June 30, 2020

CUs win as SCOTUS declines ABA's petition to hear FOM case

lawThe U.S. Supreme Court Monday declined to hear the lawsuit brought by the American Bankers Association (ABA) against the NCUA over the agency's 2016 field of membership (FOM) rule, putting an end to years of litigation. NAFCU has stood by the NCUA throughout the lawsuit and is supportive of the agency's efforts to modernize FOM rules to ensure credit unions can effectively serve communities in need.

"The Supreme Court's decision to decline to hear the banker's case is an indication that the case is and has always been a baseless one," said NAFCU President and CEO Dan Berger. "For years, bank lobbyists have been unrelenting in their hollow efforts to maximize their own profits by working to undermine credit union growth and the financial well-being of America's communities and small businesses. NAFCU stands firmly in support of the NCUA's field of membership rule. It is well within the agency's legal authority and works in favor of consumers, especially those that are underserved."

The ABA petitioned the Supreme Court in March following the U.S. Court of Appeals for the D.C. Circuit's decision in December to not rehear the case en banc. The NCUA last month urged the court to deny this petition.

At the core of this issue was the Chevron Doctrine, which allows federal agencies deference in the interpretation of acts of Congress. In the NCUA's response to the Supreme Court, the agency argued that the appeals court reaffirmed the agency’s interpretation of the Federal Credit Union Act and correctly applied the Chevron Doctrine.

"The [appeals] court recognized that Congress had 'expressly assigned the NCUA the power to define the challenged terms,'" the NCUA wrote to the Supreme Court, and noted that the court of appeals "faithfully applied that settled standard here."

To address the appeals court's concerns, the NCUA in October proposed a rule related to eliminating the urban-core requirements for local communities based on core based statistical areas.

In March 2018, the D.C. District Court declared two provisions of the rule to exceed the NCUA's statutory authority, automatically qualifying a combined statistical area of fewer than 2.5 million people as a local community and increasing the population limit for rural districts to 1 million people.

NCUA appealed that decision and the D.C. Circuit Court of Appeals' three-judge panel decision in August was largely in favor of the NCUA on key issues in the lawsuit. 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."

After the appeals court's decision, NCUA Chairman Rodney Hood indicated the agency will phase-in the rule's implementation and subsequently released the proposed rule to address remaining concerns. NAFCU offered its support for the proposal and also met with the NCUA to discuss these efforts. The NCUA continues to work to address these concerns.

NAFCU will continue to defend the credit union industry against banker attacks of any kind and urges the NCUA to continue efforts to modernize FOM rules.