United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 16, 2019 Decided August 20, 2019

No. 18-5154

AMERICAN BANKERS ASSOCIATION,

APPELLEE

v.

NATIONAL CREDIT UNION ADMINISTRATION,

APPELLANT

Consolidated with 18-5181

Appeals from the United States District Court

for the District of Columbia

(No. 1:16-cv-02394)

Daniel Aguilar, Attorney, U.S. Department of Justice, 

argued the cause for Appellant-Cross-Appellee. With him on 

the briefs was Mark B. Stern, Attorney. 

Allison Jones Rushing was on the brief for amici curiae 

Credit Union National Association, et al. in support of 

Appellant-Cross-Appellee. Nicholas G. Gamse entered an 

appearance.
2

Steven D. Gordon was on the brief for amici curiae State 

Bankers Associations in support Appellee-Cross-Appellant 

American Bankers Association.

Robert A. Long Jr. argued the cause for Appellee-CrossAppellant. With him on the briefs were Andrew J. Soukup, 

Philip Levitz, and Lauren Moxley.

Before: HENDERSON, PILLARD, and WILKINS, Circuit 

Judges.

Opinion for the Court filed by Circuit Judge WILKINS.

WILKINS, Circuit Judge: Longstanding principles of 

administrative law teach us to give federal agencies breathing 

room when they make policy and “resolv[e] the struggle 

between competing views of the public interest.” Chevron, 

U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 866 

(1984). And because many policy decisions merge with legal 

ones, Chevron requires us frequently to sustain agency

interpretations of certain federal statutes. Congress often 

expects agencies, with their political accountability, “bod[ies] 

of experience[,] and informed judgment,” to make sound 

interpretive choices “with the force of law.” United States v. 

Mead Corp., 533 U.S. 218, 227, 229 (2001) (citation omitted).

Congress expressly tasked the National Credit Union 

Administration (NCUA) with making such choices in defining 

the reach of federal credit unions. Since the Great Depression, 

Congress has maintained a “system of federal credit unions 

that . . . provide credit at reasonable rates” and banking

services to “people of ‘small means.’” First Nat’l Bank & Tr. 

Co. v. NCUA (First Nat’l Bank I), 988 F.2d 1272, 1274 (D.C. 

Cir. 1993) (citation omitted), aff’d, 522 U.S. 479 (1998). 

Although a private bank may solicit and welcome customers 
3

from anywhere, Congress has limited whom these federal

financial institutions may serve. For instance, certain

institutions called “community credit unions” may cover

individuals and entities only within a preapproved 

geographical area. The credit union will not receive a federal 

charter (and thus cannot start operations) unless it first proffers

a geographical coverage area and the NCUA accepts the 

proposal. Congress explicitly assigns the agency the task of 

creating vetting standards.

Exercising its expressly delegated power, the NCUA has 

promulgated a final rule that makes it easier for community

credit unions to expand their geographical coverage and thus to 

reach more potential members. Representing competitors to

the credit unions, the American Bankers Association 

(Association) has challenged the NCUA’s new rule as neither 

“in accordance with law” nor within “statutory jurisdiction.” 5 

U.S.C. § 706(2)(A), (C). The District Court vacated significant 

portions of the rule, deeming them to be based on unreasonable 

agency interpretations of the Federal Credit Union Act (Act), 

Pub. L. No. 73-467, 48 Stat. 1216 (1934) (codified as amended 

at 12 U.S.C. §§ 1751 to 1795k). See Am. Bankers Ass’n v. 

NCUA, 306 F. Supp. 3d 44, 61, 69-70 (D.D.C. 2018). 

We appreciate the District Court’s conclusions, made after 

a thoughtful analysis of the Act. But we ultimately disagree

with many of them. In this facial challenge, we review the rule 

not as armchair bankers or geographers, but rather as lay judges

cognizant that Congress expressly delegated certain policy 

choices to the NCUA. After considering the Act’s text, 

purpose, and legislative history, we hold the agency’s policy 

choices “entirely appropriate” for the most part. Chevron, 467 

U.S. at 865. We therefore sustain the bulk of the rule. Still, we 

do not rubber-stamp this regulation. We remand, without 

vacating, one portion for further consideration of the 
4

discriminatory impact it might have on poor and minority 

urban residents.

I.

A.

The nation’s credit unions started in the early twentieth 

century “as a populist mechanism designed to empower 

farmers against bad loans.” Mehrsa Baradaran, How the Poor 

Got Cut Out of Banking, 62 EMORY L.J. 483, 500 (2013). 

Walloped by crop failures and the Great Depression, farmers 

seeking credit became not only increasingly suspicious of 

traditional bankers, who “disregard[ed]” poor individuals and 

stayed in the big cities, but also fearful of loan sharks, “who 

would extract ‘up to a thousand percent’ in interest rates.” Id.

at 500-01 (quoting 80 CONG. REC. 6752 (1936) (statement of 

Rep. Lundeen)). The farmers thus began to build their own 

credit networks. 

In a national grassroots campaign, farmers created

localized, non-profit “credit groups” collecting funds from and 

loaning small sums to one another at low interest rates. See id.

at 501-02. The success of any such self-help institution

“hinge[s] on the interpersonal dynamics of its members: 

Lenders must be able to evaluate the ability and willingness of 

potential borrowers to pay back their loans and borrowers must 

feel obligated to pay back those loans.” Wendy Cassity, Note, 

The Case for a Credit Union Community Reinvestment Act, 100 

COLUM. L. REV. 331, 337 (2000); see also First Nat’l Bank & 

Tr. Co. v. NCUA (First Nat’l Bank II), 90 F.3d 525, 526 (D.C. 

Cir. 1996), aff’d, 522 U.S. 479 (1998).

By 1934, individuals had organized about 3,000 local 

credit unions, with about 750,000 members. See 80 CONG.
5

REC. at 6753. Recognizing the success of credit unions at the 

state level, Congress created a federal system that year by 

passing the Act. Legislators worried that “usurious money 

lending . . . obviously destroy[ed] vast totals of buying power 

[once held by] . . . the average worker.” H.R. REP. NO. 73-

2021, at 1-2 (1934); see also S. REP. NO. 73-555, at 1 (1934). 

Congress touted the Act’s ability to “make more available to 

people of small means credit for provident purposes.” H.R.

REP. NO. 73-2021, at 1; see also S. REP. NO. 73-555, at 1.

Credit unions multiplied over the ensuing decades. By 

1970, Congress created an independent agency to supervise 

federal credit unions: the NCUA. See Pub. L. No. 91-468, 84 

Stat. 994 (1970) (codified as amended in scattered sections of 

12 U.S.C.); see also Swan v. Clinton, 100 F.3d 973, 974 (D.C. 

Cir. 1996) (noting that Congress “entrusted” the agency with 

“the responsibility of overseeing” federal credit unions). 

Legislators thought that the agency would be “more responsive 

to the needs of credit unions” and would “provide more flexible 

and innovative regulation” than prior government agencies, 

which did not have federal credit unions as their sole focus. S.

REP. NO. 91-518, at 3 (1969).

The NCUA faced its first major crisis at the end of the 

1970s. After years of economic decline in several industrial 

sectors, federal credit unions tied to those business sectors

began to suffer. The resulting liquidation of numerous credit 

unions “threaten[ed] ‘the safety and soundness of the federal 

credit union system.’” Cassity, supra, at 338-39 (footnote 

omitted). Reacting to the emergency, the NCUA in 1981 

promulgated a groundbreaking rule that loosened a major size 

limitation on certain federal credit unions. Almost 

immediately, those financial institutions grew in membership.
6

Meanwhile, credit unions became “caught up in the 

broader changes in banking and faced internal as well as 

external pressure to compete with [private] banks and seek 

higher profits.” Baradaran, supra, at 505. Unlike credit 

unions, private, for-profit banks were “owned by equity holders 

who may not necessarily be customers (depositors or 

borrowers),” and they did “not have similar membership and 

commercial lending restrictions” as credit unions. DARRYL E.

GETTER, CONG. RESEARCH SERV., IF11048, INTRODUCTION TO 

BANK REGULATION: CREDIT UNIONS AND COMMUNITY BANKS:

A COMPARISON 1 (2018). To remain viable, credit unions 

“started to focus on attracting more customers and expanding 

the industry.” Baradaran, supra, at 505. As part of that

strategy, many consolidated through mergers. And private 

banks soon treated credit unions as serious competitors, 

seeking to curb their growth. See NCUA v. First Nat’l Bank & 

Tr. Co. (First Nat’l Bank III), 522 U.S. 479, 485 (1998); First 

Nat’l Bank I, 988 F.2d at 1276.

In 1998, the banking industry successfully challenged as 

contrary to the Act the 1981 rule that had eased size limitations 

for certain federal credit unions. See First Nat’l Bank III, 522 

U.S. at 503. Congress swiftly responded. In less than six

months, legislators amended the Act, superseding the holding 

in First National Bank III, loosening size limitations on certain 

federal credit unions, and adding other reforms. See Credit 

Union Membership Access Act, Pub. L. No. 105-219, 112 Stat. 

913 (1998) (codified as amended in scattered sections of 12 

U.S.C.). Partly because of the 1998 amendments and related

NCUA regulations, credit unions continued to merge and grow 

in membership. Now, more than 61 million customers perform 

their banking services at about 3,400 federal credit unions. See

2018 NAT’L CREDIT UNION ADMIN. ANN. REP. 192.
7

B.

Federal credit unions pool funds from – and give loans 

to – their members and other credit-union entities. 12 U.S.C. 

§ 1757(5), (6). A credit union’s members, whether individual 

or corporate, must come from the credit union’s membership 

“field,” id. § 1753(5), which is based on a shared occupation, 

association, or geographical area. Members receive regular 

dividends. Id. § 1763. Congress has shielded federal credit 

unions from federal corporate income taxes and most state and 

local taxes, but members must pay taxes on their dividends. 

See JAMES M. BICKLEY, CONG. RESEARCH SERV., 97-548 E,

SHOULD CREDIT UNIONS BE TAXED? 3-5 (2005).

To create a federal credit union, at least seven individuals 

must present a proposed charter and pay a fee to the NCUA. 

See MICHAEL P. MALLOY, BANKING LAW & REGULATION

§ 2.04 (2d ed. 2019). In the application, the organizers must 

pledge to deposit funds for shares in the institution and must 

describe the credit union’s proposed membership field. 12 

U.S.C. § 1753(3), (5). The NCUA must approve the charter 

before the institution may start. See id. § 1754. The agency 

will complete an “appropriate investigation” and determine the

“general character and fitness” of the organizers, the 

“economic advisability of establishing” the credit union, and 

the “conform[ity]” of proposal details with the Act. Id.

The Act governs two types of federal credit unions: 

“common-bond” credit unions and “community” credit unions. 

See id. § 1759(b). This case deals with the latter category. The 

1934 version of the Act required a community credit union’s

membership field to reflect a particular geographical area – to 

wit, “a well-defined neighborhood, community, or rural 

district.” § 9, 48 Stat. at 1219. As amended in 1998, the Act 

provides that membership for a community credit union “shall 
8

be limited to . . . [p]ersons or organizations within a welldefined local community, neighborhood, or rural district.” 12 

U.S.C. § 1759(b) (emphasis added). The 1998 version calls on

the NCUA to “prescribe, by regulation, a definition for the term 

‘well-defined local community, neighborhood, or rural 

district.’” Id. § 1759(g)(1). Thus, under the new regime,

individuals seeking to organize a new community credit union

(or alter an existing one) must commit to serving members 

within the NCUA’s contemporaneous definition of “local 

community, neighborhood, or rural district.” See S. REP. NO.

105-193, at 4, 8 (1998); H.R. REP. NO. 105-472, at 21 (1998). 

As part of their application to the NCUA, they must provide a 

proposed description of the precise geographical area that the 

credit union would serve.

Since 1998, there has been “dramatic growth” in the 

number of community credit unions. U.S. GOV’T 

ACCOUNTABILITY OFF., GAO-07-29, CREDIT UNIONS:

GREATER TRANSPARENCY NEEDED ON WHO CREDIT UNIONS 

SERVE AND ON SENIOR EXECUTIVE COMPENSATION 

ARRANGEMENTS 4 (2006). Despite a 11-percent drop in the 

number of federal credit unions from 2000 to 2005, community 

credit unions doubled to 1,115. Id. at 4, 12. Meanwhile, the 

amount of assets in community credit unions quadrupled to 

$104 billion. Id. at 4.

C.

On December 7, 2016, the NCUA amended its

membership-field rules for community credit unions. See 

Chartering and Field of Membership Manual, 81 Fed. Reg. 

88,412 (Dec. 7, 2016). Several changes rely on two terms 

devised by the Office of Management and Budget (OMB) and 

based on data collected by the Census Bureau (Census): “Core 

Based Statistical Areas” and “Combined Statistical Areas.”
9

The OMB has designated numerous regions around the 

country as Core Based Statistical Areas, which comprise at 

least one urban cluster, or core, of 10,000 or more people and 

adjacent counties with substantial commuting ties to that core. 

See U.S. CENSUS BUREAU, GEOGRAPHICAL PROGRAM,

GLOSSARY, https://www.census.gov/programs-surveys/geogra

phy/about/glossary.html. In layman’s terms, a Core Based 

Statistical Area is a city or town and its suburbs.

Meanwhile, a Combined Statistical Area is a conglomerate 

of two or more adjoining Core Based Statistical Areas, each of 

which has substantial commuting ties with at least one other

Core Based Statistical Area in the group. Id. Essentially, a 

Combined Statistical Area is a regional hub with urban centers 

connected by commuting patterns. Combined Statistical Areas

may “reflect broader social and economic interactions, such as 

wholesaling, commodity distribution, and weekend recreation 

activities.” OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE 

PRESIDENT, OMBBULL. NO. 15-01,REVISED DELINEATIONS OF 

METROPOLITAN STATISTICAL AREAS, MICROPOLITAN 

STATISTICAL AREAS, AND COMBINED STATISTICAL AREAS, AND 

GUIDANCE ON USES OF THE DELINEATIONS OF THESE AREAS

app. 2-3 (2015). 

Relevant here, the 2016 rule made two changes to the 

NCUA’s definition of the term “local community” under 

§ 1759(b)(3) and one to that of “rural district.” The changes 

affect what proposed membership areas satisfy the 

geographical limitation imposed by the Act.

The first change to the “local community” definition

involves Combined Statistical Areas. A proposed area

qualifies as a local community if it encompasses the whole or 

a portion of a Combined Statistical Area and does not exceed a 
10

designated population limit. See 81 Fed. Reg. at 88,440. The

NCUA has set that cap at 2.5 million people.

The second change involves Core Based Statistical Areas. 

The parties agree that all or part of a Core Based Statistical 

Area may qualify as a local community so long as it does not 

exceed the population limit. But since 2010, the NCUA 

required such a membership area to include the urban core. 

The new rule no longer requires that the core be included in the 

local community that a credit union proposes to serve. See id.

at 88,413, 88,440.

As for the “rural district” definition, the new rule increases 

the population cap for valid rural districts from 250,000 people 

(or 3 percent of the population of the state where most eligible 

residents are located) to 1 million people. See id. at 88,416, 

88,440. The new population limit works with two other 

constraints set by the rule: (1) an outer geographical limit on 

how far a rural district may extend past the borders of the credit 

union’s headquarters state; and (2) a requirement either that 

most eligible residents reside in Census-designated rural areas, 

or that the population density of the proposed district equals 

100 or fewer people per square mile. See id. at 88,440.

D.

On the day the NCUA published the rule, the Association 

filed this injunctive and declaratory action in the District Court. 

The Association claimed that the three changes described 

above were not only arbitrary and capricious under the 

Administrative Procedure Act (APA), Pub. L. No. 79-404, 60 

Stat. 237 (1946) (codified as 5 U.S.C. §§ 701-06), but also 

unreasonable and entitled to no deference under Chevron. The 

agency and Association filed cross-motions for summary 
11

judgment. On March 29, 2018, the District Court granted both 

motions in part and denied them in part.

The court made three relevant holdings. First, it rejected 

as unreasonable the qualification of certain Combined 

Statistical Areas as local communities. See Am. Bankers Ass’n, 

306 F. Supp. 3d at 61. Second, it sustained as well-reasoned 

the elimination of the core requirement from the Core Based 

Statistical Area a credit union proposes to serve as its local 

community. Id. at 64-65. Third, it rejected as unreasonable the 

increased population cap for rural districts. Id. at 69-70. (It

also sustained a separate portion of the rule, which the 

Association does not challenge here.)

The NCUA and Association timely appealed. We have 

appellate jurisdiction under 28 U.S.C. § 1291.

II.

At the outset, we must assure ourselves of our subject 

matter jurisdiction over the appellate proceeding. See, e.g.,

United States v. Gooch, 842 F.3d 1274, 1277 (D.C. Cir. 2016). 

In their original briefing, the parties failed to apprise us of

a rule that was promulgated while this appeal was pending and 

that changed membership-field requirements for community 

credit unions. See Chartering and Field of Membership, 83 

Fed. Reg. 30,289 (June 28, 2018). The 2018 rule eliminated 

the portion of the 2016 rule allowing Combined Statistical 

Areas to qualify as local communities. Compare 12 C.F.R. pt. 

701, app. B, ch. 2 § V.A.2 (2018), with id. (2019). The 2018 

rule preamble did not specifically discuss the removal but 

concluded that “[a]ny modification in th[e] final rule is 

consistent with the District Court decision” in this action. 83 

Fed. Reg. at 30,291.
12

“Under the mootness doctrine, we cannot decide a case if 

‘events have so transpired that the decision will neither 

presently affect the parties’ rights nor have a more-thanspeculative chance of affecting them in the future.’” Reid v. 

Hurwitz, 920 F.3d 828, 832 (D.C. Cir. 2019) (citation omitted). 

The same principle applies to individual claims. See Tucson 

Med. Ctr. v. Sullivan, 947 F.2d 971, 977 (D.C. Cir. 1991). 

Accordingly, if a rule under review (or a portion of it) is 

superseded or amended during an appeal, the proceeding (or 

relevant part) might be moot. See, e.g., Am. Bankers Ass’n v. 

NCUA, 271 F.3d 262, 274 (D.C. Cir. 2001). We therefore 

requested supplemental briefing on the issue of appellate 

jurisdiction.

Based on the government’s submission and 

representations at oral argument, we hold that the portion of the

appeal related to Combined Statistical Areas is not moot. 

“[T]he mere power to [reinstitute] a challenged law is not a 

sufficient basis on which a court can conclude that” a challenge 

remains live. Nat’l Black Police Ass’n v. District of Columbia, 

108 F.3d 346, 349 (D.C. Cir. 1997). The government has stated 

that, if we reverse the relevant part of the District Court’s 

decision, all three members of the NCUA’s board intend to 

reinstitute the Combined Statistical Area portion of the 2016 

rule if we reverse the relevant part of the District Court’s 

decision. See Decl. of Michael McKenna ¶ 3, ECF No. 

1781123; Oral Arg. Recording 11:33-48. Accordingly, City of 

Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283 (1982), 

governs this case. In Aladdin’s Castle, the Supreme Court 

deemed the controversy live in part because the government 

had announced “an intention” to restore the rule under 

challenge if the lower-court decision were vacated. Id. at 289 

& n.11; see also Am. Bankers Ass’n, 271 F.3d at 274. The 

NCUA’s submission and representations evince such an 
13

intention here, and the Association – which bears the “heavy 

burden” of proving mootness, Friends of the Earth, Inc. v. 

Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000)

(citation omitted) – offers no evidence to the contrary.

The Association attempts to distinguish Aladdin’s Castle

on two grounds, but neither sways us. First, the Association 

notes that the city government in Aladdin’s Castle said it would 

reenact “precisely the same” law, see 455 U.S. at 289, but that 

in this case any future notice-and-comment proceedings might 

produce a different “local community” definition, perhaps not 

even relying on Combined Statistical Areas. After all, the 

agency must keep a “flexible and open-minded attitude” during 

the process. See Nat’l Tour Brokers Ass’n v. United States, 591 

F.2d 896, 902 (D.C. Cir. 1978). We grant that commenters 

might convince the NCUA to change its mind; mann tracht, 

und Gott lacht. But that strikes us as speculative as public input 

convincing Mesquite legislators to enact a different law. We 

do not see Aladdin’s Castle turning on such conjecture. 

Instead, we see a live dispute because there is “no certainty” 

that the NCUA will forego reinstating the same Combined 

Statistical Area definition. Aladdin’s Castle, 455 U.S. at 289; 

see also Trinity Lutheran Church of Columbia, Inc. v. Comer, 

137 S. Ct. 2012, 2019 n.1 (2017) (holding that the court must 

find “absolutely clear that the allegedly wrongful behavior 

could not reasonably be expected to recur” (emphasis added) 

(quoting Friends of the Earth, 528 U.S. at 189)). After all, the 

NCUA continues to defend the definition here. See Knox v. 

Serv. Emps. Int’l Union, Local 100, 567 U.S. 298, 307 (2012).

Second, the Association observes that both sides in 

Aladdin’s Castle urged the Supreme Court to treat their dispute 

as live. In contrast, only the NCUA seeks to proceed here; the 

Association would prefer to wait until the agency reinstitutes 

the rule. But the existence or absence of jurisdiction does not 
14

turn on which parties challenge or defend it. Cf. Bender v. 

Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986). 

Because the NCUA remains bound by the lower-court

judgment, the present injury renders irrelevant the 

Association’s preference. “Jurisdiction existing,” our duty to 

decide the appeal “is ‘virtually unflagging.’” Sprint 

Commc’ns, Inc. v. Jacobs, 571 U.S. 69, 77 (2013) (citation 

omitted).

In short, we may review the challenge to the rule change 

involving Combined Statistical Areas. We see no jurisdictional 

issues with the rest of the appeal. We thus turn to the merits.

III.

We review de novo the District Court’s rulings on

summary judgment. See Loan Syndications & Trading Ass’n 

v. SEC, 882 F.3d 220, 222 (D.C. Cir. 2018). We review the 

administrative record and give “no particular deference” to the 

District Court’s views. Oceana, Inc. v. Ross, 920 F.3d 855, 860 

(D.C. Cir. 2019) (citation omitted).

The APA governs this suit. In relevant part, the statute 

provides that we “decide all relevant questions of law” and 

“interpret . . . statutory provisions.” 5 U.S.C. § 706. We 

ordinarily set aside agency actions that are either “arbitrary, 

capricious, an abuse of discretion, or otherwise not in 

accordance with law,” id. § 706(2)(A), or “in excess of 

statutory jurisdiction, authority, or limitations, or short of 

statutory right,” id. § 706(2)(C).

We review the agency rule in accordance with the familiar

Chevron doctrine, a two-prong test for determining whether an 

agency “has stayed within the bounds of its statutory authority” 

when issuing its action. City of Arlington v. FCC, 569 U.S. 
15

290, 297 (2013) (emphasis omitted). At the first step, we 

determine “whether Congress has directly spoken to the precise 

question at issue,” and we “give effect” to any “unambiguously 

expressed intent.” Chevron, 467 U.S. at 842-43 & n.9. 

If we glean no such unambiguous intent, we turn to the 

second step and determine “whether the agency’s answer” to 

the question “is based on a permissible construction of the 

statute.” Id. at 843. By arriving at the second step, we have 

concluded that Congress either explicitly or implicitly 

delegated to the agency the lawmaking authority to clarify the 

statute. We presume that Congress would not authorize the 

promulgation of an “[im]permissible construction.” Chevron, 

467 U.S. at 843. Accordingly, we will set aside agency actions 

based on such a construction, because they are either “not in 

accordance with law” or “in excess of statutory jurisdiction.” 

5 U.S.C. § 706(2)(A), (C); see also CSX Transp., Inc. v. 

Surface Transp. Bd., 754 F.3d 1056, 1063 (D.C. Cir. 2014); 

Ass’n of Privacy Sector Colls. & Univs. v. Duncan, 681 F.3d 

427, 441 (D.C. Cir. 2012).

IV.

For all three challenges, the first step of the Chevron

analysis proceeds in the same way. “We begin our analysis, as 

always, with the statutory text.” Tesoro Alaska Co. v. FERC, 

778 F.3d 1034, 1038 (D.C. Cir. 2015). Congress having 

expressly assigned the NCUA the power to define the 

challenged terms, see 12 U.S.C. § 1759(g)(1), we may proceed 

to Chevron’s second prong without further analysis, see U.S. 

Telecom Ass’n v. FCC, 825 F.3d 674, 717 (D.C. Cir. 2016);

Rush Univ. Med. Ctr. v. Burwell, 763 F.3d 754, 760 (7th Cir. 

2014); Comm’r v. Pepsi-Cola Niagara Bottling Corp., 399 

F.2d 390, 393 (2d Cir. 1968) (Friendly, J.) (“When Congress 

has used a general term and has empowered an administrator 
16

to define it, the courts must respect his construction if this is 

within the range of reason.”). 

An express delegation of definitional power “necessarily 

suggests that Congress did not intend the [terms] to be applied 

in [their] plain meaning sense,” Women Involved in Farm 

Econ. v. U.S. Dep’t of Agric., 876 F.2d 994, 1000 (D.C. Cir. 

1989), that they are not “self-defining,” id., and that the agency 

“enjoy[s] broad discretion” in how to define them, Lindeen v. 

SEC, 825 F.3d 646, 653 (D.C. Cir. 2016). In Chevron terms, 

Congress through explicit language “has directly spoken to the 

precise question” of whether the identified terms must carry 

certain meanings. 467 U.S. at 842-43. The answer is no. See

Buongiorno v. Sullivan, 912 F.2d 504, 509 (D.C. Cir. 1990) 

(Thomas, J.) (“When Congress expressly delegates the 

authority to fill a gap in a statute, Congress speaks, in effect,

directly, and says, succinctly, that it wants the agency to 

annotate its words.”). To hold otherwise at the first Chevron 

step would “undermine” the ability of Congress to delegate 

definitional power. Rush Univ. Med. Ctr., 763 F.3d at 760. 

Consequently, we turn to whether the NCUA’s definitions 

are “based on a permissible construction of the statute.” 

Chevron, 467 U.S. at 843. 

V.

Agency interpretations promulgated to fill an explicit 

legislative gap “are given controlling weight unless they are 

arbitrary, capricious, or manifestly contrary to the statute.”

Chevron, 467 U.S. at 844; see also Pharm. Research & Mfrs.

of Am. v. FTC, 790 F.3d 198, 204 (D.C. Cir. 2015).

Under arbitrary and capricious review, “we may not 

substitute our own judgment for that” of the agency. FERC v. 
17

Elec. Power Supply Ass’n, 136 S. Ct. 760, 782 (2016); accord 

Dep’t of Commerce v. New York, 139 S. Ct. 2551, 2569 (2019). 

Still, we are “not a ‘rubber stamp,’” Oceana, 920 F.3d at 863; 

“the agency must examine the relevant data and articulate a 

satisfactory explanation for its action,” Motor Vehicle Mfrs. 

Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co. (State 

Farm), 463 U.S. 29, 43 (1983). A rule is arbitrary and 

capricious if (1) the agency “has relied on factors which 

Congress has not intended it to consider”; (2) the agency 

“entirely failed to consider an important aspect of the 

problem”; (3) the agency’s explanation “runs counter to the 

evidence before the agency”; or (4) the explanation “is so 

implausible that it could not be ascribed to a difference in view 

or the product of agency expertise.” Id.

In turn, we assess three definitional changes in the 2016 

rule: (1) qualifying Combined Statistical Areas as local 

communities; (2) eliminating the core requirement for local 

communities based on Core Based Statistical Areas; and 

(3) raising the population cap for rural districts. We sustain the 

first and third amendments in full. As for the second, we hold

that it is rationally related to the Act’s text and purposes, but

that it is insufficiently explained.

A.

The District Court rejected the first change because it 

approved certain Combined Statistical Areas “no matter how 

geographically dispersed and unconnected” the “members may 

be.” Am. Bankers Ass’n, 306 F. Supp. 3d at 61. To the court, 

the approval did not fit with the term “local community,” 

which, in its view, “encompass[es] an area no larger than a 

county.” Id. at 58, 61. We respectfully disagree.
18

The NCUA possesses vast discretion to define terms 

because Congress expressly has given it such power. But the 

authority is not boundless. The agency must craft a reasonable 

definition consistent with the Act’s text and purposes; that is 

central to the review we apply at Chevron’s second step. Here, 

the NCUA’s definition meets the standard.

We first focus on the text. Congress introduced the phrase 

“local community” in the 1998 amendments. The word

“community” had a broad scope at the time. It meant not only 

“society at large” but also a “body of individuals organized into 

a unit or manifesting usu[ally] with awareness of some 

unifying trait.” See Community, WEBSTER’S THIRD 

INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE 

UNABRIDGED 460 (1993). The group could be “united by 

historical consciousness or . . . common social, economic, and 

political interests.” Id. But the unifying trait could also be 

simply “living in a particular place or region.” Id.

The NCUA has recognized that the modifier “local” 

“reflects congressional intent that it takes ‘a more circumspect 

and restricted approach to chartering community credit 

unions.’” Am. Bankers Ass’n, 271 F.3d at 273 (citation 

omitted); see also Oral Arg. Recording 3:16-18. Indeed, 

Congress made clear its intention to “modif[y]” the “current 

law regarding community credit unions” by adding the word 

“local” to community. S. REP. NO. 105-193, at 6-7. 

Insertion of the modifier “local” before “community” 

implies that the community “relate[s] to” a “particular limited 

district” or is “confined to a particular place.” Local, 

WEBSTER’S THIRD INTERNATIONAL DICTIONARY OF THE 

ENGLISH LANGUAGE UNABRIDGED 1327 (1993). But that place

need not be the size of a county, as the District Court held. The 

Supreme Court has recognized that the geographical areas
19

“need not be small.” First Nat’l Bank III, 522 U.S. at 492. And 

if Congress wanted a local community to correspond to a 

particular geographical unit, such as a county, “‘it easily could 

have written’ that limitation explicitly.” NCUA Br. 25-26 

(quoting Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 227 

(2008)); see also Credit Union Nat’l Ass’n Amicus Br. 15. The 

NCUA sensibly reads the term “local” to mean simply that the 

community, regardless of shape or size, should be neither 

“broad” nor “general.” Local, SUPRA, at 1327.

To be clear, we do not hold today that the NCUA must 

consider only bonds and social connections as understood in 

1998. The parties agree, and thus we assume, that the NCUA, 

despite its expressly delegated authority, must adopt a 

definition consistent with what the term “local community” 

meant in 1998, the time of its adoption.

After consulting state statutes and invoking the canon of 

noscitur a sociis, the District Court developed a rather sizerestrictive meaning for the phrase. See Am. Bankers Ass’n, 306 

F. Supp. 3d at 57-59. But we do not think that defining a “local 

community” to refer to an area larger than a county is an 

unreasonable interpretation of the Act’s text.

We receive little guidance from the state statutes in effect 

in 1998. Indeed, some of the statutes considered “local 

communities” to be quite large. See, e.g., ALASKA STAT.

§ 18.66.990(7) (1998) (defining “local community entity” as “a 

city or borough or other political subdivision of the state, a 

nonprofit organization, or a combination of these” (emphasis 

added)); see also NCUA Br. 25 n.4.

We also reject the District Court’s invocation of the 

noscitur a sociis canon. When several terms “are associated in 

a context suggesting that [they] have something in common, 
20

they should be assigned a permissible meaning that makes 

them similar.” ANTONIN SCALIA & BRYAN A. GARNER,

READING LAW: THE INTERPRETATION OF LEGAL TEXTS 195 

(2012). But the “substantive connection, or fit, between” the 

terms here – local community, neighborhood, and rural 

district – is “not so tight or so self-evident.” Graham Cty. Soil 

& Water Conservation Dist. v. United States ex rel. Wilson, 559 

U.S. 280, 288 (2010). Only the word “neighborhood” has a 

dictionary definition clearly suggesting a region of small size; 

the phrase “local community” does not, as we have explained 

above, and neither does “rural district,” as we explain below. 

A size restriction would impermissibly “submerge[]” the

independent “character” of the latter two terms. Babbitt v. 

Sweet Home Chapter of Cmtys. for a Great Or. (Sweet Home), 

515 U.S. 687, 702 (1995) (citation omitted).

The Association also points to other textual indicators. 

But contrary to what it suggests, see Am. Bankers Ass’n Br. 

27-28, we see nothing in the record suggesting that “local 

community” is a term of art. The Association also says the 

usage of word “local” in two other federal statutes indicates 

that rules permitting coverage areas of larger than a county 

would be manifestly contrary to the Act. See id. at 32; see also

15 U.S.C. § 2203 (1998) (defining “local” as “city, town, 

county, . . . or other political subdivision of a State”); 18 U.S.C. 

§ 666 (1998) (same). (The Association pointed to other laws, 

but they did not exist in 1998. See National Defense 

Authorization Act for Fiscal Year 2010, Pub. L. No. 111-84, 

§ 4703(b), 123 Stat. 2190, 2837 (2009); PRIME Act Grants, 66 

Fed. Reg. 29,010 (May 29, 2001).) True enough. But the two 

statutes address materially distinct issues – fire prevention and 

embezzlement – and thus do not indicate that the term “local” 

must imply a size limitation here. See Envtl. Def. v. Duke 

Energy Corp., 549 U.S. 561, 574 (2007) (“[M]ost words have 
21

different shades of meaning and consequently may be variously 

construed . . . in different statutes . . . .” (citation omitted)).

In addition to being consistent with the Act’s text, the 

Combined Statistical Area definition rationally advances the 

Act’s underlying purposes. In the 1998 amendments, Congress 

made two relevant findings about purpose. First, legislators 

found “essential” to the credit-union system a “meaningful 

affinity and bond among members, manifested by a 

commonality of routine interaction[;] shared and related work 

experiences, interests, or activities[;] or the maintenance of an 

otherwise well-understood sense of cohesion or identity.” § 2, 

112 Stat. at 914. Second, Congress highlighted the importance 

of “credit union safety and soundness,” because a credit union 

on firm financial footing “will enhance the public benefit that 

citizens receive.” Id. The legislative history also confirms the 

importance of common bonds, see S. REP. NO. 73-555, at 2; see 

also H.R. REP. NO. 105-472, at 12; H.R. REP. NO. 73-2021, at 

2; 144 CONG. REC. S9094 (daily ed. July 28, 1998) (statement 

of Sen. Mikulski); id. at S8971-72 (daily ed. July 24, 1998) 

(statement of Sen. Moseley-Braun), and economic “integrity,” 

S. REP. NO. 105-193, at 3; see also 144 CONG. REC. S9094 

(statement of Sen. Mikulski); id. at S8972 (statement of Sen. 

Moseley-Braun), to federal credit unions.

We recognize that there may be some tension between the 

Act’s principal purposes: A credit union with exceedingly 

close ties among its members is unlikely to have a large enough 

customer base to thrive economically. To the extent that such 

tension exists, the Act leaves to the NCUA to strike a 

reasonable balance. Congress was well aware that a viable 

credit union might serve a relatively large geographical area. 

See, e.g., H.R. REP. NO. 73-2021, at 2 (“[T]here are cases in 

which communities and organizations cross State lines.”).
22

The NCUA did just that in promulgating the Combined 

Statistical Area definition. That definition allows for larger 

community credit unions; the decision is consistent with 

decades of history promoting the economic viability of credit 

unions in the face of banks and other competing financial 

institutions. Nonetheless, the NCUA struck a balance by

ensuring that members within the local community maintain

somewhat of a commuter relationship with each other. As the 

Association even acknowledges, commuting patterns “may 

sometimes serve as a proxy for community interaction.” Am. 

Bankers Ass’n Br. 38 n.25. We see nothing irrational about 

adopting the factor as a proxy for the common bond 

contemplated by Congress. Perhaps we would have made a 

different call had we been the policymakers. Perhaps we would 

have sought a tighter bond. Or perhaps we would not have 

prioritized credit-union growth. See Iowa Bankers Ass’n 

Amicus Br. 24-25. But we must “refrain from substituting 

[our] own interstitial lawmaking for that” of the agency. 

Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 244 

(2004) (citation omitted). 

The NCUA also reasonably explained its amendment to 

the “local community” definition. To begin with, the agency 

reasonably circumscribed the size of a local community under

the Combined Statistical Area rule by imposing a 2.5 millionperson population limit. Used by the OMB in analogous 

circumstances, the cap is a “logical breaking point in terms of 

community cohesiveness with respect to a multijurisdictional 

area.” Chartering and Field of Membership for Federal Credit 

Unions, 75 Fed. Reg. 36,257, 36,259 (June 25, 2010). 

Moreover, the NCUA reasonably relied on its prior experience 

with Core Based Statistical Areas, which no party disputes can 

serve as local communities under the Act. The agency noted 

that the average geographic size of Combined Statistical Areas 

with populations of up to 2.5 million people is 4,553 square 
23

miles, and that the average size of the Core Based Statistical 

Areas approved by the NCUA as local communities is 4,572 

square miles. See 81 Fed. Reg. at 88,414-15. Given that

similarity in size, the NCUA reasonably considered adopted its

population-limited Combined Statistical Areas standard.

Finally, the NCUA’s definition does not readily create 

general, widely dispersed regions. Cf. First Nat’l Bank III, 522 

U.S. at 502 (indicating that community credit unions may not 

be “composed of members from an unlimited number of 

unrelated geographical units”). Combined Statistical Areas are 

geographical units well-accepted within the government. See

81 Fed. Reg. at 88,414. Because they essentially are regional 

hubs, the Combined Statistical Areas concentrate around

central locations. The OMB carved out the areas so that their 

constituent parts share commuting ties and they reflect

“broader social and economic interactions.” OFFICE OF MGMT.

& BUDGET, SUPRA, at app. 2-3. The NCUA rationally believed

that such “real-world interconnections” would qualify as the 

type of mutual bonds suggested by the term “local 

community.” Credit Union Nat’l Ass’n Amicus Br. 9. Thus, 

the agency reasonably determined that Combined Statistical 

Areas “simply unif[y], as a single community,” already 

connected neighboring regions. See 81 Fed. Reg. at 88,415.

The Association raises a potpourri of objections to the 

NCUA’s decision-making. See Am. Bankers Ass’n Br. 33-48. 

Virtually all of its gripes are forfeited because it failed first to 

raise them to the agency, see, e.g., Koretoff v. Vilsack, 707 F.3d 

394, 397-98 (D.C. Cir. 2013) (per curiam), or lack merit 

because they involve outdated “local community” definitions, 

which either did not allow for the qualification of certain 

geographical areas as local communities or lacked a population 

cap of 2.5 million people.
24

But one of the complaints is “deserving of sustained 

consideration.” Ortiz v. United States, 138 S. Ct. 2165, 2173 

(2018). The Association contends that some large Combined 

Statistical Areas are so sprawling that the NCUA’s definition, 

which treats a 2.5-million-person portion of them as a local 

community, must be unreasonable. Recall that a Combined 

Statistical Area is a regional hub with more than one urban 

center. Under the OMB’s technical specifications, each center 

need not be connected to every other by commuting ties; rather, 

each need only have ties to one other center within the hub. As 

the Association colorfully puts it, the OMB may designate as a 

Combined Statistical Area a mere “daisy chain” of urban 

centers “that are linked to their neighbors but have nothing to 

with those at the other end of the chain.” See Am. Bankers 

Ass’n Br. 36 (citation omitted). Theoretically, the Association 

continues, certain 2.5-million-person communities might bring 

together parts of different urban centers with no connection 

with one another. The Association also suggests that the rule 

might permit local communities comprising non-contiguous 

portions of a Combined Statistical Area. See id. at 39.

We understand the Association’s argument to be attacking 

the Combined Statistical Area definition as unreasonable. To 

the Association, the NCUA failed sufficiently to consider the 

potential for the rule to create unreasonable results. One 

hypothetical application disturbed the District Court here: the

prospect that, within the Combined Statistical Area including 

the District of Columbia and counties from three states 

(Maryland, Pennsylvania, and Virginia), one could create a 

local community bringing together Doylesburg, Pennsylvania, 

and Partlow, Virginia, towns located 200 miles apart. See Am. 

Bankers Ass’n, 306 F. Supp. 3d at 59-60. 

We might well agree with the District Court that the 

approval of such a geographical area would contravene the Act. 
25

But even so, the Association would need much more to mount 

its facial pre-enforcement challenge in this case. As the 

Supreme Court repeatedly has held, “the fact that petitioner can 

point to a hypothetical case in which the rule might lead to an 

arbitrary result does not render the rule” facially invalid. Am. 

Hosp. Ass’n v. NLRB, 499 U.S. 606, 619 (1991); see also EPA 

v. EME Homer City Generation, L.P. (EME Homer), 572 U.S. 

489, 524 (2014) (“The possibility that the rule, in uncommon 

particular applications, might exceed [the agency]’s statutory 

authority does not warrant judicial condemnation of the rule in 

its entirety.”); INS v. Nat’l Ctr. for Immigrants’ Rights, Inc., 

502 U.S. 183, 188 (1991) (“That the regulation may be invalid 

as applied in s[ome] cases . . . does not mean that the regulation 

is facially invalid because it is without statutory authority.”); 

cf. Barnhart v. Thomas, 540 U.S. 20, 29 (2003) (“Virtually 

every legal (or other) rule has imperfect applications in 

particular circumstances.”).

Here, the Association’s complaint and the District Court’s 

accompanying worry strike us as too conjectural. The NCUA

must assess the “economic advisability of establishing” the 

proposed credit union before approving it, 12 U.S.C. § 1754, 

and as part of the assessment, the organizers must propose a 

“realistic” business plan showing how the institution and its 

branches would serve all members in the local community, see

12 C.F.R. pt. 701, app. B, ch. 1 § IV.D. The Association has 

failed to demonstrate the plausibility of a local community that 

is defined like the hypothetical narrow, multi-state strip and 

accompanies a realistic business plan. And if the agency were 

to receive and approve such an application, a petitioner can 

make an as-applied challenge. See, e.g., EME Homer, 572 U.S. 

at 523-24; Buongiorno, 912 F.2d at 510. The Association has 

succeeded in such challenges in the past. See, e.g., Am. 

Bankers Ass’n v. NCUA, No. 1:05-CV-2247, 2008 WL 

2857678, at *1 (M.D. Pa. July 21, 2008); Am. Bankers Ass’n v. 
26

NCUA, 347 F. Supp. 2d 1061, 1074 (D. Utah 2004). Thus, we 

reject the facial attack on the amended “local community” 

definition involving Combined Statistical Areas.

B.

We turn to the next rule change. The District Court upheld

the eliminated core requirement for a local community based 

on a Core Based Statistical Area. The court acknowledged that 

defining a local community without its urban core “does not 

alter the . . . common bond” shared by the members in the 

remainder. Am. Bankers Ass’n, 306 F. Supp. 3d at 62-63. 

Meanwhile, the court accepted the agency’s response to the 

claim that the new definition encouraged redlining – a broad 

category of lending practices with negative impact on “areas 

where low-income and minority populations are concentrated.” 

Id. at 65 (quoting 81 Fed. Reg. at 88,413).

Like the District Court, we hold that the eliminated core 

requirement is consistent with the Act’s text and purposes. 

Still, we see merit in the Association’s redlining argument and 

thus hold the definitional change to be arbitrary and capricious.

1.

We will sustain the eliminated core requirement if it 

reflects a reasonable interpretation of “local community” that 

is rationally related to the dual purposes of promoting creditunion growth and ensuring some cohesion among members. It 

does. Omission of the urban core from proposed geographical 

area will permit community credit unions to reach new 

members in the suburban parts of the Core Based Statistical 

Area and thus to maintain a healthy membership. Because the 

suburbs under the OMB’s definition have substantial 

commuting ties to the urban cluster, they all will be “within a 
27

feasible commuting radius” and thus “share[] at least some 

geographic ties.” Am. Bankers Ass’n, 306 F. Supp. 3d at 64. 

Those bonds do not disappear if the local community lacks the 

core. The Association seeks greater “assurance[s]” of a 

meaningful bond among members, Am. Bankers Ass’n Br. 66-

67; see also Am. Bankers Ass’n Reply 11, but we do not

replace the agency’s policy judgment with ours.

We also do not believe that the eliminated core 

requirement would create sprawling, boundless geographical

regions. No one disputes that, as a general matter, a 

membership area comprising an intact Core Based Statistical 

Area will satisfy any definition of “local community.” If the 

local community with the core poses no problem, we fail to see 

how a local community without one would. And even as to

Core Based Statistical Areas that do not qualify as local 

communities (because they have populations of more than 2.5 

million), the geographical ties ensure that the proposed 

membership area will still be contained within the boundaries 

of a single, well-recognized metropolitan region. A single 

region is not what concerned the Supreme Court in First 

National Bank III. See 522 U.S. at 502.

The Association objects to the expansive hypothetical 

membership fields, highlighting two Core Based Statistical 

Areas whose populations exceed the NCUA’s cap of 2.5 

million. The Association asserts that the rule change “makes it 

much easier to unite far-distant edges” of those sprawling areas 

in a single membership area. Am. Bankers Ass’n Reply 9. Fair 

point. But economic realities do not make it plausible that 

organizers would propose such a local community or that the 

NCUA would approve it. Like the Combined Statistical Area 

definition, the eliminated core requirement does not become 

facially infirm because of farfetched hypotheticals. To the 

extent they occur in the future, troublesome rule applications 
28

might be subject to as-applied challenges. See Am. Bankers 

Ass’n, 271 F.3d at 267.

2

Despite the eliminated core requirement’s consistency 

with the Act, we cannot sustain the definitional change because 

the NCUA has not adequately explained it. 

The Association contends that the rule change “effectively 

allows credit unions to engage in ‘redlining’ by denying service 

to urban areas with large numbers of minority and lowerincome residents.” Am. Bankers Ass’n Br. 65. The NCUA 

attempted to address this concern in the preamble. At first 

blush, the agency’s statements appear persuasive. Still, the 

Association persuasively argues that the response fails to 

“consider an important aspect” of the redlining issue or is 

otherwise “so implausible” as to be unreasonable. State Farm, 

463 U.S. at 43. Thus, the eliminated core requirement is 

arbitrary and capricious.

During the notice-and-comment proceedings, the 

Association warned against redlining and objected that 

community credit unions could now “serv[e] wealthier 

suburban counties and exclud[e] markets containing lowincome and minority communities that reside in the core area.” 

Letter from James Chessen, Exec. Vice President & Chief 

Economist, Am. Bankers Ass’n, to Gerard S. Poliquin, Sec’y 

of the Board, Nat’l Credit Union Admin. (Feb 5, 2016), Am. 

Bankers Ass’n v. NCUA, No. 1:16-cv-02394-DLF (D.D.C. 

filed Aug. 23, 2017), ECF No. 26-1 at 228. Fairly read, the 

Association’s objection is not to traditional redlining, which 

encompasses the refusal to make loans in low-income or 

minority neighborhoods within a service area, see Baradaran, 

supra, at 494; see also Cassity, supra, at 348, 355. Federal 
29

credit unions “cannot ‘redline’” in the traditional sense because 

“everyone in a credit union’s ‘community’ is a member who is 

eligible to take advantage of credit union services” and credit 

unions “by definition cannot reach beyond their member 

communities to offer credit to the general public.” Cassity, 

supra, at 355. But a community credit union can engage in 

more unconventional redlining practices: “gerrymander[ing] to 

create its own community of exclusively higher-income 

members.” Id. at 359. We think it evident that the Association 

was focusing on such gerrymandering.

In response, the NCUA acknowledged that it originally 

kept the core requirement as a benefit to “low-income and 

underserved populations.” 81 Fed. Reg. at 88,413. Some 

commenters criticized the core requirement as failing to 

achieve that goal; it caused community credit unions “to 

sacrifice service to other areas” within the Core Based 

Statistical Area, id., and such service arguably could benefit 

poor and minority customers residing outside the core, see id.

at 88,414 (remarking on the importance of credit unions 

“providing financial services to low income and underserved 

populations without regard to where they are located within a 

community, i.e., beyond its ‘core area’”).

Still, the agency dismissed the redlining concern on other 

grounds, pointing to its “supervisory process to assess [creditunion] management’s efforts to offer service to the entire 

community [the credit union] seeks to serve.” Id. The NCUA 

focused on two aspects of its process. First, the agency touted 

its “annual evaluation,” which “encompasses [the credit 

union]’s implementation of its business and marketing plans.” 

Id. Citing its “[e]xperience” as support, the agency identified

the evaluation as a “more effective means” than a core 

requirement to “ensur[e] that the low-income and underserved 

populations are fairly served.” Id. Indeed, prior evaluations 
30

confirm that the agency has had “success in providing financial 

services to low-income and underserved populations without 

regard to where they are located within” the membership area. 

Id. at 88,414. Second, the NCUA noted its “mandate to 

consider member complaints alleging discriminatory practices 

affecting low-income and underserved populations, such as 

redlining, and to respond as necessary when such practices are 

shown to exist.” Id.

Both aspects of the NCUA’s supervisory process fail to 

address the redlining issue raised by the Association. The 

annual evaluation process might be an adequate response to 

traditional redlining, because it might ensure that community 

credit unions adequately serve poor and minority residents 

living in their local communities. But we do not see how it 

fixes gerrymandering or the potential discriminatory economic 

impact on urban residents. See State Farm, 463 U.S. at 43 

(requiring the agency to consider relevant factors). The annual 

evaluation process necessarily does not come into effect until 

the NCUA already has approved the charter, business plan, and 

proposed local community. See Iowa Bankers Ass’n Amicus 

Br. 12. And nothing in the record suggests that business plans 

may focus on residents residing outside the finalized 

membership area; in fact, the law forbids federal credit unions 

from serving those residents.

The complaint process also does not work in the

gerrymandering context. As the preamble points out, 

complaints are raised by the membership, which would not 

include the affected urban residents because of the rule change. 

It seems quite implausible, absent some contrary evidence the 

agency failed to detail, that members will file grievances based 

on gerrymandering harms suffered by residents outside the 

coverage area. See State Farm, 463 U.S. at 43 (rejecting 

implausible explanations). 
31

The NCUA attempts to defend the rule change by offering 

a buffet of other potential rationales in its briefing and at oral 

argument. They all fail because the agency did not adopt them 

when promulgating the rule change. See State Farm, 463 U.S. 

at 43 (noting that courts may not “supply a reasoned basis for 

the agency’s action that the agency itself has not given”

(quoting SEC v. Chenery Corp., 332 U.S. 194, 196 (1947))). 

We pause, though, to caution the NCUA about two proffered 

reasons. At oral argument, the government counsel suggested 

that the agency may reject proposed local communities if it 

suspects they discriminate against residents in the urban core. 

See Oral Arg. Recording 5:28-49, 13:43-14:09. But current 

reviewing guidelines do not indicate that the agency looks for

such discrimination. See 12 C.F.R. pt. 701, app. B, ch. 1 

§ VII.A. And the NCUA made the opposite representations to

the District Court. See Transcript of Motion Hearing at 48:23-

49:7 (“[District Court]: . . . If a credit union comes to the 

agency and says I want to serve X area, either in a rural district 

or a combined statistical area, and they meet the definition, the 

agency has no authority to reject that application, as long as the 

credit union can demonstrate that they can serve the 

area? [NCUA]: . . . I think that’s probably right, your 

Honor.”), Am. Bankers Ass’n v. NCUA, No. 1:16-cv-02394-

DLF (D.D.C. filed Mar. 27, 2018), ECF No. 33. The 

government counsel also suggested that community credit 

unions already cover the vast majority of urban cores. See Oral 

Arg. Recording 8:10-22, 12:30-41; see also id. at 7:39-8:01; cf. 

NCUA Reply 27-28. Perhaps, but the current record does not 

support the assertion.
32

C.

Finally, the District Court rejected the increased 

population cap for rural districts. The court worried that a rural

district satisfying the new, higher limit could be too large or 

could contain “numerous urban centers.” Am. Bankers Ass’n, 

306 F. Supp. 3d at 69. Because the rule qualified certain 

districts “no matter [their] geographic size or the number or 

size of metropolitan areas falling within [their] proposed 

boundaries,” the court held that the NCUA’s new definition is 

unreasonable. Id. at 69-70. But in our view, the new “rural 

district” definition is reasonable.

As suggested above, we assume that the NCUA must 

adopt definitions consistent with the statutory terms as 

understood in 1934, not today. The terms “rural” and “district” 

do not connote specific population or geographical constraints. 

See First Nat’l Bank III, 522 U.S. at 492 (noting that markets

“need not be small”). A “district” means a “portion of a state, 

county, country, town, or city . . . made for administrative, 

electoral, or other purposes.” District, WEBSTER’S NEW 

INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE 649 

(2d ed. 1934) (emphasis added). The district may be “of 

undefined extent.” Id. Meanwhile, “rural” indicates a 

“country” or “agricultur[al]” lifestyle, as opposed to that of a 

“city or town.” Rural, WEBSTER’S NEW INTERNATIONAL 

DICTIONARY OF THE ENGLISH LANGUAGE 1861 (2d ed. 1934). 

“Rural” lands generally “resembl[e]” the “country[side].” Id.

Nothing about the 1-million-person cap prevents the rural 

district from resembling the countryside. And one of the 

unchallenged restrictions helps provide a rural character to 

such districts. Either most residents in the proposed district

live on rural land, or the population density is 100 or fewer

people per square mile. See 81 Fed. Reg. at 88,440. 
33

Accordingly, even if most residents live on urban areas in the 

rural district, those areas will be surrounded by rural land. 

That’s because 100 people per square mile – or one person for 

every six or so acres – is a rural population density. 

As for size, the contemporaneous definition of “district” 

reassures us that rural districts may cross state lines. And a 

second unchallenged restriction assures that the 1-millionperson cap will not support gigantic or straggly rural districts. 

As the rule explains, the boundaries of a community credit 

union’s district may not “exceed the outer boundaries of the 

states” immediately surrounding the state where the proposed 

credit union would have its headquarters. 81 Fed. Reg. at 

88,440. Thus, even though the population density of the entire 

United States is less than 100 people per square mile, see 

NCUA Br. 56 n.44; Oral Arg. Recording 39:34-38, the 

geographical limitation forces a rural district to be much 

smaller. We are confident that such districts will not be so 

enormous as to amount to federations of “unrelated geographic 

units.” See First Nat’l Bank III, 522 U.S. at 502.

In arguing that the amended “rural district” definition is 

unreasonable, the Association relies heavily on the interpretive

analysis performed by the District Court. See Am. Bankers 

Ass’n, 306 F. Supp. 3d at 67-69. The court’s core contention

is that we must construe “rural” and “district” together as a 

specialized phrase that meant, in 1934, an “area[] much smaller 

than a state.” Id. at 68. For support, the District Court not only 

consulted two 1934-era dictionaries, results of a Westlaw 

search of contemporaneous opinions, and a database containing 

historical uses of the phrase, but also invoked the noscitur a 

sociis canon. See id. at 67-69.

The proffered definitional evidence is pretty thin. The 

1934-era dictionaries described what the specialized phrase 
34

“rural district” meant in Great Britain, not in the much larger 

and more expansive United States, which by the 1930s 

encompassed forty-eight continental states. See, e.g., Rural 

District, WEBSTER’S NEW INTERNATIONAL DICTIONARY OF THE 

ENGLISH LANGUAGE 1861 (1934) (“in England, a subdivision 

of an administrative county embracing . . . county parishes”).

The proffered Westlaw search results included scores of

federal and state judicial and administrative opinions. See 

Plaintiff’s Supplemental Memorandum app. 6, Am. Bankers 

Ass’n v. NCUA, No. 1:16-cv-02394-DLF (D.D.C. filed Mar. 

16, 2018), ECF No. 32-6. But we find little of use in those 

documents. Many of those opinions do not discuss size or 

population. See, e.g., Nicolai v. Wis. Power & Light Co., 269 

N.W. 281, 282-83 (Wis. 1936). Those that do involve specific 

rural districts whose sizes were between a town and a state. 

See, e.g., Sarther Grocery Co. v Comm’r, 22 B.T.A. 1273, 1274 

(1931). But none declares that rural districts by definition are 

restricted to any particular size or population.

The District Court next turned to the Corpus of Historical 

American Usage, a free and public online database. See Am. 

Bankers Ass’n, 306 F. Supp. 3d at 68 & n.5. The database notes 

197 mentions of the phrase in the first half of the twentieth 

century and only 37 in the second. See Search Results for 

RURAL DISTRICTS and RURAL DISTRICT, CORPUS OF 

HISTORICAL AMERICAN ENGLISH, https://www.englishcorpora.org/coha/ (follow “List” hyperlink; then search 

matching strings field for “RURAL DISTRICT”). The 

perceived drop-off led the District Court to determine that,

“even if rural district does not carry meaning distinct from its 

individual words today, it did in 1934.” Am. Bankers Ass’n, 

306 F. Supp. 3d at 68.
35

Although federal courts may use “crude[]” searches on 

databases to learn of ambiguities in a statutory term, 

Muscarello v. United States, 524 U.S. 125, 129-30 (1998), the 

search here did not suffice to show that the agency’s definition 

was unreasonable. Much more is required to cabin the 

agency’s discretion. A search of a commercial database, 

ProQuest, reveals that the phrase appeared at least 500 times in 

the second half of the century. We are not confident that the 

proffered evidence establishes a particular historical trend.

The District Court lastly invoked noscitur a sociis. See 

Am. Bankers Ass’n, 306 F. Supp. 3d at 68-69. The canon is 

inapposite. Recall that the term “rural district” was listed with 

“community,” not “local community,” in 1934. At the time, 

“community” could refer to “[s]ociety at large” or a 

“commonwealth or state.” Community, WEBSTER’S NEW 

INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE 452 

(1934). Indeed, we said that the word is “too indefinite to be 

used for purposes of exact measurement in terms of acres or 

square miles.” Lukens Steel Co. v. Perkins, 107 F.2d 627, 631 

(D.C. Cir. 1939), rev’d sub nom., Perkins v. Lukens Steel Co., 

310 U.S. 113 (1940). Thus, we do not see size or population 

as a connection between the terms.

The increased population cap is consistent with not only

the Act’s text but also its purposes. For instance, as the 

preamble noted, the expanded definition allows community 

credit unions in rural districts to reach more “persons of modest 

means who may reside” in those areas. 81 Fed. Reg. at 88,416;

see also § 2(1), (2), 112 Stat. at 913.

And the change is neither arbitrary nor capricious. The 

new rule explains that it provides a “level of operating 

efficiencies and scale” making rural districts attractive options

for prospective credit unions. 81 Fed. Reg. at 88,416. “[A] 
36

sufficiently large population base is essential to enable” them 

“to offer financial services economically.” Id. at 88,417. The 

NCUA also chose the 1-million figure based on prior

experience. The agency noted that it had approved of eight 

districts with populations of more than 250,000, and that one 

of them already had exceeded 1 million. See id. “Having set a 

1 million precedent in one state,” the agency felt justified in 

having a “fixed 1 million population cap for the other 49 

states.” Id. (emphasis added). We cannot say this policy 

choice lacks rational explanation.

The Association says the NCUA failed to consider prior 

agency decisions. See Am. Bankers Ass’n Br. 61. But we see 

no discrepancy and thus summarily reject the objection. The 

Association also turns to troubling hypothetical examples of 

rural districts with unruly shapes and those with dense urban 

areas such as Denver, Colorado. See NCUA Br. 55-61; Oral 

Arg. Recording 37:55-38:05. Again, such implausible outliers 

do not impugn the rule’s general reasonableness.

VI.

We now consider the remedy. To sum up, we hold that 

defining certain Combined Statistical Areas or portions of them 

as local communities and raising the population cap for rural 

districts are consistent with the Act and reasonably explained. 

Thus, we sustain both aspects of the challenged rule. We also 

leave undisturbed the portion of the District Court’s opinion 

that the parties do not contest on appeal.

But we deem the eliminated core requirement to be 

arbitrary and capricious. When a rule is contrary to law, the 

“ordinary practice is to vacate” it. United Steel v. Mine Safety 

& Health Admin., 925 F.3d 1279, 1287 (D.C. Cir. 2019); see 

also 5 U.S.C. § 706(2) (noting that the “reviewing court 
37

shall . . . set aside” unlawful agency action). But in “rare 

cases,” we will opt instead to remand without vacating the rule, 

so that the agency can “correct its errors.” United Steel, 925 

F.3d at 1287; see also 5 U.S.C. § 702 (“Nothing 

herein . . . affects . . . the power or duty of the court to . . . deny 

relief on any . . . appropriate . . . equitable ground . . . .”); Oglala 

Sioux Tribe v. U.S. Nuclear Regulatory Comm’n, 896 F.3d 520, 

536 (D.C. Cir. 2018). In considering whether to adopt the latter 

equitable remedy, we balance “(1) the seriousness of the 

deficiencies of the action, that is, how likely it is the agency 

will be able to justify its decision on remand; and (2) the 

disruptive consequences of vacatur.” United Steel, 925 F.3d at 

1287 (citation omitted). A strong showing of one factor may 

obviate the need to find a similar showing of the other. See, 

e.g., Fox Television Stations, Inc. v. FCC, 280 F.3d 1027, 1049 

(D.C. Cir. 2002) (holding that, because the agency likely could 

justify its action on remand, the potential for disruption was 

“only barely relevant”); Allied-Signal, Inc. v. U.S. Nuclear 

Regulatory Comm’n, 988 F.2d 146, 152 (D.C. Cir. 1993)

(determining that, because vacatur would give regulated parties 

a “peculiar windfall,” the meager chance of justifying the 

action was given “little weight” in the remedial analysis).

The NCUA has not requested remand without vacatur in 

this case. But because we have a “duty” to ensure the propriety 

of the APA remedy, 5 U.S.C. § 702, we hold that we have the 

discretion to raise the issue sua sponte, cf. Igonia v. Califano, 

568 F.2d 1383, 1387 (D.C. Cir. 1977); Gaddis v. Dixie Realty 

Co., 420 F.2d 245, 247 (D.C. Cir. 1969) (per curiam). Remand 

without vacatur is appropriate here. 

We conclude that the NCUA might be able to offer a 

satisfactory reason on remand. And as for disruptive effect, we 

perceive a substantial likelihood that vacating the rule could 

make it more difficult for some poor and minority suburban 
38

residents to receive adequate financial services. Even 

temporarily depriving these members of the opportunity is 

inequitable, because it would “set back” the Act’s objective of 

offering financial services to people of small means. See Nat’l 

Res. Def. Council v. EPA, 489 F.3d 1364, 1374 (D.C. Cir. 

2007); see also Advocates for Highway & Auto Safety v. Fed. 

Motor Carrier Safety Admin., 429 F.3d 1136, 1152 (D.C. Cir. 

2005) (declining to vacate rule because, in the interim, it “may 

do some good, if it does anything at all”).

Given the potential for sufficient justification and the 

substantial likelihood of disruptive effect, we have a rare case

in which vacatur is inappropriate. See United Steel, 925 F.3d 

at 1287. Thus, we remand without vacating the relevant part 

of the 2016 rule. We trust that the agency will act 

expediently. See EME Homer City Generation, L.P. v. EPA, 

795 F.3d 118, 132 (D.C. Cir. 2015).

* * *

In short, we reverse the challenged portions of the District 

Court’s summary judgment order. With respect to the 

qualification of certain Combined Statistical Areas as local 

communities and the increased population cap for rural

districts, we direct the District Court to issue summary 

judgment in favor of the NCUA. As to the elimination of the

urban-core requirement for local communities based on Core 

Based Statistical Areas, we direct the District Court to issue 

summary judgment in favor of the Association and to remand, 

without vacating, the relevant portion of the 2016 rule for 

further explanation.

So ordered.