Removing Barriers Blog

BIG NEWS!! Court upholds NCUA's Field of Membership Rule
Posted August 20, 2019 by CUNA Advocacy

Earlier today, the credit union movement gained an absolutely momentous victory as the D.C. Court of Appeals upheld the NCUA's field of membership (FOM) rule. The implications for this decision are huge. But ultimately, it confirms rules NCUA established in 2016 that allow credit unions to serve more members, especially in rural communities. 

“Today’s opinion by the D.C. Court of Appeals is a resounding victory for credit unions, their members, and communities across the country,” said CUNA President/CEO Jim Nussle. “That the court has recognized the benefits of an expanded field of membership speaks to the important role credit unions play in advancing financial inclusion. This is the second major recent legal victory for credit unions in the face of ill-conceived bank attacks, and speaks to the power of cooperation between CUNA, NAFCU, and CUNA Mutual Group.” 

In the ruling, the D.C. Circuit Court of Appeals overturned a previous opinion by U.S. District Court for the District of Columbia, thereby allowing allowing credit unions to serve Combined Statistical Areas of up to 2.5 million people and rural districts with up to 1 million people. The circuit court left intact the lower court's holding that allowed credit unions to serve adjacent areas, but asked the NCUA to provide additional explanation for the removal of a requirement to serve the "core" of a Core-Based Statistical Area, which NCUA should be able to remedy by providing additional information to the District Court.

CUNA has fiercely supported NCUA’s rule and the agency’s efforts to defend it in court. CUNA joined CUNA Mutual Group and the National Association of Federally Insured Credit Unions to file a brief in support of the agency in December.

“Today’s decision by the D.C. Court of Appeals upholding almost all portions of the NCUA’s rule is a big win for credit unions," read a joint statement by CUNA, NAFCU, and the CUNA Mutual Group. "This will have a positive impact for the industry’s 117 mill­­­ion members and American consumers who now have better access to member-owned not-for-profit credit unions.  For the one aspect of the rule that the court asked for more explanation, we are confident the agency will provide additional support.

“CUNA, NAFCU and CUNA Mutual Group stand united in our position that credit unions provide the best in financial services to American consumers. Against meritless banker attacks, we will continue our efforts to ensure field of membership regulations are updated to reflect the modern financial services system so that credit unions can serve their members, including the underserved.”

NCUA finalized its CUNA-supported FOM rule in October 2016, and the American Bankers Association sued the agency in December 2016. The U.S. District Court of the District of Columbia ruled in March 2018, upholding two challenged portions of the rule and striking down two provisions. CUNA believes the U.S. District Court of the District of Columbia erred in its finding that the agency overstepped its statutory authority regarding the combined statistical area approach and the definition of rural district.

CUNA attended oral arguments before a three-judge panel of the D.C. Circuit Court of Appeals in April. During the hearing, the judges considered NCUA’s appeal of Judge Friedrich’s ruling overturning the provisions of the agency’s rule related to combined statistical areas and rural districts.

Appeal Deadlines For FOM Decision
The ABA still can appeal the decision.  ABA will have 45 days from the date of the decision, August 20, 2019, to file a motion for panel rehearing or rehearing by the full DC Circuit en banc.  If the ABA wants to try to get the case heard by the Supreme Court, they’ll have 90 days from the decision date to file a petition for certiorari if no rehearing petition is filed.  If ABA does seek rehearing, the deadline would be 90 days from the date on which rehearing is denied.  The deadline for a cert petition can be extended by up to 60 days, and extension requests are routinely granted.