Louisiana Federal Land Bank Ass'n, FLCA v. Farm Credit Administration

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 8, 2002 Decided July 29, 2003

No. 01-5366

LOUISIANA FEDERAL LAND BANK ASSOCIATION, FLCA, ET AL.,
APPELLANTS

v.

FARM CREDIT ADMINISTRATION, ET AL.,
APPELLEES

Appeal from the United States District Court
for the District of Columbia
(No. 00cv01582)

Daniel Joseph argued the cause for appellants. With him
on the briefs was Beth Hirschfelder Wilensky. C. Fairley
Spillman entered an appearance.
Edward Himmelfarb, Attorney, U.S. Department of Jus-
tice, argued the cause for federal appellees. With him on the
brief were Roscoe C. Howard, Jr., U.S. Attorney, and Robert
S. Greenspan, Attorney, U.S. Department of Justice.

Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
 2

Kathleen C. Kauffman argued the cause for appellee First
South Farm Credit, ACA. With her on the brief were Nels J.
Ackerson and L. Keith Parsons.
Before: GINSBURG, Chief Judge, and EDWARDS and GARLAND,
Circuit Judges.
Opinion for the Court filed by Chief Judge GINSBURG.
GINSBURG, Chief Judge: The Farm Credit Administration
promulgated a rule eliminating geographical restrictions upon
certain activities of lenders within the Farm Credit System,
and thereby put them into competition with each other. The
plaintiffs-appellants – lenders within the System – challenged
the rule in district court, claiming it conflicted with the Farm
Credit Act and with a 1992 Amendment thereto, and that the
FCA promulgated the rule in violation of the procedural
requirements of the Administrative Procedure Act. The dis-
trict court, holding the FCA had complied with the proper
procedures and the plaintiffs’ statutory arguments were ei-
ther without merit or had been forfeited, entered summary
judgment for the FCA.
We hold the Agency was required by the APA to address
the plaintiffs’ comment before promulgating the rule. For
that reason we reverse the judgment of the district court so
this matter may be remanded to the FCA for further pro-
ceedings.

I. Background
The Congress established the Farm Credit System in order
to ‘‘improv[e] the income and well-being of American farmers
and ranchers by furnishing sound, adequate, and constructive
credit TTT to them.’’ 12 U.S.C. § 2001(a). The legislature
charged the FCA with oversight and regulation of the Sys-
tem. Id. §§ 2243, 2252. The System, which has been reorga-
nized many times since its establishment in 1916, see Federal
Farm Loan Act, ch. 245, 39 Stat. 360 (1916) (revised as Farm
Credit Act of 1971, Pub. L. No. 92–181, 85 Stat. 583 (1971)
(codified as amended at 12 U.S.C. §§ 2001 et seq.)), currently
comprises six Farm Credit Banks (FCBs), an Agricultural
 3

Credit Bank (not relevant to this appeal), and over 100 local
‘‘associations,’’ such as the Louisiana Federal Land Bank
Association. The FCBs finance the local associations, which
in turn provide eligible borrowers with credit for agricultural
purposes and rural housing. 12 U.S.C. §§ 2013, 2015, 2017,
2075, 2093, 2279b. Plaintiff Farm Credit Bank of Texas
(FCBT) is an FCB; the other plaintiffs are local associations.
The Act authorizes two types of credit facilities relevant to
this case: direct loans and loan participations. In a loan
participation, an institution such as an FCB buys an interest
in a direct loan. See La. Fed. Land Bank Ass’n, FLCA v.
Farm Credit Admin., 180 F. Supp. 2d 47, 53 (D.D.C. 2001).
An FCB may participate in loans originated either by System
or by non-System banks. 12 U.S.C. § 2013(12). With regard
to a non-System bank, however, the FCB may participate
only in ‘‘loans TTT the [FCB] is authorized to make under this
subchapter [12 U.S.C. §§ 2011–2023].’’ Id. § 2013(12)(C).
The Act itself contains no geographic restriction upon
lending (except for a minor limitation imposed by the 1992
Amendment, discussed below). Nevertheless, the FCA his-
torically has imposed such restrictions by chartering only one
lender of each type to serve any given geographic territory
and by regulation prohibiting an institution from making a
direct loan to a borrower located in another institution’s
territory without the latter’s consent. See 12 C.F.R.
§ 614.4070. Prior to the rulemaking here under review,
these restrictions also applied to loan participations; 12
C.F.R. § 614.4000(d)(2) authorized an FCB to ‘‘participate in
loans financing operations outside its chartered territory only
if the [consent] requirements of § 614.4070 are met.’’ 55
Fed. Reg. 24,861, 24,880 (June 19, 1990).
In November 1998 the FCA proposed a rule to modify 12
C.F.R. § 614.4070 by removing the geographic restrictions.
180 F. Supp. 2d at 54; see 63 Fed. Reg. 60,219, 60,219/2–3,
60,222/2 (Nov. 9, 1998). The Proposed Rule would have both
deleted what was then § 614.4000(d)(2), which had authorized
FCBs to participate in loans subject to the geographical
restrictions of § 614.4070, id. at 60,222/1, and revised
 4

§ 614.4070 to authorize an FCB to ‘‘make loans, participate in
loans, and provide related services to any eligible borrower.’’
Id. at 60,222/2. The preamble to the Proposed Rule empha-
sized the FCA’s desire to foster intra-System competition and
‘‘customer choice’’ by removing territorial restrictions both
upon direct lending and upon participations in loans originat-
ed by others. Id. at 60,220/3.
The FCA received more than 270 comments on the propos-
al, including one submitted by the plaintiffs, which argued
that the FCA lacked statutory authority to promulgate the
Proposed Rule, geographic limitations were integral to the
statutory scheme, and permitting out-of-territory lending
would hurt the System and its customers, especially small
farmers. The FCBT also argued that the 1992 Amendment,
which the Congress had enacted in the wake of the FCBT’s
acquisition of the assets of a failed Federal Land Bank,
barred the FCA from authorizing other System institutions to
engage in long-term lending within the failed bank’s territory.
On April 25, 2000 the FCA published the Final Rule, which
left § 614.4070 unchanged but removed the references to
§ 614.4070 from other regulations, including § 614.4000(d).
65 Fed. Reg. 24,101, 24,102/2. As the FCA explained, the
Final Rule thus removed geographic restrictions from loan
participations but not from direct loans, allowing an FCB to
participate in a loan outside its territory without the consent
of any other System institution. The FCA justified the rule
primarily in terms of market efficiency and risk pooling. Id.
at 24,101–24,102. The plaintiffs promptly asked the FCA to
withdraw the Final Rule and to re-propose it for an additional
comment period, but the Agency refused.
The FCBT and the other plaintiffs then sued the FCA in
district court, seeking a declaration that the Final Rule was
invalid. On cross-motions for summary judgment, the district
court held, among other things, that (1) the FCA adequately
responded to the comments presented to it, 180 F. Supp. 2d
at 62; (2) the Proposed Rule provided adequate notice of the
substance of the Final Rule, id. at 62–63; (3) the Final Rule
was not inconsistent with § 2013(12)(C) of the Act, id. at 57–
 5

59; and (4) the FCBT had forfeited its argument that the
Final Rule was inconsistent with the 1992 Amendment be-
cause it did not raise that argument before the FCA. Id. at
59–60.

II. Analysis
The plaintiffs make two arguments on appeal. First, they
claim the FCA did not comply with the notice and comment
requirement of the APA when it promulgated the Final Rule.
Second, they argue that the Final Rule violates the Farm
Credit Act. The FCBT also presses its argument that the
rule is barred by the 1992 Amendment.
A. Procedural Claims
The plaintiffs argue that the FCA’s promulgation of the
Final Rule was procedurally defective in two respects. First,
the comment the plaintiffs submitted to the FCA applied not
only to direct lending but also to loan participations and
therefore required a response in the final rulemaking, which
changes the regulation of participations. Second, the Pro-
posed Rule did not provide adequate notice of the substance
of the Final Rule.
1. Failure to Address Comment
As noted above, the Proposed Rule prompted over 270
comments including the one submitted by the plaintiffs. The
preamble to the Final Rule said almost nothing about the
comments, noting merely:
No commenter cited any statutory provision that re-
stricts the authority of System banks and associations to
participate in loans outside of their chartered territory.
Only one comment letter mentioned the statutory author-
ities of System institutions to participate in loans.
65 Fed. Reg. at 24,101/2. The plaintiffs claim this statement
did not adequately address their comment protesting the
introduction of competition by the lifting of the geographic
restrictions. In response the FCA points out that in the
preamble to the Proposed Rule it had discussed out-of-
 6

territory lending and out-of-territory participations separate-
ly, whereas the plaintiffs’ comment did not make such a
distinction and was not specifically directed to the part of the
Proposed Rule dealing with participations. Therefore, it
argues, none of the comments it received was relevant to the
Final Rule authorizing only out-of-territory participations and
none required a response.
The FCA should have responded to the plaintiffs’ comment.
Although the FCA is not required ‘‘to discuss every item of
fact or opinion included in the submissions’’ it receives in
response to a Notice of Proposed Rulemaking, Pub. Citizen,
Inc. v. Fed. Aviation Admin., 988 F.2d 186, 197 (D.C. Cir.
1993), it must respond to those ‘‘comments which, if true, TTT
would require a change in [the] proposed rule.’’ Am. Mining
Cong. v. United States EPA, 907 F.2d 1179, 1188 (D.C. Cir.
1990). In this case the plaintiffs’ comment was applicable
equally to a rule limited to participations and to one that also
removed the geographic restriction upon direct lending: it
argued against the introduction into the System of competi-
tion generally, without regard to form. In the first sentence
of the argument portion of their comment letter, the plaintiffs
asserted broadly that the FCA ‘‘does not have the statutory
authority to implement intra-system competition.’’ Letter
from Bill Zimmerman, General Counsel, FCBT, to Patricia
W. DiMuzio, Director, Regulation and Policy Division, FCA
10 (May 3, 1999) (Plaintiffs’ Comment). The plaintiffs com-
plained that the Proposed Rule would, by authorizing ‘‘out-of-
territory lending,’’ effectively ‘‘abolish Congress’s carefully
wrought statutory scheme of geographic boundaries and limi-
tations.’’ Id. at 15. That would be undesirable, the plaintiffs
argued, because ‘‘cooperation and interdependence are essen-
tial characteristics of the Farm Credit System.’’ Id. at 18–19.
We find unpersuasive the FCA’s response that the plain-
tiffs’ comment lacked adequate specificity to out-of-territory
participations. The plaintiffs argued that geographical
boundaries were required by the Act and that the Proposed
Rule would break down those boundaries; the Final Rule did
just that. True, it did so only as to participations, but that
was not a trivial part of what the plaintiffs had argued was
 7

unlawful. Specifically, the plaintiffs had argued that allowing
an FCB to compete outside its geographic territory without
the consent of the System lender whose territory is implicat-
ed would interfere with the cooperative nature of the system;
the Final Rule authorized FCBs to compete outside their
geographic territories as to participations without first obtain-
ing that consent. The FCA asserts that the term ‘‘out-of-
territory lending’’ as used in the Plaintiffs’ Comment denotes
only direct loans and not loan participations, but it offers no
reason, and we see none, to believe that. We interpret the
plaintiffs’ comment, in keeping with the rationale that under-
lies it, to relate to all forms of out-of-territory lending,
including but not limited to participation in loans originated
by others. As such, their comment deserves an answer.*
2. Notice
The plaintiffs also argue that the Proposed Rule did not
give the public sufficient notice of what the Final Rule
ultimately contained; they claim the FCA therefore was
required to solicit a second round of comments before pro-
mulgating a rule removing the geographical restrictions upon
the participations only.
As the FCA points out, an agency may promulgate a final
rule that differs from the rule it has proposed without first
soliciting further comments if the final rule is a ‘‘logical
outgrowth’’ of the proposal. Nat’l Elec. Mfrs. Ass’n v. EPA,
99 F.3d 1170, 1172 (D.C. Cir. 1996). In this case, the Final
Rule clearly is a logical outgrowth of the Proposed Rule. The
Proposed Rule would have removed the geographical restric-
tions from loan participations, among other things. Specifi-

* The district court suggested that FCBT’s comment was ‘‘purely
speculative,’’ 180 F. Supp. 2d at 62, and therefore did not require a
response, citing Home Box Office, Inc. v. FCC, 567 F.2d 9, 35 n.58
(1977) (‘‘comments which themselves are purely speculative and do
not disclose the factual or policy basis on which they rest require no
response. There must be some basis for thinking a position taken
in opposition to the agency is true’’). Because none of the defen-
dants urged this point as a basis for affirmance, we do not consider
it.
 8

cally, 12 C.F.R. § 614.4070 would have been revised to permit
System institutions to ‘‘make loans, participate in loans, and
provide related services to any eligible borrower,’’ 63 Fed.
Reg. at 60,222/2, and the preamble to the Proposed Rule
separately discussed deleting the geographical restrictions
upon direct loans and upon loan participations. Id. at 60,-
220/2–3. Therefore the Final Rule, which merely eliminated
the cross-reference in § 614.4000(d) to the geographical re-
strictions upon loan participations in § 614.4070, was a logical
outgrowth – indeed a natural subset – of the proposal.
The plaintiffs argue that the preamble to the Proposed
Rule, by describing the deletion of the cross-reference in
§ 614.4000(d) as a ‘‘conforming amendment[ ],’’ id. at 60,219/1,
60,220/3, implied the FCA would not promulgate that ‘‘amend-
ment’’ by itself; their idea is that it is not logical to adopt a
‘‘conforming amendment’’ when there is nothing new to which
it makes the amended text conform. This is essentially a
technical argument, and not a convincing one. Although the
FCA’s chosen method for removing the geographical restric-
tion upon loan participations – not by rewriting § 614.4070
but by deleting references to § 614.4070 in other regula-
tions – was not heralded in the Proposed Rule, the result
surely was. The preamble to the Proposed Rule separately
discussed the possibility of lifting the restrictions upon loan
participations and lifting the restrictions upon direct lending.
Id. at 60,220. Moreover, it provided a separate rationale for
each aspect of the proposal. Id.
As the district court put the matter, ‘‘[n]owhere does the
Proposed Rule indicate that removal of geographic restriction
is an all-or-nothing proposal.’’ 180 F. Supp. 2d at 63. Under
these circumstances, we think the plaintiffs were clearly on
notice that if they had anything to say specifically about the
effect of removing geographic restrictions upon loan partic-
ipations – either alone or in combination with the removal of
restrictions upon other activities – then they should have said
it during the period for comments on the Proposed Rule.
B. Substantive Claims
All the plaintiffs argue that the Final Rule violates the
Farm Credit Act by purporting to authorize FCBs to partici-
 9

pate in loans prohibited to them by the Act. In addition, the
FCBT argues that permitting other System institutions to
operate in the territory of the former Federal Land Bank of
Jackson invades the exclusive lending rights given to the
FCBT by the 1992 Amendment.
1. The Farm Credit Act
Section 2013(12)(C) of Title 12 authorizes an FCB to partic-
ipate with non-System lenders ‘‘in loans that the bank is
authorized to make under this subchapter.’’ The plaintiffs
argue that the Final Rule does not authorize an FCB to make
a direct loan to an out-of-territory borrower without the
consent of the System institutions located in the borrower’s
territory. Therefore, it reasons, an FCB is not ‘‘authorized to
make’’ such a direct loan ‘‘under this subchapter,’’ and the
rule, by authorizing it to participate in such a loan, runs afoul
of the statute. The FCA responds that, because Subchapter
I of the Act, 12 U.S.C. §§ 2011–2023, authorizes an FCB to
make certain ‘‘long-term real estate mortgage loans,’’ id.
§ 2015(a)(1), ‘‘section 2013(12)(C) simply restricts FCBs to
participating in’’ that type of out-of-territory loan.
In order to determine whether the FCA’s interpretation of
the Act it administers is permissible, we look to the standard
set out in Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984). At Chevron step one, we
ask whether the Congress ‘‘has directly spoken to the precise
question at issue,’’ id. at 842; if so, then we must ‘‘give effect
to [its] unambiguously expressed intent.’’ Id. at 843. If the
intent of the Congress is ambiguous with respect to the
question before us, then at Chevron step two we defer to the
FCA’s interpretation so long as it is ‘‘based on a permissible
construction of the statute.’’ Id.
The plaintiffs argue that the ‘‘plain statutory text’’ prohibits
an FCB from ‘‘enter[ing] into a participation loan if the
[FCB] could not make the loan as a direct loan.’’ Not quite.
The ‘‘plain statutory text’’ states that an FCB may not
participate in a loan if that loan is one that ‘‘the bank is [not]
authorized to make under’’ Subchapter I. This of course
surfaces the question obscured by the plaintiffs’ formulation:
 10

Authorized by what? The statute itself authorizes FCBs to
make certain long-term real-estate mortgage loans, but the
FCA, exercising its delegated authority to promulgate regula-
tions implementing the Act, restricted FCBs to a subset of
those loans. Thus the disputed statutory phrase, ‘‘loans that
the bank is authorized to make under this subchapter,’’ is
susceptible to at least two interpretations. It might mean
either ‘‘authorized [by the statute, as limited by the applicable
regulations,] to make under this subchapter,’’ or it might
mean ‘‘authorized to make under this subchapter [without
regard to any limiting regulations].’’ We conclude that in
these circumstances the intent of the Congress is unclear; it
did not speak directly to the precise issue before us.
Nothing in the legislative history of § 2013(12)(C) changes
our view of the statute. The plaintiffs point to the following
statement in the Senate Report: ‘‘land banks could parti-
ci[p]ate with nonsystem lenders only in real estate mortgage
loans that the land banks are authorized to make under the
Act.’’ S. Rep. No. 96–837, at 14 (1980). The plaintiffs argue
that if the Congress had intended the meaning now urged by
the FCA, then it would have ended this statement after the
word ‘‘loans’’ because the remainder would be superfluous.
But that is not correct because § 2015(a)(1) does not autho-
rize FCBs to make any and all real estate mortgage loans.
Instead it authorizes FCBs to make such loans ‘‘in rural areas
TTT or to producers or harvesters of aquatic products.’’ Be-
cause the Act allows FCBs to participate only in a subset of
real estate mortgage loans, the remainder of the sentence is
not superfluous even upon the FCA’s interpretation; it in-
vokes the limitation just quoted.
Having determined in Chevron step one that the Congress
did not directly address the question at issue, we move briefly
to Chevron step two. We need only say that, for the reasons
stated above, we think the FCA’s interpretation is reasonable.
The plaintiffs next claim the FCA’s interpretation of
§ 2013(12)(C) is not entitled to Chevron deference because
the Agency first presented that interpretation in this litiga-
tion. Although we would not defer to the mere litigating
 11

position of agency counsel, see, e.g., Inv. Co. Inst. v. Camp,
401 U.S. 617, 627–28 (1971), that is not what the FCA has
urged here. The Agency itself has long interpreted
§ 2013(12)(C) to authorize an FCB to participate with a non-
System lender in a loan ‘‘of the type it is authorized to make
under title I of the Act.’’ See 12 C.F.R. § 614.4000(d)(1).
2. 1992 Amendment
The FCBT alone argues that the Final Rule conflicts with a
1992 Amendment to the Act; to understand this argument
requires a bit more history.
The relevant amendment, §§ 401(b)-(c) of the Farm Credit
Banks and Associations Safety and Soundness Act of 1992,
Pub. L. No. 102–552, 106 Stat. 4102, 4128, grew out of events
set in motion by the Agricultural Credit Act of 1987, Pub. L.
No. 100–233, 101 Stat. 1568 (1988), which effected a change in
the organization of the System, requiring the merger of then-
existing Federal Land Banks and Federal Intermediate Cred-
it Banks to form the FCBs of the current System. The
Federal Land Bank of Jackson (Mississippi) – which was to
be merged with the Federal Intermediate Credit Bank of
Jackson – was placed in receivership in 1988, thus rendering
the merger impractical. Instead, the FCBT purchased from
the receiver the assets of the Federal Land Bank of Jackson,
and the FCA (1) approved an amendment to the charter of
the FCBT permitting it to operate in the territory of the
Federal Land Bank of Jackson, and (2) ordered a merger of
the FCBT with the Federal Intermediate Credit Bank of
Jackson. A suit by various System lending institutions chal-
lenged both the charter amendment and the merger. See
First S. Prod. Credit Ass’n v. Farm Credit Admin., 926 F.2d
339 (4th Cir. 1991). The Fourth Circuit held that the forced
merger was unlawful but did not reach the lawfulness of the
FCBT’s charter as amended. Id. at 344 n.2, 347.
The Congress then enacted the 1992 Amendment, which
confirmed that ‘‘[n]otwithstanding any other provision of law,
the Farm Credit Bank of Texas may act in accordance with
the exclusive charter of the bank, as amended.’’ § 401(b)
 12

(codified at 12 U.S.C. § 2011 note). The Amendment also
prevented the FCA from
issu[ing] a charter to, or approv[ing] an amendment to
the charter of, any institution TTT that would authorize
the institution to exercise lending authority TTT in a
territory in which the charter of another such institution
authorizes the other institution to exercise like authority
TTT except with the approval of [the other institution].
§ 401(c) (codified at 12 U.S.C. § 2252(a)(2)(B)). This restric-
tion was made applicable only to the former Jackson territo-
ry. Id. (codified at 12 U.S.C. § 2252(a)(2)(C)). Thus the
1992 Amendment confirmed the authority of the FCBT to act
within the Jackson territory.
The FCBT claims § 401(b) gives it the exclusive right to
‘‘make or participate in long-term real estate mortgage loans’’
in the Jackson territory. It also claims § 401(c) prevents the
FCA from issuing a regulation that would have the same
effect as a prohibited charter amendment. The district court
held, and the FCA argues on appeal, that the FCBT forfeited
these claims. Like the district court, the FCA reasons that
the FCBT’s comment properly did not include an objection
based upon the 1992 Amendment because the comment did
not focus upon loan participations, which are the sole subject
matter of the Final Rule.
There was no forfeiture. The FCBT argued in its com-
ment that because its charter authorized it to ‘‘make or
participate in long-term real estate mortgage loans’’ and was
exclusive, ‘‘only the Farm Credit Bank of Texas may engage
in long-term lending in the area its charter covers.’’ Plain-
tiffs’ Comment at 24 (emphasis added). The FCBT’s objec-
tion by its terms clearly extended both to direct lending and
to participations. Likewise, the FCBT stated that the FCA
could not permit another institution in the System ‘‘to exer-
cise the same lending authority in any part of the former
Jackson district’’ without its consent. Plaintiffs’ Comment at
24 (emphasis added). ‘‘Lending authority’’ is the term used
in § 401(c), which suggests the FCBT’s objection was as
broad as the statute upon which it was relying. We think its
 13

comment fairly put the FCA on notice that the FCBT object-
ed to permitting any other institution in the System to
exercise any lending authority, including participating in
loans originated by another, anywhere within its territory.
The focus of the district court and of the FCA upon the
FCBT’s failure in its comment to object specifically to the
authorization of loan participations in the Proposed Rule
misses the point. The FCBT did not object specifically to
direct lending either; it objected more broadly to the FCA
permitting any other institution in the System to ‘‘engage in
long-term lending’’ in its territory. Similarly, the FCBT’s
legal argument applies equally to direct lending and to partic-
ipations, and it specifically mentioned that its assertedly
‘‘exclusive’’ charter authorized participations. In these cir-
cumstances it would be odd indeed to interpret the FCBT’s
comment as applying only to direct lending.
Turning to the merits of the FCBT’s objection, however, we
are unpersuaded. Section 401(c) clearly prohibits the FCA,
without the FCBT’s consent, from issuing or changing a
charter so as to allow competition in the former Jackson
territory; but it just as clearly does not prohibit the FCA
from doing anything else – such as changing a regulation –
that would have a similar effect. The FCBT has provided us
with no persuasive reason to read into the statute a wider
prohibition than the Congress expressly put there.
The FCBT’s other argument based upon the 1992 Amend-
ment, that § 401(b) ratified the ‘‘exclusive’’ nature of its
charter, is also unavailing. The provision upon which the
FCBT relies is concerned with granting authority to the
FCBT rather than denying it to other institutions: ‘‘Notwith-
standing any other provision of law, the Farm Credit Bank of
Texas may act in accordance with the exclusive charter of the
bank.’’ § 401(b). We understand the reference to the ‘‘ex-
clusive charter of the bank’’ as recognizing the stricture
simultaneously imposed upon the FCA by § 401(c) rather
than an independent grant of authority, that is, rather than
an implicit and unremarked amendment to the FCBT’s char-
ter. That the Congress enacted the 1992 Amendments in the
 14

aftermath of the First South litigation, in which the validity of
the FCBT’s charter was questioned, strongly reinforces this
understanding.
C. Remedy
There remains the matter of the proper remedy. The
plaintiffs have asked us to vacate the Final Rule. ‘‘[V]acatur
is not necessarily indicated,’’ however, ‘‘even if an agency acts
arbitrarily and capriciously in promulgating a rule.’’ Fox
Television Stations, Inc. v. FCC, 280 F.3d 1027, 1048 (D.C.
Cir. 2002), reh’g granted on other issue, 293 F.3d 537. Rath-
er, ‘‘[t]he decision whether to vacate depends on the serious-
ness of the order’s deficiencies (and thus the extent of doubt
whether the agency chose correctly) and the disruptive conse-
quences of an interim change that may itself be changed.’’
Id. (quoting Allied-Signal, Inc. v. United States Nuclear
Regulatory Comm’n, 988 F.2d 146, 150–51 (D.C. Cir. 1993)).
Here it is not unlikely the FCA ‘‘will be able to justify a
future decision to retain the Rule,’’ id. at 1049, inasmuch as
its only error was its failure to explain what seems to be a
policy difference with the plaintiffs. At the same time,
vacatur is sure to be ‘‘disruptive’’ because it would preclude a
set of voluntary transactions that both originating and partici-
pating System lenders find advantageous. In these circum-
stances, we think ‘‘the probability that the [FCA] will be able
to justify retaining the [Final] Rule is sufficiently high that
vacatur of the Rule is not appropriate.’’ Id.

III. Conclusion
For the foregoing reasons, the judgment is reversed and
the case is remanded to the district court with instructions to
enter judgment for the plaintiffs to the extent of remanding
the Final Rule to the Agency to respond to the plaintiffs’
comment.
So ordered.