the agency here adopted definitions of local community and world district that help to ensure that all americans can access credit and savings through economically viable credit the definitions expanded on the potential membership for community credit unions by relying on the definition of local community and combine statistical area is a geographic area where by definition there is statistical evidence that there are at least a fifteen percent of the three population between areas that live in community gather in the same area that's the same kind of commuting measurement that is used to determine whether something's metropolitan division based around a secondary county is something that the agency had previously considered to be a local community and everyone agrees that the agency had statutory authority to do that enunciator a reasonable explanation of why that's a local community and so the thought that somehow these are areas that cannot be considered local because they are to do graphically limited enough or that they don't have a sufficiently small population just doesn't bear out the agency is continuously to find local communities to include areas that are single political jurisdictions like a county or a city which i realize that any statutory  it can't be the entire country you can't believe her country minus one state i think what really does the work if you're analyzing this is not saying the definition is manifestly contrary to statute it's as the agency actually recently explained why this is a local community and if the agency can't have a reasonable explanation for why disperse geographically large really populous area is still a local community and then that definition would be arbitrary and capricious there's not any evidence that local was added to distinguish the kinds of communities at issue here from let's say a virtual electronic community i mean occurs to me that that more and more we have virtual communities that i didn't see anything in that i'm not basically be the entire world local does some work and so the agency it looks for that work and what it's learned is by experience first it said in one thousand nine hundred eight when the set you got amended well look to simply narrative pieces of evidence you bring this documentation will determine whether that's a local community and in terms of my experience you know what a single political jurisdiction a county or city is a local community going to greece it's within statutory pass tory authority the congress vested in the agency and those counties and cities can be quite large you know san bernardino county has an area about size of switzerland cook county around chicago has a population about the size of ireland but we all agree that those can be considered local communities and from there you had a core base is this clarion a single urban center or a couple of urban centers in the surrounding counties that share  economic commuting patterns of people living and working together and then from there the agency said to keep that same population limit that we used for the core base at the school areas and we go to combine statistical areas that still have that same evidence injective evidence that people are living and working together apartment that it has to serve the urban core because we believe that that would better tie the community together and be able to serve people of modest means but the agency explained in this room making that's challenge is that we're going to consider any portion of these to be local communities so for a certain fine because we consider the whole area to be a local community and we're going to use or other supervisory powers to ensure that there is not any bright line which again is a hypothetical concern there's no evidence of that  how can the two means that they are she can lead to ensure that there's no red lining of any effect on the red lining issue because by definition those two needs won't apply to consumers with in coeur also the first if you're concerned about a new credit union that doesn't have any members yet if that if that prospective credit union comes forth with a plan that says you know we want to create a local team that has a don't around in urban core the agency can say why are you doing that that doesn't make any sense and if the reasons that credit union gives seem pretextual there's nothing that compels the agency to charter that community and says no we think you probably need to include that and if you're not willing to do that then we don't give you a charter what the basis for that discussion is i think the bankers disagree with you they characterize the statute as creating automatically  eligible communities so i think there are two steps here the first is have you identified an area that can be considered at all to be a local community and so that's what the categorical definitions are for if you need a single political jurisdiction physical area that is a local community but the second question is do you deserve a charter and that requires having a natural business plan that you're going to walk and serve the area be able to provide means everyone and be economically viable and if they're the agency that's a back and forth process at some time six months on the agency saying we think you probably need to include this area we are not actually sure that you can serve this serial killer precise regulatory or statutory language hand in c u rely upon to deny charge here based on a concern about you wholly down the size so i think i think there would be the agencies general discretion to say if we don't think that this can be a viable credit union and serve all and serve the area we don't think that that can be chartered it just hasn't is a precedent for that has the agency done that you know if somebody wanted to charge or just you know discrimination going on they can reject that amendment is it true that every so so basically every major urban core is already served by a credit you accept wasn't in the record and i was wondering about that and it wasn't in the record because we were explaining that we think the other supervisor powers i mean form that most population centers in the united states that are based around it or bases clary i have a credit union with them so for the example that the bankers give them the reply brief about buffalo new york the credit union there it that let me ask you about cutting out the core area i know analogies are never good but i see that like the spokes of a bike wheel and the hub that is the core urban area and what connects all of the edges are the commuters that go into the core and if you take that hope out which is which is what all of the edges or all of the spokes how do you still have a a local community with if they're if they're made a community because of their commuting into the urban core an that those people still want to be part of the local community that you that they can only be a local community if you also include people within washington d c but secondly the reason that you're creating that local community around the base it's clarion is because the evidence showing everyone in these counties is living and working in commuting together they come to the core but then they also go back to the other threatening counties and where they live and if everyone has at same time to the or that's a commonality that extends around those outlying areas even if you aren't including that part of the urban core and remember this was a challenge that the planets brought as a statutory challenge that there is no way that the statutory term local community can include these areas that that can't be right the statute permits more  that something where we can reach the merits i still want to have follow up on something that judge keller got out and that is i wanted to ask you why i didn't see in the record enough you've also said in this chartering a deal for shipping and all that with respect to the concern about serving the low income and under served populations that experience confirms that the agency's evaluations and so forth about your supervisory role now do you just do what the amicus selves that the supervisory role that your agency performs doesn't even come the un until after aguilar it is not based on pretext for discrimination but just seems as a policy matter that the the viability of the business plan is to serve you know maybe less risky and wealthier communities is there reasons i mean i understand the charter and to be principally china the economic viability of the proposed credit union and iraq and ensuring that you can follow through with your business plan to make sure that you can serve everybody for the first three years i think what the agency's talking about in his experience about we had this requirement that you need to serve a record we think that we can serve people of low income modest means effectively other ways is borne out in the twenty sixteen  loans and grants and there is a low income credit unions just in the past decade have increasing membership from six millions of thirty nine million increase in number from i think eleven hundred in capital accounts from forty seven billion to one hundred billion in the agencies pretty confident that you can ensure that credit means continue their congressional purpose of serving people of long lost means but also expanding their service to other areas which should we do about the statistics cited by your opponents so that banks serve a higher because we just don't know what this is and it could be the case if they're serving fewer people we need more data so i don't think you that report actually says that credit unions are serving fewer people than in the banks are and as you noted that if you look at that twenty six here you can see  curiosity you know i know and accrediting asking on profit who starts a credit union what why would someone i confess that i've not been involved in that process of trying to form the credit union or know it in the thirty four act when they were initially starting pretty unions you see you know creating these new website to put forth a history of this was started by several employees of construction railway in buffalo new york for the justice federal printing it was started by employees of the firm justice and so it seems that when the core based statistical area where you remove the core sort of a theoretical local community and then today you've said well if there's any mistake with that we'll we'll get to it when we decide whether to give a charter or not can you give me the best your best understanding of why you did excise or why you into the outlying areas it's really hard to get very far into those other areas and as unique as that credit union national association and suppresses bring your area for poor people in the united states is in the suburbs so if you're required by necessity to serve the urban core of your community credit you can't get far out into the other areas i mean like financial services so i think with the agency was trying to apply and this is that j a a one sixty five is we want to be able to allow the credit unions expand into further communities if they cost a lot of money to set up shop in the urban core and you don't have those resources initially then go out and establish yourself become an oakley bible and then if you want to come into that require at that point sure you can because the purpose again is extend the access to credit and savings to everybody they should retain this requirement or modify it and just on the rule districts points is just i think there may complain is that by having a population half of a million people and a population density of a hundred people per square mile or less you can no longer re interaction and common bond yeah i'm in c u a the agency actually agrees with that for purposes of local communities now they've abandoned it for rural districts and we think that's a mistake  local communities that's not something that this court house to find is a requirement of the local community we think it clearly is because of section two of the nine hundred ninety eight act that says a meaningful affinity and bond essential to the fulfillment of the public mission of credit unions but in see what he says that is an essential requirement and a in the basic problem with the combine statistical area is it's what the district court called a daisy chain it's much worse than a problem with the hub and spoke of combined statistical areas the way they are defined and this is just because we're not saying that there can't be a technical definition but this particular technical definition two or more core base statistical areas that have a fairly small amount of commuting back and forth with an adjacent core base that testicle area so we own an example on page thirty five of our brief which is the combined statistical area that we live in it's got washington baltimore most of maryland a big part of applied posture you've come up with possibly up the rise of all communities we don't see that happening and given th the interchange in it in the best of circumstances is kind of an aggregate on average level of interchange it just poses for us you know of a problem where where we get traction in except in your argument or not you know i think you raise some concerns but maybe they're completely hypothetical for reasons that have to do with a business matter for a credit union that even under the accepted existing definitions the interchanges as i said in the aggregate and and they're go plenty of people who want to try to use it don't have a relationship with other people so so what's the what's the legal framework for us so i mean i think part of the answer here is i mean first of all it is a categor making a determination as a single war that any part of any combines the testicle area so long as the population is not more than two point five million people is a single local community and i think typically i mean yes there could be concerns about rightness or something but that's the sort of challenge to of categorical rule that discord in the supreme court regularly entertain down i think you're maybe asking about a different route or given say well there may be problems here but let's wait and see let's wait and see fine as applied challenge because as applied challenge and you know if if the court sends us on that route we will try to keep track of it but there will be a significant problem which is the way these come proceedings are done when a credit union applies at the n c u a and this may be a different problem there are it is not put out for public comment there is not any record that's built by anybody who has an interest it is simply a proceeding between the agency and the credit union and this came up we decided a district district court case from utah and one from pennsylvania where there was a very limited factual record without a lot of the facts that somebody who thought there was a problem would put in so and i think the argument back will be well you know this is permissible under our rule or our gets you know so we don't really do a detailed look we have made a once and for all determination but i guess the other the one other thing to keep in mind goodness this is not is it's basically the areas but we don't know whether it's going to be a lot of the credit unions or even any of them let me push a little bit more moderate this question about you bring a challenge sort of a you know a facial challenge to this regulation thirteen up there at two thirty and it's a twenty ten opinion that that quote to be never scored the supreme court has not enough to show a mere possibility that in that case an airport might apply the answer seems in such a way as to get an unlawful results yet you can imagine under the general regulation there that it could be applied to get something that not enough because we haven't seen that think about town a measure of the exact number but i think that's roughly the number of local communities that were defined as combined statistical areas and i think you can find buried in the district court record there is some reference to that because we have to decide what to do with them so these were promptly being approved because the parties there has not been this argument made by the n c u a that you shouldn't be allowed to have a challenge  to the rule as a whole so that's sort of one point that there was quite a lot to happen good a very short time just the time it took to the district court rule so i don't think this is hypothetical i mean the other thing is what you were voting about a possibility you know the definition because it was so not before that one of you know there has to be actual interaction and common interests i mean you'd basically be it's almost the opposite you'd be saying well there's a possibility that it might work out that there are some and it would you'd have to build a different record in every patient could never say well let's combine statistical areas of presumptively there is whoever's going to be in this credit union will have a common interest interaction you never could you say that i have just one related question about that which is in your move ness filing from april fourth in your fight no you mentioned that these these applications that were approved for credit unions in combined statistical areas and then when that rule was superseded you said that the n c i has instructed the credit is not to accept any new members who would only be eligible for membership through the combined statistical aerial and i was having a hard time in vision and what that would even i came to be not one hundred percent sure how the agency all my understanding is once this gets sorted out and they will come back and do whatever is appropriate but but you have to be honest i'm not sure how they would be admitting other members of their charter has been approved on rural it means pastoral countryside not urban it's defined in contradistinction to urban so we think one of the real problems with expanding the size of  districts from two hundred fifty thousand people to a million people is that now all very large cities can be included wholly included in rural districts we gave an example on page fifty seven  denver colorado fifty seven of our red brief were denver colorado with over six hundred thousand people and salt lake city with over one hundred eighty six thousand people can be included in a rural district and that then becomes it's almost ninety percent of the total population is urban not rural and yet the way down and see you a has to find girl district that that counts  the review of the business plan is simply to see whether the credit union can serve the area that it has chosen to serve not whether it was a well chosen area or they should be required to serve some other area redlining argument on the more basic physical areas and your rural district objection that they include some metropolitan centers i mean your you represent bankers and there's a question for the rural districts of business viability whether a credit union can stay afloat in a very sparsely populated areas of the country so they've said well we're going to you know authorize where the part of the average population density is low and that will suite then some metropolitan centers it sounds like what you would require is that they carve out the metropolitan centers in th what problems really credit unions may be facing they do want to record shows clearly that own community banks which do not have the sweeping tax exemption credit unions enjoy buyable for a credit union to serve a community credit to serve those small cities otherwise then it's back to congress right right and as you know i think there's a line to be drawn even small row communities would have some sort of town of course that could be included but we think that when you get up to denver and salt lake city and it's almost ninety percent of the population is highly urban you're just outside any reasonable range that the other point i want to make about rural districts quickly because i'm not sure it was clear enough in her grief as if the core allow those who see your way to proceed definite size that can be quite large it can be a state it could be multiple states they say rural means any area so long as the average population person were miles of the whole area  necessary and sooner we think that's wrong we think congress that there has to be interaction and common interest for all creditors but they said that when you put those three things together or the average population density of the entire united states is under one hundred so we already have a state and all the states are going to be your one step away and i think if this court says that's fine that's reasonable that's within  congress there is nothing to stop the agency from saying the united states is a rural district you can serve any part of it lol district and therefore the charter could cover you know you know they mean not do that but in the supreme court case in the first national bank case the reason the supreme court uses they said you can't have more than one local community because once you breach that line it could raise the geographical limitation entirely and i think basically we're in the same place with the world district if this is ok if you can have a whole state plus all the states that surrounded it there's really no limit on size all that when there's no requirement of interaction or common interests and all that matters is one hundred people per square mile that's the whole united states and that cannot be reasonable so you've been you've given me a lot of time let me briefly address the cor not but i'm you know i think it is a version of what happens with the combine statistical areas less extreme because there is the hook and spoke but again the way the concept is  fined it's on a county by county basis and once you get out in accounting and start drawing lines it can be a rural isolated area but mountains or some other obstructions you really don't know what been this is what we think was clearly said in the district court and in the briefs the credit union gets to draw these lines it can take a red pen or whatever color parent wants and draw line around the city center a metropolitan area that itself is at the population limit that there is no opportunity for community credit union to serve you know st louis the cancer east st louis or you know it's because they can't serve you know south chicago heights you know that you that you need to have the ability to do the cleanup in the outside areas because if everybody here the qualified people are the people who are members and there's and so the supervisory authority is is less of a mismatch to your point then you know but argue it's really saying in the choice of where to be is a banking does or you know that would be the different rule by i think we would still have objections to it but it would be less objectionable but in the redlining cases we cited the old kent case from detroit or  couple of i'm from detroit they said there are plenty of banks that serve downtown detroit and that was not a defense i mean they're you know these cases are not just under the community reinvestment act they're under the fair housing the equal credit opportunity act and there is no come exemption for credit unions for those acts but i think this is just going to be a terrible problem because when the credit carvel's if somebody brings a redlining suit and says well this is a violation of the fair housing act or the equal credit opportunity act the answer is going to be well we apply to a federal agency the national credit union of ministration they accrue to the service area under a valid regulation you know approved through judicial review and it's really it's the action of the agency approving the service area and then you know the people in the urban core they're not eligible to be members at that point they're not going to be included in the business plan because there's no and it would actually be illegal for the credit union to need to be limited to county they just say they're too big or they're not really not what this court and women involved information or mix in the supreme court and aren't versus thomas recognizes that agencies are permitted to use categorical rules and specifically response to mr long's argument that under your definition of rural district tomorrow the and see you a could define the whole united states as a rural district and authorize credit to muni credit u whole lot of rural counties in between and if you're going to be shorter for that you need to be able to serve everyone who lives in all fields rural counties you need things an establishment and able to market and reach up to these people in convince them that you should join you're going to become members looking at this theme that some of the more quaint legislative history that is referenced by the bankers involves you know people agreeing with a handshake and knowing one another as neighbors and therefore being less likely to default being better credit risk it seems like we're decades past that the old rule the new rule like what meaningful role does something like commuting interchange play in you know in the world of thinking so so i understand conceptually that we're using population in commuting interchange as a stand in for that but is it a meaningful standard and if so how well yes i think it's a meaningful santa think you're right that originally credit unions were very small and that congress wants there to be local community but it express it delegate those services to people and that's what the common bond doesn't specifically in rural area that you know the common bond is necessarily less because people are spread out across a larger role area but they are they are interrelated in the credit union serving them there and that's still the