branch office anywhere in this State, provided that no bank or savings bank shall . . . establish a full branch office or a minibranch office in a municipality, other than that in which it maintains its principal office, which has a population of less than 10,000, and in which another banking institution maintains its principal office . . . . The commissioner, upon application, may set aside the population requirement set forth above for full branch offices or minibranch offices.
N.J. Stat. Ann. § 17:9A-19(K) (West 1984) (emphasis added). Montgomery concedes that state-law provisions such as the statute set forth above, which regulate bank branching, are made applicable by federal law to national banks. Based on its contention that N.J. Stat. Ann. § 17:9A-19(K) is unconstitutionally vague and bereft of adequate standards, Montgomery contests, however, the application of that part of the statute which authorizes the waiver of Montgomery's home-office protection in approving First Jersey's branch application. Montgomery challenges this delegation of legislative authority to the ...