NCUA looks to keep field-of-membership case out of Supreme Court

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The National Credit Union Administration has filed a brief opposing an American Bankers Association's position asking the Supreme Court to consider a challenge to the credit union regulator’s field-of-membership rule.

The ABA is attempting to overturn an August 2019 decision from the U.S. Court of Appeals for the District of Columbia supporting the NCUA.

The case’s origins go back to December 2016, when the banking association filed a lawsuit against the NCUA challenging the agency’s revision to its field-of-membership rule. More than three years later, it boils down to a question of how much deference courts owe to regulators under the Supreme Court’s Chevron doctrine.

The Chevron doctrine refers to a 1984 Supreme Court ruling that said courts should defer to government agencies when in doubt about an interpretation of a law, specifically in cases where the law is vague.

The ABA is arguing that the appellate court strayed too far from the common understanding of a “well-defined local community,” as required by the Federal Credit Union Act, by allowing fields of memberships to include up to 2.5 million people.

The NCUA argued in its brief that the existing ruling was reasonable and correct.

The appeals court “recognized that, in adopting the revised definition, the agency had reasonably sought to promote the statutory goals that community credit union members share common bonds, and that federal credit unions have a sufficient membership base to operate effectively,” NCUA Solicitor General Noel Francisco wrote.

The ABA has about 10 days to file a brief rebutting the NCUA’s arguments, according to Supreme Court procedure. If four justices agree to hear it, the case can then be put on the court’s calendar.

The case was originally heard in the U.S. District Court for the District of Columbia, where Judge Dabney Friedrich issued a decision in March 2018 striking down portions of the NCUA’s field-of-membership rule, which expanded the definitions of well-defined local community and rural district.

At the same time, Friedrich upheld portions of the rule that let credit unions serve core-based statistical areas without including the urban core that defines the area. He also upheld a section of the rule granting credit unions the ability to add adjacent areas to existing well-defined local communities on a case-by-case basis.

The NCUA appealed that ruling in May 2018. The ABA followed with its own appeal.

The appellate court essentially reversed the portions of Friedrich’s ruling that overturned provisions of the field-of-membership rule, while leaving the supportive portions intact.

If the Supreme Court decides to hear the case, it would not take up the matter until at least October, when its next session begins.

Three members of the court — Justices Clarence Thomas, Ruth Bader Ginsberg and Stephen Bryer — were seated in 1998 when credit unions lost the field-of-membership case that eventually led Congress to pass the Credit Union Membership Access Act. In that case, Thomas and Ginsberg sided with majority in a 5-4 ruling in favor of the banking industry.

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Credit unions Field of membership American Bankers Association NCUA