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During Tuesday's oral arguments in the appeal of the lower-court decision in a lawsuit challenging the NCUA's field of membership (FOM) rule, the U.S. Court of Appeals for the D.C. Circuit heard arguments related to the definitions of a local community and rural district. NAFCU Director of Regulatory Affairs Ann Kossachev attended the arguments.

In March 2018, the U.S. District Court for the District of Columbia upheld two challenged portions of NCUA's FOM rule and struck down two provisions in a lawsuit filed against the agency by the American Bankers Association (ABA). The NCUA appealed the decision in May and ABA cross-appealed in June.

The provisions declared to exceed the NCUA's statutory authority include those that automatically qualify a combined statistical area (CSA) with fewer than 2.5 million people to be a local community and the increase to 1 million people the population limit for rural districts.

The D.C. Court of Appeals Tuesday heard arguments from the NCUA and ABA on:

• what it means to be a "local community" with respect to a CSA and the agency's discretion to review charter applications that do not include an urban core;
• what qualifies as a "rural district" and how large the population of such an area should be; and
• whether the NCUA's FOM II rule – which took effect in September and addressed a number of issues with the first rule – effectively makes this lawsuit null.

The NCUA indicated its board intends to reenact the same definitions as the 2016 FOM rule if the agency prevails on this appeal.

NAFCU, CUNA and CUNA Mutual Group jointly filed an amicus brief in support of the NCUA's appeal, arguing that "this lawsuit is a clear and transparent attempt by bank lobbyists to hamstring credit unions' ability to help more American consumers."

The ABA, in its brief, argued that credit unions engage in redlining. NAFCU has repeatedly highlighted that credit unions have not engaged in the illegal and discriminatory practices of banks, including redlining, because credit unions were established to offer provident credit to any member in their field of membership. Considering credit unions already work so hard to serve their communities, NAFCU continues to strongly oppose all efforts to extend the Community Reinvestment Act (CRA) to credit unions.

NAFCU has urged the NCUA to continue efforts to modernize FOM rules in its letter on 2019 priorities. The association will let credit unions know when there is a decision in this lawsuit.