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The NCUA and American Bankers Association (ABA) filed supplemental materials to the U.S. District Court for the District of Columbia Friday in the case against the NCUA's field-of-membership (FOM) rule regarding the definition of "rural district" and the bankers' challenge to the provisions in the regulation addressing "core-based statistical areas."

The court heard summary judgment motions in the case Wednesday and requested the supplemental materials.

During Wednesday's hearing, both parties contended points on rural districts and core-based statistical areas, including how the definition of rural districts should be derived and the NCUA's process and authority to grant expansions.

In its supplemental materials, the NCUA defended its definition of "rural district," arguing it has the authority to define a term based on the issue at hand, rather than how terms have been used elsewhere. The agency noted that it considered the cost of operating a credit union in sparsely populated areas, and that rural areas often cover large portions of land, making it difficult to meet the requirements of a well-defined local community.

"NCUA's definition reduces a disparity between rural and urban areas concerning the population base for credit union growth, and ensures that credit unions can feasibly serve both," the NCUA's document states. "The agency's definition was not required to ignore the challenges of bringing affordable financial services to rural areas."

The ABA's supplemental materials provided the specific definitions of the terms in question, referring to dictionaries and other sources used when the Federal Credit Union Act was enacted in 1934.

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. The banking trade asserts in its lawsuit that the NCUA has exceeded its authority under the Federal Credit Union Act in how it defines FOM.