## Facts

- The National Credit Union Administration (NCUA) processed applications for federal credit-union charters under the Federal Credit Union Act.
- National Alliance of Postal and Federal Employees (National Alliance) was a national labor organization with about 40,000 members; most members were Black postal employees.
- National Alliance applied for a federal credit-union charter to serve its membership on a nationwide basis.
- The NCUA Administrator denied the application, stating that National Alliance’s membership lacked a sufficient “common bond of association.”
- The Administrator also found a “100 percent overlap” between National Alliance’s proposed membership and the membership eligible for an existing United States Postal Service Federal Credit Union, and treated that overlap as making a new credit union not “economically advisable.”
- National Alliance satisfied the economic-advisability benchmarks set out in the NCUA’s organization manual, but the Administrator did not base the denial on any detailed investigation or developed record showing a low probability of economic success.
- National Alliance sought administrative review within NCUA; the Administrator affirmed the denial but suggested that National Alliance pursue separate local or district charters instead of a single national charter.
- The record reflected that NCUA had granted national charters to other nationwide associations, including the National Association of Postmasters, the National Medical Association, and the International Arabian Horses Association.
- National Alliance sued the Administrator in federal district court, alleging the denial was arbitrary and capricious under the Administrative Procedure Act (APA). The parties filed cross-motions for summary judgment.
- In the litigation, the Administrator conceded that a common bond existed among National Alliance members, but argued the association was not strong enough in extent or nature to justify a charter.

## Issues

1. Whether the NCUA Administrator acted arbitrarily and capriciously under the APA by denying National Alliance a federal credit-union charter based on asserted lack of a sufficient common bond and “economic inadvisability” grounded primarily on member overlap with an existing credit union.
2. Whether the Administrator could depart from NCUA’s written economic-advisability standards and the agency’s prior practice of chartering national associations without a reasoned, record-based explanation.

## Decision

- The court ruled for National Alliance on the cross-motions for summary judgment.
- The court set aside the Administrator’s denial as arbitrary and capricious because the denial relied on conclusory reasoning rather than the agency’s stated criteria and a developed evidentiary basis.
- The court rejected the agency’s use of “100 percent overlap” as a substitute for a concrete economic feasibility analysis, particularly where National Alliance met the economic benchmarks in the NCUA manual.
- The court found the Administrator’s shifting position on “common bond” (including the later concession that some common bond existed) left the denial without a coherent application of statutory factors.
- The court directed further agency action consistent with its opinion, after invalidating the denial.

## Legal Principles

- Under APA arbitrary-and-capricious review, an agency must give a reasoned explanation that connects the record to the decision and applies the governing statutory factors.
- When an agency publishes criteria or standards for decisionmaking (including internal manuals used as operative benchmarks), it must apply them in a consistent, explained way and cannot replace them with ad hoc considerations without justification.
- “Common bond of occupation or association” may be satisfied by membership in an established association; if the agency accepts that a common bond exists, it must explain why the bond is nonetheless legally insufficient.
- Economic feasibility must be supported by record-based analysis; the existence of an overlapping field of membership with another credit union may be considered, but overlap alone does not demonstrate that a proposed credit union is not economically feasible.
- Inconsistent treatment of similar applicants and unexplained departures from agency practice can support a finding that agency action lacks a rational basis.

## Conclusion

National Alliance of Postal and Federal Employees v. Nickerson held that NCUA’s denial of a federal credit-union charter could not stand where the applicant met the agency’s stated economic standards and the Administrator relied largely on asserted overlap and a conclusory view of associational strength, without a reasoned explanation tied to the record and consistent agency practice.


National Alliance of Postal and Federal Employees v. Nickerson, 424 F. Supp. 323 (1976)