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WASHINGTON-CUNA and NAFCU plan to work together to help defend NCUA’s field of membership rules coming under fire in a lawsuit recently filed by the American Bankers Association and others over the field of membership approval for Tooele Federal Credit Union. CUNA and NAFCU, under the auspices of the Campaign for Consumer Choice, have teamed up to hire Attorney Paul Lambert of Washington law firm Bingham McCutcheon to represent the two trade associations in the case. The campaign’s Oversight Task Force is expected to give its final approval shortly. Lambert “has been involved in more field of membership litigation than any other attorney in the country,” according to NAFCU Senior Vice President and General Counsel Bill Donovan. He added that the groups plan to file a notice to intervene in the case soon. “I anticipate we’ll be doing that some weeks from now, we’ll be filing a motion to intervene and doing that within the 60-day window that’s available before replies must be filed, so I anticipate some time late August, early September,” Donovan said. CUNA General Counsel Eric Richard explained, “Intervening in the case means we actually become a party to the case. We’re a full participant and both sides will be trying to get this case decided on summary judgment, which would short circuit the need for any kind of trial or lengthy proceedings.” Intervening goes beyond just filing an amicus curiae, or `friend of the court,’ brief. “The main thing is that when you become a party to the case, you can be subject to discovery, and that’s a very burdensome, time-consuming, and expensive process,” Richard followed up. “It’s a drain on resources, but this is what we’re here for, so we’re going to spend the resources on it.” He added that whether the Utah League of Credit Unions and the three credit unions named in the complaint would join the two trade associations or attempt to intervene separately is still up in the air. What is new about the ABA’s approach is that this is “the first time they’ve challenged the actual application of NCUA’s field of membership rules since H.R. 1151, so this gets into the facts of specific situations and in that sense, I think it is something new,” Richard said. “It’s not new compared to what we did before H.R. 1151, but it’s new since H.R. 1151. And, I think if we were to lose this, it would cast in doubt NCUA’s future grants of community charters in many cases, and therefore, it’s very important that we win.” Both groups firmly believe NCUA made the correct decision on Tooele’s field of membership. However, Donovan said, “Any legal challenge needs to be taken seriously. I believe that this case, when analyzed by the court will lead to the conclusion that NCUA acted within the scope of its authority under the Federal Credit Union Act, as amended by the Credit Union Membership Access Act.” “In all likelihood,” NAFCU’s top attorney said, the case is going to be determined by summary judgment. “A key element in analyzing that record that the court’s going to want to look at is the definition of local community.[W]hen words are not fully defined in the statute-and the term `local community’ is not defined in the statute-then it’s the prerogative of the regulatory agency with responsibility for enforcing the law or implementing the law to provide a definition to those terms.” Donovan said. This is known as the Chevron Doctrine. The court would then defer to the regulator, he said, “provided that that interpretation is not clearly an arbitrary and capricious interpretation of the phrase.” When asked whether NCUA Board Member Deborah Matz’ dissenting vote on the field of membership would hurt the agency’s case, Donovan said that no one expects agency boards’ decisions to be unanimous all the time and that its approval should be accepted as valid. [email protected]

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