11-3408-cv, 11-3285-cv Town of Babylon v. FHFA, Natural v. FHFA UNITED STATES COURT OF APPEALS 1 FOR THE SECOND CIRCUIT 2…

11-3408-cv, 11-3285-cv
Town of Babylon v. FHFA, Natural v. FHFA
UNITED STATES COURT OF APPEALS 1
FOR THE SECOND CIRCUIT 2
August Term, 2012 3
(Argued: September 14, 2012 Decided: October 24, 2012) 4
Docket Nos. 11-3408-cv, 11-3285-cv 5
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6
TOWN OF BABYLON, 7
8 Plaintiff-Appellant, 9
v. 10
FEDERAL HOUSING FINANCE AGENCY, EDWARD DEMARCO, in his capacity 11 as Acting Director of Federal Housing Finance Agency, OFFICE OF 12 THE COMPTROLLER OF THE CURRENCY, a component of the United 13 States Department of the Treasury, JOHN G. WALSH, Acting 14 Comptroller of the Currency, 15
16 Defendants-Appellees, 17
CHARLES E. HALDEMAN, JR., in his capacity as Chief Executive 18 Officer of the Federal Home Loan Mortgage Corporation, MICHAEL 19 J. WILLIAMS, in his capacity as Chief Executive Officer of the 20 Federal National Mortgage Association, 21
22 Defendants. 23
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 24
NATURAL RESOURCES DEFENSE COUNCIL, INC., 25
26 Plaintiff-Appellant, 27
28 v. 29
FEDERAL HOUSING FINANCE AGENCY, EDWARD DEMARCO, Acting 30 Director, FEDERAL HOUSING FINANCE AGENCY, OFFICE OF THE 31
1

-- 1 of 17 --

COMPTROLLER OF THE CURRENCY, a component of the United States 1 Department of the Treasury, JOHN G. WALSH, Acting Comptroller 2 of the Currency, 3
4 Defendants-Appellees. 5
6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7 Before: WINTER, CABRANES, and CARNEY, Circuit Judges. 8
This opinion disposes of two separate appeals from two 9
district courts heard in tandem. Plaintiffs-appellants Town of 10
Babylon and the National Resources Defense Council appeal from 11
grants of motions to dismiss in favor of appellees Federal 12
Housing Finance Agency and the Office of the Comptroller of the 13
Currency in the Eastern District of New York (Leonard D. 14
Wexler, Judge) and Southern District of New York (Shira A. 15
Scheindlin, Judge), respectively. Appellants argue that the 16
district courts erred in concluding that 12 U.S.C. § 4617 17
precludes judicial review of a Directive issued by the FHFA to 18
Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and 19
also that they lacked standing to pursue their claims against 20
the Office of the Comptroller of the Currency. We affirm. 21
ERIK A. ORTMANN (William J. 22 Tinsley Jr., Christopher K. 23 Smith, on the brief), Goldberg & 24 Connolly, Rockville Centre, New 25 York, for Plaintiff-Appellant 26 Town of Babylon. 27
28 HOWARD N. CAYNE (Lisa S. Blatt, 29 Asim Varma, on the brief), Arnold 30 & Porter LLP, Washington, D.C., 31 for Stephen E. Hart, Federal 32 Housing Finance Agency, for 33 Defendant-Appellees Federal 34 Housing Finance Agency and Edward 35
2

-- 2 of 17 --

DeMarco. 1
2 THOMAS A. MCFARLAND (Varuni 3 Nelson, Assistant United States 4 Attorney, Julie L. Williams, 5 Daniel P. Stipano, Horace G. 6 Sneed, Douglas B. Jordan, Office 7 of the Comptroller of the 8 Currency, on the brief), 9 Assistant United States Attorney 10 for Loretta E. Lynch, United 11 States Attorney for the Eastern 12 District of New York, for 13 Defendant-Appellees Office of the 14 Comptroller of the Currency and 15 John G. Walsh. 16
17 KATHERINE KENNEDY (Benjamin H. 18 Longstreth, on the brief), 19 Natural Resources Defense 20 Council, New York, New York, for 21 Plaintiff-Appellant Natural 22 Resources Defense Council. 23
24 BERTRAND MADSEN (Benjamin H. 25 Torrance, on the brief), 26 Assistant United States 27 Attorneys, for Preet Bharara, 28 United States Attorney for the 29 Southern District of New York, 30 for Defendant-Appellees Office of 31 the Comptroller of the Currency 32 and John G. Walsh. 33
34
35
WINTER, Circuit Judge: 36
This opinion disposes of separate appeals from two different 37
district courts. We heard the appeals in tandem because of the 38
similarity of the issues raised. 39
The Town of Babylon and the Natural Resources Defense 40
Council, Inc. (“NRDC”) appeal from orders entered by Judge Wexler 41
in the Eastern District of New York and Judge Scheindlin in the 42
3

-- 3 of 17 --

Southern District of New York, respectively. The district courts 1
dismissed appellants’ complaints against the Federal Housing 2
Financing Agency (“FHFA”) 1 and the Office of the Comptroller of 3
the Currency (“OCC”). 2 Appellants claimed that a Directive of 4
the FHFA and a Bulletin of the OCC adversely impacted the 5
operation of first-lien Property Assessed Clean Energy (“PACE”) 6
programs. The district courts dismissed the actions on the 7
grounds that: (i) the claims against the FHFA were precluded by 8
12 U.S.C. § 4617(f), and (ii) appellants lacked Article III 9
standing to pursue claims against the OCC. We affirm. 10
BACKGROUND 11
PACE programs are operated by local governments. They 12
encourage property owners to make home improvements that reduce 13
energy consumption, promote clean energy, create local jobs, and 14
reduce greenhouse gas emissions, thereby mitigating the effect of 15
global climate change. The local governments offer financing to 16
commercial and residential property owners to fund the cost of 17
the property improvements. Typically, the owners repay the 18
particular local government, which calls the financing advances 19
1 The Federal Housing Finance Agency, or FHFA, was established in 2008
by the Housing and Economic Recovery Act (“HERA”) to regulate Fannie Mae,
Freddie Mac, and/or the Federal Home Loan Banks (“FHLBs”). See 12 U.S.C. §
4511(a), (b)(2). Under 12 U.S.C. § 4617, the FHFA has the power to appoint
itself as a conservator or receiver of Fannie Mae, Freddie Mac, and/or the
FHLBs. The FHFA appointed itself conservator over both Fannie Mae and Freddie
Mac in September 2008 and remains conservator over both entities. See Fed.
Hous. Fin. Agency, Statement of FHFA Director James B. Lockhart Announcing
Conservatorship of Fannie Mae and Freddie Mac (2008).
2 The Office of the Comptroller of the Currency is a federal agency that
charters, regulates, and supervises all national banks.
4

-- 4 of 17 --

“assessments,” on a scheduled periodic basis. If a scheduled 1
payment is not made, in many PACE programs, the delinquent amount 2
attaches to the real property as a “tax lien.” Such a lien has 3
priority over any other lien attached to the property, including 4
new and preexisting mortgage liens, and stays with the property 5
in the event of sale. However, some PACE programs do not carry 6
such priority and are not affected by this litigation. The Town 7
of Babylon operates a PACE financing program styled the Long 8
Island Green Homes program (“LIGH”). It includes a lien-priority 9
provision. 10
NRDC alleges that “first lien status is critical to the 11
success of PACE programs” because junior lienholders typically 12
lose the entire value at stake in a foreclosure. In contrast, it 13
alleges, “PACE lien seniority is immaterial to holders of the 14
underlying mortgages,” because the assessments are relatively 15
small, the risk of default is lessened by the improvement in the 16
owner’s financial status due to energy cost savings, and the 17
value of the collateral is increased. 18
The Federal National Mortgage Association, commonly known as 19
Fannie Mae, and the Federal Home Loan Mortgage Corporation, 20
commonly known as Freddie Mac, are federally chartered 21
corporations of a type commonly referred to as Government- 22
Sponsored Enterprises. The entities together own or guarantee 23
close to half of the home loans in the United States, and the 24
value of the combined debt and mortgage-related assets of the two 25
5

-- 5 of 17 --

entities along with the Federal Home Loan Banks (“FHLB”) exceeds 1
$5.9 trillion. As noted by Judge Wexler in the Town of Babylon 2
matter, “The position held in the home mortgage business by 3
Fannie Mae and Freddie Mac make them the dominant force in that 4
market. . . . [I]t is not a stretch to assume that lenders in the 5
home financing market are guided in their decisions by Fannie Mae 6
and Freddie Mac requirements.” Town of Babylon v. Fed. Hous. 7
Fin. Agency, 790 F. Supp. 2d 47, 49-50 (E.D.N.Y. 2011). In 8
September 2008, as discussed in more detail infra, FHFA appointed 9
itself conservator over Fannie Mae and Freddie Mac. 10
On July 6, 2010, the FHFA issued a Directive (“FHFA 11
Directive” or “Directive”) directing Fannie Mae and Freddie Mac 12
to take “prudential actions,” “not limited to” certain enumerated 13
suggestions not pertinent here, 3 to protect themselves against 14
safety and soundness concerns -- risks -- raised by PACE programs 15
3 These suggestions were as follows:
Adjusting loan-to-value ratios to reflect the maximum
permissible PACE loan amount available to borrowers in
PACE jurisdictions;
Ensuring that loan covenants require approval/consent
for any PACE loan;
Tightening borrower debt-to-income ratios to account
for additional obligations associated with possible
future PACE loans;
Ensuring that mortgages on properties in a
jurisdiction offering PACE-like programs satisfy all
applicable federal and state lending regulations and
guidance.
Fed. Hous. Fin. Agency, Statement on Certain Energy Retrofit Loan Programs
2 (2010).
6

-- 6 of 17 --

that impose priority or first-liens on participating properties 1
like LIGH. Fed. Hous. Fin. Agency, Statement on Certain Energy 2
Retrofit Loan Programs 2 (2010). The Directive also directed the 3
FHLBs “to review their collateral policies in order to assure 4
that pledged collateral is not adversely affected by energy 5
retrofit programs that include first liens.” Id. 6
The concerns expressed were related only to the 7
subordination of mortgage liens to PACE-related first-lien 8
priorities. Nothing in the Directive or other associated 9
publications of the FHFA suggests any concern over PACE programs 10
that do not impose first-lien priorities. Indeed, FHFA expressly 11
disclaimed any such concern in its Directive Id. (“Nothing in 12
this Statement affects the normal underwriting programs of the 13
regulated entities or their dealings with PACE programs that do 14
not have a senior lien priority.”). 15
The same day, the OCC issued “Supervisory Guidance” in the 16
form of a Bulletin (“Bulletin” or “OCC Bulletin”) stating that 17
national banks “need to be aware of the FHFA’s directives” and 18
“should take steps to mitigate exposures and protect collateral 19
positions,” as well as “consider the impact of tax-assessed 20
energy advances on . . . asset valuations” when investing in 21
mortgage-backed securities. Office of the Comptroller of the 22
Currency, OCC Bull. No. 2010-25, Property Assessed Clean Energy 23
(PACE) Programs 1-2 (2010). 24
Subsequent to the actions of the FHFA and the OCC, Fannie 25
7

-- 7 of 17 --

Mae and Freddie Mac each issued statements declaring that they 1
would no longer purchase mortgages secured by properties subject 2
to first-lien PACE obligations. See Freddie Mac, Bull. No. 2010- 3
20, Mortgages Secured by Properties with an Outstanding Property 4
Assessed Clean Energy (PACE) Obligation 1 (2010); Fannie Mae, 5
Announcement SEL-2010-12, Options for Borrowers with a PACE Loan 6
2 (2010). On February 28, 2011, the FHFA, by letter, directed 7
Fannie Mae and Freddie Mac to “continue to refrain from 8
purchasing mortgage loans secured by properties with outstanding 9
first-lien PACE obligations,” and “undertake other steps as may 10
be necessary to protect their safe and sound operations from 11
these first-lien PACE programs.” Letter from Alfred M. Pollard, 12
General Counsel, FHFA, to Timothy J. Mayopoulos, General Counsel, 13
Fannie Mae, and Robert E. Bostrom, General Counsel, Freddie Mac 14
(February 28, 2011). 15
The alleged result of these various statements has been 16
reduced participation in, and diminished viability of, LIGH and 17
other first-lien PACE programs. The Town of Babylon and the NRDC 18
then brought the present actions asserting a host of legal 19
theories, including, as relevant to this appeal, violation of the 20
Administrative Procedure Act (“APA”), 5 U.S.C. § 706, for acting 21
in an arbitrary and capricious manner; violation of the APA, 5 22
U.S.C. § 553(b),(c), and the Housing and Economic Recovery Act 23
(“HERA”), 12 U.S.C. § 4526(b), for failure to solicit notice and 24
comment; and violation of the National Environmental Policy Act 25
8

-- 8 of 17 --

(“NEPA”), 42 U.S.C. § 4332(2)(C), for failure to prepare an 1
environmental impact statement. See Complaint at 14-18, ¶¶ 53- 2
75, Town of Babylon v. Fed. Hous. Fin. Agency, 790 F. Supp. 2d 47 3
(E.D.N.Y. 2011) (No. 10-cv-4916); Second Amended Complaint at 19- 4
20, ¶¶ 55-66, NRDC v. Fed. Hous. Fin. Agency, 815 F. Supp. 2d 630 5
(S.D.N.Y. 2011) (No. 10-cv-7647). Both district courts concluded 6
that the claims against the FHFA for the issuance of the 7
Directive were expressly precluded by 12 U.S.C. § 4617(f). Town 8
of Babylon, 790 F. Supp. 2d at 54; NRDC v. Fed. Hous. Fin. 9
Agency, 815 F. Supp. 2d at 642. Both district courts also 10
concluded that appellants lacked constitutional standing to 11
challenge the OCC’s actions because the redressability 12
requirement was not satisfied. Town of Babylon, 790 F. Supp. 2d 13
at 55-56; NRDC v. Fed. Hous. Fin. Agency, 815 F. Supp. 2d at 639- 14
41. The district courts therefore dismissed appellants’ 15
respective complaints. Town of Babylon, 790 F. Supp. 2d at 56; 16
NRDC v. Fed. Hous. Fin. Agency, 815 F. Supp. 2d at 642. For the 17
reasons stated infra, we affirm. 18
DISCUSSION 19
We review a district court’s grant of a motion to dismiss 20
under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) de 21
novo, Klein & Co. Futures, Inc. v. Bd. of Trade, 464 F.3d 255, 22
259 (2d Cir. 2006), accepting as true factual allegations made in 23
the complaint, and drawing all reasonable inferences in favor of 24
the plaintiffs. Holmes v. Grubman, 568 F.3d 329, 335 (2d. Cir. 25
2009). 26
9

-- 9 of 17 --

a) Section 4617(f) 1
In 2008, the FHFA appointed itself as the conservator of 2
Fannie Mae and Freddie Mac pursuant to authority granted by 12 3
U.S.C. § 4617. The appointment was based on a determination that 4
“unsafe or unsound condition[s]” existed. 12 U.S.C. § 5
4617(a)(3)(C). See Fed. Hous. Fin. Agency, Statement of FHFA 6
Director James B. Lockhart Announcing Conservatorship of Fannie 7
Mae and Freddie Mac (2008). 8
Section 4617 empowers the FHFA as a conservator to “take 9
such action as may be -- (i) necessary to put the regulated 10
entity in a sound and solvent condition; and (ii) appropriate to 11
carry on the business of the regulated entity and preserve and 12
conserve the assets and property of the regulated entity.” 12 13
U.S.C. § 4617(b)(2)(D). Judicial review of “the exercise of 14
powers or functions of the [FHFA] as a conservator” is prohibited 15
“[e]xcept as provided in [Section 4617].” Id. § 4617(f). 16
Nothing in Section 4617 authorizes judicial review in the present 17
circumstances. 18
Appellants argue that the Directive was not issued pursuant 19
to FHFA’s powers as a conservator. They note that even as a 20
conservator, FHFA continues to have powers as a regulator, 21
pursuant to 12 U.S.C. § 4526, that when exercised are subject to 22
the notice and comment procedures of the APA and reviewable under 23
5 U.S.C. § 704. They then argue that FHFA exercised this general 24
regulatory authority, rather than its powers as a conservator, 25
when issuing the Directive because either: (i) the agency’s 26
10

-- 10 of 17 --

conservator powers do not include the power to issue the 1
Directive; or (ii) the agency did not rely on powers as a 2
conservator when issuing the Directive. 3
Argument (i) lacks any basis in the statutory language or 4
legislative purpose. The FHFA Directive to Fannie Mae and 5
Freddie Mac related concerns that PACE priority liens enhanced 6
the risks associated with subordinated mortgages and directed the 7
entities to protect themselves against such risks. As a 8
conservator, FHFA was expressly empowered to take “such action as 9
may be -- (i) necessary to put [Fannie Mae and Freddie Mac] in a 10
sound and solvent condition; and (ii) appropriate to . . . 11
preserve . . . [their] assets and property.” 12 U.S.C. § 12
4617(b)(2)(D). Directing protective measures against perceived 13
risks is squarely within FHFA’s powers as a conservator. 14
Even if FHFA’s powers as a regulator and conservator 15
overlap, the exclusion of judicial review over the exercise of 16
the latter would be relatively meaningless if it did not cover an 17
FHFA directive to an institution in conservatorship to mitigate 18
or avoid a perceived financial risk. 19
As for argument (ii), the FHFA’s supposed silence in the 20
Directive regarding the authority under which it was acting is 21
irrelevant. 4 The statute excludes judicial review of “the 22
4 Much ink has been consumed in arguments concerning a later statement
by the FHFA (issued after these actions were filed) that it had acted in its
role as a conservator in issuing the Directive to Fannie Mae and Freddie Mac.
We need not address the issue because of our conclusion that the exclusion of
judicial review under Section 4617(f) was triggered by the conservatorship and
the nature of the Directive. The subsequent statement certainly did not
render the Directive subject to judicial review.
11

-- 11 of 17 --

exercise of powers or functions” given to the FHFA as a 1
conservator. Id. § 4617(f). A conclusion that the challenged 2
acts were directed to an institution in conservatorship and 3
within the powers given to the conservator ends the inquiry. See 4
Volges v. Resolution Trust Corp., 32 F.3d 50, 52 (2d Cir. 1994) 5
(interpreting the scope of a virtually identical jurisdictional 6
bar in the Financial Institutions Reform, Recovery, and 7
Enforcement Act of 1989, and concluding that no jurisdiction 8
existed where “[t]he proposed sale of the Volges mortgages 9
plainly f[ell] within the ‘powers or functions of the [Resolution 10
Trust Corporation] as a conservator or receiver’”). No 11
particular talismanic incantation of authority is required to 12
trigger Section 4617(f). 5
13
b) Standing to Pursue Claims Against the OCC 14
“Article III, Section 2 of the Constitution limits the 15
[subject matter] jurisdiction of the federal courts to the 16
resolution of ‘cases’ and ‘controversies.’” Mahon v. Ticor Title 17
5The FHFA’s Directive addressed not only Fannie Mae and Freddie Mac but
also the FHLBs. However, unlike Fannie Mae and Freddie Mac, the FHLBs are not
under a conservatorship. Therefore the FHFA’s Directive, insofar as it is
directed to the FHLBs, is not shielded from judicial review by Section
4617(f).
However, to the extent that appellants challenge the FHFA Directive as
it applies to the FHLBs, they have failed to show that the alleged injury is
likely to be redressed by the relief sought. Unlike the Directive’s direction
to Fannie Mae and Freddie Mac to undertake affirmative action, the Directive
required the FHLBs only “to review their collateral policies in order to
assure that pledged collateral is not adversely affected by [PACE] programs
that include first liens.” Fed. Hous. Fin. Agency, Statement on Certain
Energy Retrofit Loan Programs 2 (2010). For reasons discussed in Part b,
infra, withdrawal of the Directive would not make it likely that the FHLBs
would alter their practices.
12

-- 12 of 17 --

Ins. Co., 683 F.3d 59, 62 (2d Cir. 2012) (citation and internal 1
quotation marks omitted). “In order to ensure that this . . . 2
case-or-controversy requirement is met, courts require that 3
plaintiffs establish their standing as the proper parties to 4
bring suit.” Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 89 (2d 5
Cir. 2009) (quoting W.R. Huff Asset Mgmt. Co. v. Deloitte & 6
Touche LLP, 549 F.3d 100, 106 (2d Cir. 2008)) (internal quotation 7
marks omitted). To establish Article III standing, one must 8
show: (i) injury-in-fact, (ii) causation, and (iii) 9
redressability. Id. The district courts found with regard to 10
these claims that the last element, redressability, was absent. 11
We agree. 12
Appellants allege both procedural injury -- the lack of 13
solicitation of notice and comment as required by the APA, 5 14
U.S.C. § 553, and of an environmental impact statement as 15
required by NEPA, 42 U.S.C. § 4332(2)(C) -- as well as 16
substantive injury -- arbitrary and capricious agency action by 17
the OCC -- resulting from the OCC’s promulgation of the Bulletin. 18
Where, as here, a litigant complaining of procedural or 19
substantive injury is not the regulated party, the litigant must 20
demonstrate that favorable action by the agency is likely to 21
result in favorable action by the regulated party in addition to 22
demonstrating a link between the procedural or substantive injury 23
to the litigant and the adverse agency action. See Lujan v. 24
Defenders of Wildlife, 504 U.S. 555, 561 (1992) (noting the 25
general rule that “it must be likely, as opposed to merely 26
13

-- 13 of 17 --

speculative, that the injury will be redressed by a favorable 1
decision” (internal quotations omitted)); id. at 562 (explaining 2
that “when the plaintiff is not himself the object of the 3
government action or inaction he challenges, standing is not 4
precluded, but it is ordinarily ‘substantially more difficult’ to 5
establish.” (quoting Allen v. Wright, 468 U.S. 737, 758 (1984))); 6
id. at 570-71 (plurality opinion) (“[R]edress of the only injury 7
in fact respondents complain of requires action . . . by the 8
individual funding agencies; and any relief the District Court 9
could have provided in this suit against the Secretary was not 10
likely to produce that action.”); Simon v. E. Ky. Welfare Rights 11
Org., 426 U.S. 26, 42-43 (1976) (“The complaint here alleged only 12
that petitioners, by the adoption of [the] Revenue Ruling . . . 13
had ‘encouraged’ hospitals to deny services to indigents. . . . 14
It is purely speculative whether the denials of service specified 15
in the complaint fairly can be traced to petitioners’ 16
‘encouragement’ or instead result from decisions made by the 17
hospitals without regard to the tax implications.”); St. John’s 18
United Church of Christ v. FAA, 520 F.3d 460, 463 (D.C. Cir. 19
2008) (holding that a plaintiff injured by a regulated third 20
party must demonstrate a likelihood that the third party would 21
change action in the event that the defendant agency changes 22
action, notwithstanding the fact that plaintiff has alleged a 23
procedural injury). 24
Excluding the harm alleged to have resulted from the non- 25
reviewable Directive to Fannie Mae and Freddie Mac, the only 26
14

-- 14 of 17 --

injury alleged is the harm from the alteration of lending 1
practices by national banks -- the institutions that are 2
regulated by the OCC but are not parties to this litigation. 3
However, if the OCC Bulletin were vacated, the national banks 4
would remain entirely free to treat PACE-related properties on an 5
unfavorable basis. 6
6
Town of Babylon’s pleadings and affidavits contain no 7
allegation or assertion that the national banks regulated by the 8
OCC would act differently were the OCC Bulletin vacated. NRDC’s 9
complaint similarly lacks any allegation that national banks 10
regulated by the OCC would alter current practices if the OCC 11
Bulletin were vacated. 12
NRDC did provide declarations by three municipal officials 13
with experience on the city-planning side of PACE-program 14
implementation. Each stated that if both the FHFA Directive and 15
the OCC Bulletin were vacated, then national banks’ lending 16
practices would revert to the status quo ante (pre-July 6, 2010). 17
However, the FHFA Directive, as applied to Fannie Mae and 18
Freddie Mac, cannot be vacated for reasons stated above, and none 19
6 Therefore, the instant matter is distinguishable from New York Public
Interest Research Group v. Whitman, 321 F.3d 316 (2d Cir. 2003). In Whitman,
we stated briefly and in dicta that the lax standard traditionally applied to
claims of procedural injury applied in the context of an injury caused in part
by the actions of a regulated party. Id. at 326. Whitman involved a petition
to the EPA regarding the failure to issue objections to draft permits issued
by the state agency that were not in compliance with the Clean Air Act. Id.
at 319, 323. If the EPA were to object to the permits, the cessation of the
injury-causing action (that led to uncertainty about harm caused by the
stationary pollution source) would have necessarily followed. 42 U.S.C. §
7661d(b)(3). Here, even if the Bulletin were vacated, the banks regulated by
the OCC would still be entirely free to adjust mortgage practices regarding
LIGH and other first-lien PACE program participating homes.
15

-- 15 of 17 --

of the declarations stated, or could state, that vacatur of the 1
OCC Bulletin alone would result in national banks resuming their 2
status quo ante lending practices. Nothing in the OCC Bulletin 3
compelled national banks to take any action. The Bulletin is 4
labeled “Supervisory Guidance,” and is couched in entirely 5
permissive language. See Office of the Comptroller of the 6
Currency, OCC Bull. No. 2010-25, Property Assessed Clean Energy 7
(PACE) Programs 1-2 (2010) (“National banks need to be aware of 8
the FHFA’s directives . . . . National bank lenders should take 9
steps to mitigage exposures and protect collateral positions 10
. . . . [B]anks that invest in mortgage backed securities . . . 11
should consider the impact of tax-assessed energy advances.” 12
(emphasis added)). The Bulletin alerts recipient banks only to 13
the need for calculating a risk that varies from locality to 14
locality. Were the Bulletin withdrawn, the need for a 15
calculation would remain. 16
A return to the status quo ante by the banks after vacatur 17
of the Bulletin would be a likely result only if the banks 18
calculated the risks and benefits exactly as they are alleged to 19
be by NRDC. That is not a necessary result. More critically, 20
however, even if the OCC Bulletin were vacated, Fannie Mae’s and 21
Freddie Mac’s refusal to purchase mortgages of properties subject 22
to first-lien PACE programs would remain in force. Any 23
contention that national banks would continue to lend on the same 24
terms as before the issuance of the OCC Bulletin must simply 25
ignore the impact of Fannie Mae’s and Freddie Mac’s changes in 26
policy. 27
16

-- 16 of 17 --

Therefore, we conclude that appellants have failed to show 1
that it is likely, as opposed to merely speculative, that their 2
claims against the OCC would be redressed by vacatur of the 3
Bulletin, and the claims against the OCC were properly dismissed 4
for lack of standing. 5
CONCLUSION 6
For the reasons above, the district courts’ judgments are 7
affirmed. 8
9
17

-- 17 of 17 --