PETITION FOR CERTIORARI
Washburn respectfully petitions this Court for
a Writ of Certiorari to review the Judgment and Order of the United States
Court of Appeals for the District of Columbia Circuit (“Court of Appeals”)
entered on
OPINIONS BELOW
On
JURISDICTION
After the Judgment and Order of the Court of Appeals
was entered on
STATUTES AND REGULATIONS INVOLVED
The Question Presented is rooted in an unusual dynamic that exists between four inter-related federal statutes and a single federal regulation pertaining to the imposition of enforcement sanctions for violations of the Bank Secrecy Act[1] (“BSA”) and BSA-based implementing regulations. The four statutes and one regulation are:
(a) 12 U.S.C. § 1818(i)(2) (“section 1818(i)(2)”)
(b) 12 U.S.C. § 1818(s)(1) (“section 1818(s)(1)”)
(c) 12 U.S.C. § 1818(s)(3) (“section 1818(s)(3)”)
(d) 31 U.S.C. § 5321(e) (“section 5321(e)”)
(e) 12 C.F.R. § 21.21 (“section 21.21”)
Because of their number and length, extract copies of the foregoing statutes and referenced regulation (along with certain other statutes and regulations cited in this Petition) are included in Appendix E and are prefaced with an index on the first page thereof (also reflected in the Table of Contents), showing the page location of each statute and regulation.
STATEMENT OF THE CASE
A. Institution and Final Disposition of Agency Action
The OCC instituted a civil money penalty action against Washburn in February 2001 pursuant to section 1818(i)(2), charging that he “aided and abetted” violations of section 21.21[2] that were allegedly committed by the Peoples National Bank, Seneca, Missouri (“Bank”), where Washburn served as President. Washburn formally denied all of the charges and exercised his right to a hearing to determine their merit. In preparation for a hearing the scheduled to begin in October 2001, Washburn conducted extensive discovery and incurred significant attorneys’ fees and related expenses.
In mid July 2001, Washburn filed an amended answer, disputing the jurisdictional authority of the OCC to institute a penalty action under section 1818(i)(2) for violations of section 21.21. The amended answer was supported by an analysis of the legislative history of BSA that tracked the design and development of the enforcement scheme crafted by Congress over the past 30 years regarding the manner in which the legislative objectives of BSA were to be administered; which agencies were charged with what responsibilities in the areas of examination oversight and regulatory enforcement; and what powers were vested with the agencies to facilitate the execution of their responsibilities.[3]
The amended answer pointed out, inter alia, that Congress made its intentions very clear with regard to the precise manner in which it intended the OCC to enforce section 21.21. That regulation was promulgated pursuant to section 1818(s)(1), and section 1818(s)(3) provides explicitly that with regard to violations of regulations promulgated under section 1818(s)(1), the responsible agency “shall issue an order” pursuant to the agency’s cease and desist authority under either 12 U.S.C. §§ 1818(b) or 1818(c). Section 1818(s)(3) is uncharacteristically specific regarding the identity of both the regulation violated as well as the identity of the specific sanction to be used to enforce violations of that regulation. Because of that specificity and the mandatory use of the word “shall” in the statute,[4] the amended answer contended that section 1818(s)(3) was the controlling statute for enforcing violations of section 21.21, not section 1818(i)(2). The OCC dismissed the action a month later.[5]
B. Application for Award of Attorneys’ Fees and Expenses Under EAJA and Final Agency Disposition Thereof
In September 2001, Washburn filed an application under EAJA for an award of the attorneys’ fees and related legal expenses he incurred defending the penalty action the OCC dismissed a month earlier (“Application”). The Application demonstrated that all of the statutory elements in EAJA regarding an award under that statute were satisfied, and that the supporting documentary exhibits appended to the Application were sufficient to satisfy those elements requiring such documentation.
The OCC Enforcement Division (“OCC Enforcement”) responded, arguing that the Application be denied on three grounds: (1) Washburn was not a “prevailing party;” (2) the agency’s decision to institute the action was “substantially justified;” and (3) the fees and expenses claimed were not “incurred” by Washburn, as such terms are used in EAJA.
Since the penalty action had been dismissed prior to the scheduled hearing, there was no evidentiary record upon which to adjudicate the merits of the issues raised by the parties. Accordingly, and based upon the reasoning in Kuhns v. Board of Governors of the Federal Reserve, 930 F.2d 39, 43 (D.C. Cir. 1991), the ALJ issued an order, sua sponte, permitting the parties to submit documentary and testimonial materials in support of their respective positions for inclusion in the record. The parties submitted such materials, and the record was subsequently closed at the end of December 2001.
In early February 2002, the ALJ issued an Initial Decision regarding the merits of the Application (“ALJ Decision”) (App. D, 7a-22a). The ALJ Decision determined that Washburn was a “prevailing party” and that the Application satisfied all but one of the remaining requirements of EAJA that were addressed by the ALJ.[6] Nevertheless, the ALJ Decision concluded that the agency was “substantially justified” to institute the penalty action against Washburn, and therefore recommended that the Comptroller deny the Application.
The ALJ properly bifurcated assessment of the
substantial justification requirement into the separate issues of “substantial
justification in fact” and “substantial justification in law.” Pierce
v Underwood, 487
With all due respect to the ALJ, the most egregious (and obvious) deficiencies of the ALJ Decision regarding that issue are twofold: (1) the abject absence of any reasoned analysis, and (2) the extremely abbreviated treatment accorded the issue. The entire discussion of the pivotal issue of substantial justification in law is discussed in six short paragraphs and a concluding sentence, with the first four paragraphs devoted to merely paraphrasing the contentions of the parties.
The fifth paragraph (App. D, 18a) is not much better in terms of analysis. In that paragraph, the ALJ noted, “Congress may grant similar authority to more than one department or agency,” and implicitly argued that the power of the OCC to assess a civil money penalty for violations of section 21.21 (or any other regulation) reflected in section 1818(i)(2) simply overlaps with the same authority of Treasury in 31 U.S.C. § 5321 (“section 5321”) to impose the same type of penalty for the same violations of law. Unfortunately, and rather than proceed with any type of analysis of those two statutes, the ALJ simply (and erroneously) assumed they provide overlapping authority to the OCC and Treasury to impose the same sanction for the same violation of law. The error is easily demonstrated with a simple side-by-side comparison of the terms in section 1818(i)(2) with those in section 5321 regarding the minimum standard of culpability required to be proven, and the maximum penalty amounts that can be imposed.[7]
Thus, the entire adjudicatory analysis of the linchpin issue of substantial justification in law is reflected in the following single paragraph and concluding sentence in the ALJ Decision:
More importantly, the statutory language relied upon by the OCC is unambiguous. Through FIRREA, Congress delegated to OCC, and the other banking agencies, the authority to assess civil money penalties for the violation of “any law or regulation.” § 1818(i). Section 21.21 is unquestionably a valid regulation and, therefore, OCC may assess money penalties for its violation. See Cousin v. OTS, 73 F,3d 1242 (2nd Cir, 1996). Washburn’s assertion that the lack of litigated cases alleging an aiding and abetting violation of § 21.21 shows the OCC knew it lacked legal authority, is unconvincing. An agency may not bring certain cases for a variety of reasons other than lack of authority. While diligent inquiry may be appropriate before advancing a new or untested enforcement position, in this case the regulation enforced and the enforcement authority are clear on their faces.
OCC’s reliance on the plain meaning of its statutory authority was reasonable, and its position [to institute the penalty action] was substantially justified in law. [App. D, 12a; emphasis added]
There has never been any contention the “unambiguous” and “plain meaning” characterizations of the terminology used in section 1818(i) are any better or worse than those attributes of the terminology in section 1818(s). The self-evident truth is that both statutes utilize equally “unambiguous” terminology, thus making the “plain meaning” of both equally discernable. That being the case, the cited reasoning of the ALJ that the reasonableness of the agency’s reliance upon the “plain meaning” of only one of the two statutes in question was sufficient to deem the agency’s decision to institute an action under that statute “substantially justified” is illogical on its face.
The fatal flaw of the ALJ Decision is that it never addressed the right question, or at best, only examined half of the problem. In this case, there are two equally clear and unambiguous statutes, and each has a “plain meaning” that can be reasonably interpreted as being applicable to the enforcement of violations of section 21.21. In determining whether the OCC’s decision to use one of those statutes in lieu of the other was more “reasonable” and therefore “substantially justified” within EAJA, the ALJ Decision made two critical errors: (1) it only examined one of the statutes, and (2) it failed to determine whether the OCC’s intended use of the statute was consistent with the purpose intended by Congress.
The purpose of section 1818(i)(2) is generic. That statute was enacted to enable the agency to enforce violations of any law or regulation (and certain other infractions) committed by persons or entities subject to the agency’s enforcement authority by assessing a civil money penalty for such violations. In contrast, the purpose of section 1818(i) is very specific. That statute was enacted for the purpose of enabling the agency to enforce violations of a specifically identified set of regulations (i.e., those promulgated pursuant to section 1818(s)(1)) by requiring the agency to use a specific power, viz., its authority to issue a cease and desist order to enforce such violations. The ALJ failed to recognize that distinction. Instead, the ALJ Decision strongly suggests that the OCC “reliance” the ALJ characterized as “reasonable” was premised on the agency’s intended use of the statute for the purpose of assessing a penalty for violations of section 21.21, rather than for the purpose of enforcing violations of section 21.21 in accordance with law. After the parties filed exceptions briefs detailing alleged errors in the ALJ Decision, the Comptroller entered a Final Order in early May 2002, denying the Application (“OCC Decision”) (App. C, 5a-6a). The OCC Decision does not contain any analysis of any issue and simply adopted that portion of the ALJ Decision pertaining to the issue of substantial justification as the decision of the agency. Because of the dispositive effect of the adverse manner in which that issue was decided by the ALJ, the OCC Decision did not address the contention of OCC Enforcement that the fees and expenses claimed were not “incurred.” In that same vein, the OCC Decision declined to either adopt or reject the finding in the ALJ Decision that Washburn was a “prevailing party,” explaining that review of such determination was unnecessary.
C. Appeal of OCC Decision to
Washburn filed a notice of appeal of the OCC Decision in early June 2002 with the Court of Appeals and argued two separate but inter-related theories: (1) the penalty action was not “substantially justified” within EAJA, and (2) the OCC acted in bad faith and seriously abused the agency’s power to impose enforcement sanctions as well as the agency’s adversary adjudication process and hearing process.
In support of the first theory, Washburn argued the OCC could not have been “substantially justified in law” to institute the penalty action pursuant to section 1818(i)(2) for alleged violations of section 21.21 since the agency did not, in fact, have the legal authority to institute such action pursuant to that statute, pointing out:
(1) the ALJ and OCC knew section 21.21 was promulgated pursuant to section 1818(s)(1) and that the “plain meaning” of the unambiguous provisions of section 1818(s)(3) required the agency to enforce violations of section 21.21 by using its power to issue a cease and desist order under 12 U.S.C. §§ 1818(b)or 1818(c);
(2) the ALJ and OCC knew (or should have known) the cannon of statutory construction that holds where two statutes (1818(i)(2) and 1818(s)(3)) appear to govern the same matter, the statute with the most specific terminology regarding its applicability is controlling;
(3) the OCC knew that it and the other Federal banking agencies had never at any time during the past 13 years (i.e., since section 1818(i)(2)(A) became law in 1989) instituted a penalty action under that statute based solely upon alleged violations of BSA or any of its implementing regulations, including section 21.21; and
(4) the ALJ and OCC knew that the agency, as a bureau of Treasury, was familiar with the 1994 testimony of the Assistant Secretary of the Treasury for Enforcement, who testified before Congress on behalf of the Treasury Department, in support of legislation that required the Secretary of the Treasury to delegate to the OCC and the other Federal banking agencies the power to assess civil money penalties for violations of BSA and its implementing regulations, including section 21.21.
In support of the second theory, Washburn argued that the OCC acted in bad faith in instituting the penalty action and at the same time also abused the agency’s enforcement powers and adversary adjudication process, pointing out:
(1) the OCC instituted a formal enforcement action against Washburn to assess a civil money penalty even though the agency knew at the time formal charges were issued that it did not have the legal authority to institute such action;
(2) the OCC issued formal charges against Washburn accusing him of “aiding and abetting” violations of section 21.21 committed by the Bank when it knew at the time it made such charges that the Bank had not actually committed such violations, as evidenced by the fact such violations were never found to have been committed by OCC examiners and were never cited or mentioned in the 2000 OCC Report of Examination of the Bank upon which the charges against Washburn were based; and
(3) the OCC issued formal charges against Washburn for the purpose of using the pendency of such charges as a weapon to intimidate and coerce Washburn to agree to the issuance of a civil penalty order by consent, and/or if Washburn refused to agree to such consent order, for the purpose of imposing the financial burden and expense that Washburn would incur to prepare for a hearing as a substitute “penalty” by secretly determining at the time the charges were issued to dismiss such charges prior to the commencement of any hearing that might be requested by Washburn.[8]
In sum, the OCC made a mockery of EAJA by perpetrating an elaborate (and highly unethical) hoax on Washburn that was extremely prejudicial and that will result in an enormous financial loss to Washburn unless this Court validates his claim for fees and expenses under EAJA.
Although OCC Enforcement had vigorously argued in earlier submissions that Washburn was not a “prevailing party,” and that the fees and expenses claimed were not “incurred” by Washburn - even to the point of specifically preserving the right to make the latter argument in any appeal, both arguments were abandoned by the OCC in its reply brief to the Court of Appeals. Except for a generic general denial, the OCC did not respond directly to any of the arguments or allegations made by Washburn regarding the issues of bad faith or abuse of agency’s enforcement powers. Rather, the agency only suggested that the Court ignore Washburn’s averments since they were not raised in any prior pleading or previously filed brief.
After oral arguments, the Court of Appeals entered
its Judgment, per curiam, in May 2003, affirming the OCC Decision
“for the reasons stated by the Administrative Law Judge and adopted by
the Comptroller.” Washburn’s petitions for rehearing were denied on
Due to the summary and adoptive nature of the rulings of the Comptroller and the Court of Appeals, that portion of the ALJ Decision pertaining to the determination the OCC action instituted against Washburn was “substantially justified” within the meaning of EAJA is the “decision below” for purposes of any review of this case that may be undertaken by this Court.
REASONS FOR GRANTING THE PETITION
A. The Question Presented is Important
In landmark legislation enacted into law in 1980, EAJA provides a limited waiver of sovereign immunity by the U.S. Government for the payment of attorneys’ fees and expenses under certain conditions for purposes that Congress proclaimed served the national interest. In doing so, Congress established a new paradigm and shift in public policy designed to enhance the integrity of governmental regulatory activities and policies and at the same time strengthen citizen confidence in the validity of actions taken by the multitude of agencies through which the Federal government functions. The principal catalyst of EAJA is the infusion of fundamental principles of equitable fairness and agency accountability as integral components of the manner in which all adversary adjudication proceedings are conducted to resolve disputes between the government and the citizenry it governs.
EAJA’s purposes are well documented and widely recognized. The Report of the House Committee on the Judiciary that preceded the final passage of EAJA noted that the high cost of legal assistance and the superior resources and expertise of the Federal agencies frequently acted to seriously deter private parties from challenging, defending against, or seeking review of unreasonable and unfounded actions instituted by such agencies.
[EAJA] rests on the premise that certain individuals... may be deterred from seeking review of, or defending against unreasonable governmental action because of the expense involved in securing the vindication of their rights. The economic deterrents to contesting governmental action are magnified...by the disparity between the resources and expertise of these individuals and their government. [H.R.Rep. No. 96-1418, at 5-6 (1980)]
When the cost of contesting a government order...exceeds
the amount at stake, a party has no realistic choice and no effective remedy. In
these cases, it is more practical to endure an injustice than to contest
it. ... [T]he government with its greater resources and expertise can
in effect coerce compliance with its position. Where compliance
is coerced, precedent may be established on the basis of an uncontested
order rather than the thoughtful presentation and consideration of opposing
views. In fact, there is evidence that [individuals] are the target
of agency action precisely because they do not have the resources to fully
litigate the issue. This kind of truncated justice undermines the integrity
of the decision making process. [
Congress clearly recognized the notion of “a more
level playing field” embodied in EAJA was not only intended to benefit
the financially disadvantaged citizen by providing a limited waiver for
a fee award thus making the Government agencies more accountable, but that
it was also intended to serve a public purpose and further the public interest
in several respects: (1) “by refining and formulating [sound] public policy”
through the process of challenging unreasonable and unjustified agency
actions based upon poor or misdirected policies; (2) “by providing a concrete,
adversarial test of government regulation” thereby providing added “legitimacy
and fairness of law” to the adversary adjudication process; (3) by providing
a vehicle or means by which agencies will be compelled to “develop and
announce more precise rules;” and (4) by “curbing excessive regulation
and the unreasonable exercise of government authority,” thereby enhancing
the quality and efficiency of the agencies that exercise supervisory oversight
responsibilities and the power to impose significant regulatory sanctions.
[
Perhaps the most insightful reflection in the House Report on the measure that became EAJA was the precept that the new law would instill an internally driven desire within each agency to recognize and nurture the value of taking appropriate pro-active precautionary measures to ensure that agency’s decisions reflect an “informed deliberation” by the agency:
[EAJA] helps assure that administrative decisions
reflect informed deliberation. In so doing, [it] becomes an instrument
for curbing excessive regulation and the unreasonable exercise of government
authority. In this context, the committee believes that [EAJA] serves
the public interest. [
As a result of the final determination in this case that an agency can be substantially justified in law to institute an action even though, as a matter of law, it is indisputable that the agency did not actually have legal or jurisdictional authority to institute such action makes a mockery of all of the foregoing pronouncements extolling the high-minded purposes and principles embodied in EAJA. Indeed, the summary manner in which the ALJ, the Comptroller, and the Court of Appeals treated the critical issue of substantial justification should give anyone serious pause. Again, the final determination of the pivotal issue was not supported by any reasoned analysis; was not supported by any assessment of the law; was not supported by any meaningful consideration of the jurisdictional authority of the agency; and was not supported by logical thought or the application of common sense. Rather the determination of substantial justification was premised upon an abbreviated and simplistic semantical construct of the phrase “any law or regulation” in section 1818(i)(2) [without any mention of section 1818(s)(3)] that was more reflective of the efforts of a grammarian than an adjudicatory officer or jurist. If that is the sum value of the jurisdictional authority of an agency in determining whether an agency can be deemed to be substantially justified in instituting an action under EAJA, Congress might just as well repeal the statute. How can EAJA possibly instill confidence and eliminate the “financial disincentive” in the minds of private citizens regarding the cost of engaging in a litigated proceeding to challenge or seek review of unreasonable or abusive agency action, if a determination regarding substantial justification can be made that will totally exonerate the government agency without any analysis or finding that considers the issue of whether the agency had legal authority to take the challenged action? The simple truth of the matter is: It can’t.
The willingness of the ALJ and Comptroller to
decide that an agency can be “substantially justified” within EAJA to institute
an action against a private citizen without the slightest concern or review
of the agency’s underlying legal authority to take that action does not
further any of the espoused purposes of EAJA. This Court held in Sullivan
v. Hudson, 490
Finally, this Court in Ardestani v. I.N.S., 502 U.S.129, 137 (1991) stressed the need for reviewing courts to be careful not to “assume the authority to narrow the waiver that Congress intended,” in EAJA, citing United States v. Kubrick, 444 U.S. 111, 118, (1979), and Irwin v. Department of Veterans Affairs, 498 U.S. 89, 95 (1990). The failure of the Comptroller and the Court of Appeals in this case to correct the glaring deficiencies in the ALJ Decision regarding the jurisdictional authority of the agency not only served to “narrow the waiver Congress intended” EAJA to provide; it essentially “eliminated” the beneficial of any such waiver from Washburn’s vantage point.
B. The Decision Below Was Decided in a Manner That Conflicts With Prior Rulings of this Court
As noted previously, the Judgment and Order of the Court of Appeals (“decision below”) affirmed the OCC Decision (which in turn, adopted that portion of the ALJ Decision pertaining to the determination the decision of the OCC to institute the penalty action against Washburn was “substantially justified” within EAJA), “for the reasons of the Administrative Law Judge and adopted by the Comptroller.” Since the referenced portion of the ALJ Decision are pages 16a-21a of Appendix D, the decision below is comprised of the discussion and findings of the ALJ reflected on those same pages. As demonstrated below, the ALJ Decision has several fatal deficiencies and was decided in a manner that conflicts with prior decisions of this Court.
The decision below is predicated upon: (a) a review totally devoid of any type of reasoned analysis regarding the central issue of substantial justification in law and the jurisdictional authority of the OCC to institute a penalty action for violations of section 21.21; (b) an erroneous assumption that the legal authority of the OCC to enforce violations of section 21.21 pursuant to section 1818(i)(2) by imposing a civil money penalty for such violations overlaps the same authority of the Treasury to enforce the same violations of section 21.21 pursuant to section 5321 by imposing the same penalty for the same violations; and (c) a finding of substantial justification that completely disregards and turns a totally blind eye toward well established cannons of statutory construction that have been upheld by this Court and that, if applied in this case, would preclude a finding of substantial justification in law.
The touchstone issue of substantial justification in law in this case essentially asks the following question:
Given a desire and intention of the OCC to enforce discovered violations of section 21.21, and given the existence of two enforcement statutes [(viz., section 1818(i)(2) and section 1818(s)(3)] that are equally clear in terminology and that can reasonably construed as being applicable to the enforcement of that regulation, is there any principle or rule founded in law that would convince a reasonable person to believe that the use of one of those statutes is preferable (and therefore more reasonable and justifiable under EAJA) over use of the other for the purpose of enforcing the discovered violations of section 21.21?
There are at least three well established cannons of statutory construction that answer that question in the affirmative,[9] and if applied by the ALJ, would preclude any determination that the OCC’s decision to employ the provisions of section 1818(i) to enforce violations of section 21.21 was “substantially justified” or more reasonable than the provisions of section 1818(s)(3).
The most compelling of the three cannons that have been totally ignored in this case is the rule of construction that holds: where there are two statutes that can be reasonably construed to govern the same matter, and in the absence of any legislative intent to the contrary, a clear preference is accorded to the statute that is the most specific in terminology regarding its applicability. This Court has repeatedly upheld the application of that rule, holding that a “specific” statute[10] is never controlled or nullified by a “general” statute,[11] and that the more specific statute is given a preference over the general statute, regardless of priority of enactment.[12] Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445 (1987); Busic v. United States, 446 U.S. 398, 406, (1980); Radzanower v. Touche Ross & Co., 426 U.S. 148, 153 (1976); Morton v. Mancari, 417 U.S. 535, 550-51 (1974); Preiser v. Rodriguez, 411 U.S. 475, 489-90 (1973); Bulova Watch Co. v. United States, 365 U.S. 753, 758 (1961; and Rodgers v. United States, 185 U.S. 83, 87-89 (1902).
The final determination of substantial justification
in this case subsumes and relies upon an interpretation of section 1818(i)(2)
that effectively renders the provisions of not just one, but two other
statutes as nothing more than meaningless surplusage contrary to both of
the other rules of statutory construction that were ignored by the ALJ,
the Comptroller, and Court of Appeals. If section 1818(i)(2) is construed
to empower the OCC to assess a civil money penalty for violations of section
21.21, the provisions of section 1818(s)(3) and section 5321(e) are effectively
made meaningless and repealed by implication. This Court has repudiated
such treatment repeatedly. Dole Food Co. v. Patrickson, 123 S.Ct.
1655, 1661 (2003), citing Mertens v. Hewitt Associates, 508
Based upon the foregoing, an inescapable conclusion emerges: the Decision below was made in a manner and based upon considerations that are flatly contradicted by the application of adjudicatory principles that have been validated in numerous prior rulings and decisions of this Court.
C. The Decision Below is Incorrect and Validates an Agency Action Instituted in Bad Faith
As a pure matter of law, the OCC does not have (and has never had) jurisdictional authority to enforce violations of BSA and its implementing regulations (including section 21.21) by assessing a civil money penalty for such violations. That conclusion is underscored by the fact that there is unmistakable evidence showing that as late as 1994 (i.e., 5 years after Congress enacted section 1818(i)(2)), Congress expressed its clear belief that the OCC and the other Federal banking agencies did not have such authority.
Section 406 of Title IV[13] of the Riegle Community Development and Regulatory Improvement Act of 1994 amended BSA by adding a new section (e) to 31 U.S.C. § 5321. As amended, that statute provides in applicable part:
The Secretary of the Treasury... shall delegate ... any authority of the Secretary to assess a civil money penalty under this section on depository institutions ... to the appropriate federal banking agencies (as defined in section 3 [of the Federal Deposit Insurance Act]).
The Secretary of the Treasury has never complied with the Congressional directive. The resulting negative inference is overwhelming. Unless section 5321(e) is construed as a meaningless exercise, Congress itself (as the source of all regulatory enforcement authority granted to the OCC and the other Federal banking agencies) proclaimed that as of 1994, Treasury was the only government agency it had empowered to assess a civil money penalty for violations of BSA or BSA- related regulations. That fact coupled with the agency’s de facto failure during the past 13 years to assert any authority under section 1818(i)(2) to assess a civil money penalty for any violation of BSA or BSA-based implementing regulation (including section 21.21), stand as irrefutable evidence that the OCC not only lacked jurisdictional authority to institute a penalty action under section 1818(i)(2), but also that the agency knew it did not have the legal authority to institute the penalty action it instituted against Washburn. In short, the OCC charges against Washburn were issued in bad faith.
Common sense says that a void of any civil money penalty enforcement activity by any of the Federal banking agencies for any violation of any regulation promulgated pursuant to section 1818(s)(1) over a period 13 years is not an insignificant circumstance and cannot be dismissed as mere coincidence. When such a vacuum of agency enforcement activity is also considered in the context of a designed uniformity of agency enforcement among all of the agencies, coupled with the well known high level of policy coordination for regulatory enforcement that exists among the banking agencies, serve as very strong indicators that the OCC knew it lacked jurisdiction when it instituted the penalty action against Washburn.
As discussed earlier,[14] the OCC penalty action against Washburn was instituted in bad faith in a seriously misguided effort to coerce Washburn to execute an agreement to facilitate the issuance of a civil money penalty order by consent, or if for some reason that tactic failed and Washburn exercised his legal right to vindicate himself at an adjudicatory hearing, the OCC would allow Washburn to incur substantial legal fees and expenses preparing for such hearing before “pulling the plug” and dismissing all charges - and treat such expenses as a “substitute penalty” the agency wanted to assess. The calculated and deliberate decision of the OCC to issue formal charges it knows are not supported[15] and outside of the agency’s jurisdictional authority for the purpose of pressuring Washburn to agree to a consent order, and at the same time only pretend to offer Washburn the right to a hearing in order to use expense of participating in the agency’s adjudicatory process as a means of inflicting a financial penalty constitute wanton and malicious abuses of legal process. On that basis alone, this Court has the inherent authority to summarily grant the petition, vacate the decision below, and remand with instructions.
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted,
Stephens B. Woodrough
THE BANKING LAW FIRM
St.
Telephone: (727) 898-9009
Facsimile: (727) 898-9006
Counsel of Record for Petitioner
[1] Although technically comprised of other provisions in the United States Code (e.g., 12 U.S.C. §§ 1818(s) and 1829b, and 18 U.S.C. §§ 1956 and 1957), the Code provisions codified at 31 U.S.C. §§ 5311-5330 are generally understood as the “Bank Secrecy Act.”
[2] Congress amended the BSA when it enacted section 1359(a)(1) of subtitle H of title I of the Money Laundering Control Act of 1986 (Pub. L. No. 99-570, 100 Stat. 3207-27). The new law was codified in the U.S. Code as a new section (s) of section 8 of the Federal Deposit Insurance Act, 12 U.S.C. §1818(s). Paragraph (1) of that statute required all of the Federal banking agencies to promulgate regulations requiring institutions subject to their examination authority to adopt policies and procedures designed to assure compliance with BSA. In accordance with that requirement, all of the affected agencies, including the OCC, promulgated and announced implementing regulations that were substantively identical with each other. See, Procedures for Monitoring Bank Secrecy Act Compliance, 58 Fed. Reg. 2858 (1987), adding, inter alia, 12 C.F.R. § 21.21 by the Comptroller.
[3] The results of the research conducted to prepare the legislative history and analysis appended to the amended answer were subsequently published. See, Woodrough, Civil Money Penalties and the Bank Secrecy Act - A Hidden Limitation of Power, 119 Bank. L. J. 46 (Jan. 2002).
[4] At the time section 1818(s)(3) was enacted in 1986, the OCC and the other Federal banking agencies were already vested with the power to institute a cease and desist action under 12 U.S.C. §§ 1818(b) or 1818(c) for violations of any law or regulation. Accordingly, Congress must have intended the term “shall” in section 1818(s)(3) to be construed and applied in its mandatory sense, i.e., whenever the agency determines the institution of formal enforcement action is appropriate to enforce violations of regulations promulgated under section 1818(s)(1), the agency must utilize its power to institute a cease and desist order for such violations. Otherwise, section 1818(s)(3) is nothing more than meaningless surplusage vis-a-vis the provisions of 12 U.S.C. §§ 1818(b) and 1818(c) - a circumstance this Court has repeatedly repudiated. Duncan v. Walker, 533 U.S. 167,174 (2001) and the decisions cited therein. See also decisions of this Court cited, infra, at pp. __.
[5] The time delay between the filing of the amended answer and the dismissal was largely due to misguided efforts of OCC Enforcement Counsel to use inaccurately styled papers to document the final disposition of the action. For example, the first document submitted for that purpose was styled as a “Notice of Settlement” that falsely stated the parties had reached “an informal resolution” of the charges. That filing resulted in a flurry of pleadings by the parties, including a Motion for Summary Disposition filed by Washburn in early August 2001. After the ALJ issued an order in mid-August directing the OCC to either “dismiss the charges or respond to Washburn’s motion for summary disposition,” the OCC filed a “Notice of Withdrawal” that announced all of charges issued against Washburn were withdrawn. The ALJ correctly treated that action as tantamount to a final order of dismissal (see 12 C.F.R. § 19.5(b)(7)) and ordered the action struck from the court’s docket.
[6] Without explanation, the ALJ Decision did not address the OCC contention that the fees and expenses claimed in the Application were not “incurred” by Washburn.
[7] Compare 31 U.S.C. § 5321(a), as implemented by 31 C.F.R. § 103.57, with 12 U.S.C. §§ 1818(i)(2)(A)-(C). See also, Woodrough, Civil Money Penalties and the Bank Secrecy Act - A Hidden Limitation of Power, supra, at 53-54.
[8] In three different pleadings, OCC Enforcement explained: (1) the action against Washburn was dismissed “because of resource considerations;” (2) the agency “determined it was best not to expend its limited resources to litigate a matter involving the assessment of a $2,000 civil money penalty;” and (3) that “prior to incurring the immense cost associated with discovery,” the agency “decided that it needed to conserve resources more than it needed to obtain a final order assessing a $2,000 civil money penalty order against Washburn.” Since the total span of time between institution of the action (February 2001) and agency decision to dismiss (July 2001) was only 5 months, all of the underlying information that presumably supported the truthfulness of such “explanations” must have been known at the time the action was instituted. The OCC has therefore admitted that at the time the action was instituted, the agency was only pretending to offer Washburn the right to a hearing.
[9] Loosely stated, the three rules are: (1) in the absence of a clear legislative intent to the contrary, a statute with “specific” terminology regarding its applicability will be given a preference over a statute of “general” application; (2) statutes must be construed in a manner that accords meaning to all of their terms as well as those contained in other statutes, and therefore cannot be construed in a manner that effectively renders the provisions of another statute as meaningless surplusage, and (3) the repeal of a statute by necessary implication will not be upheld in the absence of a determination of the existence of irreconcilable statutes.
[10] The terminology in section 1818(s)(3) regarding its applicability to violations of specifically identified regulations (i.e., those promulgated under section 1818(s)(1)) is indisputably more specific that the general applicability of section 1818(i)(2) to a violation “of any law or regulation.”
[12] The priority of enactment of section 1818(i)(2) in 1989 as the more recent (and therefore more probative) expression of legislative intent is therefore irrelevant.