Federal Judge Overstepped Her Bounds in FOM Ruling: Metsger
If the decison stands, Metsger says more people will have "limited access to credit union services."
A federal judge failed to follow a well-established legal doctrine when she threw out two portions of the NCUA’s Field of Membership rule, NCUA Board Member Rick Metsger said Thursday.
“Our rural district definition is neither arbitrary nor capricious, it is designed to solve very real financial access problems for residents of rural America,” Metsger said, according to the text of a speech he delivered before the Minnesota Credit Union Network’s annual conference.
And he called the American Bankers Association, which filed the suit challenging the field of membership rules, “protectionist.”
U.S. District Judge Dabney Friedrich on March 29 threw out a provision of the agency’s new field of membership rule that increases to one million people the population limit for rural districts. She also threw out a provision of the rule that automatically qualified a “Combined Statistical Area” or a contiguous portion of it with fewer than 2.5 million people to be a local community.
The agency is consulting with the Justice Department over the next step, but Metsger said he is encouraging agency staff to “consider all legal and regulatory options to address the court’s decision.”
Metsger said that under the so-called the Chevron doctrine, courts are supposed to give federal agencies great deference in interpreting statutes unless the agency action is arbitrary or capricious. Friedrich failed to defer to the agency, Metsger said.
Metsger said that in developing the rule, the NCUA used the definition of the word “rural” used by the Agriculture Department.
“The NCUA actually limited the definition further by stipulating that a rural district could not extend beyond its home state and states contiguous to it,” he added.
Metsger said it is an “established fact that residents of rural areas are persons of modest means whose incomes lag behind residents of major cities and their suburbs.”
“It is also an established fact that America’s banks are deserting rural America,” he added.
He said that when Congress passed the Credit Union Membership Access Act in 1998 it required the agency to define the phrase, “well-defined local community, neighborhood, or rural district.”
And Metsger said that the NCUA did not create the concept of a Combined Statistical Area; the Office of Management and Budget did.
“If the judge’s decision is allowed to stand, residents of these rural areas in Minnesota and its neighboring states will have more limited access to credit union services,” he said. “In addition, if the judge’s decision stands, the 300,000 people who live in the combined statistical area, but outside the metropolitan statistical area, cannot be served by a federal credit union based in the metropolitan statistical area. That is arbitrary and capricious.”