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NCUA Clarifies Electric Co-op FOM Considerations
ALEXANDRIA, Va. (6/13/13)--The National Credit Union Administration would use a standard seven-item test, as set forth in the agency's Chartering and Field of Membership Manual, to determine if an electric cooperative qualifies to be included in a federal credit union's field of membership, NCUA General Counsel Mike McKenna said in a legal opinion letter.

The letter responded to a request for clarification, which asked if an electrical cooperative shared sufficient associational common bond to be included in a given credit union's field of membership.

"No one factor alone is determinative of membership eligibility as an association," including whether the cooperative requires its members to purchase electricity from it, McKenna wrote.

"In the end, the particular details of a cooperative's structure and other factors surrounding its operation will determine if its relationship with its members is primarily or incidentally a customer-client relationship and if it satisfies the totality of the circumstances test," McKenna said.

The seven factors that the NCUA must consider as part of the circumstances test are:

  • Whether members pay dues;
  • Whether members participate in the furtherance of the goals of the association;
  • Whether the members have voting rights. To meet this requirement, members need not vote directly for an officer, but may vote for a delegate who in turn represents the members' interests;
  • Whether the association maintains a membership list;
  • Whether the association sponsors other activities;
  • The association's membership eligibility requirements; and
  • The frequency of meetings.
NCUA considers all of these factors together, McKenna wrote.

For the full NCUA legal opinion letter, use the resource link.
Other Resources

NCUA Letter
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