Internal legal memos from the NCUA's general counsel to its board on the methodology and how it calculates the overhead transfer rate was considered "attorney work product."Therefore, it is privileged and confidential information that is exempted from the Freedom of Information Act, the NCUA alleged in a letter to NASCUS that was released to CU Times Monday.
NASCUS President/CEO Lucy Ito had previously called on the NCUA to release all of its documents related to the OTR, as well as how it is determined.
The NCUA replied with a letter from general counsel Mark McKenna, dated July 30, which called out Ito for publicly requesting a public evaluation of "differing legal conclusions about whether the OTR or its methodology are subject to the notice and comment requirements under the Administrative Procedure Act."
"Specifically, you have called on NCUA to release confidential privileged materials," the letter said. "In my opinion such a public debate about the technical legal issues surrounding this matter is not about transparency and will certainly not resolve the differences of opinion on the subject."
The letter from McKenna went on to state that "courts not public forums are best suited to resolving such complex legal issues."
McKenna said the NCUA has released more data than possibly any other federal agency has already.
Ito fired back Monday, stating that she believes the OTR is a rule under the APA. She also acknowledged that a legal opinion developed by the NCUA general counsel (which the agency has declined to release publicly) on the applicability of the APA to the OTR may contain privileged information. However, she requested that the agency "draft and distribute an analysis of the legal issues that is suitable for public consumption."
"NCUA has a public duty to justify its actions to stakeholders – beyond a conclusory statement that the agency is not in violation of the APA," Ito wrote.
NASCUS also called on the NCUA to provide a detailed explanation of its refusal to do so.
"Earlier this year, NASCUS released a detailed legal analysis from a respected Washington, D.C. law firm, which concluded that the OTR is a 'rule' under the APA definition and, therefore, properly subject to formal public notice and comment to the same extent as NCUA's proposed RBC and MBL rules," Ito said in the letter. "We are asking for – and the credit union system deserves – a candid and transparent discussion of the administrative procedure surrounding the OTR."
NCUA Public Affairs Specialist John Fairbanks told CU Times the agency has received a copy of the Aug. 10 letter from NASCUS, and that it is reviewing the letter and will issue the requested legal opinion for public consumption regarding the applicability of the Administrative Procedure Act's notice and comment process to the overhead transfer rate.
"The 2011 PriceWaterhouseCoopers analysis, which was a cost accounting determination, not a legal opinion, validates the OTR formula," Fairbanks said. "The PwC report concluded, 'Based on PwC's review, there was no reasonable basis to conclude that the OTR Methodology … favors or disadvantages any one type of credit union (i.e. federal versus state chartered) over another.' This methodology is commercially reasonable and fairly attributes costs."
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