Legal Seminar, Denver, CO

ABA Challenges NCUA’s Field of Membership Rule

• Federal Credit Union Act limits membership in community common-bond credit unions to persons or organizations within a “well-defined local community, neighborhood, or rural district.” 12 U.S.C. §1759(b)(3). • Congress expressly delegated to the NCUA the power to define this term. 12 U.S.C. §1759(g). • 2016: NCUA broadens definitions of “local community” and “rural district.” • ABA files lawsuit challenging four aspects of new rule.

Core-Based Statistical Areas Without the Core

• Prior rule: A “local community” is any portion of a Core-Based Statistical Area that contains less than 2.5 million people. • New rule: Same as prior rule, but the “local community” need not include the “core.” • Court’s ruling : Upheld NCUA’s new interpretation as a “barely reasonable” one. • Commuting patterns to “core” establish “some traces of the social, economic, and geographic commonalities of a local community.” • Court not troubled by potential for redlining, because NCUA believes credit unions are adequately serving low-income areas.