Legal Seminar, Denver, CO

Rural Districts • Old rule: A “rural district” is any area composed of 250,000 or less people and that does not exceed 3 percent of the state where most of the district is located, provided (i) the population density does not exceed 100 persons per square mile, or (ii) most of the area’s population resides in rural areas. • New rule: Same as prior rule, except that the “rural district” can now include up to 1 million people and the 3% cap is removed. • Court’s ruling : Invalidated NCUA’s new interpretation. • “Rural districts” are small, non-urban areas. • NCUA’s definition problematic because it permits “rural districts” to serve areas that (i) are larger than entire states or (ii) primarily encompass urban centers.

Implications of Court’s Decision

• Latest in a string of significant ABA victories against NCUA • NCUA v. First National Bank & Trust (U.S. 1999)

• ABA v. NCUA (D. Utah 2004) • ABA v. NCUA (M.D. Pa. 2008)). • NCUA’s instructions to credit unions:

• No new applications will be granted under invalidated rule. • Approval of credit unions’ expanded charters under invalidated rule will be withdrawn. • Credit unions should not accept new members only eligible for membership under invalidated rule. • Credit unions not required to de-list members who joined under invalidated rule. • NCUA appealed on May 29, 2018; ABA cross-appealed on June 13, 2018 • Rulemaking implications • No impact on multiple common-bond credit unions