DC Circuit Finds in Favor of NCUA FOM Rule

On August 20, 2019 the United States Court of Appeals for the District of Columbia Circuit handed down a decision finding in favor of the National Credit Union Administration in the case of American Bankers Association (ABA) v. National Credit Union Administration (NCUA).  The case involved the NCUA’s December 2016 field of membership rule for community-chartered credit unions which expanded who credit unions could serve.  The rule made two changes to the NCUA’s definition of the term “local community” and one to what constitutes a “rural district”.  The lower court held that the NCUA’s qualification of certain Combined Statistical Areas as local communities was unreasonable as well as rejecting the increased population cap for rural districts.  The lower court upheld the NCUA’s elimination of the requirement that a credit union include the core of a Core Based Statistical Area.  The Circuit Court reversed the lower courts decision in rejecting both the CSA qualification and the rural district cap but remanded without vacating the elimination of the urban-core requirement allowing the NCUA to provide sufficient justification for the elimination of the core.  The Circuit’s Courts decision is a significant victory for credit unions and those persons they seek to serve.  The ABA has some legal tools they can still employ including asking for a hearing before the full Circuit Court and/or asking the U.S. Supreme Court to hear their case.