March 30, 2018

Court invalidates parts of NCUA's FOM rule

court rulingThe U.S. District Court for the District of Columbia on Thursday upheld two challenged portions of NCUA's field of membership rule and struck down two provisions in a lawsuit filed against the agency by the American Bankers Association (ABA).

The provisions declared to exceed the NCUA's statutory authority include those that automatically qualify a combined statistical area (CSA) with fewer than 2.5 million people to be a local community and the increase to 1 million people the population limit for rural districts.

The court ruled in favor of the NCUA's rule on all other provisions.

"Our organizations are pleased the court upheld components of the NCUA's field-of-membership rule; however, we strongly disagree with the court's decision that aspects of the rule exceed the agency's legal authority," said NAFCU President/CEO Dan Berger, CUNA President/CEO Jim Nussle and CUNA Mutual Group President/CEO Robert Trunzo. "The field-of-membership rule is not only entirely consistent with the Federal Credit Union Act, but also credit unions must have the ability to grow and serve more Americans. As the parties consider their options going forward, we will continue to support the agency on this critical issue."

NAFCU is reviewing the court decision and will provide a more detailed analysis.

The NCUA's FOM rule took effect in February 2017.

NAFCU filed an amicus brief supporting NCUA's FOM rule last June. The association believes the NCUA's FOM rule is well within the agency's legal authority and is in keeping with the Federal Credit Union Act. NAFCU stands behind the NCUA's decision to issue the final rule, which was the first meaningful update to the agency's FOM rules over the past decade.

In December 2016, the ABA filed suit against the NCUA over this rule.