## Facts

- The FDIC periodically performs full-scope, on-site examinations of insured banks under 12 U.S.C. § 1820(d).
- After a June 2015 examination, the FDIC assigned Builders Bank a CAMELS rating of 4 (on a 1-to-5 scale, where 1 is best and 5 worst).
- Builders Bank contended its condition warranted a 3 and sued under the Administrative Procedure Act (APA), alleging the rating was arbitrary and capricious.
- The FDIC argued the rating was unreviewable because capital adequacy is a CAMELS component and 12 U.S.C. § 3907(a)(2) grants the agency discretion to set minimum capital levels.
- Builders Bank maintained it accepted the FDIC’s capital determinations and challenged only the other five CAMELS components: asset quality, management, earnings, liquidity, and sensitivity to market risk.

## Issues

1. Whether dismissal under 5 U.S.C. § 701(a)(2) (“committed to agency discretion by law”) is jurisdictional or instead a merits determination under the APA.
2. Whether the FDIC’s statutory discretion over capital levels makes the entire CAMELS rating unreviewable under § 701(a)(2), even when the bank challenges only non-capital components.

## Decision

- The Seventh Circuit held that § 701(a)(2) is not jurisdictional; it addresses whether the plaintiff can prevail on the merits under the APA.
- The court held that the presence of capital as one CAMELS component does not automatically make the entire CAMELS rating “committed to agency discretion by law.”
- The court vacated the district court’s dismissal for lack of jurisdiction and remanded for further proceedings.

## Legal Principles

- When a private party seeks review of agency action under the APA, subject-matter jurisdiction is generally supplied by 5 U.S.C. § 702 and the applicable jurisdictional statutes; § 701(a)(2) does not withdraw jurisdiction.
- If agency action is “committed to agency discretion by law” because there are no judicially manageable standards, the claim fails on the merits rather than for lack of subject-matter jurisdiction.
- A multi-factor agency determination is not necessarily unreviewable in its entirety merely because one factor involves statutory discretion; separable, standard-guided components may remain subject to APA review.

## Conclusion

The Seventh Circuit vacated a jurisdictional dismissal of an APA challenge to an FDIC CAMELS rating, holding that § 701(a)(2) is a merits limitation and that discretionary authority over capital levels does not by itself immunize the entire CAMELS rating from judicial review.


Builders Bank v. Fed. Deposit Ins. Corp., 846 F.3d 272 (7th Cir. 2017)