Court Hears Arguments In Challenge To NCUA’s FOM Rules

WASHINGTON—During oral arguments this week in the appeal of the lower-court decision in a lawsuit challenging the NCUA's field of membership rule, the U.S. Court of Appeals for the D.C. Circuit heard arguments related to the definitions of a local community and rural district.

DC Court of Appeals

As reported here, the appeal involves a March 2018 U.S. District Court for the District of Columbia decision that upheld two challenged portions of NCUA's FOM rule and struck down two provisions in a lawsuit filed against the agency by the American Bankers Association. NCUA appealed the decision in May and ABA cross-appealed in June.

The provisions declared to exceed the NCUA's statutory authority include those that automatically qualify a combined statistical area with fewer than 2.5 million people to be a local community and the increase to one million people the population limit for rural districts.

The Arguments Made

NAFCU Director of Regulatory Affairs Ann Kossachev attended the arguments this week and noted Court of Appeals heard arguments from the NCUA and ABA on:

  • What it means to be a "local community" with respect to a CSA and the agency's discretion to review charter applications that do not include an urban core
  • What qualifies as a "rural district" and how large the population of such an area should be
  • Whether the NCUA's FOM II rule – which took effect in September and addressed a number of issues with the first rule – effectively makes this lawsuit null

NCUA indicated intends to reenact the same definitions as the 2016 FOM rule if the agency prevails on the appeal.

NAFCU, CUNA and CUNA Mutual Group jointly filed an amicus brief in support of the NCUA's appeal, arguing that "this lawsuit is a clear and transparent attempt by bank lobbyists to hamstring credit unions' ability to help more American consumers."

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Copyright Year: 2019
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