A federal judge’s decision today in the U.S. District Court for the District of Columbia was a mixed bag for credit unions, as the court upheld two portions of the National Credit Union Administration’s embattled field of membership rule but struck down two other provisions in a lawsuit from the American Bankers Association.

The two provisions Judge Dabney Friedrich ruled exceeded NCUA’s statutory authority include measures that automatically qualify a combined statistical area with fewer than 2.5 million people to be a local community and a provision that increases the population limit for rural districts to 1 million people.

National credit union trade groups – including the National Association of Federally-Insured Credit Unions, the Credit Union National Association and CUNA Mutual Group – quickly released a joint statement criticizing the court’s ruling and promising to continue to fight to support NCUA’s rule.

"Our organizations are pleased the court upheld components of the NCUA's field-of-membership rule; however, we strongly disagree with the court's decision that aspects of the rule exceed the agency's legal authority," NAFCU President/CEO Dan Berger, CUNA President/CEO Jim Nussle and CUNA Mutual Group President/CEO Robert Trunzo said in the statement. "The field-of-membership rule is not only entirely consistent with the Federal Credit Union Act, but also credit unions must have the ability to grow and serve more Americans. As the parties consider their options going forward, we will continue to support the agency on this critical issue."

For its part, the American Bankers Association cheered the ruling, with Rob Nichols, the trade group's president and CEO, noting in a statement that “it never made sense that an entire region could be declared a ‘local community’ or that an entire state could be declared a ‘rural district,’ and today’s ruling recognizes that fact.”

Nichols added, “While we appreciate the judge’s acknowledgment that NCUA overstepped in amending its rule, we’re disappointed in the court’s decision to uphold with faint support NCUA allowing credit unions to avoid serving the urban core of metropolitan areas, and to expand beyond their local communities to serve adjacent areas. This would allow credit unions to cherry pick communities and ignore serving people of modest means, which is fundamental to the original purpose of the credit union tax exemption.”

The ABA originally filed suit in December 2016, and CUNA, NAFCU and CUNA Mutual jointly filed an amicus brief last June supporting the rule and NCUA’s cross-motion for summary judgment.

The lawsuit represents the fourth time the ABA has successfully sued the NCUA over its membership policies. One of those lawsuits — NCUA vs. First National Bank & Trust Co. in 1998 — was argued before the U.S. Supreme Court and led directly to the Credit Union Membership Access Act of 1998.