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With all the complex rules credit unions must follow, it is not surprising that CU leaders sometimes seek a legal opinion from the agency that wrote a particular regulation. What is required in a specific circumstance or whether a planned service fits within legal limits are two common subjects of requests for a legal opinion.
Sometimes the agency responds with clarification. For example, last year the National Credit Union Administration’s Office of General Counsel, which writes NCUA opinions, addressed the permissibility of credit union indirect lending participations, with certain caveats. This was done in response to a request from the Georgia Credit Union Affiliates. The business of credit unions is complicated, and such opinions can be useful in applying a legal provision to a credit union’s operations or products.
An agency legal opinion, which also may be termed an “advisory opinion” or “legal interpretation” among other things, represents the agency’s views regarding the application of the law or rules, and can be relied on by the party making the request as an authoritative determination. An agency legal opinion also can provide guidance for other credit unions regulated by the agency that have the same or closely related issues. An opinion also can be very useful, for example, in settling a dispute with an examiner.
An agency legal opinion does not create new authority, but rather must be based on and be consistent with current law, rules or other agency interpretations. Otherwise, the agency would likely need to seek comments from stakeholders and the public regarding the impact of the interpretation.
Getting an Opinion
There is no requirement that a request for a legal opinion be filed by an attorney, but it is useful if the request articulates why the applicant has concluded, after a general review of relevant laws, rules and agency guidance, that the question presented has not been previously or adequately addressed. It may be that after the credit union undertakes such a review, the need for an agency legal opinion will no longer exist.
If an agency legal opinion is pursued, it is always good to know on an informal basis what the likely answer will be before requesting the legal opinion letter. Agency signals could come during conversations with the credit union’s examiner, but talking it over with the examiner may not always be convenient, productive or even feasible. A credit union official or its representative may also contact an agency’s legal department directly and talk with one of its attorneys regarding the issue.
This research is important because while agency guidance through legal opinion letters can be useful, not having any letter is better thanw a contrary answer that may take years to reverse, if it is ever revisited.
In other words, if the credit union receives initial indications from the agency that it will not respond favorably to the request, a legal opinion would be counterproductive and should not be pursued, unless the credit union plans to challenge the opinion.
What if They Don’t Give an Opinion?
No matter how burning an issue may seem to a requester, the agency may determine a legal opinion letter is not advisable or is unnecessary from the agency’s perspective. Agencies are not required to issue legal opinions. Indeed, the number of legal opinions NCUA has issued in recent years is low. There is no set timetable for when an agency will complete a legal opinion letter. Also, while agency staff may be willing to talk about an issue and give their interpretation verbally, they may not want to put it in writing.
If a credit union’s management determines a legal opinion is needed, but its regulator declines to issue one, or verbal interpretations from an agency are insufficient, management should work with its counsel to develop its own, well-grounded and reasonable interpretation of the relevant legal provisions. Counsel’s opinion should be reduced to writing and retained in the CU’s files.
Such an opinion will not bind the agency, but will help clarify the limits of the law and rules for the credit union, and may help the credit union identify what actions to pursue. It will also help establish that the credit union is making a good faith effort to follow legal requirements while developing new products and services or taking other action in service of its members.
Not all questions regarding the application of a rule or law warrant a legal opinion, but if a credit union’s management determines that is a step it needs to take, important options exist to obtain clarity regarding statutory provisions and regulatory requirements. No one is entitled to his or her own version of the law, but understanding the law better may well be worth pursuing.
Mary Mitchell Dunn is a partner with CU Counsel, PLLC, Washington, D.C.
