ABA to seek a review of appeals court's FOM decision

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The American Bankers Association is refusing to call it quits in its long-running challenge to the National Credit Union Administration’s field-of-membership regulation.

Last week, the banking trade group petitioned the full U.S. Court of Appeals for the District of Columbia — 17 judges in all — to review a decision handed down in August that upheld most of the rule, save for a portion remanded to the district court due to redlining concerns.

The ABA’s request for an en banc hearing in front of all the circuit’s judges is the next step in the appeals process. After that lies the U.S. Supreme Court.

The ABA originally challenged the field-of-membership regulation in December 2016, filing suit in the U.S. District Court for the District of Columbia. That case resulted in a split decision in March 2018, with Judge Dabney Friedrich upholding two of the four provisions at issue and striking two down.

The NCUA’s decision to appeal a few months later opened the door for the ABA to challenge the parts of Friedrich decision that didn’t go its way, but the move appears to have paid off so far.

The only issue left unsolved by the August decision involves the field-of-membership regulation’s stipulation permitting a credit union to serve parts of a core-based statistical area while excluding the urban core that defines it. The ABA’s argument such an outcome might encourage redlining struck a chord with the three-judge panel that heard the appeal.

At the same time, it wasn’t sufficiently convincing for the judges to strike the provision down. They remanded the provision to the District Court to allow the NCUA to clarify its position.

The Supreme Court’s Chevron doctrine requires courts to defer to regulatory agencies’ interpretations of their fundamental statues — in this case the Federal Credit Union Act. Unbowed by its August reverse, The ABA is arguing that the appeals court’s decision allowing, among other things, a combined statistical area of 2.5 million inhabitants to qualify as a well-defined local community stretches appropriate Chevron deference past the breaking point.

“Rehearing en banc is warranted to realign this Court’s Chevron jurisprudence with that of the Supreme Court,” the ABA said Friday in a press release.

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Field of membership Federal credit unions Law and regulation NCUA American Bankers Association Washington DC